• C++ Programming for Financial Engineering
    Highly recommended by thousands of MFE students. Covers essential C++ topics with applications to financial engineering. Learn more Join!
    Python for Finance with Intro to Data Science
    Gain practical understanding of Python to read, understand, and write professional Python code for your first day on the job. Learn more Join!
    An Intuition-Based Options Primer for FE
    Ideal for entry level positions interviews and graduate studies, specializing in options trading arbitrage and options valuation models. Learn more Join!

After US/UK, India facing its own subprime crisis?

rishab dhar said:
Don't you see any other variables causing debt and equity to change? They are not only interdependent securities. In 2008, equity market itself was in harm. Do not consider equity as an only alternative source for debt and vise versa. The rates on US Treasury securities were volatile doesn't at all suggest that its alternative investment source were not volatile. So how could one move his funds to equity when equity market itself was fluctuating along with real estate and commodities.
Click to expand...

This was in response to

And fluctuation in rates always works in favor of equity.
Click to expand...
Click to expand...

You missed the point. The above is true only holding everything else constant.
 
Okay.

But, as I said in my post #1 and the heading of the thread, we might experience a US or UK 2008 style great recession ( at-least this is what the things point at), in which case the best possible alternative would to be debt.

If you have a better alternative, please suggest.
 
Our current situation reminds me of Ben Bernanke.

Our GDP growth, mainly through growth in services sector and exports, is masking the current imbalances in economy. If the bubble were to pop, irrespective of other things that might be happening, it would be devastating for the Indian economy, resulting in sub-par growth and high unemployment for several years to come.

China is in similar situation, though I cannot be completely be sure.

Another thing is that as all things go through cycles of booms and bust, this too will go through a bust. The problem is that we had 20 years of boom in India and some 30 years of boom in China (at-least on paper), with no bust. The Asian Financial Crisis of 1997 and the Western Financial Crisis of 2008 are startling reminders that we are not an exception.
 
Just be informed that CDs are called FDs (Fixed Deposit) in India.

You can FD for 15/30/45 days or 3/6/9/12/18/24 months and so on.
Rates (compounded quaterly) rise with tenure.

Just found on India's no 2 real estate developer's (Unitech) website that it is offering FDs at 14.36%/annum.

http://www.unitechgroup.com/unifd/index.asp
 
only 15%? In Russia the mortgage rates are like 25%... :P
 
lol.

Though, I can't comment on the state of Russian economy.

Indian capital markets are usually considered more robust, more transparent, and less risky (See 2008 performance of Indian economy) than the other countries in the BRIC acronym. Therefore, we probably have lower interest rates than other countries.
 
Well, hopefully they've gone down a bit since I last checked... I do know that having a savings account in Russia is quite profitable. You used to be able to find banks that would pay you 6-7% in dollar interest (or like 9% in rubles should you so choose). Insured by the government of course. Visiting my family was like walking into a whole other realm...
 
rishab dhar said:
After petrol hike that left petrol prices in India at European level ~ 1 to 1.2 EUR/Liter ($1.42 -$1.7/liter), the UPA is planning to raise diesel prices.

http://articles.timesofindia.indiat...etrol-prices-kerosene-prices-lpg-and-kerosene
http://articles.economictimes.india...7_1_petrol-prices-lpg-and-kerosene-price-hike
Click to expand...
If you raise petrol prices by almost 10% , its but obvious that diesel price rise is in the offing... You can't just increase one and leave other untouched... It would be too bad for climate...
 
Climate... you must be joking.lol

Even without the 10% hike in petrol, it was still 50% more expensive than diesel. CMP diesel -40 rupees/liter and CMP petrol -64/liter.

The Oil marketing companies have no control over prices of Diesel/Kerosene. The government decides when to raise their prices, and their prices are kept artificially low so as not to trigger massive inflation (votes).

It is because OMCs will go bankrupt unless government either raises prices or incurs higher fiscal deficits (to reimburse the losses). As it is, government deficit is already too high, so it plans on raising prices.
 
never scalped CDSs ...
Click to expand...

Do you mean CD or CDS. There is huge difference between them.

CD -Certificate for Deposit (at a Bank)
CDS - Credit Default Swap (Insurance against default)
 
I think that capital required for buying a CDS is too high for an average person to trade in those markets. Even for US/Germany/UK it is around $40-$60k/annum for 5 years. For countries such as India, it would be around $200-$400k. Of course, you could close your position in first year itself. Besides the CDS of these countries (India, China, etc) could b e very illiquid.

Wouldn't it be better and easier to just short bonds? Sovereign/Corporate depending on your choice.
 
http://www.ft.com/intl/cms/s/2/d75bd87c-81a5-11e0-8a54-00144feabdc0.html#axzz1N07EqKWf

I don't know so many western economists cry about real estate bubble in China, but no one even cares about massive real estate bubble in India.

Top end real estate prices twice that of Shanghai. Though a search through portals such as 99acres.com and magicbricks.com suggests that prices are even higher @ 80k-100k rupees/sqft

(http://en.wikipedia.org/wiki/South_Mumbai)

As FT chart clearly shows, prices are clearly much higher now than in 2008/2009/2010

As a ratio to average per capita income, real estate prices in the business districts remain the most expensive in the world.
Click to expand...

Even this is beside the point.

Compare the per capita incomes in the cities.

http://en.wikipedia.org/wiki/Mumbai#Economy Mumbai - $2,900
http://en.wikipedia.org/wiki/Shanghai#Economy Shanghai - $11,500
http://en.wikipedia.org/wiki/Manhattan Manhattan - $100,000
http://en.wikipedia.org/wiki/Econom...nomically_strongest_NUTS-1_and_NUTS-2_regions Inner London - 85,000 Euros

If UK/US were a bubble then what is India?
 
rishab dhar said:
I don't know so many western economists cry about real estate bubble in China, but no one even cares about massive real estate bubble in India.
Click to expand...

Because China is a far bigger economy, whose domestic problems will cause a global tsunami? In terms of nominal GDP, China must be about four times larger than India.
 
Back
Top