Comments for Prasad Capital

Comment on Book Summary: In The Long Run We’re All Dead by Saurabh

Saurabh — Sat, 01 Oct 2011 20:01:48 +0000

You’re right. Fixed it.

Comment on Book Summary: In The Long Run We’re All Dead by Im awesome

Im awesome — Sun, 25 Sep 2011 19:45:34 +0000

awesome write-up. Btw Cheretin = Chrétien?

Comment on Free Markets by manian

manian — Fri, 16 Sep 2011 13:11:43 +0000

It is a well understood argument that there has to be a strong state, judiciary, which guarantees property rights for free markets to exist. The state’s purpose should be to create the infrastructure and environment for free market to flourish.The state also needs to provide a balanced regulatory environment as well. What one also has to appreciate is that sometimes the aims of free markets runs counter to the process of democracy. The creative destruction process of free market causes pain, which a democratic process cannot allow some of its people to suffer. And hence, can the govt, effectively tackle the two. Also is the problem of aggregating data, which will get heavily biased in a bureaucratic process. But in the end, do I think markets can regulate themselves? Yes, but a lot of injustice and pain has to occur for that ( people dying in a air carrier which does not adhere to safety standards, before people switch to a safer choice) Markets can be much more efficient, when the state provides a strong environment for it and protects it. Hence they go hand in hand. Its all about finding that balance

Comment on Thank you, Republican senators of Wisconsin! by Saurabh

Saurabh — Thu, 21 Jul 2011 19:31:29 +0000

I think both are to blame (cop-out reply, I know). Management may have used rosy projections, but at the same time unions did push for these benefits. At the end, it is not the analytic ability of one party or the other, it is simply where the power lied. Power lied heavily with unions and to rise up the ranks of management, you needed support of the unions, and hence you acceded to those demands.

Comment on Thank you, Republican senators of Wisconsin! by manian

manian — Thu, 21 Jul 2011 14:00:15 +0000

While the unions are in some ways rightly blamed for the problems at GM, I think a case you might want to do some study on why the management at GM in the 80′s gave them these huge benefits. For example the number crunchers in the 80′s, came up with this model which said healthcare costs will decline and hence give them these benefits. So is anyone blaming the foolish management for many such steps

Comment on Thank you, Republican senators of Wisconsin! by manian

manian — Sun, 20 Mar 2011 01:56:10 +0000

This is what I was talking about Obama, in some ways. I remember that Bill Clinton had a very similar time. Right after he got elected, the only thing Republicans did was to oppose everything he did and not let him do anything. Remember how they won the 1994 congress back and Newt Gingrich was the speaker. Same exact situation. And then try to blackmail the president into accepting their budget else they wont raise the debt limit. And what does Clinton do, starts giving it back to them. And when Gingrich did the debt ceiling thing, you know what happened. I think Obama needs to talk to Clinton and just play hardball with them. Not sure why history always repeats itself!

Comment on Outlook for 2011 by Saurabh

Saurabh — Mon, 14 Mar 2011 23:07:45 +0000

My short answer to the first question: yes, Fed tried to stimulate demand that didn’t exist.

Long answer:
Some theory first -
Fed stimulates by lowering cost of capital. So, if no inherent demand exists, it doesn’t matter what the interest rates are. Also, interest rates almost never influence short-term demand, as it makes little difference. To sum, long-term interest-rate sensitive investments are what Fed aims to influence / can influence.

Now, let’s look at what are some typical long-term investments by consumers and corporations–housing, and long-term Capex respectively. None of this were likely to be spent post such a large crisis, as every needed to de-leverage. This is why banks are holding close to $1T in reserves and not lending it out / cannot lend it out.

As for the second question, both parties will engage in saber-rattling, but no one wants to be blamed for govt. shutdown. For now, looks like they’ll figure out a way by doing these 15-days deals.

Comment on Outlook for 2011 by Manny

Manny — Mon, 14 Mar 2011 05:23:44 +0000

Is the fed trying to stimulate a demand which does not exist? In other words, won’t the demand be for different kinds of goods post the crisis.

Also, with the two political parties quarreling, will the deficit be arrested, which is necessary before the bond market starts trembling?

Good stimulating post

Comment on A sell pitch for RHT by J

Thu, 04 Nov 2010 09:10:09 +0000

I’m sold!

Comment on Structural unemployment–the latest dirty phrase by Saurabh

Saurabh — Sat, 16 Oct 2010 12:58:02 +0000

Govt is already supporting the housing in two big ways–Fannie and Freddie are supporting more than 90% of the loans, and the Fed is buying trillions of dollars worth of mortgages.Under the idea, with depressed home prices, govt. will end up taking even more losses.

The idea will not pass the current political climate at all, and even if it could, there are better places that the govt. could spend money on (see CBO director Doug Elmendorf’s presentation to the Senate Budget Committee- http://www.cbo.gov/ftpdocs/118xx/doc11874/EconOutloook_SummaryforWeb.pdf. Page 5 has the key chart if you’re in a hurry.)

Let’s not even throw robo-signing in the mix.