Basant:

I cant comment on electronic secirity system, but one area where I see tremedous potential is the expansion of Air cooling services in India. I see a lot of potential for ductiling cos. like fedder Lloyd. I saw in the corporate magazine of alfa Laval, that they have the concept of district cooling in France. In India, we are still talking about Centralised air conditioning....dont you think that air refrigeration and cooling space has a lot to offer, especially companies in the service management like fedders

Another sector Investors could watch out for would be the nuclear energy space. worldwide a major portionn of power requirement is obtained through this route.

Basant,
I don't want to sound pessimistic but I have been watching and investing in Uranium stocks since last 2 years. I saw some posts mentioning low supply of silver/gold etc. But do you know where is the biggest problem. IT IS URANIUM. Now if silver price goes very high, we see less demand and some recycling as silver is not burnt . Oil is burnt but if price goes too high, people will use public transportation, less driving, use ethanol, gas etc. Now U is very intresting. Global demand is 200m pounds. Supply is only 100m pounds. This is since 1993. I know your question(where did they find rest of 100m ponds?). 1. There was draw down on inventory of power plants and most important 2. When Russia broke up, US was worried abt their nuclear arms getting sold in black mkt. Clinton admin made a deal of converting those bomb grade U into mild u for power plants. They named it "Megatons to Megawatts Program". Some people expect that supply will be done in '07. Now U is probably most inelastic metal to price. To explain it better if price of salt goes up 10 or 20 times would it matter to home budget? Its cost is just so much negligible for generating power. But than think if there is not enough supply. Somebody(and lot of them) will have to shutdown plant.

Now on demand side: There are many new plants planned. China is planning to add 1 or 2 every year. India has plan for some 24 of them. Though it takes many years to build them, no body has idea where would they get big "U".

On supply side: As in other metals, it will take years from exploration to mining to refining. But other problem with U is it is most sensitive matter due to radiation and getting all clearances take more time than any other metal.
Since Russia is minting money on oil and metal money and their Nukes inventory wend down, who knows, Putin might start building them back so even less U.

I am not worried abt the price. It is matter of getting the material at ANY PRICE.

We could also look at some of the old sectors - these are not as exotic as media or internet - but still have a long long way to go. The one such sector that comes to my mind is oil and gas.

Five countries - the US, China, Japan Germany and India - account for nearly half of the world's GDP as measured by buying power in US dollars, according to a new World Bank report.The new data released shows the world economy produced goods and services worth almost $55 trillion in 2005 and that almost 40 per cent of the world's output came from developing economies.In the new tabulations of GDP, the US remains the largest economy in the world with a world share of 23 per cent, followed by China with 10 per cent, and Japan with seven per cent. Germany comes next with five per cent followed by India in the fifth place with four per cent.

Govt is feverishly printing money

Whenever the government wants to borrow more than what people are willing to lend it, it simply passes the hat around to the Reserve Bank. It is technically called borrowing, but in reality it is tantamount to printing money to pay for its expenditure.

With so much "monetised" money sloshing about in the economy, the net result is often higher inflation - after a lag. So, if you are celebrating the dramatic drop in inflation from nearly 13% in August last year to just over 5% now, don't. The inflation dragon has only gone into hibernation. It will return.

The reason why the centre's finances are in a shambles is populism. In last year's budget, the centre announced a Rs60,000 crore farm loan waiver. Then there was the Sixth Pay Commission report, and the huge oil and fertiliser subsidies. The net result: as at the end of December 2008, the centre's fiscal deficit -gap between revenue and expenditure that has to be bridged by borrowings - had already spiralled to Rs2,18,262 crore. And this is merely official deficit. Unofficial deficit - which includes oil and fertiliser subsidies that are not shown in the budget - is much higher at Rs3,04,204 crore. And that's a conservative estimate.

The 2008-09 budget had pencilled in only Rs1,33,287 crore as fiscal deficit. The gap between the real fiscal deficit and the budgetary claim has resulted in huge additional borrowings and a frenetic printing of notes.
n Cash balance with RBI falling

Cash balance with RBI falling

The UPA government has "monetised" -- ie printed notes -- worth Rs66,946 crore to bridge the yawning fiscal deficit.

As of January 30, 2009, the monetised deficit of the government stood at Rs 66,946 crore. This recourse to credit from the Reserve Bank suggests that traditional avenues of financing the deficit are not sufficient. Already, more than a quarter of the fiscal deficit as of December 2008, has been met by borrowings from the central bank. Worse still, more of the same may be in the offing as the year draws to a close.

Why? The facts tell their own tale. The economic stimulus package entails huge expenditure. On the other hand, the revenue front is far from rosy. Duty cuts in indirect taxes will render the exchequer poorer by Rs10,000 crore while the slowdown in economy will hit even normal flow of receipts.

Now there's news that, even in regard to direct taxes, the picture is less than sanguine. A Rs100,000 crore revenue shortfall stares us in the face.

The gross borrowing programme of the centre is set to go up to Rs2,52,154 crore from the originally envisaged Rs1,78,575 crore. The Reserve Bank has indicated that more borrowing to the tune of Rs50,000 crore is likely before March 2009.

Thanks to huge spending, the centre's cash balances with the Reserve Bank are falling. Till December 2008, there had been a drawdown to the tune of Rs60,959 crore in cash holdings - the budgeted figure for 2008-09 is only Rs7,224 crore. Besides, the government has availed itself of ways and means advances of Rs11,654 crore. As the exchequer comes under strain, it is a safe bet that the Reserve Bank's credit to the centre, that is "monetised" deficit (defined as Reserve Bank's holdings of treasury bills, and bonds adjusted for the government's cash balances), will also swell.

So, brace for higher inflation later this year or in 2010.

source: DNA

Recession? The US is in a depression

"It's all in your mind, V. They can take away your job, but they can't take away that brain you have inside your head," she told me, trying to pacify my fears of being fired.

"I guess, you are right," I replied.

"But to tell you frankly, it is not looking good. The US has come up with another rescue plan. This time, the big round number is $787 billion. So if we add the earlier two rescue efforts, the bigger round number is more than $2 trillion. One of the biggest items in this new plan is a $400 payroll tax cut for individuals and $800 for couples.
Some others like retirees, war veterans etc who do not pay payroll taxes will get a $250 payment from the government. The idea is that the beneficiaries will spend all this money, which will help revive a contracting economy and, in turn, save jobs. But I don't think all this is going to make much of a difference," she said, puncturing all the pacification she had just indulged in.

"Why do you say that?" I asked.

"I don't think all the efforts being put in by the US government to get its citizens to start spending will bear much fruit. Private debt is usually around 80% of the gross domestic product (GDP), but right now in the US it is 140% of the GDP. In money terms, private debt in the US is now around $6 trillion and this is after nearly $1 trillion was written off in the last two years. Now, I need not tell you, that is a hell of a lot of money.

People realise that unless they save, they won't be able to pay off all the debt that they have accumulated. People have also lost nearly $30 trillion in value from their homes and investments over the last few years. This has led to a huge change in psychological attitude when it comes to spending. With real estate prices falling and incomes either stagnant or falling, it is natural that people want to hold on to all their cash. Savings as a percentage of income currently stands at around 2%. Now, that rate has to increase if people are to pay off all the debt that has been accumulated. So, basically, people want to save even though the government wants them to spend in order to revive the economy. Get that?"

"Yup, I do. You seem to be getting better and better," I commented.

"You know, David Rosenberg, an economist at Merrill Lynch, has opined that the US economy is not in a recession, but in a depression," she said.

"Depression! But what is the difference between a recession and a depression?" I asked.

"Good question. I Googled and found that there is no precise difference between depression and recession. But a depression is essentially an extremely severe recession. And that is why all these attempts by the government to print and spend money -- and to get its citizens to spend -- to revive the economy just won't work."
"Hmmm! But why won't it work? There have been cases in the past when increased government spending has helped revive many economies?" I questioned.

"You know this is an exception that proves the rule. The prescribed remedy for a government to get out of any recession is increased government spending that leads to its citizens spending more and hence revival of the economy. But this time it's different. People just have way too much debt to pay off and, even if they are given tax cuts like they have been offered in this new plan or lower interest rates to borrow and spend, they just won't spend. All the plans presented till now seek to get people to spend and hence revive consumption. But the economy is in trouble primarily because people borrowed way beyond their capacity and spent too much. As economics and financial writer Mike Shedlock recently put it,
'Consumers and banks have both been burnt, and attitudes have changed'," she replied with great confidence.

"You explained the consumer part of it. But what about the banks...
Why are they not lending? The US government has been helping banks. The increase in lending to American banks as of November 2008 was a staggering $700 billion. Where is all that money going? Even after a lot of government money has been pumped into banks,"

"Hmmm! Just imagine if all that money were to hit the economy. What do you feel will happen?" she asked.

"Well at a very basic level, such an increase in money supply will lead to a humungous increase in inflation. "Inflation is always a monetary phenomenon," this is one of the few things that various schools of economics seem to agree on," I answered.

"Right! The fact is that inflation is well under control even with all this increase in money supply. What does that tell you?" she asked.

"It means that all that money given to the banks is not coming into the economy... But if it's not coming into the economy, where is it going?" I asked.

"Banks are depositing the money lent to them by the US Fed, back at the US central bank. On this, the US Fed pays them an interest of 0.1%. Other than this, the money that banks raise through depositors is also being deposited with the US Fed. Now why would a bank which pays an interest of around 2% on its fixed deposit, go back and deposit that money to the US Fed at almost zero percent?" she questioned.

"It would do that only if it expects to lose more money by lending to people," I replied, finally getting what she was trying to explain.

"But is there a way out of this?" I asked.
"There is a way," she answered. "Economist and investment letter writer Bill Bonner wrote in a recent column, 'There is about $6 trillion worth of debt that needs to be eliminated before the economy can begin to grow again. Liquidation would do it - quickly and painfully'. He seems to be suggesting that the simplest way to get around all this is to write off the humongous amount of private debt that remains and start afresh."

"So why is it not being done?" I asked nonchalantly.
"You know, you can be really stupid at times. If that happens, the US dollar would simply collapse and that of course is not acceptable to the present establishment or for that matter the previous establishment.

But I guess the US dollar would collapse anyway. All those dollars that are being printed to rescue the economy will hit the economy sometime, and, when that happens, inflation is going to go through the roof. When inflation goes through the roof, the world at large won't want to hold on to the humongous amount of securities issued by the US government. They will get out of those securities leading to a crash there. Once they have got the dollars by selling those securities, they will also want to sell off those US dollars and get into other currencies and that my dear, as you have explained in the past, will lead to the US dollar crashing," came as a long wielding response from her.

"So what is the moral of the story?"
"Buy gold. With the expected collapse of the US dollar, all the money is going into gold."

source: DNA