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Future economy .vs. Bill Gross, George Soros, and Nouriel Roubini June 22, 2009

Posted by Bipin Agarwal in Future of transporation, Global Economy, Politics and economy, Recession.
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Everybody who has any interest in economy, market, recession, recovery from financial meltdown, probably have either heard or read about these three people;

  1. Bill Gross (Bond king, PIMCO)
  2. George Soros (philanthropist, and ex. Hedge fund trader)
  3. Nouriel Roubini (Dr. doom, NYU economic professor)

If you are thinking, that these three ultra smart people will have similar views and thinking about the current and  future state of economy, You are dead wrong. Alan Greenspan, ex. Fed chairman is also very influential, who can move the market but you cannot count on making your economic strategy dependent on him, because he is a paid consultant and he is paid by the likes of PIMCO, UK government, political think tanks, etc. Let me first give you a little background of the above three people, on their incentive, and interest which I believe have hugely effected their views.

Bill Gross: This Sunday June 21st there was front page write up on Bill Gross in New York Times. Article outlined clearly that his view are more reflective of how he is going to make big money based on his partnership and connection with US government.  If it is good for him, that is what counts.  He is a fund manager and trader. He is a strong supporter of PPIP (Public-private investment program), because that is how he and his funds will make billions in fees and his investors may do well.

George Soros: Last week George Soros wrote in Financial Times that worst of the recession is behind us. Government should continue to do more in the form of stimulus until credit market is liquid, after that, they need to figure out as how to get out of the market and work on reducing their debt. Market are not efficient, his theory of reflexivity (or his fixation with the theory) drives his views. He is a big supporter of OBAMA administration. His life experiences are definitely inspiring. He spends more of his personal time on Philanthropy, and world cause. His most recent gift to Eastern Europe of 100 million dollars  to deal with economy is most recent example of giving.

Nouriel Roubini: Dr. Doom as he is now known in the world is a economic professor.  He is famous, is making lot of money by consulting, publishing research paper, etc. In the current economic environment, where People are fearful, will pay you a lot of money if they think you have a solution. The fact is, he has no solution, He only has suggestion to government that will not listen to him any way. He is in a safe zone. He is covered. If economy turns out to be his way, he is covered. If economy gets better I do not think people will ask him question and in any case, he will take the credit.

Conclusion & summary: After reading the overview I provided above, and off-course you should read more about them, you cannot formulate any definite point of view of the future economy.  But unfortunately, these are the guys who make headlines on Financial Times, New York times, CNBC, Bloomberg, Yahoo news, etc.  It is possible that you can make money by investing with Bill Gross, and his funds, You certainly do not want to buy expensive research form Roubini, that will make you only poor and no better insight then you already may have. George Soros is interesting. He is optimistic and making some good obvious suggestion to government.

I personally think that lot of the pain about residential real estate we had to go through is behind us. We still need to realize the full extent of losses for commercial real estate, credit card portfolio loss.  It is possible that the loans sitting on the balance sheet of financial institutions are still overvalued, so what? these loans will be written down over time when they mature or people decide to sell their house or foreclose. There could be another couple of hundred billions in write-off by financial and non-financial institutions, however that will not impact the economy much. Biggest unknown right now is, the USA government deficit financing and how it will impact the USA domestic and worldwide economy. Unfortunately, you one can not predict the economic outlook for short or medium term (up to 10 years) based on economic fundamentals only, economy is hugely effected by the political events and strategy. In the long run,  it is more important to know, who will come out as a winner once the dust settles down.  USA, China, Mexico, Germany, India, Africa, and Brazil are well positioned for long term overall economy. However it will not be a smooth ride. Hold your rope tight.

You have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask.


Bipin Agarwal



CHINA Super Power – Do not move their Cheese June 18, 2009

Posted by Bipin Agarwal in Global Economy, Politics and economy, Real Estate Development in Global Economy, Recession.
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  • China GDP will grow by seven percent or more next year.
  • China will mandate buy China for domestic usage
  • China will buy IMF bonds
  • China owns about 800 billion of US Treasury
  • China has two trillion dollars of foreign reserve. This will grow to three trillion in next five years.
  • China wants to have significant say at IMF
  • China does not want to called as part of BRIC, It should be renamed as BRIM (Brazil, Russia, India, and Mexico)

CHINA wants it bad, and they may be right. They have all the attributes it takes to be a super power. Financial times has a special addition called CHINA confidential to give outside world a good insight into CHINA. These are all facts, not fiction.

Why there is problem in accepting CHINA as a super power? It is time that G-7 or G-8 should be re-organized to represent the new world financial powers.  Current grouping based on the dollar value of GDP is misleading and does not take into account the realities of  the world economy.

If  other super power, IMF, or world economic forum or other developed countries have a problem in accepting CHINA as super power, I have another suggestion.

Let us have cheese and non-cheese economic blocks. All the countries that consume significant amount of cheese; USA, Italy, European countries,  should be grouped into one category.  Countries that do not consume a significant amount of cheese; CHINA, India, Indonesia should be grouped into a separate category. It will be then possible to look at GDP of cheese eating countries and non-cheese eating countries. This will stop the currency war among dollar, Euro, yen, pound, and Yuan.

What I have described above is not a joke. There are several benefit of doing it. You may have read the famous book; “Who Moved My Cheese”. Here is the link if you are interested.


Once you have above two categories defined, if any of the country in the non-cheese block does not succeed financially, they can not say; “Who Moved my cheese”, well you are in the non-cheese block, there is no cheese to be moved.

Reality is that America is well positioned to prevail economically for lot of reason. I do not think America need to worry about China in the short term or long term.

You have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask.


Bipin Agarwal