1 conflict, 2 outcomes

The subprime crisis has caused havoc to anyone with a pulse.  Most people are affected in a negative way and a select few are actually doing well because of it.  

First the bad news, I’m not 100% sure but I believe Karthik Rajaram is the first person to commit suicide due to the crisis. He lived in a suburb of Los Angeles and not only killed himself but 5 others – mother in law, wife and 3 sons. His 19 year old son was a Fulbright Scholar, no small feat, at UCLA.  Really, there is not much else to say…[LA Times story]

Now the good news, the USD 700 billion dollar man is Neel Kashkari, he used to work in Redondo Beach, California a stones throw from where I used to live.  According to his biography Neel “developed technology for NASA space science missions.” Paulson is brilliant for selecting Neel, maybe he can re-package all this toxic paper and shoot it into outer space…problem solved.

The Harvard Plan has Passed

On Friday, the US House approved the revised USD 700 billion bailout to stabilize the financial markets. Henry Paulson has finally gotten his way and now the question remains…will it work? Based on what the equity markets did the last couple days, there is not much confidence. The credit markets are still locked up and LIBOR rates have hit recent highs.

I personally feel Paulson is the wrong guy to be leading the clean up, since it seems he was partly to blame in the creation of this mess.

…we and other global firms have, for many years, urged the SEC to reform its net capital rule to allow for more efficient use of capital. This is the single most important factor in driving significant parts of our business offshore, so that our firms can remain competitive with our foreign competitors risk-based capital standards must become the norm. The SEC has made it clear that risk-based capital rules can be implemented only when the Commission is confident that firms employing value-at-risk models have robust credit and risk management policies in place. (full testimony)

That was Paulson’s statement back in 2000 to allow banks to take on more leverage.  So in 2000 he asks for more leverage, then 8 years later it blows up and now is asking to clean it up.

That would be similar to an executive of a large alcoholic beverage maker asking to lower the drinking age, allows advertising on college campuses, sponsor parties, etc…Then realizing kids are getting drunk and doing things they shouldn’t be…Then hiring that executive to clean up it via legislation. Only in America.

So why do I call it the Harvard Plan because the 4 most powerful men right now in this economic blow-up all attended Harvard:
George Bush – MBA ‘ 75 
Henry Paulson, Treasury Secretary – MBA ’70
Ben Bernanke, Chairman of the Federal Reserve – BA ’75
Christopher Cox, Chairman of the SEC – MBA ’77

A little humor, check out this website for Strategery Capital Management

Ferrari Friday

The last two weeks have been mentally, physically and financially draining:
Mentally –  thinking of all the permutations and outcomes is tasking
Physically – checking the markets every 3-4 hours means I’ve gotten very little continuous sleep
Financially – watching your 401(k) go down the toilet is no fun 

Enough of all that non-sense, let’s talk about Ferrari’s…The highly anticipated Ferrari California had a sneak peak in Los Angeles and Maranello on September 22 (I believe Wall Street was melting down) and the car is really sweeeeeet looking. The official launch was yesterday at the Paris Auto Show.

A couple of my friends sent me some random pics of Ferrari’s (I request if you have any please forward them to me). The first 3 pics were taken at Tokyo’s Narita Airport – 430 Modena. The fourth picture is a swarm of Ferrari’s, my only question who invited the piker with the Porsche to the party?

(hat tip to Pankaj C. and P. Nath for the pics)

Still Connecting the Dots…

On this day 3 years back I moved to India for business and it’s been quite an adventure ever since. Working in India has a whole set of challenges that sometimes make you wonder WTF!!! There is yoga and exercise to manage the stress but what I usually do is fire up my iPod and listen to one of my favorite lines from Steve Job’s 2005 Stanford commencement speech:

Again, you can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever.
As I type my 276th blog post, I’m still connecting the dots but I’ve always told people it will make for a great story in Fortune/Forbes in 5 years.
 
Here is my advice for people looking to come to India considering the recent economic clusterfu$%#%:
– Most people don’t give a damn if you are from NYC (for business) or LA (for entertainment), they want to know where your parents were born and make a cultural connection
– The quantity of quality people is lacking
– Real estate is dead, PE, SPV’s…RIP
– If your business involves gov’t oversight, that requires a skill set most ABCD’s don’t have 
 
So did I make the right decision to move to India? Here is what I track EVERYDAY:
 
Oct 1, 2005. Rs. 44; Sensex @ 8,634; DJIA @ 10,658; NASDAQ @ 2,151
Sept 30, 2008. Rs 47; Sensex @ 12,860; DJIA @ 10,850; NASDAQ @ 2,082
 
Compounded Performance: Rupee +2.22%; Sensex +14.20%; DJIA +0.60%; NASDAQ -1.08%
 
BREAKING NEWS: Ford reports 34.6% drop in sales for Sept. Sales of the Explorer SUV, once a top seller, plunged 67.3 percent to 3,498 and sales of the F-Series pickup fell 41.6 percent to 32,727.