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From Wall Street to Dalal Street... - Views on News from Equitymaster
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  • Dec 20, 1996

    From Wall Street to Dalal Street...

    The atmosphere in a bull market is, well, charging. Everyone is smiling because wealth is being created and, before you can say "Buy More", money is being spent equally rapidly on flashy cars and mansion homes. Being on Wall Street is what it was like in the heady days of 1991-92 when we earthlings, now sitting in the depths of despair in Dalal Street, also enjoyed this phenomena of creation of wealth and its carefree distribution. Aaah, how times have changed! But hold on, you dying breed of bulls on Dalal Street, the next great bull run may be just around the corner.

    Just think about what has happened in the United States over the last four years and you will be astonished to see the similarities in the macro-picture. Since 1992 President Bill Clinton and his administration have been accused of more wrongdoing than any other US President. If Nixon had to resign because of this Watergate affair in which secret files of political foes were being examined by private dicks in the middle of the night, Clinton should have been sent on exile to the moon for his act of requisitioning over 900 files of politicians from the FBI in broad daylight! Poor Nixon, he probably had to waste money on batteries for all those flashlights and paid night-time wages to his men.

    And that little town in Arkansas where President Clinton comes from is supposedly the source of many questionable deals in which the First Lady is known to have made a profit of US$ 99,000 on a US$ 1,000 investment. Moreover, some partner of the First Lady is apparently in jail on a scandal while another key witness died on the way. And did you know that the Clinton Administration may have given the go-ahead to South American rebels to sell drugs to blacks in Los Angeles and let them use their huge profit to help fight for democracy and peace?

    Or were you aware that foreigners (including the Government of India) have been busy funding the US elections through donations to Clinton's Democratic Party. In return for these donations some Asians managed to get photographs of themselves shaking hands with the President and, you guessed it, probably have those photographs hanging on their walls winning them deals, friends, and money.

    All of this sounds familiar in the Indian context. Sons of our ministers may have made the same returns as the First Lady on their investment in petrol pump stations, fertiliser deals, and housing allocation scandals. Instead of hitting out at them and asking for their arrest maybe we should give them jobs as fund managers with obnoxious salaries and apartments with breath- taking views of Marine Drive. Atleast the NAVs of our funds will show better performances!

    And lets get the dealmakers to work for the country while they continue to amass personal wealth. If donations to politicians gets me a photograph which I can use to set up a pickle company in India or win a few fertiliser deals or some work with steel plants what's wrong with that? If these people are such great deal-makers lets hire them as our merchant bankers, pay them hefty success fees and get moving. Look at all these power projects in India: no one has paid any money and everything has gone by the book which is why we are in darkness. But look what some loose change in telecom deals has done to the country: there is now a phone in every village! If the US has dealmakers like Goldman, we can have our Godman!

    And if members of the US administration can, in broad daylight, steal 900 secret files from the Federal Bureau of Investigation what is one forged document in some far away island called St Kitts? Lighten up, Mr CBI, it was probably an oversight or a joke. Let's just forget the whole thing and move on.

    Or if a minority community in the US can be converted into a ghetto of drug addicts and if there is a different scale of justice for being white or black what's all this fuss about religion, caste, or creed in India. A few structures knocked down here or there or a few rules which favour minorities is not the death knell of the nation.

    The parallels between what has happened in the US and India over the last few years are eerie but there is one fundamental difference: We, the people of India, are stupid. We have let all these silly things bog us down. The world is about now and here not the after-life and the hereafter. While Madonna was getting physical, the US was getting practical, and India remained philosophical. (How's that for a slam-dunk?!)

    And while Bill Clinton is about to be re-elected with a thumping majority we threw out Rao and his gang. Well, serves us right! The Dow Jones has gained 100% over the last 4 years and the Sensex has lost 40%. If we had sense we would have re-elected the Congress and let them finish the job that they began so well forty-five years ago - that of finishing the country. This slow death is more injurious than cigarette smoking - one quick fire sale to all the multinationals and atleast a few of us would have remained rich. Now everyone is poor - even the captains of Indian industry who issued warrants to themselves to make a quick buck and are now left holding worthless junk.

    If all that the press writes in the US is true and if the Dow has zoomed to record highs despite all that, India can do it too. On the basis of this scam-to-share-price ratio Dalal Street must be the cheapest market in the world. While research analysts are pouring over the RBI's monetary policy to figure out which way the market is moving and before they discover yet another silly ratio to justify why we have lost all our wealth, I suggest you read the US newspapers and follow the scandals there. Go ahead, call your broker and buy the market before the FIIs figure this one out.



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