Purchasing Power Parity

We have on varied and multiple occasions breathed long and vocal sighs when we hear the large dollar/pound/euro salaries and benefits that our very close and dear friends earn when they work in developed countries like USA, UK, Netherlands, Australia, etc (at least I do this purposefully on every occassion :)) What we tend to dismiss with the wave of our hand or the flick of our finger is their living expenses based on a certain minimum lifestyle in such countries. Obviously this applies to people who have stayed back for some duration like for say 4-5 years and not the other set of friends who were there on a short stay (how they behave is beyond of the scope of discussion in a blog post!) And this is where we should think of Purchasing Power Parity or more commonly known as PPP.

PPP: In simple terms it is difference in cost of a Big Mac at McDonalds in your native country vs. in the foreign country you are comparing to. Or you could say it is the cost of a meal/ movie/ party/ car/ house/ etc. in the countries you are putting in the comparison bucket. Again always look at averages across items, and across geographical regions within each country. So the coffee your NRI friend buys for $4 you can very well buy for ₹25 here - its like saying that the value of $4 is the same as the value of ₹25.

Are there any standard measures: Not really. Over the years various economists and organizations have tried to do something in this direction without much success or recognition. Although the Big Mac Index has some popularity in this matter - it was first popularized by The Economist. It essentially tracks the price of a Big Mac produced and sold across 120 countries that have a McDonald's outlet. Since this burger is a standardized product it is very loosely indicative of PPP or currency under/over valuation. Again, it is not a serious economic indicator, as in no country would probably base its economic policy on this. But it comes in handy when you want to write a post like this !

Why should I be bothered: Well, we probably wouldn't even use it in our day-to-day life unless you are economic policy advisor to the Government of India. But it helps to look at things in perspective, and realize errors in leading media articles like this on TOI today. I usually am wary of our media - half the time their content and the journalistic quality is such crap such that I cringe to pick up the morning newspaper. Some have gone so bad that their editorials come out as incoherent jingoistic babble in favor of the babus and netas. But this particular piece takes the cake pretty near the bottom. Aren't newspapers supposed to raise awareness about issues that people are concerned with ?? And not mislead the junta ??

Oh, by the way, my favorite newspaper is "Bangalore Mirror" - flawless and entertaining in their coverage of storm drains, petty theft, celebrity sightings, and your sex problems! What more can you ask for ??

Capitalism and Honest Living

Now that the old government has been elected anew and inducted into the Parliament, I am starting to think if all this is going to make a lot of difference to the state the people are in.

I recently was talking to a farmer who incurred an electricity bill of more than Rs. 66000 and was asked to pay up under the threat of law taking its own course with dire consequences for him. This astronomical figure was the sum total of his electricity bill for the past 7 years or so. I was pretty surprised as to why this farmer hadn't paid his bill for such a long time, when I was sure that he had been doing well for himself pretty steadily all these years. On further digging more facts were revealed. He admitted he could have easily paid the bill all these years, but he was living on the hopes that a new government would take the typical socialist stand and just write off his bill amount under some new scheme and he would save some money. But as years passed, the government did nothing of the sort in his district. Although this same government floated lots of other dole out schemes. In the meanwhile his bill kept incurring additional interest, compounded. And this was the plight of fellow farmers in his village too.

Seeing no way out, they visited some government officials and petitioned them with their plight. In the end, the district administration relented and waived off the interest amount on the bill. This farmer in the end ended up paying Rs. 40000 approx.

While the people are not inherently lax in their duty and obligation towards their country, the false hopes that the government keeps giving them makes them want to take advantage of all available such options. One such welfare scheme floated by the government is the NREGA - National Rural Employment Guarantee Scheme under which any person living in rural areas will get 100 days employment. Why is it just 100 days, why not the full 365 days ?? Is it because the government is aware that it cannot create jobs in enough quantity and is dispersing what it has to a larger multitude to keep them happy and garner more votes as it did this time around ?? Who will actually ask these rural people whether they are really satisfied with the scheme ?? Why only unskilled daily wages jobs for these people and why not skilled jobs too which are higher paying ??

On the other hand look at what capitalism does to the same category of daily wage workers. Every year millions of people migrate out of their poor villages towards the swanky towns and cities looking for a better place to work and live. The most visible example is that of the laborers in the real estate industry. I personally have worked with an NGO who teach the children of such unskilled workers. These guys toil very hard and put in a lot of physical work, that you and I won't be able to do without puking our guts out. After the initial coaxing they are very eager to send their children to schools, and that too private schools where they can interact with the teaching staff and be updated about their child's progress. One big factor for them also is that these children would typically be served a mid-day meal also. Their single aim seems to be see their child educated and with a more decent life than theirs. So why does the government school nearby not appeal to them - because it does not teach English. Its not as if they are richer than their rural cousins, but they realize that they stand a better chance at a more decent life if they work hard and not support themselves on government dole.

There are questions and then there are questions ?? Lots of cynics would say that its easy to raise questions. I disagree. It might be easy to raise questions. But it is difficult to do so in a sustained and coherent manner.

April Fool's Joke

My Dear Fellow Salaried Friends and Other Honest Tax Paying Individuals,

One of the main highlights of today's budget speech delivered by our very own Honorable Finance Minister (as is done every year, irrespective of the political party in power) was the announcement of tax sops for individuals in form of bigger slabs and consequent lower taxation. This single event would have lifted the spirits of all, me included. I even started to calculate the savings and new expenses that I could make out of the saved taxed. Leading websites claimed it as power to the aam aadmi. People in my office and nearby were in joyous discussions about the amount they would save and where they would spend it. So much joy around and from someone who is as unrelated to you as the ruler of a foreign country set my skeptical nerves in action. What's wrong ? And that is when I realized this: We are being returned a fraction of the money that is taken from us by the way of inflation. Somebody realized that too much would expose their modus operandi. Here's how.

Let's take the example of a salaried person, who has say an annual package of Rs 6Lakhs (Cost-To-Company). Going by accepted norms of salary structure in the IT industry, that person would be taking home somewhere close to Rs. 4 Lakhs in net taxable income after deductions. According to existing tax slabs for 2009-2010 (Assessment Year 2010-2011), the income tax amount for this is Rs. 34,000 (10% * Rs 1,40,000 + 20 * Rs 1,00,000). Since the basic tax free slabs have not been raised, we can safely assume that the net taxable income for the same salary would remain same in the forthcoming year also. So given the new tax slabs the income tax for the same taxable income is Rs. 24,000 (10% * Rs 2,40,000). So a savings of Rs 10,000 per year. Awesome figure you would agree !

Now comes the interesting part. As any mildly conscious person would know if there is one thing that kills all your hopes and dreams it is Inflation. Did you ever realize that that is also a tax that the governments put on your earnings (besides multiple other excise, octroi, services, sales, VAT, GST, etc. etc) ? Let's consider the inflation numbers as given to us by the moneylender of last resort - 7% (although I have full faith that you as a conscious breathing eating living human being know that the actual number is more than that). So if we are to beat inflation we must earn at the least 7% more next year, right ? Which translates to Rs. 42,000 (7% * Rs 6,00,000). Compare that to the Rs. 10,000 savings you got out of your tax sops.So just by inflation our governments take away our money from us.

Given the recent high inflation across all countries, somebody clever realized that too much of it might invite too many uncomfortable questions. So lets give these fools something to cheer about. So they gave you Rs. 10,000 back. And you know which date this new round begins - April 1, 2010. Enjoy!

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By the way, you are not spared if you are living in India or any other developed/developing nation worldwide (except for countries like Austria, Switzerland, etc.)

Why Socialism fails !

An economics professor at a local college made a statement that he had never failed a single student before, but had once failed an entire class.


That class had insisted that Obama's socialism worked and that no one would be poor and no one would be rich, a great equalizer.

The professor then said, "OK, we will have an experiment in this class on Obama's plan".

All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A.

After the first test, the grades were averaged and everyone got a B.

The students who studied hard were upset and the students who studied little were happy.

As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy.

When the 3rd test rolled around, the average was an F.

The scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great but when government takes all the reward away, no one will try or want to succeed.



Couldn't be any simpler than that!

General Welfare

They are full of pride and high expectations. An appointment with the minister! Finally they are admitted, and finally they have the opportunity to make their cause heard. The petition is submitted to the minister. Great injustice and unbearable sufferings have befallen them, they add. The unfair competition of the sun was a burden not only to them, but to the whole people. If government could only decide to compel all citizens to darken their rooms with thick curtains during daytime, the candle-makers would be fine. And not only they! Also the butcher would have to slaughter more animals to produce tallow for candles. This would improve nutrition for everyone. And the producers of beeswax... and, and, and...

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Even the meanest selfish interest will be concealed as a contribution to the “general welfare” in the political debate – even if it causes more damage than benefit. Extracted from The Essential Frederic Bastiat

Getting into groove @ Bangalore

Over the just commenced weekend, I did the rounds of the good places in Bangalore and have since come to realize why people are so in love with this place. And why the place around church street, brigade road is still happening.

Amoeba - good bowling alley. lots of lanes. yet if you go after 7ish in the evening, you need 2 wait in queue for a while. address - church street. valet parking available.

Bangalore Bistro - awesome food, cool setting. you get your choice of food - Mediterranean, Lebanese, Mexican, Continental, and anything else you can think of and the chef can cook up. Beware you should know what you are ordering - a couple of people in the group I was visiting with, made the wrong choice and landed up with something they did not like. Well, I did surely make hay while the sun shined. I need visit sometime in the evening for the setting outside - looked cool and people recommend it too. address - Brigade Road ( couple of years earlier it was in cunningham rd). Valet parking available.

13th Floor - the destination pub in bangalore. Actually situated on the 13th floor, with a terrace setting - smoking area. They also have a inside setting - non-smoking area. Be sure to make reservations in advance if you are going on a Saturday. Or shell out a few extra bucks for the tables on the terrace. The view of the city and the UB City is amazing, the crowd is happening, and the music is good. address - M. G. Road (entrance available on church st. also without parking)

All these places are within walking distance of each other. So your afternoon lunch extends into a matinee movie (INOX Magrath Rd) extends into a early evening bowling session and peacefully ends with a evening session on 13th Floor. What more can you ask for on your birth-weekend !!!

I am loving it !

Welcome to India's newest, secret state

Welcome to India's newest, secret state- Hindustan Times

I regularly read the blog Antidote by Sauvik Chakraverti. Its inspiring and pedantic. Blasts the floor out of so called development and inclusive growth that our elected representatives keep harping about. Some of the most awesome stuff and best Libertarian Opinion that I have found in India.

In his post for today, he points out the article above. It sets me to think, if the Naxals have realized that the way to entrench themselves in the mind of the junta is to go about building infrastructure rapidly then why doesn't our mighty The State realize this. Or is it just that nobody wants to realize this. And from the HT article again, if they are contemplating doing this as an honest low-cost job, then why does it take the government so long to plan and execute such infrastructure projects ??

As Sauvik points out in his various posts, our The State is higher and holier than thou. Its so far up there that it will never understand the problems that we the common man have. And isn't that true ? How can somebody sitting in Delhi realize that a common man in Bangalore Rural is probably dead because of a badly built road and open manholes. I like to believe that these things are best left to the local government, like BBMP. And have localites as officials in these bodies who when forced to travel through such roads on a daily office will sit up and take notice. Or am I dreaming !

Romeo And Juliet

a lovestruck romeo sings the streets a serenade
laying everybody low with a lovesong that he made
finds a streetlight steps out of the shade
says something like you and me babe how about it?


juliet says hey it's romeo you nearly gave me a heart attack
he's underneath the window she's singing hey la my boyfriend's back
you shoudn't come around here singing up at people like that
anyway what you gonna do about it?


juliet the dice were loaded from the start
and I bet and you exploded in my heart
and I forget I forget the movie song
when you gonna realize it was just that the time was wrong juliet?


come up on different streets they both were streets of shame
both dirty both mean yes and the dream was just the same
and I dream your dream for you and now your dream is real
how can you look at me as I was just another one of your deals?


well you can fall for chains of silver you can fall for chains of gold
you can fall for pretty strangers and the promises they hold
you promised me everything you promised me thick and thin
now you just say oh romeo yeah you know I used to have a scene with him


juliet when we made love you used to cry
you said I love you like the stars above I'll love you till I die
there's a place for us you know the movie song
when you gonna realize it was just that the time was wrong?


I can't do the talk like the talk on the tv
and I can't do a love song like the way its meant to be
I can't do everything but I'd do anything for you
can't do anything except be in love with you


and all I do is miss you and the way we used to be
all I do is keep the beat the bad company
all I do is kiss you through the bars of Orion
julie I'd do the stars with you any time


juliet when we made love you used to cry
you said I love you like the stars above Ill love you till I die
there's a place for us you know the movie song
when you gonna realize it was just that the time was wrong?


a lovestruck romeo sings the streets a serenade
laying everybody low with a lovesong that he made
finds a convenient streetlight steps out of the shade
says something like you and me babe how about it?


Singer: Mark Knopfler
Band: Dire Straits
Album: Making Movies

If you love songs and haven't heard Mark Knopfler sing this one, you are missing something. You should definitely try this. For a better appreciation of who or what Mark Knopfler is I would recommend a blog post from 10 reasons WHY I love Mark Knopfler!

From Dr. Gavin Kennedy's post

Dr. Gavin Kennedy asks if his blog readers can spot the errors in this post. Since I do not feel qualified to put a direct comment on that blog, here I am recording my response.

The first error is in David Ross' assumption that Adam Smith was an economist. That is wrong. Adam Smith was a moral philosopher first and then an economist if at that, evidence in the fact that his "Theory of Moral Sentiments" was published to his "The Wealth of Nations".

The other mistake I am still searching for. Anybody help ??

For people who are not yet aware, Dr. Gavin Kennedy writes on his blog Adam Smith's Lost Legacy about the obvious topic - Adam Smith and his works. I have that blog listed on my side bar. This blog forms part of my daily read and keeps my intellectual synapses functional, keeping the student in me alive.

The dust is settling down

The world as I know it seems to have cooled off its recent hectic activities and is beginning to offer some quantum of time to sit back and think, maybe bask in the glow of what it has achieved in the past few months that have sped by. While I was never a very prolific writer, this blog did allow me to explore and keep in touch with my English and its nuances of grammar and sentence construction.

As time goes I have begun to realize more often than not that I personally become very conscious of what I say, not just the syntactically but also semantically. That I believe has helped me in my communication with my customers these past few months. Of the many design documents and the follow up discussions mails that have been exchanged nobody has said "Could you explain ?" In fact, there have been commendations on the economical use of words and the lucidity of language. For those who are not aware, I quit my previous large organization and joined a services startup, where our current business model focuses on generating revenues first and then channelizing those into in-house products to give that fillip to the revenues. Given all the market scenario and the negative spiral ( tailspin, perhaps ?), it so far has been good going. Things are looking steady so far, and we are now planning to look at more avenues for growth. Let's see what comes along.

Speaking of the world of markets, while the general markets are still in bad shape - thanks to all the dole that these governments have been giving out - and may continue to do so for some more years, the capital markets have at least shown some signs of hope, maybe lesser despair to say the September - October time frame of last year. That was an awesome time - a time to understand and appreciate behavioral finance as a respected field of study. There are so many biases that an investor holds - confirmation bias, hindsight bias, anchoring bias. From what little I know of the actual finance industry it looked like the hotshot big bosses went through at least some or all of those. In fact I am pretty confident that the ordinary conservative Indian investor did better. My Dad, with his fixed deposits, definitely did better for sure. And I for one have learn some valuable lessons that will last me my lifetime. Couldn't have come at a better time as I have just begun my investment journey and am yet to have invested large sums. In retrospection things look rational - the markets rewards only the rational investor over the long term. That apart the best investment is the investment in oneself and in one's career.

To help the Indian capital markets come out of its despondency vis-a-vis other world markets, along came the endgame of the Indian Political Theater - the five-yearly General Election and the Election Commission behemoth. At the cost of sounding much too cliched, the world watch as we did the dance of democracy and elected our representatives, lawfully and peacefully to a large extent. And the citizenry did quite a good job of getting convinced massively by the arguments of the Grand Old Party. Kudos to the strategics in their camp to have devised whatever they did and to have come up with such numbers when all and sundry to bet on haggling and horse-trading post elections. Thankfully that did not happen. What happened instead is that the party seems to have found some spine on its own in the way it is dealing with its current allies. Hopes are up that the disinvestment process that had been stalled, thanks in no small measure,to the Left, will be renewed and the fiscal deficit will go down. Now all that we need are a few more honest-to-self ministers and things would start to look pretty good. Looks like steps are being taken in the right direction when we consider that the party-and-family loyalist Arjun Singh has not been honored with ministerial berths. I am also hoping others like Kamal Nath also make way for better people. These two guys top my list of personal peeves in politics. All this 5-week long election and threw up quite some interesting tidbits of voting patterns, mindsets, etc, etc.

There are other places also where the dust has settled - Indian Premier League. Apart from the elections if there is one topic which occupied the mind and heart (o yeah, the heart too!), it has been this. The drama has been never ending. But the best comment was from a local spectator in the field - "I don't understand cricket. I came here to watch the cheerleaders." I like it !!! And in all this I also discovered a few good places in Bangalore where they broadcast matches for the public and serve nice drinks too !!! Obviously you need to pay.

Anyways, things are cooling down all around. And as the dust settles the leader starts to prepare for the next boom cycle.

Cheers !!!

The Indian Political Theater

This post written around May 2007 is dated in the future so that it stays at top of all posts and symbolizes the burning desire to act in this regard. For other posts see below.
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That's how the Economic Times describes its political news page. And I think it aptly sums up the feelings and expressions of any regular educated middle class Indian. Especially those that belong to the creed of people who move away from home for better pastures abroad, not necessarily to different countries but to neighboring states within India itself.

Oftentimes, when I have been involved in any sort of discussion (heated debate) on the situation in Indian political scenario, both parties have derogated the current existing state of Indian politics in general and then have proceeded to thrash the party in opposition to their own favorite. What probably they miss is the point that both are agreeing that its the Hobson's choice and yet are taking no cognizance of the fact.

Getting more specific, people of my age (mid-20's) are acutely aware of what is missing and will endlessly debate about what can be done. We whine about the availability of good leaders, about there not being enough people with political will to implement development projects as we like it. But when it comes to action to get a better society, we pull back citing not enough resources and not enough experience. Recently in such a debate one person alleged that the country had not given him anything, had not helped in his progress in any way. So he was not bothered about the progress of the country and would rather think about the progress and welfare of his own family.

But here lies the crux of the matter: WE DON'T EVEN VOTE IN ELECTIONS, LET ALONE TAKE ANY AFFIRMATIVE ACTION. Can you think of a bigger hypocrite than this??

I have been burning with this idea since sometime. And I have decided to do something about it. Here are a few simple things that can be done and I hope to follow them through, keeping in view that the next national elections are to be held approximately 2 years from now.

1. There is enough time, so get the voter id card. It makes you eligible to vote.
   
2. Save some holidays and plan so that during election time you can go back to your constituency and vote. Far as I have heard, you can also vote from where you are now. Need to find out more details.
3. Cast your vote. It is essential. You find that the candidates from the larger parties are not good. Simple idea says choose one of the independents. Let the government formation take care of itself. As of now, nobody can foresee anything but a coalition government at the center.

More ideas later, but I believe these are very simple and you and I as the educated but frustrated middle class can follow them through and make a lot of difference. All voting statistics in the recent times say that only 45% of the people registered do actually vote. And the winning party takes only about 30% of that. Which makes it only 13.5% affirmation for the largest party in power. Imagine the difference you could make.

Update (31.08.2007) : As of yesterday, I am an Indian citizen carrying the voter id card, that makes me eligible to vote in the forthcoming Indian parliamentary elections.

If you are reading this, then go out and get your voter id card. Don't just read this.

Update (14.12.2007) : All please follow the Lead India campaign on Star One at 8:00 pm every Saturday.

Update (01.10.2008) : Try out Jaago re ! Is a good option to get more information on the voting process and a lot of help on it. www.jaagore.com

Biking to Wayanad, Kerala

After a long long long hiatus I finally went biking, traveling, exploring hitherto unvisited places. Exploited the 3 day Republic Day weekend to the hilt.

Trip planned was to Wayanad, Kerala. A small district in the northern part of Kerala. Distance from Bangalore is around 350 kms or more, depending on which town you put up there. The two most known are Sultan Bathery and Kalapeta.

Starting off at 6am in the morning on Saturday morning, we were greeted with cold-chilly-winter-morning-just-after-sunrise air to the extent that even at 7 o'clock we were blowing smoke through our mouth, nostrils and possibly every other opening. Additionally one of my friends did not have gloves. His hand chilled so much that we had to stop half-an-hour into the drive for a round of tea-and-biscuits, which restored some fuel to burn energy inside. Another stop for tyre air-pressure check we were off to Mysore.

The Mysore Palace (not the more beautiful front side view) The Bangalore-Mysore State Highway (SH-17) is an awesome 4-lane thing, the only irritant being occasional speed breakers. So sudden that you can't brake because the vehicle behind you will hit you, and you can't jump over if you not confident. Do what you will !!! But nevertheless, awesome road and a pleasure to drive on.

After the breakfast stop just outside of Mysore, awesome roads through the Bandipur National Park. Looks more like a tree-lined pathway on which you can keep meditating.

This clump of forest hits you as soon as you cross into Kerela border, and is probably the first place where you can stop without blocking other traffic.

Scene outside our place of stay - Eastern Tourist Home, Sultan Bathery. Bloody cheap @Rs. 300 for a room with 3 beds and a clean bathroom. What else does a biker need !!! On Saturday we just lazed around in our room and rested our tired bones.

Some Christian celebrations in progress outside the Hotel Windflower - good food at reasonable rates. We had most of our meals here.



The same Christian celebration procession. We tried to ask around a lot but no one could tell us what the thing was exactly about.

On our way to Meenmutty Falls on Sunday morning we hit this kind of greenery all around. No wonder Kerala is called God's own country.

We missed our dirt path turn to Meenmutty Falls and almost landed in Tamil Nadu. The guard (in the pic) at the border let us know the way back. The road in the picture led to Ooty (another destination in the future for me !)

Tea gardens just before starting our steep 1Km trek down to the waterfalls.

Meenmutty Falls. The trek was pretty steep and thankfully short at 1Km. Even our guide slipped once. We 3 grouped up with another group of 4 and took one guide. The rates charged are : Rs. 300 upto a group of 10. Rs. 30 per person above 10. Apparently there is a gentler slope to go down, which the guide takes if you have females in your group.


Kuruva Islands. Rather Kuruva Dweep (as known locally). The road is through Pulpally. And there are two roads from Sultan Bathery to Pulpally. One is the easy main road off the road that goes towards Mysore. The other is from the other side of the town of Sultan Bathery, which goes through jungle and potholed roads. Not a soul in sight for kilometres at length. Always the fear of getting lost. More challenge for the biker in me !!! But Kuruva Islands in themselves turned out to be disappointment. We reached late. The boating time had ended. And it did not look like there was much to do there anyways.

While returning from Kuruva Islands we lost our way, mostly thanks to me. I was leading the group and just kept going on. Then we realized we were lost and there was absolutely nobody. In the twilight, it was getting difficult. And then we saw these woods lying there. After driving quite some distance on the wrong road, we came across a kindly autowallah who guided us back.

We started back on Monday morning and reached Bangalore by afternoon. It has been an awesome ride. Especially given all the mountainous roads and their U-turns (they are called twisties in the biker's lingo I learn), it was a fun ride. But yeah, there needs to be a lot of caution on these roads.

Having been there once, it left a lot be explored. Kalapeta for one. And then people tell me that the backwaters are in the southern parts of Kerela. I must visit it one more time and with more time and enterprising people with me.

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On a separate note : I also did a solo trip to Chennai over the Christmas weekend. And found awesome roads. The toll road from Bangalore-Hosur-Vellore-Chennai is really well-maintained and not a single jump anywhere. I have dreams of buying a HD V-Rod Screaming Eagle someday. When I tell this to people they ask me where I would drive it around in India. I think I found the roads.

Jaago re!

Brilliant commercial. And it actually works !!! Check out the site www.jaagore.com

The Indian National parliamentary elections are almost around the corner. Its time that I started to speak about it again and hopefully rope in more people to actually go ahead and vote. And you too can do that. Check out the site. Lots of information and useful insights as to how to raise awareness as individuals, student community, employees and other institutions. 

Jaago re! helps with registration camps and kits and promotional materials. I think the reasons for not registering to vote have gone by at least a few counts more.

Inflation and Expenses

Everybody has variably heard of the word inflation. As a matter of fact, any educated person would like to rattle off his/her knowledge on inflation, and with the current market news (maybe I follow it a bit too much) its all over. So here's a small peek into what is it and how it affects us.

Inflation: In simple terms it is the phenomenon due to which the little orange candies which used to cost 10paise each back when I was a kid at school, now cost more than 50paise (on a conservative estimate). Or the onion butter masala dosa a south Indian delicacy that used to cost a mere Rs 13, would now cost somewhere in the region of Rs 20 to Rs 25.

How does inflation affect me: Due to inflation the cost of every goods or service that you buy goes up. And you are not spared, whether you are spending in dollar, euro, yen or the rupee. It affects all commodities and makes them dearer every year. So in general the price of petrol/ diesel you buy at the pump goes up every year.

The amount of real return earned by keeping money in the bank goes down. For example, given the current real scenario in India, the interest rate offered in a normal savings account hovers around 3.5%. While with the recent released figures, the inflation hovers around 5% and above. If we were to assume that today you have Rs. 100 which would purchase you a cake at the Barista, then due to inflation next year the same cake would cost you Rs. 105. But since you chose to eat the cake next year, and kept the money in the bank, your money grew to only Rs. 103.5. And so you don't have enough money to purchase the cake anymore.

Are there any standard measures: In India, inflation is measured by the Wholesale Price Index (or the WPI) released by the Reserve Bank of India(or RBI) every Friday. Check under the Database -> Weekly Statistical Supplement and select "Index Numbers of Wholesale Prices". The WPI is a more broad based measure than the variably used Consumer Price Index (or CPI) used by other countries, or many other measures. The WPI numbers released for India include on the upwards of 435 item prices and give a good picture of the overall price rises.

What is the extent of the affect it has on us: Year to year, there is hardly any effect that an individual may feel. In fact with increasing efficiency in some spaces, prices may actually go down in some categories of goods, most notably technology products. But in the long run we all get hurt by inflation. Even if we assume a modest average inflation figure of 5% per year, in 20 years the cost of any good is bound to grow by 2.65 times. So we need to plan our savings in such a manner that we beat atleast that figure.

Why is there inflation: Economists vary regarding all the possible factors affecting inflation. But some of the most common reasons are

• Increase in the price of goods due to increase in demand in excess of supply available. This also gives rise to ocassional black market.
• Increase in money supply due to government/ central bank policy. Sometimes if the government sees that there is not much spending by the consumer, it may reduce interest rates to encourage the consumer to borrow and spend. This decreases the value of money, and companies increase the selling price to keep the value that they earn the same. This in turn pushes up prices.
• Higher interest rates. Due to this the cost of purchase of raw materials or labor increases for the business which may be passed onto the consumer. This effect may not be seen immediately, but is over the long term prices rise/fall to match interest rates.

Any other information: Yes. There are two more terms that be mentioned in the context. They are deflation and stagflation. Plus there are other terms like disinflation, reinflation and hyperinflation, but of lesser significance.

Currency Carry Trade

The recent and ongoing global financial crisis was precipitated due to a lot of factors, a few of which I actually know about and all of which I am sure no single person knows about. Albeit everybody would agree a part of it was due to the collapse of the American consumer market, especially the housing market where individuals could no longer afford the monthly payments on the houses they purchased on loan.

The other factor that I am aware about is the effect of the Yen Carry Trade. Today I read an article in Investopedia, which pretty much explains in basic terms what it means with an example.

What does it mean

A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. A trader using this strategy attempts to capture the difference between the rates - which can often be substantial, depending on the amount of leverage the investor chooses to use.

Example

Here's an example of a "yen carry trade": a trader borrows 1,000 yen from a Japanese bank, converts the funds into U.S. dollars and buys a bond for the equivalent amount. Let's assume that the bond pays 4.5% and the Japanese interest rate is set at 0%. The trader stands to make a profit of 4.5% (4.5% - 0%), as long as the exchange rate between the countries does not change. Many professional traders use this trade because the gains can become very large when leverage is taken into consideration. If the trader in our example uses a common leverage factor of 10:1, then she can stand to make a profit of 45%.

The big risk in a carry trade is the uncertainty of exchange rates. Using the example above, if the U.S. dollar was to fall in value relative to the Japanese yen, then the trader would run the risk of losing money. Also, these transactions are generally done with a lot of leverage, so a small movement in exchange rates can result in huge losses unless hedged appropriately.

Britain's Got Talent

Measuring Code Quality

Find the original picture source here.

Change of Perspective

I called up my brother today, wanting to discuss a transfer of funds to some account. I was expecting it to be a pretty regular call as calls between brothers could go. The call went something like this:

Tring, Tring

Bro: Jaldi bolo. (Be quick)
Me: Kyun ? (Why?) [Normal human tendency to delay proceedings when you are asked to speed them up.]
Bro: Abhi hum ICU mein hain. (Am in the Intensive Care Unit)
Me: Wahan kya kar raha hai? (What are you doing there?)
Bro: I got my duty posting here.
Me: Ok. We can talk later.
Bro: Nahi. Tum bolo... (It's Ok. You can speak)

Did I tell you my brother has completed his studies as a medical undergraduate student and is currently undergoing his one year long internship.

Do you push-up ?

As the age changes, so does the fad to exercise. Yesterday it might have been yoga, today it's power yoga. Fads come and go, but basics stay. And the one which has endured over the centuries is one's ability to do push-ups, variably called as dips.



I just found a push-up calculator, which determines your body fitness according to the number of push-ups you can do. Oh, and women can also measure their push-up strengths there.

I know money can't buy happiness

... but money can buy stuff that can buy happiness. For example this bike.