Fin-nomics

  How real is the real estate industry in India?                                                           -by Abhishek Maity Real Estate sector has seen immense challenges in the past 5-6 years, currently valued at Rs 65,000 crore being the second largest employer generating strong multiplier effects, this sector is expected to reach US $ 1 trillion in market size by 2030, at present the sector contributes 6-7% to the Indian GDP and this is expected to increase up to 13% of GDP in 2025 as per Indian Brand Equity Foundation recent report. Firstly, the sector is infested with speculators or informal agents locally called the Hundis who buy in bulk the housing inventory from the developer firms in ...

  Securitization an Art or a curse?              -by Abhishek Maity   Securitization is a procedure where an issuer creates a financial instrument by pooling together various financial assets into one group. An advanced form of the above process is a mortgage-backed security which is a pool of only mortgages exclusively. Assume that a bank has a lot of housing loans on the book which provide returns in terms of interests and principal payments to the bank plus these loans are also guaranteed by the underlying housing properties known as mortgages. But then an investment bank approaches the older bank to create a new financial instrument by pooling all the housing loans into different tranches according to their credit-worthiness, known as collateralized debit obligations (CDOs) and then selling units of these CDOs to a different class of investors. So, our traditional bank get returns from the usual intere...

  Which Apple will we prefer, the man made one or the natural one -          By Abhishek Maity   Physiocrats were an 18 th century group of French economists who believed that agriculture was the source of all wealth whereas the manufacturing and service industries did not produce any surplus. Physiocracy was a theory of wealth which was the first to grasp the general principles behind the workings of economic phenomenon, the founder of this group Francois Quesnay believed in free trade and minimal intervention of the government in the markets to ensure that entrepreneurial spirits of the farmers or agricultural workers are not taxed away which in turn could stymie the growth of the economy. But come the 21 st century the theory of physiocracy seems redundant as clearly the companies like Google, Microsoft, Apple and many other firms whose valuation runs into billions are not producing agriculture related products such firms ...