Thursday, December 04, 2008

The Modern Economy Explained

Once there was a little island country. The land of this country was the tiny island itself. The total money in circulation was 2 dollars as there were only two pieces of 1 dollar coins circulating around.

1) There were 3 citizens living on this island country. A owned the land. B and C each owned 1 dollar.

2) B decided to purchase the land from A for 1 dollar. So, now A and C own 1 dollar each while B owned a piece of land that is worth 1 dollar.

* The net asset of the country now = 3 dollars.

3) Now C thought that since there is only one piece of land in the country, and land is non producible asset, its value must definitely go up. So, he borrowed 1 dollar from A, and together with his own 1 dollar, he bought the land from B for 2 dollars.

*A has a loan to C of 1 dollar, so his net asset is 1 dollar.
* B sold his land and got 2 dollars, so his net asset is 2 dollars.
* C owned the piece of land worth 2 dollars but with his 1 dollar debt to A, his net residual asset is 1 dollar.
* Thus, the net asset of the country = 4 dollars.

4) A saw that the land he once owned has risen in value. He regretted having sold it. Luckily, he has a 1 dollar loan to C. He then borrowed 2 dollars from B and acquired the land back from C for 3 dollars. The payment is by 2 dollars cash (which he borrowed) and cancellation of the 1 dollar loan to C. As a result, A now owned a piece of land that is worth 3 dollars. But since he owed B 2 dollars, his net asset is 1 dollar.

* B loaned 2 dollars to A. So his net asset is 2 dollars.
* C now has the 2 coins. His net asset is also 2 dollars.
* The net asset of the country = 5 dollars. A bubble is building up.

(5) B saw that the value of land kept rising. He also wanted to own the land. So he bought the land from A for 4 dollars. The payment is by borrowing 2 dollars from C, and cancellation of his 2 dollars loan to A.

* As a result, A has got his debt cleared and he got the 2 coins. His net asset is 2 dollars.
* B owned a piece of land that is worth 4 dollars, but since he has a debt of 2 dollars with C, his net Asset is 2 dollars.
* C loaned 2 dollars to B, so his net asset is 2 dollars.

* The net asset of the country = 6 dollars; even though, the country has only one piece of land and 2 Dollars in circulation.

(6) Everybody has made money and everybody felt happy and prosperous.

(7) One day an evil wind blew, and an evil thought came to C's mind. "Hey, what if the land price stop going up, how could B repay my loan. There is only 2 dollars in circulation, and, I think after all the land that B owns is worth at most only 1 dollar, and no more."

(8) A also thought the same way.

(9) Nobody wanted to buy land anymore.

* So, in the end, A owns the 2 dollar coins, his net asset is 2 dollars.
* B owed C 2 dollars and the land he owned which he thought worth 4 dollars is now 1 dollar. So his net asset is only 1 dollar.
* C has a loan of 2 dollars to B. But it is a bad debt. Although his net asset is still 2 dollars, his Heart is palpitating.
* The net asset of the country = 3 dollars again.

(10) So, who has stolen the 3 dollars from the country ? Of course, before the bubble burst B thought his land was worth 4 dollars. Actually, right before the collapse, the net asset of the country was 6 dollars on paper. B's net asset is still 2 dollars, his heart is palpitating.

(11) B had no choice but to declare bankruptcy. C as to relinquish his 2 dollars bad debt to B, but in return he acquired the land which is worth 1 dollar now.

* A owns the 2 coins, his net asset is 2 dollars.
* B is bankrupt, his net asset is 0 dollar. ( he lost everything )
* C got no choice but end up with a land worth only 1 dollar

* The net asset of the country = 3 dollars.

************ **End of the story; BUT ************ ********* ******

There is however a redistribution of wealth.
A is the winner, B is the loser, C is lucky that he is spared.
A few points worth noting -

(1) When a bubble is building up, the debt of individuals to one another in a country is also building up.
(2) This story of the island is a closed system whereby there is no other country and hence no foreign debt. The worth of the asset can only be calculated using the island's own currency. Hence, there is no net loss.
(3) An over-damped system is assumed when the bubble burst, meaning the land's value did not go down to below 1 dollar.
(4) When the bubble burst, the fellow with cash is the winner. The fellows having the land or extending loan to others are the losers. The asset could shrink or in worst case, they go bankrupt.
(5) If there is another citizen D either holding a dollar or another piece of land but refrains from taking part in the game, he will neither win nor lose. But he will see the value of his money or land go up and down like a see saw.
(6) When the bubble was in the growing phase, everybody made money.
(7) If you are smart and know that you are living in a growing bubble, it is worthwhile to borrow money (like A ) and take part in the game. But you must know when you should change everything back to cash.
(8) As in the case of land, the above phenomenon applies to stocks as well.
(9) The actual worth of land or stocks depend largely on psychology.

Monday, November 17, 2008

Marriages &Children

Are u a family man? Are you planning to get married ever in this life? Are you a Divorced or a Widow(er)? Definitely you should have a rethink ,on the crime of marriage.All the religions describe marriage as AUSPICIOUS .But what about the outcome ,is that quite enjoyable .When a man or woman ties the knot they are signing the contract of life-that both would share the joy& sorrow ,the crests and troughs of the upcomin life.Even if you know eachother for a very long period of time (more than 2 years) ,can you totally judge a person his insticnts,obvioulsly you can expect how (s)he is goin to behave in a situation ,but you are not a final judge to close that case.Here the system of marriage is getting questioned. How can you get in to a life term contract with another person?Why can't a men and women live together in a society if they love each other ;and want to enjoy together.Is it because one section is considered weak ;since they are to be protected by some contract ? Or is it because the outcome of a live-in or marriage - the children are to be protected?
The question then points to the system of FAMILY.Children are expected to be under the family protection .Except in the Soviet era the modern times have never seen a child being considered as a part of a community(IT was there in the ancient Bharath,where children were sent to GuruKulas for education where they were totally depleted from parents till the age of 18).The modern day childern see their parents as their idol for character building .So a boy would idolise his pa and girl her mother ..till the age of 14 or 18 most of them are brewed like a brolier chicken (havin a brolier chicken in one go).They dont experience the outside world much ,they are denied the chance to communicate with the society.A person would strong only by his own experiences and experiments; of course some supervision is required.In the modern times we dont have a setup other than the family to take care of the children and ageold.A boy can never forgive his father ,likewise a daughter can for her mother.We should stop the system of marriages ,By that we find an end to the psychactric problems of men and women,the stress,their aging issues,no more divorces ,the dowry .People would become more creative and enthusiastic ,they would try many different things ,rather than settling for what ever they have.There is no point in life if you are with a person physically while you are fondling the memoires of another man/woman .Get out and start another .Obviously if u dread abt the soliltude of life then thinking defensively would create more problems ...enjoy your solitude ,till the next match.From Birth to death man is bothered abt eternity.Sex is all about body and death is leavin the body.You are a result of sex ,hence you have to leave the body once.Paradise is on this earth itself,enjoy your stay!!

Wednesday, September 03, 2008

Get the bottle, switch on TV, it's hartal again!

This is a warning bell for the state.The only state in India which depends on the money earned by those who live outside the state .The biggest consumer state in India ,with less than 10% produced of food requirement;there are no renowned industries .But the figures which ET reported makes feel how come a high literate state become such idiotic in its deeds.If a hartal is announced every one would sit inside the house because there is no protection outside on the streets.Politics is supposed to be the sound of majority ;its a way of expressing opinion NOT A WAY OF LIFE! .Its a pity that once a self sufficient state in food demand is now in such a state.
Has Communist Marxists/Congress has done any good in terms of progress ?


India is home to worlds large number of destitute subjects.Every year IMF releases its global economic report.India had topped the list of maximum number of poor people .The norms which IMF uses is in the Greenback.Yes we have many people who earn very less than 5$ a day ; cost of one lunch in UK,or US .Remember in India equivalent Gandhi is 200 ,which would be enough for a middle class person's food for a whole day.Do we have to accept we are poor.What advantages we get by accepting these? Whats the exact reason of poverty..does it mean that if one doesnt have a means to earn his food hes poor or if hes not having enough in pocket for next days needs? We have enough fields and farms to produce the food;the effort is calculated in the local currency not in global.We used to get huge foreign aid by projecting that we are poor ;remember nothin comes for free from the west or from east everything is accounted.They dont know what's called Bhiksha;you can see bhikshak only in Indian streets (asian).There is no ground breaking technology which we have come up in the past 6 decades since independence.We dont make opportunities here .We take up those which are outsourced or bangalored simply because the expenses will be skyhigh in Greenback.Atleast we have those jobs;which are not under any labour law.We are forced to believe that we are poor ;this affects people psycological strength and hence his physical growth.This nudges the thought of every indian.It affects his confidence.We are not deprived of good culture we are simply challenged for indigeneous technology.We are not poor
If u compare an Indian with an European in aesthetic sense an Indian wont look attractive in his dressing,or scent.This is simply because of the difference of thought .Majority Indians don't believe in attractive looks ;judging an Indian by looks u are in the wrong position.Thus Indian cosmopolitan cities Delhi,Mumbai,Chennai are not as clean as NY,London,Tokyo etc.But availability is there and freedom is there;which u cant enjoy in many clean cities any where else in the world.

Sunday, August 24, 2008

Apar Himalayas

The worlds highest phenomenon ...was created by collision of the Indian Platonic plate to the Eurasian plate..If Himalayas were not so altitude then he bharatiya culture wouldn't have existed...for sure, because the existing culture of the then would have grappled the indian subcontinent.In a matter of time ther is no bharat and bharat sanskar which persists now.Existing is a blend of everything in the indian subcontinent.But things on the other side of himalayas was pertty much untouched...I mean the Cantonese...Chinese....When the world watched this years Olympics every chinese had a role to play in that...It was taken as that nations prestige.China didn't have much participation or history in olympics till 1990's .But a conscious effort put forth by the government made it possible for them...Because for a nation to be strong the subjects have to be strong mentally and physically.Both are interrelated.Chinese have not only become commanding in sports ;they are equally commanding in the artforms tooo...Indian Government always spits "INDIA SHOULD BECOME STRONG".But that they said on the context of nuclear warfare.Dear ,India doesnt have a unique voice internally like china,we are multiracial (Arabs,Aryans,Dravidians,Cantonese) we have different political views tooo .How can then such a nation become strong...with out having a goal ? WHo will set the goal and how it would be taken up by the country men?

We are a nation without strong view ;we preached non-alignment ;we took english as our common language ...But northies say Hindi is widely spoken and tamilians say india doesnt havea national language it just has an official language ;but they would teach and preach tamil and english as second language...take east ...most of the east is cantonese ..undergoing mass conversion to Xianity by the nuns and preachers going from God's own Country( Because they have to show the headcount for the $,£ got from foreign missionaries.What happened to our non-alignment our scientists invent any new technology in the 6 decades, the ones who migrated from this country ever came back with any technical know how to teach our younger generation.
One can blame the governments who came to power;they are being elected by a majority ...are indians so stupid ?Worlds second biggest population is struggling to show the world that it can thrive on its own.We are made to belive that we are poor and underdogs.
We are not poor..poverty is what you are blamed upon you...its relative...India produces enough grains for all her citizens ..But its being hoarded some where just because we dont have a renowned public distribution system.We know our country is so vast its not congested too...then whts the exact reason ? "We need young brains and iron hard muscles " -vivekananda.Have any young indian ever been taught seriously abt his pysical fitness at school ;we always think of becoming intellectually brilliant;Younger generation needs to be physically strong too.Gandhiji was a failure in his physical strength...(he admits this).We need to have a strong idol.Cricket is not a complete physical exercise.In a debate abt india's sporting culture a comment came " Our cuntry is too hot ;we would sweat more "..Bullshit ..We shuld sweat..then only all the sweat pores would become clean.
India needs to develop a sporting culture its an urgent requirement ...we had a good football team,hockeyteam before independence.Sports and athletics always refreshes your brain,,,it makes you agile and happy .Perhaps this should be conjugated with the shrinking indian agriculture ....agro---+---culture...It was a way of life for us.

Wednesday, February 20, 2008

Wht will u do?

A group of deaf children were playing near two railway tracks, one in use while the other was not used. Only one child played on the disused track, the rest of them were playing on operational track.

The train is coming, and you are just beside the track interchange. You can make the train change its course to the disused or unused track and save most of the kids. However, that would also mean the lone child playing by the disused track would be sacrificed. Or would you rather let the train go its way?

Let's take a pause to think what kind of decision we could make................

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Most people might choose to divert the course of the train, and sacrifice only one child. You might think the same way, I guess. Exactly, I thought the same way initially because to save most of the children at the expense of only one child was rational decision most people would make, morally and emotionally. But, have you ever thought that the child choosing to play on the disused track had in fact made the right decision to play at a safe place?

Nevertheless, he had to be sacrificed because of his ignorant friends who chose to play where the danger was. This kind of dilemma happens around us everyday. In the office, community, in politics and especially in a democratic society, the minority is often sacrificed for the interest of the majority, no matter how foolish or ignorant the majority are, and how farsighted and knowledgeable the minority are. The child who chose not to play with the rest on the operational track was sidelined. And in the case he was sacrificed, no one would shed a tear for him.

The great critic Leo Velski Julian who told the story said he would not try to change the course of the train because he believed that the kids playing on the operational track should have known very well that track was still in use, and that they should have run away if they heard the train's sirens. If the train was diverted, that lone child would definitely die because he never thought the train could come over to that track! Moreover, that track was not in use probably because it was not safe. If the train was diverted to the track, we could put the lives of all passengers on board at stake! And in your attempt to save a few kids by sacrificing one child, you might end up sacrificing hundreds of people to save these few kids.

While we are all aware that life is full of tough decisions that need to be made, we may not realize that hasty decisions may not always be the right one.

(POST UR thoughts in the comments section )

"Remember that what's right isn't always popular... and what's popular isn't always right."
Everybody makes mistakes; that's why they put erasers on pencils.

Saturday, February 16, 2008


The widely used jargon this time of the year is RECESSION ...yeah of course in the banking world .I am related to that stream now adays ...(professionaly).If u are expecting i'm gona tell something on that..(JFO!!!)

I am gona tell abt somethin personal ...Nothin useful will be published in this blog -the motto of AUNGLESTIEN...
Since i posted my last blog crshes the opposite sex friends have receeded alot in their number ..mostly because i dont keep in touch with them ..over phone or via text..
secondarly i will be mostly travelling .Yes to keep girlfriends ,i think you should keep'em flattered allround..other wise u r gona looose ...(no more debits on ur bank A/C).Another FACT is that most of my pervious friends were in their mid 20s and as per the industry standards how much stone the hen weighed regardless of its capacity to lay eggs ....they are sold ..because ITS AN OVERHEAD to maintain ;so better to be passed on to someone ,whomsoever has inherited or own financial capacity,mental strngth to feed it and its hatches for a next generation...Within an year i have lost links to 70% of the above said community.
So why cant u go for loans ...LOANS u know they are very attractive they are only a temporary solution..u will have to pay interest ...interest rates are low ,yes u are right now adays the rates are goin down but i dont have much securities to pledge man!!--moreover i dont feel secure too
TAKE RISKS u are single good advice-thank u! May i ask u ` will the risk rate decrease based on ur marital or financial status?` .Its naive to take chances .The biggest risk u can take is to have a personal bond like i will ther be with u all along all the way to the end.NO Risks no PAIN.
At school we have learned various life cycles .Most of the things start and end at same point so ineffect there is no beginning or ending,if there is a crest there is a trough ,hope for goodtimes with ur fingers crossed.(JFO!!).Unless u work on it nothing is gona get better.So i am gona work on this RECESSION to make new tie-ups.
SO Goodlucks till the next boom.