Wednesday, April 22, 2009

Wall Street bankers in rage

NYMag has an excellent article on life after the crash for Wall St bankers. This is one of the best articles I've read on this topic and the comments are even better as they truly reflect the public's mood towards the wailing bankers.
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24 comments:

Anonymous said...

The suckers who fuelled Real Estate boom will be paying the hefty price for their reckless behavior. Chipmunks, who were predicting 20-25% growth in IT/ITeS sector, have resorted to various unethical practices

~ you will be hired but will be paid a stipend of Rs 6000 in case if you are not placed in a project

~ appear for the test (eventhough the offer letter was given in 2007). If you fail then good bye

~ You have got CRR 4 aka poor performance….get lost

~ you will be moved across subsidiaries aka BPO, Call center units…

~ your variable pay has been trimmed by 40-60%

IT-industry-braces-for-salaryBangalore: These are not the best times for those working in India’s information technology or IT companies, as the top firms have said there would be no pay hikes, no promotions and cuts in variable pay.
Infosys Technologies Ltd, the country’s second largest software services firm, initially said it would pare variable pay of its top management but later announced that all employees have to take such a cut, ranging from 12-42%. Also, “this year, because of the economic situation, we decided there will not be wage increases or promotions”, said V. Balakrishnan, the firm’s chief financial officer.
Industry leader Tata Consultancy Services Ltd, which cut variable pay by 5-10%, will also not give raises. “Salaries will be whatever we have been giving in FY09,” said human resources (HR) head Ajoy Mukherjee.
Pratik Kumar, HR head at third largest Wipro Ltd said: “To clarify, we have no plans to either increase or cut salaries.”
Vineet Nayar, chief executive of HCL Technologies Ltd, said: “Irrespective of how the economy would turnaround, we will not lay off.”

Anonymous said...

mungerilals back to real world..

http://www.business-standard.com/india/news/it-staff-asked-to-use-public-transport/355987/

Anonymous said...

Dear Vulture,

Just wanted your views on property assuming the stock market goes to 15k in 3 months.

Kulkarni

Bharat said...

Dear Kulkarni,

While we wait for Vulture to respond, I thought I will add my two bits here.

The stock market will not go to 15K in 3 months. Its going to go down from here pretty soon. All the technical indictors are pointing to a sell-off...I would advise you to exit the stock market asap.

http://economictimes.indiatimes.com/Risk-looms-as-mkt-contradicts-economy/articleshow/4443900.cms

Anonymous said...

Dear Bharat,

You maybe right but incase if it goes to 15k what will be the implication on properties.

Stock has moved 3k i.e. from 8 to 11k and assuming if it moves another 4k, what would be the implication on properties.

Pls. can someone guide me.

Kind regards,

Kulkarni

shailesh said...

Vik - Where is the picture on main page from?

shailesh said...

To all bulls expecting RE or Stock market start climbing soon, wakeup.

The biggest growth in last 10 year was IT outsourcing and its trickle down effect. To some extent the story is intact, many companies may outsource to reduce costs, but the margins have come down significantly. Not only that large portion of IT business was due to new projects and new capital investments done by US companies. That has dried up. Also we are generating almost 5 lakh new engineers yearly, how will they get absorbed?

Now India needs to develop its own market internally. This is much tougher. The government is in lot of deficit so cant spend like China. The recovery will come, just not in 6 months to 1 year that all expect.

Anonymous said...

Kulkarni,

Guys like you will rush and buy property at higher prices. This site will see new names. People like Vulture, Bharat etc will not be seen on this blog for years to come.

I am not sure if the market will reach 15k in 3 months all will depend on June corporate results.

Inida has great potentail and the world knows about it, we will get some direction after the election and corporate results. We can never compare US housing bubble to India. People who are doing are fools. Yes builders are in thick shit but they know for sure that it is the question of confidence and not affordability. We have seen builders reducing the price by 20% and managing to sell hundreds of flats within days.

If Congress comes to power builders will stand to gain if BJP comes you will see the stock market rolling upwards.

Let us wait and watch it is just matter of months we will get clear direction.

Atul

Anonymous said...

Tables are slowly turning against the bears, some visibility is there now, and Peoples confidence level has improved. Interest rates are likely to come down further.

These are the potent ingredient for the markets to move. IT has taken a set back but we all know this a temporary phase.

Weak builders will perish and strong builders will emerge stronger. Pls. don’t expect any major correction if the stock market moves to 15k and we have stable govt.

Atul

Bharat said...

Dear Kulkarni, Atul and Shailesh,

Some very interesting points.

I like Kulkarni's steadfast attachment to the basic question - are the stock markets and real estate markets linked? If the stock market moves up will the real estate market also move up in a concurrent fashion? Good Question..on the surface, Like I said before the stock market will correct significantly before it makes new highs. But Historically there seems to be a converse connection between the stock markets and real estate markets...whenever the stock markets have gone up the real estate markets have gone down! Except the last time around when there was a huge liquidity/credit tsunami in global markets.

On the other hand, I agree with Shailesh that the core concern for Real Estate markets should be GDP growth and jobs/higher salaries. That kind of major recovery based on domestic consumption will take a lot of time.

Dear Atul, I did not understand what you meant by me disappearing. I read this blog assiduously because of some intelligent comments and respond whenever I think I have something to contribute in as unbiased and unprejudiced a fashion as I can. Interest rates coming down at this time is an indirect form of taxation..i.e., it will lead to inflation. While inflation it seems in CPI terms is almost the same as before. So the measures currently adopted by the government are going to lead India to a deeper hole as will the lack of governance and formation of coalition govt.

Moral of the story: In the longer run, everything will turn around from this bust and boom, everything will be more expensive and so on..but the question is when will this longer run happen? I agree with Shailesh and others that the long term boom is some years away and the long awaited severe correction/bust in real estate markets will happen in the short to mid-term.

Anonymous said...

Conveniently we link stock market to property and delink when needed. Lets us wait and see first if the market moves to 15K

GDP will only slow between to 5 to 6% but will not get beaten. I feel 5 to 6% GDP growth for India during tough time will attract lot of money.

Atul

Anonymous said...

@Atul 6:04 AM
"Yes builders are in thick shit but they know for sure that it is the question of confidence and not affordability"

stop peddling lies. Can you please explain how the salaried employees ( got 30-40 cut in fixed and variable components of the salary), new entrants working with meager stipend, experienced employees COUNSELD OUT, employees working on the contract basis can afford the housing loans, down payment or EMI? Are you saying that they have got the enough money? Please get some employment and only then will you be able to understand whether there is a crisis of affordability or confidence.

A major chunk of speculators are the IT guys who purchased 2-3 flats during the boom. Now they are buried under increased home loan rates, reduced income (sent back to offshore), less salary. We will see the spike in distressed sales.

Guys, dont go for the ready possession flat as advertised by the builders. You will be catching a falling knife. Wait for a distressed sale.

Vik said...

The picture is a representation of the TCS campus in Chennai - OMR. The project is amazing and this a genuine case of building infrastructure for the 21st century, access roads notwithstanding.

As for the sensex prognosticators, can you tell me how much money you have lost when the ball dropped from 21k to 10k. Average MF return is down -60%.

Except Mumbai, no other city is linked to the market and that too due to the realtors who generalize the trend and justify it to increase properties.

In 2003, diamond market in Bandra Kurla was used to hype up rates upo Vile Parle in Mumbai,

I fail to see how diamond polishers earning 10k-15k a month can afford 1 crore apts.

If the builders have their say, each of us will be living in 1 crore chawls measuring 500 sq ft.

Anonymous said...

Bharat et al,

I too read this blog regularly, because a lot of intelligent people who are into real estate are commenting and discussing. Good show.

There is on an average, pessimism on this site - more people seem to think that prices will fall further. I get my daily dose of pessimism here (along with marketwatch.com of WSJ).

I dont comment frequently, but I continue to feel that this is just a lull in the relentless rise of real estate prices. I am still waiting and watching.

There was a big full page ad from India bulls on "20 Lakh for 2BHK" flats in Gurgaon in TOI. The idea of "reduce price by 10% in psf + reduce total flat area" idea is apparently being tried by all the developers. Uniworld gardens II announced "sold out" in an ad - no idea if its true or a fake declaration.

6th pay comission pay will go a long way in substituting IT pay. Most govt officers are now getting around 1 Lakh per month. Not much by IT standards but good for the 20-30 Lakhs flats.

I agree that BJP will be good for stocks and will have low taxes and low inflation i.e. poor growth in RE prices (Good for consumers of RE). Unfortunately, no chance for BJP.

Congress will be average for stocks and good RE with relentless inflation. Congress has always run inflationary governments and most RE dealers and speculators are the main backbone of the party. Hope they come to power - they are worse than BJP but at least better than the Yahoos of the Commie/third front

Third front will be bad for stocks but will cause hyperinflation - there will be general chaos. While existing RE will appreciate like crazy, no new RE will be built because of high taxes and poor/collapse of administration, agricultural land will not be built upon, restrictive rules etc etc.

Elections will tell. Wait for 16 May is my Mantra for now.

Coments from anyone having actual working knowledge of Gurgaon RE would be welcome.

Cheers, Venkat

Anonymous said...

Stock market Vs Real Estate:
Coefficient of correlation is zero. In past posts where people have referred it, the context was very different. For more information about why stock market is different than RE please refer my old comments on comparison.

Volatile markets create an opportunity to buy & sell & you can still make money in today’s stock market. But you can’t make money in RE, it’s illiquid market. Large fund houses can very well influence the stock market. Agreed sustainable growth in indices indicates the economic growth,
but after counting the volatility.

If you still want to compare Stock market growth with RE growth first compare the correction in both markets. RE growth depends on Employment condition so it can be co-related to GDP.
First answer, why didn’t 9% GDP sustain the RE prices? Then how can 5% support it?
Will GDP reach to 9% in 2010? Another biggest factor is global economy, which influences the global trades & creates opportunities for business & employment.

Some persistent advisers without understanding the impact of global economy are painting gloomy pictures about RE. If it was so isolated problem, why the politician friends failed to fix it?

So guys let it fall then only pick up, minimum 50% price cut is guarantee.

Vulture.

Anonymous said...

In 98(after the crash) we needed 22times our annual Income to buy a house, today we need 6 times.

Time alone will tell us where we are heading. Urbanization is only 23% in Inida and in developed contries it is above 90%. Huge scope!!! :-)

It is only the sentiments are down, banks are loaded with funds and will have no option but to disburs at lower rates. IT will see a surge of orders in comming quarters.

Vulture said
If you still want to compare Stock market growth with RE growth first compare the correction in both markets

Stock market is almost four times since 2004 and property is almost three times or less since 2004.


Pls. go ahead and buy before it increases by 50%. Dont time, dont time, dont time.


Bindas Bhai

monica said...

Kulkarni,

To understand your query and how stock markets are different from real estate I suggest you read Cash The Crash by Yogesh Chabria/Happionaire. He very well explains a few formulas and says property will crash. I just found out that he is getting threats from builders for exposing such things.

http://www.blog.happionaire.com/2009/04/for-every-indian-dont-be-brainwashed.html

This proves that builders are scared and prices are crashing.
Long live Vik, Vulture and others!

Cool Head said...

There is no way that reduction in property prices by 20% has spurred actual buyers. Yes, there are a few more enquiries, but that's it. I still see thousands of flats in empty buildings (finished and ready to move in) all over Thane, Mumbai and Pune. Most MNCs are also not doing so well and not just in IT. Many employees have been asked to take pay cuts, that is if they haven't been sacked.
The IT boom has stalled, the Dubai/Gulf boom has stalled and the sectors that heavily depended on these ( financial/stock market services, insurance, automobiles) are also down in the dumps. Ditto with the "retail revolution". Selling groceries in air conditioned malls with English speaking attendants is not going to make the new retail companies profitable. So that sector is too down, since the "growth" was being financed by Wall Street, never mind the bleeding P & L. Only pharma and FMCG are doing well (if they haven't blown their gains by trading in Forex derivatives etc).

The ordinary locals never had that much money anyway. For those of the local businessmen who had/have money, they already had a lot of property anyway and they are not going to bail out some distressed builders to buy their property at a higher price.

For prices to appreciate the number of buyers must be more than the number of flats for sale (exactly the opposite is the case today) PLUS buyers must be sure of their economic future PLUS the sentiment must be bullish. Since none of these factors are positive, the property prices will crash or at best remain where they are for a loooonnng time. The resale prices in Thane have already crashed significantly ( a resale flat which was being offered for 75 lakhs last year is now being offered for about 50 lakhs this year, but has yet to find buyers-the location and building both are excellent). However prices need to come down more to align with the longterm trend (reversion to mean). Before the bulls on this board shout me down, note that I have data from actual sellers, so I am not peddling some myths.

Anonymous said...

I am glad to see that others too have read Cash The Crash. I showed it to the builder I was wanting to buy a flat from and he went red in the face. He offered to reduce the price by Rs. 10 lakhs and I started laughing, I know he is in huge debt and on the verge of bankruptcy.

Property prices will crash 50-70%. Enjoy it guys!

-KC

Anonymous said...

Thane and New Mumbai falling has nothing to do with overall fall. Where there is excess supply or investor driven market at times like this it is bound to fall.

Mumbai is another story, demand is sill huge and people are just scared because of weak sentiment.

Cash strapped builders will clear some inventories and hence would have seen some fall and minor correction here and there in Mumbai. Buyers be careful there is risk in putting your money in these kinds of projects!!

In coming quarters sentiment will only improve and you will definitely see movement in property. Infact couple of deals has already happened this week for the properties I know.

This Gudi Padva Maharashtra State transport dept has racked in maximum money so far it has ever collected in its history. Where is the recession? We still have to wait for atleast three months for Some model of cars.

I still maintain where the properties have multiplied 3 times or less since 2000 will hardly see correction.

Cheers!!! The movement has already started and with the support of stock market, new Govt and interest rates very soon you will see the media singing a different tune.

REMEMBER IT WILL BOUNCE BACK WITH VENGEANCE

Guys don’t time the market, just matter of time properties will go up by 50%.

Don’t Time, don’t time, don’t time.

Bindas Bhai

Anonymous said...

@Cool Head 10:29 AM

Good analysis...!!!

Anonymous said...

Last recession cycle

Considering the enormity of current economic crisis, please add adequate tolerances in calculations.

1997 RE boom

Job losses[2001]
http://timesofindia.indiatimes.com/
articleshow/53708617.cms

Real estate trouble[2001]
http://timesofindia.indiatimes.com/
articleshow/655335602.cms

Cut in real estate prices[2001]
http://timesofindia.indiatimes.com/
articleshow/619834604.cms

RE show/exhibitions [2001]
http://timesofindia.indiatimes.com/
articleshow/1797050205.cms

Land registrations dip[2002]
http://timesofindia.indiatimes.com/
articleshow/8002068.cms

GDP 4.4 [2003]
http://timesofindia.indiatimes.com/
articleshow/36778718.cms

Aftermath of RE slump [2004]
http://timesofindia.indiatimes.com/
articleshow/886625.cms

RE prices raised [2004]
http://www1.timesofindia.indiatimes.com/
articleshow/905412.cms

Bhai, your plsssss….. really came out from bottom but time is bad. India will become a developed nation [2050] & it will have huge demand for RE but not now.

http://www.ficci.com/media-room/
speeches-presentations/2005/nov/
real-estate/session3/A-J-Jaganathan.ppt

So guys let it fall then only pick up, minimum 50% price cut is guarantee.

Vulture.

Anonymous said...

Bhai,

Thanks for your views, I do agree once the stock market moves to 15K and with Congress Govt and interest rates going down the lull for the real estate will be over. Having said i would also like to add that it will take alteast 6 quarters for real estate to really pick up.

Bhai these guys are sitting on the lap top, posting the cutting and making analysis without seeing the ground realities.

My broker tells me that the day when the market moves more then 200 pts up he gets a lot of call from the buyers asking about the status of the property they saw some time back.

Guys are not buying expecting a fall. Things will only change once the stock market touches 15k.

FII's have started buying in last two months. Pls. check myiris.com to know the volume.

Let us wait and watch.


Atul

Anonymous said...

Ground reality --- "broker tells me that the day when the market moves more then 200 pts up he gets a lot of call from the buyers asking about the status of the property"