Balaji Viswanathan

What Does India's Future Hold for the World Economy?

Hi,
I neither claim nor believe that India will pull the world out of this recession. I claim that a combination of factors coming out of India and a few ohter regions will cause significant pressures in a lot of markets. Wat I saw on the ground is a real change that didn't exist even 4 years ago. This change in the ground level takes years to accumulate up and show in the macro statistics. And that would rise the possibility of a commodity crunch that we saw last year. Maybe oil will not go up to $150, but the commodity prices will be much more expensive relative to the wages. So, if the average wages in USD drops from $15 to $10 and oil price stays the same, it is equivalent to having oil get 50% more expensive.


On Mar 06 11:50 AM User 224899 wrote:

> Although India has the potential to influence world markets, it appears
> to have let down all the analysts who predicted a big influence from
> the Indian component of "Chindia". There has been an impact on the
> fertilizer market, but nobody is betting any real money on India
> pulling the world out of a global recession.
>
> One has to wonder if a huge nation with 100's of millions of stunningly
> poor people and dozens of nation-fragmenting language barriers can
> have any sort of concerted, organized agenda that projects in any
> meaningful or consistent fashion into the global market.

Hedging the Price of Oil

Buying such long term futures makes sense for a lot of companies even more than near term futures. Southwest used such long term futures to make good profits for a long time (till the previous quarter). If you are a big airline, you know you need oil for a many years to come and if you are big oil producer you know you will produce for a long time to come. Both these companies would want to reduce the risk for their shareholders and there lies a need for the market. The main purpose of futures markets is not to serve the traders but to help the connect the consumers and producers and for many of these parties only long term futures makes sense.


On Nov 05 09:28 AM Fred Banks wrote:

> Interesting. I just finished explaining to a gentleman that there
> is no liquidity in the oil futures market for contracts with a maturity
> of more than 6 months, and often less, and now I read in the above
> that it is possible to buy futures for 5 years.
>
> Somebody said that there is a fool born every minute, but I think
> that every second is more appropriate. Don't they teach people anything
> at all in those store-front universities on Wall Street or Rodeo
> Drive.