I’m pretty irritated.

Firstly, that there is no leadership emerging in the US take control and stem the panic that is spreading throughout the financial markets. When no one knows what’s going on, someone has to step up (and I don’t just mean reading from a tele-prompter, Bush) and provide some direction. We are seeing nothing. I guess it just reinforces that the current President is a big fat fail. The sad thing is, he’d have no credibility anyway.

Secondly, I’m irritated by this knee-jerk anti-bailout reaction (”$700bn to the fat cats!”). Check this diagram which I’m borrowing from the BBC:

Bail-out plan

It doesn’t help when the media sensationalises things. There is no $700bn going into some Wall Street bankers pockets. First off, $450bn of this bailout money is conditional.

Also, see that arrow pointing from the Banks to the Gov’t? That’s a stake in the banks being given to the taxpayers. So you’re not just losing money, you’re gaining an asset, and the chances are, at a very good price.

There’s a chance the US Gov’t could end up making a profit out of the situation when the housing market recovers, which it inevitably will. This credit bust is definitely a mess, but this doesn’t mean there won’t be any credit in the future. We need to think 5-10 years into the future. Things will recover, they always do.

The closest thing to this I’ve ever studied were the currency crises that happened in Asia in 1998 (indeed they were my savior in my final international economics exam). The big lesson I learned was that self-fulfilling prophecies can occur in the markets. If everyone loses faith in a currency, then it will crash, even if nothing has fundamentally changed.

The same thing can happen with banks. If we think some are going to fail, sell its shares, then we can help make it fail. So to counter-act that you need some pretty aggressive action, and even if it isn’t perfect, people are misunderstanding that doing nothing could be much, much worse (I mentioned that US Gov’t debt is not looking as secure as it once was – and that underpins everything in the current global economy).

If this credit problem is not solved and confidence restored, then it is easy for the effects to spill over to the main economy. The worst would be for otherwise healthy firms to stop receiving credit, be forced to lay people off in a downturn, add to unemployment, and then just make the whole macro condition worse for everyone. Credit plays a vital role in smoothing out consumption and investment cycles – so the banks that facilitate this and are otherwise healthy need to be backed up.

It turns out that the bill not passing may have been because of political fighting/posturing – not economic concerns. This is frankly infuriating:

“Rep. Roy Blunt, R-Mo., the whip, estimated that Pelosi’s speech changed the minds of a dozen Republicans who might otherwise have supported the plan.

Frank said that was a remarkable accusation by Republicans against Republicans: “Because somebody hurt their feelings, they decided to punish the country.”

I guess I’m incredibly lucky to have left banking, and moved to Canada. The funny thing is I actually interned on a credit structuring desk – the very people that created this mess.


Some time last year I remember stumbling over this video of US house prices (adjusted for inflation) since 1890 presented as a rollercoaster ride. Watch it, it brings out the extent of the recent boom very well.

This is the source data in a graph:

US House prices

Patrick points out that the y axis doesn’t start at zero, making things look worse than they are, but it’s an index starting at 100 (the baseline is emboldened), not zero.

Anyhow, here’s the ‘proper’ chart as Patrick mocked it together:

proper chart

Still pretty worrying.


I just got an email from my mum about her firm unexpectedly adjusting their pay to reflect increased inflation in the UK (http://www.statistics.gov.uk/cci/nugget.asp?id=19).

Inflation becomes threatening when expectations in the economy change significantly. The big oil shocks of the 70s triggered huge wage price spirals (prices rise, salaries rise, prices then rise, salaries rise more) and all of a sudden we have runaway inflation which screws with a lot of things in the economy (that’s my technical explanation! I shudder to think what my old Econ tutors at Oxford would think if they read this).

Anyway, there’s (anecdotal) evidence this is now happening. Not really good times, high inflation really messes with the efficiency of the overall economy.

Incidentally, the pay rise was below the RPI rate, so this was a tad cheeky, they just reduced everyone’s real wage. Time for mum to move to Canada.


I’ve been experimenting with a tumblog (?) because it was so damn easy to set up (and easy to use with the bookmarklet), to track the stuff I find interesting online.

So here it is: Kul’s tumblr.


IPL in the NYT

07May08

Cool article on the Indian Premier League in the NYT. Like the “billionaire vs. bollywood” bit. Can’t wait to go back out to Mumbai.


The Indian Premier League is killing it. Everyone had high hopes for the tournament, but there were many risks. It’s a first of its kind for cricket, and it was organised in just over six months, despite being a logistically bigger tournament than the cricket world cup. Added to that, India has never experienced city loyalty/rivalry before (the skeptics said Indian fans are too used to supporting only the national team), which makes the success to date all the more remarkable.

The reason for me being so bullish? Well, I have a lot of anecdotal evidence to the impact its having (it’s on all the Indian tv channels all the time at home), the games are all near sellouts despite it being in the first half of the tournament, the Facebook game is addictive and busy, and I just read this post by Adam Rabiner over on the Live Current blog.

To quote from the Economic Times:

“The ongoing Indian Premier League (IPL) matches have virtually taken the life out of cinema theatres and television programmes….

Star Plus sources said the fresh Television Audience Measurement (TAM) ratings are expected in a day or two. However, till April 22, the IPL dominated the TAM ratings.”

And, I also just had the photo editor from the WSJ contact me for photos, you may even hear about it in the US!

And hey, the IPL has its very own Moneyball-esque Oakland Athletics: The Rajasthan Royals.

Read here for Cricinfo’s view.


mutual friends

13Apr08

An interesting look at (my) top friends by number of mutual facebook friends, courtesy of the fb app mutual friends.

Unsurprisingly, I share the most mutual friends on Facebook with Harjeet.


Harjeet does a really great job of thanking the people who helped us get to where we are.

I’ve talked about the power of our network before.

To echo Harjeet’s sentiment, we’re all very grateful for everyone who’s assisted along the way.

We’re also very appreciative of Live Current, who are taking a bet on our technology and people. I fully believe and we’ll realize the full potential of our combined team.

Also for Phil’s view, our first employee, read this.


in case…

26Mar08

there was any ever risk of us taking ourselves too seriously, Baz (Brian Collins) sent me this picture of our team to use for our latest BBC piece.

The response I got after forwarding it to the BBC was, “I’m not sure that would work without explaining who everyone is in the picture”. And so it lives here, on my blog.

From left to right, that’s Phil, Patrick, Brian, John, Harjeet and me, the Auctomatic team.

Auctomatic Team


A while back I was asked to contribute to a discussion on the “future face of enterprise”, by the Make Your Mark campaign.

Here is the viewpoint piece I wrote.