Genesis of currency crisis

Part 1 : The Economic Pyramid

Earlier ppl would do farming and barter for things they need .

Then we progressed to industrial era and started producing stuff and exchanged these stuff via money aka currency . Then come the services era where no money was exchanged . But values were added to existing things . Consider your wedding planner , portfolio counselor etc . This sort of graduation has two implications for common man .
1. He has to buy far more things than what he produces .
2. He has less control on these things .

This tiny looking thing however had big impact on the social behaviour . We can say that money had to be invested so that all of above is possible or say money made all this progression possible .

Part 2 :  The new economic master

Master are always there , from animal kingdom to MR market . Just in the pre-industrialized era there was feudalism which controlled the daily life of the peasants . So when we graduated to industrial era there was nothing new that happened in this arrangement . However somewhere in between the monopolization happened . Things like patent , advertising , alliances etc moved from the benevolent ideals to that of controlled regimen . What happened with that is the free spirit features of democracy process went off . The freedom to invent and prosper , the freedom to choose and compete became more of illusion that reality .
Now look at the 2 implications i told you above . Here we realize the absolute control the newer masters get .
Coming to latest era , if you see the items that are in inflation index , we will realize that a common man needed less of these things than he does now . SIM, DVD, typing , travel , AC etc . Services touch more aspects of our life than it used to earlier . So while we debate on inclusive growth etc , we need to realized that the system was created in the way where consumers are not left with options .. We simply do not have option to remained linked to production economy and still progress !
So what it results is gradual moving up the chain of everything . Things that were agriculture/skill based move to production and then move to service ..
Consider the progression from buying wheat to buying Packaged aata to buying packaged chappati ! Lets do that to all items around us or in the inflation index list and we see that we have lesser choice that the illusion of progress tells us . At the same time it also ensures that the company that facilitates this progression grows exponentially ! That’s why rich grow richer ..
Consider .. Pepsi/Coke which brought mineral water era … Maggi .. Soap/detergent makers .. ah toothpaste ppl .. ( few ppl realize that legal cases can be fought on hand written paper !) ..

Part 3 : The Mathematical Derivative .

If you analyze the past 2 part you see that we moved from natural and original to enchanted paradigm .(See the original BIS file here :dt1920a)
In maths we have this phenomenon called as derivative .. and one of the most interesting phenomenon then is .. the further you differentiate an expression the more you approach zero .

When you look at the financial meaning of such economic shit you see that we have reached the final stage ..
What started as barter .. got derived into money ( on a trust value )…
What started as production sharing for derived as equity ..
and there on we moved to FnO types derivatives …
Then we put join differentiation on the equities as CDO and CDS …

and you know the last number we can get from such stepping down or cross stepping maths … is Currency …

Currency and its value .. which is generally expressed via exchange rate is the last stop .

If we try and differentiate that further via any thing .. any measure .. scheme .. agreement .. we land onto zero which in this case means nothing .. this is where the numbers start disobeying us ..
So all this competitive currency devaluation , QE etc .. is dead end .. if it doesn’t stop as a progression … then the govt will have to also find a way to keep us all in psyched state (which could be a war ) ..

Part 4 : Concluding remarks .

When tarp was started at that time at least the US govt had a recession and housing crisis to defend . Now for QE 2 , things are taken for granted to such an extent that Govt blatantly says that we need this stimulus to progress the economy …

Why ? there is no consideration to it ..

So there is no end to this QE 2 . Govt in deficit can`t print their way out via debt . Its the death bed of currency . What it means is the QE will not stop when all the Default swaps are absorbed and the economy can stand on its own .. Which is like Govt standing as party of all the transactions made in 2000-2008 era .. So in effect there is no end . IF this QE is allowed to happen then we are in for huge multiple for any numbers we use in daily life . Esp considering that US is not know to be slow and steady the QE will generate enough shocks 6 months after its allowed .. and will continue till doesn`t exhaust the currency . So unless US and world economies take fundamentalist approach in the QE .. there is no way out .. (We need some sort of QE since public has to be manged).

Which brings me to the basic point .. that the QE 2 us make or never kind of situation for economies on earth .

Which in essence .. is to say that its not currency crisis .. its actually crisis of reserve currency .. Anything we see things moving to that solution the Bull market will be born .. till then ..
Abort …

Additional note

The baby sitting example is very useful one.
Say i baby sit your kid and later you do mine . Both of us save unknown amount of money . But in open market both of us have to pay 2000 rs a month .
Where do i get this money from ?
I have to earn it from my work . And here my employer/company controller my unit of payment . (or i take debt)

Now .. we can’t take things from nature .. we don’t do agriculture .. we don’t do production of our own .. so net net .. we can’t barter and have to depend on currency payment as means of any service or goods ..
so in the long run unless a person is super duper in his craft he is a looser and hell lot poorer for the amenities he can avail .. and the person who controls the unit of payment ( my company ) as an end result only gains . This is what i call as the necessity of the master .. any master ..

In fact currency as means of all our exchanges is the biggest social change that has happened in the western dominated flavor of economic progress .
Its not money or currency is bad but the compulsion of it ..

So when we say QE 2 etc will destroy the currency system .. there is a poetic justice happening ..
Of course the end result will be somewhere in between the 2 extremes of Currency as sole mean of payment vs no currency at all .

Further reading : http://daveeriqat.wordpress.com/2008/12/21/the-myth-of-the-service-economy/

Ego , accident and a night …

The house was old and the building dirty and I was trying my best to hide my displeasure to my broker, Kiran  .Not sure if that was me acting practical and mature with my house hunt or was it effect of a full days of work at company .

“sir this is the only house you can afford , rest all are costly  ” , that was indeed a harsh statement coming from Ramesh . My broker Kiran, looked with a worried look into my eyes , knowing me…..  he was expecting a fight back answer
.But something , there was , today that made me very calm this evening . or may  be that I was not interested in comments third party broker……… oh yes, I too was surprised that I did not react to someone telling me what sort of budget I can afford for my house ….

Hunt being hunt , we got out of that place and me and kiran rode our bike back to kothrud depot (KD) . KD a  funny place with a busy city bus depot located  at the main circle and a 4 lane way .Its a worst place  to ride your bike in pune . I was about to curse the traffic as we approached the cross roads..

“Careful ” Kiran shouted ….

and there she was , a lady .. 50 something was sitting on the road in middle of the heavy traffic .. I immediately felt the concern at the poor lady . you know , may be she was not able to cross the road in this traffic … or may be she was  picking something up from the road or something ..
.. I wondered how many possibilities my software mind was thinking off …split second it was , I though all this …
and split second it was for me the realize that old lady, was not sitting on the road …. she had her left feet stuck under a car …and nobody realized this …or may be none was able to hear her feeble screams ..

“shit” , I said and jumped from my pillion seat and rushed to the car , time had frozen may be …

I remember that the lady (lets call her geeta)…. had plastic bag in her hand and wearing an economy saree .. the car was maruti swift ..the numerous bikes surrounding us and the SRS travels bus that stood just beside geeta …much more and there I was standing in front of the car shouting for the driver to take the car reverse….

Ah , that look , the driver too was a lady .. not that it matters .. but the look of studious curiosity and frozen mind… unable to make decision …
I was sure the very moment that it was futile to expect the driver ( lets call her mona ) would be able to help … that’s it ….and I bent down … and started lifting the left corner of the car .. and the indeed we could make enough space for geetas feet to be pulled out ….. little did i realized that by  this moment  10 more people had joined me in this car lifting …….

the traffic was getting loud and restless … and geeta was in great pain….
“Where is the doc ?” , “Where the hell is the doc, isn’t anyone here a local ?” I shouted as i bent down to lift geeta and take her to some doc ..

there was firm no ……. in her eyes … don’t know how did I sense that …but there was that painful  “No” …and geeta limped her way to stand up …
and i moved my hands to open the doors of this swift …….involuntary .. not even caring to ask mona , if I should …

and may be there was no need … she started the engine and the car started moving almost instantly ….. a physical sensation of which i remember …
“Are you bleeding ?” ..”Whats your name madam ?” …”Do you want me to call someone ?”..

she looked up …I froze . Pain and helplessness and a futile effort to appear brave and graceful … that mix of emotion in eyes of geeta ..made me realize how out-of-place my questioning was …
“I have a mobile”  , it wasn’t the first sentence I was expecting to hear from geeta, and she bent to her plastic bag to take that out .

One glimpse ,…………
a “mangalsutra” full of only black bead and the tiniest of gold pendent in it ……and i realized … even without thinking …where and why that mobile answer came from ……
probably the best thing I did this evening was next 5 minutes …I shut my mouth up  …held hand of that lady ..and took her inside nearby hospital …kiran and mona followed …they were my most productive 5 mins in recent times …

looking constantly in geeta’s eyes .. holding her limp hand   …age …pain …and silence … hadn’t felt them so clearly , recently  …

The Doc took over and announced it was non critical injury …the Xray et al ..

“Need I buy the medicines , I know this hospital” … Ah mona …I noticed …a 35 something …trendily dressed…and an upper class tone ..

I felt as if some one had puke all over the place with this question ….”you should ” , the maximum I could say … mona left for the medical downstairs …

and I moved to doctors cabin …geeta was in pain…
“Is everything ok doctor ?”
“Yes, don’t worry “….
“Then I can call my relatives to pick me up….”
My software mind was about to pick up the anomaly in this dialogue…and just when I was to inquire more……………… mona returned with the bandage etc …

dressing done geeta asked the doc … “Do i Have to come to you again ?” ..

okies, this is too much I thought …or may be this lady has trouble walking and that is why she is saying so , I thought .

“This is my number and I have holiday on Wednesday … so in case you need help , call me …..and I will take you to the doc for revisit” .. I said almost automatically …

“I make roties at people houses … there are four of such houses …that’s where I was returning from “…

yes… i began to understand things and I moved …almost mechanically….and took notes out of my  wallet and gave them  to geeta …she will miss a weeks of wage …

geeta looked into my eyes …. yes .. there was a thank you …or may be she said so … i dont remember ….but the money was returned to me …

I felt dumb … knowing not what to do …and the moment geetas relative ….. her sister and 2/3 men  entered the clinic …

“Did you do this ” …. geetas nephew asked  ..
“We didnt ” … kiran said …
“Don’t expect me to deal with these guys …. do you expect me to give her money ?” Mona ….
“Yes”… Me …

It happened almost simultaneously ….and last sentences of iPhone holding Mona made me numb …

Geeta started crying …after this much time … holding hands of her sister ….

“Dont cry , its ok” …geetas sister said ….
“She should” … I said …

somehow i began to understand geetas tears …….and the feeling…………….. of fighting……….. to show your brave and dignified face to life ….
contrasting that with…the intellectual apathy of mona  ..  it felt even more intense ….

…….. the feeling of helplessness in the  crusade for dignity in life  ………………
…………………. that realization was shattering many things in my mind today ..

yes .. tonight i cried ……..for someone else……for  a long while…. … after may years …..

and my decision of which locality my house for me and my old parents should  be ……  was made …

a student .. death and success

He was just back from his Germany trip and like any 21 year old he was happy as hell for the all cost paid trip  !

Its was his  project on low cost water purifier .It  was selected by UN for sponsorship and that how shanty went to Germany.I was happy for the progress he made .Felt contented for hours of lecture i used to give shanty on his engg project and studies .

“Dada , Germany is awesome” ,  I felt very proud  when shanty told me this .

it reminded of his similar statement , “Dada , Wake up … we need to start the class” !

Giving tuition  wasn’t really a fun thing to do while in 9th class  .

But it was nice feeling to be able to earn 200 bucks at that age .  That’s exactly how much I was paid for teaching my 2 pupils .  Maths , language and DI that’s what i would teach . Call it mini version of CAT .We had to pass that exam for qualifying to govt scholarship . My having stood in  merit  for that in 4th class made me an obvious candidate for giving guidance to juniors in town.

Shantanu   wasn’t actually a junior seeking advise from me . He was a bright student in his class , his father knew it . It was him who convinced me to give tuition to shanty .

And what a class it was …….. a 15 year old kid teaching two 8 year olds . Not that i  was a bad teacher but there would be times where the age factor would show up . At times they would quarrel with me over the punishment I gave . Other times there would be them .. my 2 students standing near my bed at 7 am and trying to wake me up for the class to begin ! Of course Iwould  start with the subject even without brushing my teeth .

And it showed ….. shantunu got the merit too . I was glad and so was his father . I was already possessive over shantanu by then and i would debate with his dad on why Shantanu should stay in town  and not join Navoday school .

Mr patahk passed away the month after . And Novoday which was an option became necessity for Shantanu .

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Yassen was a man of fine taste . Lean body , sharp features , jet back hairs and an overwhelming sense of humor added to his charm  . I would often loose sense of time when he would open his pitara of stories …  Stories of common man , at times stories from Islamic legends and most often it would be caricature and mimicry of people around us . He loved to mock  unpolished ,cocky ways of vidharbhian villagers .

It used to go on for hours and that was our first introduction to startling mix of  oratory and stand up comedy . I now realize how deftly   he did mix facts with imagery , Shakespearean quotes and shades of his secular sufi Islamic philosophy . Its this last specialty that made  me at home at his house in India of babri masjid/1992 . What used to attract us  most were times when , he engrossed in his   wizardry would forget our ages and go “adult” in his language . That was fun ,although some of my “good boy” friends used to find that  irritating , i used to adore him for that frankness . Except may be the frequent clearing of through he would do .

We used to advise him many cures for that . From gulping cumin seed drink to Benedryl to homeopathy , he tried them all and almost become an expert in it . Occasionally he too would express sadness over it .

It was his dream to do a public show of his comedy story telling . He wanted to enthrall all of the town and villageers around …  in that one show he would do . It was quite uncommon for an English teacher in Urdu school . But that was yaseen ,he was the most proficient and fluent person in English in my town n around and my English teacher .

Funny thing is I learnt more  Urdu at his home than English .  Not that I would understood Ghalib and Amir khusro at that age but my progress had already happened to being literate in Urdu and do poems in it . “I want you to elect Urdu instead of Marathi in your board exams , I want to prove it to the world that its not language of Muslims but every Indian ” , he used to tell me often. Aleef , Be , Te … i went ..

It inspired me ! I had nearly convinced my parents for that and was looking forward to get in to 9th class to see that dream fulfill the year next .

And what a decision that was , my first big decision in life then .. It thrilled me as i left my town for my long summer vacation at  my relatives in UP . ……… It was like doing something big or it felt like that in that age .

I would practice urdu every day there and was elated when i could demonstrate me reading all the signboard in amina bazar of lucknow . So much fun it was being in a diff sate and having diff skill … Urdu !!

Back home Raza sir was diagnosed throat cancer . People tried their best  ..but  He succumb to it  immediately …

i could never fulfill his dream of passing 10th with urdu elective…….. while the legacy of poetry continues ..

………… Shanty is doing his final year Engineering now . Lean body , sharp features , jet back hairs and an cute sense of humor adds to his charm ….

Life goes on .. and so does the story of a student .. death and success..