Gold and the mighty US Dollar

During the last three months, my understanding of economics has been challenged significantly by the movement of Gold and US Dollar.

I always thought that the more deficit financing (or printing money) is done, the less the value of the currency. I also thought that the greater the fiscal deficit, the lesser the value of the currency. To put it another way, if you have too much of currency around, then each unit of the currency has a lesser value compared to something that is limited and does not increase significantly in quantity (i.e. Gold).

So by that token, I was expecting Gold to be in the vicinity of around $1100 per ounce by now. I was quite confounded by the repeated plummeting of Gold and the unstoppable raise of the US Dollar. Going through my online research, I have uncovered quite a lot of theories that attempt to explain the current phenomenon.

One school of thought which I think is quite credible, believes that American investors and corporations are selling off their international investments and bringing home dollars. This leads to demand for dollars and thus an increase in the value of the Dollar. This school of thought believes that soon the value transfer will stop and when that happens, the dollar will plummet. As the dollar plummets, the dollar denominated Gold will increase in value and gain its rightful place in the asset value rating.

Only time will tell if this is true!

A time to invest

Scanning through the news papers this weekend, the common theme was that investors were panicking and exiting the share market much against the advice of the investment advisors.

I guess that at any point in time, you should not invest your bread & butter money. As long as you invest amounts that you can afford to lose, you get the fortitude that enables you to wait out the lows in the market and then be richly rewarded when the markets come back up again.

At times when the market is doing well, every one recognizes that you should buy low and sell high, people remember the positives of systematic investment and asset allocation. Most also talk about keeping the long term trends in mind and not to be distracted by the short term noise in the market. However if one were to invest more than what they can afford to lose, all the accumulated wisdom flies out of the window as soon as market turbulence makes its appearance.

I am pretty convinced that, now is the time to buy in a systematic manner with a focus  on beaten down Blue chips to reap a good reward probably after the middle of 2009! Happy hunting and of course, chins up!!

A case for Animal Existance

It has been a wonderful summer so far and we had the previlage of taking care of our neighbours dog "Jango" for a day while they were away. Now Jango is a wonderful dog and the envy of the neighbour hood. He is pretty young ( less than 2 years old) and is a mix of Collie and Golden Retriever.

Jango is extremely well behaved and affectionate. Pam dropped him at our place in the morning and we had our own doubts if we can handle him for the day. We put up a brave face and Pam left with a heavy heart. Jango kept watching out of the storm door for Pam to come back and get him. When he saw them drive away, he did whimper for a minute and then we felt that he was quite sad. However, he was quiet and well behaved and sat in a corner.

Jango is a rescued dog. I gather that his previous owner was a convict and Jango was given up at some point of time or rescued due to cruelty. Pam had just lost her Labrador of twelve years and was heart broken and adopted Jango. That was just six months ago.

In those six months, Jango has bonded well with Pam and has probably been able to forget the trauma of the past. In the early days he was afraid of men, especially ones in black trench coats. Now he is quite comfortable amidst friends and strangers alike.

I watched him as he sat in the corner ocassionally closing his eyes and responding whenever his name was called. He seemed to have taken life the way it was unfolding. this is where I got my definition of animal existance.

We live in the same time and space, but Jango is perfectly happy and comfortable looking at the blades of grass, the bumble bees, the birds and the sky! I dont know what he was thinking all the time, but Jango was at peace. Jango loves every one, is trusting to a great extent and brings joy to every one around him.

I think we could take a leaf from his book and start trying to cut through the noise in our lives and get a firm focus on what is important. I think these days we are driven towards materialism and to support the materialism, we work as hard as possible and in the process we are preoccupied by a virtual world that has no relation to the real world.

The real world consists of our family, the nature around us and what we want to experience in our life. We only live once and we really need to make the most of it. I remember a song that goes some thing like "Live like you are dying". If you just had 3 months to live, what would you do with your life? would you be hunched up behind a computer working away on that important project or would you rather get away from it all and lead an idyllic animal existance? May be I learnt something from Jango already.

A sad day indeed

I have finished reading about the series of blasts across Bangalore first and then Gujarat. It seems that people who are miserable want company and want to drag every one down.

It was equally unfortunate to hear comments from the Gujarat Congress spokesman that Modi should take responsibility and resign. The blatant attempt to play politics with a national tragedy speaks volumes of the opportunistic politics that have come to undo the Indian growth story.

Equally horrible is the decision of the NDA to oppose the liberalization agenda that UPA plans to push through as a result of winning the no confidence vote.

Seems that India is suceeding despite the inept politicians and that the politicians are getting thouroughly shameless and are opposing the Nuclear deal (which will give energy security) and now prevent liberalization!!

The usual platitudes of the bombing being a cowardly act, asking for people to exercise restraint etc are being bandided around. Meanwhile the few terrorists who were caught red handed trying to enter the parliament are yet to be executed despite a Supreme court order. One wonders what they will do by catching perpetrators of the latest attrocity.

Back to thinking

It has been a very hectic last few months, however with the Victoria day break resulting in a long weekend, I have been able to get back to the blogging.

I think that in the last few months, I have had a ring side view of the impact of the indeterminate state of the economy on daily work. It feels like no one really knows how deep the problems run and how soon things will get back to normal. The result is close monitoring of costs with a very short term vision and frequent course correction.

In my profession as a Project Manager, this has presented some challenges. The normal progress of project is now interrupted by conflicting requests for information. This is leading to additional costs (an unintended consequence) and delays.

I have been reading up on Agile project management and the light weight concepts with the hopes of finding some interim solution to my problems. Meanwhile there is an opinion gaining currency that the problems in the global economy will sort itself out by middle of 2009.

The weekend is now coming to an end! Got to log off for now

Intro and ramblings my favourite topic, entertainment!

Before anyone gets all excited, this starbuck is not related to the gorgeous, spirited and sexy pilot of Battlestar Galactica… a huge fan though.

So, Gregory David Roberts’s pretentious tome, “Shantaram” is being made into a movie, with no less than Johnny Depp and Amitabh Bachchan starring in it. Don’t know if anyone else got the same feeling, but methinks it was created with the hope that it will one day grace the silver screens across the world. It has all the Masala of a Hollywood film complete with prison torture, odd "Madame" characters, War and a dying hero in this same war. Best part is, it will also appeal to the bollywood crowd, as it seems to have bollywood masala cleverly woven into the plot! Ah globalization !

If anyone out there is asking for my opinion, I think Leonardo Di Caprio would have made a far better Shantaram. No substitute for Amitabh Bachchan for the role of Khader Bhai. I hope they pick Rajpal Yadav for the part of Prabhaker.

Charity and Governance

Now that the markets are a bit more stable, I have been able to think of other things. This time it is about Charity.

Charity is a big thing in this part of the world and also while in Ireland, I noticed that the Irish are really big on charity. These days, I have noticed a lot of advertisements asking for charity. Some say you can sponsor a child in Africa or some where in the third world. There are visuals of malnourished kids and emaciated families.

There are tax breaks and various incentives to provide to accredited charities. To facilitate charities, it is now possible to authorize deduction of charities at the payroll itself. This allows mobilizing vast sums towards charities. To mobilize these charities and channel them to the target audience requires overheads of organization. Organizing and deploying charity is an industry in itself and has huge corporate sponsorship and charitable giving is likely to be part of performance appraisals in the near future.

The average Canadian is quite happy to donate to charitable causes the year round. The fact that quality of life is good in the first world allows people to be open to donating and also sensitive when shown human suffering.

What is prominent is the fact that there are campaigns to provide education and basic living facilities to disadvantaged children in the third world. This is really a good achievement. However, I always wonder if there are any charities that are aimed at addressing the root cause of these misfortunes. There is a common link between orphans, poverty and refugee issues and that is poor governance. The difference between regions of prosperity and regions of intense misfortune is governance.

Regardless of whether a country is resource rich (like Nigeria) or totally barren (Ethiopia) or has been prosperous in the past (Zimbabwe), the common thread is poor governance. The responsibility of the government is to be the custodian of the collective futures of its citizens and to manage the resources with a good vision and effective clean administration. Where this element is absent, what happens is that the proceeds of national resources do not reach the people. Corruption becomes rife and when public protests increase; there is a violent clampdown. It is established that those in government can benefit from the national resources, then elections become violent and common people get caught in the cross fire. Democracy becomes a casualty.

The result of all of this is the swelling number of orphans, poverty, and hopelessness. People who can flee such regimes end up as unwanted refugees. They risk their life and limb and end up in the shores of Spain or elsewhere in containers.
I am going to spend some time on the net doing research to find out if any NGO is involved in addressing these root causes and will share my findings. Meanwhile I can only think that if we are in a boat that has a hole in the hull, bailing buckets of water will help only to a certain extent. What will really solve the problem is sealing the hole. Similarly charity addressed at providing education and food to orphans and the needy in the third world is like bailing buckets of water from the boat. The water will continue to fill up until the hole in the hull is plugged.