Posts Tagged ‘Financial Crisis’
Sensex got a breather today
Image courtesy Zadeus on Flickr.com
The Indian stock exchanges today got a sound breather. Both BSE and NSE are up today. Thanks to the festive season of Diwali and also the Gujarati New Year. The BSE will be open for muhurat trading tomorrow between 6:15 pm and 7:15 pm IST.
It might be that a lot of people are considering these days as auspicious for investment and hence they are grabbing all the shares that are coming fairly cheap. But, a lot depends these days on the US market and the other world markets. Indian markets simply follow the trend of other markets around the world.
A lot of this is due to panic created among the investors and also the FIIs pulling out the money to balance their investments in other parts of the world. But, there are a lot of individual investors who put a lot of risk behind their investment, in anticipation, by borrowing money to put into the stock market. There are lot of cases of suicides every time there is a major crash in the markets.
Caution is adviced.
Markets crash
Bombay Stock Exchange - Image courtesy Zadeus on Flickr
Rumor mills are the only successfull business enterprise these days. Yet another rumor of Unitech going bankrupt has caused all the realty stock going bust on the BSE and the NSE. Unitech lost more than 50% of its value in a day. DLF and others were not far behind. Rupee value is at an all time low.
These are the tough times and rumors make them even tougher. We have not yet recovered from the news of ICICI bank going bankrupt, that we have one more. A lot has to be blamed to the big builders who have build a lot of big apartments, in high anticipation, only to find there is no demand or rather the demand is declining. Apartments with capacities in thousands have been springing in cities like Bangalore and we wondered when will this ever stop.
Now, is the answer. Latest news is that even posh apartments are being given out on rent. The builders are definitely facing a cash crunch and the falling price of realty coupled by excess availability has compounded their problem. Also, the global financial crisis have not helped them.
Who could have imagined a situation like this even three months before? Only if my portfolio were not red …
Investment Ideas
If you purchased $1,000 of Delta Airlines stock 1 year ago, you would have $49 today.
If you purchased $1,000 of AIG stock 1 year ago, you would have $33 today.
If you purchased $1,000 of Lehman Brothers stock 1 year ago, you would have $0.0 today.
But, if you purchased $1,000 worth of beer 1 year ago, drank all the beer, returned the aluminum cans for a recycling refund, you would have $214.
Disclaimer: Investments are subject to market (and now, health) risks. Please consider/ignore this as a pure email forward.
Nice Quote
I came across a very good quote courtesy a forward which said the following about the current financial crisis:
There are two sides of the balance sheet – Left (liabilities) and Right (assets). These days, on the left there is nothing right, on the right there is nothing left
What does bankrupt country do?
I was looking at our blog’s stats and found a very strange search engine query that led to our blog - what does bankrupt country do. I read it, re-read it! Still clueless, I recollected a news item on TV that talked about Iceland’s financial crisis. The country fears it may go bankrupt.
Now, how would a country go bankrupt? The answer lies in an earlier post by Sankar. The banks of the country have assets (read liabilities under the current situation) that are 9 times in value to the country’s annual GDP of 16 billion euros. The Prime Minister of Iceland, Geir Haarde, in an address to the nation said that if these banks collapsed, the entire nation shall go bankrupt. The banks are not getting financial help from other international banks due to the development of a complete lack of confidence in business between the banks.
However, Russia has come to the rescue of the country with a 4 billion euro state loan to Iceland, this inspite its own banks ailing. Even a Swedish bank has provided a loan to a top Icelandic bank. The situation is still critical and Icelandic economy is still under a lot of pressure.
GE and the financial crisis
General Electric (GE) is a giant of a conglomerate and surprisingly at a time when most financial firms are crumbling, GE Money is still showing profits. But, sooner or later the cash dearth is going to catch up and to challenge it, GE plans to raise around $12bn in cash through the sale of stock.
It will also allot preferential shares to Warren Buffett’s Berkshire Hathway to the worth of $3bn, at a discount. It may also allot a further $3bn, taking the total investment to $6bn. Buffett calls GE as the “symbol of American Business” and believes that it has a “staying power” to withstand the economic downturn. Buffett recently gave a similar financial backing to Goldman Sachs.
Warren Buffett may now be compared to J.P. Morgan, who took similar actions during the Panic of 1907. It seems that Buffett took the decision to invest such a huge amount within hours of a request from GE through his banker at Goldman Sachs.
GE is supposedly today’s only listed company that was also listed on the original Dow Jones index in the 19th century. It has survived various economic downturns in its hundred plus years of history and is most likely to survive a few more.
