Mother India


India has come a long way since I left in 1991. Liberalization of the license Raj, a legacy left behind by the Colonial rule of 200+ years, alongside a systematic deconstruction of Nehru's decision to be a State dominated republic, and the incredible resourcefulness and hard-work of Indians have contributed to the stunning economic growth. Rising tides lift many boats, and is also true in India. The economy has created an enormous swath of hungry consumers, with pockets that can afford even prices that will shock many in the Western Worlds. A 3BR apartment (or flat) that costs USD 1,000,000 is not uncommon in metro areas. Given its continuing growth, and despite the global financial crisis, property values did not suffer as much (as in the US, for example). I have seen projections that call for India becoming the 2nd largest global economy, in 30 to 40 years. At that horizon, arguing about the potential rank does not have a definitive answer. To be candid, it really does not matter wether its #1 or #2. Well done folks, well done.

I am a US Citizen now, and have been one for many years. This does not, in any way, diminish my sense of pride. Most of my family is still in India, and my heritage gives me a unique perspective. I love India as much as I love the US.

Despite the astronomical leap of economic progress, or perhaps because of this very phenomenon, there are deeply rooted social issues that have not changed much, if at all. What follows is NOT a sweeping indictment of the nation, or of every man in India. Please do not slam me with hostile fire, for this commentary is not aimed at anyone. It is based on my observations.

Amidst all the glamor, glitter and boom time success stories, the singularity that stands out is how poorly Indian women continue to be treated.

While some Indian women have also achieved very high educational, professional and economic success, many (and in my mind even 1 is one too many) are regularly abused at home, or at work by a man - a boss, a brother, a father, a husband, or a son. Abuse comes in many shades, physical and emotional being the foremost forms. Some have a support network, and are able to walk away. Others do not, or can not. So, thousands of women suffer in silent agony each day, resigned to their fate. Or, waiting for the day they can walk away. At times that fate is paying 'the ultimate' price.

No one likes to talk about 'dark' issues. We have a propensity to bottle up, and not acknowledge that which is ugly in our lives. We want to pretend all is well when it is not. This is what we tend to do - compartmentalize.

I doubt India will ever achieve true greatness, until it faces the plight of its women. As a nation. Laws that provide protection to women exist, but we know that parliamentary (congressional) dictate, in it of itself, is acutely incapable of social reform. That has to come from within, one household at a time.

I long for the day. Always have, and will continue to do so. I have hope.

PS - I am all too familiar with violence against women in America. It is flagrant. And, it is rampant. It is a shame, and neither forgiven, nor ignored. I am also aware of the flip side of this coin, where men are the abused in a relationship. Regardless, real men do not abuse the women in their lives. Cowards do.

Gas Prices

In a past life I spent some time trading derivatives on Wall Street. It was a highly lucrative, and a very eye opening experience. Wall Street was meant to help companies raise funds, go public through IPOs, and help us John Qs with our investments and retirements. Over time, that business model expanded into a few higher margin areas - mortgage securitization, risk management, aka hedging risk, proprietary trading, private equity investing, and prime brokerage services.

We are all to aware of how the Securitization business wreaked havoc - the US housing and financial crisis - personal bankruptcies, foreclosures, blighted communities , among its side-effects (makes securitization look like was a dangerous, new social Rx medicine). But Wall Street's lust for originating, buying, and securitizing low documentation, low documentation, no income proof - collectively known as Liar Loans - into Mortgage Backed Securities, and selling them around the world also led to Wall Street being (temporarily) brought to its knees.

As mortgage payment default rates soared, starting mid 2006, greed kept the Street from paying attention. Fraught with inertia, and the propensity to worship money making, Wall Street kept amassing raw inventory of "Alt-A" liar loans, until our marked to market regime blew the cover off the House. Among the many high profile people, and investment banks, that lost the shirt off their backs were several bank CEOs, Bear Stearns, Lehman Brothers, Wachovia Bank, Washington Mutual Bank, and Merrill Lynch. All were iconic companies in the US. Gone, over a period of 12 months. 100s of billions of Dollars of shareholder capital lost. 10s of thousands of low and mid level jobs lost (I have no sympathy for the highly paid superstars of Wall Street who lost their jobs too).

The attentive reader may, by now, be thinking that this rant has nothing to do with Gas Prices! It does. I just have a fondness for the scenic route.

Prop Trading, as in trading for the House, on Wall Street is very large. There are no sane, internal leverage limits for money spinning businesses. Prop traders can take extremely large positions (buy and sell) in anything they want. Prop trading is pure speculation at its core (I wanted to say heart, but they don't have one).

Prime Brokerage was meant to settle and clear trades for independent traders. Then, Hedge Funds got involved, and Wall Street was more than happy to provide the leverage and liquidity to Hedge Funds. Most hedge funds are pure speculators. Some readers may remember the spectacular demise of LTCM (Long Term Capital Management), in 1997, which was the largest hedge fund of its time. Ironic how short the Long Term was. John Merriwether, and his band of traders at LTCM, including the Nobel Laureate Myron Scholes (of the Black-Scholes option pricing model fame), leveraged their fund in excess of 100:1 ($100 of borrowed money, for each $ of capital) to bet on World Convergence. Then, Russia defaulted on its debt obligations, and that default set off a chain reaction of World Divergence that blew LTCM out of the world!

Starting in the mid 2000s, economists and researchers started predicting a major future shortage in global oil supply. A large factor in these projections - the astonishing and continuing growth in Brazil, Russia, India, and China (the BRIC group). Wall Street Prop Traders and Hedge Funds pounced on this as an opportunity to make a lot of money for themselves. The logic actually may have some merit.

Hedge Funds do not disclose their holdings of crude oil, or the size of the open positions in the crude futures prices. Investment Banks do, but in a convoluted manner, buried on page 900 something of their annual disclosure filings. The obfuscation is startling.

It has been reported, elsewhere, that Wall Street owns several hundred million barrels of crude oil, sitting in tankers off the US coast. One report I saw claimed 120 million barrels. That would roughly be 4 days of US's total consumption of oil.

Found an interesting graphic to make my case: http://goo.gl/MyDWC

It shows that crude oil prices collapsed, starting in September 2008. Remember that the weekend of 9/15/2008 was when Lehman Brother failed, and Merrill Lynch was forced into the arms of Bank of America. Within 3 months, gas prices hit $1.60 per gallon in the US. The Bush (junior) Administration bailed out our dear Investment Banks in October 2008.

See a trend in gas prices since then? It is not a coincidence. The cost of producing a barrel of gas has not risen by 100% in the last 4 years. It is Wall Street that is back at its GAME - pump (pun unintended) and dump. In their Prop books, and alongside their Hedge Fund customers!

With unemployment in the high 8%s, and stagnant relative incomes, the John Qs of America are being taken to the cleaners. By Wall Street. And our Congress, including the Administration can do NOTHING about it. Frank Dodd Act, and CFTC's amended powers could have put the brakes on such naked speculative hoarding and trading, BUT the Republican controlled House has effectively blocked Frank Dodd Act, and may infact entirely repeal it. The CFTC meanwhile had its budget severly cut, so the amended powers to monitor and regulate oil speculators was dead on arrival.

America's next NIGHTMARE - Romney @ 1600, combined with John Boehner as Speaker of the House, and a GOP majority, or a close tie in the Senate. If that happens, we are all SCREWED.

About Rudy

Yesterday, 'America's Mayor', aka Rudy Giuliani endorsed Mitt Romney for President.

Forget about the GOP primary debates leading up to the 2008 Presidential elections, and the fact that both sides took nasty swipes at each other then. No matter, that back then, Giuliani dropped out of the race and endorsed the eventual GOP nominee John McCain.
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Its irrelevant, that In January 2012, Giuliani said "Romney will say anything to become President of United States." He added during an interview: “I’ve never seen a guy change his positions on so many things, so fast, on a dime, on everything. Pro-choice, pro-life. …Then he was pro cap-and-trade. Now he’s against cap-and-trade. He was pro-(health care) mandate for the whole country, then he becomes anti-mandate, and he takes that page out of his book and republishes the book. I could go on and on.”

Today, Giuliani said "Romney has won, fair and square." When asked about polls showing Romney has a "likability" problem (is not likable), Giuliani put the dagger in to his new friend:

"This reminds me of going to a surgeon. If I've got a terrible cancer or something to be operated on -- when I had to be operated on for prostate cancer -- I didn't go to the nicest doctor, I went to the best doctor. The guy could have a great personality and tell great jokes and put the knife in the wrong way."

Let me see if I got this right - Giuliani was endorsing Romney for the Presidency of the United States. And, in this analogy President Obama is the 'nicest doctor', with Romney being the 'best doctor'. The US Presidency is about our country's fate, and its future. Is Giuliani then suggesting United States is the prostate cancer?

Call me slow, but this felt like reluctant dealmaking rather than an endorsement for anything.

Oh, and Mr. Giuliani, you'd be well advised to avoid any metaphors related to cancer, of the prostate, or otherwise. Be a little less of a narcissist.