what are we going to do now?

President-elect Obama
"What are we going to do now?". That's the first thought I had when I saw MSNBC declare Obama to be the next President of the United States. I will be the first to admit that despite all the opinion polls and financial market predictions of a landslide Obama victory I was not convinced that it was actually going to happen.

I actually made several comments to my friends about how I did not rule out the possibility that a certain demographic was lying on their opinion polls. You see it is difficult to trust a certain demographic considering that history has shown us that prejudice ruled this country (and others) for years. Bigotry and ignorance dominated reasoning and rational thought. Ok, I will refrain from making this a rant on social and racial prejudices. But I will admit that I underestimated a section of this country's population. I am a very cynical person (as most of you know already) but I am glad to admit that I was too cynical in this case. And I am glad to be proven wrong. You can slice and dice the election result in as many ways you want to but there is no denying that it makes a STRONG statement to the rest of the world about racial prejudices in this country. Now now, obviously this does not mean one event wipes out the history or this is a monumental leap and things are going to completely different from now on but this is step in the right direction. Shalom!

Economy
I have to give props to Bill Gross of PIMCO who had a podcast in July 2008 which was titled something along these lines "Welcome to the Office President Obama-here now go handle a $1 Trillion budget deficit!". Amazingly both predictions came true. You dont have to be a superstar economist to realize that the next President will inherit the largest budget deficit in history. Someone has to calculate if after adjustment for inflation that is still the largest deficit. But you get the picture.

So what to expect in the next 6-12 months on a macro-economic scale? Well, let’s see here: Paulson goes out and orders a $700B TARP package and then promptly tells banks that he is going to back off. Which means more rescue packages (see Citi bailout part II today-interestingly a classmate of mine predicted this), a huge stimulus package. If you are wondering how the Government is going to pay for all this, well simple, print more $s. Uhuh. That is how this is going down people. More dollars printed means more inflation and more devaluation of the dollar. In the short-term there are signs of deflation (for obvious reasons) but believe me inflation is going to be back in a big way in mid-2009 (if not earlier). And if the interest rates are held this low for a while watch out for inflation!

So is there a bottom you ask? At this point I am not going to predict anything and eat it later. I believe the earnings season is upon us and who knows how that will shake up the markets. Gas prices are low, people are still driving less, discretionary income is low, people are spending less, unemployment is high, and home sales are regressing. There is a potential for the market to take a severe beating in the next 2-3 months. What is going to save them? Well, confidence in the next government; confidence on wall street to give more credit out; hedge funds who have loads of cash going out and buying assets that are valued low; people going out and spending like crazy during the holiday season among other things. So there is a chance it is going to get better soon but let’s see how it turns out.

Well, that turned out to be a serious post. I promise to be funny next time! Geeez! I did not even talk about the auto-industry bail out proposals. And nothing about school either. We are having a well-needed Thanksgiving break this week. Off to my sister’s to see Mom and nephew! Should be fun.

Have a great thanksgiving break!

Historic Day?

well, how is tomm going to shape up?
Are all the opinion polls going to prove correct?
Will this country elect as its leader someone they've never elected before?
Will the world enter into a new phase in terms of energy and the environment?
Can kids dream of being whoever they want to be regardless of social status, culture, and race?
Is this country going to set an example to the rest of the world?
Can this country finally elect someone for their substance?
Is the youth of this country back into mainstream politics?
Will tomm be a small but significant step in soothing racial tensions worldwide?


Let's see.

I know a lot of my friends are nervous about tomm (and I am not being melodramatic about this), so good luck to you all.

hmmmm....is there a pattern?

- I have to start by congratulating all those self-loathing Philadelphia sports fans who finally had a chance to celebrate (after 25 years) a sports champion from their city (Rocky is fictional you see).

The Phillies won the World Series with relative ease it seems like and kudos to them. Funny game baseball, a team with marginal pitching, playing in a box of a stadium, with a manager who can't speak more than five words coherently, and with an incompetent (previously atleast) GM ended up winning the World Series. I am by no means diminishing what the Phillies achieved. I love Howard, Utley, and Rollins and am glad they won. Hopefully this will calm the entire Philly area sports base for a few years.

-Speaking of the Phillies winning. Is there a pattern here? I left Philly this summer, and the Phillies won the World Series. I left Boston in 2003 and the Red Sox won the World Series in 2004. I am apparently not a good luck charm to these two cities!

-It's been a while since I posted here. As usual a lot is going on. We finished mid-terms and got our grades back. I got what I deserved (have not got finance yet) in all the mid-terms. I am not proud of my econ grade and hope to do well in the final.

-We finally had a week last week with no regular classes. It was relaxing, although we had to take what are called SIP classes (Sloan Innovation Period). I sat in a Macro-Econ SIP class taught by this exuberant MIT Econ prof. It was great! This guy has apparently studied 72 of the last economic crisis in the world (really) and he spent half the class telling us about what makes a crisis and how to avoid it. I am not sure if I believe in everything he said but he had good insights. I am definitely going to sign up for his Macro-Econ class next semester.

-I finally had time to reflect on what I want to pursue for my internship next summer. And I've made a decision and am happy about it. It does not involve Investment Banking or Sales and Trading. That's all I can say for now. (people read these blogs you know)

-I have a feeling that by the end of this month I am going to overwhelmed with non-class activities. I am in the organization teams for five of the biggest conferences organized by MIT in the next few months. It is going to be a challenge to juggle all those duties.

-I got referred by a classmate of mine to a VC firm from the west coast for a paid project in January. It was a good conversation with this VC firm and I am being kept in the loop. Interestingly I have spent the last few weeks reading up more about VCs. It is definitely a challenging and unique profession. The history of VC (less than 35 years old) is legendary with a long list of hits and misses. I talked to a high-profile person at MIT who knows VCs well and his opinion on the evolution of VCs in unique and one that I've not heard before.

-We had to submit our resumes this past Friday to the career development office. They are now on the resume book that goes out to firms (for a steep price apparently) to a huge list of firms. Recruiting season is officially in second gear now. People have started preparing for interviews in consulting, banking, and sales and trading by having mock interviews. A lot of second year's were seen reviewing resumes of the first year's this past week.

-The career development office posted a list of available internships for next summer just this week. From a first glance it seemed like most firms from last year are offering summer internships in all sectors. Let's see how that unfolds.

-There was a Halloween party this Friday and one of my classmates dressed up as me to the party. He thought it was funny. I was lame and did not dress up at all. But I had fun.

-George Soros gave a guest lecture at MIT this past week. I skipped class to attend it and it was well worth a class ditch. I came away very impressed with his chat. The guy was very philosophical in analyzing the economy, finance, and predictions. He sounded very Marxian which is good in my book. It was interesting when a young MIT undergrad called him a name (for shorting the pound in the 90s and ruining the British economy for a few years) and he calmly reacted by saying "I followed the rules and actually did them a favor".

-The markets. Ah yes, them. I am going to start writing more about the markets from my next post. I am going to make time to analyze the markets again and follow them more closely than I've been in the past 3 months.

later