RBI has cut rates by 50 basis points – which is 0.50%. That means everything is cheaper! Even in stock markets! (Nifty is currently lower. But it’s seriously crazy so who knows where it will be by the time I finish writing)

So the history is like this, and from today, the repo rate will be 6.75%

Repo is the rate at which banks borrow for their requirements from RBI overnight. In recent times, banks have only parked excess cash with the RBI, so this rate may make no difference. Even today, after the rate cut, when there was a repo auction for 15,000 cr. the banks only took 8,000 cr. of it:

This rate cut won’t make a difference immediately but it will require them to cut rates.

Outlook: Not good for world, and we have to stoke demand for India

The summary of the statement is:

Since our last review, the bulk of our conditions for further accommodation have been met.

Meditation isn’t easy. It takes time and energy. Some people wonder why they should bother with meditation at all.

Here is an inversion of meditation. This is what Meditation isn’t.

There are a number of common misconceptions about meditation. The same things come up over and over.

In Mindfulness in Plain English, Henepola Gunaratana deals with 11 of these preconceptions one at a time.

Misconception 1: Meditation is Just a Relaxation Technique

The bugaboo here is the word just. Relaxation is a key component of meditation, but vipassana-style meditation aims at a much loftier goal. The statement is essentially true for many other systems of meditation. All meditation procedures stress concentration of the mind, bringing the mind to rest on one item or one area of thought. Do it strongly and thoroughly enough, and you achieve a deep and blissful relaxation, called jhana. It is a state of such supreme tranquillity that it amounts to rapture, a form of pleasure that lies above and beyond anything that can be experienced in the normal state of consciousness. Most systems stop right there. Jhana is the goal, and when you attain that, you simply repeat the experience for the rest of your life. Not so with vipassana meditation. Vipassana seeks another goal: awareness. Concentration and relaxation are considered necessary concomitants to awareness. They are required precursors, handy tools, and beneficial byproducts. But they are not the goal. The goal is insight. Vipassana meditation is a profound religious practice aimed at nothing less than the purification and transformation of your everyday life.

Misconception 2: Meditation is Going Into a Trance

Here again the statement could be applied accurately to certain systems of meditation, but not to vipassana. Insight meditation is not a form of hypnosis. You are not trying to black out your mind so as to become unconscious, or trying to turn yourself into an emotionless vegetable. If anything, the reverse is true: you will become more and more attuned to your own emotional changes. You will learn to know yourself with ever greater clarity and precision. In learning this technique, certain states do occur that may appear trancelike to the observer. But they are really quite the opposite. In hypnotic trance, the subject is susceptible to control by another party, whereas in deep concentration, the meditator remains very much under his or her own control. The similarity is superficial, and in any case, the occurrence of these phenomena is not the point of vipassana. As we have said, the deep concentration of jhana is simply a tool or stepping stone on the route to heightened awareness. Vipassana, by definition, is the cultivation of mindfulness or awareness. If you find that you are becoming unconscious in meditation, then you aren’t meditating, according to the definition of that word as used in the vipassana system.

Misconception 3: Meditation is a Mysterious Practice That Cannot be Understood

Here again, this is almost true, but not quite. Meditation deals with levels of consciousness that lie deeper than conceptual thought. Therefore, some of the experiences of meditation just won’t fit into words. That does not mean, however, that meditation cannot be understood. There are deeper ways to understand things than by the use of words. You understand how to walk. You probably can’t describe the exact order in which your nerve fibers and your muscles contract during that process. But you know how to do it. Meditation needs to be understood that same way— by doing it. It is not something that you can learn in abstract terms, or something to be talked about. It is something to be experienced. Meditation is not a mindless formula that gives automatic and predictable results; you can never really predict exactly what will come up during any particular session. It is an investigation and an experiment, an adventure every time. In fact, this is so true that when you do reach a feeling of predictability and sameness in your practice, you can read that as an indication that you have gotten off track and are headed for stagnation. Learning to look at each second as if it were the first and only second in the universe is essential in vipassana meditation.

Misconception 4: The Purpose of Meditation is to Become Psychic

No. The purpose of meditation is to develop awareness. Learning to read minds is not the point. Levitation is not the goal. The goal is liberation. There is a link between psychic phenomena and meditation, but the relationship is complex. During early stages of the meditator’s career, such phenomena may or may not arise. Some people may experience some intuitive understanding or memories from past lives; others do not. In any case, these phenomena are not regarded as well-developed and reliable psychic abilities, and they should not be given undue importance. Such phenomena are in fact fairly dangerous to new meditators in that they are quite seductive. They can be an ego trap, luring you right off the track. Your best approach is not to place any emphasis on these phenomena. If they come up, that’s fine. If they don’t, that’s fine, too. There is a point in the meditator’s career where he or she may practice special exercises to develop psychic powers. But this occurs far down the line. Only after the meditator has reached a very deep stage of jhana will he or she be advanced enough to work with such powers without the danger of their running out of control or taking over his or her life. The meditator will then develop them strictly for the purpose of service to others. In most cases, this state of affairs occurs only after decades of practice. Don’t worry about it. Just concentrate on developing more and more awareness. If voices and visions pop up, just notice them and let them go. Don’t get involved.

Misconception 5: Meditation is Dangerous and a Prudent Person Should Avoid it

Everything is dangerous. Walk across the street and you may get hit by a bus. Take a shower and you could break your neck. Meditate, and you will probably dredge up various nasty matters from your past. The suppressed material that has been buried for quite some time can be scary. But exploring it is also highly profitable. No activity is entirely without risk, but that does not mean that we should wrap ourselves in a protective cocoon. That is not living, but is premature death. The way to deal with danger is to know approximately how much of it there is, where it is likely to be found, and how to deal with it when it arises. That is the purpose of this manual. Vipassana is development of awareness. That in itself is not dangerous; on the contrary, increased awareness is a safeguard against danger.

Misconception 6: Meditation is for Saints and Sadhus

It is true, of course, that most holy men meditate, but they don’t meditate because they are holy men. That is backward. They are holy men because they meditate; meditation is how they got there. And they started meditating before they became holy, otherwise they would not be holy. This is an important point. A sizable number of students seems to feel that a person should be completely moral before beginning to meditate. It is an unworkable strategy. Morality requires a certain degree of mental control as a prerequisite. You can’t follow any set of moral precepts without at least a little self-control, and if your mind is perpetually spinning like a fruit cylinder in a slot machine, self-control is highly unlikely.

…

There are three integral factors in Buddhist meditation— morality, concentration, and wisdom. These three factors grow together as your practice deepens. Each one influences the other, so you cultivate the three of them at once, not separately. When you have the wisdom to truly understand a situation, compassion toward all parties involved is automatic, and compassion means that you automatically restrain yourself from any thought, word, or deed that might harm yourself or others; thus, your behavior is automatically moral.

Misconception 7: Meditation is Running Away from Reality

Incorrect. Meditation is running straight into reality. It does not insulate you from the pain of life but rather allows you to delve so deeply into life and all its aspects that you pierce the pain barrier and go beyond suffering.

Misconception 8: Meditation is a Great way to get High

Well, yes and no. Meditation does produce lovely blissful feelings sometimes. But they are not the purpose, and they don’t always occur. Furthermore, if you do meditation with that purpose in mind, they are less likely to occur than if you just meditate for the actual purpose of meditation, which is increased awareness. Bliss results from relaxation, and relaxation results from release of tension. Seeking bliss from meditation introduces tension into the process, which blows the whole chain of events. It is a Catch-22: you can only experience bliss if you don’t chase after it. Euphoria is not the purpose of meditation. It will often arise, but should be regarded as a byproduct.

Misconception 9: Meditation is Selfish

It certainly looks that way. There sits the meditator parked on a little cushion. Is she out donating blood? No. Is she busy working with disaster victims? No. But let us examine her motivation. Why is she doing this? The meditator’s intention is to purge her own mind of anger, prejudice, and ill will, and she is actively engaged in the process of getting rid of greed, tension, and insensitivity. Those are the very items that obstruct her compassion for others. Until they are gone, any good works that she does are likely to be just an extension of her own ego, and of no real help in the long run. Harm in the name of help is one of the oldest games.

Misconception 10: When you Meditate, you Sit Around Thinking Lofty Thoughts

Of course, lofty thoughts may arise during your practice. They are certainly not to be avoided. Neither are they to be sought. They are just pleasant side effects. Vipassana is a simple practice. It consists of experiencing your own life events directly, without preferences and without mental images pasted onto them. Vipassana is seeing your life unfold from moment to moment without biases. What comes up, comes up. It is very simple.

Misconception 11: A Couple of Weeks of Meditation and All My Problems will go Away

Sorry, meditation is not a quick cure-all. You will start seeing changes right away, but really profound effects are years down the line. That is just the way the universe is constructed. Nothing worthwhile is achieved overnight. Meditation is tough in some respects, requiring a long discipline and a sometimes painful process of practice. At each sitting you gain some results, but they are often very subtle. They occur deep within the mind, and only manifest much later. And if you are sitting there constantly looking for huge, instantaneous changes, you will miss the subtle shifts altogether. You will get discouraged, give up, and swear that no such changes could ever occur. Patience is the key. Patience. If you learn nothing else from meditation, you will learn patience. Patience is essential for any profound change.

Mindfulness in Plain English is worth reading.

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Sponsored By: Greenhaven Road Capital: You think differently - now invest differently.

You want a career you love, right?

One that’s interesting, challenging, financially rewarding, and that makes all of your friends say, “Damn, how did you land that job?”

Everyone wants that kind of a career, but most people settle for a string of jobs.

Why does this happen?

Today I want to introduce you to two common but rarely discussed “traps” that kill most career hopes so you can get past them and choose a career that’s right for you.

Trap #1 – Following your passion

Commencement speakers, career “experts,” and parents throw around “follow your passion” advice all the time. It’s no wonder people believe that if you’re not following your passion, you’re somehow getting it wrong.

But what are you supposed to do if you don’t know what your passion is?

Are you supposed to just sit around and think your way into it? Take some career quiz that’ll spit out a list of jobs you should be passionate about?

Kill me now.

I get so mad when I read most of the career advice out there because it’s unspecific at best, and blatantly wrong at worst. (Don’t believe me, check out the worst career advice ever.)

All of us want to find work we love to do, and then get paid for it, but our passion isn’t just going to fall from the sky – we have to pursue it.

In this video, I explain my take on passion. Pay close attention to 2:22 where I explain where most people go wrong when thinking about passion and how you can take a different approach.

You’ll be much better off if you spend time getting good at something. Once that happens, it’s likely the passion will follow.

Okay, now that you’ve let go of the need to figure out what your passion is, it’s time to take a look at some of the thoughts that might be getting in your way.

Trap #2 – Thinking you need specific credentials to have a career you love

Over the past 11 years I’ve taught hundreds of thousands of people how to save money, earn money, and automate their finances. And I’m not a Certified Financial Planner or CPA.

I’ve also helped thousands of people who lack the “right” credentials and experience find their Dream Job, and I’ve never taken a career counseling or career coaching class in my life.

Yes, sometimes credentials do matter. If you want to be a cardiothoracic surgeon, then you better get some initials next to your name, but there are plenty of people who’ve reached the top of their field without racking up a list of traditional credentials and experiences.

So, what separates those who move forward despite their supposed lack of credentials and those who just cross their fingers and hope the perfect career lands in their lap?

Mindset.

When it comes to going after something that feels a little bit out of reach, our invisible scripts hold us back.

Take choosing a career. You’ll often hear people give up before they even start with lines like:

• “I didn’t go to an Ivy League school so I’ll never get an interview at the company I want to work for.”
• “I work really hard so I should be given more opportunities. It shouldn’t be so hard to get noticed.”
• “I don’t know the right people.”
• “I don’t have the right credentials so I’ll never get a job in my field of choice.”

Sound familiar?

Invisible scripts keep you stuck and prevent you from having a career you love. That’s why the smartest people relentlessly identify and dismantle their invisible scripts. Others let their scripts control them.

Here’s one easy way to start liberating yourself from your scripts: Pretend you’re already perfect.

Pretend you already have the “right” credentials and the “right” experiences for the career path you’d like to pursue.

If this were the case, how would you approach your job search differently?

• “I’d ask for a meeting with a top performer.”
• “I’d network more aggressively.”
• “I’d apply for the job I really want and tell them exactly how I’d change the company in that role.”

No, you may not be perfect, but that doesn’t mean you can’t do all of the things mentioned above. It’s funny how clear people get on the best steps to take when they get rid of the barriers and just pretend they’re already perfect.

When you act as if you’re already perfect, you stop focusing on what you think you’re missing and start moving toward the career you want.

Choosing a career you’ll love

Now that you’ve avoided the 2 key traps that kill most careers, it’s time to actually choose your career — and I have a special bonus for you today that’ll make it really easy for you.

Sign up below and get instant access to my 46-minute video, The 80/20 Guide to Finding Your Dream Job. I go in depth on how to find your dream job and share detailed strategies, mindsets, and stories about how to short-circuit the process that so many people waste time on.

2 Common Traps to Avoid When Choosing a Career is a post from: I Will Teach You To Be Rich.

The Slack Discussions

The Slack group at Capital Mind Premium has been extremely active and if you haven’t been there, pop us a note by replying to this email. (If you’re a trial member this probably sound like Greek to you; it will be available when you sign up!)

A brief summary of some of the interesting things discussed there in the last few days:

#general: Will Piramal Realty Prove To Be Lucky For Warburg Pincus And Goldman Sachs?

It is a clear case of oversupply in Thane, with no demand,” says Ahuja, who is one of the 300 registered agents among a crop of 2,000 largely unorganised ones who have mushroomed over the past five years in Thane.

http://www.outlookbusiness.com/the-big-story/lead-story/will-piramal-realty-prove-to-be-lucky-for-warburg-pincus-and-goldman-sachs-1936

#general: Goldman Sachs joins the ETF rush

Trenches are being dug in the next big battleground for the investment industry, as Goldman Sachs’s asset management arm launches its first exchange traded fund to snag some of the billions of dollars pouring into the next generation of passive investment products.… (Read On...)

India Cements will give shares of Chennai Super Kings Ltd. (The company that owns the IPL team) to all its shareholders, for free. The record date is October 9, 2015.

So you get a chance to own the Chennai Super Kings if you buy India Cement Shares now or before October 7, and hold them through the record date. You get one share of the Chennai Super Kings owning company if you own a share of India Cement.

Apparently, there is no major value being ascribed to India Cements:

• Stock Price: Rs. 76.9
• Futures Contract Price (October): Rs. 77.0

Typically, in such arrangements people would believe that the stock price of India Cements will fall (to account for the value in the CSK team) on the record date. The October Futures contract, which expires 29 Oct (much after the record date) should be trading at a lower price to reflect this fall.… (Read On...)

Currently reading this paper by Brelsford, Martin, Hand and Bettencourt of the Santa Fe Institute (did I tell you I just got my first MOOC certificate from this institute last week?) on the topology of cities. I have only a rudimentary understanding of topology (thanks to an excellent session with Dr. V Vinay), but considering that I know Graph Theory fairly well, I’ve been able to follow the paper so far.

The paper talks about “universally accessible blocks” in cities, which is basically about blocks where each unit can be accessed directly by road without going through other units. Developed cities, the paper argues, has mostly universally accessible blocks, while non-universally accessible blocks are artefacts of non-developed countries and old cities.

The problem with non-univerally accessible blocks is that the “inner units” in such blocks (which are not directly accessible by road) are mostly deprived of public and emergency services and this affects the  quality of life in such blocks. The paper, for example, talks about mostly slums having such architecture, and that newly developed cities usually try to have universally accessible blocks.

When Bangalore was developed in a planned fashion starting in the 1950s (led by the “City Improvement Trust Board” which later morphed into the “Bangalore Development Authority”), a number of new areas were designed for large houses. Large sites were allotted, and regulations framed such that buildings on such sites be sparse (they were called “bungalow sites”). The part of Bangalore I live in, Jayanagar, for example, has a large concentration of such bungalow sites.

While in theory such sites make sense, the fact is that not too many people were enthused about sparse buildings on such sites. So they took advantage of loopholes in regulation (even best designed policies have loopholes) to build multiple buildings on the site. Later on, these sites got partitioned into smaller sites, with at least one building on each smaller site. As a result of partitioning, a large number of units thus created were not “accessible”.

Allotting big sites and getting people to build big houses on them in order to “lead development” into a new area might have been a great idea in theory, but the fact that most people could not afford to build such big houses and loopholes in regulation resulted in non-accessible units! Of course it results in lower infrastructure costs (since the road network is sparser than is necessary), but it comes at a price since not everyone has equal access to infrastructure.

As a wise man once said, #thatzwhy we need strong regulation.

Options are good, right?

Not necessarily.

Think about the last time you were in a grocery store. What kind of soap did you buy? What brand of cereal? Likely, it was one you’d had before — even if you aren’t completely satisfied with it.

Why is that? The reason is that there are just too many options for you to evaluate each one. So, your brain goes to the default.

You are not alone.

Consider this experiment:

“Shoppers at an upscale food market saw a display table with 24 varieties of gourmet jam. Those who sampled the spreads received a coupon for $1 off any jam. On another day, shoppers saw a similar table, except that only six varieties of the jam were on display. The large display attracted more interest than the small one. But when the time came to purchase, people who saw the large display were one-tenth as likely to buy as people who saw the small display.”

How can you compare 24 different types of jam? You can’t. That’s why the overwhelmed shoppers choose nothing. This is the Paradox of Choice in action.

Of course, this isn’t just about jam or groceries. The paradox of choice affects many areas of our life. BIG areas like our finances, our career, and even our productivity.

What happens when we have too many choices

The truth is, we have limited cognition and willpower and when we waste it processing minor decisions such as what type of jelly or soap to buy, this is what happens:

Even when we’re motivated to do big things — save money, find a new job, or finally finish that looming project — we don’t get it done.

But we’re not doomed to this pattern forever. By understanding how our brain works, we can take steps to reduce or even eliminate the effect of the paradox of choice when it really matters.

What to do about the paradox of choice

If you want to live a Rich Life, focus on the four or five big wins. Get a dream job. Negotiate your salary. Invest automatically so you don’t have to think about it. It’s not a decision.

This type of focus short-circuits the paradox of choice. If you do these four or five things, it doesn’t matter how many lattes you buy. It doesn’t matter if you buy a small Coke or a large Coke. You don’t have to worry about the never-ending stream of little questions because those micro decisions are irrelevant in the grand scheme of things.

In other words, you don’t have to worry about which type of spaghetti sauce is the most affordable per ounce because you’re earning enough not to care. Grab the one that looks most interesting and move on with your day.

Today, I want to show you how focusing on just three Big Wins can help you reduce the paradox of choice in your life.

Big Win  #1: Eliminate the paradox of choice in your finances

Think about the 50+ money decisions you have to make today: Should you save more? What should you cut down on? What about investing — real estate or stocks or index funds? Pay off debt? Did you send in that Comcast bill on time? Is it time to rebalance your portfolio?

Faced with an overwhelming number of choices, most people respond in the same way: They do nothing.

As I said in my NYT best-selling book, I Will Teach You To Be Rich:

The idea that — gasp! — there is too much information is a real and valid concern. “But Ramit,” you might say, “that flies in the face of all American culture! We need more information so we can make better decisions! People on TV say this all the time, so it must be true! Huzzah!” Sorry, nope. Look at the actual data and you’ll see that an abundance of information can lead to decision paralysis, a fancy way of saying that with too much information, we do nothing. Barry Schwartz writes about this in The Paradox of Choice: Why More is Less:

…As the number of mutual funds in a 401(k) plan offered to employees goes up, the likelihood that they will choose a fund — any fund — goes down. For every 10 funds added to the array of options, the rate of participation drops 2 percent. And for those who do invest, added fund options increase the chances that employees will invest in ultraconservative money-market funds.

For the exact step-by-step system to stop wasting mental energy on your money, I created the free Ultimate Guide to Personal Finance (including entire chapters from my NYT best-selling book).

No overwhelming choices here. Just the few tactics I’ve discovered and perfected for automating and optimizing your money. You can manage your money in less than an hour a month and start spending on things you love, guilt-free.

Big Win #2: Eliminate the paradox of choice in your career

The paradox of choice is a very real problem when looking for a job — and it starts early. Remember high school? What do I want to do? What electives should I take? What college should I go to?

At 15 (or younger) we’re told we’re deciding our fate for the rest of our lives. The trouble is our choices are nearly endless.

The decisions don’t stop there — What should I major in? What about a minor? Should I get my master’s or get a job? If I go back to school, how will I make money? Can I start my own business? What if I have multiple passions?

Our parents don’t get this. They’re like, “Go get a good job! They have really good benefits!” I once went home during college and a family friend was visiting. He worked at a very large consumer-packaged goods company and believed I was a lost soul who needed advice. Imagine my face when he gave me this advice:

“Ramit, you should join this company. You work here 30 years, you’ll have a MILLION DOLLARS when you retire!”

I looked at him in disbelief. A million? That’s it? 30 years from now?

See, we don’t WANT to work at the same company for 30 years. But at the same time, we’re stuck choosing among 2, 3, sometimes 10 different ideas. What if we choose the wrong one and close all the other doors?

In the video below, I explain how to get a handle on what you really want to do and narrow down your choices in a systematic way:

Big Win #3: Eliminate the paradox of choice and get more done

When we don’t focus on the Big Wins, our brain is constantly using our precious energy on all the little things we have to worry about — the dirty laundry, what to eat for dinner, when to call mom.

Even when we’re not aware, our brain is working on solving these minute problems — leaving less mental capacity for working on the big stuff. Which means we’re constantly making a choice like should I worry about the laundry or worry about my career. The result? Again, we do nothing.

When you look at masters of their craft, you’ll notice that they’ve always built routines for the ordinary parts of life, so they can focus on what they’re best at.

For example, Steve Jobs wore turtlenecks every day so he didn’t have to worry about clothes. And professional athletes stock their fridges with vegetables and lean protein so they don’t have to decide between cake and celery.

You can build microsystems in your daily life that eliminate the paradox of choice so we can focus on what really matters.

Watch this video to learn how to eliminate the effect of the paradox of choice so you can finally tackle your to-do list.

Bonus Win: How to eliminate worry with the Worry Vault technique

New sources of stress will always pop up in our day-to-day lives.

A few years ago, I stumbled across a simple technique for eliminating these little stressors and worries so I can focus on what really matters. No more choosing minute-by-minute or wasting my willpower and cognition.

You can learn it in this free bonus video: “Eliminate 99% of Your Worries With This One Simple Technique.”

In the video, you’ll learn:

• How to stop worrying about what you can’t control
• Simple ways you can clear your mind and sleep better every night.
• My “Worry Vault” technique — so you never have to stress about little things again.

I bet you can find at least 3 things you could put in your “Worry Vault” today and never stress about them again.

How to overcome the paradox of choice is a post from: I Will Teach You To Be Rich.

Oh what a circus, oh what a show. Silicon Valley NRIs have gone to town. Over the visit of the Indian PM Narendra Modi.

Thousands have gathered in the SAP Center in San Jose, CA, to hear the great man speak. A lot of self-congratulatory speeches will be made, and the successes of NRIs in the US recounted. There is only one truth that will not be mentioned: that all these NRIs are in the US because they voted with their feet. They voted with their feet and came to the US because of what India is. This fact should actually shame Indians and its leaders. But instead they are oblivious to its implications. And it will be a cold day in hell when Indian leaders will ask themselves, these questions: “Why is it that so many hundreds of thousands of Indians vote with their feet? Why do they create wealth for themselves and for those foreign lands instead of creating wealth in India? Could it be because in India the government of India has put massive barriers to the creation of wealth?”

Dear PM Modi, when the circus is over, when the performers have done their song and dance, when the photos have been taken, when the NRIs have all patted themselves on a great event they made possible, do ponder the simple question of why are there so many NRIs? Because there is another phrase that describes these NRIs — economic refugees and economic migrants. When will India be such a place that there will be very few NRIs to welcome Indian politicians in foreign countries?

I don’t mean to rain on the parade but those questions need some attention if not a response.

I remain an NRI supporter of yours,
Atanu

Governments of successful economies don’t create large corporations.

The economic prosperity of a country is usually the consequence of the economic freedom that its citizens have. Entrepreneurs create a large number of small enterprises. Some of these grow up to become giant globe-spanning multinationals not because of government largesse but because some of those small enterprises created value for its customers and grew organically as more people found its goods and services worth buying.

Google, Facebook, etc etc, were not conjured up by some politician, or a bureaucracy, or through government diktat, or any “Make in India” type marketing campaign. For large corporations to grow in India, what is needed is an environment that is conducive to the small enterprise. This will of course not happen because there’s little hoopla one can engage in by freeing the little guy.

Let me haul a comment from the archives:

As it happens, any successful economy is a connected network of self-directed people and firms who do what they have to do, mainly out of self-interest. It is certainly not a neat set of large “investors” working in splendid isolation, shielded from the rest of the economy. A modern economy is best characterized as an ecosystem of diverse people and firms. It is a web of interrelated and interdependent economic agents whose actions are coordinated spontaneously by the market without the intervention of any centralized planning authority.

So you cannot have a set of rules that treat large firms differently from other economic actors. Why? Because every firm depends on the presence of other firms. If you don’t have small firms, you don’t have large firms. If there are missing markets, then all firms are affected. You cannot bring some firms under any umbrella without at the same time keeping out others from under that umbrella.

A large firm like Google depends on firms of every size — large, medium, small — to provide it with goods and services that it should not bother producing in-house. It has to focus on its core competency. A Google can not arise and prosper in a place where it cannot rely on the presence of firms that have complementary competencies.

Google did not arise from some government program that promoted the search engine industry or the advertising industry. It arose spontaneously because the economy provided all the innumerable inputs that are required for Google to do its job of combining them to produce its output. This is true of any large modern firm: it depends on every other industry. Google’s inputs come from every firm of the global economy, either directly or indirectly.

You cannot mandate nor conjure up a Google in your economy. Wishful thinking and fanciful promotions about “Make a Google, Twitter & Facebook in India” will not work. If the conditions are right, if the ecosystem exists, these will arise unbidden. The job of the government is to figure out what are the barriers to any firm — regardless of size — and remove them. The ecosystem will grow. That’s the nature of the world.

But if the conditions are not right, even if the government lays out the red carpet, nothing will happen.

The economy is really an ecosystem. If you have a sunny mild climate, adequate water, fertile soil and the absence of pests, things will grow. Leave it alone and it will soon become a healthy, balanced system. It will not be a monoculture.

If your field is not producing anything, it is best to take a bit of time and ask why your seeds are not growing. It is pointless to fund an advertising campaign promoting the idea “Our Fields are Great for Produce” and expect to reap a rich harvest. The seeds don’t care about ads; they only work if the conditions are right.

No bold and drastic measures need to be taken. Make sure that you are not poisoning the fields and get out of the way.

Thanks to Amit Chaubey for pointing to the comment.

Recep Tayyip Erdogan, Turkey’s president, has repeatedly tried publicly to bully the central bank into cutting interest rates, calling its governor a “traitor” and evoking the peculiarly paranoid notion of an “interest rate lobby” that was damaging Turkey by demanding high borrowing costs.

In Brazil, the central bank is still part of the finance ministry, and its head is answerable to the president. Its governors are also appointed by the president and have no fixed terms. In last October’s election, Marina Silva, the Brazilian Socialist party candidate, argued strongly that the central bank had done too little to control inflation in an election year because of political pressure from Dilma Rousseff, the president.

Photo Credit: Terence Faircloth

Q: So what is an asset worth?

A: I thought we talked about that.

Q: Yes, but we never really got through it.  Suppose on a nonvolatile day I want to sell $100 in shares of an open end mutual fund.  Now suppose I want to sell 5% of the total shares of the same fund.  What are my mutual fund shares worth?

A: This problem isn’t any different than that for an individual stock.  Liquidity carries a price.  If you want to buy or sell a lot at any given time, and you are the one demanding the trade be done, you will have to pay up for that privilege.  People who are less motivated than you will have to receive compensation for taking the other side of the trade.

Q: But on a mutual fund, why should the price move on a big trade?  Shouldn’t everything be tradable at the closing NAV?

A: Can you sell the whole world at the close?  To whom?  Where will you get all of the cash?

Q: Huh?

A: Only a tiny fraction of all the assets in the world trade on any given day.  There isn’t a lot of reason for most assets to trade — in the long run, we make money when we hold , not when we trade.  Trading itself is a small net economic loss, with money paid to brokers.

This is why there are primary markets, secondary markets, and within secondary markets, block trades.  Any big trade in stocks or bonds requires special handling — either a trader has to break it up into a bunch of little trades, or he has to hand it off to a specialist who finds someone willing to take the other side as a whole for a price concession, or the block trader takes the trade himself for a concession and tries to cover the position through small trades.

The thing is, there is not one price for an asset at any given point, but many prices — and they change depending upon how many want to buy or sell, and how quickly.  More buyers?  Crawl up the supply curve.  More sellers?  Slide down the demand curve.  There is no one price — and when we do name one price, it is a shortcut — a convenience.

Q: I find that confusing.

A: Look, economics has almost always moved in the direction of greater subjectivity over time.  An asset does not necessarily have the same value to you as it does to someone else.  Consider my house as an example.

Q: I’ve been to your house — it’s a bit of a hovel.  You couldn’t pay me to live there.

A: And I love it.  I have a lot of happy memories there.

Q: Aren’t we off track?  There’s a lot of difference between a unique house, and a share of a mutual fund.

A: That is only true because we sell identical tiny slices of a mutual fund.  If you wanted to sell all of the assets of the mutual fund as a whole, it is the same problem.

Liquidity in markets is always limited.  Always.  A small stream of trades helps validate prices for a given asset and related assets, but is inadequate to answer the question of what happens to the price when you want to do a big trade in a short period of time.  After all, supply and demand curves are theoretical constructs — it’s not as if you can look them up in the daily newspaper.

Q: What’s a newspaper?

A: Humph.  Are we done yet?

Q: I guess for now.  Are you going to write anything regarding the SEC’s proposal on open end mutual funds and ETFs regarding liquidity?

A: Probably.  I had a knee-jerk response to it, but as I read more about it, I became convicted that I had to study it more before I birthed bits and bytes into the cold abyss of the internet.  Remember, last time I wrote, I sent it to the SEC, and even talked with their legal staff.  Off the cuff most of the difficulties could probably be solved by loads that get paid to the mutual funds any time shares are created or liquidated, but that’s just a bias.  I like simple solutions because perfect regulations are a terror — perfection is impossible, so write something simple that covers 90% of it, and ignore the rest.

But all for now — my main question to myself is whether I have enough time to do it justice.  There’s their white paper on liquidity and mutual funds.  The proposed rule is a monster at 415 pages, and I may have better things to do.   If I do anything with it, you’ll see it here first.

Q: Until then.

Corporate disclosures rules in the US still permit long delays more appropriate to a bygone age before technology speeded up everything from stock trading to instant messaging. Cohen, Jackson and Mitts wrote a paper earlier this month arguing that substantial insider trading occurs during the four business day window available to companies to disclose material events. The paper studied over forty thousand trades by insiders that occurred on or after the event date and before the filing date; the analysis demonstrates that these trades (which may be quite legal) were highly profitable.

Cohen, Jackson and Mitts also document that companies do usually disclose information much earlier than the legal deadline: about half of the disclosures are made on the same day; and large firms are even more prompt in their filing. But nearly 15% of all filings use the full four day delay that is available. In the early 2000s, after the Enron scandal, the US SEC tried to reduce the window to two days, but gave up in the face of intense opposition. I think the SEC should require each company to monitor the median delay between the event and the filing, and provide an explanation if this median delay exceeds one day. Since there are on average about four filings per company per year, it should be feasible to monitor the timeliness over a rolling three year period.

Another troubling thing about the US system is the use of press releases as the primary means of disclosure. Last month, the SEC filed a complaint against a group of traders and hackers who stole corporate press releases from the web site of the newswire agencies before their public release. What I found most disturbing about this case was that the SEC went out of its way to emphasize that the newswire agencies were not at fault; in fact, the SEC redacted the names of the agencies (though it was not at all hard for the media to identify them). Companies disclose material events to a newswire several hours before the scheduled time of public release of this information by the newswire; the newswire agencies are not regulated by the SEC; they are not required to encrypt market sensitive data during this interregnum; there are no standards on the computer security measures that the newswires are required to take during this period; a group of relatively unsophisticated hackers had no difficulty hacking the newswire websites repeatedly over a period of five years. And the SEC thinks that no changes are required in this anachronistic system.

I hate carrying and transacting with cash. I find it extremely inconvenient and ineffective. The only place where I’m happy carrying and transacting with cash is Spain, where there is a high rate of pickpocketing, and carrying cash puts a floor on your downside.

There are several reasons to this. Cash is messy and dirty. Cash is prone to mutilation. Change is a massive problem. Even from the point of view of the central bank, printing currency costs significant money. When splitting bills at dinners I’m usually the guy who uses his card and “friendTMs”.

Recently (much belatedly, as I figured), I discovered IMPS. This service by the National Payments Corporation of India allows you to transfer money realtime. I used it once to transfer money between two bank accounts held (at different banks) by me. The “funds received” SMS arrived before the “funds transferred” SMS. It’s actually real time.

I had to make a payment to someone else last week and I had a problem with my ATM Card. Using the Citibank Mobile App, I discovered I could pay him up to Rs. 1000 without a second factor authentication, and only knowing his account number and bank IFSC code. The transaction took less than a minute. If he has a “MMID”, I could do the transfer using that ID and his mobile number, without him giving me his bank details. Again instantaneously.

So I’ve started wondering what prevents the tender coconut guy down the road (with whom I have a perennial change problem since a coconut costs Rs. 25, and 5 rupee notes/coins are hard to come by) putting up a board with his mobile number and MMID so that I can pay him through IMPS. I wonder the same about other vendors that I encounter in daily life.

The problem is one of product management and pricing. One reason credit cards haven’t taken off as much in India is that many vendors are concerned about the (~2%) interchange fees they pay on every transaction. So far I haven’t been charged for IMPS (at either end). Popularising and marketing it needs funding, though, and some kind of transaction fee structure needs to be figured out.

Currently, you have apps like Pockets, PingPay or Chillr that allow IMPS transfers. The beauty of these apps is that they eliminate the need for sharing MMID (which recipients have shared with the app on registration), and money can be transferred using the recipient’s Mobile Number only. The problem, though (as I had mentioned in this LinkedIn piece), is that these apps are currently building walls around banks, not permitting interoperability.

Since transactions take place on IMPS, there is no technical constraint. It’s about the war between these apps which prevents inter-bank integration. Given the network effects, though, it makes eminent sense for these platforms to merge and consolidate (or for one to “beat” the other), since this will unleash the “2ab term”.

Having watched the payments sector in a while now, I’m fairly bullish that electronic and mobile payments will take off in a rather large way here. What I’m not so clear about is what kind of pricing model will emerge, who will pay for it, and who will ultimately make money from it.

Prime Minister Modi is visiting the SF Bay area this weekend. Entreaties to “Make in India” will echo all around. Sadly, little attention has been given to why Indians themselves are unable to make in India, or even make it in India. Indians make it anywhere except in India. Particularly, Indians make it in the US. They are immensely successful as entrepreneurs and as top level managers in major corporations in the US. Why?

I wrote this in February earlier this year. Here it is, for the record.

Indians are not congenitally stupid. They are quite capable of getting things done. Creating schools and colleges is well within the capacity of Indians. The fact that the Indian education system is so worthless cannot be explained by the incompetence of people; it can only be explained by the fact that the government has a stranglehold on the system. Why would the government do that? Because of simple economics.

The economics of monopoly control explains the problem with India’s education system parsimoniously. If you want to make super-normal profits (what economists call “rents”), you cannot get it in a competitive market. You have to restrict entry of suppliers in the market and become the monopolistic supplier. Competition within the market always erodes rents. To capture the rents, the government can effectively shift competition within the market to competition for the market. Entry barriers is one way to effect this.

The government has entry barriers, major and minor. In essence, entry can be obtained by bribing the government. This reduces competition within the market and shifts the competition to “for the market.” One ex-chief minister of a major state of India is particularly infamous for controlling all entry into the education sector in the state and is reputed to have amassed a fortune valued at tens of billions of dollars. The high prices people have to pay to get a seat even in a worthless college in the state ends up in part in that man’s pocket. Rationally, therefore, some people make the decision to send their kids abroad if they can afford it.

Entry barriers guarantee low quality and high prices. Where there are no entry barriers, competition within the market guarantees a range of prices commensurate with quality and adequate supply. It also guarantees the absence of rents. These aspects of competitive markets make it particularly unattractive to the politicians. Rents are attractive to those who control. In this case, the politicians do the controlling and therefore collect the rents. That leads to high prices. Then there is the additional feature of a controlled market: low supply. When the supply is low, the politicians can ration out the limited supply to various favored groups in exchange for political support. This is where the caste- and religion-based quotas come into play. Naturally this is bad for the people as it fractures society along caste and religious lines. But it is good for the politicians.

The story is broadly simple. The constitution mandates the government involvement in the education sector. This is of course justified on the spurious grounds that education is a very critical sector and therefore the people cannot be trusted free-entry into providing that service. Government involvement in the sector politicizes education. The politicization of education corrupts the sector. In the end, the people suffer while the politicians enjoy the fruits of office.

The Modi government wants foreigners to invest and “Make in India.” Why would they want to make in India when people in India themselves are not allowed to make in India? I cannot fathom the logic of preventing Indians from doing things and then attempting to persuade outsiders to please do their business in India. It is time that the government removes all barriers to entry into the education sector. That will have the salutary effect of making education in India, lowering prices and raising quality. It will also save India a lot of foreign exchange that is lost to schools abroad. That will make India into a place where you won’t have to do a song and dance about “Make in India.”

Source: Make India first to “Make in India”. Feb 2015.

Four days ago, Tuesday, I was in NJ. It was the end of a very hectic East coast visit. I returned the rental car around 9 AM. I had put around 1,500 miles (about 2,500 kms) on it doing trips to Washington DC, Philadelphia, New York City, and Boston. The Hyundai Elantra was comfortable and spacious but it handled turns rather uncertainly. Could have been due to the tires but it could also be because I am used to a firmer suspension on my Saab 9-3. Anyhow, the rest of the day was spent in transit from Newark NJ to San Jose CA on Southwest Airlines. The layover was in Austin TX, a city famous for its music (Austin City Limits).

Upon arrival late evening, I got to know that Yogi Berra had passed away that day in Caldwell NJ. Although I have no interest in baseball, I had always loved “Yogi Berra-isms”. Indeed, I consider knowing them as part of a complete American education. In the final exams I set for econ courses I have taught, I always included one bonus question for extra points: “What is your favorite Yogi Berra-ism?” I kid you not.

You might wonder how he got the name “Yogi” when his actual name was “Lawrence Peter Berra.” The NYTimes obituary reports:

As a boy, Berra was known as Larry, or Lawdie, as his mother pronounced it. One day in his early teenage years, he and some friends had gone to the movies and were watching a travelogue about India when a Hindu yogi appeared on the screen sitting cross-legged. His posture struck one of the friends as precisely the way Berra sat on the ground as he waited his turn at bat. From that day on, he was Yogi Berra.

One of the most famous Yogi Berraisms is “It’s like déjà vu all over again.” It’s so well known that people tend to add the “all over again” every time they want to say déjà vu. Here are a few Yogi Berraisms.

“Thanks, you don’t look so hot yourself.” — After being told he looked cool.

“I always thought that record would stand until it was broken.”

“Yeah, but we’re making great time!” — In reply to “Hey Yogi, I think we’re lost.”

“If the fans don’t come out to the ball park, you can’t stop them.”

“Why buy good luggage? You only use it when you travel.”

“It’s never happened in the World Series competition, and it still hasn’t.”

“How long have you known me, Jack? And you still don’t know how to spell my name.” — Upon receiving a check from Jack Buck made out to “bearer.”

“Baseball is 90% mental — the other half is physical.”

“A nickel isn’t worth a dime today.”

“If you can’t imitate him, don’t copy him.”

And for those who like to steal hotel towels (not me, I swear), the truth of this one will hit home:

“The towels were so thick there I could hardly close my suitcase.”

Yogi, thank you and goodbye. I’m glad you were around.

{Part 1 of this series: “Turbulence in Houston.”}

In yet another tollway default, an SPV owned by GMR Infra has had delays in servicing debt, and has been downgraded to D (default) status by CARE. GMR Hyderabad Vijaywada Expressway Pvt Ltd (GHVEPL) has an incredible excuse for their troubles:

GHVEPL is located in the state of Telangana and Andhra Pradesh. Post bi-furcation of the state, both the state governments have formulated the sand mining policy, banning movement of minor minerals (especially sand) across the state border. Further, states have imposed levy of new taxes like octroi and entry tax on movement of goods across the state border. Due to such changes in the policies, the commercial vehicle traffic on account of movement of sand has drastically reduced from the projected traffic. Commercial vehicles contribute significant amount of revenues. This has severely impacted the revenues and cash flow of the company resulting in slight delay in payments.

So now it’s like “Oh we can’t pay because you won’t allow sand to be moved”, so we’re going to default.… (Read On...)