Current Economy Crisis - Thoughts from Yogesh Chanbria

From Yogesh Chhabria :
Investor, Entrepreneur, Educator and Happionaire!

LATELY, I have been thinking a lot about the Lehman crisis. Spending
money that they didn't have and going beyond their means is one of the
main reasons for their situation today. In fact that is the cause for
the current economic crisis in the US.

When I see all this happening, I can only remember the good old days.
Then, karz (loan) was bad. People looked down upon those who took loans.
Parents would not give their daughter's hand in marriage to a man with
loans.

But of course, the times have changed now. Everyone I know has a loan.
The buzz word is EMI (equated monthly installment). Today, you can buy
everything on EMI - a house, a television, even an i-Pod. In fact I know
of someone who just bought a fancy BMW 3 series on EMI, instead of
buying a cheaper car outright with cash. I mostly prefer to take public
transport, but then I am an old man with old thoughts!

Anyway, coming back to what caused the crisis.

Imagine having Rs 2 lakh in your bank account, no regular income, yet
buying a house worth Rs 65 lakh, in the hope of selling it for a higher
price. Even if the price of the house fell by just 5 per cent (that is
Rs 3 lakh), you will go bankrupt.
This is what Lehman Brothers did; with around USD 20 billion they went
and bought assets worth over USD 600 billion. Isn't it suicidal and
simply foolish?

I am sure things would have been different, had I been the head of
Lehman brothers. But who wants an old conservative man like me to head a
complex financial institution.

But there are a few lessons that we can learn:

1.Live a balanced life and avoid overspending.

2. Don't buy things we don't need.

3. Don't buy Branded goods.

4. Don't buy excess Food, Clothes, Cosmetics, Footwear, electronics and
Fashion accuracies. Just think before you buy.

Tip: World still has a lot of growth ahead and the future holds
immense opportunities for us. Let us make the most of it and save and
invest it wisely instead of wasting our precious little on things we
don't need.

5. Try to balance life with work (No one is happy to work in their
professions).

6. Don't stress out your self, after work try to do some extra
activities like swimming, yoga, walking, running where you can divert
your mind from stress.

A thumb rule: Health is more important than money.

7. Try to understand each other (Wife and Husband) in financial matters
and help each other.

Tip: As soon as you get your monthly salary, set aside a fixed
amount, usually 35 per cent, for insurance, savings and investments. You
can then spend the rest.

8. Not all loans are bad. Loans that are 'need based' (home loans,
education loans) can always find a place in your finances against those
that are largely 'want based' (Credit cards, personal loans, car loans).

9. Borrow only if repayment is financially comfortable.

A thumb rule: Keep EMIs within 35 to 45 per cent of your monthly
income.

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U CAN MAKE A HUGE DIFFERENCE

U CAN MAKE A HUGE DIFFERENCE TO THE INDIAN ECONOMY BY FOLLOWING FEW SIMPLE STEPS. Please spare a couple of minutes here........ for the sake of India ... our country.. I got this article from one of my friends, but it's true, I can see this from day to day life, Small example,            Before 5 months                1 CAN $ = IND Rs 32            After 5 months. Now it is 1 CAN $ = IND Rs 37 Do you think Canadian Economy is booming? No, but Indian Economy is Going Down. Our Economy is in u'r hands INDIAN economy is in a crisis. Our country like many other ASIAN countries is undergoing a severe economic crunch. Many INDIAN industries are closing down. The INDIAN economy is in a crisis and if we do not take proper steps to control those, we will be in a critical situation. More than 30000 crore rupees of foreign exchange are being siphoned out of our country on products such as cosmetics, snacks, tea, beverages... etc which are grown, produced and consumed here . A cold drink that costs only 70 / 80 paisa to produce is sold for NINE rupees, and a major chunk of profits from these are sent abroad. This is a serious drain on INDIAN economy. "COCA COLA "and" SPRITE" belong to the same multinational company, "COCA COLA"? Coke advertisements says ' JO CHAHO HOJAYE, COCACOLA ENJOY' (Whatever the hell, let it happen, you drink coke) What can you do?

You can consider some of the better alternatives to aerated drinks.
You can drink LEMON JUICE, FRESH FRUIT JUICES, CHILLED LASSI (SWEET OR SOUR), BUTTER MILK, COCONUT WATER, JALJEERA, ENERJEE, MASALA MILK........ ..


Everyone deserves a healthy drink, including you!
Over and above all this, economic sanctions have been imposed on us. We have nothing against Multinational companies, but to protect our own interests we request everybody to use INDIAN products only for next two years. With the rise in petrol prices, if we do not do this, the rupee will devalue further and we will end up paying much more for the same products in the near future.


What you can do about it?

1. Buy only products manufactured by WHOLLY INDIAN COMPANIES.
2. ENROLL as many people as possible for this cause.


Each individual should become a leader for this awareness.

This is the only way to save our country from severe economic crisis. You don't need to give-up your lifestyle. You just need to choose an alternate product.

All categories of products are available from WHOLLY INDIAN COMPANIES.

LIST OF PRODUCTS

BATHING SOAP: USE - CINTHOL & OTHER GODREJ BRANDS, SANTOOR, WIPRO SHIKAKAI, MYSORE        SANDAL, MARGO, NEEM, EVITA, MEDIMIX, GANGA , NIRMA BATH & CHANDRIKA

INSTEAD OF - LUX, LIFEBOY, REXONA, LIRIL, DOVE, PEARS, HAMAM, LESANCY, CAMAY, PALMOLIVE


TOOTH PASTE: USE - NEEM, BABOOL, PROMISE, VICO VAJRADANTI, PRUDENT, DABUR PRODUCTS, MISWAK

INSTEAD OF - COLGATE, CLOSE UP, PEPSODENT, CIBACA, FORHANS, MENTADENT.


TOOTH BRUSH: USE - PRUDENT, AJANTA , PROMISE

INSTEAD OF - COLGATE, CLOSE UP, PEPSODENT, FORHANS, ORAL-B

SHAVING CREAM: USE - GODREJ, EMANI

INSTEAD OF - PALMOLIVE, OLD SPICE, GILLETE


BLADE: USE - SUPERMAX, TOPAZ, LAZER, ASHOKA

INSTEAD OF - SEVEN-O -CLOCK, 365, GILLETTE


TALCUM POWDER: USE - SANTOOR, GOKUL, CINTHOL, WIPRO BABY POWDER, BOROPLUS

INSTEAD OF - PONDS, OLD SPICE, JOHNSON BABY POWDER, SHOWER TO SHOWER


MILK POWDER: USE - INDIANA, AMUL, AMULYA

INSTEAD OF - ANIKSPRAY, MILKANA, EVERYDAY MILK, MILKMAID.


SHAMPOO: USE - LAKME, NIRMA, VELVET INSTEAD OF - HALO, ALL CLEAR, NYLE, SUNSILK, HEAD AND SHOULDERS, PANTENE

MOBILE CONNECTIONS USE - BSNL, AIRTEL INSTEAD OF - HUTCH


Every INDIAN product you buy makes a big difference. It saves INDIA . Let us take a firm decision today.


BUY INDIAN TO BE INDIAN we are not against of foreign products.

WE ARE NOT ANTI-MULTINATIONAL.

WE ARE TRYING TO SAVE OUR NATION. EVERY DAY IS A STRUGGLE FOR A REAL FREEDOM.

WE ACHIEVED OUR INDEPENDENCE AFTER LOSING MANY LIVES.

THEY DIED PAINFULLY TO ENSURE THAT WE LIVE PEACEFULLY. THE CURRENT TREND IS VERY THREATENING.


MULTINATIONALS CALL IT GLOBALISATION OF INDIAN ECONOMY. FOR INDIANS LIKE YOU AND ME IT IS RECOLONISATION OF INDIA ...

THE COLONIST'S LEFT INDIA THEN. BUT THIS TIME THEY WILL MAKE SURE THEY DON'T MAKE ANY MISTAKES.


WHO WOULD LIKE TO LET A" GOOSE THAT LAYS GOLDEN EGGS" SLIP AWAY.

PLEASE REMEMBER: POLITICAL FREEDOM IS USELESS WITHOUT ECONOMIC INDEPENDENCE .


RUSSIA , S.KOREA , MEXICO ..........THE LIST IS VERY LONG!!
LET US LEARN FROM THEIR EXPERIENCE AND FROM OUR HISTORY.

LET US DO THE DUTY OF EVERY TRUE INDIAN.


FINALLY: IT'S OBVIOUS THAT U CAN'T GIVE UP ALL OF THE ITEMS MENTIONED ABOVE,


SO GIVE UP ATLEAST ONE ITEM TO FOR THE SAKE OF OUR COUNTRY.

We would be sending useless forwards to our friends daily.
Instead please forward this mail to all your friends to create awareness.

"LITTLE DROPS MAKE A GREAT OCEAN ."

 

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Bankruptcy explained in simple words !!!

 

Bankruptcy explained

 

Once there was a little island country. The land of this country was the tiny island itself. The total money in circulation was 2 dollars as there were only two pieces of 1 dollar coins circulating around.

 

1) There were 3 citizens living on this island country.  A owned the land. B and C each owned 1 dollar.

 

2) B decided to purchase the land from A for 1 dollar. So, now A and C own 1 dollar each while B owned a piece of land that is worth 1 dollar.

 

* The net asset of the country now = 3 dollars.

 

3) Now C thought that since there is only one piece of land in the country, and land is non producible asset, its value must definitely go up. So, he borrowed 1 dollar from A, and together with his own 1 dollar, he bought the land from B for 2 dollars.

 

* A has a loan to C of 1 dollar, so his net asset is 1 dollar.

* B sold his land and got 2 dollars, so his net asset is 2 dollars.

* C owned the piece of land worth 2 dollars but with his 1 dollar debt to A, his net residual asset is 1 dollar.

* Thus, the net asset of the country = 4 dollars.

 

4) A saw that the land he once owned has risen in value. He regretted having sold it. Luckily, he has a 1 dollar loan to C. He then borrowed 2 dollars from B and acquired the land back from C for 3 dollars. The payment is by 2 dollars cash (which he borrowed) and cancellation of the 1 dollar loan to C. As a result, A now owned a piece of land that is worth 3 dollars. But since he owed B 2 dollars, his net asset is 1 dollar.

 

* B loaned 2 dollars to A. So his net asset is 2 dollars.

* C now has the 2 coins. His net asset is also 2 dollars.

* The net asset of the country = 5 dollars. A bubble is building up.

 

(5) B saw that the value of land kept rising. He also wanted to own the land. So he bought the land from A for 4 dollars. The payment is by borrowing 2 dollars from C, and cancellation of his 2 dollars loan to A.

 

* As a result, A has got his debt cleared and he got the 2 coins. His net asset is 2 dollars.

* B owned a piece of land that is worth 4 dollars, but since he has a debt of 2 dollars with C, his net Asset is 2 dollars.

* C loaned 2 dollars to B, so his net asset is 2 dollars.

 

* The net asset of the country = 6 dollars; even though, the country has only one piece of land and 2 Dollars in circulation.

 

(6) Everybody has made money and everybody felt happy and prosperous.

 

(7) One day an evil wind blew, and an evil thought came to C's mind. "Hey, what if the land price stop going up, how could B repay my loan. There is only 2 dollars in circulation, and, I think after all the land that B owns is worth at most only 1 dollar, and no more."

 

(8) A also thought the same way.

 

(9) Nobody wanted to buy land anymore.

 

* So, in the end, A owns the 2 dollar coins, his net asset is 2 dollars.

* B owed C 2 dollars and the land he owned which he thought worth 4 dollars is now 1 dollar. So his net asset is only 1 dollar.

* C has a loan of 2 dollars to B. But it is a bad debt. Although his net asset is still 2 dollars, his Heart is palpitating.

* The net asset of the country = 3 dollars again.

 

(10) So, who has stolen the 3 dollars from the country ? Of course, before the bubble burst B thought his land was worth 4 dollars. Actually, right before the collapse, the net asset of the country was 6 dollars on paper. B's net asset is still 2 dollars, his heart is palpitating.

 

(11) B had no choice but to declare bankruptcy. C as to relinquish his 2 dollars bad debt to B, but in return he acquired the land which is worth 1 dollar now.

 

* A owns the 2 coins; his net asset is 2 dollars.

* B is bankrupt; his net asset is 0 dollar. (he lost everything)

* C got no choice but end up with a land worth only 1 dollar

 

* The net asset of the country = 3 dollars.

 

**************End of the story; BUT *********************

 

There is however a redistribution of wealth.

 

A is the winner, B is the loser, C is lucky that he is spared.

 

A few points worth noting -

(1) When a bubble is building up, the debt of individuals to one another in a country is also building up.

(2) This story of the island is a closed system whereby there is no other country and hence no foreign debt. The worth of the asset can only be calculated using the island's own currency. Hence, there is no net loss.

(3) An over-damped system is assumed when the bubble burst, meaning the land's value did not go down to below 1 dollar.

(4) When the bubble burst, the fellow with cash is the winner. The fellows having the land or extending loan to others are the losers. The asset could shrink or in worst case, they go bankrupt.

(5) If there is another citizen D either holding a dollar or another piece of land but refrains from taking part in the game, he will neither win nor lose. But he will see the value of his money or land goes up and down like a see saw.

(6) When the bubble was in the growing phase, everybody made money.

(7) If you are smart and know that you are living in a growing bubble, it is worthwhile to borrow money (like A) and take part in the game. But you must know when you should change everything back to cash.

(8) As in the case of land, the above phenomenon applies to stocks as well.

(9) The actual worth of land or stocks depends largely on psychology (or speculation).

Be wise n right on speculation if u want to win!!!

 

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