This is WAR

I bet this is the thought in each and every Mumbaikar's mind, even as the dust settles on what has been the most audacious terrorist attack on India. Having been a resident of Mumbai all my life, even i have been used to such attacks as the city has witnessed numerous such attacks in the past. But this time its clearly different, the water seems to have passed over the head. The words spirit and resilience of Mumbai are often brought up after such acts, i believe these words are abused, as it is economic compulsion which compels most people to be back on the job soon after such disasters. And the calamity was something Mumbai has never witnessed in the past, as hotels which were the icons of Mumbai were chosen as targets and the primary aim seemed to be taking foreigners hostage.



The scale of planning involved in the operation illustrate the intention of the terrorists. A huge cache of explosives, automatic assault rifles, detailed knowledge of the topography all helped the terrorists wreak havoc in the city. The Mumbai Police, which was the first to rise against the threat had to face highly trained and motivated adversaries, put up a brave fight losing fourteen men in the process. It seemed the city was brought to its knees, until the Government sent out an SOS to the elite forces. Clearly it was time to switch gears. The Army and Rapid Action Force was deployed. Additionally, units of the National Security Guards (NSG) popularly known as the Black cats, the crack Marine Commandos (MARCOS) were called in and soon took charge of the situation. It was time to fight fire with fire, the heavily armed and well trained commandos responded in earnest to the threat which had India's financial capital in its grip. It was almost 60 hours before the entire operation could be completed, Mumbai could breathe freely again.


We all owe a deep sense of gratitude to the heroic efforts of the elite commando teams, who lost two of their own in the daring operations. The sense of professionalism imbided in the commandos was exhibited as a news reporter spoke to them after the completion of the operation. The reporter repeatedly thanked them for their bravery, to which the commandos replied it was their duty and they wouldnt spare any one who posed a threat to this country. Brave men indeed....saludos, my head bows in respect for these men and their deeds. It is very reassuring to know, we have such capable men to fall back upon in times of adversity. I also feel a deep sense of loss, as so many innocent people have lost their lives in this seemingly mindless act. The efforts of the staff at the Taj and the Oberoi, in what was seemingly a hopeless situation, stand out.



The other overwhelming emotion i have is anger,which is directed at politicians. Though it would be harsh to paint everyone with the same brush, it wouldnt be wrong to say we have a bunch of useless corrupt politicians governing us. And this is true across the political spectrum, irrespective of party affiliations. How could one explain political parties attacking each other for votes, even as the anti terror operations were on in Mumbai. Its a pity the NSG, which was raised as a anti hijacking and anti terror force is now primarily responsible for security of politicians. What a waste of the best and bravest of our forces!!!!!


This time, it is upto us people to ensure the politicians are made accountable for the horrible mess we find ourselves in. Even as i am writing this post, the news of several changes in the bureaucracy and the cabinet have started coming in. I hope these are just the beginning of sweeping changes in our system. I am pretty sure, the ordinary citizen is not going to remain a mere statistic and will stand up to be counted. The political establishment has to dish out some real tough answers, the goings on in Mumbai are only likely to reinforce calls for swift and decisive action with a view to protect the ordinary populace.

The party's over....a "real" bubble pops

The party seems to be well and truly over for Real Estate. The ongoing global credit crunch has not spared India, which has caused a tightening of lending by banks. A bigger worry for the real estate sector is an absence of buyers due to a combination of high prices and the almost prohibitive cost of availing a home loan. The writing was on the wall (pun intended) , a fall in rentals in Bandra Kurla Complex in Mumbai now acknowledged as the benchmark for commercial property rates, suggested the wheels of the industry were losing traction.

It wasnt difficult to see this coming, as real estate companies have been reluctant to lower prices. The liquidity squeeze has led to companies disposing properties to raise cash, a notable example being Unitech. News reports have also suggested companies are offering discounts for bulk purchases, subject to the payment of a cash component upfront. Friends wouldnt believe when i had told them about six months or so the next market to witness a correction could be real estate. However, I have to admit i was wrong when i expected the big well established players to survive the oncoming consolidation. Even the well entrenched players like Unitech & Emaar are struggling, it seems the whole industry is struggling to come to terms with the slowdown in demand.

Does it mean housing becomes more affordable for the common man? Well for a start, the process has been initiated as developers have agreed to cut rates by 5-10%. But i would argue for a sustained revival in demand prices would have to be cut more aggressively, lower interest rates for home loans will also make things easier for investors looking to buy new homes. I sincerely do hope the froth in the real estate market is cleansed, an ominous example are the Investment banks an industry which has witnessed a shakeout akin to nothing ever seen before. I continue to wait and watch closely as i hope getting that dream house becomes a little easier.

The brakes have been slammed....big time.

The statement pretty much sums up how the auto industry feels at the moment. The present travails of the auto industry are not surprising considering auto loans are the second largest liability most people have, the biggest being a housing loan. The carnage brought about by the subprime mortgage meltdown in conjunction with the credit crisis has well and truly rewritten the archives of financial markets. Now comes the second leg of pain, as shrinking loan availability from banks has deterred buyers.

The extent of the problem being faced presently can be gauged from the fact that General Motors has said it might run out of cash before the end of the year. The clamour for a investment bank style bailout has been rising in the US, considering the importance of the big three i.e. General Motors, Ford and Chyrsler to the US economy. Sadly, the present state of affairs are likely to culminate in either one of these big three filing for Chapter 11 bankruptcy protection.

Whether the US government bails out the auto industry remains to be seen, one thing is for sure. The pain is being felt from Detroit to Stuttgart and even Tokyo. Some of the biggest names in the industry Nissan, Toyota, BMW, Honda have all issued profit warnings for 2009. Is there bigger trouble in store? My fear is, should the freeze in credit continue, its only a matter of time before credit cards become a problem area. The credit crunch seems to be easing as Libor has cooled off sharply from the highs, however confidence is a key ingredient which seems to be missing in global financial markets these days. From the way things look presently, we could be yet some way off before things start to improve for the better.

Almost a $1000 billion and still counting...

$841 billion, thats the amount of losses the financial services industry has already taken from the global credit crisis, according to a report in the Financial Times on 13th November. The amount is staggering to say the least, its feared there's more to come. The International Monetary Fund now estimates likely total losses in the financial sector could be $1400 bn, about 47% higher from the April estimate of $950 bn.

The present crisis can be classified as one of unprecedented proportions. Another fallout has been a massive reduction in jobs, it is being speculated an additional 70,000 jobs could be trimmed in the US alone as banks tighten their belts further. These losses are in addition to the 150,000 already lost globally. Needless to say several industries have been shaken to the core, a prime example being the hedge fund industry. Hedge Fund Research estimates the average hedge fund is down about 15% this year, the worst performance ever. Things dont look too good for the future either. Billionaire investor George Soros in a testimony to a House Oversight and Government reform committee said hedge funds will be decimated by the current financial crisis and be forced to shrink their portfolios by 50-75%.

The crisis has spread to the real economy and the likely onset of a global recession looms. What else has the global economy got to endure, only father time can tell!

Here we go again...

The next round of pain for global financial markets appears to have begun. A rally in the last week of October seems to have petered out due to the emergence of fresh negative news across regions. Global stock markets, most notably the Dow Jones, clearly look set for a new low. Not that there was any doubt in the first place, as highlighted by the reluctance of markets to respond positively to huge stimulus packages announced by Governments, the latest being China. It would seem rallies are being used to exit holdings rather than initiate fresh longs.

What started out as the subprime crisis lead to the credit crisis and is penetrating into the real economy. It is worthwhile to note the overwhelmingly pessimistic picture painted by economic indicators. Consumer sentiment, business sentiment and industrial activity are at record lows in several countries. The automobile industry is the focus of the bad news presently, as a possible bankruptcy hovers over General Motors. CNBC carried a report which, citing private studies estimates said about 2.4 million jobs could be lost if General Motors, Ford or Chrysler were to go belly up, a scary scenario indeed.

In India, the scenario is grim to say the least. A lot of industries have resorted to shutdowns whilst cost saving seems to be a top priority these days. To put things into context, the Tata group has asked its group companies to put all acquisitions on hold unless absolutely necessary and focus on optimizing costs. Needless to say, industrial production figures are likely to nose dive and drag capital goods stocks like Larsen & Toubro, BHEL & Siemens lower.

The pain felt by investors globally is going to be much longer than anticipated. I believe the pain could linger on for another 3-6 months, as equity markets tend to bottom out earlier than the real economy. I believe expectations for an economic recovery in 2010 should help equity markets bounce back from the present downtrend, it wouldn't be a surprise to see a strong showing for equities in 2009 even as the flow of adverse economic news reaches a zenith.

Though in the short term, I personally do not want to try and catch a falling knife, i.e. try bottom fishing. I would rather wait for things to settle and then take a relook at the markets. For all of us its the time to buckle up and sit tight, since the last and possibly, the most painful leg of the bumpy ride has begun.

Tough luck Felipe

This post might look like a misfit amid all the other contributions on financial markets, but this is about one of my favorite sports - Formula 1. Having been a F1 fan for more than 17 years now, i can state this season was one of the most exciting in recent times, if not the most exciting ever.
And at the end of the season, i couldnt help but feel sorry for Felipe Massa, who did everything expected of him at Interlagos, Brazil, his home circuit. A pole position preceded a superb victory, though it wasnt quite enough to clinch the drivers championship for the Brazilian. Lewis Hamilton, who was vying to become the youngest F1 champion managed to capture 5th place, which was required for him to clinch the world title.

Being a Tifosi, i couldnt help but wonder what might have been. The Italian team have suffered from a series of blunders in the pits and mechanical problems, a notable one being Felipe Massa's engine blowing up when he was in the lead at the Hungaroring, Hungary. Clearly the crack team of Michael Schumacher, Technical director Ross Brawn and Team Principal Jean Todt had a huge role to play in the team having a stranglehold on the Drivers and Constructors championships through much of the decade gone by.

I hope the team is able to pull up its socks and go one better in the drivers championship next year. In particular i expect Kimi Raikonnen, who clearly is one of the most naturally gifted drivers in the paddock to lift his game one notch higher. Though the 2008 season has just ended, i believe there is lots to look forward to in 2009 as i wait in eager anticipation for the engines to be revved up again.