Rakesh Saxena

Maoist Conflict Threatens Indian Stocks

Good debate, Mrudula-Uppai, though I'm not sure whether I want to engage in a political analysis in this forum. Both of you are making valid points.- Rakesh


On Oct 15 08:11 AM Uppai Mappla wrote:

> Mridula:
> My suggestions were based on painful experience. When I was young
> and green in the early nineties, I was in charge of allocating rice
> and wheat for PDS (i.e. rations for the poor) at Ministry of Food,
> GOI. Just a random example of the corruption among politicians: the
> wheat allocation to Nagaland (a remote north-eastern state) seldom
> used to reach them due to logistic reasons. FCI would report something
> like 20% delivery but Nagaland govt would claim 100% offtake! Then
> I received a letter from Nagaland CM addressed to Union FM demanding
> 6000 tonnes of additional wheat to distribute among the poor. And
> the Union Food Minister had scrawled on the margin "Allocate immediately."
> As a loyal government servant I was supposed to immediately issue
> allocation telex. But I had too much data. I dared to put up a note
> mentioning the anomaly and that previous month's allocation had never
> reached Nagaland. I linked and cross-linked all relevant files and
> papers. When the file came back after a day, the entire note sheet
> had been removed and full allocation had been approved again. The
> allocated (highly subsidized) wheat would never leave Delhi but would
> be distributed among rollar flour mills. I can give you dozens of
> examples like this.
>
> This kept happening in the remote north eastern states and states
> like Orissa, Bihar etc, where the poor were mostly illiterate. Now
> the poor have been aroused and they are asking questions the only
> way they know. I wish there were a Gandhi, not a terrorist to guide
> them.

Maoist Conflict Threatens Indian Stocks

Just by way of clarification, I am not "lamenting" anything. I am only trying to identify if the forthcoming government offensive will create concerns amongst foreign investors and, if so, to what extent. - Rakesh


On Oct 14 01:38 PM Uppai Mappla wrote:

> This Maoist uprising, bloody though it is, attempts to address in
> a crude way the terrible inequalities of rural India. It is a sign
> of the rising awareness among the oppressed. Kerala went through
> this phase 45 years ago and came out with a higher human development
> index and equitable distribution of wealth. The rest of India is
> now catching up. The poorest of poor have been kept ignorant and
> bonded by upper castes for centuries. But now the oppressed are hitting
> back and it is an irreversible process. The author laments that villagers
> are helping the Maoists. Let him ask himself why the normally docile
> villagers should set about derailing trains and killing officials.
> A wise government will not set the army upon them but address their
> needs which will bring them into the mainstream.
> Such aberrations will not affect India’s long term growth or cohesiveness.
> For the last 60 years, political pundits have been predicting doom
> for India at every tragedy but the reverse has happened. India is
> getting internally united and stronger than ever before. India is
> used to disasters, both man made and natural. India has survived
> the partition, Khalistan, Al Qaida, Hindu militancy, floods, earthquakes….
> If history is any guide, these are not going to affect the country’s
> economic growth.

General Electric: 'Buy America' Clause Severely Limits Downside Potential

Dear John: No I have not been to those places. But the numbers from that region speak for themselves. Many thanks - Rakesh


On Feb 16 09:20 AM john s. gordon wrote:

> re third world countries - we have our own third world country right
> here, it's called appalachia (generically) and west virginia (specifically).
> have you been there?

General Electric: 'Buy America' Clause Severely Limits Downside Potential

Dear redsea: Rather than trying to provide you a brief here, I should direct you to the GE website where you should review the presentations, particularly those pertaining to GE's positioning in various manufacturers and producers in the developing world. In my view, no other American company has that type of reach; there is also the issue of GE's long-standing alliances in nearly 100 countries--those alliances should enable GE to access relatively cheaper goods required for domestic infrastructure. Of course, we will have to wait and see how GE capitalizes on its global presence--that is the reason I am not recommending any long positions on GE, just exiting shorts. Many thanks- R


On Feb 16 12:39 PM redsea wrote:

> "given the last-minute dilution in the Buy America clause, a good
> portion of those foreign assets are likely to become a significant
> advantage."
>
> Can you elaborate on this statement? If is not obvious how ge's foreign
> assets are likely to become a significant advantage? An advantage
> compared to what? compared to who? compared to when?
>
> Thanks

General Electric: 'Buy America' Clause Severely Limits Downside Potential

Dear B smith: I agree with you that we should look at other "managed" economies and learn lessions where applicable rather than simply debating the merits and demerits of protectionism. Many thanks- Rakesh


On Feb 16 08:21 PM B smith wrote:

> How about some discussion of positive ideas to improve our economy.
>
>
> We have allowed litigation, regulations, work rules, unions, taxes
> and a host of similar things to become greater and greater burden
> on the cost to produce things in the United States. At the same time
> we opened trade agreements, which lowered or ended import duties
> on the same items, with countries that had little or no regulation,
> cost of litigation, few or no work rules or unions, taxes, environmental
> considerations and on and on.
>
> The result is you make it difficult to do business in the United
> States , while opening the door to business in other countries that
> make it easy to do business. The result, closed businesses, lost
> jobs, declining economy. For a short time we enjoyed the lower prices
> for goods and services from overseas. The trend however accelerated,
> and people felt that it would keep going, and that eventually we
> would not have enough economic energy to continue to grow and create
> enough wealth to have a robust economy. Add doubling energy, and
> gasoline prices for two years in a row and the camels back breaks.
>
>
> We can try to re-invigorate housing or re-inflate other industries..
> and subsidize energy alternatives, which is helpful, but in my opinion
> only takes care of 20% of the reasons we reached the tipping point
> and headed downhill.
>
> The basic faith in the economic system of the United States will
> not be re-established until we 1). Discuss the reasons for the imbalance
> of non-free trade, and determine what we are going to do about it.
> 2). Discuss the cost of energy, and the market factors around supply
> and pricing and what we can do to create a pricing and supply situation
> that will provide moderate and stable energy costs, until we can
> get alternatives working in sufficient amounts to move away from
> fossil fuels.
>
> My suggestion is that we:
>
> a). Create a US sovereign fund to invest at low interest rates in
> expanding existing manufacturing or stimulating lost industries to
> come back to the US.
>
> b). Examine managed economies around the world for good ideas, and
> unbalanced conditions and balance the playing field as a condition
> for free trade imports.
>
> c). We should eliminate litigation against manufacturers or cap awards.
> Create a federal panel of judges to hear complaints and a set package
> of awards for legitimate claims. Create a 10 year package of environmental
> rules that will not change, and create a federal environmental board
> that makes citing decisions that are not subject to legal appeal
> or lawsuits. Put excellent knowledgeable people on these non partisan
> boards like we do with the federal reserve. They should be appointed
> and remain and not be political like current cabinet related posts.
> Rotate members in and out over time.
>
> d). In order for companies to qualify for being part of this plan,
> they would have to agree to conditions such as executive compensation
> limits, green environmental standards, workers bill or rights and
> agree to provide stock to employees as part of their pay.
>
> We need to do some radical changes to set America back on its feet
> and be self dependent.
>
> Comments?

General Electric: 'Buy America' Clause Severely Limits Downside Potential

You may well be correct Tedamerica. But short trading requires extreme discipline, and if the assumption upon the shorts were predicated have changed, one needs to exit. If one leaves profits on the table, so be it. Many thanks - Rakesh


On Feb 16 01:05 AM Tedamerica wrote:

> GE will drop to between $5.00 and $7.50 next week. This will be a
> good time for new buyers to make a good, long term investment.

General Electric: 'Buy America' Clause Severely Limits Downside Potential

Yes ED K. Fears of a trade war are overblown. In the face the global downturn, virtually every country has already implemented subsidies and tarrifs to protect their domestic producers and exports. Many thanks- Rakesh


On Feb 15 06:41 PM ED K wrote:

> Good informative article.
>
> Telling the American public to buy American is not enough.Without
> government action in the form of some kind of higher import tariffs
> to level the playing field even when products from abroad are of
> leeser quality the lower price will win out.This might even generate
> some additional jobs.
>
> I don't think an action of this kind would trigger a trade war as
> many countries already have high import fees.Should'nt our manufacturers
> have a shot at America's buyers??????

General Electric: 'Buy America' Clause Severely Limits Downside Potential

Dear Nitram: You sound like a disgruntled and angry Obama voter, on the verge of turning into a Rush LImbaugh follower. I can only suggest that you start dealing in facts if you want to save your capital. Many thanks - Rakesh


On Feb 15 04:31 PM NITRAM wrote:

> Dear Saxena.Were you alive during the Epression. No. you talk is
> what you read in books or heard from other people.You talk through
> your butt. You are correct in not listrening to any Congressman.
> However, if you dont believe that Tzar Obama and assistant Tzar Emanuell
> want Socialism and a trade war, you should clean your ears. I am
> from New York and I am sorry to say I voted for Chuck Schumer. Did
> you listen to his news conference. He said, " Americans dont care
> about PORK". I care how my money is spent. I have never been political,
> but know I will work against everything Obama and his socialistic
> team say and do. You ust realise that every day he changes things
> that he said durinng the campaign. He appoints and congress approves
> a Treasury Secretary who has commited crimes against the agency he
> heads.

General Electric: 'Buy America' Clause Severely Limits Downside Potential

Dear HiSpeed: You are one of those people who continue talking about the economics of the Great Depression without any facts in hand. FYI, the "globalization" we speak of today is unique, and the facts as they present themselves today are entirely different from the "global" facts in the 1930s-1940s. Moroever, you are perhaps not aware that numerous countries have restructured their economies with the aid of protectionist measures. I am not advocating a trade war; protectionism is a reality, let's deal with it constructively. So don't be misled by your local Congressman. And facts, please! Many thanks-Rakesh


On Feb 15 11:36 AM HiSpeed wrote:

> This author actually believes a trade war would be good for America?!?
> WRONG! Protectionism killed global trade by OVER 60% -- this was
> a significant contributor to the depth of the 1930s Depression!<br/>
>
> Protectionism was and will be a complete disaster to the US economy!
>
>
> History has proven that protectionism has failed America miserably
> in the past. I'm afraid this is going to be one of history's reruns.
> The author is a fool for promoting such poorly thought-out tripe.
>
>
> BTW, GE is going to cut their dividend soon.....

General Electric: 'Buy America' Clause Severely Limits Downside Potential

Dear Herbert Hoover: The disclosure statement must be read in the context of earlier articles aggressively advocating short positions in GE. The disclosure was made out of an abundance of caution for those visiting this site regularly, not to advance any long-position agenda. Many thanks - Rakesh


On Feb 15 09:36 AM Herbert Hoover wrote:

> Disclosure: No Outstanding Short Positions on GE.
>
> Doesn't that mean that the guy is long? This entire article is nothing
> but an attempt to get others to buy this stock so his investment
> can appreciate. Hardly an unbiased look by an unbiased "analyst".
> A waste of everyone's time.

Government Risk Rises: Credit Markets Face Structural Collapse

Dear Ebenezer: You have a point. My point, however, is that the proper recognition of such contracts on balance sheets is vital, now and in the future. The FSAS 157 guidelines are too vague, and subject to subjective interpretations. Many thanks - Rakesh


On Jan 28 12:02 AM Ebenezer wrote:

> Let us not forget a fundamental risk character of the derivative
> contract: No rule/law requires the maintenance of an "appropriate"
> reserve to pay off on the contract if its terms are not met. If the
> seller is unable to pay off a CDS default, for example, the buyer
> has gained nothing. These things are not sold like an insurance policy
> by a regulated insurance company required to maintain certain amounts
> of capital for potential statistically anticipated payouts. Close
> up the seller's company, sorry the premium was paid in salary, commission
> and overhead, and nothing is left to pay on default. Ultimately,
> the loss goes back to the banks loaning the money at the point of
> purchase, the shareholders of the funds investing in the contracts,
> or the issuers themselves. Lord knows, you'd think even the politicians
> could figure this one out...

Government Risk Rises: Credit Markets Face Structural Collapse

Dear thannagan: I am not able to access your blog. Could you send me the details. It is certainly worth looking at the state of bank lending now in more detail, particularly foreclosures etc (per "Oscar" above). Many thanks - R


On Jan 26 12:55 PM thannagan wrote:

> Rakesh - Thanks for the insights. I like your contantly referring
> to the risk-adjusted rates as the best reflection of likely (real
> world) returns on various instruments - and therefore their relative
> actual value. I think the systemic implications (cascading market
> imbalances) are largely related to the lack of sufficient risk-based
> pricing, and net asset values.
>
> I discuss some of these issues realted to bank lending in my blog:
> decisionanalyticsblog....
>
>
> Please continue to publish.

Government Risk Rises: Credit Markets Face Structural Collapse

Dear User 72304. For clarity, we have been pricing CDOs in 2007 and we continue to do so now. I am not offering any wisdom in hindsight, just the facts as they present themselves today and how best can those facts be interpreted. Unlike Dr. Roubini, I am not interested in any doomsday predictions. My interest is highly specific: what short-term trading and arbitrage opportunities are being thrown up today? I trust that provides the clarity you are seeking. Many thanks - Rakesh


On Jan 26 09:06 AM User 72034 wrote:

> "Overall systemic risk matrix" ? Doesn't anyone speak English anymore?
>
> You're advancing the thought that the CDS market is being used to
> drive financial stocks lower and those spreads are affecting the
> creditworthiness of the underlying bonds? You're taking that one
> step further and saying this malaise is starting to affect sovereign
> debt and the US treasury market too? Thanks for the brilliant, but
> hardly fresh insight -----
> The author has a service that prices derivative risk. I wonder what
> his outlook was on CDO's in 2007. It's getting awfully popular to
> be a 'Roubini'-doomsayer -------- now.

Government Risk Rises: Credit Markets Face Structural Collapse

Dear hefaistos: I guess the Fed will start with the secondary market-- it has already indicated that it will do that. What they do if that measure fails is anybody's guess right now. Many thanks - Rakesh


On Jan 26 07:34 AM hefaistos wrote:

> Excellent article!
> I want to add one component. This week there are some big treasury
> auctions, and there is a worry there won't be enough demand from
> foreign investors, leading to higher yields. That's easy to understand
> given the high dollar rate and the low yields, and the prospect for
> inflation in not too distant future. Is it likely that the Fed steps
> in in these upcoming treasury auctions to avoid having higher yields?
> How would such instant monetization be perceived? Or will they act
> only on the secondary market?

Government Risk Rises: Credit Markets Face Structural Collapse

Tom: The traditional definition of default has been the failure to make full payment on maturity dates. But, certain countries (e.g. Argentina & Ecuador) have started offering partial payment along with a new instrument where the principal includes the balance of the principal plus accrued interest. The "liberal definition" I refer this trend towards restructuring. Many thanks - R


On Jan 26 07:23 AM Tom Armistead wrote:

> Rakeesh, could you please explain what is meant by "the relatively
> more liberal definition of sovereign default" gaining momentum.
>
>
> Unless the definitions can get around the problem, it would seem
> that the power of the printing press would make CDS protection on
> the US government meaningless.