Lehman Brothers bankrupt!

[ravimanoram]

in a way I see an opportunity in this bankruptcy for mid ranged financial companies that would want to go to the top..... the good thing about it all is that the game is not going to be the same again, so new players who get into finance now would have to show some new innovative ideas, while the old dogs would have to learn new tricks......

so guys cheer, India has not lost much, infact in this aftermath of distruction, there are new opportunities that are going to come up, wait another couple of yrs.....

[born2rule]

Fed has now come out with a plan of 1 trillion $ to save usa banks....
from where is fed getting such money?

also why is ruppe going down vs dollars at 47? usa economy is weakening then rs should rise

[dragon]

If only it were that simple.. The US economy isn't an isolated one.. Indeed, none of the globalised countries can remain unaffected by any of the major economies. The Rupee going down is dependent on lots of factors, the IB meltdown just one. Inflation back home is a far more major force contributing to the Rupee's slide.

1 trillion $ is a lot of money(heck, it's half India's GDP), but when you have a treasury reserve of 12 times that amount(US), it's peanuts.. Besides, the money is coming mostly as an investment and loan, not a write-off..

[ravimanoram]

Fed has now come out with a plan of 1 trillion $ to save usa banks....
from where is fed getting such money?

also why is ruppe going down vs dollars at 47? usa economy is weakening then rs should rise

very good question but framed in the wrong sense.......

first of all the its not the US economy that is going down but its only the financial markets that is majorly affected, things like rising inflation and stuff is something which is a global disease at the moment and that is mostly because of the rising fuel costs, since we need transportation for a our business thus it hits every sector, mostly the FMCGs......

having said that,the economy though is not directly affected by the financial markets in the same proportion, but it does play an important role as the fin markets provide the transaction of huge capital for the rapid development of the market.... but that is to those who are very much dependent on it.....

ok the important question, why is the rupee's valuation going down......
first of let me explain to u the importance of dollar and how it is just not a currency but an economic tool directly affected by politics as well as economics.....

when the world's economy is going slow, people tend to buy dollar alot... that is precisely because USA is the most powerful country today in terms of economy and political power... so it is natural that it shall be the last to be destroyed......remember the newspapers, even India stores its wealth in terms of dollars, the foreign exchange...

so it is not that the rupee is going down, but it is that the dollar is going high... because everyone is "buying" dollar like u wud buy berger and patties from the mech canteen, or maybe u wud buy alot of stuff to reserve for future if stravation was going to hit the country......

the second reason why dollar is going high is because of the "outflow" of dollar from the indian economy, the FIIs which invested in India are selling alot because they wish to cover their looses that took place in the US financial market.......

and u wud remember when the RBI governor(he is also an engg from IITK ) annonced some liberal measures so that
NRIs and some FI FIIs could park their dollars in India then again the dollar amount in India increased and so did the rupee cover up a bit, and so did the BSE sensex......

if their is a disruption at the moment in the US , its in the financial sector, the stock markets have always been volatile....and the effect wud really be short lived.....
ppl are comparing this with the 1930 great depression, well at that point of time, the whole economy had gone down, not only the financial markets....its infact after that time the financial markets started shaping up.....

[ravimanoram]

one interesting thread at dcetech... after along time...

[ravimanoram]

the US economy is not the isolated one true, and India is not affted very deeply by the present financial market, that is also true......
the europeans,japs and lill bit of china have been majorly affected by this.....

the europeans, these classy son of b******, have alot of extra funds with them,there is a financial term for that...but let us just say excess funds, what they do is that they part their excess funds in the US, where it continues to grow, and they sit back and enjoy that, and this extra money is all because of the income earned from conolialism, these assholes do really need some kicks, ita good they got it really hard this time,

China the Japs have worked hard to earn alot of financial reserves to parl it in the US,that is mainly because for safetly and not for return especially with china, so now they are also hit....
india's foreign resrves are low, and they are mainly lying with the RBI or in very safe bondss in the US, so India is not hit that hard.....
some banks had invested with lehman bhaiyya.... but a portion of it is recoverable.......

but the crisis is sub prime crisis, the land is still in the US,the homes are still there, so the industries are not majorly hit..... I guess the present scenario is recoverable.....

[ravimanoram]

and yes one last thing.... dont get afraid by hearing the big figures in billions and trillions, when u talk markets it always means big money..... so once u start reading some good finance papers(ET is good for a start), u will surely become use to it........ it wud become as common as 3 rupees ki chai...

[ravimanoram]

my apologies rbi guv is not an iitk alum but from dse ....confused him with some else

[born2rule]

CDOs - Collateral Debt Obligation instrument caused the Sub-Prime crash and the 'Financial Earthquake' on Wall Steet.
So, what Next - how about a 'Financial Tsunami' - CDS? Whats that you may wonder?
Collateral Debt Swaps - The instruments total US$ 16 Trillion - Please note - it is 'T',
not B.
As we are entering era of 'Financial turbulence', not sure when CDS will implode. Better fasten your seat belts and sit tight!!

Worst is yet to come we havnt even started yet

[dragon]

It is not about the present scenario being recoverable.. Like every other industry, it is going through a phase of consolidation. The problem is that IB is dependent heavily on more than one major sector(real estate, retail, manufacturing).. et al. So the consolidation will be both complicated and time consuming. The sub-prime crisis isn't a surprise.. It's been in the works for a couple of years now.. There were few ways to avoid it....


The next three years will be fun to watch.. (esp for those of us in core engg jobs, since we don't have too much at stake here.. )