Economy

Imagine a movie hall where it has just caught fire, and the people are trying to rush out from every conceivable door and window. At that point, the fire safety officer comes and yells in top of his voice, that he is declaring the movie hall as unsafe from fire. That's how the rating agencies are working now. Fresh from their failure on mortgage backed bonds, and trying to build their reputation back, they are going overboard in the other direction now. In the run up to 2008, the more you rate high the more credibility it brings to you.

It is quite interesting the way China has shown interest in buying the bonds of countries on the brink of bankruptcy. It's a good step from China's angle to buy the debt, as it takes it a step closed to becoming super power. Once the debt is under China's belt, it will be easy for them to control the different countries. Just make so much economic sense from China's angle. This will also provide ability to China to force the countries to be favorable in importing China's goods.

Inflation has been the most important phenomena for Indian economy for last 3 years. It has run like a wild fire and remains uncontrollable. In spite of tightening cycles of RBI, the inflation does not seems to be under control.

India is struggling with inflationary pressures for more than two years now. All attempt to contain the inflation by central bank and government has not yielded the desired result, apart from momentary successes. The successes also can be attributed to the supply of commodities at various time because of good harvest of crops, then anything else. Apart from that, the inflation has remained not to be tamed.

Fed is printing money and printing like anything. I wonder where all those paper money go and disappear. In spite of so much of money, most of the people, in the world still do not carry a feel good factor. The society is creating extreme riches and extreme poors. It's true that with free market economy and democracy in place, it's easier for a man to cross those boundaries either way. With good judgement and right strokes of luck, one can become rich, extremely rich. Some poor judgements or not understanding the risks correctly, can make someone pauper also quickly.

In "The wealth of nations", Adam Smith promotes the concept of invisible hand. He pursues the path of reasoning that the more good to society is done, if we let the invisible hand of market to function. The division of labour is the core tenet which is important for the invisible hand of market to function properly. The natural extension of this theory is the extreme globalization of the world, where division of labour works all the way up and down.

Markets work on:

In the old days, we used to have barter system. It was a slow system but quite stable in its nature. People cannot leverage as the possibility to move the commodities at a faster rate. The commodities were first class citizens in the world of exchange and not buried deep down under a chain of instruments and promissory notes. The economy cannot run berserk in either direction because the commodities cannot run fast or sometimes cannot run at all.However it has its own disadvantages as their were chances that the underlying commodity can loose its value completely.

How short sighted the human kind as a culture has become. Couple of months back most of the people were not seeing any end to the bottom. Most of the people in the street were not ready to believe on the undying spirit of the man on the road and his ability to bounce back. The people on Wall street and Dalal street with lenses coloured with complex mathematical and computational tool were sending one after another the message of doom.

Google is one of the big phenomena of the present century. How a smart search algorithm as part of a doctoral thesis got turned into a multi billion dollar enterprise. The Google's revenue generation model is built around the on line advertisement and it got its strength from its muscle power in the on line search. The growth of the company has been a dream for its stakeholders and many in the street as it turned one after another milestones and came in the league of likes of Microsoft.