Hi,

The seeds of a down turn are sown when the markets are at their highest. Companies basking in high growth rates and profits seem to think that the orders will continue to come for ever. Capacity expansions are done with optimistic projections. Normally the down turn comes before the expanded capacity is available.
This story is seen to repeat over years. I was told once that the best time to tighten your belt is during the heights of boom. Retrenching people after down turn and re hiring when next up tun comes is a very bad way. Not only does it demoralise your staff but you loose trained people.
I do not think the economy will collapse. The cycle of economy will be towards slow growth. Companies which hav ebetter financial management, will recover and those who have gambled will close. Better stick to time tested companies in these times. It may be a good time to start investing.
Regards ...

Hi latikav,
This deal is really good step towards development of the economy. Power will become more expensive with all the additional implication of carbon credits etc. Nuclear power is known to be the cheapest.

India can not afford and does not need the machoism of another nuclear test. Once you have demonstrated the bomb, the deterrant is in place. As said by you, the spin offs could be great for Indian industry. Smaller countries have become rich by engaging the world in an un hindered way, allowing transfer of technology and capital. India of past was scared of foreign influence. Now after the likes of Infy & Tata have shown the capacity of Indian companies to stand their own against global competition, there will be less scepticism. We should try & get in the main stream of global business. Indian population has for long sufferd from political & economic isolation, China has side stepped these obstacles and become a great power, which will surpass US in a few years.
Now is the time India tries the same path.
Let us hope that we are able to manage the extra power efficiently, if the "losses" in distribution continue, more generation will mean more "losses".

Any ideas what this will mean for the long term prospects of Thermal power players like Reliance Power?

Regards
...

Amar,

Quite interested to read "further analysis". You seem quite convincing. Any way, I will wait to re enter for some more time.
What do you think will be the effect of the financial meltdown in US? Indian Rs is depreciating fast. Does this reflect USD withdrawl from Indian markets? The corection could be quite high if this happens.

Regards
...

I guess this depends on what currancy India buys its imports in and what currancy Indian exports earn. Most of these transactions would be in US$. The banks would not want to churn their portfolio to avoid conversion costs, would prefer to have USD accounts.
If oil starts being traded in Euro, we may see a big shift of countries carrying Euro balances. Perhaps this may trigger another big fall in USD value.
Regards...

I find this article short but describing the situation very
clearly.....

IT all began with the sub-prime crisis.

If you lost your money in the market crash of January 2008, here's the
route to your loss, in chronological order.

2001-2005: House prices in the US begin to rise rapidly. Banks lend
aggressively and create a sub prime industry.

Sub-prime lending refers to lending (at slightly higher interest
rates)
to people who may not be eligible for a loan under normal
circumstances.
Maybe they don't have a regular job or income, or have defaulted in
the
past.

Banks traditionally did not lend to such people due to high risk of
default. But since these loans were mortgaged against property and
property prices were rising continuously, banks started doing so. If
customers defaulted, they could sell the mortgaged property.

2005: The booming housing market halted abruptly in many parts of the
US.

2006: Prices are flat, home sales fall.

February 2007: Sub-prime industry collapses in the US; more than 25
sub-prime lenders declare bankruptcy, announce significant losses, or
put themselves up for sale.

While they were lending, banks did not factor in the possibility of a
fall in property prices. When the Federal Bank (the US equivalent of
RBI) started increasing interest rates, the sub-prime borrowers
started
defaulting and banks started selling off the mortgaged properties. As
more and more properties came into the market for selling, the
property
prices fell.

August 2007: Many leading mortgage lenders in the US filed for
bankruptcy

March 2008: Bear Sterns falls.

September 2008: Lehman Brothers file for bankruptcy. Merrill Lynch
sells
off to Bank of America.

Between 2001 and 2006, the US financial markets had developed a new
product - a bond securitised against the mortgages.

In simple terms it means that the mortgage banks borrowed money
against
the mortgages on the condition that they would repay to lenders as
soon
as they recovered their mortgages. The lenders in this case were
financial institutions (like Bear Sterns, Lehman and Merril Lynch) who
in turn sold retail bonds to individuals.

Sadly, the repayment never happened. And institutions like Bear
Sterns,
Lehman, Merrill Lynch and AIG were the casualties. Since the mortgages
were not honoured, the banks could not repay these financial
institutions who in turn could not repay retail investors.

In short, there is more pain to come. India will not remain insulated.

Regards
...

Dear black,
It is people like you who do not add an iota of value here. Just ridiculing others is not a valiant thing. Please look at your own actions and compare them with the people you say bad things about.
This is a public forum and people like you make its value low. Why are you not able to take criticism, which you give out so bluntly. Or did I get too close to the truth?

Regards...

I am sick of the govt bashing that goes on here. Best thing to do is to support your own elected government in time of need.

Most vocal borders take pride in stating stupid things regarding our leading politicians. Not a brave thing to do from behind fake names. With due regards to some of the good BJP leaders, I think SOnia is the best thing to happen to Congress. At least the party has been run professionally.

Regards

...

At best a Global slowdown Key Factors : Global economic landscape US : already in a recession and it is likely to continue for another few quarters Bailout Plan : poorly designed – at best a confidence building measure even if it gets passed later US Financial system : high risk of a complete meltdown Europe / Japan / China : varying degrees of slowdown – slide continues Key Factors : Indian Landscape GDP Growth : 5% or lower levels over next two years Slowdown across all sectors Factor price correction as the cycle progresses : salaries , land prices, interest rates will come down as the economy recalibirates Dollar flow has multiple elements : investment flows, capital flows and trade flow plus some other sub components. Each will react differently. US & Europoean Investments will definitely flow out of country. The financial systems there are starved of cash. Liquid investments like stocks will flow out first. Lower demand for dollar on capital account. Not sure of direction of trade flows. Indian Stock Market outlook Have already shared my assessment. Over next 9-12 months, downslide will continue. 70% chance of a 12K breach. If 12K breached, then another 70% chance of a sub 10K Sensex levels. Slowdown of global and Indian economy remains the key driver. On the upside , my estimates suggest that Sensex likely to go up to 40K (min 25K) by Sept 2013 and 80K (min 45K) by 2016 In a Nutshell At best we are looking at a global slowdown and a severe impact to the financial systems of countries – impact varying from country to country At worst we are looking at a Global recession accompanied with a complete meltdown of major financial systems across the globe Either ways, the worst is far from over for India and the World ; US economy will be the worst impacted....

Dear rdadhe, It is you who have started ridiculing others.. Your first message was of a frustrated Congress supporter, who feels alone when his favorite party is being fired left and right. Its better not to add any value than posting useless posts. After so many blasts and idiotic utterances by your friend Patil, you think that people will garland Italiano... Just because of some educated person like you supporting the party, Congress is looting this country since independence... Anyways there is no remedy for brainwashed guys like you. All the best.......

If you feel sick, then it is advisable that you avoid this board... In fact, people like you, who cannot digest the truth, are unwelcome. Instead, go and lick the feet of that Italian.....