ASEAN and Common currency

The visit of Indian PM to Japan is a strategic move from country's point of view. With this visit the relationship between India and Japan is growing in terms of safety. The PM has already noted down the advantages of this visit and the need for a strategic partnership between ASEAN and East Asia.

We already know that the partnership between Japan and China are very good and they are dependent on each other. With the technical and economical influence of Japan and the human capital of China the two countries are growing supporting each other. With the slowdown in Western countries the developing countries specifically the ASEAN counterparts are now looking at the domestic continent for growth apart from west. This is a good opportunity for India to build strategic relationship with East and Middle East. With the support from these ASEAN countries the ASEAN tigers can perfrom exceptionally good.

This relationship if grown successfully then we can dream of a common currency in ASEAN countries like in EU or US as mentioned by Abegglen (2006). The implications of the common currency have both positive aspects and negative aspects. If we look at positive aspects are that this stabilizes the forex trading across globe. The effect of speculation will get reduced. This provide a balanced play field for all the players. It becomes easy to manage the global economy. A stronger relationship will be achieved across ASEAN players. Trade will grow in the third world. The dependency towards West will be reduced. On the other it is difficult to bring all the ASEAN players who are responsible for the growth together due to the political factors. This common currency will remove the effect of low cost strategy. This might act as a negative factor for some countries.

But overall if we see the effect of new common currency in ASEAN region will improve the state of global economy and will reduce the dependency of Dollar across geography.

Cycle reversal - Nationalisation VS Liberalisation

Post the collapse of Berlin wall and the fall of communism, the western world started following the capitalistic path of America. Many countries started to open their market for trade. Those countries which are closed for international trade are treated to be conservative in its behaviour. Majority of developed nations started preaching that capitalism is the only way to improve national status and for business growth. The term Neo Liberalism started to be seen in the news articles.

Along with the neo liberalism the introduction of internet enabled the companies to go global with less issues and problems. Thus the companies started to become global and started diversifying themselves across borders. This raised new terms like Globalization, Internationalization, Transnational business, Americanisation, Regionalization. The companies across world wanted to follow any one of these terms.

When the globalization path was seen as the safe bet to get good profit across globe, the financial downturn forced by credit crunch made top management of many companies to rethink on this aspect. Even the government bodies started to nationalize its banks. We saw the bailout action first in US and slowly as a precautionary measure in UK. The public and management in India suddenly started praising Y.V. Reddy(former reserve bank of India) chairman who maintained conservative approach in liberalizing banking sector which somehow got insulated due to the financial legistalions that the country follow. But this does not mean that India is not affected by the financial crisis. The financial crisis entered into Indian market through Indian stock market. For long period the Indian stock markets are relying on foreign institutional investors to inject capital into Indian markets. Thus when there came the real need for money by the institutions in their respective countries the FIIs started taking money away from our markets. This led to sudden fall in BSE which reached a life time high of around 21K mark.

The thought to take away is that should RBI need to think about liberalizing Indian financial sector when western countries are trying to nationalize its banking sectors? Is the financial regulations and rules safe enough to safeguard out Indian public? Are out government having strong hold in our business methodology which follows western system of management?

Dreaming about big dreams of life

Its quite unfortunate for me as I was not able to write a blog for some times now. The main reason was terrorism in its varied form. The terrorism of drug addicts and robery made me lose my precious laptop which acted as my wife since I bought it with my second month salary drawn in Dubai. Leaving apart the sympathy I want to shout about the dreams about the big dreams I have in life and how I move towards it.

Leaders of modern world such as Dr. Abdul Kalam, and Mr. Ratan Tata asks people to start dreaming about future. In management we used to say every company is having a purpose to exist. The words of these leaders reiterates the point that organizations can be termed as organisms as mentioned by Morgan. They have life on its own like human beings. So taking lessons from organizations an individual can have a purpose to survive. This brings us to a conclusion of having a long term aim and a path to follow to achieve it.

My aim is to improve my society in intellectual capacity. When I say my society it greatly means my land of interest where I want to settle after say 40 years. The path I want to follow is to start a business. By starting business I can generate job opportunities for many people and can generate revenue to the country. By generating job opportunities I become responsible for the financial growth in those families. When a family gets financial freedom, it helps in improving the standard of living. As the living standard improves it triggers the quality of life and education. This generates a strong knowledge base within those families. This inturn become responsible to improve the intellectual capacity of the society.

surge in oil price a reality or hype?

Oil an essential commodity treated as precious as Gold has made its peak this year. After the attainment of the peak there is a sudden fall in the oil prices. The OPEC were forced once to inc the trease its production are now thinking of reversing the trend. What can be the real behind this?

Looking back at history now it can be said that there was economic bubble due to the subprime crisis in US. Countries were worried about the consumption of oil by China due to the development activities prior to Olympics. Hence according to me the people started to manipulate the scarcity for oil. This gave rise to the increased level of short selling in the market. This not only affected the oil industry but industries which are related to oil such as automobile industry were affected. The sales volume started falling down and yoy sales and profit fell down.

Unfortunately by the end of Olympics the economic downturn started with full force which affected not only the west (US/EU) but also the East(Japan/Singapore) which entered recession. When the economies which attributed for 40% of global economy is in recession again people started thinking of less demand for oil. Thus started the downturn and now it is even predicted that oil might even go as low as $30-$40 a barrel. Now due to the financial failure in US, banks are not confident enough to approve loans which is affecting the sales of automobile industry.

Thus according to me the real for this unrealistic movement of oil price is the investor sentiments due to improper prediction and not the subprime or credit crunch or anything else. But these terms are related in one way or other with the investor sentiments based on the glass through which they see the world.