random musings...

DOW surprised most of technical indicators, because of double dipping within 3 months span. The last November’s low (~7500 and S & P ~750) was considered as low of this bear market but now again DOW down for second time. Historical perspective now this recession/depression is compared with 1873 great-great depression. But history for just reference point we can’t take it as is. As everybody knows we are going through an unprecedented tough time of our life time. Investor’s usually ignore main street’s money spending, stimulus plans, mortgage relief’s, they are very curious about how this government going to fix credit market. So far no body from new Mr. Obama’s administration detailed out some robust plan to fix credit markets other than some stress test.   May be they are still brainstorming how to’s and other matters. But investor’s point of view they want to hear a solid plan from new administration. One message from lawmakers is, if stress test failed on a bank, then the bank...

As per basic of investments, if person A lost x amount of money, person B gained the same x amount. The money stays in economy, and person B might reinvest the money for some other purpose, this is called money rotation (my own lay-man term). What happened now is, people lost money on real estate and no body else gained it, the money just evaporated. Lending institute is the one dodging the bullet by writing down bad loans. One question may arise why lending institute is selling at low price now, and can they wait some more time to sell it higher price? But holding a foreclosed asset is high expense than selling it 20-25% price down. A rough estimation is, an average lending institute holds 90% of home loan value on foreclosed houses. 1 million houses were already foreclosed and almost 6 million will be foreclose with in next year. On each house for sake of argument say lending institute losing $100k, so that equal to 7,000,000 X 100,000 = 700,000,000,000/-, which itself is $700 Bill...

There are so many blame game swirls around here about who is responsible for this recession? Each recession is unique and we can’t blame some particular industry or group of people or a single entity for failure. This recession is really a combination of many things, it is very hard to pin point why and what went wrong? But we can concentrate on who lost most from this recession. Developed nation’s unemployment rate should not go above 5%, but now U.S.A unemployment rate is 7.6% and some places unemployment rate is above 10%, which is unacceptable. As usual, undocumented workers and some legal immigrates are more affected in terms of jobs and they were returned or forced to return to their home country, which is unrecoverable. As per Chicago Tribune report, there are some 367K undocumented workers forced to return and volunteer return may be close to 1 million. As of legal immigrates, most of them are degree holders returned to their home country and joined various local companies. ...

Finally a balanced version of stimulus package going to approved by lawmakers from both the houses. The final version is very balance, 35% in forms of tax cut and remaining 65% towards spending, mainly construction. My first wish list, redo all Chicago area roads, too many pot holes, too large also. The hope is as soon as this Stimulus becomes law, Caterpillar Inc would rescind most of 22,000 layoff which announced recently. This will be applying to all over country, some companies want to rehire some layoff people as soon as this becomes law, most of the spending towards rebuilding and most of 3.6 Million layoffs were from construction, manufacturing industry. They can easily find a job from this spending. First time home buyers are getting almost 15% tax credit, definitely it is going to help real estate also. Here is a chart of job losses from this recession, just compare with previous one, it is mother of all recession so far, and 3-4 months ago it looked like another 2001 recessi...

In software engineering, we have “trail and error” to fix an issue, we don’t know the solution for a problem but merely provide a code change and hoping that would fix the issue. If not, then try again. We are in same mode for current recession also. Mr. Obama’s stimulus package definitely going to help economy to flourish but how long. It was very unfortunate that world leaders not coming together to fix the fundamental financial architecture break down. We have to first understand what caused this issue. Joe planning to buy a house in San Jose , CA . He walks into a bank for a loan at value of $800,000/. Bank determines that Joe has some issue with credit history hence he will not eligible for prime rate. Even though Bank gives mortgage loan to Joe at sub prime rate @ 3.5 Adjustable Rate Mortgage. Bank then sells this mortgage to big investment firms like Lehman Bros, Bear Sterns etc. This investment firms bundle up all this loans and sells al...

Whether we like it or not, next big wave of technology space is Web 2.0 (for 2.0 addicts, it is time to explore Web 3.0) and cloud computing. For small start up firms cloud computing is huge cost saving and more importantly time saving. There are two level of security issue arise from Web 2.0 A) Privacy Issue : Use of web 2.0 social sites like blogging, micro blogging, Face Books etc B) Data issue : Data transfer between this sites and cloud providers. First we will look into details of use of social media and its privacy issues.                   First time when e-Commerence becomes reality, the same security/privacy become an issue, but now it is a non issue, in fact buying from Amazon is very safe than giving a credit card to a real person for check out. Now social media, we are facing a new level privacy issue, which is not necessary an identity theft, but our own footprint may be revealing us.   Our life should be an open book, before some one wants to make connect or hire us t...