rajesh purohit / blog

The economy bubble gone burst now it's time for inflation ! Strokkur (Icelandic for "churn") is a geyser in the geothermic region beside the Hvítá River in Iceland. Strokkur erupts very reliably every 5-10 minutes, hurling boiling water to heights of up to 20 metres (70ft) towards the sky.

We are already in recession... Nov. 14 (Bloomberg) -- Sun Microsystems Inc., the world’s fourth-largest maker of server computers, plans to cut as many as 6,000 workers amid the global credit crisis. Royal Bank of Scotland will cut around 3,000 jobs worldwide over the next several weeks to reduce costs amid the global financial crisis, according to British media reports. 13 Nov 08 : Telecoms giant BT says it expects to have cut 10,000 jobs by the end of the financial year. The cuts will mainly affect agency and contract staff and offshore workers, the company said. The company said it had already cut 4,000 jobs, leaving a further 6,000 to go by the end of March. BT has a global workforce of 160,000. 12 Nov 08 : Chip manufacturing equipment company Applied Materials plans to reduce its global workforce by about 12 percent, or 1,800 workers, in a move to cut costs and streamline its business, the company announced Wednesday 11 Nov 08 : Yell plans 1300 job cuts in £100m costs drive Nort...

What's the difference between Investment Bankers and London Pigeons? The Pigeons are still capable of making deposits on new BMW's Quote of the day (from a trader): "This is worse than a divorce. I've lost half my net worth and I still have a wife." I had a cheque returned earlier. "Insufficient Funds" Mine or the banks?

The bail out plan declared last week by UK Prime minister and Chancellor saw today nationalisation of three of major banks (okay only Barclays and HSBC is left now). Taxpayers will pay 37 billion £ for majority stack in the banks. RBS is to raise £20bn, £17bn will be put into HBOS and Lloyds TSB. Barclays intends to raise £6.5bn without government help. There are no free lunches now.. HBOS, Lloyd TSB and RBS will not pay cash bonuses this year and all future bonuses will be paid in stocks. This will prevent bankers to take short term goals and high risks.

The current credit crunch was result of excessive lending by naive bankers. The last thing which is required to correct this mess is to lower interest rates. When people are not saving enough, how can bank going to lend more and that too with low interest rates? The solution for all this mess is to increase interest rates, ask people to save more ask United States to cut spending on War and defense expenses This will result in lower spending in America and lower export for China, India or other countries and in turn will fuel recession. But all this is necessary to curb the problem before it result in world war III. Before lending to US, IMF or Asian banks should demand less spending on defense. Commodity speculations should be brought under control by banning all financial derivatives i.e. future contracts which does not result in physical delivery of commodity… This will keep investment bankers and gamblers out of commodity market and will result in fair price calculation of commodit...

Western developed countries were advocates of ‘free market’ and had forced some of asian economies to open their market for global firms. Now in their own backyard one of the ‘globalized’ firm has gone burst and they are now planning to ‘sue’ the country who now owned the global firm. The country in question is United Kingdom and it’s Prime Minister is furious that Icelandic bank operated in UK, which accepted deposits from UK nationals, invested in UK economy by providing loans to/buying stacks in major retailers, and when it goes burst couldn’t honour their debt. First of all why UK government councils didn’t keep their money in UK banks rather than ‘investing’ taxpayer’s money to foreign banks? What was the reason is it because of ‘greed’ or they didn’t have faith in UK banks? Councils kept millions of £ as investment in banks and kept raising council tax year after year. Now if councils couldn’t recover that money from Icelandic banks they will be forced to increase council tax aga...

BULL MARKET -- random market movement causing an investor to mistake himself for a financial genius. BEAR MARKET -- 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex. VALUE INVESTING -- The art of buying low and selling lower. P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing. BROKER -- What my broker has made me. STANDARD & POOR -- Your life in a nutshell. STOCK ANALYST -- Idiot who just downgraded your stock. STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves. FINANCIAL PLANNER -- A guy whose phone has been disconnected. MARKET CORRECTION -- The day after you buy stocks. CASH FLOW -- The movement your money makes as it disappears down the toilet. YAHOO -- What you yell after selling it to some poor sucker for $240 per share. WINDOWS -- What you jump out of when you're the sucker who bought Yahoo @ $240 per share. INSTITUTIONAL INVESTOR -- ...

It’s not fare to blame all on US banks for the credit mess created all over world. Isn’t it? European banks too should share some responsibilities for the credit crunch problems. To start with US banks are blaming European counterpart for hoarding cash and not giving fresh loans to them. But do they have cash to give others in first place? Remember ‘not to be a donor if you are bleeding’ Here is what Bloomberg data says - RBS, Barclays, Lloyds TSB Group Plc and the U.K.'s three other biggest banks need to repay as much as 54 billion pounds of debt by the end of March 2009 as par the reports on Bloomberg. The total, which includes bonds, loans and commercial paper, is triple the debt repaid in the same period a year earlier. RBS has about 11.5 billion pounds of obligations coming due in the next six months, while Barclays has 15.9 billion pounds maturing, according to data compiled by Bloomberg. Before going to press, RBS and Barclays are at doorsteps of Chancellor of the Exchequer ...

We have heard of n number of investment banks, retail banks and few insurance firms going down the drain because of ‘credit crunch’. Now it’s turn for few countries for a change. Reports are Iceland and Pakistan is near collapse if they do not act quickly.  To start with Pakistan is near defaulting its debt. Pakistan 's credit rating was cut by Standard & Poor's, which cited doubts about the country's ability to meet $3 billion in debt-servicing costs in the coming year. Rumours are that Pakistan 's President Asif Ali Zardari is seeking $100 billion to overcome the nation's economic crisis. And I wonder where from he will get that amount of money when US congress itself is unpleased of giving 700billion$ to their own banks and insurance firms. The nation is running short of money to repay state debt. Pakistan 's foreign exchange reserves fell to $8.14 billion as of Sept. 27 from $8.80 billion a week earlier, central bank data show. That is less than ha...

So ex-bankers (from Lehman) are busy ringing their lawyers inquiring their options after knowing they will be getting nothing but 800£ salary (way lower than minimum wedges defined by government). The 750 Lehman Brothers Holdings Inc. U.K. staff that lost jobs yesterday are guaranteed 800 pounds ($1,426) under law and must line up with other creditors if they hope to get any of their discretionary bonus. Discretionary bonus is not guaranteed. I feel they should not waste their inclusive minutes (and precious savings) talking to lawyers. The report that Lehman, Goldman Sachs Group Inc., Morgan Stanley and Bear Stearns Cos. paid about $50 billion in salaries, benefits and bonuses in 2007. The bonus portion, estimated at 60 percent of the total, rose to $29.8 billion from $26.1 billion. Wonder why this was not analyzed by free press earlier at start of the credit crunch. With that much amount of money, employees could have bought 2-3 Bear Stern themselves.