ExpertDabbler

Looks like there are conflicting theories to all pressing issues including commodity futures trading and price rises, also called ‘Yooga vanigam’ in tamil.

There are some politicians and intellectuals in Tamil Nadu who attribute commodity futures trading as the leading cause of price rises and inflationary conditions. Maruthuvar Ayya, and the left are examples of the anti-futures trading camp, which makes me get closer to the opposite camp quite naturally.

But they simply say that as a statement, as if like the causal relation has been as proven as ‘The sun rises in the east’. There is one columnist in Kumudham Reporter called Solai (or Cholai) who claims that had rice had not been banned from commodities futures trading, the price of rice per kg. would’ve reached Rs. 100. I am not sure where and how he comes to this conclusion. He does not explain that, maybe we should believe him just like the way we believe Kalaam on N-deal? On the other hand, articles like these give a different view. Yaarai namburadhu?

If commodities futures trading had led to price rises, how come there were no price rises in all the countries where it had been in vogue all along? When did commodities futures trading come into effect in other countries? Is the correlation valid only for India?

I am not very clear on this issue, but from what I read, I am more inclined to the view taken by the Sen committee and in opposition to the view expressed by the maruthuvar ayya camp and the Solai camp whose ideas are decidedly governed by Leftist ideologies. Any pointers welcome.

The left parties want petrol hike to be reversed. Assume the government accedes to the demand. The government has to increase the subsidy on petrol. Who funds the subsidy? Taxes of course. Most of the tax revenue come from indirect taxes – central excise, customs and sales tax. Indirect taxes are by nature regressive – for a beedi bought, I pay the same tax as a guy who does not even work.

That is, when Bobben Kunjokka, a left party worker smokes Malabar beedi, he contributes the same extent to the subsidy to as any rich guy who smokes Malabar Beedi. And the beneficiary can be even a guy who fills gas for his Merc.

Okay, assume the government decides to print notes to make up for the deficit. This will again push up inflation which in turn will hurt the poor more than the rich.

So long as indirect taxes far exceeds direct taxes, so long as subsidy is given blindly for all, subsidy is a mosadi on the poor. There is no better way to keep richer and the poor poorer. And this is precisely what the left wants. Conversely, the left should be the only group in the history of mankind capable of protesting against what in effect are, their own philosophies.

* - this is based on my own understanding of economics.

Finance matter
Forex derivatives and ‘Armstrong’ Palanisamys - a very interesting article by Gurumurthy

Fun matter
Manal Kayiru = Linked list - funny post by Vettipaiyal. English blogs (well most of them) sucks when compared to thamizh blogs. Do check out Gilli for the GPS in Chennai post too. Reminded me of my own traffic tips written two years ago. Total fun

Tech matter
Joel Spolsky regulars would know this was written loooong back. But I read this only last weekWhat is Design?(First Draft)

Yesterday, I was traveling in a mofussil bus from Thirumangalam to Virudhunagar. There was this talkative siddha medicine sales rep guy sitting next to me. I am not the ice-breaker sort but when somebody opens up i believe i give them good company. So with this guy, the topic veered from his business, software and finally to the agri loan waiver by P Chidambaram.

Immediately, this guy was like,”Aniyaanga, ellam waste!”. I was more curious to know the reason for his conclusion. But neverthless I offered my 2 cents about private money lenders blah blah. He saw me as one extra terrestrial and gave this gyaan

“Adellam illainga. vishayam enna na, idhai vanginavanga neraya peru vivasayiye kedayadhunga. enakku therinju oru amma, konjam nelam vechirukkudhu, vesaayam ellam pannalai. aana adhu bank la indha vevasaaya loan vangirukudhu. adhaan namba oorla kaasu kudutha enna certificate vena kudupaangale.. adhai kamichu kadan vangi velila vatti ku vittutu irukunga!, news kelvi pattu, ‘ayyo innum konjam vaangaama poitene’ nu polambittu irukudhu”
This was bizaare twist to me to say the least.

You need either of the following to survive in this great country.

Learn to screw the system, or
Have the patience to endure when the system screws you.

The P in P Chidambram may well be construed as ‘Pari Vallal’ after our Finance Minister’s proposal to waive off Rs.60,000 crores farm loans. But if one goes by Gurumurthy Article*, it seems, at best, more a case of misplaced generosity than a decision with any thought.

It’s all the more intriguing when RBI data clearly shows NPA in agricultural loans are only to the extent of Rs 7367 crores.
The Radhakrishnan group has identified the real culprit in farmer suicides - private lending, which obviously is different from the lending by scheduled commercial banks.

Now, Why do the farmers go to private money lender? Well, I tried to open a savings account for my mother in a nearby public sector bank and got treated like shit. And this is one of the better performing, friendlier PSU banks.
I can only imagine how the treatment will be for a small farmer who approaches a bank for farm loans in rural areas. In short,there is a definite need to redesign the delivery mechanism of agri credit. If that’s not done, then we are not addressing the core issue. The farmer suicides may well continue. And since we now have a precedent set by a Harvard educated FM, every Finance Minister who comes next will try to emulate PC’s (misplaced) generosity. Thus, it is not just a matter of waiving off Rs.60,000 crore once for all. We may have more in the offing whenever there is an election fast approaching.

Economics is certainly not my forte, but whatever little i know tells me that pushing Rs.60,000 crores into the system without any output in turn will push inflation - supposedly what Chidambaram claims he is trying to control now.

‘Ponaal pogattum Poda’ may be apt for a Sivaji Ganesan pathos, but it should not be the philosophy in matters like economics.

*- there are some sections in Gurumurthy’s article which i did not understand. For. e.g - his explanation of Rs. 2,40,000 crores and Rs.2,80,000 crores and how this Rs.60,000 crores are factored in there.

First off, thanks a ton to folks who bothered to comment on my previous post. That did cheer me up and i am back on track:)

Sometimes I can get worked up all too much and i feel like running away from everything. But obviously I would not do once better sense prevails I guess i am entitled to my share of polambals

Let me also clarify that my gloomy post had nothing to do with the stock market crash
I have not put naya paisa into it. It may have been slightly different had it been real estate since i bought a flat last year. But having visited FAIRPRO and seen the response first hand, i guess i need not worry about real estate crash for now. So 2009 might be the right time to worry about real estate.

I have written posts like these three years back. The only difference between those times and now is that nowadays i get a few comments and offline messages from the monus and karthiks and NV sirs of the world to cheer me up. I am truly proud of my blog in moments like these