Why The Wall Street Turmoil Is Hurting Us???

People always talk about fall out in the U.S market as made the Indian market run in turmoil Why is these so???? And what was the reason for these biggest every economical crisis that as caused around the globe.

It all started in the mid 2003, interest in the United States fell as low as 1%. People used this as an opportunity to take home loans to buy property. Since demand far exceed the supply,this ensured that real estate prices started to rise. Bankers saw lower interest rates as a chance to expand the market. They started to give out home loans to even those who would not have got home loans in the normal scheme of things. This market was came to known as subprime market.

Then these loans were adjustable rate home loans(ARLs) of two types. Interest-only ARLs involved paying only the interest for the first few years. This period could vary anywhere from 3 to 10 years. Only after that did principal repayment kick in. The other kind was payment option ARL. In this, a low interest rate was charged in the first year. Once the first year was over, the interest applicable on normal home loans was applicable. However there were no free lunches. The unpaid interest or the difference between the interest rate that a subprime borrower paid on the payment option ARL and the real rate of interest on other home loans kept adding to the principal outsatnding. So initially a lower interest rate was charged. What these meant was the borrower had to pay a lower equated monthly instalment(EMI) and this ensured individuals borrowered. The higher EMI kicked in only after sometime. The borrower thought that since real estate prices were on the rise, he would sell out before the higher EMI kicked in. However that didn't happen. Real estate prices became very high and after a certain point, people just stopped buying. What these meant was the subprime borrowers looking to sell out could not find any buyers. When could not sell out, and higher EMIkicked in, the only remaining option was to just stop repaying the EMI.

These simply busted many financial institutions, all the banks who had given out home loans securitised their loans. What they did was issue financial securities and sold them off to WALL STREET firms. Every time borrower repaid the EMI, a major portion of it was passed onto these firms. This ensured that banks giving out the home loans did not face any risk of default. But once the home loan borrowers started defaulting big time,the WALL STREET firms that had bought the financial securities ended up holding just pieces of paper.

So how these WALL STREET impact us, WALL STREET firms invest all across the world. Because subprime borrowers started to default, these firms started to face losses. In order to make good these losses, the firms had to sell out their profitable positions in market like INDIA and CHINA. When they decided to sell, there were not many buyers and so the stock markets fell.


I guess the above passage doesn't clear about the firm losses in INDIA. Now let me talk about leverage, how that as implemented this. Well in order to spice up teir returns from finanacial securities issued on subprime loans, WALL STREET firms borrowed money, but unlike you they obviously had to pay interest on the borrowed money. But the returns they had to pay was much lower than the returns expected from investing in the finanacial securities. Once the sub prime borrowers started defaulting on their EMIs, the money stopped coming in. And the WALL STREET firm ended on the loss of leverages which they had considered in making profit on the money investment. Also the money lenders who had given money to these WALL STREET firm wanted their money back. One of the way to give the money lenders money back was to sell out financial securities, but by then the word had gone out and no one wanted to buy these securities. So in order to repay these lenders, the firms had to sell their investments in other parts of the world, which led to stock markets in INDIA also going down. And those who could not repay their lenders simply went bust or were bought out at throw away prices.

BAILOUT IN AMERICA!!!!

U.S. lawmakers have proposed an initial bill to bailout the U.S. financial system. This measure, which involves the government acquiring or insuring as much as $700 billion of troubled mortgage-backed securities, is intended to reduce uncertainty regarding these assets and restore confidence in the credit markets.

Following several financial crises among major financial U.S. financial institutions in September 2008, including the federal takeover of Fannie Mae and Freddie Mac, the bankruptcy of Lehman Brothers, an emergency Federal Reserve loan to American International Group, and the merger of Merrill Lynch into Bank of America—events considered part of the on-going financial crisis of 2007–2008—the United States Secretary of the Treasury Henry Paulson proposed a plan under which the U.S. Treasury would be authorized to acquire mortgage backed securities that are backed by troubled housing loans, with the outstanding balance of acquired assets not to exceed $700 Billion at any time.The plan was immediately backed by President George W. Bush and negotiations began with leaders in the United States Congress to draft appropriate legislation. Proponents of the plan argue that the urgent, dramatic intervention called for by the plan is vital to prevent further erosion of confidence in the U.S. credit markets and that failure to act could lead to a significant downturn in the economy. Opponents object to the massive cost of the plan and point to polls that show little support among the public for bailing out Wall Street investment banks.

The proposed bailout of the financial system is a misguided scheme that will hurt the U.S. economy in the short run and long run. The economy currently is stumbling as a consequence of a government-created housing bubble, but a bailout of companies, executives, and shareholders that made unwise decisions would, at best, extend the economy's adjustment process. More likely, the bailout would impose considerable additional economic damage because political factors would at least partially supplant market forces in determining the allocation of resources.

Some politicians and government officials are making reckless charges of greater financial turmoil in the absence of a bailout. These grossly irresponsible statements may cause short-term market losses as investors try to second-guess how other investors will respond, but the assertion that the stock market's health - especially in the long run - depends on bigger government is belied by real-world evidence. Japanese politicians made many of the same mistakes in the 1990s that American politicians today are considering, and the Nikkei suffered a lengthy period of decline - and remains today far below its peak level.

Proponents of a bailout also are trying to rattle credit markets by arguing that inaction will cripple commercial and household lending. Fortunately, there is little evidence of a freeze in credit markets, thought the Administration's rash rhetoric and the specter of a bailout doubtlessly are causing needless uncertainty and temporarily higher interest rates. Once the issue is resolved, one way or the other, credit markets will resume normal operations. The only question is whether capital allocation will be distorted - and long-run growth hindered - by government intervention.

Providing government with enormous - and opaque - new powers is likely to exacerbate economic uncertainty and increase system-wide risk. There is no need to incur this additional risk when the Federal Reserve and Federal Deposit Insurance Corporation have been able to deal with several major institution insolvencies (Washington Mutual, Wachovia, Bear-Stearns, Lehman Brothers, and AIG) with existing authority.


Why the Bailout is Bad for America ??????

-->The bailout is bad for the economy. The unfortunate truth is that bad government policy has resulted in excess investment in the housing sector, and the inevitable reallocation of labor and capital is going to cause some economic dislocation. The good news, though, is that this process - if not hindered - will create a stronger and more vibrant economy. A bailout, however, will discourage this process and reduce economic efficiency. This may not seem important in the short run, since modest changes in the rate of economic growth are difficult to perceive. But in the long run, because of compounding, even small changes in the rate of growth can have a significant impact on living standards. Small differences in annual growth rates are why disposable income in the United States is substantially higher than disposable income in nations that practice economic interventionism, such as France, Germany, and Japan.

-->The bailout repeats the mistakes Japan made in the 1990s. There are several historical episodes that indicate the dangers of government intervention to prop up a bubble. Japan faced a similar situation at the end of the 1980s, with real estate prices rising to absurd levels. The bubble then burst, but rather than let market forces operate, Japanese politicians sought to prop up both insolvent institution and asset prices. This interfered with the orderly reallocation of labor and capital, created considerable uncertainty, and contributed to a "lost decade" of economic stagnation. Another worrisome parallel is what happened during the 1930s. Policy mistakes such as protectionism (Hoover), higher tax rates (Hoover and Roosevelt), increased government spending (Hoover and Roosevelt) and increased intervention (Hoover and Roosevelt), helped turn a stock-market correction into the Great Depression.

-->The bailout will increase corruption in Washington. When politicians have more power over the allocation of economic resources, people have an incentive to play the "rent-seeking" game of exchanging campaign contributions and hiring lobbyist in hopes of obtaining unearned wealth (or, more honorably, taking the same steps in hopes of protecting themselves from those seeking unearned wealth). The squalid mess at Fannie Mae and Freddie Mac was made possible in part because politicians received enormous amounts of money from advocates of the two government-sponsored enterprises. If the government obtains power over financial markets, including the ability to steer money to particular firms, it will create a feeding frenzy of lobbying and influence peddling.

-->The bailout rewards executives and companies that made poor choices. Unfettered markets are the best generator of prosperity because people have incentives to make wise decisions. If an entrepreneur figures out a way to provide a valued good or service to others, he can become wealthy. But if that entrepreneur makes a mistake, he will suffer losses and maybe even bankruptcy. If investors put money into a well-run company, they can increase their wealth. But if they put their money into a poorly-run firm, the opposite can happen. In other words, market forces encourage people to make smart decisions so they can prosper. But it is equally important that people bear the consequences when they make wrong choices.

-->The bailout will encourage imprudent risk in the future. The debacles at Fannie Mae and Freddie Mac, as well as the savings & loan failures from the late 1980s/early 1990s, are compelling examples of the negative economic consequences that occur when profits are privatized but losses are socialized. Faced with this perverse incentive structure, people engage in riskier behavior (analogously, if you are in Vegas, and somebody else is going to cover your losses, you obviously have an incentive to make bigger bets). A bailout would extend this risky behavior to the whole financial system, if not the entire economy.

Tribute To Father Of Nation

Mohandas Karamchand Gandhi (Gujarati: મોહનદાસ કરમચંદ ગાંધી, IPA: [moɦən̪d̪äs kəɾəmʧən̪d̪ gän̪d̪ʱi]) (2 October 1869 – 30 January 1948) was a major political and spiritual leader of India and the Indian independence movement. He was the pioneer of Satyagraha—resistance to tyranny through mass civil disobedience, firmly founded upon ahimsa or total non-violence—which led India to independence and inspired movements for civil rights and freedom across the world. He is commonly known around the world as Mahatma Gandhi (Sanskrit: महात्मा mahātmā or "Great Soul", an honorific first applied to him by Rabindranath Tagore) and in India also as Bapu (Gujarati: બાપુ bāpu or "Father"). He is officially honoured in India as the Father of the Nation; his birthday, 2 October, is commemorated there as Gandhi Jayanti, a national holiday, and world-wide as the International Day of Non-Violence.

Gandhi first employed non-violent civil disobedience as an expatriate lawyer in South Africa, in the resident Indian community's struggle for civil rights. After his return to India in 1915, he set about organising peasants, farmers, and urban labourers in protesting excessive land-tax and discrimination. Assuming leadership of the Indian National Congress in 1921, Gandhi led nationwide campaigns for easing poverty, for expanding women's rights, for building religious and ethnic amity, for ending untouchability, for increasing economic self-reliance, but above all for achieving Swaraj—the independence of India from foreign domination. Gandhi famously led Indians in protesting the British-imposed salt tax with the 400 km (249 mi) Dandi Salt March in 1930, and later in calling for the British to Quit India in 1942. He was imprisoned for many years, on numerous occasions, in both South Africa and India.

Gandhi was a practitioner of non-violence and truth, and advocated that others do the same. He lived modestly in a self-sufficient residential community and wore the traditional Indian dhoti and shawl, woven with yarn he had hand spun on a charkha. He ate simple vegetarian food, and also undertook long fasts as means of both self-purification and social protest.

Mohandas Karamchand Gandhi, pictured in 1931
Born	2 October 1869 Porbandar, Kathiawar Agency, British India
Died	30 January 1948 (aged 78) New Delhi, Union of India
Cause of death	Assassination
Nationality	Indian
Other names	Mahatma Gandhi
Education	University College London
Known for	Indian Independence Movement
Political party	Indian National Congress
Religious beliefs	Hinduism
Spouse(s)	Kasturba Gandhi
Children	Harilal Manilal Ramdas Devdas
Signature

Azamgarh Terrorism and GOvernment!!!!

Azamgarh in Uttar Pradesh is on edge, after the police revealed that the alleged terrorists in Friday's encounter were from there. The terror accusations have affected the lives of both Muslim and non-Muslim students in the area.
Sudan Chauhan has got mail, and money from his labourer son in Dubai. Everyday such money keeps the hearth going in almost every home in Azamgarh.
Against popular belief, more Hindus than Muslims are out working as migrant labourers. The number runs into lakhs. That brings in nearly 25 crores every month.
Iqbal Ahmed was 13 when he left Sanjarpur for Singapore. "There was nothing here. People went out, earned and that helped people study. Go to Malaysia, Cambodia or Vietnam, you will find somebody from Azamgarh."
The exodus started nearly 100 years ago. Girmitia labourers went to Surinam and the Malay islands. Post independence Bombay became the hot destination. Some from here took to crime and started recruiting from Azamgarh. Azamgarh started figuring in national crime records.
The pace of migration was and is triggered by lack of opportunities. There are no hospitals and professional training institutes in Azamgarh. Of the 200-odd educational institutions, most are madarsas, and there's just one proper college.
So, students head for big cities, for computer and English-speaking courses -- just like Saif who was arrested in Delhi last week for alleged terror links.
Shahdab, Saif's father, says: "If my son is guilty, I will not forgive him."
Nearly 10-lakh men in Azamgarh have no jobs. The zari trade is dying. Crime offers an escape route. So over the years, Azamgarh ignored its tag of town-of-bad boys.
Now, some of its young men figure as terror suspects. Old men with wise eyes admit that a not so progressive interpretation of the religion, and Godhra, Babri Masjid, India's proximity to the US are pushing some to radicalism. Boys are angry and they feel isolated.
Salman Sultan, a reader in local Shibli College, says: There is a problem. Like, boys were made to stage protest marches against the cartoonist who showed dishonor to Prophet Mohammed."
To add to the burden of life, vested interests bring in videotapes of Osama's speeches, Gujarat riots, inciting pamphlets -- raising the feeling of persecution.
Suleman Haider, a resident, adds: "If Government does all this, won't terrorism be on a rise?"

What the fuck is this!!!

It is one of the most beautiful words.
The English language should be proud of it.
I don't think any other language has such a beautiful word.
One Tom from California has done some great research on it.
I think he must be the famous Tom of Tom, Dick and Harry fame.
He says: One of the most interesting words in the English language today is the word 'fuck'.
It is one magical word: just by its sound it can describe pain, pleasure, hate and love.
In language it falls into many grammatical categories.
It can be used as a verb, both transitive (John fucked Mary) and intransitive (Mary was fucked by John), and as a noun (Mary is a fine fuck).
It can be used as an adjective (Mary is fucking beautiful).
As you can see there are not many words with the versatility of 'fuck'.
Besides the sexual meaning, there are also the following uses:

Fraud: I got fucked at the used car lot.
Ignorance: Fucked if I know.
Trouble: I guess I am fucked now!
Aggression: Fuck you!
Displeasure: What the fuck is going on here?
Difficulty: I can't understand this fucking job.
Incompetence: He is a fuck-off.
Suspicion: What the fuck are you doing?
Enjoyment: I had a fucking good time.
Request: Get the fuck out of here!
Hostility: I am going to knock your fucking head off!
Greeting: How the fuck are you?
Apathy: Who gives a fuck?
Innovation: Get a bigger fucking hammer.
Surprise: Fuck! You scared the shit out of me!
Anxiety: Today is really fucked. And it is very healthy too.

If every morning you do it as a Transcendental Meditation -- just when you get up, the first thing, repeat the mantra "Fuck you!" five times -- it clears the throat.
That's how I keep my throat clear!

Dalal Street v/s Wall Street

Dalal Street?

Dalal Street (Hindi: Dalāl means a broker, or dealer) in downtown Mumbai, India is the address of the Bombay Stock Exchange(BSE) (in the Phiroze Jeejeebhoy Towers) and National Stock Exchange(NSE) and several related financial firms and institutions. When Bombay Stock Exchange was moved to this new location at the intersection of Bombay Samāchār Marg and Hammam Street, the street next to the building was renamed as Dalal Street.


Wall Street?

Wall Street is a street in lower Manhattan, New York City, New York USA. It runs east from Broadway downhill to South Street on the East River, through the historical center of the Financial District. Wall Street was the first permanent home of the New York Stock Exchange; over time Wall Street became the name of the surrounding geographic neighborhood. Wall Street is also shorthand (or a metonym) for "influential financial interests" in the U.S., as well as for the financial industry in the New York City area.

Several major U.S. stock and other exchanges remain headquartered on Wall Street and in the Financial District, including the NYSE, NASDAQ, AMEX, NYMEX, and NYBOT.


The Effects of Wall Street on Indian Market:


The current rise and fall of the capital markets (measured approx by the SENSEX) at the Dalal Street makes it necessary to look at the American economic strategy formulated post the 1930 depression to cushion the US economy from jolts of economic cycles. Every occupant of the White House has, since then, supported the broad principles of this theory. It concerns about creating buyers and purchasing power in the Third World countries so that produce of the American industries is not short of buyers even when the domestic demand falls as a result of natural economic cycles.



In the bygone era the US government’s financial assistance to the least developed countries (LDC) was an attempt to do this. The method that is in vogue is to aggressively pursue the governments of the less developed countries to implement the policies of free market economy and opening up of the capital markets and at the same time assiduously selling these concepts to the masses through the multi-trillion dollar media machine.



In the recent times India has been a classic example of this economic disease and shows every symptom associated with it. Every time an American fund invests a dollar in our market the hype is created convincing us that it reflects the confidence reposed in our economy by the West. Unfortunately, we swallow not only the bait but the dangerous hook too. We bend backwards to ensure that the so-called foreign investment keeps trickling in. Our Finance Ministers begins to loose sleep over the net outflows of the FII (Foreign Institutional Investor) investments. We gave them all. They did not like the “badla” system that we are adept at so we too condemned it and brought in “futures, options and derivatives” – a colonial cousin of the same system that they were too familiar with.



The fact is that the American and other funds in the West and in the Japan are constantly looking out for a manipulative market where they could quickly make some money and take it back in time to invest in their own countries. Indian capital market is far from statistical efficiency that a market needs to enjoy its natural stability. This is because the size of our markets in terms of money as well as number of players is too small for any inherent econometric forces to play. As a result, a couple of billion dollars of investment (or dis-investment) is enough to fire a bull (or bear) run on the market and that is exactly what the FII's are looking for – a temporary hedging place to park their monies. As a solution to this, the champions of this system seek to educate the people and persuade them into investing in the capital market. This too goes in the favour of our cousins in the West. It is like whipping up more cream for others to pick.



What is so different between the “Wall Street” and the “Dalal Street” that the former is a technically efficient market and we are easily vulnerable to the manipulation? Simply put, it is because it is their system and we never really had our own. Let me elaborate on this. A farmer is Australia brushes his teeth with Colgate drives his pickup truck to a shell station, drinks Pepsi (or coke) and smokes Marlboro eats stake and drinks beer in a can. He goes to see his aunt in the US he sees people in the countryside doing the same, speaking the same language and discussing same problems; he goes to Ireland to visit his sister and it’s a same thing all around. When he lands in India as a tourist he suddenly finds a changed scenario: the cars look different, the gas stations look different, cigarettes taste different, croissants are vague and bread does not feel the same. He enjoys India as a change, he loves our “garlic nan” and swears by its taste but in the corner of the mind he knows its not “us” its “they” and when it comes to parting with the money no one likes to give it to a stranger.



Therefore, when he gets “bumper crop” and has his session with his investment agent he would want his money with the familiar names; the Coke, Pepsi, Colgate, Microsoft and Ford. You say Wipro, Infosys or emerging market he smirks. He is happy to put it his bets on the Wall Street though he is fast asleep when the markets open in NY. These people all across the world, which Wall Street once nicknamed as “Small American”, grant the NYSE the strength and stability it enjoys despite several scams that rocked it from time to time. Markets do rise and fall in the all parts of the world. NY, London or Zurich is no exception.



The difference is that their markets behaviour is in synch with what is happening around. With us it is chaotic. As we witnessed in past couple of years markets continued to rally though the inflation went up, fuel price reached unprecedented high, the terrorist threat to the country increased and above all for the first time the paucity of “electric power” became acutely evident. The only thing going for India was a big boom in telecom industry and huge part of the credit for this goes to Lalu Prasad Yadav (surprised!) and his Railways that caused the “bandwidth” availability in the country to rise exponentially.



Somewhere we have got impatient. We seem to forget that the West too took its time to reach economic maturity that they enjoy today. We have a long way to go and there are no short cuts. We have to first see that the goods manufactured in India find their firm place on the global shelf (like the Japanese did). Without such strong foundation if we act in a hurry it would be too late to reverse and change course. Even seemingly informed people seem to think it would be a good idea to invite Wal-Mart to India and we seem to think that our retail trade will not be affected. That is being naïve. Anyone who knows Wal-Mart knows that its not just a chain of stores, it is cult and a strong cartel. Once we open our doors to this monster we can only be awed by its aggressive measures. It not only has capacity to put our retail business in jeopardy but as Indian manufactures vie to put their products on its shelf it can squeeze them off the last penny of profit and render them incapable of competition. My concern in this area may sound exaggerated but it cannot be ignored that if East India Company was a symbol of orthodox colonialism then Wal-Mart is a symbol of neo-colonialism.

Tribute To Indian Hero Who Worth More Than A Gold Medal

Sep 19,2008 : India salutes its brave son, who became a martyr for his motherland. India pays rich tribute to martyr MC Sharma. Long Live Shahid Mohan Chand Sharma!. This is the biggest loss for Delhi police after the death of Ranbir Singh earlier this year

Inspector Sharma(44),, who was killed in Delhi’s Jamia Nagar encounter with terrorists today, was described as one of their finest by the Delhi Police.

As per tip off from Gujarat Office, Delhi Police specialist cell stormed into an apartment at Jamia Nagar where 5 terrorists were holed up. Atiq, wanted in connection with the serial blasts in Ahmedabad and Delhi, and one of his associates were also killed, while two managed to escape. One was held and has been taken for the interrogation.

Inspector Sharma, who was awarded a Police Gold Medal for gallantry on Republic Day this year by the President of India, has in all received 150 rewards in his police career so far, including seven gallantry medals. He had neutralized 35 terrorists while he was responsible for the arrest of 80 of them. The officer had also neutralized 120 gangsters so far. He was involved in more than 75 gun battles, several involving dreaded gangsters from the badlands of Uttar Pradesh.In his time time, his team solved the Red Fort attack, the Parliament attack, and the 2005 Diwali blasts cases.

Sharma had always led from the front. He has shown the way to the Delhi Police. Such was the character and dedication of Sharma, he left his little son sickbed in Delhi’s Kalra Nursing Home with dengue fever saying “I have to rush… I’ll be back in an hour. We have some good leads. Pray for us. We have to get the right men and bring this (bombings) to a stop.”. At that time son was battling for life with urgent need of rare O+ blood.

The Special Cell of Delhi Police was formed in 1986, when militancy in Punjab was at its heights. It used to be known as a dumping ground for police officers who either did not perform well or were not in the good books of senior officers. In 1998, things began to change. Ashok Chand was appointed DCP. Encounter specialist Rajbir Singh, who had by then made a name for himself, was posted as ACP. Ranbir Singh handpicked his team from officers whom he had worked with earlier. Mohan Chand Sharma, Badrish Dutt, Lalit Mohan Negi, Hridya Bhushan and several others joined. And since then, there has been no looking back..

here we salute to one of the greatest cop in Indian Police...