The thinking that started with the "Create Moments" now rests as my holidays in USA. DO let me know what all you feel about all these shows. I share views with so many other students of the subject that - these new thinking ways will prove to be most cost effective rediscovery of timeless values for helping us for a fulfilled life. I see lot of coincidence for me in getting the most complex turmoil resulting from the rigid thinking ways - the market meltdown. I feel confident that such thinking ways alone can bring newer comforts and satsifaction in human life. Wish you all the best.
My US stay was absorbing. So much of travel - more than India to US and back - it was all very good experience. My son Salil and Kavita had p[lanned it all in adavance. Reading and spending time on those themes was further enjoying activity. Since there is phone calls and visitors I could spend time I felt enjoyable and that is the reason I may nor be in a position to spend such time back home.
Thursday, October 2, 2008
Sunday, September 28, 2008
Market Meltdown in USA - Economic Bail Out – a thought model
Readings as a visitor in USA Summer 2008
Market Meltdown in USA
Economic Bail Out – a thought model
Before going further it is necessary to have a look into the total numbers about the US economy.
US Economy Bailout
The US Budget Estimates Budget Totals (Dollar amounts in billions)
Market Meltdown in USA
Economic Bail Out – a thought model
Before going further it is necessary to have a look into the total numbers about the US economy.
US Economy Bailout
The US Budget Estimates Budget Totals (Dollar amounts in billions)
US $ 700b bailout (now estimated) is about 25% of annual revenue and about 4.5% of US GDP
CONSUMER PRICE INDEX: AUGUST 2008
August level of 219.086 (1982-84=100) was 5.4 percent higher than in August 2007.
If it is coming out of the budget, at what cost?
Health and Human Services ?
Defense?
Education?
Homeland security?
Agriculture?
Energy?
Veterans Affairs ?
National Science Foundation?
NASA?
Else from where it will come?
More budget deficit ( inflation )?
Yes, some are free to decide fate of those who are unable to decide, but suffer.
U.S. Treasury Secretary Henry Paulson has requested sweeping new powers for the Treasury Department as he seeks $700 billion in government funds to purchase troubled financial assets from firms facing a lack of liquidity or investor confidence.
..he hopes to see the U.S. economy through the crippling credit crisis this way.
..he has asked that there be no judicial oversight to the plan and that the Treasury Department have sole discretion over which assets should be purchased.
Can Secretary Paulson or all other president’s men achieve anything by reacting on symptoms?” “We have asked congress to do something huge in short time …” White House
Why when the situation is equally bad in other areas?
Around 2% annualized GDP growth
Negative saving rate
Inflation National debt closing in to GDP
High transaction costs
Reducing disposable incomes
Growing unemployment
Economic indicators
These indicators command more serious attention in so many areas for improvements in these.
The US insensitivity for borrowing originates like this
Govt Security Holding country
US $ Billion.
US Trade deficit partly financed this way. Above is external debt
Recent internal debt is in addition to the external debt mentioned above .
Feel good or populist solutions will just borrow some time…
As seen above, so many things need real correction.
Make or Imports
Employment
Trade deficit
Bailout as initiated will just help credit system to survive to keep markets pulsating and keeping problems in place. With most of current income discounted for living the way most people live.. by discounting the future
Wiser will find their savings and investments their values reducing …
The real purchasing power is scarce to keep markets stable – then from where growth will come?
….how many can buy durables, cars and houses if credit cards /loans are not available?
… how many people will come forward to buy houses?
The answer is obvious – very few.
Then how the operating manufacturing companies / shoppers will remain profitable?.
Look at some news contents
“September 24, 2008 - The nation’s home builders today called on Congress to move promptly to enact the emergency financial rescue plan proposed by Treasury Secretary Henry Paulson that is designed to stabilize worldwide financial markets and restore consumer and investor confidence in the U.S. economy. “
“… investors are holding units they would like to unload if they could -- just take a look at the condo inventory, which jumped to a record 769,000 units in July (’08)”
“..the situation commands to deal with the cause of causes, if USA wants to remain strong and retain its strengths.”
“…since lenders do not like to hold property, they won't hesitate to dump houses on the market as fast as they can -- and since they've shown they are willing to write assets down to virtually nothing “
Criticizing is simple, but it is too late now!
Clarity and sense of direction is the need of the time for lasting solution.
A good thought model is desperately needed. It MUST evolve from the diagnosis and prognosis – with focus on causes and cause of causes.
Lets build up the model – at least we can correct what we can.. to help and contribute….
Inviting sincere, honest and purposeful thoughts from stake holders to build a solution model is a process – a simulation with real life data and indicators.
Fortunately the American spirit has proven itself time and again by achieving good results out of impossible conditions. The current situation is too precious to be an exception.
Does not matter how others defines the urgency - such solutions will take time to get built up.
Time of suffering is the real cost for something wrong of this magnitude as such problems, unfortunately, can not be dealt with in one go.
No one can have real insight of the complexity when so many failures are getting exposed and we are looking at them post facto.
We may need to assess the larger impact
It is always possible to take ‘problem solving’ as opportunity to create something better that was not there to begin with.
So let us split the problem- break it down. THINK There is always a better way of doing things.
Let us look at some of the variables involved.
This is the demand side
Let us try to find out
Who amongst the above
-have borrowed and paying regularly? -have borrowed and likely to default? -will buy houses at disposal? -can buy and borrow with some equity of their own?
“WASHINGTON (MarketWatch) -- U.S. home builders sharply reduced the number of new homes starting construction in July and dropped the number of new single-family permits to the lowest level in 26 years, the Commerce Department estimated Tuesday. Housing starts fell 11% to a seasonally adjusted annual rate of 965,000 in July,”
…a common sense approach - deviating from the normal accounting / valuation norms – calls a look at the collateral values on real time basis – replacement cost basis. Let us start from “Point Zero” as if this is the problem and cause of real problem.
If we mix up with the Wall Street problems this stage we may get distracted. So we start with solutions on this situation.
…knowing real asset values and losses incurred by the lenders can bring us out of box.
…it is one way of looking at the problem
…forget what the books say while visualizing a thought model.
Forget they were built earlier and have problems – just forget.
This is useful as the loss in value of collaterals is a function of demand / supply gap in the first place and secondly it is also in finding credit worthy buyers – which are the real causes for the present scenario. These factors need correction for future solutions.
Why there is a lower credit worthiness?
Unemployment, No savings, already discounted future earnings – all leading to lower equity in houses
This needs to be corrected in the real bailout process. This is a big job by all means -even at cost of US$ 700 billion with no solution for the future.
How many are looking beyond present?
Do not you feel looking at the future problems and solutions are essential?
The U.S. government has taken control of mortgage giants Fannie Mae and Freddie Mac. It will arrest a failure of those institutions, but how this activity will remain healthy.
People do need houses, but some are unable to pay for them effectively.
What’s the purpose of committing huge resources ahead of time? How much of house building is funded by borrowings? Why a wrong judgment in this information age?
Is it Greed? Is it hurry?
One thing is certain - All wheels of this vehicle are not running at same speed – so where it will lead?
Is this a beauty of free enterprise and free economy?
Do we have initiatives to correct or market alone will do this job?
No still there is government and election coming on. Some action must be taken – urgently – but an effective action – a real correction.
Realizing the best value for immense number of existing housing and business properties is a major part of the solution – to protect the bank assets and synchronizing speed of new constructions of such properties is essential.
The losses the lenders face is because of a mistake - absence of real selling and lending function. Both builders and lenders are responsible for this. This needs to be corrected.
In a market economy each will think of their own interests first, but each one must concede something for the normalcy.
Can, between themselves, these forces will work it out on their own?
No still there is government and people’s representatives are struggling even at week end.
With election coming on, urgent action is essential – but they also know it has to be effective action – a real correction. Pray god they remain uninfluenced by lobbyists.
To visualize the fragments of thought model lets start thinking loudly.
Find credit worthy buyers for foreclosed and new properties.
Leasing some of these properties for good rentals. This may also apply to doubtful mortgages to emerge.
Accelerate the process by making these investments attractive by tax incentives.
Tax payers put up their money in properties and gain out of it too!
Objective set must be like
Leveraged tax concessions for shorter budget deficit.
Private sector execution with close oversight . Motivated long term economic consolidation.
Builder buyback of ‘tinted’ properties, with reasonably priced soft credit has to be seriously considered at this stage.
It is real function of ‘industry’ to care about its high inventory of ‘products’ and not the responsibility of lenders and government – and this is a MUST in free economy. It is not a centrally controlled economy where government is the ultimate solution provider.
Let us not forget it is builders’ erroneous judgement which has snow balled in to this situation.
It is unpopular decision but most sensible under given situation. However, it is better for monitoring and better follow up action for real solutions. The builders are real big stakeholders for times to come.
The US government has enforced a new housing bill to offer tax benefits to first time house Buyers. This can be modified to cover second home buyers and rentals to introduce mutuality of interest and minimizing federal involvement for direct taxpayer involvement in bail out.
Cleaning lender books with added moratorium is a good way.
The cash degeneration of lenders due to bad mortgagees till a cut off date should be replenished by “Bail Out”. May be as equity or quasi equity so as to retain the ‘private’ ownership till the things turn the corner – whatever time it takes – but with conditionality's about cap on executive remuneration and proper accountability, management changes if necessary.
A blanket buy out of bad debts will add to continuation of old ways. Even the congressmen and decision makers are afraid of this – what a confidence in the money managers!
This way money will be bit scarce but at least this way frenzy spenders will realize its real worth. They will try to earn it before they spend and not simply borrow and spend - they will realize that the borrowed money needs to create some values to cover more than the cost of borrowing.
The ‘money managers’ will think down to earth to find profits with limited resources and will learn not to overplay through ‘derivatives’ route.
“Derivatives” are parasites and have killed big and small with one bad judgment. ‘Derivative’ as concept is a downward and vertical way of thinking – going deep in one direction. It focuses on more liquidity when minds are frenzy with profitability greed.
The situation is pregnant enough to inspire Edward De Bono or his disciples to coin a new term for this.
Derivatives are good options, but in highly exceptional conditions but not purposeful in the normal course.
For “Bonus” oriented money managers it proved to be curse.
Keeping credit lines open is essential for healthy normalcy in the economy – real purchasing power, real demand and bit of higher savings to fund the economy for growth.
But for this further and real growth is difficult.
Whatever we have seen so far is post facto way to correct the situation.
Real solutions lay in adding fundamental strengths in economy - controlling trade deficits – optimizing imports – everything, clothing, toys, electronics, cars, hardware and what not..
USA has forgotten the joy of market friendly productivity for the local market. Spirit of “be American buy American” is twisted for sectional benefit and not for economy and certainly not for the producers and workers in America. This brings in American competitiveness in the pictures.
Somebody must start conceptualizing this aspect – globalization, national advantages, outsourcing and hyper sensitivity within the economy.
Americans are known to innovate; others exploit knowhow to compete with Americans.
It may be quality systems, Six Sigma, productivity and competitive advantage and what not.
Looking at future these still seem to be valid solutions – globalization or no globalization. If one removes something from the system, it needs to be replaced with something to keep people gainfully occupied.
What we see happening here now?
Other countries can produce so many things successfully; why not Americans?
I know they are not resigned from an ‘honest labour’ and sense of pride.
Yet why they want to enjoy a produce of other countries where men, women and children work in work in ‘inhuman’ conditions.
Where are the people who fight for the human rights of ‘terrorists’?
Do Americans need a renewed commitment to help their country remain stronger?
People need to ask these and such questions to themselves.
Creating more jobs and a competitive advantage is THE real long term solution.
Some areas which are left unattended and undecided are - Energy, offshore / onshore petroleum, refining, steel, public works, infrastructure, energy efficient communities with network of public transport, affordable housing designs.
Tax encouragement for savings and empowering more demand is like riding on two horses running in opposite directions – but an evolving equilibrium is needed badly.
Remember they did it differently in Great Depression. That time government invented the work to circulate money in the system – THROUGH PEOPLE and not by bailing out institutions.
The PEOPLE know what they need and for what they are willing divert their own money and not the sophisticated, aggressive marketing function. Marketing is not a bad thing, but look what they created - a superfluous thing – a bubble – an unfounded confidence to buy a dream with weaker financial fundamentals.
A Good thought will always overcome the adversities.
Visualization with a salute for American Spirit
http://www.contrarianprofits.com/articles/700-billion-bailout-still-loaded-with-uncertainties/5616
http://www.nahb.org/page.aspx/ NAHB Builders Call on Congress to Pass Treasury Rescue Plan.mht
Office of management and Budget/Budget of the United States Government, FY 2007.mht
Household income in the United States - Wikipedia, the free encyclopedia.mht
Internal Revenue Service - Wikipedia, the free encyclopedia.mht
Pent-up supply now holding housing back - MarketWatch.mht
The Bulls - A Mind Set - Part 2
I was uneasy about the way the realities were evolving. I know mostly governments guard the ways the bitter realities come out to avaoid shocks and fall outs. But this ,I felt, needed an exception. The financial meltdown is going to affect practically everybody - now, today, tomorrow, day after tomorrow. Such catastrophic events highlight a fact that even in collective undertakings we have not yet perfected the self correction mechanisms. It can be understood if one single person makes a mistake and unable to correct himself; but in businesses where cream of gretest Universities is absorbed, when they enjoy the greatest life and financial security one would not have dared to dream - forget their real role as a team members - they fail to keep sanity on rails, respect the trust people have put on their abilities. It has been happenning - but when it happens we fail to respect a lable of ' intelligent animal'.
One can understand a mountainier taking a risk beyond life, but a business executive who is handling 'trust', not money, needs to think hundreds of times. People have no alternatives, they have to survive as it is demanded, they go on accepting these experiences as part of life. It does not matter what people call it - pesimist, run of the mill fellow - it does not matter and it should not matter.
I have been constrained by numerical ways to express myself. I needed some soul to put it in words and I will always remain happy that Anny responded positively and did a finest job.
The slideshows seems to be superinfluenced by web linked, pictorial ways and associated subjects. To me each slide allows viewer to dwell on the slide's core content for time he or she requires. Next slide is usually linked with last one and a message gets built up. It can very well be a entertainment medium, but it can also be used it for self learning. Anny took it near to that object. I am happy she poured herself in it - I do not know what is her background - for me that is immaterial - she is a best person - product of this time and aspiration to go beyond. I always tell her that ,'I will not wish her best luck', the reason she does things from heart and preparedness she does not need luck to achieve what she wants to achieve. She will always do it what she desires.
Market Meltdown in USA; A thought model for solution
This is a subject which deserves pages and pages of plans. But I think this is enough to begin with. Like a man sitting and looking from rear window - objective look at the situation always helps
Sunday, September 14, 2008
What people say about "Pursuit"
Whenevr I read a cooment on a show I try to judge how far I could reach to that person on the subject I chose.
What an interesting analogy on the thought process of the human mind .. one has to be very methodical to put this process in such eloquent terms .. the images of car lights on a highway at night taken yourself in just amazing .. Prakash your mind has to be very well organized to put this presentation together .. I really enjoyed this journey with you >>>>>>>>Spider :)
The graphic step by step advancement of the theme reminds me of the upanishads (books of Indian metaphysics.) The camera work of abstract art is really wonderful. tnx 4 sharing.
posted by SRINI
Very original research. Keep the fire on so that it ends in a breeze of cool wind.
posted by vedanti
WOW! Thanks Tanksons for sending this link to me. Very well written. I read it like a poem and it made lot of sense. Thanks again for sharing.
posted by jayparkhe
Prakash Sir, thank you for this wonderful, inspired presentation. Here is to the power of the inquisitive mind, the desire to explore and achieve evermore closeness to the creator.
posted by amimar77
very nice photograph work well done , very good choice for your tellings;;; you too now no download, not a problem for me,, take care and stay in touch !
posted by Karina.75
A really interesting point of view my dear Prakash!!! Wonderful wording leading to valuable conclusions!! Nice work!! Congratulations!! Thanks for sharing...
posted by ak85ka
What an interesting analogy on the thought process of the human mind .. one has to be very methodical to put this process in such eloquent terms .. the images of car lights on a highway at night taken yourself in just amazing .. Prakash your mind has to be very well organized to put this presentation together .. I really enjoyed this journey with you >>>>>>>>Spider :)
The graphic step by step advancement of the theme reminds me of the upanishads (books of Indian metaphysics.) The camera work of abstract art is really wonderful. tnx 4 sharing.
posted by SRINI
Very original research. Keep the fire on so that it ends in a breeze of cool wind.
posted by vedanti
WOW! Thanks Tanksons for sending this link to me. Very well written. I read it like a poem and it made lot of sense. Thanks again for sharing.
posted by jayparkhe
Prakash Sir, thank you for this wonderful, inspired presentation. Here is to the power of the inquisitive mind, the desire to explore and achieve evermore closeness to the creator.
posted by amimar77
very nice photograph work well done , very good choice for your tellings;;; you too now no download, not a problem for me,, take care and stay in touch !
posted by Karina.75
A really interesting point of view my dear Prakash!!! Wonderful wording leading to valuable conclusions!! Nice work!! Congratulations!! Thanks for sharing...
posted by ak85ka
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