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Just Shoot Me

Bala, 28, Gordon Gekko in the making, pseudo-intellectual, cynic, bibliophile, obsessive compulsive ranter...

A series of unfortunate events

August 29, 2007

Dear Constant Reader,

Due to a series of unfortunate events, i have not been able to blog. The monsoon has bought in a bit of slapstick to my otherwise boring and uneventful life. First my apartment flooded and then my TV and Modem were taken out by a mighty bolt of lightening. My attention has been occupied by more immediate concerns like bailing out water and keeping the apartment dry, running after the TV mechanic and re configuring the modem to use USB instead of LAN connection. All this amidst titanic upheavals in the stock market. I am still a tad unsettled by all this furious activity and will be back to regular ranting in a couple of days...


PS : That bolt of lightening was the loudest, awesomest, bone jarring bit of lightning strike i have seen. There were sparks coming out of my TV ;-)

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posted by Bala, 5:56 PM | link | 0 comments |

Why he is called helicopter Ben?

August 17, 2007

Q: Why is Ben Bernanke called Helicopter Ben?

A: In 2002, when the word "deflation" began appearing in the business news, Bernanke gave a speech about deflation. In that speech, he mentioned that the government in a fiat money system owns the physical means of creating money. Control of the means of production for money implies that the government can always avoid deflation by simply issuing more money. (He referred to a statement made by Milton Friedman about using a "helicopter drop" of money into the economy to fight deflation.) Bernanke's critics have since referred to him as "Helicopter Ben" or to his "helicopter printing press". In a footnote to his speech, Bernanke noted that "people know that inflation erodes the real value of the government's debt and, therefore, that it is in the interest of the government to create some inflation."

True to his nickname, he has helicoptered in to rescue the markets. Tsk Tsk, all ye dyed in the wool libertarians and free market evangelicals out there.. i pity you..

Q: Why Global markets are in such a mess?. Is Leverage that dangerous?
A : Leverage is a double edged sword. As to how we got to where we are now -

....today any wealthy individual can take $1 million and go to a prime broker and leverage this amount three times; then the resulting $4 million ($1 equity and $3 debt) can be invested in a fund of funds that will in turn leverage these $4 millions three or four times and invest them in a hedge fund; then the hedge fund will take these funds and leverage them three or four times and buy some very junior tranche of a CDO that is itself levered nine or ten times. At the end of this credit chain, the initial $1 million of equity becomes a $100 million investment out of which $99 million is debt (leverage) and only $1 million is equity. So we got an overall leverage ratio of 100 to 1. Then, even a small 1% fall in the price of the final investment (CDO) wipes out the initial capital and creates a chain of margin calls that unravel this debt house of cards. This unraveling of a Minskian Ponzi credit scheme is exactly what is happening right now in financial markets....


Q: Can i read more about this Sub-Prime Crisis?
A : Prof. Stephen Cecchetti has a great FAQ over here. Go read it.

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posted by Bala, 6:51 PM | link | 0 comments |

Why my procreating might be a crime against humanity?

August 14, 2007

Yesterday i heard from my mom that my dad tried to convince a green-card-holding,disillusioned,want-to-return-home,middle aged NRI code jock about how wonderful life in America is and why he (the NRI) should "adjust" and stay there. This is particularly funny because, my dad hasn't been to the North of Bangalore in his entire life (as far as i know) and the NRI relative has been living in San Jose for at least twenty years. Such happenings remind me of the inherent lunacy encoded in my DNA and why my procreating and propagating this genetic line might be considered as a vile crime against humanity. ippo theriyudha, naan en norman bates madhiri irukkaennu?

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posted by Bala, 2:25 AM | link | 0 comments |

putting money where the mouth is

August 12, 2007

dear free market peoples,

i am vexed at your lack of faith in your creed. when all is well and rosy, you wax prolific about economic Darwinism and the invisible hand of the market. But the minute the shit hits the fan, you run to central banks and cry for liquidity. The communist fools have had their share of egg on the face, but you free market evangelists are always bailed out by the deus ex machina act of the central banks. This is so unfair and spoils the fun for us cynics.

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posted by Bala, 11:58 PM | link | 0 comments |

Here we go again

August 09, 2007

Ladies and Gentlemen, please welcome the latest entrant to the subprime cluster-fuck - BNP Paribas and the cost is a paltry $2.2 Billion.

update:
Goldman Sachs joins the party.

update 2:
AIG comes over to the dark side..

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posted by Bala, 9:50 PM | link | 1 comments |

The batte for my intestines

August 07, 2007

Dear Constant Reader,

I am having a running (pun intended) battle with E. Histolytica. So will be back once my intestinal tract is secured.

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posted by Bala, 8:11 PM | link | 1 comments |

idhu epdi irukku?

August 04, 2007

When your hedge funds create headlines because they are NOT bankrupt your company is really fucked up.

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posted by Bala, 1:53 AM | link | 0 comments |

what another one?

August 02, 2007

Here goes another one? என்ன கருமாந்திரண்டா இது? sub prime ஆம் sub prime! கண்ட கண்ட பரதேசிகளுக்கெல்லாம் கடன் குடுக்க வேண்டியது, அப்புறம் அவன் கட்டலைன்னு திவால் ஆக வேண்டியது. இந்த சப் ப்ரைம் தொல்லை தாங்க முடியல பா. கொசு மருந்து அடிச்சு கொல்லுங்கடா..

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posted by Bala, 10:28 PM | link | 1 comments |

The bear God waketh

August 01, 2007

1) Doesn't NYSE have price band limits for stocks? Yesterday American Home Mortgage lost 90% of its value in a single day after basically saying "we are broke". Once it started its free fall trading was stopped in the forenoon when it was trading at around 10$ and when it was reopened for trading in the afternoon (around 12 in the night for us), its price crashed to a dollar!!!. Indian stock exchanges usually have price band limit for stocks beyond which a stock price can't change - so we don't witness such interesting behavior here. (i don't think there is a price band for stocks with stock futures. hafta check this out)

2)Yet another Bear Stearns Hedge fund seems to be going under. Bear Stearns has stopped redemptions from the $900 million Asset-Backed Securities Fund today. The other two from Bear family which were in trouble earlier have filed for bankruptcy. (so far i had heard only of chapter 11, it seems if you are cross border you file for chapter 15.. hee hee).

3) We had a blood bath today.. yawn... 615 points in the sensex .. yawn..180 in the nifty.. yawn. It was absolutely wonderful to watch the parade of fools in CNBC suddenly discover the phenomenon of gravity. As i am typing this now, udayan mukherjee is looking like he just died and mithali mukerjee is looking like she just saw a dead man. I missed Tanvir Gill today, this funeral atmosphere is tailer made for her.

4) Let me repeat, when puNNakku vikkaravan and gundoosi vikkaravan start becoming star fund managers, the bear God really gets annoyed and you don't want him annoyed.

5) Margaret Brennan is really hot.

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posted by Bala, 7:46 PM | link | 0 comments |