Problem with Geithner's plan

As per the new Geithner plan, the Fed is going to partner with private investors and treasury to take care of the toxic assets in the balance sheet of banks. As per the plan, while the treasury and private investors will have equal equity stakes in the assets, the fed will be providing loan to support the rest of the toxic assets. 

The idea is that the treasury and the private investors will bid to set a price for the toxic assets and who ever wins the auction will own it at that price. The assumption is that the auction will help discover the correct price of those assets. 

Now the banks will be provided by the cash instead of the toxic asset and thus cleanse their balance sheets and be solvent again.

Now the plan has lots of negatives at this point:

1) When the private investors are currently not ready to pay more than 30 cents on a dollar, why would they be willing to pay more then that as part of this scheme. Besides there would be no reason why they would be willing to invest money in a scheme where the probability of losing it is very high.

2) The other scenario is that the banks may partner with private investors and have them support the scheme on their behalf so as to cleanse their balance sheet. This would mean that the bank takes money from fed and give it to the private investors to invest for them. This will result in bank losing a tenth of the amount to cleanse their assets. So this is eventually giving the bank a huge empty check from the tax payers money.

3) Now if that is the case, then do other private investors know that this scenario  is evident and is that a incentive for everyone to participate. This is because the payoffs are definitely very high if the scheme goes through.

Eleven Surprising Stock Market Indicators

Some really funny indicators....my favorite is the hem line of skirts corelation with market.

http://www.cnbc.com/id/29257460

Recession blues!!

Recently there has been a spate of killings in US and I think that can be atributed to the current economic recession. With increased job losses, people are more frustrated and depressed and eventually commit crimes that they would otherwise not have done.

It would be interesting to see if such behavior was highlighted in the past recessions and should the US police become more active and be more vigilent as the recession enters its 18 months?

Resolution - One topic expert in a month

As I read the novel, I dare you....one thing that I have decided to do to increase my mental power is to select a topic and be an expert in that industry in a month. Atleast put the effort to know more about the topic then others around me.

Since the auto industry crisis is on currently, my topic for April is on Auto's. Let me see how I come out of April as an auto expert.

I dare you!

I am reading this novel "I dare you" by William Danforth currently. Before I go ahead more about it, I must say it is a must read for everyone.

I have read halfway till now and it basically tells about the importance of phisical exercise and mental exercise to succeed in this life. Apart from that, it stresses the importance of sharing things for them to grow.

Having read halfway, I have thought for myself some of the things that I will try and change in my life.

1) Live healthy - Some of the basic things that I would start doing for that for the next couple of months till they become a habit are:

a) Sit straight

b) Walk Straight

c) Study on the table.

d) Eat breakfast

e) Start by exercising every morning - stretches.

2) Think healthy - Some of the basic things that I would start doing for that for the next couple of months till they become a habit are:

a) Select a topic and become an expert on that or atleast try to know more then anybody else on that topic in a month.

b) Write a blog everyday on something current.

Some of the things that I have changed at the moments or trying to change are:

- Trying to sit straight

- Sitting and studying on table - This is how I will clear CFA if I clear it.

Trip to Indianapolis....

I just came back exhausted after a fun trip to Indianapolis. It so happend that Anukul and myself were chatting around 11.00am in the morning regarding planning to do something for the weekend or atleast in the evening. He said he was bored of staying inside for a week as I was preparing for my Monsanto interview.

Then we realized that Ankur had taken a new car and we could ask him for going on a drive. And so we started thinking where we could go. Chicago was ruled out as it is too far away and so the next closest place was Indianapolis. I proposed and he agreed and we were calling Girish and Ankur and after initial 'No' both of them were game for it. By the way, did I tell that there was a winter warning for St Louis and adjoining areas and it was raining pretty heaviliy here at St Louis also. And so as usual, my red jetta did not start because of the rain and so Ankur and Girish, Dia decided to come and pick us up. So here we were, ready to leave for Indianapolis, without any idea of where we were going and without any plan as such.

Anyway, the four hours in the car was fun. It was a different feeling sitting on the back sit rather then driving all the way. So had fun joking and pulling each other's legs....basically ankurs. On our way , we decided that since we were driving for four hours, what is the point of coming back and so stayed at Super 8 motels...deciding after few phone calls after reaching Indianapolis. Its amazing how technology has made things so easy. After refreshing for a few minutes, we went out to roam around the downtown.

After lot of discussion, we decided to have dinner at P F Chang. The food was really good and delicious. The fortune cookies made anukul and ankur...partners for life and Ankur finally knew that he saw "rab...laughing budha"...in anukul. After the dinner, we headed out to have a walk around the downtown and saw the memorial. The clouds and the lights and light rain created a beautiful view.Check out the pics. When all of us were almost freezing, we decided that enough was enough and headed for Sub Terra. The pub was pretty good with nice music. A little bit of dance till late in the night and we headed for home. I knew I was going to fall sick by that time because I already had a little cold in the morning. 

The next day we headed for south indian restaurant near by...Uduppi. I have to say...although it was veggie...the food was really good and authentic. After a heavy brunch, we went to the motor sport hall of fame and I was flooded with memories of 2005 when I was there in the stadium watching the last F1 race in the stadium. But this was from the other side and it was different to be on the tracks, on the podium and the media center and where all the VVIPs sit. It was around 3 by that time and we were on our way back. I was feeling sick and I slept almost all the way. Oh by the way while coming back, we happen to see two cars colliding right infront of us while taking the exit. So all of us were shocked for a while but then we went ahead and reached home safely...ofcourse now that I am writing this..u know I have reached home.

Benefits of Recession!

1) Some of the brightest people go back to India which is an example of reverse brain drain .

2) This could be the turning point for a shift of power from US to China. China being the most powerful and economic superpower would also benefit India in terms of proximity effect.

3) This is an economic tragedy that significantly increases the chances the next Intel or Cisco Systems will launch outside the U.S.," Wadhwa wrote.

4) The economic recession will only boost outsourcing further.

5) Fewer Indian students would plan to come to US and would prefer staying in India.