javascript hit counter Garam Masala: May 2010

Garam Masala

Monday, May 31, 2010

Where do you want to settle?

I am not going to write about how to plan for retirement or tell you how much to save for kids etc. Yesterday N and I were considering options about the cities that we can settle in once retired. On the face of it weather and language was considered. Beyond that we were pretty lost on what we think is important for us during our retired life. Here are some points that we pondered over -

Going back to a calmer and more peaceful place is definitely a priority. What we had in mind was something like the Bangalore of old times. Mysore was an option... and so was Shimoga.
Fact: In India alone 15 million people are going to migrate from villages to cities in the next 5 year.
What that means is that the bigger cities are definitely going to be overcrowded (over over over crowded) and at some time Govt will have to look beyond the big cities and focus on tier 2 cities (corporations like IBM are already doing so.. the issue is that these companies are human capital intensive and cannot find required resources in a smaller town. But that is besides the point). So, in all probability, at the rate India is growing (in population and GDP) tier 2 cities of today would have been promoted to tier 1. So, at this point we might as well rule out these tier 2 cities and concentrate on some small towns that have potential of moving to a tier 2 city. But spotting those is nearly impossible at this point.

A more secure place is another important criteria. We dont want to save up for our last 10 years and be shot by some idiot who claims to be a Robin Hood.
I think the Naxalism is reached a tipping point where either the government will grant them their rights or wipe them out of the face of the earth. One way or the other, large portions of India will be rid of mindless violence. I cant say that about inflitration.. because I have more confidence in the Islamic fundamentalism than India's attempt to root them out. So, India will continue crying for US attention and US will continue asking Pakistan to stop cross border terrorism.. and nothing will come out of it.
Back to 'a more secure place' - I think it is too soon to plan.. though a rough idea of the kind of place will keep us happy. But if Naxalism will cease to exist, something else will crop up.

Third criteria was the language. This we can be sure of... more or less. Living in Karnataka, we will want to be among people who can speak Kannada. English or Hindi as second / third language is not too bad. But I would want to say a 'amman' here and an 'akkan' there to digest my afternoon meal.

Thursday, May 06, 2010

Where to invest?

With Greece, Portugal, Spain in the firing line, the immediate impact on India is something of a worry. 150 billion is what will be given to Greece. Just a comparative figure, the total remittances into India this year was 54 billion!! (anyway, that's besides the point).

Read (past tense) about the simplified reason for sovereign default. It goes - Govt expenditure is considered as the proven option to get out of recession. This is done by governments taking huge loans to kick start projects, which in turn generates employment. In effect the govt manages to increase GDP enabling the country to pay back the debts. But when the cycle does not complete, and the projects do not convert to employment, everything falls apart. (ah! so it is a project management issues!)

This "govt expenditure to kick start economy' works most times. It worked in the two recessions US went through. May be that is what is meant when you hear - It works most of the times. We know that Japan could not do it and piled on huge debts which, after 20 years, is still deflating. And now it is the EU countries.

So here we are - Markets are going down. Goverment bonds are not reliable. Banks are defaulting. Real estate in China is predicted to be on a collapse. Analysts (Analyst is a make believe position created. They think that the world functions based on the formula they derive by crunching some apparently useful information. Beware!) have predicted that China might collapse in a decade (or was it a year?), which will either leave India as a only prospective super power (yay!) or cause India (and the world) to collapse. So, I wonder, even for a risk taking individual (unlike me), what does one hedge his risky investments against? Gold, may be! Or keep it under the pillow!