December 2009
The more I think of it the less I conclude about prophecy or its much touted scientific cousin astrology . Were I to pen this , last year this time,a heading of “2009 the doomsday conspiracy” would have been more apt . A few bed man in a few good American banks had conspired to spell doom across the world .That it took a few months and few governments to replace doom with boom put prophecy in its place and the astrologer out of a job .Globalisation which magnified the intensity of the problem then contracted it with a bailout solution agreed upon by all heads of states across the world As the early learner would say the difference between boom and doom is but one letter and that too a mirror image . In fact , what happened was the mirror image of uncertainty and liquidity .Normally more liquidity means less uncertainly and vice versa . Not this time .Both were responsible for what 2009 was made out to be and what it finally was. If the sub prime crisis had promised uncertainty and a flight of liquidity for 2009, today as we finish the year, we still remain uncertain as to how and till when can just liquidity convert a survival into a revival .
On a more positive note nothing succeeds like success .The skeptics have been left to do what they are best at –suspect . Everybody spelt doom when the sub prime crisis broke . What followed were reports of large scale irregularities by US banks . It led one to believe that everything will crash. But we forgot that money unlike water does not evaporate and money like water always seeks its own level . Displaced from the US system by treacherous and greedy bank managers, money found its place in better bets like gold , stocks and commodities . Most of them reached their historic highs . A weak interest rate kept so as a part of stimulus for revival across the world ensured that money stayed and grew in these investments and still does so . A dropping dollar just helped . Even real estate despite being in pain ran along albeit at a much slower pace .The only threat being inflation –another fallout of the global stimulus drive which makes countries print currency and create liquidity and therefore demand . For once the west which was always right turned left for support and to learn a few lessons .Major support has come from China with its bumper production which has pulled up investments and commodity prices and fuelled up demand for oil. The lessons have come mainly from India which thanks to a sensible and stable policy of the RBI, a continuation in governance and a renewed thrust to reforms has somewhat insulated India from the global shocks . Terror shocks ensured that travel was less . This meant more telephone calls at lesser rates thus keeping everybody in check . To sum up 2009 was about more liquidity stocks,gold, oil , inflation , capital gain and less employment ,travel ,dollar and income So it was more or less fine
In retrospect , 2009 will be remembered as the year when he world got depressed by the onset of what was touted as the greatest depression ever, want mad on Madoff , private equity became a very private affair , bailouts were belted out , Lehman brothers were in dire straits or as the group Dire Straits would sing “Brothers in Alms”, it was a may or may not for the nationalization of Fannie Mae . Then came the turnaround as costs were razed and capital was raised and those like Warren Buffet had a buffet meal of cheap stocks not before Dubai sheiks shook the world .
So how does 2010 look .In India “Lucky seven” is a popular game to gamble . India’s central bank predicts a 7 percent growth in gdp , Holland’s predicts a 0.7% growth and a less than 7% growth in unemployment growth. These predictions are above what was estimated this time last year . So again how does 2010 look? Lets say , certainly better than what we thought 2009 looked in December last year . But then 2009 surprised , would 2010 too ? High inflation and low employment hold the key as does the movement in the dollar . Till then the going is good . Lets go with it