If these economic jolts of last few weeks are called recession; I am pretty amused by it.
– Pleasantly amused by my all brokers (companies like ICICI Direct, Kotak) sending me mailers explaining different plans and simple logic behind them. None of them cared a quarter back. Last year it was a “take it or leave it” attitude.
– Pleasantly surprised that companies are talking about online, mobile, low cost models, leveraging technology etc etc. A quarter back, everybody was in a land grab mode – open as many outlets as possible, hire as many people as possible
– Pleasantly surprised when I went to my school back at ISB. Students’ expectations seem to be with rest of the world. An year back – everybody was dreaming for a Cr job
I think two main +ive developments have happened:
1.) Businesses are willing to spend time with their customers. There is a thought of “Customer Retention”.
2.) Cost of doing the business – from real estate cost, talent cost etc has come down.
Overall, I think lot of arrogance, which comes with growth have moderated. I understand that a recession also brings lot of pain (I lost my entire savings of last year) but I think it’s necessary to set things right for further growth. Thoughts? Comments?
-Mukul
- Onion Rs65/kg, Petrol Rs65/litre, Beer Rs65! - January 19, 2011
- NEN Program for Women Entrepreneurs - September 3, 2010
- A Billion Dollar Indian Internet Company - August 19, 2010
The difference is that this time around the havoc is global and those entitled to design *the fix* don’t see often beyond the next election; not that they have any clue how to.
The whole song and dance of cutting interest rates and offering moratoria on interest payments betrays a desperate central bank, now paying obeisance more to Chidambaram than to prudent treasury practices. But is the market reacting? Are companies hurrying to borrow or are banks willing to lend? Not for nothing that an orthodox economist and Governor Y.V.Reddy got replaced by a Bureaucrat like D.Subbarao who took off from North Block to land at Mint Street, breaching all conventions.
See the upshot. Last week Chidambaram warned bankers *to lend or else*, and servile bankers announce rate cuts. To you, it means while your equity exposure stand depleted by over 50% already, your fixed deposits with banks are also sought to be undermined by this forced lending – by a government that has less than an year to go 🙁
Looks like they don’t need all the time they got to complete the rout!
Nalin – On your second para of point (1); I personally observing two things happening:
– Companies who are badly hit by recession might become so called “Ultimate Risk Averse”; some of these companies have very bad experiences in last 12 months when interest rates have more or less doubled and cost have gone up
– There is another set of companies who are doing well so far. However; given the uncertainty in the environment and their own visibility in future, they are cutting cost and probably compromising growth. Is it “Ultimate Risk Averse” – I don’t think. Is it bad – I don’t know. Every entrepreneur is trying to save cash and increase the company’s life. Lets see how all this shape up
-Mukul
Nalin/Krish – I understand that recession has a spiraling effect and things can hit badly if it continues. And we all love growth rather than businesses shutting down.
Nalin – I agree that people become risk averse and being in the investment industry myself; I am seeing things around. Yeah, hopefully I have my own lessons from these events. I don’t know how things will move for next 6 months. That time, I’ll come back to this community to share my thoughts again and revisit what I m feeling now.
-Mukul
the second para of point (1) was what I intended as point (2)– not sure if that’ll make sense to you- but yes, it’s not the lack of money- but the lack of willingness to bet on good people– that hurts when there is a recession.
Possibly you could debate the opposite of my premise and I could write volumes about why I say that- but yeah; that’s what I feel.
@ Mukul:
I really appreciate the honesty behind this particular post of yours.
But yea, I think that the danger with recessions is two-fold;
1) That there is a danger of things spiralling down and down… that consumers consume less– so companies cut production– and production cuts mean fewer jobs and a lower emphasis on productivity and a higher emphasis on being risk averse… and maybe a greater degree of beaureaucracy…
The danger with beaureaucracy/risk-aversion is that for people whose careers are emerging in a world ridden of beaureaucracy/risk-aversion– their aspirations and world-view become one of creating the ultimate beaureaucracy OR creating the ultimately risk-averse company… which if those people are in a influential position in the ecosystem– is bad for the ecosystem as a whole…
what say ?
2)
Personally though Mukul– I think it’s a bit early in your career– and once you have seen and learnt a few more things about markets– I’m sure you too will mature as a professional… everyone does… even KV Kamath and Dr.Manmohan Singh!!!