Choclate Rush.....1

Dark Chocolate Rush: Spoke person of Market leader Cadbury responds an e-mail in Nov 2006: "Currently we do not market any dark chocolate in India. In our view, dark chocolate will only cater to niche segment." But exactly after two years (Oct 2008), Cadbury India, launched its dark chocolates--Cadbury Bournville Fine Dark Chocolate-in the Indian market.

Let's see the flavors in it, once upon a time "xocolatl" was the drink of emperors & warriors. Today, the emperors & warriors might no longer be there, but the beverage seems to have left behind a "Dark" & tempting legacy.

Neither Montezuma nor Cortes knew it then; the bitter, frothy, drink was rich in carbohydrates & contained small amounts of stimulants including caffeine. All xocolatl drinkers agreed, however that it gave them a great energy boost. And Cortes decided to bring the re-vitalizing drink back to Spain. We learnt all of this more than 500 years after Cortes returned home with dark beans.

I'm sure that your mind is thinking; Who is Montezuma & Cortes? What's there relation?

When Montezuma, the Aztec Emperor of Mexico, entertained Herman Cortes, the Spanish conquistador, in 1519, he gave the warrior a special welcome-drink called xocolatl, literally "bitter water". And it was bitter for more than 2000years, the Central American Civilizations of the Mayas, Toltec and Aztecs had been cultivating an evergreen tree called cacao. It's an odd plant that produces its fruit, or pods, from its trunk and limbs. Inside each pod are 20 or 40 seeds that are protected like embryos in a fleshy womb. These seeds are called cocoa beans. The inquisitive conquistador asked the Emperor how the beans had been transformed into the bitter beverage he was drinking. He was told that they had first been fermented in their pods, then roasted, ground into a paste over a small fine and mixed with vanilla, spices and maize. This paste had been patted into small cakes and dried under the shade of a tree. When Montezuma wanted xocolatl, his royal servitors broke up the cakes, mixed in some hot water and whisked them into a foamy consistency before presenting it to their Great Lord. The prepared drink must have looked like our espresso.

Food for thought(to be contiune)!

Money 3

Very unfortunately, I never went for dinner today (06/18/08) since I’ve been engaged with important meeting. However in continue with my previous mail, I’ll tell you “What is the Repo Rate?”

Whenever the banks have any shortage of funds they can borrow it from RBI. Repo rate is the rate at which our banks borrow rupees from RBI. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive. (Note, there is no acronym for REPO. It’s just Repurchase Agreement, find below the definition)

Just to add, What is the link between the repo rate and the bank rate? The repo rate is the rate at which the RBI borrows from the banks, while the bank rate is the rate at which the banks borrow from the RBI. Naturally, then, if the RBI cuts the repo rate, it may not be long before it cuts the bank rate as well.

In finance, "repo" means repurchase agreement, and the "repo rate" is the current interest rate for secured overnight or very short term secured financing involving the sale and repurchase of securities. Its how some securities positions are financed. "reverse repo" is the same transaction from the borrowers perspective.

So, those terms make sense to financiers in the securities industry. I dont know that they make sense in the automobile industry, other than "repo" which is short for "repossession". That of course is what happens when a borrower fails to make a lease or financing payment on her car. Then the "repo man" comes to take the car back as permitted for breach of the financing agreement.

Ways to go……..

Money 2

I came back (06/18/08). Yesterday, I was in hurry & I could not able to complete the whole piece about the printing money. Here you go with some factual information about the crisis & terminology.

There is nothing to prevent Senor Chavez, for example, from printing as much Venezuelan currency as he likes. He can even lie about how much is in circulation if he wishes. [In the US, the Federal Reserve prints the amounts needed and decides how much to permit]

Of course, money is only worth what it will buy. If real goods are scarce, as they are now in Venezuela, prices will rise [or goods will disappear from shelves and transactions will take place in the alleys in lieu of the stores].

And the local currency will fetch increasingly fewer units of foreign currency, even from the black market guys in those alleys. As it’s currently happening in Venezuela, in fact. The process can go on and on for many years -- and it'll eventually cause either the economy to implode or a change in government. Might be years though -- Weimar Germany ran hyperinflation for about a decade before the reforms of the 1930s. Germany's new government in 1933 turned out to not be so good for the country though -- or its neighbors.

The country's laws only regulate the amount & only the treasurer and his department can decide how much currency the country should print. No one can stop them except if they print too much, the value of the currency can come down. Hence, the term was called as "Fiat Money".

Fiat Money: Currency that a government has declared to be legal tender, despite the fact that it has no intrinsic value and is not backed by reserves. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith.

Just think; Most of the world's paper money is fiat money. Because fiat money is not linked to physical reserves, it risks becoming worthless due to hyperinflation. If people lose faith in a nation's paper currency, the money will no longer hold any value.

I’m sorry, I missed another question. How often does the Government print money?

The central bank (i.e., the Fed in the US) of any country does the money printing. In some countries these are directly controlled by the Government and in others they are not (like many western countries).They generally only print enough to replace old notes and coins which they take out of circulation and destroy. If they just printed heaps of money, inflation would skyrocket as the money is pumped into circulation. This happened to some South American countries in the 1980s (like Argentina) when they tried to finance their budget deficits by printing more money. (Note: America deserve the gold standard, just read the Fiat Money again)

It seems that you all waiting for today’s dinner chat, but I have to tell another two terms which I missed here are Repo rates & the Inflation…….

Money 1

Today (06/17/08) Me, Kvulo & Selva had an interesting chat in the cafeteria while dinner, I would like to share those interesting facts to you all.

How does printing money work? As in, who regulates how much money a particular country can print for themselves?

Basically what I want to know is that who regulates this amount? What if the government of a particular country simply decides it will print some more money and use it, who will stop them and how will they be caught?

The individual country issuing the money polices itself. That is why some currencies are considered better than others, because they have a strong monetary policy so that people who do business in that money are confident in it. Countries like The US, UK, the European Union, etc have strong Central Banks that monitor how much money needs to be in circulation. Money is not flooded into the market to devalue everybody's wages and savings.

Other countries have poor financial control of their money making policy, and as a result have horrible problems with their money supply. A typical example is Ecuador. They are famous for having populist Presidents and corrupt politicians who when they would need money to spend on what they want so they simply ordered more money printed. Inflation in 1999 reached 2000% and economically destroyed the country. They desperately switched their currency from the home made Sucre to USA Dollars, which is the legal currency now.

Since then, their economy is stable, but politicians complain about only being able to spend what revenuers they have. Other countries who recently have had financial crisis due to spending and monetary mismanagement include Brazil and Argentina.

Wait for the update on crisis.

US Recesion

Let’s have a closer look of the U.S. economy, with fuel prices topping four dollars per gallon in some states; many citizens want to keep their paychecks in their pockets and out of their gas tanks. Right now, what’s there big concern; it’s all about their economy’s recession.

In the past couple of months, even economists have shifted their dispute from whether a recession will occur to how long and devastating the recession will be. Whether the U.S. quickly bounces back, suffers a long period of economic weakness or falls somewhere in between will have a significant effect on the global economy. The Federal Reserve says the most likely scenario is that the U.S. recession will be short and the economy will quickly bounce back, although threats do still exist.

A recession is officially defined as two quarters of negative GDP growth, which certainly have not had yet, since 2007 Q4 (0.6%) was positive (not done with 2008 Q2). Having said that, 2008 Q1 was probably very near zero, and Q2 is not exactly starting off with a bang. But I think John is technically correct (Recession Is Still a Possibility, Not a Reality: John M. Berry). American standard of living is declining and will continue to decline, but that is not what the official definition cares about (maybe they need to come up with another word for it).

In a real scenario, people are paying more for food, gas, housing, and some are even losing their homes (sub-prime woe). In parallel, the unemployment rate is also increasing. The terms "crisis," "devastated," "weakness," & "distress" be certain to consider that the word "recession" applies.
Source: Federal reserve & Bloomberg