Housing boom or bust??

Disclaimer:
The author is seriously incompetent to make any rational judgement and comment on the general state of economy, politics or any other matters. All the views are personal and not endorsed by any of the firms that might have employed him in the past or are currently employing him.


Recently with many of my friends actually moving to buy a house (well I think for those people in the fast lane, who got married soon after b-school, and now are getting settled by buying a house), people were contemplating the decision to rent or buy.

Many people believe that house prices can simply never come down (this imagination is fuelled by the current housing boom in India, just like the rest of the world) and people in India would rather pay an EMI (monthly mortgage payments) of Rs 50,000 instead of renting the same flat for Rs. 25,000.
That is negative carry of Rs. 25,000 a month!!!
All this for convinience of not moving frequently, and believing that the same house would keep appreciating in value by the same amount each month.

Since my dad works in the construction industry in Mumbai, I do know that housing prices can be equally volatile, but yet not every one believes me.

Thankfully for skeptics, the US Subprime housing crisis has already started and people have started accepting the Reality.

I found this link on the Freakanomics blog which has plot the inflation adjusted house prices from 1890 onwards.
This confirms the current trend since mid 1990s about the skyrocketing housing prices (driven in an era of low inflation, easy consumer financing, growing economy and rising incomes) but go back a little further and the real picture emerges.

India like in every other thing is a little behind the rest of the world, and much more volatile than the rest of the world, would surely follow the suit.

so my advice to anyone right now: "Keep renting"
(Hahaha, this is keeping in mind the disclaimer above)
I am doing the same in London, (not that I have enough money to buy anyways)
And you can see the graph for yourself

Dammit its crossed 2 !!!! yippppppeeee .... arrrggggggggghhhhh

Haha, I am not talking about Sachin Tendulkars score, and the cheers which Indian cricket fans might have when he scores a few runs but I am talking about the Pound Sterling (GBP) the lawful currency of the United Kingdom which has appreciated to be worth more than 2 USD.

Working on the trading floor in an investment bank, we all were anticipating this move since last december, that it might occur some time, but it finnaly breached the barrier last week.
And we heard the cries of anguish and happy depending on which trader was long or short which currency.

All the colleagues and friends started talking about, how this might affect their bonus at the end of the year. (Since we all work in an American Bank, compensation is in USD, but we live in UK so expenses are in GBP)

And all my indian friends are complaining about how their wealth has fallen due to the surging rupee (INR). (INR went up from being 46 to the USD to 41.68 in the last couple of months)

Even for me it has been mixed feelings all my current savings are worth more, and my parents are suddenly richer (though not that they would ever understand the currency markets)
My future earnings might be a little lower.
But dammnit. Why complain in currencies moving by 5-10% a year when I should be more bothered about increasing my own salary by working harder (or should i say smarter??)

Anyways not all my readers might appreciate the importance of this post, people might consider what is the importance of currency rates (and many including my parents think they are normally fixed through out) the FX rate and the interest rate in the different economies provide tremendous arbitrage opportunities.

Take for instance the Yen carry trade. People borrow in japanese yen (at 1% per annum) and deposit money in US Dollars (at 5% per annum) this looks like neat 4% profit, but you are exposed to the currency fluctuations.

I guess bigger than the Yen carry trade has been the Turkish Lira and the Brazilian Real.
With Rates being 16-20% and the currency appreciating, its sure has been some investment.
(Imagine, you could borrow in Yen at 1% and invest in Turkish Treasury bills and get a return of 18%, so much money to be made, just for taking some currency risk!!!)

Well though all these ideas appear fantastic in hindsight, if one loses on such trades, you would surely be branded as an idiot.

Anyways enough of gyaan on FX (foreign exchange for my non banker readers) lemme now mope around on my loss of future wealth. :P

Stallion battalion

Saw this one weekday when I was going out for lunch (which I invariably do, when the food in the cafeteria at work is not per my liking)
There was the Mayor of London, coming for some Ceremony at the St. Pauls Cathedral, and thus there was some elaborate security arangements.

One was the horse back police force. I am sure they could incorporate such a scene in buddy cop movies, should be hilarious. A chase in the city of London, with narrow winding streets with dead ends, (Unlike NY, where every thing is in a grid format) a horse back chase should be fun, especially throw in a double decker bus in the back ground.
Wonder why no one thought about it yet



also in case you see some crime, you can always report it to the policeo n the number being advertized on the horses

Pictures from Paris

After seeing the Video posted by Exchange students Meeku and Nanhee (hope I got their dorm names right), let me post some pics about my trip to Paris.

Most people have seen most of the wonderful sights there, (the Eiffel Tower, Arc De Triumph, the pyramid outside the Louvre, Champs Elysses ...) Let me post some pictures about the sights many might not have seen.

First some from La Defense, though many people might think what is so nice about a business district, it is a bit unclean, crowded (not so on weekends though) and has nothing much else apart from tall glass buildings. Well I beg to differ, it does have some pieces of different architecture, and though not everyone might agree with me, I am sure some of it is magnificent.




Some nice Arty mega size sculpture in La Defense, the business district of Paris

Some weird architecture at La Defense

The Arch at La Defense

Next, though a movie has been made about Moulin Rouge, not many know it lies in the heart of the Red Light District of Paris, (Tube Station Pigale). Though now Moulin Rouge has proffessional dancers and not prostitutes, along the streets you can continuously be pestered by people trying to sell you pornographic DVDs, inviting you to Lap dancing, pole dancing, and all other kind of shows. What was a geeky brahmin of conservative middle class upbringing like doing at this place? No need to ask :P

then the view of the city from Sac re Cur. It is the highest point in the city, from where one can see the skyline. As you observe not many tall buildings, unlike Manhattan (or even London where you see so many cranes in the sky which are about to be building sky scrapers). Paris is a massively huge city, especially once you venture out in the suburbs. A lot of it appears semi rural to be frank. Unlike Mumbai, which is one long concrete mess.

Videos from D16

Well in the era of Youtube, every one is guaranteed their 15 seconds of fame, and there are crappy videos dime a dozen, a couple which came out of my dorm in IIMA, i think are fabulous (obvious bias due to dorm loyalty)

The first one is by my juniors (class of 2007) about their batch

the other one is by French exchange students, who have made a video about Paris, for the residents of the great dorm, and this is another good one, and surely gives me ideas about how to shoot a video.

Also i think i will upload my videos about the Oktoberfest soon.

London bridge is falling down ...

... falling down, london bridge is falling down and God save the Queen

Well i do vaguely remember the nursery rhyme, and now I live near the great Tower bridge (near tower of london) and routinely jog (ok yeah walk) along the bank of the river Thames (or Temms as the brits pronounce it), I like the look of the magnificent bridge, and last weekend i saw one of the rare sights, the bridg openning up to let a ship pass through.

Thankfully we live in the era of camera phones, and I managed a picture, though a little grainy since taken by a camera phone.

Trip Back Home to India

Well in the year 2007, I have been lucky enough to visit home twice in the space of 3 months.

The funny thing is whenever i go home, since I have been staying away, the watchman always stops me and asks where do i wanna go. Any amount of explanation doesn't work that I actually lived there. The problem is every 2-3 months the day watchman changes.
This is surely unlike the nightwatchman (not to be confused with the same term in cricket) Pandey, is the same since I last can remember. And he knows me really well, since in our small building I am the only guy who routinely returns post mid-night, and he has to stay awake till i return. (Yes, after that he locks the gate securely and goes off to sleep). This perk is the only thing that makes him stay there. Apparently he has another day job, and he saves paying rent in mumbai (which is exhorbitant as many of my readers will vouch for) and gets paid Rs 2200 as well. No doubt the day watchman quits as soon as he gets a better job. Why are they being paid so less. Well in a building full of gujaratis, no one is willing to pay enough for security. (Damn, no wonder Somnath Temple was looted umpteen times by all the invaders)

Anyways, apart from that, the other thing i notice in my house is that on the Television suddenly the sports channels are relegated to later slots, and i spend a couple of hours just searching for them. Gone are the days when i had ESPN and StarSports within first 10 channels. This time round I found them at 59 and 71.

Also with all the hullabaloo about the salaries in IIMA, with people getting astronomical salaries, and then rejecting them to start some lingerie business, (didn't I say some one puts their personal interests before money) my parents inquired how much did I actually make in a year.
When I smilingly told them my salary, and even multiplied the figure by 85 to convert Pound Sterling to Indian Rupees, my mother got shocked. Then my father asked me how much did I save, and when I told them the figure, they were terrified. So little, and that is when i cook clean and wash utensils myself? go bicylcing to work, and live in a shared accomodation.
Some how my mum felt sad, her middle class brahminical values of thrift had not been completely imbibed in me.

Moving from salaries, I went and visited my maternal grand parents. With all my maternal cousins hitched, unfortunately I am the next one in line. Loads of not so subtle comments are made, about me being the next one and I made my best attempts to act ignorant. (Next for what? Walking the plank, being the sacrificial lamb, next to be guillotined? Nay much worse .. marriage #*$*^%%#!!!)
Now I am sure many of you might think marriage is not that bad, (did I hear necessary evil here?) and some might go on to advocate the benefits to me.

But wait a second, 4 years of engineering apart from adding analytical abilities left me completely socially challenged, and through all my adolescence and young adulthood till now i think a total of {exp(i*pi)} (e raised to the power i times pi) girls might have been interested in me. (Do I here sniggers why am I still single?!?!?)
And having no other attractive feature I am sure in an arranged marriage, only reason why a girl would end up considering a guy like me, would be stable cash flows in the future. Having a beer belly is bad enough, but being looked upon as a (Cash) Cow is absolutely pathetic.
Some how I wriggled out of those ugly situations saying I am only 25, but my mental age is more like 12, and the killer one was I hardly save a tidbit from my monthly salary.

I am sure i might have to face, many more such subtle questions from other relatives as well (just like any young adult of indian origin might be), thankfully my parents dont ever talk about this topic (yet). I guess looking at the deterioration in their quality of life post marriage and post my birth, they dont wish such misery on others.
I guess no one values the freedom, and independance you have while being single and earning enough with no liabilities.


And yes when I am home with nothing to do, I resumed one of my routine tasks which was assigned to me when i was living at home. That was buying groceries and vegetables.
The problem with your family living in the same locality for 22 years is that every one knows you. From the vegetable vendor, to kiranawala. The shopkeepers not only greeted me but also asked how long was i back for? Most of them though were under the impression I was still studying, and that too some where in Amayricka (sic). They too raised the topic of marriage (damn, damn, damn, curse the whole indian society !&^#%$#*!$^*^%%#)

Last but not the least, my motorcycle was finally given away. (Dad has given it to his employee as a perk of the job) Well though i might have cursed it a lot, for its lower than expected mileage,
have had my share of accidents, but I truly miss my bike. Hardly Davidson as I jokingly referred to it, or MH-02 EA 7211, as it was registered was definitely an extension of myself if not a part of me. It was with me for 5 years, and gave me the freedom not having to use the overcrowded public transport, while zipping through the clogged traffic of mumbai.

And this time when i was visiting a friend, i thought I rather travel by local train from Andheri to Bandra by train rather than by Autorickshaw and safe Rs40 (50 pence here). And in the whole process i broke the glass on my Omega watch which took a lot more to repair. (did i hear penny wise pound foolish here?)

More over when i went the second time round to India for recruitment in IIMA, it was another nice feeling. For a change I was on the other side of the fence. I could ask a question of which I had no clue about. And apart from that, the girls actually are looking forward to talk to you. (hahahah).

Though there are many more things to write about, but they are even more boring than the ones written above, and I wish to spare my dear readers from that.

Cricket for Charity

Well after India is knocked out from the World Cup, and loads of advertisers have lost money, ad agencies have to come up with smarter ads rather than make Sachin Tendulkar smile, and sell more Toothpaste, Motorbikes to Energy drinks, and every Indian has started talking about how bad the game is, all is not lost.

At least here in London, CRY (Child Relief and You) has organised in London, a cricket tournament which would raise money for the poor orphans. Now since obviously they cannot rope in the popular and much loved (??!??!??!?) indian national cricket players, generating money by selling tickets (leave alone television rights) is not possible, they are roping in corporates, to play the tournament and actually pay money for playing in the tournament, when there is NO prize money. (only incentive to win is you get to play more matches, which might be a good one, especially for those in the Indian Cricket Team)

When a colleague forwarded an email about this and asking for volunteers, saying it is some thing like 100 Pound Sterling to play, I was a little taken aback.
Come on I am the kind of guy who likes watching sports, and my dose of adrenalin rush comes from cheering my teams (and sighing in despair when they invariably lose).
My complete lack of fitness, (as regular readers might know my whipping in squash by Murari continues) and with my increasing waistline, my right arm medium fast i guess has become right arm gentle medium, and am sure my dibbly dobblies will be despatched for boudaries (that is when i bowl the ball on the stumps). All this is when bowling is my strongest suit in cricket. [:D] The less we talk about my batting and fielding (I am sure I here a couple of giggles here) the better.

But nevertheless, since it is for a noble cause and i shall have something to look forward to on the weekends, I am game.

Also with the Indian debacle I can root for the team i really like, Stephen Fleming's Black Caps.
The Kiwis have got a couple of setbacks during this cup, the worst being Lou Vincent's injury (Darryl Tuffey has also been sent home, Mark Gillespie and Ross Taylor are still injured).

And India's outster from this world cup would sure have its benefits. I am sure it would have been much worse if India lost all matches in the Super Eights. We have been spared the pain, and also with India out most of indian fans will be able to focus on work, and the Indian GDP will rise 0.3% faster this month, and surely Indians can do better than play this silly sport. Acquiring global companies for instance [;)]. Ratan Tata, Mukesh Ambani and Kumarmangalam Birla should have their eyes focussing on manufacturing firms abroad, not a motley bunch of guys dressed in blue.