02.08.2007

• Is my prophesy coming true?
• Do you remember my prophecy about the sub-prime mortgage market of the US having a systemic impact? See what I noted on 24.03.2007 here.
• And see what happened yesterday all across the world stock markets from East Asia to Asia through the EU to the US. What caused the havoc? Global investment houses Macquarie Bank and Bear Sterns warned of losses in some of their funds with an exposure to the US sub-prime loan market.
• Well, so is that the end of the road? NO. Markets will be volatile in the short to medium term. But till the time the full impact of the hit on various investment banking houses due to their exposure to the sub-prime mortgage market are known, the markets will remain edgy. Markets have a tendency to pick up the shreds soon after they know the full details of a development – be it a scam, a huge loss or a potentially damaging news item.
• India may set up 2500 tonne polysilicon complex soon
• Mr. R. Chidambaram, Principal Scientific Adviser to the PM has said that the country is planning to set up such a facility with an investment of Rs. 1000 crores.
• But what is polysilicon?
• It is a material used in the manufacture of the LCD screen in high-end multimedia projectors. It gives a better contrast ratio and faster response time than TFT LCD screens.
• Polysilicon technology splits light into red, green and blue (RGB) components and directs each to its own liquid crystal display (LCD) panel. Each LCD creates an image for its respective color by blocking out portions of the light (similar to a film negative). The output or images of the three panels is then "assembled" by a prism and transmitted through a lens to project a fully saturated color image.
• When do dollar inflows affect interest rates and hinder investment activity?
• I framed this question for you from an article that appeared in today’s ET. It is very good article by TK Arun explaining the need for freeing up more urban land, for lower rates. Let’s see the explanation:
• Dollar inflows convert into rupees, and add to the money supply. If these get absorbed into investment leading to greater generation of goods and services, the increase in money supply would not lead to inflation. If most of the flows fail to get absorbed as output-boosting investment, more money would chase the same old quantity of goods and services, leading into inflation. So the RBI steps in to mop up the additional rupees, by selling government bonds (banks hold bonds, rather than money) or hiking the CRR (banks surrender a portion of the funds mobilized from public to the RBI and get no interest on these deposits). Such intervention by the central bank pushes up interest rates, hindering investment activity further.
• Some things worthy of note about the Sugar industry in India
• An estimated 50 mn farmers are associated with the sugar sector, providing sugarcane to almost 500 mills in various parts of the country, each mill procuring cane from an average 18,000 farmers.
• The current bagasse based exportable power capacity is 847 MW. A study by KPMG says that the country has the potential of taking this figure to 9,700 MW by 2017.
• When did star hotels in India start a dual pricing policy?
• Dual pricing policy here refers to their practice of having two separate tariffs – one in rupees and another in dollars.
• This originated sometime in 1980’s when the government introduced an expenditure tax of 10% on the rupee earnings made by these hotels. That is, a guest paying rupees will be subjected to this tax. As guests paying in dollars were exempt from the expenditure tax, the hotels resorted to a dual pricing policy. Though the expenditure tax was subsequently withdrawn, the dual pricing policy remained.
• Now, with the rupee strengthening against the dollar, the hotels are doing a rethink and are set to announce a single tariff policy from September or October onwards.