Contrarian view on Inflation

Inflation in India touched 13 year high and even government reports suggest that there will not be any sign for de-acceleration in next three month.


Here is a contrarian view on high inflation -

Increase in commodity prices or inflation is good. Japan is struggling with deflation from more than 10 years, inflation is good for us (it helps some set of people making good profit), more the inflation it is much better (money power shift will be faster). Look at it as the shift of economic power or money flowing from commodity consuming to commodity producing countries.

Let us take an example, Petrol prices has gone up, so we will start controlling our expenses, is it not good? In case if we pay more to petrol producer then he/she will make good money and ultimately that money will come back to economy. It is like zero sum game, we lose they gain and when they lose we gain. So, just be happy and start investing.

Indian stock markets during last 5 years were in Bull Run not due to MF or domestic investors but due to FII. Who are these guys? They are from far west countries like US/UK etc. So, if oil is boiling what it means, Oil producing country will become reach and sooner or later they will deploy their profits where they can get better return. Hence money will come back to India/China or country with high GDP growth.

Any engine which is running fast need to take a pause or slow down before it moves further. And it is better that our markets are cooling down so that we can move further.

Even if we take a conservative $100 as the average price for crude oil, we are talking of $2 trillion worth of foreign exchange reserves being generated this year for oil producing countries. A maximum 10 per cent of this can be invested in the local economies, if they have to achieve a GDP growth rate of 10 per cent without over-heating their respective economies.

This means that $1.8 trillion worth of additional liquidity is expected to be generated in the world over the next year or so. By all estimates, whatever the losses of US sub-prime mess (which some say will be in the neighborhood of $3 to 4.5 billion — equivalent to about three months of oil selling), the incremental liquidity of $1.8 trillion should flow into world markets.

Source: hbjcapital

Web 2.0

These days I am getting lot of time over week ends. People can realize this if they look at my blog. Started exploring web 2.0 tools. Though these things came up much earlier, I just started using these services, sercices like RSS feed, micro blogging, gadgets to improve presentation of blog.

I created RSS feed for this blog using FeedBurner which you can see it in right corner of this blog above welcome message. Two or three of my friends added this feed to iGoogle home page to view contents of my blog without actually visiting my blog. This is the way they tackle my did-you-read-my-blog bugging.

Twitter, a micro blogging service, is useful to convey some news or other updates which are not qualifying for full post in blogs. I gave my Twitter feed to SpringWidget gadget which you can notice below welcome section . (I am trying to update twitter using IM service like gtalk, but somehow its not working, I am getting some gateway error. Google search results for this issue ask me to add some entries to google service gateway of thru google application control manager. But I guess solution to this will be much more simpler. So if you guys able to update twitter using IM services, please let me know.)

SlideShare is another web 2.0 services which simulates slide shows over web. You can notice Slide Share widget in my previous post 'Pay Hike 8%, Inflation 8.1%'. This is what I did - I registered myself in Slide Share, created a presentation using ‘Open Office Impress’, uploaded the presentation into ‘My Slides’ of Slide Share, copied the widget code for Slide Show and added to my post. Doesn’t it sound very simple?

And this blog is also powered by SnapShots using which users can preview the target pages of hyper links; preview satisfied people can continue their navigation by clicking on the link in preview window.

Sharing slide shows of albums uploaded in PicasaWeb and Flickr are commonly used web 2.0 services. YouTube video sharing, social book marking services like Del.icio.us, content DIGGing services, Google Maps, blogs, WIKI and lot of web 2.0 services were developed to empower people to collaborate and share their content.

One of my friend use to send daily quotes in the form of ’Thoughts of the Day (ToD)’ mails. Though they are good quotes, not many times I had time look at them. During leisure time I use to take a look at them to get myself motivated, but many of them were slipped thru my mail archives. My friend’s brother also received these ToD mails from this friend. What he did was a interesting stuff, he created a blog, Thoughts for Blogger, added mailer friend’s e-mail to contributor list and asked him to send ToD mails to thoughtsforblogger.xxxx@blogger.com which will update the blog automatically with the quotes. Without much effort, content is getting generated easily in a organized manner, way better than having them inbox. This is a perfect example of integrating web 2.0 concepts into our work flow and achieve meaningful result .

I digged to see if there is any extensive list of web 2.0 services available in web. This TecMagazine link has almost full list.

Here is a interesting introduction to Web 2.0 -

Pay hike 8%, Inflation 8.1% !!???

It is a well known fact that IT companies are paying good. But pay hike this year (FY0809) in IT service companies has been in the range of 6-10%. One major player in services sector cut performance based pay by 25% last quarter; if this has been considered, actual pay hike will be much lower whereas inflation data released recently touched 8.1%. But highly inflated sectors like real estate are not factored into this inflation data though major chunk of money is going into rents and mortgage payments. Reduction in purchase power of money due to high infaltion is not been factored into pay hikes. So what to do to maintain same lifestyle?

- Look for high paying jobs
Almost all services companies are paying almost equal, so service to product companies, product companies to overseas job are the options.
- Cut expenditures by living frugally
Cut unnecessary expenditures by reducing frequency of eat outs, efficient use of vehicles and controlling consumerism
- Look for better investments which beat inflations
Capital market and real estate are potential inflation beaters. Capital market is entering into bear phase which has been confirmed by many market gurus. Real estate prices gone to eye popping level in tier I cities. So people with potential and guts can try out these ventures
- Look for additional job or new business ideas
Additional job or new business idea will get you additional pay check.

It is believed that IT employees drove the prices of everything in Tier I and II cities. It will be interesting to see how we are going to manage the current lifestyle with 6-8% hike and 8+ percent inflation. American job, American pay, American lifestyle and now its going to be American style credit-driven financial fate.

Meanwhile, enjoy wage-increase cartoons here…

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