Wednesday, May 23, 2012

Cell phone towers increase cancer risk in residential buildings

Recently I thought of looking for a rental apartment in Mumbai and asked few brokers to show me some apartments. One of the apartments I liked was on the 6th floor of a 7 storey building which had a cell phone tower installed on the terrace. I had heard about the ill-effects of cell-phone radiation in the past but never thought much about it as it didn't  affect me. I did a quick google search and a very recent study done by an IIT professor Dr Girish Kumar came up in the results. 

The results of his study are alarming. In one case  he has listed the occurrence of cancer in residents living in consecutive floors of a building(5,6,7,8,9) which faces a cell phone tower. This particular instance was enough for me to abandon that particular apartment and finding the choice apartment has now become increasingly hard as there are cell phone towers everywhere. Given that one can easily step-up the power of these RF amplifiers I would not be surprised if a majority of cell-phone towers are  on steroids. I urge all home-seekers ownership or rentals to consider this very important factor  in their home search.

Staying 400 meters from a cell phone tower is possible only in the IIT Mumbai campus :). 


The study is below. Mobile Tower Radiation Danger and Solutions Proposed to Government - Prof. Girish Kumar - May 2012

151 comments:

Anonymous said...

*facepalm*

DingDing said...

thanks for link vik

Anonymous said...

So this issue is only in Mumbai, India? Is this not verified certified by some government body in State or India?

If this is true, what can we do to protect ourselves? stay out of Mumbai?

Anonymous said...

Man, you must be joking!! Though, I concur with your observations, there are far more dangerous polluting agents causing different sorts of cancers/diseases in the atmosphere of Mumbai that the risk posed by the cellphone towers is negligible in comparison. If you want a long life, i advise you to go to places like lonavala, matheran, mahabaleshwar etc. Even these places wont be safe in the future, as food adulteration is rampant in these places.

Do you know that a large population in Mumbai has drug resistant TB and you and me are exposed to it all the time in malls, trains, offices, places of worship etc.

Maybe, this is the natures way to control overpopulation.

Anonymous said...

along with cancers you get headaches, nausea and various other irritants in your life. Why would you want to stay close to a cell phone tower anyway even if there are other other pollutants in the atmosphere. Just like the carcinogenic nature of tobacco was hidden for decades, what happens if 10 years later there are studies which vindicate Dr Girish Kumar's study. With health it is better to be safe then sorry. In fact one of my relatives has a tower on his bungalow in a small town in Mumbai. I hate to see him or his family getting hurt due to the RF radiation

Anonymous said...

I have been yelling from the top of my lungs on this website for the past few years that if a correction is to come in Indian RE, it will come in real (and not nominal) prices.

I have been vindicated. INR collapse has made Indian RE cheaper by at least 30% and even more reductions are on the way.

Anonymous said...

// I have been yelling from the top of my lungs on this website for the past few years that if a correction is to come in Indian RE, it will come in real (and not nominal) prices. //

I applaud you, hope that makes you feel better.



//I have been vindicated. INR collapse has made Indian RE cheaper by at least 30% and even more reductions are on the way. //

really? so all NRIs will buy RE in India, why? is that NRIs are expecting RE to go up in near future? that's what they thought past few year, especially past few months when Rupee started falling.

Correction is only when it happens in real and nominal terms. I' waiting for Diesel, Kerosene and LPG hike and then removal of subsidies for farmer and other needs.

Anonymous said...

There are 2 kind of NRIs. some are settled abroad and are financially well of. Second caegory mainly consist of laborers, Technicians, Accountants etc. They second category consist of 80% of NrIs, Fill the indian coffers with dollars but are financially no better off than most Indians. Because of the weakening Rupee, mos of these guys use Hawala to send money.The first category of NRIs never invest in India but help politians launder money taking a cut.

It is evident that Indan Rupee is becoming a sick currency.Inflation is likely to increase, so is law and order. When all this is happening, people will hold on to real estate. It looks like a crash is a distant dream

Anonymous said...

When I do not care about basic civic amenities like road systems, sewage, safety, do you think I give crap about a little radiation.

My investments are rising by 50% annually and that is all that matters to me!!!

Anonymous said...

no worries. Life in India is normal day after blasts, riots, scams.. this too shall pass.

I think, most of the people are back to normal after a day of petrol price hike. See same number of cars, same happiness and proudness of owning RE and burning fuel.

As of cell radation... who cares. Next topic please.

Anonymous said...

http://economictimes.indiatimes.com/markets/real-estate/news/property-sales-fall-by-36-y-o-y-eighth-consecutive-month-of-volume-decline/articleshow/13486422.cms

Anonymous said...

@Anon above,
Your link - status 404

Obviously someone didn't like the article

Anonymous said...

Go thru this article
http://timesofindia.indiatimes.com/city/goa/Property-fair-piques-buyers-interest/articleshow/13460605.cms
Several prople are interested in RE even for 3 cr properties.

Anonymous said...

One can speculate that rupee becoming devalued leads to......better looking women.

devalued rupee-->expensive petrol

expensive petrol-->hopefully people are more likely to walk/bicycle than use vehicles

for the love of god, are indian women content with having "cellulose" on their legs? don't they realize (without being forced to) that a little exercise makes them look good?

Anonymous said...

awareness level of indians is so low that even upper middle class people think like village bumpkins. nirmal baba's popularity is an example of how moronic indians are

Earthquake Risk said...

Yes. Cell phone towers impose great risk of cancer. I have read an evidence of some news paper last month, which inquired a small urban village with Highest number of Cellphone towers for number of cancer patients. The results are of no surprise, with almost 45% of people suffering from cancer. And almost 35% saying i dont know. what's more evidence it need than it.

But we should also focus on another Big risk- Earthquake. A single earthquake can make the whole mumbai flat and simply killing lakhs of people. The only solution is to live in an Earthquake resistant flat.

Normal people may not analyze the super complexities existing in the Big residential projects, But there is a simple solution- Arch rating. Which tells how safe your residential project is if an earthquake occurs. Find it at archrating.com. What's your views on it? any suggestions.

Anyway, thanks again for this blogger for creating great article resource.

DhImAn said...

Your archrating thing is crappy.

It doesn't appear to have a straightforward list of buildings with a rating. One has to type in a "project id", whatever the f*ck that means, to get a supposed "rating".

Sorry, if you had the balls, you'd just publish a building name and its rating - for instance - Hiranandani whatever: 0- (or whatever). But you know that if you did that, you'd probably get murdered by the builder-politician-mafia types.

Thus, you are merely a shill, a tool of the same unholy nexus, trying to drive up traffic to your website and to that of builders.

So, which lowlife builder got the idea of earthquake resistance to one-up his competition and put you out in front?

F*ck off.

DhImAn said...

It may be expensive, but get one of these GHz range EMF testers.

Make your own measurements - you'll be able to find apartments that have a low enough radiation level.

Of course, things change all the time, new towers will keep coming up, so it is probably advisable to use conductive paint to shield your home.

Shielding is science and a bit of an art, somewhat expensive, but it is not impossible, and its cost far outweighs the risk of cancer.

As for earthquakes, I guarantee you this: regardless of what the builder says, no building is safe. I come from a long line of civil engineers who built a great deal of the infrastructure we see around us today; and I can only laugh at the "earthquake resistance" of these buildings.

To make them truly earthquake resistance would double or triple their cost and add at least a year to the project completion time - and so virtually no builder will do that.

They'll simply buy their "rating" from shill sites like "archrating".

GSM said...

Speaking of earthquake, I have a couple of questions.

1. If there is a earthquake and the flat collapses, is the builder liable to be sued? Or the Govt going to compensate or just that EMI's should be paid anyway without the property?

2. After an earthquake would the prices go up or down?

Anonymous said...

@GSM -

Sue builder - with our court system, this will take a few decades of appeals, etc.
Govt compensation - of course not. We are not a vote bank.
EMI - to be paid on time. The earthquake is not the bank's fault.
Of course, prices will go up since supply has gone down!

Anonymous said...

Anon @ 735am. Excellent Summary! Equake or no equake; India RE knows only one way and its up up and up and up.......whether ppl like it or not....

aam aadmi said...

To make buildings earthquake proof one has to replace the red brick so ubiquitously used with the hollow cement block brick (costlier). Use more steel (costlier) and more pillars (costlier).

So you can guess why no one makes earthquake proof building.

GSM said...

Of course, prices will go up since supply has gone down!

Is it only about supply/demand after an earthquake? I guess we have to look at the other aspects also

1. Would the banks lend to people who are already in neck deep in debt?
2. Will there be incentive for the people to pay back their EMI's without their property. Will this make the bank more stringent in lending?
3. Would the speculators still speculate after losing their property or try to exit asap
4. Will there be interest in new Investments to be made in the city or set up the same industry somewhere else?
5. Would the migrants leave to another city with better perspectives?
6. Important of all, would people be still crazy about owning a home as a status or inclined to rent with no strings attached?

Looking at the above possibilities, I would say most likely the prices would come down after an earthquake. Expert views welcome.

Pawan said...

A Japanese colleague on a recent trip was telling us about people who lost their homes in a recent quake in Japan but are still required to pay EMIs.

Anonymous said...

http://economictimes.indiatimes.com/news/politics/nation/power-cuts-water-crisis-in-gurgaon/articleshow/13582674.cms

Anonymous said...

Guys,

People who dont believe there is a bubble please explain this phenomenon:

My rent for a 2 bhk in Pune's kothrud area in the indicated year was:

1. 2009-2010 = 12500/-
2. 2010 - 2011 = Rs 11000/-
3. 2011-2012 =Rs 12000/-

I will be moving to my next rented establishment for the year 2012-2013 for a rent of Rs 12000/-

All the flats that I have lived in from 2009 have been similar and in the same in demand locality of kothrud.

What gives?????

aam aadmi said...

@Above
I too am seeing the same things. In last six years my rent has gone up by 20%, while in the same time period the price of a kilo of rice has doubled. I am happily living on rent. When SHTF, I will just pack up and go.
Others (esp the immigrant couples) will be left in an alien city in an expensive apartment with no job.

aam aadmi said...

A taste of future

http://www.thehindubusinessline.com/industry-and-economy/economy/article3466048.ece

Fuel shortage still starves Chennai

Looks like the distorted pricing of Diesel and Petrol has resulted in a diesel shortage and since no pump owner wants to buy petrol there is a shortage of both.

FYI : A barrel of oil yields lesser amount of diesel than petrol and higher demand for diesel will mean that India will have to import more oil simply because there is no diesel to spare. Of course petrol will be exported but it takes time to build enough refining capacity so there will be shortages in the near future.

Anonymous said...

@above,

I saw a recent timesofindia headline:

"Job prospects excellent for cycle rickshaws"

Anonymous said...

http://www.moneycontrol.com/news/real-estate/a-real-estate-crash-is-good-for-youindia_573162.html

Anonymous said...

http://www.economonitor.com/blog/2012/05/the-great-pretender-indias-economic-past-and-future-part-1-india-shining/

http://www.economonitor.com/blog/2012/05/the-great-pretender-indias-economic-past-future-part-2-a-sea-of-troubles/

http://www.economonitor.com/blog/2012/05/the-great-pretender-indias-economic-past-and-future-part-3-political-atrophy/

Pawan said...

People who don't believe there is a bubble please explain this phenomenon

You wont find many such on this blog.

RE is in a clear bubble and the govt. should have allowed it to go bust in 2008 but they did not. Instead, they let it blow even bigger. And that is how bubbles operate - when everyone thinks its bust time, they grow even bigger and suck in even more number of people. The resulting clean up takes even longer and is even more painful.

Look at equity markets. If they rally 25% in the next 6 months even then they will be at the same level as they were 5 years backk in Jan 2008. So no returns for 5 years even in nominal terms.

The same things is coming for RE.

DhImAn said...

Real estate is in a bubble by design, not by co-incidence.

The thing is, if you are the government of any nation on this planet today, you have to show literally crazed growth rates as a part and parcel of "globalism", and the usual way to do that is to emit as much money as you can from your central banks.

Unfortunately, this money, if uncontrolled, causes a rather unpleasant effect called price inflation, which governments understandably are scared of, given that unleashing inflation on the poverty stricken masses is a certain recipe for regime change at best, and the guillotine at worst.

Diverting this newly minted money to avenues like real estate is the only way that countries may print up wads of cash without causing significant inflation in prices of day to day goods.

Thus, governments create artificial incentives, such as tax breaks and so on for people buying houses to prop up and sustain real estate.

It is no wonder then that real estate bubbles are so resilient, and when they burst, they usually take down the entire national economy with them. And so, governments must protect real estate prices at all cost.

This is like riding a tiger - once you hop on, there is no way for you to hop off because the moment you do, you will become the tiger's dinner. The ride continues to get wilder, but you hang on for dear life.

But then an external event happens - the tiger slows down, or stumbles, or speeds up, or takes a turn, or whatever, and you lose your balance and fall. You get eaten, but you can then blame it on the external event.

To be continued...

DhImAn said...

Continued...

Thus, the fundamentally flawed idea of the Euro can be safely blamed on Greece; or the fundamentally flawed idea of inflation of the money supply can blamed on the subprime crisis.

With this background, I trust you realize that the situation is this: If you want to get your real estate prices under control, you will have to reduce your rate of inflating the money supply.

If you do that, you will kill the general economy - real estate loans will die, taking many banks to the grave with them, exports will plunge because of a stronger currency; NRIs will find it harder to invest in India and so on.

But you will save the rupee.

Or continue on the same path, real estate in nominal terms will go up; exports will boom, NRI money will flow in again and so on.

But you will kill the rupee.

Governments rarely choose the first option; they continue to destroy the currency till real estate prices reach levels that are so high that they naturally correct; and at that time it becomes too late to save real estate or the currency.

Then they drag their feet, hoping for either a scapegoat to lay the blame on, or a miracle to save their asses.

If the populace is especially docile, like in Japan, you get lost decades, wherein everything stagnates for extended periods of time and people generally experience creeping reductions in their purchasing power.

In India, you can bet that the government will not let real estate prices come down in nominal (i.e., Rupee) terms. They will weaken the currency till they can get away with it, i.e., till foreign governments refuse to lend or till the rise in import prices threatens to destabilize the coalitions.

Then they'll try to hop off the tiger by reducing the rate of money printing, but that very action will be the trigger for a massive real estate crash.

The message will go out to the marginal real estate speculator that real estate prices will stagnate or fall; and that will coerce him not to buy; causing a real fall; causing others to not buy, causing a steeper fall... and so on.

Engineers know this as a positive feedback loop, and once this happens, there is no way to avoid instability or complete failure of the system.

This is the simplest explanation that I can come up with for what will happen. Bubble deniers will no doubt bring in many counter arguments - such as demographics, such as corruption, black money, and so on; but this is the mechanism of a bubble burst, and every one bubbles past has burst this exact way, regardless of all other variables.

The question is what are you going to do.

Anonymous said...

@Pawan - "And that is how bubbles operate - when everyone thinks its bust time, they grow even bigger and suck in even more number of people. "

Agree. That would be the "return to normal stage" in this chart.
http://en.wikipedia.org/wiki/File:Stages_of_a_bubble.png
Is India there ? or are we still in enthusiasm/greed stage ?

The USA is probably in the capitulation stage. In many places prices have reverted to mean. Though interest rate hikes may mean further falls.

Anonymous said...

@Dhiman - ".. and that will coerce him not to buy; causing a real fall; causing others to not buy, causing a steeper fall... and so on."

Another problem will be debt deflation. Asset prices fall, but debt remains the same. Folks start to save more and pay off debt faster. This in turn accelerates the fall in prices.

Anonymous said...

There is no such thing as "earthquake proof".


"Earthquake resistant" is the correct term and as it implies, this is no guarantee that the structure will not be compromised during an earthquake. It will depend on the magnitude, duration and other such factors.

If you are paying top dollar and are concerened about safety of your family then have a discussion with a qualified civil/structural engineer to learn more.

Ofcourse, most "investors" are not actually living in these structures so they could care less as long as the building stands up for 2-3 years so they can sell their "investment" to a greater fool.

Anonymous said...

Milk adulterated with sewage is being sold in Vile Parle!!!

http://www.mid-day.com/news/2012/may/290512-mumbai-Your-milk-packet-may-contain-sewage-water.htm

I don't think that the cell phone towers pose a greater risk!!

Anonymous said...

I want to know... (from bubble experts: Dhiman etc).... at the time of burst of RE, will the currency (rupee) also fall in value? I am a regular reader of this blog and patrick.net and keep myself updated with these blogs and the intelligent discussions in comments.

If a person (me), today, is not investing in RE, but putting hard-earned money in savings account or FD, what is the probable projection at the time RE bubble bursts? Will the saved money, be also de-valued that it would be no use, or banks would refuse or close or what?

Like the situation in the US today, where banks are suffering from bad loans and people are defaulting because of RE depreciation. I think its good time to buy there, as the prices are low after the crash. But, would a US citizen, who had not invested in RE (back then), but just saved his dollars in a bank account, better off than those who took loans? Is his saving de-valued or can he buy the lower priced houses from bank autions etc now?

Same question for an Indian citizen now.... Would a RE crash in India, de-value the currency, to the extent that there is no use having a saving account either.... Maybe get some gold or i dont know what.... Not for investment, but just to save urself from the crash....

[I dont want to invest in RE or gain anything out of this or play any other gamble or speculate. I just want to have a hope to live in by the time I am 50 years old. I will buy one time, when I have the money, without a loan]

aam aadmi said...

@Above
No one knows what will happen but history is your best guide. Following things are possible and have happened throughout history.

1. Hyperinflation (likely)
2. Very high inflation for a prolonged time (very likely)
3. Deflation (unlikely since all CB's have decided to join hands, but cannot be ruled out)
4. Worldwide Economic collapse(unlikely)
5. Local economic collapse (unlikely at this point)
6. War
7. Continued Economic growth (unlikely)

In 1 and 2 you'd want to hold gold, in 3 cash is king. 4, 5 and 6, you can't do much but hope for the best, cash is definitely not the way to go though.... gold ...maybe, since it's very portable. Another thing you can do is invest in building some other skills or escaping to a more stable country or region.

Only in 7 do I see the point of buying RE or equity, maybe I'll have some (though not much) RE and equity in case of 2.
So you are better off having a mixed strategy which involves gold (most emphasis) ,cash and some equities.

Anonymous said...

If you need a house to live / "settle down" AND you can afford to finance it with a conservative payment plan then go ahead and do not waste your limited lifespan by worrying about the future macro economic picture which is not going to be in your control anyway.

If anything that has been the lesson of the last 10+ years. I know many Indians in US who could have bought in 2003-04 but instead chose to wait for correction. Guess what, crash has happened but only in areas where they would not find a job, good schools, safety etc. So they are continuing to rent.

If you are looking to invest on the other hand, there are plenty of better/safer/liquid instruments than real estate. Infact, as Case-Shiller proves, over an extended time period RE is the worst performing asset and Indian RE may even become a liability due to fraud, lack of clean titles etc.

Anonymous said...

Anon @8:51

To buy RE or to stay cash or where to park money?

I think staying cash and parking money in 10-12% interest rates is the best bet for the next 2-3 years. You can get into equities if Sensex drops to 12K otherwise stay cash.

If someone has it invested in RE, it will definitely lose 60% value. And investor would lose 100% of the downpayment when prices fall. I would short RE big time and all stocks associated with RE, banks and construction supplies etc.

I would not park it in Gold as Central banks will not print as much money as they have in the past. The problem is excess liquidity that created these bubbles and not shortage of liquidity. But the Govts. all over the world are going to tout for more printing and all currencies will devalue at the same time, so net effect would be almost same. USD will do a lot better because it is reserve currency and EU may disintegrate in the next 3 years.
Gold itself is in a massive bubble stage.

There is no safe place to invest as Govts. and central banks all over the worls have screwed up the system so bad, it will take a decade or more to clean up. Can't do much, just park it safely and wait for the RE crash. Once the prices drop by 60%, make your moves. Otherwise your money will double in the bank in 7-8 years.

Think about people in US who are so fucked with interest rates on 0.25% in banks, cannot invest in RE as it is still falling in US after 5 years of fall, equities are again on dope from Fed money printing, unemployment at 20%, massive deficits and going to Greece like conditions etc.

I would say try to protect your job as India is going to see a big round of layoffs in banking, construction industry. IT would be ok but salaries would be slashed.

Anonymous said...

Anon@8:51

"Like the situation in the US today, where banks are suffering from bad loans and people are defaulting because of RE depreciation. I think its good time to buy there, as the prices are low after the crash. But, would a US citizen, who had not invested in RE (back then), but just saved his dollars in a bank account, better off than those who took loans? Is his saving de-valued or can he buy the lower priced houses from bank autions etc now? "

This is a fantastic, fantastic question. One of the best questions posed in this blog. Ever. You have hit on the key question that tackles all of the issues we are grappling with, w.r.t. RE, INR, inflation and wealth preservation.

I don't know the answer to this question as there are too many variables involved, although I hope others can chime in on it.

The answer to this question will unlock the door to the acquisition of real wealth.

DhImAn said...

I want to know... (from bubble experts: Dhiman etc).... at the time of burst of RE, will the currency (rupee) also fall in value?

I think Aam Aadmi has summarized it quite well, and although I do disagree with him many a time, this time I quite agree with what he's written.

It is quite possible that governments will return to sanity and save their currencies, but history seems to show that this is a rather rare occurrence.

The more common thing is that they print until they go broke, and then everything comes crashing down. This seems to imply that the currency and real estate will both collapse simultaneously, and I don't disagree.

I strongly urge you to look at John Exter's work, especially Exter's pyramid. Wikipedia describes it thus: "In Exter's scheme, gold forms the small base of most reliable value, and asset classes on progressively higher levels are more risky."

If you allocate your portfolio inversely with risk, I'm sure you'll do well in protecting your assets for the future. Allocating inversely with risk means putting less in the riskier asset.

DhImAn said...

The answer to this question will unlock the door to the acquisition of real wealth.

For millenia, real wealth has been a certain barbarous relic that is today so maligned that most mainstream economists ridicule the very notion of its ownership.

At the same time, they glorify the cult of paper and worship at its altar while simultaneously impoverishing humanity by the billions.

You make up your own mind about who will win this epic battle. I know this - the barbarous relic has never lost. Not once.

Anonymous said...

The more common thing is that they print until they go broke, and then everything comes crashing down. This seems to imply that the currency and real estate will both collapse simultaneously, and I don't disagree.



I think that there would be a 4-5 years of lag time between RE and currency bust. RE will burst and the process will take 3-4 years to go down to 60% levels which would not be the bottom and currency bust would take another 2-3 years from that point of time as Govt. will keep printing to prevent the RE collapse.

It would be during these 2-3 years of time after RE has collapsed and currency is still okay, you would buy more RE to hedge against inflation and toilet paper currency. FOr now, keep cash, wait till RE corrects and then park your money in RE. Then just wait and watch till retirement as RE would not go up again like this in our lifetime.

aam aadmi said...

@Anon at 8:51
Oh and I don't see the economy surviving the way it does today (a formal banking system, stock markets etc etc) on a long time scale say 30-40 years. The worlds resources are dwindling and climate is changing rapidly. Most countries are unlikely to survive through this episode.

I could be wrong but the chances of that are slim.

Pawan said...

To buy RE or to stay cash or where to park money?

I will attempt an answer knowing fully well it is stupid to give free advise to anyone.

When you ask currency will be devalued, do you mean in USD terms or because of money printing? Since in USD terms does not mean much to us in context of local investing, I will try to answer in inflation terms.

People think that Inflation is an increase in money supply. I would say it is increase in credit availability (available + affordable). Just because there is more money around, credit availability does not improve. When banks are saddled with bad loans, govt. will write them off by printing money but that money will not be available to anyone for carrying out further misadventures. Credit will be difficult to get and even if it is available to a few, they will have to pay dearly for that. Think of a 15-20% rate on home loans.

(An unrelated example is auto industry. Falling rupee is making cars costlier, auto loans are costlier and rising fuel prices are a killer. Auto companies are totally s*****d.)

My advice (and don't take it it seriously because I am mostly wrong) is that for now we being in a short term deflation stage, keep money in FDs. Look to get into stocks on any serious drop. Stay in stocks for the next few years till your money in stocks is relatively worth more than RE prices of that time and then switch from stocks to RE.

Reason for above advise is that equity markets adjust the fastest to any change. Today everyone thinks that our GDP growth will be 6-6.5% and equity markets have adjusted to reflect that. RE prics are still assuming 10% GDP growth till 2020. If and when economy turns, big businesses will make money first before it trickles down to service class and then to small businesses. So you should switch from stocks to RE when companies start talking of double digits hike again.

Pawan said...

As soon as I posted there is a news out that Q4 GDP was 5.3% and Sensex is adjusting to that in minutes. RE will take a few years for that.

Anonymous said...

GDP is down, sensex is down and rupee is falling. The only place to get good returns now is RE. Buy now and wait for 4 years. Prices will double. Same thing happened in 2008. Those who bought in 2008 are lucky. Remember what Buffet says.

DhImAn said...

Now, with GDP growth at 5.3% comes a minor decision point for the government - save the rupee or not?

If they want higher GDP growth, they have to increase the money supply. Yes, I agree with Pawan that money supply is the sum of cash and credit; after all whatever can be spent constitutes money.

They could increase the money supply by increasing cash (not a good method) or by reducing the interest rate (good, because of leverage).

It seems that it is a given that RBI will reduce the repo rate by 25 bps come June 18.

Thus, the government seems to be on a course to keep GDP numbers high. Unfortunately, this path is the same one that leads to the destruction of the rupee, or more specifically, the purchasing power of the rupee.

If the RBI decides to raise interest rates, that will lead to lesser credit outstanding, i.e., lesser money supply, lesser inflation, and the rupee will be better off.

But then the GDP numbers will worsen, the outlook for India will get degraded, foreign investments will reduce, and real estate will fall in rupee terms.

If you ask me, the government will think - "The poor common man on the street has nothing to do with the USD or the exchange rate. If we devalue the rupee, he won't care. But if we strengthen the rupee, and he loses his job or whatever, then much bigger problems can arise."

And they will choose higher GDP numbers - with the effect that INR prices of RE will go up, and the rupee will get weaker.

This will lead to higher oil prices, and eventually much higher food inflation, but at least the can will be kicked down the road for another few years.

Anonymous said...

All the govt has to and will do to save the rupee is fload dollar denominated bonds. If SBI floats these bonds at 9% interest, the govt will have more dollars than it will need.

Pawan said...

@Dhiman,

I do not think one can deduce that a reduction in interest rates or depreciating INR against USD will cause RE prices to go up.

Infy has given zero hike this year and cut variable pay. Add inflation and Infy people on variable pay would be earning 15% less in real terms.

They won't take loans given future uncertainty. Nor will banks lend to them given the already high NPA on their books. Of course the speculators can play with cheap money. But the example of USA proves that devaluing your currency while keeping interest rates near zero still does not do anything for RE or GDP. Japan proves the low interest rates case too.

Anonymous said...

// Infy has given zero hike this year and cut variable pay. Add inflation and Infy people on variable pay would be earning 15% less in real terms.They won't take loans given future uncertainty. Nor will banks lend to them given the already high NPA on their books

This is a stupid statement. Whay are you assuming that infy employees are poor and have no savings. I know few Infy employees who are worth crores. Go get a life man

DhImAn said...

I do not think one can deduce that a reduction in interest rates or depreciating INR against USD will cause RE prices to go up.

No, I did not say that. I said that the government will try to prop up real estate prices with the only tool they have in their toolbox - inflation of the money supply.

They will weaken the rupee in the hope that real estate stays up; and in the process they will end up destroying both real estate and the currency.

The cause and effect chain is this: GDP growth slowdown -> money printing or reduction in interest rates -> hope that RE stays up -> currency loses value -> general inflation in prices of goods -> less money available for real estate -> real estate also loses value.

DhImAn said...

This is a stupid statement. Whay are you assuming that infy employees are poor and have no savings.

I am sure you don't know this, so let me tell you.

It does not matter what you think you are worth, or even what you are really worth.

The only thing that matters, and is truly king and queen - is cash flow.

Not understanding this gets too many naive people like you in trouble, so for your own sake, go read up a bit about it.

Pawan said...

I know few Infy employees

I am married to an ex-Infy employee.

Pawan said...

Wonderful commentary on Facebook IPO which applies to RE too:
Smart insiders were supposed to sell their shares to the dumb outsiders on the open market. But so many investors had gotten shares at the IPO price, and hoped to get out at a higher price, there wasn't enough dumb money to take their shares.

GSM said...

I said that the government will try to prop up real estate prices with the only tool they have in their toolbox - inflation of the money supply.

Dhiman, Now you are thinking like Helicopter Ben. Unfortunately, for Ben and Central bankers they can only do a helicopter drop of the money but cannot control where it lands. If it lands on other assets, the result is what we are today.

But if we strengthen the rupee, and he loses his job or whatever, then much bigger problems can arise

Somehow, I never understood this. Didn't we have the highest growth of 9.5% in 2007 when 1USD = 39 Rupee. And even Software Exporters were booming then than now.

DhImAn said...

Dhiman, Now you are thinking like Helicopter Ben.

Hardly, GSM - I'm merely parroting what the Helicopter Bens of the world are thinking.

I agree with whatever you've written, dude.

I'm simply telling you what moronic government bureaucrats think, and since you and I don't have any power but they do, you can be sure what will happen.

DhImAn said...

Read this.

From this article, "Among the factors that have contributed to the slowdown are the tight monetary policy that led to a significant rise in interest costs and the weak global sentiments that affected growth in domestic private investment ... have bottomed out," Mukherjee said.

So, if a tight monetary policy led to USD 1 = INR 56.5, I would love to see what a loose monetary policy could achieve.

What he's really saying that the tight monetary policy as a factor for the low GDP number has "bottomed out" - meaning that henceforth, we may expect a "loose monetary policy".

Basically, this is Helicopter Mukherjee for you.

Hate to say it, but - told ya!

Anonymous said...

Congress criminals devalued the INR in early 1990's and this supposedly led to two decades of stellar growth. This is the popular narrative.

Most of this is utter balderdash of course. India has lagged behind most of its competitors in this part of the World, including China, the S.E. Asian tigers, Hong Kong and Indonesia in every conceivable metric of human development.

This idea that you can somehow devalue yourself to prosperity is among the ugliest consequences of Keynesianism. Germany and Japan, two of the most successful export-oriented economies in the World both have historically had STRONG currencies.

Anonymous said...

"The only thing that matters, and is truly king and queen - is cash flow."

This is exactly the kind of thinking that got Americans into trouble.

Your average American has a mich higher "cash flow" than the average Indian but the average Indian has a much higher net worth than the average American (who typically has negative net worth).

In any case if cash flow is so important, why are you going around advising everyone to put all their wealth in Gold, an asset that produces precisely ZERO in cash flow?

Kulbir said...

@Dhiman
I agree with you that GOI will print money in order to support real estate prices if they fall down but the question is will they succeed, I strongly believe that no amount of money printing can ever reflate a busted economic bubble. In India we do not have much experience in economic bubble except for Harshad Mehta scam so we have to make inferences from experiences of other countries. In Japan the stock market is still down 80% after their bubble busted in 1989. In US after the Nasdaq collapse of 2000 Greenspan reduced interest rates from 6.5% to 1% but Nasdaq even today is half of its March 2000 highs, similarly Ben Bernanke reduced rates from 5.5% to 0% and increased the base money by 4 times but still US real estate can not recover.
My point is money printing alone cannot keep up bubble. We overestimate the power of central banks and under estimate the power of markets, as Jim Rogers once said its the market which has got most money and not the central bankers.
Thanks

Anonymous said...

What are the gold traders forecasting? If the problems in Europe get worse and there is rush to safety of USD will gold prices collapse?

Another scenario is that banks liquidate their gold holdings to avoid collapse.

DhImAn said...

Your average American has a mich higher "cash flow" than the average Indian but the average Indian has a much higher net worth than the average American (who typically has negative net worth).

Umm, you don't really understand cash flow, do you?

If you have high net worth, say USD 1 million (arbitrary number); and a negative cash flow of USD 10000 per month, you will become penniless in exactly 100 months.

That process is inexorable because it is simple arithmetic.

Whether you deem to save in gold or any other vehicle, negative cash flow will eventually render you flat broke.

Americans thought exactly as you do - they thought that their high net worth (look up the wealth effect) was such a great thing that a negative cash flow didn't matter.

They found out the precise consequences of this - and the inexorable nature of a negative cash flow.

If you think that the modest net worth of Infosys professionals is enough to mitigate the consequences of negative cash flow, then you seriously need some perspective and perhaps even some education.

In any case if cash flow is so important, why are you going around advising everyone to put all their wealth in Gold, an asset that produces precisely ZERO in cash flow?

Things don't produce cash flows, people do.

The only way you can save anything at all is if your cash flow is positive (i.e., you spend less than you earn).

Once you save something, that thing is not part of the cash flow equation at all, regardless of what that thing is.

My advice of saving in gold is not mine at all - it is timeless wisdom that was self evident until rather recently.

And so, gold has precisely zero to do with cash flow. You could save in real estate, or stocks, or treasuries or whatever but have negative cash flow and will still inevitably land up on the street, penniless.

DhImAn said...

Kulbir: My point is money printing alone cannot keep up bubble.

Absolutely true. I've been talking about the mechanism of the bubble bursting - that the bubble exists and will burst is a foregone conclusion.

Has anybody seen the movie "Kung Fu Panda"? Shifu sends a messenger (Zeng) to the prison where Tai Lung is being held to inform the warden to double the guard.

Unfortunately, Tai Lung escapes using a feather from Zeng.

This is some of the deepest philosophical wisdom you'll find anywhere - it's called self-fulfilling prophecies.

Essentially the meaning of this is that you so fear something that the road you take to avoid it leads you right to its doorstep.

Had Shifu done nothing, or had Oogway not said anything, Tai Lung would have rotted away till his end.

Governments fear deflation, real estate crashes, stock market panics and so on.

However, the very actions that governments take to stave off those scenarios take them closer to those eventualities.

Should government not bail out anybody, it would all but eliminate moral hazard, staving off deeper collapses in the future.

But they will never take that course. They will itch to "do something", and that very thing will precipitate their worst fears.

Anonymous said...

The rupee is going down but I dont see how this is impacting anybody. Personally my spending habits have not changed.Also prices have not increased so much as people are predicting. So let the rupee go down. It will be good for the exports

Anonymous said...

// The rupee is going down but I dont see how this is impacting anybody. Personally my spending habits have not changed.Also prices have not increased so much as people are predicting. So let the rupee go down. It will be good for the exports //

Really? very near sighted opinion. Then why not make rupee 100 or 1000 to 1 USD. Then why have petrol rates hiked overnight? Then why ask NRI for USD? Read some earlier great posts by Dhiman, Amm Admi, Skeptic Ghost..

Are you buying RE currently?

Anonymous said...

// Then why have petrol rates hiked overnight?

Hike in petrol prices might not be bad. It will oncrease inflation and if inflation increases salaries will also increase at the same rate. This is why inflation is a good thing for salaried class. Eventually you will get 12% hike on a salary of 5 lakhs, but inflation will only affect a part of your spendings resulting in net gain

Anonymous said...

// Then why have petrol rates hiked overnight?

Hike in petrol prices might not be bad. It will oncrease inflation and if inflation increases salaries will also increase at the same rate. This is why inflation is a good thing for salaried class. Eventually you will get 12% hike on a salary of 5 lakhs, but inflation will only affect a part of your spendings resulting in net gain

Anonymous said...

Guys perol price hike does not matter to Indians as a lot of Indians have family living abroad who send money monthly. Since the rupee is falling, the money they get offsets price rice

Anonymous said...

// Hike in petrol prices might not be bad. It will oncrease inflation and if inflation increases salaries will also increase at the same rate. This is why inflation is a good thing for salaried class. Eventually you will get 12% hike on a salary of 5 lakhs, but inflation will only affect a part of your spendings resulting in net gain //

That doesn't answer the question that why was petrol price hiked? Anyways, what you mentioned is utter rubbish. Let me know if anyone is getting 12% hike this year. Last I know people getting 3% hike lately and some none.

Ask someone to pinch you to wake you up.

Anonymous said...

// Guys perol price hike does not matter to Indians as a lot of Indians have family living abroad who send money monthly. Since the rupee is falling, the money they get offsets price rice //

compare Indian population to Indian population that is abroad and that to Indians that send money to India. Do the math and please post your comment with modified version.

Anonymous said...

// Let me know if anyone is getting 12% hike this year

Except for Infosys most of the IT companies have doles out 8 - 12% hikes. Even in infosys those who got promoted got hikes. You seem to be working in a small company as you are talking about 3% hikes

GSM said...

The rupee is going down but I dont see how this is impacting anybody. Personally my spending habits have not changed.Also prices have not increased so much as people are predicting. So let the rupee go down. It will be good for the exports

Wait for 6 months to see the results if rupee stays around the same level. Go back and remember in 2008, oil price went to $146 a barrel in the speculation of increasing demand from India and China..and once Lehman Brothers collapsed, recession scared everyone away. Lets see the greedy companies borrowed in foreign currency default and the magic unfolds itself

Anonymous said...

Does it ever bother anyone that the bulls refuse to even consider the possibility of a correction.
Is this what they call the "denial" phase???

Anonymous said...

"compare Indian population to Indian population that is abroad and that to Indians that send money to India. Do the math and please post your comment with modified version."

I don't know about the North, but in the South (especially Kerala + Tamil Nadu + Andhra Pradesh), almost every family has at least one member working abroad.

Anonymous said...

The real reason RE is not falling is because Indians and their wealth are well hedged in all direction, by a perverse combination of a lack of trust in government, a filthy and corrupt cultural core which has its origins in the caste system, a weak currency, massive amounts of NRIs earning in a different currency, massive hedging via gold holdings and a cultural affinity and social pressure towards owning RE at any cost.

At these rates, RE prices will come down in nominal terms...in...think NEVER.

DhImAn said...

At these rates, RE prices will come down in nominal terms...in...think NEVER.

Well, then the "nominal terms" will get massacred in "real terms" much, much before "NEVER".

To those who think that real estate (or anything for that matter) will go up forever, the obvious implication is that after some long time, you'll be able to buy almost everything in the whole world for a tiny pinpoint of land.

If that were possible, I argue that it would have already happened - and the fact that today say 1 square mm of land gets you pretty much nothing, even in nominal terms, proves my point.

skeptics ghost said...

Uncle Benny Lava Ben Bernanke will hold rates to zero indefinitely

Ive said before and again - US still is the supreme military power - and without a challenge like an all out war that changed things after the Great Depression - nothing is going to reset the printing presses of the world's central banks.

Greek and Spanish banking might semi collapse - but the ECB will print in tandem with the Fed, Bank Of England and their Jewish cabal -
WE will remain slaves of fiat currency unless we have some Gold and some guns ...

Prices won't fall in INR (now even if there is a big war)

aam aadmi said...

Prices won't fall in INR (now even if there is a big war)

I bet you haven't seen a war esp. when it's fought in your neighborhood. I come from North East, trust me RE is the last thing on your mind when bullets are flying in your backyard.

When there's a war and if you are forced to migrate, all that perceived wealth will disappear in one second.

Anonymous said...

For those of you who want to make hay while the sun shines.

Buy cash $s. Appreciation is going to be higher than real estate.

FC dealer

Anonymous said...

// Buy cash $s. Appreciation is going to be higher than real estate. //

Atleast for now Rupee has stopped from free fall. What insight do you have to say that Rupee would fall more?

Anonymous said...

Central banking criminals (CBCs) can control nominal prices but have no control over real prices.

During Zimbabwe's period of hyperinflation, house prices went through the roof in nominal terms, but in real terms (i.e. when measured in CHF or JPY) they fell off a cliff.

My advice to those wishing to save for RE is to do so (to the extent the CBCs permit you) in hard currencies.

Anyone saving in INR should be admitted into a mental institution promptly.

Anonymous said...

Too much short term thinking going on. Everyone is worried about missing out on the next big bet.

Ignoring the forest for the trees.

What type of a society/future do you want to create for your children/grandchildren.

No amount of personal wealth is going to be of any consequence if the society has disintegrated.

On the flipside, if you live in an evolved society you don't need a lot of personal wealth to have a high quality of life.

Choice is yours.

Anonymous said...

There seems to be 2 types of people here. One are the analyst type who keep on harping things like macroeconomic factors, nominal terms etc and claim prices will fall. But they never have and never will. The others are the on the ground people who have dealt with RE agents and have multiple properties and know that the RE still has scope to go up. Remember there is still a pent up demand and Indians in general will cut on other things before doing fire sales. There was a story in TOI about the Indian buisnessman held hostage in China. His wife in Mumbai sold everything but held on to RE. As long as there are prople like this RE will never go down

Anonymous said...

Anon 7:21 said "Atleast for now Rupee has stopped from free fall"

Yes it has, no doubt. For how many days or months. When you one sees clouds on the horizon, the obvious expectation is rain. The UPA govt is showing candy to the people and paint a bright economy and try to manage the show with borrowed money. This will go one until the next election. Once this period lapses, the true bitter picture is likely to emerge. I wont be surprised by the IN hitting $100 for a dollar.

When Rupee reached $, all sorts of rumors/speculations started but things calmed down. When it reaches 100, same thing will happen

The Indian Rupee value is not going to make a dent to the rich elite, for they will pass on the buck to you and me.

America is going to take away the best of brains from India as $ will become more attractive, leaving behind the brainless and corrupt to rule us

SKG said...

That is exactly which should be discussed first and taken in to consideration.

"what is the mentality or thought process of a command indian man?"

The one who is at the bottom of the pyramid who is working hard and is a key driving factor of the economy (there are others like FDIs/NRIs/Many more i dont know about)

The common man doesnt understand the macroeconomis but is part of the market, so i would like to understand what common man's actions constitute to in the current scenario?

Once we have that it can be mixed and matched with macroecononics hypothesys to see the results.

Am i wrong? Do i need to read more?

Thanks
SG

Anonymous said...

The women whose hubby was in China could not sell the property because the hubby was the co-owner and needed to sign the papers.

Kulbir said...

Every bubble itself sows the seeds of its destruction, the amount of real estate being developed is so huge that it can not be productively used. In 2002 Chandigarh had just one five star hotel today we 4 running hotels and 3 more are under construction, besides these two five star hotels have come up in neighboring Panchkula and some more are being planned in Mohali and Zirakpur. Surely Chandigarh gas made a lot progress in last decade but do we really need so many five star hotels. Similarly the number of multiplexes has also multiplied greatly but only some are doing well. People's expectations regarding future is way to optimistic they feel we are going all going to be crorepatis and real estate companies are developing properties at such frantic pace that in another decade their is going to be no agricultural land in 50 kilometer radius of Chandigarh. If this not bubble I can't imagine what will be termed as bubble.
I will like others also to share some data of their respective cities as it gives a much broader perspective to the present scenario.
Thanks

Anonymous said...

The US jobs report and the stock market crash today will force the FED to do a QE3. This will result in the US dollars flowing to India. So the rupee will start appreciating from now on

Anonymous said...

Given the current economic conditions, this is the best time to invest in RE! I am sure all the Builders, Brokers and media people covering RE will agree with me! So will investors.

1. The Rupee is weakening. Means NRIs will send more money to India - where will they park it? Of course RE! That means demand for RE will increase. So resident Indians should beat the NRIs by investing themselves before NRIs

2. For anyone who invested in RE in 2007, within 5 years their investment has tripled! Even if we take a little slower rate of increase, TOday's investment will surely double by 2017! Aaj ka Ek crore becomes rs. 2 crore or more by 2017!!

3. Stock market is going down so investors will sell stocks and invest in RE! Beat them to the game by investing in RE before they do!

4. RBI is expected to reduced interest rates, which will mean more people will be able to afford loans (they might not have jobs but that's never a factor) ...suddenly salaried people will take huge loans and demand for RE will increase. Beat them and invest in RE before they do!

5. It is clear the that present government has no alternative. So they will 2014 elections! All the money collected after the elections will need to be parked! Where else but RE! Beat them ....

6. India's population has increased and will keep increasing. Land is scarce. So RE can never come down. More people will be born in the next couple of years than in the last couple of years! More people means more demand. Beat them to it ...invest in RE before they do!

Overall the situation could not be better than it is today and a even bigger RE boom is the only thing one can expect!

samix said...

Anyone saving in INR should be admitted into a mental institution promptly.

unfortunately this is the case with most Indians, as they do not have any exposure to the kind of economic news and discourse that we enjoy on blogs like this.

Anonymous said...

"The US jobs report and the stock market crash today will force the FED to do a QE3."

Aint' gonna happen. Election year, tremendous pressure from opposition to do nothing. More bad news that can be pinned on Obama better it is for Romney.

Anonymous said...

We need some real LEADERS like this one:

http://www.youtube.com/watch?v=PubsFbjZCBo

Instead of mere politicians (aka donkeys and dogs)

Can you imagine any Indian giving such an intellectually honest address on the world stage.

Sadly, I can't...

Anonymous said...

// Aint' gonna happen. Election year, tremendous pressure from opposition to do nothing. More bad news that can be pinned on Obama better it is for Romney.

Are you mentally retarded. Where in the world does the central bank listen to the opposition

aam aadmi said...

Too much short term thinking going on. Everyone is worried about missing out on the next big bet.

You summed it up well, people are so busy thinking about their bank balance that they don't care what kind of lives they are gonna live in 10-15-20 years.

Economic collapse is staring us in the face, I believe they can keep playing the game for a lot longer and will do so, but in the end they will destroy all currencies, and in the process destroy people's faith in the society.

And frankly they don't have any other choice, people and media are so paranoid about GDP growth going by recent media reports that the only way out is more stimulus even if it means the death of money.

No one should save in Rupee anymore, keep some for practical purposes but no more. The current appreciation is a temporary thing. Finally it's a race to the bottom for all currencies.

DhImAn said...

I come from North East, trust me RE is the last thing on your mind when bullets are flying in your backyard.

Right on! I'm from the north east too, and I saw first hand what the actions of a certain post-menopausal, fatherfu**ing bitch did to that region. Emergency, curfews, shoot at sight orders - to the point that fathers could take their sick children to hospitals and risk getting shot, or stay at home and risk their children dying.

There was no milk for the kids - and even condensed milk (Milkmaid) and powdered milk were scarce - so much so that many shops ran a lucrative black market in these essentials.

When there's a war and if you are forced to migrate, all that perceived wealth will disappear in one second.

Yes, this is absolutely true too. I've seen far too much wealth evaporate precisely like that to become blind by the current real estate madness. I've seen the US RE bubble collapse up close and personal, and I guarantee you, India is following exactly the same playbook.

Anonymous said...

Romney has stated that he will fire the Bernank if elected. So if anything, the Bernamk has a strong incentive to do QE3 (or QEor QE5 or QE6 if necessary) before the election to keep his job if nothing else.

Pawan said...

QE3 is coming.

http://pragcap.com/so-goes-the-stock-market-so-goes-obama?utm_source=twitterfeed&utm_medium=twitter

Anonymous said...

As long as nominal interest rates are less than the rate of inflation (i.e. real interest rates are negative), the BEST investment you can make is to get into as much debt as possible. This is the SUREST WAY TO BUILD WEALTH.

Let me explain this in the simplest terms: Artificially low interest rates by CBCs are nothing more than a transfer of purchasing power and wealth from savers to leveraged debtors.

With nominal interest rates set to remain below the actual rate of inflation worldwide FOR THE REST OF OUR LIFETIMES, debtors will continue to have the ability to profit from the high present value of their loans relative to the highly depreciated repayments they will be making.

One of the easiest ways to get into debt is to buy a house, because RE is highly leveraged debt. You can get a loan for up to 6 to 7 times the amount of your initial downpayment - so you are levering up by 1:7.

Of course, I would never EVER buy a house in India. If you want to buy in a fairly-priced market, buy in the U.S. (Florida, Nevada, Arizona and Georgia come to mind).

Pawan said...

http://profit.ndtv.com/News/Article/how-spain-went-from-boom-to-bust-in-10-years-305315?pfrom=home-otherstories

DhImAn said...

As long as nominal interest rates are less than the rate of inflation (i.e. real interest rates are negative), the BEST investment you can make is to get into as much debt as possible.

On the surface, this appears to be sound logic; however, let me assure you that it is a certain way to disaster. Let's try to analyze.

Yes, it is known that today CBs are inflating the money supply, and that means that tomorrow's currency unit has lesser purchasing power than today's, and thus, returning currency units worth less tomorrow nets you purchasing power.

However, consider the motive of CBs to inflate so freely, and that of banks to lend so freely.

It's not like they don't know that they will be paid back in depreciated currency - after all it is they themselves who are doing the depreciating.

So why then? Could it be possible that this is basically the same old moneylender's trap?

That they entice you to so first take on a lot of debt, and then make the currency units harder to obtain so that they lay claim on the collateral?

Could it be that the real game that is afoot is a massive real wealth grab by the elites from the common man, and by extension, by rich countries from the poor?

After all, this is exactly how the East India Trading company became the ruler of a billion people.

The alternative is that central banks and other banks who are more than happy accepting depreciated currency units in the future are doing it out of the goodness of their heart.

After all, if you are building wealth in the long run by borrowing, then the banks, who lent you something with great purchasing power today must be losing wealth in the same long run by lending.

That they choose to suffer for you must therefore be attributable to altruism, their kindness, their soft hearts that bleed for the people or some such.

If this strikes you as absurd, then you are right - it is absurd.

The truth is, the lender is in a more powerful position than the borrower. The nature of the contractual obligation of a loan is that you are responsible for the repayment of currency units.

If a CB decides to tighten the money supply (under whatever pretext), then they immediately create a mechanism whereby they grab all the collateral, and make you a slave too - because the collateral may not, at that time, cover then entire amount to be paid back.

By borrowing, you are willingly putting yourself in such a position - and regardless of how much I stood to gain, I'd never do that to myself.

An alternative way to build wealth while CBs inflate and destroy the value of the currency is to save in that thing that appreciates inversely with the profligacy of central banks, that is dense, portable and has proved its worth as a store of purchasing power over thousands of years.

Debt is not it.

Anonymous said...

Anon @4:11am

Leverage (without appropriate hedges) is the fastest way to the poor house.

Anonymous said...

This is interesting
Can anybody be trusted in this corrupt and lawless country

http://www.punemirror.in/article/62/2012060220120602084215206bd5d3d41/150-families-locked-out-as-PMC-builder-show-them-highway.html

samix said...

So much for buying costly flats in luxury complexes that have foreign like zinnea, roxannia or whatever!

I think that people in India should now just stop buying real estate altogether, what is the point ? buy real estate and then face all these problems.

Anonymous said...

Another Article on our fiscal ineptness and corruption

So many articles talking about how the real estate bubble in India has meant the most steep price rise across the globe and how the govt. has managed to screw up India in a major fashion.

Meanwhile DLF has nosedived from 1200 in 2008 to 182 today..I don't know what to infer from it.

Parth said...

We are at a wonderful party, and by the rules of the game we know that at some point in time the Black Horsemen will burst through the terrace doors to cut down the revelers; those who leave early may be saved, but the music and wines are so seductive that we do not want to leave, but we do ask, "What time is it? What time is it?" Only none of the clocks have any hands

- Adam Smith, The Money Game

Earthquake Rating said...

Some people here argued, how the arch rating was useful if it was not directly showing Earthquake Resistance of Projects with their "name".

But we have just initiated the project and it was not possible to conduct Seismic performance analysis of thousands of projects all over India. Moreover Builders are not permitting us to publish the Rating if it was Low. Hence we have drawn the system of "Search with Id". So that only Builders who wish to take advantage of High arch rating will themselves publish and promote it.

Anyway, after reaching some stage we will replace the "search with project id" with just "search".

Incredibly thanks for your feedback.
Arch seismic rating services.

DhImAn said...

Moreover Builders are not permitting us to publish the Rating if it was Low.

Precisely my point. Thanks for proving your own utter uselessness.

Pawan said...

@Dhiman,
Excellent point :)
I feel the same about Residex. As soon as prices fall down, the data will not be reported. In fact, Indian govt did the same to weekly reporting of inflation numbers few months back.
Hide the bad new. Put up a brave face.

Pawan said...

http://www.outlookindia.com/article.aspx?281109

aam aadmi said...

@Pawan
The answer to the Article's title "Was it a mirage then" is a resounding Yes.

Cheap money inflow does not equal wealth, neither does exploitation of natural resources. Both of them result in temporary prosperity. Real prosperity requires grass roots social reforms.

What we are witnessing is neither corruption nor conspiracy, it's a classic case of tragedy of the commons. I didn't see articles like these in 2006 or 2007 when sensex was touching 21k. Everyone, including our middle class which is shouting corruption corruption nowadays drank the cool aid back then, now when the repercussions are coming forth everyone's complaining.

Anonymous said...

So when do you think RE will stabilize/fall/crash.. have been hearing this since the last 5 years.. but see no difference.. are we going the zimbabwe way? indian inflation and economic insecurity is rally palpable now..

Anonymous said...

// So when do you think RE will stabilize/fall/crash.. //

Crash = RE on par with other expenses. Yes, it is already on, see other expenses getting on par with RE prices, more to come. This time RE crash is not because RE prices will fall, but because of so-called inflation.

// have been hearing this since the last 5 years.. but see no difference.. //

are you kidding! everything is getting expensive, corruption is on rise.

// are we going the zimbabwe way? indian inflation and economic insecurity is rally palpable now..//

We might not be able to beat zimbabwe, but we are going that way. See RBI cutting rates and that too when inflation is increasing.. India is different and doing this very differently than what Japan and USA did.

Anonymous said...

Please elaborate and enlighten us:;
"unfortunately this is the case with most Indians, as they do not have any exposure to the kind of economic news and discourse that we enjoy on blogs like this."

aam aadmi said...

@Above
Is it so difficult to understand this statement...most people don't even know basic econ 101 let alone things like economic history, climate change or resource depletion. You could argue that ignorance is bliss and to a point you are right. But then they get shocked and angry when things turn ugly, people who know about these things don't and keep their BP in control.

Anonymous said...

dhimanbaboo,

what is this bukbuk..
go get a house as prices will shock you in 5 yrs. and work more hrs to pay the damn EMI///

skeptic's ghost said...

@Dhiman

If a CB decides to tighten the money supply (under whatever pretext), then they immediately create a mechanism whereby they grab all the collateral, and make you a slave too - because the collateral may not, at that time, cover then entire amount to be paid back.

this is not going to happen - for 4 years Fed interest rates have been 0% and will stay that way for at least 2 more years

In United States, housing loans mortgages are not full recourse - and Banks gave away loans with 0 down payment with the guarantee from FHA and Fannie Freddie to bail guarantee that low income borrowers wouldnt default. This didnt happen as the moment the property prices fell by a percent greater than the interest rate - the mortgages were underwater (you owed more than what the house was worth) the trigger point was not job losses but a glut in housing and demographic gap where there werent any new buyers (and all the flipper investors became net sellers)

In India typically a bank only lends 80% of the White component - White component is 70% of the actual price. - So end users are paying (30+14)% no matter what.

In order for mortgages in India to qualify as underwater prices would have to correct by 44% at least in INR terms. No way on earth, will the central bankers let that happen - and they will keep depreciating the currency instead.
They have backing from the rest of the worlds' central banks who are doing the same.

Even If there are massive job losses in IT sector - the people who took out mortgage will only have to sell/auction their houses for whatever they loaned to get away from trouble from debt collectors. (eventhough they take a 44% loss).

That trigger point/black swan as I have repeatedly said will not come now (it might take an entire generation of 30 years to happen).

Unless there is a war or a catastrophic event, the muddle along kicking the can will continue.

So who here has luxury to wait for 20-30 years for prices to fall?
"Borrow Now,Spend,Enjoy,(dont worry about kids),Die" is the new "save, help kids enjoy, hope they take care of you when old"

Anonymous said...

The answer to the Article's title "Was it a mirage then" is a resounding Yes.

It was worse than a mirage. It was theft.

Corruption has ensured that the profits have been privatized.

The country has been saddled with debt which all (especially the middle class salaried workers) will pay dearly for.

Losses are (and will be) moved to the public balance sheets.

The environment has been raped and natural resources have been looted.

DhImAn said...

this is not going to happen - for 4 years Fed interest rates have been 0% and will stay that way for at least 2 more years

Ah, now the discussion is going somewhere!

You are right, they won't do an outright theft from the people by stealing their property.

But they'll steal their property for sure, albeit indirectly.

The modus operandi is what we've seen all along - get the government to bail you out; this is in effect the very same theft, except that people don't generally recognize it as such.

They will force governments to keep bailing them out until the governments literally become their puppets, at which point they become the effective masters.

In the US, they told the US congress to prepare for martial law if the bailouts didn't go through; they forced the US to bail them out, and then they went ahead and paid themselves millions of dollars in bonuses.

Look at Greece to see a live example as it plays out.

Know that whatever the game is, it will be played under cover of "law"; i.e., there will be no overtly illegal activity, and people will continue to think that their governments and the "law" will provide them protection.

But people will continue to get poorer, either because of direct losses or indirect ones like inflation.

And as you know, at some point, poor people sell their assets, such as land and gold - and the moneylender... err elites stand ready to "buy" those assets with the same paper play money they can create at will.

This is a more complicated way of playing the same game, with the same outcomes, except that the poor people won't find anyone to blame, and won't send the elites to the guillotine.

You know why the mainstream hates the barbarous relic so much?

Because it alone stands in the way of this insidious wealth transfer.

aam aadmi said...

You know why the mainstream hates the barbarous relic so much?

I usually don't have any love for gold coz it's mostly useless for anything other than coinage but it looks like it along with other PM's will be the only haven against the financial storm that is already raging.

And the mainstream doesn't just hate gold, they also hate anything which encourages people not to buy useless shit.

People who encourage a simple gadget free living are usually classified as Eco-terrorists or Luddites.

jimi said...

Our beautiful Naples provided apartments and homes are among the human joint protection in the City expanse. With our tender and pensive staff, you testament be provided relocation options to fit your requirements and be fit to superior your perfect short-term or long-term accommodations.
naples corporate housing

Anonymous said...

"Jimi" you are a retard for posting here. And your language would be hilarious if not so pathetic.

DhImAn said...

I usually don't have any love for gold

I don't profess a love for the metal gold (or any other material thing) either.

My love is towards the ability of anything to insulate me from the stupidity of other people.

I have a deep faith that other people, especially those with power, will do stupid things, and these things will impact me negatively.

Anything that protects me from that, I love.

People who encourage a simple gadget free living are usually classified as Eco-terrorists or Luddites.

That's why I love India so much - I'd be classified as a sanyasi and worshiped.

(Just kidding.)

Anonymous said...

I am a little more confused now :-(

A) Commented: Anyone saving in INR should be admitted into a mental institution promptly.

B) Replied to (A): "unfortunately this is the case with most Indians, as they do not have any exposure to the kind of economic news"

I am confused whether (B) is criticizing a ludicrous comment or (B) is supporting (A) and saying majority Indians who might be doing this are foolish...

Please excuse me... Maybe I couldn't read between the lines.

Anonymous said...

http://www.firstpost.com/investing/real-estate-is-a-no-no-in-the-current-slowdown-scenario-332787.html?utm_source=MC_TOP_WIDGE

I feel people are unjustifiably writing such negative stories.
They need to be sued/prosecuted for fear mongering.

-NCR Real Estate & Property Dealers Association

aam aadmi said...

That's why I love India so much - I'd be classified as a sanyasi and worshiped

That's not unique to India. Almost all religions preach asceticism, think Buddhist/Christian Monks and Sufi saints. On a humorous note I'd say that becoming a sanyasi is the fastest route to money, sex and fame nowadays.

aam aadmi said...

I feel people are unjustifiably writing such negative stories.
They need to be sued/prosecuted for fear mongering.


LOL. And you are writing this on a blog like this??

I think before we start prosecuting people for fear mongering, we must prosecute people who are into corruption and cheating.

Anonymous said...

RE prices in India are on the upswing.

http://economictimes.indiatimes.com/markets/real-estate/news/india-sees-3rd-highest-rise-in-housing-prices-in-january-march-quarter/articleshow/13850699.cms

Anonymous said...

Rupee fall is going to fuel RE boom

http://www.ameinfo.com/investors-clinic-witnesses-20-increase-demand-302782

Anonymous said...

Anon @2:37 PM above

Only financially illiterate NRIs will borrow abroad to buy real estate in India.

Rent earned is pitiful (2-3%) and is in depreciating rupees which cannot be repatriated. Any nominal gains in prices are dwarfed by real depreciation of currency.

The astute will do the exact opposite just as the Indian elite have been doing all along, transfer as much of their net worth abroad and away from the toilet paper that is the Indian rupee.

samix said...

The NRI's settled in the Middle East do not have an option because they have to eventually come back to India after retirement, so they are always trying to "invest" in India and make "Something" before they have to return to India.

The case is different for NRI's settled in the west for they do not need to come back thus they may prefer investing in the countries where they live.

Anonymous said...

So the first sign of revival of the economy and the forum goes dead?
Look at the Sensex go up. realty index will go higher still.
25% YoY gain for the next 10 years is guaranteed.

Anonymous said...

So 25% for 10 years would mean a house worth 1cr would become 10cr..I suggest, everyone to take a loan and buy houses...after all what would be the emi for a loan at? 12-15%? Become Rich!

aam aadmi said...

So the first sign of revival of the economy and the forum goes dead?

Well yes of course...a 400 pt surge on sensex indicates a revival of the economy. How naive of me.
You my friend have a lot to learn.

I stopped following stock markets a long time back. It's of no consequence to what's happening in the real world. The way things are, economic collapse is written in stone, it's all pervasive and continuous, from time to time fire crackers like Greece will go off but don't look for any end of the world scenarios.

Anonymous said...

>>So the first sign of revival of the economy and the forum goes dead?>>

I want to ask the bears in this blog, in your job don't you expect a very high appraisal, if not jump to a competitor without any loyalty? If so why do you complain about RE prices? You can't have the cake and eat it too!!

Pawan said...

in your job don't you expect a very high appraisal, if not jump to a competitor without any loyalty?

Never in my 10 years of career have I done that. I can go to Bangalore - the mecca for techies in India - and get a 30-50% hike without breaking a sweat but I am not going. Instead I am working in a startup where we may not even get a hike this year. If the company does well, only then we will all make money. I have interviewed more people than I can remember and I can tell you I have only recommended two i.e., 02 people ever for hire in my 10 year career. Many of those whom I rejected were earning as much or even higher than me. Every tom, dick and harry is getting paid in top dollars today but that too is a bubble.

Anonymous said...

Haha. With the sensex galloping, the rupee appreciating and hopes of an interest cut, FII money is flowing in. Bye bye RE bust for another couple of years. If you dont buy now in 2 yrs you will be priced out and can never buy a home.

DhImAn said...

If you dont buy now in 2 yrs you will be priced out and can never buy a home.

And that is a bad thing... exactly how?

Anonymous said...

// And that is a bad thing... exactly how?

This is bad becuase people who rent in India have to move constantly. Moreover, people renting houses are looked down upon and have less social standing.

Anonymous said...

// people renting houses are looked down upon and have less social standing. //

That will change. Trust me.

Anonymous said...

they have to eventually come back to India after retirement, so they are always trying to "invest" in India and make "Something" before they have to return to India.

Good point. Thanks for highlighting the other perspective.

Anonymous said...


// people renting houses are looked down upon and have less social standing. //

That will change. Trust me.


1000+ years of recorded human history suggests that won't be the case.

Landlord > tenant

Anonymous said...

// people renting houses are looked down upon and have less social standing. //
That will change. Trust me.


renting works as long as one is single. Once you are married and have kids if you are still renting it will hurt. People in India are very nosy and keep asking why you did not buy a house. Life just becomes miserable

polt said...

@Pawan - "Every tom, dick and harry is getting paid in top dollars today but that too is a bubble."

Amen to that. A common feature across all bubbles is that the large majority don't know that they are in a bubble. A small minority do (the warren buffets, peter templetons, george soross') and they profit immensely from it.

Salaries (atleast in IT) are in a bubble. And folks seem to expect double digit rises for ever. What remains to be seen is whether this will be pricked by a slowdown or the rise of another low cost competitor.

@Anon - "people renting houses are looked down upon and have less social standing. "
Not universally true. More people rent in Germany than own. This was true to an extent in the US as well, till the invention of the 30 year fixed mortgage, that fueled the ownership culture.

Anonymous said...

// Not universally true. More people rent in Germany than own. This was true to an extent in the US as well, till the invention of the 30 year fixed mortgage, that fueled the ownership culture

This might not be true universally but we are talking about india, you moron. Here social relations and people poking noses in each others affairs or running down others is very common. Look at marriages. Where else in the world people spend crores on a wedding.

Anonymous said...

Dear Sir,
I Have read this topic and I totally agree with you.

www.propertygurgaon.co.in

Unitech Group (Real Estate Developer) said...

Hii....
Unitechgroup is today a leading real estate developer in India. Known for the quality of its products, it is the first developer to have been certified ISO 9001:2000 in North India and offers the most diversified product mix comprising residential, commercial/IT parks, retail, hotels, amusement parks and SEZs.

Siyaram Kanojiya said...

With close proximity to Navi Mumbai, a Property In Dombivali will give you best of both world- affordable property and easy connectivity to the city. Contact us for any queries, we will be glad to offer you one solution for all your queries.