Some Updates

As I resumed blogging this time around, I swore to myself that I would post more frequently this time. It wasn't to be. My last post was done about month and half ago. So, now that I am done with my work for the day and I have got some good bedtime reading with me, I thought its' about time to write a quick post.

Life has not been dull in the last month or no… far from it. In the midst of some very busy office work and a short holiday trip, there has been some good learning and quite a few things to share. I will post about them soon. But first, I have got two exciting news to share

The first one is that I am a father for the first time. Our little boy was born early last month. He is slowly coming to terms with this world and is continuously keeping us enthralled.

The second great news is that I have been inducted into the Visual Studio ALM rangers program. Special thanks to Mike Fourie for recommending me. Here is the post from Willy-Peter Schaub introducing me to the program. I am thrilled to bits to be part of the program. The rangers program has released some great software in the past and I am looking forward to contributing positively.

Now and then...

Today, I read this brilliant post from Jawwad Farid and it immediately struck a chord with me.

From my early childhood memories, I remember that things around us were not in such abundance and people generally lived a much simpler life. I remember, we did not have a telephone at home. Having a phone was a privelege. Infact our whole apartment block had just two households with phone. All acquainances just called our neighbours, who would call us attend the call. Try telling it to today's kids in school. They would genuinely struggle with the idea of sharing their cell phones with their siblings. And it wasn't just technical items. All other things like cars, long distance travel, fast food, etc. were scarce and a luxury.

Most the people I know from my childhood have progressed in some form or another. People who came to Karachi from small village and towns in search of better lives have settled down, some have bought property in their ancestral lands. People with motorbikes now have cars - sometimes two. And all of this is from Pakistan, at times when the country have moved from one sort of crisis to another .

So, the question is where has all this money come from? No doubt, technical progress has contributed a lot. Things got cheaper and more accessible. Also, people worked hard and. But, for me one of the greatest reason is the world's definite tilt towards capitalism. In the last two decades, we have seen the world moving from nationalisation and a more state controlled "population focussed" model to a privatised and "profit centric" model. There has been many winners of this model but also the disparity of wealth between wealthy & poor has swelled tremendously. People have more wealth but at the same time they have become more indebted as well.

The current economic meltdown may just prove to be a turning point. We have already seen huge enterprises being bailed out and effectively getting "nationalised", so a lot of things that happened in the last two decardes in being undone. Let's see how far it goes and what the future unfold for all of us.

Quantitative Easing

The term "Quantitative Easing" has been mentioned quite often in news these days. I didn't know an aweful lot about it and had some time handy today, so thought to study it a bit. I am just jotting down my findings in as simple words as possible.

Wikipedia defines "Quantitative Easing" as a mechanism for central banks to pump liquidity (money supply) in the economy. In other words, central bank will print more money and put it in circulation, so for example if there was £18bn of wealth in circulation through currency notes it would be increased to £20bn of wealth.

So, how do central banks do it?
Well, the honest answers is that it's the central bank and it's standing in the world that determines the wealth for us. A £10 currency note is actually the property of the Bank of England and the idea is that if I give £10 to BoE, it would return me an equivalent amount of "wealth". Now, "wealth" used to be old solid gold in the old days (well, upto 1932). These days its a combination of T-Bills, government bonds and a host of other financial tools. These tools are bought and kept by commercial banks as deposits for the lending they do.
Through quantitative analysis, central banks buy back these bonds and provide cash against these. Since, banks are required to only keep a percentage of their deposits as reserve (say 50%), increasing liquidity in banks by say £1000 would enable them to lend out £2000. This increase the money supply to banks, who can then lend them to individuals and business.

Negative Effects:
With more money in circulation, there will be more money chasing lesser goods making everything more "expensive". There is a genuine risks of inflation shooting through the roof. It depreciates the "actual" value of assetts for investers and devalues the currency.

Who's doing it?
Bank of England announced it earlier this month. And today, the Federal Reserve in US has announced it. The scale of money pumping in by the US is mind boggling. Of course, both the economies are hit hard by the credit crunch and are undergoing negative inflation.

Winners & Loosers:
The winners would be banks and financial companies. With the value of money reducing, the actual value of their bad debts would go down and they would have more cash to lend. After Quantitative Easing, a bad debt of say £100,000 would have the same effect as a bad debt of £90,000.

The biggest loosers, I think, would be Asian and OPEC countries, who keep their reserves in dollars. All gulf countries, for example, have pegged their currencies against dollars. A devaluation of dollars would devalue their currencies and reduce their wealth. Also, countries like China and India have hoarded huge sums of dollars. They will see the actual value of their dollar based wealth dwindle.

What next?
I am quite keen to see

1) How China respond to this announcement by Federal Reserve today? Will they be selling T-Bills? Would it switch buy more Euro based assetts?

2) Will the European Central Bank adopt Quantitative Easing? This is one of the sternest test of the European Economic Commission. They have countries like Germany & France on one end, which would want it to happen and have countries like Poland, which still have strong inflationary pressure and would not want to do it.

Say yes to "No"

Josh Billings once famously said

"One-half the troubles of this life can be traced to saying yes too quickly..."

and reflecting back, this is certainly something true to my life. I have often found myself worried about doing things, which I could have avoided. I think, my habbit is rooted from my cultural background.

The fact it that people from Indian subcontinent are not used to hearing apologies. So, if someone invites you for dinner, for instance, and you can't make it, it can become really difficult to excuse out of it. People would insist and insist until you agree to what they are asking. The result is that people end up making commitments that they can't meet and people saying things they don't really mean. I, for one, find it frustrating.

Hope for a change...

Today is a big day in US history as Barak Obama takes oath. I haven't seen such anticipation and media hype for anyone sworning in. I think the hype around this one has as much to do with the departure of a highly unpopular president as with the arrival of a charasmatic and popular Obama. Let's hope that this marks a change for betterment and the new president is more listening and less defiant and that he put his focus on attaining peace in the world.

welcome 2009!!

It's been a while since I blogged. We have had Christmas and New Year in between and 2009, with its own set of twists and turns, is well underway. Reflecting back on 2008, it was a year of consolidation for me. I got married, moved into a our own house and have generally settled down nicely. Unlike 2006 and 2007 my career growth in 2008 had a more horizontal feel to it. This year started with a promotion, so not all the good work done last year was lost. I have also made a resolution to start something outside work this year.

Talking about the current economic climate, things have turned for a worse at the start of this year. Woolworths, about which I wrote in my previous post, does not exist in more. Morever, some other big names like MFI, Officers Club, Whittard of Chelsea, Morgan and most recently Land of Leather have gone to administration. These draw a gloomy picture in the retail sector. Banking and Car manufacturing industries have also announced thousands of job cuts. Today I found this link http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3542572/Financial-crisis-UK-job-losses.html on Daily Telegraph, which draws the job losses in UK since Oct 2008 on a map. Frightening stuff!!

Having said, quite a few of positives can be taken from this "Credit Crunch". Firstly, hopefully now people will know the consequence of spending beyond their means albeit in a hard way. I am a firm believer in fundamentals and the very basic principle of economics is if your earn £1 and spend £1.10, sooner or later you will be in trouble. The other good thing is that people would more "earn" their wages. With more people and fewer jobs, only the fittest can survive. It's not such a bad thing. Ever since I have moved into UK, I have always had a feeling that most youngster get it too easy here. With a strong economy and strong social system, youngster with some potential do not have to work that hard to get a life, which youth of many other countries dream of. With a strong economy and strong social system, youngster with some potential do not have to work that hard to get a life, which youth of many other countries dream of. Ask an Indian and he will tell you what it takes to get into IIM in India. I am told three hundred thousand students compete to get thirteen hundred seats.

That is a a bit extreme but i would more like to see people around the world competing on equal grounds. That would surely mean a more fairer world for everybody.

The crunch have us !!!

Unless you have been stuck in a far away deserted island or been slumbering like Rip Van Winkle, you would surely have heard about the ongoing Credit Crush. It is unique in that it is truly global, effects all of us and in a way challenges the very basics of modern economics.

So far, it was the bankers and related industries who faced the wrath of credit crunch. Banking giants like Lehman Brothers and Merrill Lynch succumbed to the dramatic change in investment climate. But then they were bankers who make money out of taking risks. I mean these are a bunch of clever cookies who make money through astute investments and taking calculated risks.

Today, for the fist time I saw the very visible face of credit crunch - by visiting the local
WoolWorths store. It's arguably the most visible casualty of credit cruch and would remind us of the times we live in everytime we visit the high street - A century old high street chain a source of income to some thirty thousand, mostly unskilled, people would cease to exist from as soon as early Jan next year.

I am used to finding Woolworths on every high street and almost always shop from there for all my little nephews & neices. Have always found the staff cordial and the ambiance inviting. But, it wasn't the case today. There weren't any smiles, the staff were visibly distressed, some even shattered, the stores bore resemblance to a warfare after the bargain hunters' onslaught.

My heart sagged - for the diligent workers who were in this situations because of decisions made by someone else - probalby in a boardroom. In the quest of growth and ever more profitability, the very fundamentals of sustainability were overlooked.

I wish all this would not have happened. None of the workers working there deserve this. For me this is the first real human factor of credit crunch!!

Opening up...

It's my third attempt to blog. The previous two attempts where thwarted by my efforts to blog on a particular topic and also my tries not to divulge too much details about my personal life. I guess that didn't work. There's so much going around us in these times we live in. I feel obliged to write about them. I will also attempt to include some work related technical posts related to what I do at work.

If you don't already know me, I am an Pakistani expatriate living in Britain. Pakistani I am by heart and soul and half a decade of living away from homeland hasn't changed that. I am a software consultant by profession and work with a global consultancy in London. This was a a brief introduction to break the ice, my next blog would be about Credit Crunch and how it is effect the life of people in London.