Job market in 2009...may be 2019

LOL

Money can buy happiness

Well over the period, I was in debate (disagree) with the argument whether money can buy happiness, but I have to agree now. Money can buy happiness only if you spend on others. People works day and night to make money and still they are unhappy in their personal life, still they think missing something. They spend and buy lot of stuff to make them happy, but it does not somehow feel really happy so they end up spending more.

Recent research found century old belief, ( "It is more blessed to give than to receive." ) that it can buy happiness, if you spend on others or if you give away money to charity.

There is no wonder why more and more rich people give away money to charity, they realized that this is the only way to be happy, not to mention Warren Buffet. "Indeed, although real incomes have surged dramatically in recent decades, happiness levels have remained largely flat within developed countries across time," they wrote. That mean, if you go from low income to medium you certainly feel happy, but after certain stage it does not.

In our Indian culture, there is saying that its better to have "prasaana" rather than "khush". "Khush" is temporary while "prasaana" is eternal. There was one classic example one of our saint told during Diwali. If you use the firework for yourself, it gives you happiness, but its temporary However if you give fireworks to others who need, it feel you eternal happiness which is called "prasaana".

Meet our future president and his vision

Speech is truly intelligent and inspiring. I can't wait to vote him.

Price of Freedom

Do you wonder why United States is not interested in Tibet Freedom?
Oil? No.
Uranium? Nope.
Any other economically feasible natural resources? Nada.
Significant potential trading/economic partner with the U.S.? Never

How Bear Sterns fails?

If someone don't know how the financial compaines are facing the credit crunch, here is I am trying to explain what happens.

In 2003, when household person went to refinance their loan to Loan Broker.

Household: Hi Mr Broker, I want to refinance house, because the rate is very low, I will save lot of money in my Mortgage. (Household spend the money and economy went up, Thanks to Mr. Greenspan)

Broker: Sure thats way to go. But, hey do you want to buy another house for investment, since the rate is low, and when you rent it you will have positive cash flow.

Household: But I don't have down payment or monthly income that I can get loan

Broker: You don't worry about it, we will manage it. Congratulation, you are just qualified for $400k loan.

Now he goes to real estate agent to buy $350k house

Household: I want to buy this house, I have my loan approved.

Real Estate Agent: Sure, but you have to bid 50k higher, as there are many interest in this property.

Household: No problem, my loan is approved for $400k, here is my offer for $400k.

Real Estate Agent: Congratulation, you got the house.
Broker: Congratulation, you got the loan, with 0% down, and 1% loan for 2 year, and it is interest only, the payment is less than the rent you get, so you get a really good deal.

In 2004...

Household: Wow, my house has gone up to $500k, I have a profit of $100k, with no money to invest, this is GOLD

Next time broker call for Equity Line of Credit

Mr Broker: Hey bro, do you want to take equity from the home? You have 100k in there that you can use either to buy home or spend for vacation. Its like an ATM card, where you can get the money when you want.

Household: Can I do that?

Broker: Sure, here it is, spend any way you like.

I guess lot of people did this way...year goes by.

Now lets see what happend on the back side, where consumer has no idea what's going on.

In 2005...

Brokerage Firm: In there team meeting they tell the Business Situation. We have $xxx Billion of open order to buy AAA securities, don't we have anything to fill this order? Also we have lot of MBS that we just finance. Guys lets work on it. They decided to work on this and come up with, new financial instrument, called CDO, Corporate Debt Obligation. The biggest scam of the century. Its a structured investment instrument, which is 80% backed by Mortgage (so called subprime mortgage) and 20% is the tranches, which makes its rating AAA by major credit agency such as Moody's and S&P. To understand this tranches you have to read 80,000 pages of document. I never understood what it is. They start filling the order from the banks, so here is what happend:

Mr Hedge Fund Manager: I have a fund, if you invest it gives you 8% return and it is AAA, fantastic deal.

Mr. Bank : Wow, that's cool. I am very must interested in it. How do you do that? I want $100 securities, so I will get $8. How about If I want to buy more.

Mr Fund Manager: Sure, give me more money, I have to buy more CDO, that will give this return. Basically its a Mortgage backed bond.

Mr. Bank: Sure, I want to lend you money, you just pay me 6% of that money and you keep 2%, how about If I lend you $3000?

Mr.Fund Manager: Wow, so for $3100, I get $248, and if I pay you interest i.e 180, I keep $68 on my original $100 investment. i.e. 68% return, my customer will be very happy with this return. Lets do it.

Times goes by...2006... the house price fall because mortgage rate reset after 1 or 2 year and the new payment household cannot afford. Still get money so its worth to sell, so lot of inventory and price fall further more. Economy 101, supply and demand.

So, In 2007 this is what it happen.....

Banker: Hey Mr Hedge Fund Manager, remember I lend you money $3000 at 6% ? I still have a promissory note. Can I get $1000 back as we think that most of the mortgage that CDO has will go bad.

Hedge Fund Manager: Dude! The price of CDO is already down 5%, If I sell bond to get you $1000 then I would get $50 loss (1000*.05) . So for $100 of my original investment I h ave $50 loss, which 50% lost on investment. And, I have to mark to market and need to report to my investor.

Banker: Well, we really need our money back, at the value of the underlying document is not worth that much.

Hedge Fund Manger: Damn! Everybody else doing just like you. If I keep selling this bond, the price of the bond will go 20% down. Which mean I have to take $200 loss, and I just invested $100. That means now only I wiped out but you also loose $100. And if you want all your money back then you will lost $600 of your $3000 investment too.

So banks has taken the hit and write off in the next earning.

Below is the description of the character described above:

Household: Person living somewhere in Atlanta and has job in Mcdonald. Many of them are in forclusure. I personally was one of them back in 1997, back then I didn't have any credit, nor much down payment and they got me house.

Real estate Broker: Toll Brothers, Lennars, Pulte, Dean Horton etc.. They all struggling to sell the houses.

Loan Broker: Countrywide, Washington Mutual, Fremont Bank etc, atleast 90 of them went bankrupt already. Many of them wind up with real estate so call REO.

Hedge Fund Manager: Carley Group Fund, Bear Sterns, Lehman, some I don't remember, and more are coming. Some of them are bankrupt already, and some in severe trouble.

Bankers: Citigroup, all major banks, international bank from Europe, China, India, Japan, and so forth. Most of them are expected to write off.

They borrowed 2.5Trillion loan in last 3 years, if you count the value of the underlying security lost by 20%, then there is $500B loss some or all combined has to take. So far, they have declared $185B, so $315B loss still to go....

US Treasury is not safest investment in the world anymore.

Over the decades, US Treasury Bond is the most safest investment in the world by far. And that is the reason Japan and China hold 50% together of our debt.

For a two days in the last week, the Treasury Bond is loosing the ground against the German Bond. This was due to the fact that Fed Reserver Bank has announced that they will pump up $200B dollar US Treasury into the system in exchange of MBS based security and for 28 days. Wow. Fed never took this debt obligation before and not for that many days.

This means that Fed want to bail out some few wall street company such as Bear Sterns which is going to bankrupt anyway.

With this news, Dollar and Treasury both lowered. Some people are speculating that US Debt obligation are too much now, (approx $9 Trillion), that US may not able to pay off and may default on it. So China and Japan should worry about it!!! LOL

There was Tech Bubble and it burst , and lot of company went bankrupt and people lost job and money, Silicon Valley was mainly affected, and now we are facing Credit Bubble or Credit Crunch, where lot of company like Countrywide, Bear Stern, and not to mention this hedge fund will go bankrupt, unless someone rescued them, and New York is facing similar problem. First time ever I saw that rich people are feeling the bleeding.

Billionaire : Transfer of the wealth.

Over the past decade, Bill Gates was #1 richest man. Not any more! Its Warren Buffet. Next year will certainly other, as Warren donated the money to Charity.

People and Company were dominated by US in the past. Due to globalization, transfer of wealth occured across the country. China has more wealthier company than any other country in top 10. US is still dominated by Billionaires, out of 1145 Billionaires, 456 is in US. First time there are more than 1000 are Billionaires. Approx 70% of Billionaires came from US, India, China and Russia. So this countries will be certainly financial power in the world. Interestingly, 4 out of top 10 Billionaires are Indians, taking 4,5,6 and 8 spot, namely Laxshmi Mittal, Mukesh Ambani, Anil Ambani and KP Singh (Real estate king). If you consider family, Ambani Family is the richest in the world.

What a few years make a diffence!!

How to live your life?

This post is inspiration from the last lecture of Prof. Randy Pausch. He recorded this session because it was his last lecture of life and he want his kids to see this lecture, if you have not listen to him here it is:

10 min version

Full version.

Here is the main points of this lecture, some of the philosophy is same as Swami Vivekanand's, but to listen from the person who knew, he is going to die, that's make it different.

1. Its ok to dream, let your child dream what they want to be or to do. Never loose the spirit. Vivekanand also said Set the goal, and do not sleep until you reach it.
2. Its ok if someone tell you that you are not doing good, that means the person care about you. If you do a bad job and nobody point out then it means they given out of you, but if they do it, means they care you better.
3. While archiving your goal there could be a lot of rejection. Rejection is good. The brick wall that you see on your way is for reason. They are not to keep us out, they are there to give us a way to show how much we wanted. So they are there to find how badly we wanted. This illustrate the same philosophy of Swami Vivekanand. Here is the small illustration that I remeber for a long time now. One day he went to his Guru (Ramkrishna Parmanhans) and said there is no God in the real world. His Guru, take him to the Ganga River, and then told him to jump on the river. He does not know how to swim. He jumped on the River, Guru also jumped. Then his Guru keep pushing him down, so he won't come out of water. After some time he pulled him out. Then his Guru said to him, Listen if you want to achieve the God, you have to do the same effort that you did when you were in the water to come out.
   
4. Have a fun all the time. Mother are the people who loves you when you pull her hair. Its important for a kids to have a good parent. Let kid do whatever they want. It could be anything. The creativity of kids is more important than any other thing. Never underestimate the result of fun.
   
5. Don't let other to felt bad or guilty, just because you don't like it. He gave a very good example of kids throw out when they were sick, in his new car.
   
6. If you want to achieve your dream, and live with integrity then always tell the truth. Secondly, always apologize. Apology has three part: Sorry, its my fault and how do I make it better. Most of the people forget the last part in the apology.
   
7. Another point is my favorite, No body is evil, its your thought that makes other Good or Evil. Give some time on the people you don't like, do not give up, they will show you their good side. This always works.
8. Do not complain or whine, because simply it does not solve the problem. Just work harder. If you complain it, then it divert your force away from your work, which makes you fail. So do not spend time in complaining.
   
9. If you live properly, as mention above, then the dream will come to you.

Click here to see latest on his health.

God bless him.