Monday, June 18, 2018

GLOBAL ECONOMIC SLOWDOWN IN H2 2018....


2018 H2 seems to be a tough time for the global economy. Slowdown seeds have been sown and the fruits are getting ready. Europe is completely into the doldrums. Brexit battle followed with Italy having a very inexperienced government followed with Germany struggling with its own government stability has just amplified the economic slowdown. Angela Merkel’s coalition partners – the Christian Social Union (CSU) is creating an immense problem for her stability. We have Donald Trump as topping over the ice of slowdown where his trade policies irrespective of what percentage of they contribute to his economy is already affecting productions of other countries. Germany is under very much under the nightmare of losing its most valuable market US.

China is under immense slowdown and it is busy is saving the global and Asian economy form another major recession.  Shadow banking ghost is being now slaughtered by the Chinese monetary and government therapist. Their economy is now under immense pressure externally as well as internally.  Bond issuance cancellation by China has grown significantly, April-47 billion yuan and in March 47.4 Billion. The combined debt of China which includes borrowing via loans and bond issuance is 13.2 trillion Yuan which is US$2.1 trillion as of March 2018. Please don’t compare the debt with other economies since every economy has its own macro dynamics ruling the same.

Investment in China has taken a massive blow and almost low to the 1990 levels. This means consumer segment will face slow down and manufacturing has already taken a setback. Banks are reluctant to fund and business loans have dried up. Cleaning the books of China was a good idea but Donald has turned that into a nightmare with its trade war and restriction of Chinese companies taking up stake and investments in the US. IPR has become a big threat and copy based economic growth of China now seems to be a difficult game.  Chinese companies shave to pay 2.7 trillion yuan of bonds and in the offshore segment during 2nd half of FY-18 they have to pay another 3.3 trllion yuan of trust product sets which are about to mature in the second half of the calendar year 2018. The global currency will be under immense threat of volatility. The corporate debt to GDP of China is 167% which is significant threat currently after Donald trump trade war. Always remember when manufacturing happen flow of capital keeps moving but when goods start getting dumped at ones warehouse things becomes difficult. China is focusing on de-leveraging the economy and that will come at a huge cost for the economy. Chinese banks are also under pressure of holding around 4.1 trillion yuan of bonds and govt is chasing the banks to offload and reduce the exposure. Shadow banking is under elimination but it will come at a cost for the Asian economy since the slowdown in China will affect other major economies too.

Brexit has created a threat for the other countries as the difference of opinion and unity of EU is broken which is a big threat for EU as a whole. Russia and U.S both are keen to exploit and find resources to turn things and rule within the EU economy. EU is broken and the pain is being heard very lightly currently as all focus is on the Donald Trumph trade war.

Trade war and protection policies will spook inflation and also slow down investments which leads to cut down on consumption pattern on the global landscape.  Commodity prices are already increasing and trade barriers would create massive volatility of the prices which will erode the profits. Zero interest rates days are over and whatever wage the US citizens got are on the way of depletion as higher borrowing cost eats up.  Global interest rates are scaling up and fragile manufacturing and trade outlook leads consumers to be on the sidelines.


The trust factor and no proper outlook of the different economies keep investors under immense pressure. Scaling up of interest rate spooks liquidation of risky assets and flight towards safer assets. 2018 end and beginning of 2019 would be massive slowdown phase keeping the global economic scenario in mind as developed currently. Asian bond market will need soon support as trillion of bonds are about to mature and repayment is tough game. The irony of bond issuance have been that bond buyers dont know what type of complex hybrid bonds have been issued.  Well very soon the world will come to know once the default happens.

Monday, May 14, 2018

ARTIFICIAL INTELLIGENCE ...DRIVEN BALANCED SCORE-CARD


Finally, a dream has come true where humans will be replaced by machines or technology. Everyone has watched Star Trek serial which used to be a fascination of a different world.  We have now originally created the same but are we creating a sustainable economic growth and social development. Today I will depict one of the tools of strategic cost management called Balanced Scorecard and its relative measure of the technological advancement and its link with the same. The motive behind this short article is that we need AI driven Balance Score Card Approach.

Balance scorecard and technology-driven process need a quick look at how they are getting linked to each other or there is some gap between the same.  Balanced scorecard 4 principles need to be aligned well with changing technological innovation in the long term otherwise organizational imbalances will emerge as one of the key bottlenecks for long-term sustainable business.

Artificial intelligence is the new era of the global economy.  Automated process and negligible human interference lead to a significant drop in human labor and more efficiency in the business process and cost management. Does this mean that cost management and traditional costing methods and strategies are getting obsolete and new strategies are transforming the same into AI or Blockchain based strategies? The global economy is adopting Blockchain and AI in much faster pace as compared to the previous decade of the Internet revolution.

Efficiency in process and system cannot be achieved alone based on IT. IOT helps in improving the efficiency of the humans and of the organization. It leads to a substantial jump in the learning curve and also in customer satisfaction and improving the financials of the companies who are using IOT to improve the values.  A perfect match of Balanced scorecard but where does this Balances scorecard 4 pillars fit when we remove or replace humans and just focus on creating robotic and AI-based systems.
Cost management and Technology helped the societies across the world to develop and grow and prosper into a much-advanced civilization. Now in the current or upcoming decade, we are witnessing trends of cost management leads to zero marginal cost of production followed with advanced technology replacing human manpower. Cost management has been able to resolve the issue of getting prices lower so that equal participation could happen from the society is achieving the balance of living standard.  This is one of the key principle benefits of the subject, but with the advancement of technology and now AI and other modes which are taking over the traditional practices would spook imbalances in many fronts. Unemployment is the key fruit of AI and Block Chain. I will keep IOT out of the thing as this helps to build efficiency in accordance with the principles of the Balanced Scorecard.
Now the biggest questions are the will AI or Blockchain will be able to adhere to the principles of Balanced Score Card. Operational efficiency might grow but with massive technology changes, the investment risk remains always high. Human manpower combined with Technology is the best since human cost investment is limited whereas technology-driven process would be high-cost extensive matter as technology changes faster than one changes his dress.

Now Blockchain or AI should be implemented but with a combination of humans too. Operational efficiency maintenance through technology is huge cost initiative hence complete dependence on the same would be a problem for the long term since technology investments is not constant like human cost where the cost remains the same with an abundant supply of skills and labor.

Customer satisfaction which is one of the key pillars of Balanced Scorecard is the prime focus of the emerging economies but they are forgetting that easy money investments days in return of negative ROI is going to end soon. Once the easy money comes to an end and ROI is being demanded the investments in technology would decline and that’s the place where again one has to start the with human labor.

 The learning curve is just declining due to AI and another technological advancement where humans are involved is negligible.  Human’s involvement plays a pivotal role in developing the future technology based on the customer interaction. Feedback process and one-time interaction is highly required to develop the future growth strategy. Big data analytics are being deployed to find a pattern of customer consumption patterns and in other areas but one should remember nothing is constant hence consumer pattern change would be faster by the time the data-driven product development hits the ground. The simple formula to save oneself is developing a rapid system of identification of upcoming changes rather than past data analysis.  The learning curve over here needs to assemble with humans and not with only robotics and algorithm-based system.

The prime aim of cost management as a subject has been to develop efficient products for the mass and social development of an economy through a judicious mix of human manpower and technology. But capitalist mindset is all set to eliminate the growth the society and only focused towards a collective growth of capital. AI or Blockchain should improve the expertise of the human and society. The learning curve should not be compromised at any point of time. We need an AI-based balance scorecard approach.

Monday, May 7, 2018

SMARTPHONE FRAUDS...BILLION LOST TO ECONOMY

The economic loss due to financial frauds is multifold and not restricted to any country or family. Where a family suffers financial loss due to online frauds, an economy and insurance companies also face the same. One of the most interesting parts of studying this subject is that individual loss could boil down to an economic loss when that family due to financial loss degrades the middle-class family just below the poverty line or below the poverty line.  This subject and aspect are often ignored in a financial fraud based economic loss. Fraud from Banks and other places creates a big hole in the pocket which effects consumptions of an economy in the long term. This subject is quite ignored but when taken on cumulative basis the affect could be multiford.  The income inequality widens and creates a multifold problem for the family or for the society at large over the period of time. One fraud can convert a golden spoon into bronze one.

Coming to India we find  Public Sector Banks in India lost at least 227.43 billion (Rs 22,743 crore) owing to fraudulent banking activities between 2012 and 2016, according to an IIM-Bangalore study. This was recently informed by Electronics and Information-technology minister Ravi Shankar Prasad in the Parliament, citing Reserve Bank of India (RBI) data.  

Prasad said there have been over 25,600 cases of banking fraud, worth Rs 1.79 billion up to December 21 last year. According to data released by the apex bank for the first nine months of FY17, approximately 455 cases of fraud transactions - each of Rs 1,00,000 or above - were detected at ICICI Bank; 429 at State Bank of India, 244 at Standard Chartered Bank and 237 at HDFC Bank.  

Hence being cashless can lead you to be really cashless. Cloning of data is one of the fastest and silent ways of hacking and stealing financial information. Many articles have been written on various online frauds and scams. Now among the thousand articles I have come up with some real experience and so new but common smartphone based scams which are duping the customers. Online frauds have been a most known topic but what about online financial scams through smartphones. It's not restricted to any country as of now. Recently around  148 MILLION U.S. consumers were put at risk for identity theft last year when their sensitive financial data—including Social Security numbers and credit card and driver’s license information—was hacked in a data breach at the credit reporting company Equifax. Every website is secured until its breached.

Smartphones are really smart for the crime world and particularly for the hackers.  Financial Transactions comes up with OTP which is further autosaved and not being executed manually. It does not ease of doing business. Please don’t place everything on the shoulders of the technological advancements and innovation. Certain things need to be manual so that hackers could be kept away.

Recently many of us might have received SIM card swap option. One of the most deadly and the funniest part is that in case you want to block the sim it takes time and also mobile operators in case of pre-paid connection fail miserably to provide you any proof of the number is under your name. Yes, Post Paid we get statements and documents but what about pre-paid. Does this mean that Pre-paid people are of no value? Remember most of the misuse of sim card related issues happen in Pre-paid phones. 

Many of us have recently started getting sms text followed with links to online shopping or financial investments or asking to upload personal details like adhar and pan card. Well these text sms based online links are all cloned websites smartly created to fool people. If you click on the link in the text directly, the scam artist may be able to install malware that can collect personal information (account numbers, passwords, etc.) from your phone. Mostly all phones we have e-commerce apps and we have all our credit card or debit card and bank account details auto saved. This is the key data which they easily get once you click on these offers. The phone call based scam has become old since with the stupendous growth in the last couple of years. Scammers are so smart that the caller ID might show the call is ostensibly from a bank, creditor, insurance company, or government agency. Investments related frauds can be executed in the same way just by cloning the websites. SMS and texting are one of the most critical baits for the online scammers. Every financial app or website is secured but when a breach happens only Gods know who hardly speaks.

I think Harvard University should open and deploy these hackers to create some good stuff for the benefit of the society rather being a scammer.

Swiping at shops and petrol pumps has become riskier. Reason being is that nowadays most banks have turned to payment cards where data is embedded in a small chip, rather than on a magnetic strip. This chip is the data provider to the scammer. Enter the “shimmer,” a thin card-sized gadget that con artists install on machines at various swiping points or gas pumps. These “shims” contain a microchip that can read and transmit information from your card. Though your chip card cannot be cloned in the same way that a strip card can, bad guys can glean enough information to make purchases using the extracted data.We are often surprised how my data of cards got lost. Well, next time look before you leap.

Pop based online virus attack and vendor connection are new in the breed where your computer freezes, and you get an ominous pop-up telling you to immediately call this number for Apple, Dell, HP, or Microsoft. When you do, you’re connected to a “technician” who informs you that your computer has a virus and all of your files are at risk. It seems legitimate and terrifying. The tech guy might ask for remote access to your device, then guide you through some diagnostic tests where you can see “proof” that there’s a problem—when in fact there’s none. Such ploys are convincing enough that countless people have turned over credit card information to pay for unnecessary “repairs.”  They even install malware and keep a track of your computer always when you are online where you never come to know about the same.

 These segments are growing up like anything. It's better to remember the numbers in mind or save somewhere else where next time it becomes handy but not auto-saved. Autosaved and freeing our memory have become the most important bait for the online fraud people and scammers.

Most people travel during holidays with families. Booking online tickets from pop up website is a big risk. Better to buy the same from the original website. Often AI and big data analytics capture the searches of our online shopping. We occasionally click on the same to browse further. This is the place of hackers were a cloned website can make huge shopping at your expense may not be immediate but obviously in the near future. Cheap and lucrative offers need to check before blindly getting into same. Facebook likes are also often used and framed by the hackers. Blindly liking post can be dangerous since the cloning of websites could be of great risk.

Online frauds have also taken a step higher than the ones who protect the system. We should avoid all these traps. Financial frauds happen only when you save the data and you don’t take a proper risk assessment. Many of us think that scam happens to rich people. Well, scam always happens to people who are on the roads and not in high rise skyscrapers. Online savings of data and swiping at any places should be avoided. The global economy faces a huge threat from the growing cashless economy.

Sunday, March 25, 2018

US TRADE WAR..SILK ROAD,BUYING BONDS & REPATRIATE OFFSHORE FUNDS


Before I begin the analysis I would like to draw the attention of the economist and financial world across the globe towards this point that Trade war by the US is based on product and not on the manufacturer.To support repatriation of profits which is lying outside of US is a herculean task for the US economy despite Tax rates were slashed. We all know that low cost of production and shift of consumer market over the last 2 decades have resulted in a flow of jobs and capital out of US. For decades, U.S. multinationals have shifted profits abroad and deferred their taxes on them. Moody's estimated in November that U.S. companies were holding about $1.4 trillion in cash offshore. Forget about the number of billions of profits lying outside the US, the important point is that will lowering tax rates would bring back this capital back to the US. No. Since the broomstick even used in American Houses are made by American companies producing in China.

In 1965, manufacturing accounted for 53 percent of the economy. By 1988 it only accounted for 39 percent, and in 2004, it accounted for just 9 percent. With the birth of the North American Free Trade Agreement in 1994, Mexico became a major recipient of outsourced U.S. manufacturing jobs.  For example, Boeing 20 years ago, most of its aircraft parts were manufactured domestically, while today, sadly, up to “70 percent of the airframe of the company’s next-generation 787 Dreamliner will be made overseas, including key parts such as the fuselage and wings.” Even the engine will be produced outside the U.S., while workers inside the U.S. are left with layoffs.

Now, this was history which we all know. Now, what we need to know how strong this trade war game will go ahead. It is a strong challenge given by the US to China as US wants manufacturing to shift to the US and which leads to repatriate the capital lying outside of US. The trade war is based on product and not on the manufacturer. US ban means getting back the US-based manufacturing companies back to its own country. This is the grey area on which Trump has emphasized indirectly. All he wants is that his offshore funds to come back to the US and then buy its bonds to fund its budget and fiscal deficit.

Another prime reason to get into a war with China is that US companies based in China will soon get access over the next decade or before that to sell its goods through the silk route which is being developed by China connecting many countries. Once this happens hardly any US based company manufacturing in China will ever come back to its home country.  Silk route will open up huge growth for China as a whole economy and would make its largest economy in the world in the coming days.   Hence trade war would put brakes on the Chinese government income through taxes etc earned from these US-based companies operating in China.


Getting the offshore money back followed with getting the business pulled out of China is the key factor being strategized by the US economy. Further is China gets the silk route developed US exports from their own country would hardly find buyers and would find significant blackout for its own economy. The trade war is just to get the manufacturing out of China and get back the offshore funds back to its own country to buy bonds to manage the deficit.

Friday, March 23, 2018

JAPAN HONGO VALLEY IS JUST LIKE SILICON VALLEY



We all know that for long-term sustainable economic growth through technological advancements, entrepreneurship.  and innovation is the two lifeblood of the economy.Japan an economy which has struggled every time is now on the verge of radical change which is going to remove all the stains of its economic failures. The economy needs no introduction but its upcoming growth is going to surprise the global economy. Till yesterday every citizen was looking ahead for government jobs in Japan. They studied hard to get government job which is secured and used to be known as prestigious one. Still, it’s being considered as a prestigious job but the next generation is moving away from these jobs. Blessings of technology advancement and internet have changed the landscape of the next generation outlook towards the job market.  The next generation of Japanese are risk-taking and they have the courage to go beyond the traditional employment atmosphere.  Change in the long-term behavioral segment of any economy is the key path to identify opportunities for growth as well as to identify the failure points.

Entrepreneurship is being promoted in Japanese colleges.  The insect of innovation has bitten the young generation and now it’s the driving the culture of entrepreneurship within Japan. Well paid jobs of Banking and management are being left by the new generation of Japanese and they are joining the club on innovation and entrepreneurship. Japan employment style has also changed. Companies now hire more temporary employees, and those people are more likely to start companies to gain a better sense of security than being a temporary employee. Hence entrepreneurship is just about to boom out in Japan.

Bridging the gap in various sectors like healthcare, Agritech, Internet of Things and AI are driving around 80% of the innovation market and funding is also happening to that tune only. Universities of Tokyo have taken new initiatives to promote entrepreneurship. These universities are not focusing towards jobs anymore; they are driving innovation-based entrepreneurship. Just like “Silicon Valley” they have created “Hongo Valley” which is now the birth land of a new type of social-based entrepreneurship. Large size incubators are being created in Japan for driving innovation in bridging the gap between the social aspects.

The huge inflow of capital will be attracted to Japan going ahead followed with stupendous technological penetration within the economy. Social gaps have been a huge opportunity for the growth of entrepreneurship within the economy. Japan is just working on these steps. Over the next 3 to 5 years Japan will be a big hub for innovation promoting social entrepreneurship and creating a new generation of exponential growth.  Hongo Valley will be a revolution for the next generation of Japanese. Time is just about to prove the same.

The only glitch the country faces had faced previously is that early sell-off of companies under entrepreneurship as they lack English language and hence they could not take their innovation to the global platform. But this problem has been resolved since the next generation has good English language training and they are well capable to take it to the world.

This leads to a significant change for the Japanese economy in the coming days.  Global recession could be survived and avoided if social gaps are being filled up with innovation and technological advancements.

Ease of doing business and internet of things is changing the landscape of the Japanese economy going ahead.  At the same time cultural risk aversion, funding at an inflexible labor market remain as challenges. Consultants across the globe should look towards Japan as the startup culture was just born in Japan. Nobody knows how to make a startup in the current situation. The regulatory aspect of the Japanese economy towards entrepreneurship is changing which gives the huge potential for newcomers to up and start their innovation culture. Opportunity for investors is that it is easier for companies in software development, electronic commerce, and biotech to get funding, but investors are still conservative in other sectors. Hence investors could look beyond these segments to invest and grow the wealth from social entrepreneurship in Japan. Japan economy will be an attractive point for the global economy going ahead. Hongo Valley is all set to make a change.

Sunday, March 18, 2018

FOR WHOM AND WHY U.S INTEREST RATES WILL GO UP



Donald Trump tax cut down and massive expenditure plan for infrastructure leads to an significant growth of fiscal deficit for the US economy over the next decade. The things might be good for the short term for the US equity markets to dance on these tunes but the music will soon get into a dumb silence when the aftershocks of this massive announcement come into play. The tax law is estimated to add more than $1 trillion to deficits over the next 10 years.

Congressional Budget Office's (CBO) readings the after the tax bill, we projected that the deficit would reach $983 billion in FY 2019 and $1.05 trillion in FY 2020. Now the CR will increase the deficit further to $1 trillion in 2019 and $1.06 trillion in 2020. In between the Treasury, Borrowing Advisory Committee expects the federal government will need to borrow $955 billion in the fiscal year 2018, which ends on September 30. The story does not end here. The US Congress then delayed three taxes under Obamacare, which would have raised revenue to the tune of $31 billion. Further, there are several times Hurricanes which keeps attacking the US states which is a significant cost to the US economy. According to CBO estimation, sequester relief will lift the discretionary caps by $240 billion over the next two years disaster relief totals $81 billion, and tax extenders are revived through 2018, the deficit would reach $1.12 trillion in 2019 and $1.13 trillion in 2020. It is quite possible that there will be other costs on top of that from larger sequester or disaster relief and/or other policies that are lumped into a budget deal.

How this massive deficits and borrowing plans would be financed? Only through Bonds which will be sold by the US government. Now when these bonds will be sold the buyers will demand more interest rates as other financial products and other countries bonds are more attractive than the US. Hence more interest rates will attract these buyers. Now trade war has already begun and China has reacted well by dumping the US treasuries. China's holdings of U.S. Treasuries fell to 1.1682 trillion U.S. dollars in January, down from 1.1849 trillion dollars in December, reaching the lowest level since July, at the end of 2017, foreign governments owned $4.03 trillion or nearly 29 percent of the $14.47 trillion in Treasury securities outstanding. China and Japan, two major U.S. trading partners, are also the top two foreign holders of Treasuries with combined holdings of $2.25 trillion in December.

Now with trade war, foreign buyers may not be interested to buy these bonds.  The truth as it seems is that the US doesn’t want foreign buyers of its treasuries. The US do not want some other country to control its treasuries and dollar. Then who will buy them? US have reduced the tax on repatriation of profits from overseas countries to back home (US).  The US wants its own people to buy the bonds and hold them.   The reason behind such an action is that the US want complete freedom of its financial products from foreign hands so that if there is another financial crisis its assets are protected at home.

US stocks will be facing hard times as increased borrowing cost followed with increased inflation will eat up the profits within the US, whereas the tax breaks will not be so much benefit to the corporate.  Individuals will be more under-more saving zone rather going ahead for consumption. A decade the US preached borrow and spend and now its teaching saves tax and spend but don’t save.  The recession has taught US people to save now. It’s a behavioral finance getting changed.

US markets will be flooded with bonds and too many bonds will make the segment less attractive. Quality of papers and depth of bailout in case of default needs to be analyzed before investing. The next collapse of the world market might come from Bond and Debt Market segment.


The interesting factor to watch out will be who will be buyers of the Bonds based on the trade war created by Donald Trump. The US cannot fund anymore its own expenses hence borrowing is must and hence higher interest rates are the only way to getting bond buyers attracted. Inflation driven interest rate decision is just a hoax to fool the world. Get ready for some interest rate ride by the US 

ICAI TO ICMAI THE FIGHTERS BEHIND THE JOURNEY



The EASTERN REGION COUNCIL of ICWAI 84 HARISH MUKHERJEE ROAD, will  remain a special place behind making this historic moment for the Cost Accountancy Profession undergoing through its name change into ICMAI from ICAI/ICWAI. This recognition did not come so easily. There are stories and key people who fought for the same just like the ones who started the fire of India’s Independence in 1857.

 Today I will share one of the historic stories of few fighters for the profession who started this name change and recognition of Management Accountant.

Before I begin a big thanks to the Youngest President of the Institute Mr. Sanjay Gupta for his contribution to the profession. The journey started long but the real shape of the fire came for the small room on the 3rd floor of the Eastern Region of ICWAI next to the library (It’s no longer now as it has been dismantled) used to be the ammunition room for the fighting for the rights of the profession and it’s for its recognition. Finally after decade fight the institute got the recognition of the Management Accountant  - ICMAI. I was fortunate to be a  part of the research wing carried out by Eastern Region and worked under the guidance of Mr. Siddhratha Sen the Ex Director of ICWAI Research wing.I have written many research insights and articles favoring the recognition as Management Accountant.

 The small room on the third floor of the Eastern Region of ICWAI ( 84 Harish Mukherjee Road)  was the room which carried out many initiatives to get the recognition of the profession as Management Accountant.  Under the Guidance of the Chairman Mr. Kali Kinkar Sarkar I don’t remember the year 1st time region came up with forming a Research Wing for the professional development of ICWAI. It was not an easy task to form that wing since rivals within the house never wanted the profession to grow. The EX Senior Director of Research of ICWAI Mr. Siddhartha Sen was appointed as the key person to carry out the research and  to continue his fight which he carried out which he was doing  under the Key Position as a Director of Research of ICWAI.  Mr. Siddhartha Sen Just retired in 2008 and was appointed immediately by the Eastern Region to carry out the research initiatives. I was fortunate to work under him for more than 2 years before the curtains came down.

Mr. Siddhartha Sen ,Mr. KaliKinkar Sarkar  , Dr. Sanjiban Bandopadhya, Mr. Shomnath Mukherjee, Mr. Mritunjay Acharjee  and few more whom I don’t recollect their names currently,  carried out extensive fight for the getting the recognition for Management Accountant for the profession. These people wrote many articles and many research insights to prove the society, government, various Ministries of the government about the core values and importance of the profession and its role behind social development.  The fought for getting the recognition of Management Accountant. When the name of the Institute was changed we still fought for the management accountant name inclusion. These people did not look after their families as they traveled extensively to various ministries to give representation of our rights and prove about our abilities. The brainstormed, developed new insights and kept the government aware of the same. 

 Thousands of Hours and Thousands of memos, research insights, and representation have been made by various council members for getting this recognition. But the key person who started the fight should not be forgotten India’s independence journey began from 1857 which should not forgotten in the history of Indian economy. In similar fashion all these people should not be forgotten for starting the journey and passing the baton to the current council members.

 Mr. Siddhartha Sen is no more, many of the council members of that time are in  longer in the council of today but their hard work, their fights, their presentation and deep love for the profession finally got the Institute name to be recognized as  ICMAI. All these said members played pivotal role for getting the various Ministries understand the key role of the profession and how its helps Indian economy to grow in the long run.

 None of these people were on the Dias on 16th and 17th March 2018 to hear the same in live but all these warriors needs great felicitation for the fight on getting this recognition as Management Accountants.  

That research wing got closed up but the fire of recognition was kept alive by all these council members past as well as presents to get this name change and recognition finally being achieved. I am thankful that I was a part of the research wing carried out by Eastern Region and worked under the guidance of Mr. Siddhratha Sen the Ex Director of ICWAI Research wing. His acumen and his depth of knowledge is hard to be challenged even after his death. 

All those members whose name I mentioned above are equally knowledgeable and capable in old bones to fight for the rights of the profession. Time may change but history remains unchanged as once its written it cannot be erased. Many new members will be try to take the credit of the same but we need to give credit to the Freedom Fighters of India who started the fire in 1857. In similar fashion we need to give credit and recognition to these council members who started the fight during that time.

Monday, March 12, 2018

CUBE TECHNOLOGY PLANS TO FALL CRUDE PRICES


Crude prices will again fall and would benefit the Importing countries going ahead. The price will fall will not emanate now but will be around 2nd half of CY-2019. The new technology is changing the culture of crude production.The world will soon be flooded with crude oil and US will now gobble up Russia and other countries that are producing crude. In February, the International Energy Agency predicted that U.S. shale output could meet nearly all new global demand. Funding of terrorism has been used from the selling of crude and the world has numerous examples in hand supporting the same. It's been found that after fracking technology US have come with another advanced level of crude oil production and in coming years the markets are going to be flooded.  Shale production is just going to grow by leaps and bounds as the new production technology catches string grip of the US crude production.U.S. national interest right now is all about increasing domestic energy sources.

Cube Development is the new technology being used for crude production by the US. Its 3-dimensional” technique called cube development. The average cost of production of crude will be falling down and less working capital would be required which enhances the prospects for the oil producers. Under the cube development, in which a company drills about 20 wells from a single wellpad, extends in every direction. Its prime aim is of extracting oil and gas from the multiple layers of the Permian, rather than each well targeting as an individual shale layer. The driller is accessing the entire three-dimensional “cube” beneath the surface, rather than just the hydrocarbon resources immediately around the individual wells.

The largest gas producer in the US country is drilling as many as 30 to 40 gas wells per wellpad, with laterals extending as long as 4 miles in every direction. What does this mean for the Industry?  It means that it produces massive crude as a single cost which results in the US to be a future dominating country in term of crude production. The cube process could accelerate a drilling boom that’s already helped push US production past an historic 10mn bpd, rewriting the rules of global energy markets along the way.

More production leads to more price fall but as low cost of production rules this cube process, the revenue would grow significantly even from low prices but it’s a threat to the other producing countries.

Cube will also lead to consolidation of the industry in the long run as technology would lead to change in employment pattern and hence more cost-cutting and more profits would jump. Economies of scale might not be achievable but the dominance of Russia and OPEC would be reduced.  Importing countries would benefit again, countries like India would be again is sweet pot but not earlier 2019 end.

The biggest thing to watch out is that how much more OPEC could keep the production low and how much more they can suffer. The future markets will be entering into a volatile phase after the crude production from US increases. Crude will soon witness short term triggers of volatility followed with prices driven by production levels.  Technology is changing the scope of crude production but at the same time countries like Russia and OPEC are spending less on technology and hence they are going to witness more burn of cash compared to a low cost of production.

Don’t forget that low crude prices helped India to manage its fiscal condition and improve inflation levels. Well, the History is all set again to roll over. 


Cube is all set to revolutionize the Production system. 

Tuesday, February 20, 2018

DEFAULTS TO BANKING INDUSTRY THANKS ICWAI IS SAVED


We cannot trust on Banking audit, we cannot trust on corporate audit, we cannot trust on Tax audit. Well before I get on the subject I have an interesting perspective to share.  Thanks to those who lobby ed against the ICWAI profession over the last 2 decades and only gave exclusivity to the Chartered Accountants in Corporate India.  Since due their hard work of Lobby ICWAI did not get involved into any such malpractices.  People ask me which product gives highest return. Well my 15 years of knowledge have come to end when I discovered that the fastest way of making million sis not by investing but the other way around. 

Want to make Millions is short time then please form a company, bribe bankers, auditors and credit analyst and take a bank loan and later on default. The PNB matter and prior to this Global Trust Bank and many small other banks which got merged into SBI have shows the true picture of the Indian corruption created by professionals.  The surprising part is that concurrent audit and other metrics have lead to an significant failure of the system where the next phase of economic growth will take hit. Those who have clean books will face the heat of the stringent norms created by the blessings of the defaulters like the recent one. Every company bribes its Chartered Accountants and their network to get credit off take from the banking industry.

We cannot trust on Banking audit, we cannot trust on corporate audit, we cannot trust on Tax audit.  All of them have been ruled over the last 2 decades by the Chartered Accountants only. The biggest scam creators are those people who were in the lobby of all areas depriving the ICWAI profession and giving more strength to the chartered Accountants. Well the proof of the lobby strength was that ICWAI have to fight for every opportunity in financial and accounting segment whereas Chartered Accountants got everything easily without much trouble. Many of the veterans of the lobby have dies or few are just still living with one closed eye. The biggest gift to the lobby people who worked against the ICWAI profession in making their task and journey difficult and depriving them for rights equivalent to Chartered Accountants is that their retirement savings earned hard by lobbying  are no longer safe in the banks where they have parked money.

Cost Accountants have been asking for a long time to get opportunity of full and equivalent rights of Chartered Accountants in the banking industry but nope they were never given. In fact inside lobby was also there in the last 2 decades within the all the segment of getting ICWAI outside of the ambit of banking industry. Cost Accountants presented many papers many memos to different government at different times but a corrupt lobby kept the ICWAI profession just outside the banking industry just like an office bearer sitting outside an office. If full rights were given to the profession about a decade ago then Banking Industry would not have failed so bitterly.

When an economy grows significantly multiple professionals are deployed to keep a tab on the audit aspect of such growth. Well we are always on one side –Chartered Accountants.  Only CA knows everything about banking audit to company audit and many more grey areas. Well if one profession is given so much leeway then corruption, malpractices, internal lobby and many more such things are bound to happen.

ICWAI is also set up under the Act of Parliament then why this profession have been neglected and why did the previous government did not gave full rights to the profession.  Those from all corners were involved in the lobby of depriving the Institute and working in favour of the Chartered Institute should be rewarded as they have pulled down the Indian economic growth images. Surprising part is that Auditors and all financial forensic have cooked the games so beautifully that no one ever came to know about such scams. We are struggling with economic driven NPA at the same time willful defaulters have emerged to be big number. The taxpayer’s money will now be ploughed back by the government from the price hike and revenue hike targets. Fiscal deficit and FRBM management will go for wild toss in the coming years.  The credit off take just began in the last quarter is now way towards sliding down. SME segment will struggle and banks will now be more vigilant to refuse cases for funding. Expansion plans which are of genuine quality will take slowdown and economic growth will be under pressure. It’s not the point who created the NPA under which regime. The point is that the government did not deploy multiple vigilance during the expansion of the economic growth.

Very recently India got the title of improving the ease of doing business but a series of corruptions being opened up, reflects that very soon overseas investors would be skeptical to invest in such corporate corruption driven system.

Thanks to those lobby people who deprived the rights of the ICWAI. In fact they saved us for Nobel cause and its being found that Nobel time has arrived and now the government should give equal rights like Chartered Accountants and give the definition of ICWAI profession the same rights with no tweaking. Since tweaking will create problem for the Indian economy in the coming decades.
The final point is when government will give equal rights to the Cost Accountant profession like Chartred Accountants. Are we waiting for Lehmen Brothers to happen in India.

Saturday, January 27, 2018

DOLLAR TO REMAIN LOW...BENEFITS TRUMP FRIENDS



Record profits, Record Quarterly performance, record stock markets' price appreciation, record dividend payouts to wealthy shareholders, new tax laws to make the wealthy more richer to richest. Dollar would remain low. Yes low it will be as Trump is focused towards making the richer to richest.  Investment banks, private equity firms, hedge funds, insurance companies, finance companies, and asset management companies are one of the biggest gainers going ahead and also they will be printing more in the long term. DowJones to scale new highs going ahead as quarterly profits increases, buyback of shares increases and over and above when infrastructure spending boost will be given.

Tax rate cut down benefits passed to rich is clear but dollar will remain low.  Dollar low benefit goes to the US multinational corporations' offshore profits which are maximized when these profits are   being converted in local currencies back to the dollar, before they repatriate those profits back to the United States at the new lower Trump tax rates (12 percent instead of 35 percent repatriation tax rate) and, even more lucratively, when they pay no taxes on offshore profits virtually at all starting 2019. The richer will become richest many folds in the long run.

Trump trade war fight is only to increase its own export in those countries. Trade deficits etc are just numbers game to be narrowed in the long run. The Trump private friends circle is similar to what precipitated the 2008 financial crisis prime players. Investment banks such as Lehman, Bear Stearns, insurance giant AIG, and GE Credit were the prime players during that time and now we are waiting for new sets of names to emerge going in the long term. The US FED and its upcoming vacancies will be all Trump people followed with major planning of new draft policies being designed with the help of the top close business friends of Trump. Real Estate Prices will grow and another boom phase will be soon joining the US markets. The bankers market and financial business will grow. Leveraged deals will pick up as funding will increase from the government spending on infrastructure space.

Low dollar will boost the climate for the richest Americans to treble their earnings by the next 3 years. Repatriate of cash would make them grow their wealth as domestic interest rates earnings and buyback of shares would push the US capital market to new highs. Hence private equity, hedge funds, insurance companies, finance companies, and asset management companies would grow up more. Leveraged deals and over exposed trade activities is about to begin.

Trump friends would rule at the Treasury, in the White House, at the New York Fed, and in a majority of the Fed governorship. Infrastructure would push up the inflation which will be taken as a positive vibe by the economy but actually common people of US will be squeezed and richer will become richest. Dollar game is to make export cheaper and also to make the currency gains to be more lucrative.

Moral of the story is that bubble is in the process of being made and also bankers would make good bonuses in the long term as US FED and US banking gets more into the drawing room of Trump. The debate is how much capital will fly out and how much would come back into emerging countries. The production cost debate of US is that it’s costly to produce in US compared to other economies like India and other Asian countries is no longer valid now. Artificial intelligence and 3d manufacturing has changed the landscape of the US manufacturing which would reduce its cost of production compared to the emerging economies. 

This is the key area where they will pull back the capital and invest but not aggressively in US as they wait for supportive policies from Trump.  The flight of capital will be used as a tool to blackmail and renegotiate higher levels of export form US within other countries. Trump strategies of US economic growth is all linked with his friends to be made more cash rich. Another recession after 8 years is in the making.

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