In all the debate about taxing "carried interest" as ordinary income, I haven't seen any discussion about how the payment is treated in the investor's books - does the investor simply pay capital gains on its earnings net of fees or does it pay (as I believe it should) capital gains on the gross earnings and deduct the fees as a business expense (saving 35%)?
Say, I invest $ 10 million in a hedge fund on terms of 2 and 20; say, it performs well and produces a gross return of 50% - this means that of the $ 5 million earned, I get 78%, or $ 3.9 million, while the manager gets $ 1.1 million
From first principles though, the tax calculation should be quite straightforward
Who owns the capital? Me
What is the total capital gain? $ 5 million
So, I should be taxed at 15% on this gain
What have I done to earn this money? I have employed a hedge fund and so the fees I should get a business expense deduction on the fees I pay
Thus, I would pay $ 750,000 in capital gains tax, $ 1.1 million in fees of which I could set off 35% (or $ 385,000) against my taxes - thus, my net post tax earning would be $ 3,535,000
Since the $ 1.1 million was a business expense in my hands, it must be business income in the hands of the earner - the fund's manager, who would earn $ 1.1 million and be taxed at 35%, for a net post-tax earning of $ 715,000.
The total take for the government would be $ 750,000, exactly equal to the 15% capital gains on the actual gains
Unless of course, as is likely, the goverment IS getting screwed since the investor is being taxed correctly and pays only (in our example) $ 365,000, while the fund manager pays (at 15% of $ 1.1 million) only $ 165,000. This would give a total tax revenue to the government of $ 530,000 on a capital gains of $ 5 million for an effective rate of just 10.6%.
If this is the case, it should be pretty open and shut since, as any tax lawyer would agree, a business expense in one hand (the investor) has to be business income (not capital gains) in the other
Surely it isn't this simple?
Friday, July 13, 2007
Monday, July 2, 2007
ARE WE THERE YET?
Globally, markets are, once again, getting very nervous. The sub-prime crisis in the US came to broad public attention a couple of weeks ago when Bear Stearns, one of the leading bulge bracket firms on Wall Street, had to unwind two of its mortgage-related hedge funds. The firm has already taken a bad hit on its last quarterly profits, and, with the process nowhere near finished, there’s certainly more to come. And, of course, nobody knows whether this is simply the tip of the hedge fund iceberg.
The big picture concern is that, as more and more US “hooker mortgages” go into default, there could be a domino effect on the huge collateralized debt obligation (CDO) market, with more and more market players, large and small, getting caught, which could lead to a serious bout of risk aversion, which, of course, could lead to a tumble in the price of a wide array of assets worldwide.
In response to this, the VIX index, a surrogate for risk aversion, shot higher to 18.89 last week, a shade short of the level it hit in March this year, when the first sharp fall in Chinese equities (this year) triggered a sudden bout worldwide nervousness, but way below the 45 level seen during the unwinding of the dotcom bubble. Thus, edgy thought the market is, risk is still quite cheap in historic terms, and, to be sure, the VIX has since dipped back to a more comfortable level.
US Treasuries, another key indicator of market sentiment, also slipped sharply, with June 13 seeing the largest one-day fall since 2004, with the 10-year bond yield climbing above 5.25% and breaking a long-term technical resistance. However, here, too, market has retraced some of its losses, but a lot of pundits remain on edge – some, very extravagantly so. I got a mail from an old friend, a very experienced US-based fund manager, who said, “Everyone (hedge funds, prop trading and technology-based firms in that space, discount brokerage firms and FCM's) are or have already gone public or ingested large sums of private equity within the past 6-12 months. As somewhat of a perpetual skeptic, I wonder why this activity is simultaneously occurring in all areas of our business, where astute traders who have made money for years are generously willing to let the public participate in the feast. Is it a market top of generational proportions or simply taking advantage of the unsatisfied demand for investment returns at any price …?”
A market top of generational proportions? Thems big words.
But, then, nickel has already fallen by over 30% – that’s right, 30% – since end-May, and in technical jargon may be in process of forming a frightening head and shoulders pattern, which, if triggered, could turn everything to dandruff. The volatility of the Euro is the lowest it has been since the Euro was first constituted in January 1999, suggesting some sort of breakout. Money supply in Japan has fallen below 100 trillion yen for the first time since mid-2000; as money supply tightens, demand for yen increases, which could put pressure on the gigantic volumes of the carry trade that has been (partly) fueling the vitality of financial markets in recent years. Clearly, there are several signs of a major shake out.
So, are we there yet? Is it time to pay the piper for these past few years of good times?
I don’t know.
But my sense is that we are not. There are far too many analysts predicting some sort of major collapse, and as we all know by now, one of the main jobs of financial markets is to prove the largest possible number of brilliant minds wrong. As Keynes famously said, the market can remain irrational a lot longer than you can remain solvent. I think the most correct interpretation of that is that rationality is not a natural state, which is why, time and again, the most astute – and rational – market analysts stumble long before the final hurdle, calling tops (or bottoms) months, sometimes years, before they actually occur.
Which is not to say that there won’t be any hiccups in asset prices. But, I don’t believe there will be any wide-ranging collapse, partly because the wide dispersion of risk created by the super-exponential growth of derivatives (and credit derivatives, in particular) will ensure that even large hiccups will be rapidly attenuated. But another, and to my mind, more important reason may be that global growth today is itself dispersed to a very micro level – the villages of India, for instance – where credit plays, at this stage, a relatively minor role.
So, even if another few hedge funds tumble, or if Chinese equities really correct, or if the yen surges to 115 on a serious unwinding of the carry trade, we may have a few weeks of risk aversion, but, in my view, these will all be buying opportunities.
India will, of course, respond to these signals, with both equities and the rupee likely to take a hit. However, despite the 8+ growth, which remains a certainty, the increasing failure of political governance – flooding in our international financial center, tarring of the office of the President, and, of course, continued sclerosis in deregulation – will, sooner or later, hit sentiment, exacerbating any volatility induced by global events.
The big picture concern is that, as more and more US “hooker mortgages” go into default, there could be a domino effect on the huge collateralized debt obligation (CDO) market, with more and more market players, large and small, getting caught, which could lead to a serious bout of risk aversion, which, of course, could lead to a tumble in the price of a wide array of assets worldwide.
In response to this, the VIX index, a surrogate for risk aversion, shot higher to 18.89 last week, a shade short of the level it hit in March this year, when the first sharp fall in Chinese equities (this year) triggered a sudden bout worldwide nervousness, but way below the 45 level seen during the unwinding of the dotcom bubble. Thus, edgy thought the market is, risk is still quite cheap in historic terms, and, to be sure, the VIX has since dipped back to a more comfortable level.
US Treasuries, another key indicator of market sentiment, also slipped sharply, with June 13 seeing the largest one-day fall since 2004, with the 10-year bond yield climbing above 5.25% and breaking a long-term technical resistance. However, here, too, market has retraced some of its losses, but a lot of pundits remain on edge – some, very extravagantly so. I got a mail from an old friend, a very experienced US-based fund manager, who said, “Everyone (hedge funds, prop trading and technology-based firms in that space, discount brokerage firms and FCM's) are or have already gone public or ingested large sums of private equity within the past 6-12 months. As somewhat of a perpetual skeptic, I wonder why this activity is simultaneously occurring in all areas of our business, where astute traders who have made money for years are generously willing to let the public participate in the feast. Is it a market top of generational proportions or simply taking advantage of the unsatisfied demand for investment returns at any price …?”
A market top of generational proportions? Thems big words.
But, then, nickel has already fallen by over 30% – that’s right, 30% – since end-May, and in technical jargon may be in process of forming a frightening head and shoulders pattern, which, if triggered, could turn everything to dandruff. The volatility of the Euro is the lowest it has been since the Euro was first constituted in January 1999, suggesting some sort of breakout. Money supply in Japan has fallen below 100 trillion yen for the first time since mid-2000; as money supply tightens, demand for yen increases, which could put pressure on the gigantic volumes of the carry trade that has been (partly) fueling the vitality of financial markets in recent years. Clearly, there are several signs of a major shake out.
So, are we there yet? Is it time to pay the piper for these past few years of good times?
I don’t know.
But my sense is that we are not. There are far too many analysts predicting some sort of major collapse, and as we all know by now, one of the main jobs of financial markets is to prove the largest possible number of brilliant minds wrong. As Keynes famously said, the market can remain irrational a lot longer than you can remain solvent. I think the most correct interpretation of that is that rationality is not a natural state, which is why, time and again, the most astute – and rational – market analysts stumble long before the final hurdle, calling tops (or bottoms) months, sometimes years, before they actually occur.
Which is not to say that there won’t be any hiccups in asset prices. But, I don’t believe there will be any wide-ranging collapse, partly because the wide dispersion of risk created by the super-exponential growth of derivatives (and credit derivatives, in particular) will ensure that even large hiccups will be rapidly attenuated. But another, and to my mind, more important reason may be that global growth today is itself dispersed to a very micro level – the villages of India, for instance – where credit plays, at this stage, a relatively minor role.
So, even if another few hedge funds tumble, or if Chinese equities really correct, or if the yen surges to 115 on a serious unwinding of the carry trade, we may have a few weeks of risk aversion, but, in my view, these will all be buying opportunities.
India will, of course, respond to these signals, with both equities and the rupee likely to take a hit. However, despite the 8+ growth, which remains a certainty, the increasing failure of political governance – flooding in our international financial center, tarring of the office of the President, and, of course, continued sclerosis in deregulation – will, sooner or later, hit sentiment, exacerbating any volatility induced by global events.
Friday, June 29, 2007
WHAT GOES AROUND COMES AROUND
I was startled a few weeks ago when I read an article by Martin Wolf, usually one of the soundest voices in the FT, more than concerned about the prospects of Rupert Murdoch and Newscorp taking over the Wall Street Journal - while Mr. Wolf was always a balanced voice in the debate about business and society, it seemed that his terror about the possible demise of one of the few well-articulated and balanced (???) voices of business journalism - Im paraphrasing, because I dont remember his exact words - seemed very unfair and judgmental of the New Barbarian
I was reminded of this yesterday when I saw a column by Paul Krugman of the New York Times, which was even more hysterical about the now-more-or-less-certain takeover - of course, Mr. Krugman, with whom I have agreed on a lot, is much more left wing, so his hysteria may be somewhat more understandble
But all in all, it is rather surprising that people who broadly subscribe to the market model of life should be horrified when in works against their tastes or interests
I hold no brief for Mr. Murdoch, except to note that he is a master of business - and I dont mean MBA - and, incidentally, a remarkably virile man, and I say more power to him and if the puny Wall Street Journal establishment is unable to withstand the assault from one of its very own free marketeers well - so much for hypcrisy
Again, it is rather remarkable that these liberal commentators view Mr. Murdoch distastefully relative to the WSJ - I read one issue of the WSJ recently after a long time and i was shocked at the near-fascist tone of a couple of its edit page articles - I couldnt believe there were people who believed the kinds of things they wrote and, equally importantly, that a supposedly reputable newspaper would publish that kind of stuff
Well, what goes around comes around
I was reminded of this yesterday when I saw a column by Paul Krugman of the New York Times, which was even more hysterical about the now-more-or-less-certain takeover - of course, Mr. Krugman, with whom I have agreed on a lot, is much more left wing, so his hysteria may be somewhat more understandble
But all in all, it is rather surprising that people who broadly subscribe to the market model of life should be horrified when in works against their tastes or interests
I hold no brief for Mr. Murdoch, except to note that he is a master of business - and I dont mean MBA - and, incidentally, a remarkably virile man, and I say more power to him and if the puny Wall Street Journal establishment is unable to withstand the assault from one of its very own free marketeers well - so much for hypcrisy
Again, it is rather remarkable that these liberal commentators view Mr. Murdoch distastefully relative to the WSJ - I read one issue of the WSJ recently after a long time and i was shocked at the near-fascist tone of a couple of its edit page articles - I couldnt believe there were people who believed the kinds of things they wrote and, equally importantly, that a supposedly reputable newspaper would publish that kind of stuff
Well, what goes around comes around
Saturday, June 23, 2007
THE DIFFERENCE BETWEEN INDIA AND CHINA
is not the difference between Mumbai and Shanghai or the differences in infrastructure or whatever - these are simply the effects of the real difference, which is that China is run by businessmen while India is run by politicians
It is hard to see that happening in India - some years ago I had told Anand Mahindra that he should enter politics, and he looked at me thoughtfully (but that was at Goa airport, so perhaps my powers of observation were colored), but we need somebody much more ruthless, like one of the Ambani boys (although Anil has been discolored by his recent liasons) or Subash Chandra, who has sparred with Rupert Murdoch - but they are probably all busy making more and more money and nothing wrong with that - perhaps Sunil Mittal hmmm...
It is hard to see that happening in India - some years ago I had told Anand Mahindra that he should enter politics, and he looked at me thoughtfully (but that was at Goa airport, so perhaps my powers of observation were colored), but we need somebody much more ruthless, like one of the Ambani boys (although Anil has been discolored by his recent liasons) or Subash Chandra, who has sparred with Rupert Murdoch - but they are probably all busy making more and more money and nothing wrong with that - perhaps Sunil Mittal hmmm...
Friday, June 22, 2007
THE NEXT US PRESIDENT
Michael Bloomberg, of course - looking for a bookie; since he hasnt even announced, it should be in the range of 50 to 1
Wednesday, June 20, 2007
TIME TRAVEL
jet lag is wonderful - when you're up, there's this amazing clarity, when you crash, you go into a deep sleep - perhaps its tending to the zero gravity experience - this then suggests that rather than trying to get over jet lag, we should try to prolong it - huh?
Monday, June 18, 2007
AN AMERICAN SANDWICH - 2
Another wonderful thing we noticed about America this time is how much more integrated it is – apparently, years of affirmative action are finally paying off in the evolution of a much larger black middle class. I know, I know, there are no black people left in America, only African Americans, but please pardon my political incorrectness, Im from India, after all. [While I scoff at political correctness, perhaps I should pay more attention, although to me it is simply really affirmative action gone over the top – this is America, after all].
Anyway, we saw and met a lot more black and white people partying together, even in New York, a far cry from the time I lived there. I remember one time back in the early 1980s, an old friend, Duane, had taken me to a club near Lincoln Center which was 100% black (plus one Indian) and, on my being surprised, said, hell man, black people and white people don’t party together in New York, not like they do on the coast. Well, Duane bhaijan, things are changing. The rooftop bars at 60T were quite mixed the few days we were there, although, as I recall, the ones midtown were not. Maybe downtown is still the cutting edge.
I spoke about this to Nicole, who has recently hooked up with one of my closest friends, and is part of a politically left-leaning mixed race couple, and was a bit surprised – left-leaning, remember – when she readily agreed that there seemed to be more mixed race couples around. Of course, this could simply be because she herself was part of a mixed race couple and you always see more of who you are around you.
But we saw colors mingling everywhere. In fact, on the West Coast (right on, Duane bhaijan) and in Miami, the integration is much louder, but its more Spanish-speaking in color. Of course, there were concerns. Momo, my cousin in San Diego was pretty pissed off that the bi-lingual education in the public schools pushed things down to the lowest denominator to where he had to put his daughter into private school, even though that required him to schlep her back and forth most days. But, on the other hand, his step-daughter-in-law (welcome to California), Shannon, is married to a Mexican kid, who shared Momos passion for the Padres and cigars.
Net net, I think my observation is correct. After all, theres even a black guy trying to run for president on a major political ticket
And this – the fact that there is a lot less racial tension around – is, to my mind, one of the most unremarked of invisible forces that is boosting the US economy. I mean, if there is less energy being spent in anger and hatred, theres more energy left for living and making money. Indeed, if I am correct and this new integration continues to grow, we will see US growth surprise on the upside, which means that interest rates will take longer to come down than people exect and the dollar will, notwithstanding the current account deficit (which, while high, is, incidentally, falling relative to GDP), get stronger, at least against the Euro and sterling.
Incidentally, the funniest example of this new integration we saw was in the pool at the Ritz Carlton in Miami, where, one evening, we met these two young (19 and 21) fat (sorry) black girls, who – prepare for more political incorrectness – looked like any number of media pictures of poor black inner-city kids, who spend all their time doing crack and having babies with a series of cool ass-holes. Turned out they flew to Miami from Baltimore first class and were hanging out at the Ritz. While the first class was probably simply a result of the Great American Travel Machine, it was clear – they were at the Ritz, after all - that they were doing alright financially. In fact, when Terrelito told them he was from California, one of them squealed, Oh, I want to go to Orange County. I – a foriegner, remember – was more than surprised by that and asked her, Why? She looked at me as if I was nuts, Shopping, of course, she tinkled.
Remember Bob Uncles description – a nation of shopkeepers buying from and selling to each other. My comrade-in-silliness, Terrelito and his wife Carmel, design and make some absolutely wonderful embroidered pillows and other houseware-tye gifts, decorated with funky maps of the different states and whatnots – they call themselves store-whores and I cant imagine a single day when they don’t buy something from some store somewhere.
In fact, to a visitor from Mars (or India), it would seem that every American house or apartment comes equipped with a minimum of fifteen phoos-phoos tubes (shampoo, conditioner, deodorant, body gel, body pel, body poo, etc) per bathroom, and an equivalent number (or more) of cosmetics (lipsticks, lip gloss, lip floss, lip boss, and so on) for each bedroom. Now, don’t get me wrong – I love lipstick and on this trip was delighted to be feted by the phoos-phoos girls at Saks in New York when Pravina was buying lipstick. More about that later, but the point is that America IS about shopping.
And there is such a wide assortment of things and brands of things to buy that you just cant help it. Neither Pravina nor I are serious shoppers – I mean we don’t drool at the mention of Dubai or Singapore – but even we ended up shopping so much that we had to buy another bag. And what a beauty we got in Beales (or something) in Bradenton – it was parrot green, had wheels, and was just so…so handome. And, IT WAS ON SALE. We got it for 20 bucks – couldn’t imagine getting anything so swish at three times the price anywhere. And this, I think, is another important force keeping the American economy rocking. With so many people making so much stuff and so many people sellling so much stuff, it stands to reason that the different cash flow requirements of so many businesses result in something or another being heavily discounted all the time. Which may explain why consumer spending has remained robust through all the ups and downs of the housing market and the occasional burp in equities.
Another very economically valuable aspect of this mad and everywhere consumerism is that at any time in America there are a sufficient number of people who will buy anything. My friend Tom told me that a few weeks or so ago he went on a zero gravity flight – they used to only have them out of Florida and Vegas, but they now offer it out of La Guardia. He said it was absolutlely amazing – you sit in a plane (or something) that zooms up to 40,000 feet and then swishes down to 25,000 feet (or something) and during the downwaves you slip into a zero gravity environment for a few seconds, which experience is repeated several times. He said it made him feel like a one-year old baby. Sounded like drugs to me but hey, all you have to do is pay for your pleasures. He said it was a bit expensive – it cost $ 3,500 a round. Now $ 3,500 is a lot of money but its also not a lot of money. And this to me was the learning – that there were enough people in America more than willing to shell out $ 3,500 to see what it felt like. Which is what made it commercially viable, and this – the fact that there are enough people in America who will buy anything – is what sustains entrepreneuership. If you know you can sell it, you can dream up any IT you like.
People have often talked about entrepreneurship being one of Americas great economic values. What I realized while nibbling on my American sandwich is that this value is underpinned – nay, perhaps defined by – the fact that shopping is one of the key essences of America.
To close this meal, I should mention a visit to Costco. I was stunned, terrified, amazed that, for example, there was so much toilet paper in the world. [On a long term basis, I would short Scotts, Kimberley-Clark and all toilet tissue manufacturers, but that’s another story.] Wandering around Costco in shock and awe, Momo ran into a very lovely woman - an early work associate, he said – who told us that she had retired and lived nearby. My chirpy self, I couldn’t resist – I said, so you’ve become a Costco queen. She flashed her diamonds and pearlies at me and said, smiling, All I do is watch Oprah and come to Costco. I think she was kidding but, you never know.
Weclome to America – MORE TO COME.
Anyway, we saw and met a lot more black and white people partying together, even in New York, a far cry from the time I lived there. I remember one time back in the early 1980s, an old friend, Duane, had taken me to a club near Lincoln Center which was 100% black (plus one Indian) and, on my being surprised, said, hell man, black people and white people don’t party together in New York, not like they do on the coast. Well, Duane bhaijan, things are changing. The rooftop bars at 60T were quite mixed the few days we were there, although, as I recall, the ones midtown were not. Maybe downtown is still the cutting edge.
I spoke about this to Nicole, who has recently hooked up with one of my closest friends, and is part of a politically left-leaning mixed race couple, and was a bit surprised – left-leaning, remember – when she readily agreed that there seemed to be more mixed race couples around. Of course, this could simply be because she herself was part of a mixed race couple and you always see more of who you are around you.
But we saw colors mingling everywhere. In fact, on the West Coast (right on, Duane bhaijan) and in Miami, the integration is much louder, but its more Spanish-speaking in color. Of course, there were concerns. Momo, my cousin in San Diego was pretty pissed off that the bi-lingual education in the public schools pushed things down to the lowest denominator to where he had to put his daughter into private school, even though that required him to schlep her back and forth most days. But, on the other hand, his step-daughter-in-law (welcome to California), Shannon, is married to a Mexican kid, who shared Momos passion for the Padres and cigars.
Net net, I think my observation is correct. After all, theres even a black guy trying to run for president on a major political ticket
And this – the fact that there is a lot less racial tension around – is, to my mind, one of the most unremarked of invisible forces that is boosting the US economy. I mean, if there is less energy being spent in anger and hatred, theres more energy left for living and making money. Indeed, if I am correct and this new integration continues to grow, we will see US growth surprise on the upside, which means that interest rates will take longer to come down than people exect and the dollar will, notwithstanding the current account deficit (which, while high, is, incidentally, falling relative to GDP), get stronger, at least against the Euro and sterling.
Incidentally, the funniest example of this new integration we saw was in the pool at the Ritz Carlton in Miami, where, one evening, we met these two young (19 and 21) fat (sorry) black girls, who – prepare for more political incorrectness – looked like any number of media pictures of poor black inner-city kids, who spend all their time doing crack and having babies with a series of cool ass-holes. Turned out they flew to Miami from Baltimore first class and were hanging out at the Ritz. While the first class was probably simply a result of the Great American Travel Machine, it was clear – they were at the Ritz, after all - that they were doing alright financially. In fact, when Terrelito told them he was from California, one of them squealed, Oh, I want to go to Orange County. I – a foriegner, remember – was more than surprised by that and asked her, Why? She looked at me as if I was nuts, Shopping, of course, she tinkled.
Remember Bob Uncles description – a nation of shopkeepers buying from and selling to each other. My comrade-in-silliness, Terrelito and his wife Carmel, design and make some absolutely wonderful embroidered pillows and other houseware-tye gifts, decorated with funky maps of the different states and whatnots – they call themselves store-whores and I cant imagine a single day when they don’t buy something from some store somewhere.
In fact, to a visitor from Mars (or India), it would seem that every American house or apartment comes equipped with a minimum of fifteen phoos-phoos tubes (shampoo, conditioner, deodorant, body gel, body pel, body poo, etc) per bathroom, and an equivalent number (or more) of cosmetics (lipsticks, lip gloss, lip floss, lip boss, and so on) for each bedroom. Now, don’t get me wrong – I love lipstick and on this trip was delighted to be feted by the phoos-phoos girls at Saks in New York when Pravina was buying lipstick. More about that later, but the point is that America IS about shopping.
And there is such a wide assortment of things and brands of things to buy that you just cant help it. Neither Pravina nor I are serious shoppers – I mean we don’t drool at the mention of Dubai or Singapore – but even we ended up shopping so much that we had to buy another bag. And what a beauty we got in Beales (or something) in Bradenton – it was parrot green, had wheels, and was just so…so handome. And, IT WAS ON SALE. We got it for 20 bucks – couldn’t imagine getting anything so swish at three times the price anywhere. And this, I think, is another important force keeping the American economy rocking. With so many people making so much stuff and so many people sellling so much stuff, it stands to reason that the different cash flow requirements of so many businesses result in something or another being heavily discounted all the time. Which may explain why consumer spending has remained robust through all the ups and downs of the housing market and the occasional burp in equities.
Another very economically valuable aspect of this mad and everywhere consumerism is that at any time in America there are a sufficient number of people who will buy anything. My friend Tom told me that a few weeks or so ago he went on a zero gravity flight – they used to only have them out of Florida and Vegas, but they now offer it out of La Guardia. He said it was absolutlely amazing – you sit in a plane (or something) that zooms up to 40,000 feet and then swishes down to 25,000 feet (or something) and during the downwaves you slip into a zero gravity environment for a few seconds, which experience is repeated several times. He said it made him feel like a one-year old baby. Sounded like drugs to me but hey, all you have to do is pay for your pleasures. He said it was a bit expensive – it cost $ 3,500 a round. Now $ 3,500 is a lot of money but its also not a lot of money. And this to me was the learning – that there were enough people in America more than willing to shell out $ 3,500 to see what it felt like. Which is what made it commercially viable, and this – the fact that there are enough people in America who will buy anything – is what sustains entrepreneuership. If you know you can sell it, you can dream up any IT you like.
People have often talked about entrepreneurship being one of Americas great economic values. What I realized while nibbling on my American sandwich is that this value is underpinned – nay, perhaps defined by – the fact that shopping is one of the key essences of America.
To close this meal, I should mention a visit to Costco. I was stunned, terrified, amazed that, for example, there was so much toilet paper in the world. [On a long term basis, I would short Scotts, Kimberley-Clark and all toilet tissue manufacturers, but that’s another story.] Wandering around Costco in shock and awe, Momo ran into a very lovely woman - an early work associate, he said – who told us that she had retired and lived nearby. My chirpy self, I couldn’t resist – I said, so you’ve become a Costco queen. She flashed her diamonds and pearlies at me and said, smiling, All I do is watch Oprah and come to Costco. I think she was kidding but, you never know.
Weclome to America – MORE TO COME.
AN AMERICA SANDWICH
I moved to the US when I was a lad of twenty-one – now, I know, these days, twenty-one is hardly a lad, but this was some time ago. Indeed, I lived in America for about fifteen years before I returned to the old country and returning there for a visit a couple of weeks ago, I realized that its been twenty-one years since I left America. I guess time does fly when youre having fun.
Ive been back in the interim, of course, but somehow this trip seemed more seminal. Maybe it was the sandwich-ness of it – I was 21 years old before I went there and its been 21 years since. Or, perhaps, it was more. Perhaps it was – as my wife says - that I have finally become Indian again and when I refer to the old country these days I am more likely than not speaking about America.
And what a joy it was being back. It had been about three years since we were last there and it seems to be a completely different place. No doubt I am different – who isnt – but America has clearer eyes, a greater sense of joy and delight, and more – much more – money. For all these differences, however, its twin essences – shopping and the search for innocence – remain unchanged, which is probably why I felt completely at home.
But let me begin at JFK. Pravina and I flew in after a long flight – it was the first time in years we did it straight through from India – and, while we were tired, the excitement of hitting New York, as always, had me almost jumping up and down as the plane landed.
The terminal was cleaner than I remembered and immigration – no, Homeland Security these days – was a breeze. We had waited but a few minutes before we were with this stocky guy who took one look at us and said, Youre boyfriend and girlfriend, right? It hit the spot, we chatted a bit about how tough it is to pay the rent in New York and we were through to baggage claim in minutes.
While waiting for out bags, I had to use the toilet – I had forgotten about restroom – and,after a wide-ranging wander, found it, right by the Homeland Security desks. I went in, positioned myself at a urinal and began my business. As I streamed forth, I suddenly saw what seemed to be a fly in the urinal. I wasn’t sure – I was groggy after a 14 hour flight – but as I looked closer, I saw that it was,indeed, a fly – not live, but painted on the urinal at a relatively comfortable aiming position. I leaned across to look at the bank of (empty) urinals and, sure enough, each one had a fly sweetly painted to entertain the just arriving visitor. Welcome to America took on a new meaning.
Delighted and relieved, I found Pravina, the bags and our limo and we sped – well, given that it was around 9 a.m., sped may not be the best word – into town. It was a beautiful day (of course), bright sunshine and wonderfully w-a-r-m. I tried to gab on the phone – I had a US mobile, which I had rented in India – but, true to New York tempo, I got about seven voice message. [I realize now that they used to be answering machines – the same impact, but different.]
We got to the hotel – 60T – around 10, and, unsurprisingly, our room wasn’t ready – check in is at 3. But we were prepared and, leaving our bags, headed down to Reas for a shower. And stepping out onto Thompson Street, turning south to Broome and then left towards West Broadway, the city came rushing back into my feet. It was like I lived here, like I always lived here – except I don’t. I live in Bombay, but, I guess, since I know New York so well, it was like being on holiday in my home town – an extraordinary feeling that few of us get to experience very often. Welcome to New York.
Well, this set the tone for the trip. We spent a few days in New York, then flew out to San Francisco; after a few days there at The Clift hotel – the Redwood Bar is one of the best ever anywhere, by the way – we hopped down to San Diego to visit my cousin Momo and his lovely wife, Mary; then, back across the country to Miami, where I morphed into Ramon (also known to those in the know as Miami Mecklai), where we were joined by Terrelito and Carmelita, who flew across from the Bay Area to be our guides and co-conspirators in silliness; three days in Miami – South Beach, Ocean Drive, Little Habana, mojitos, bikini tops – would make even the most spiritually defaced intellectual believe in God; we left the Ritz Carlton on a cloud to our next stop to visit my aunt and her husband, who had (operative last letter I think) been laid up with cancer in Bradenton, across the state. My aunt, though born in India, has lived in the US for about fifty years, but, in my belief, is the most American American anywhere. Without any thought or doubt, she wears red, white and blue EVERY DAY BETWEEN MEMORIAL DAY AND LABOUR DAY, and just goes about her business. I want to get a video of her doing her thing onto Youtube. Staying with them was about as America as you can get and, since they had hosted me when I first went to the US, a perfect place to taste the American sandwich. Final stop, of course, was Nueva York again. I LOVE NEW YORK.
But I live in Bombay, which is fabulous and where Im back now digesting the America sandwich. Its tasty with, surprisingly, a raft of different flavors, but, instead of going into every detail – spare me the details, I often tell my much-more-skilled daughter – let me just hit a few high notes of observation.
First of all, as I mentioned in passing, the economy is doing great. Everywhere we went, people were out spending more money – much more money – than they used to three or four years ago. Now, I know, I was visiting the high spots and I was on vacation, but Ive lived in America, and I can feel the economic energy. It is high – way up there. When I spoke about it to some people we met on the West Coast – a wonderful Sunday afternoon at Stinson Beach – one of them said, maybe people are seeing the light at the end of the Bush tunnel and so are in a better mood.
My uncle in Florida said the economy is the strongest hes seen it in a long time. He said, you know what Napoleon said about the British – theyre just a bunch of shopkeepers buying from and selling to each other. That’s America in spades, and you know what the British did to Napoleon. He said another interesting thing – he said the best time he can remember is from about halfway through Clintons first term till the end of his second term, when the economy was on a wild tear. And, he said, you know why that happened? Because the White House and the Congress were controlled by opposite parties and the government couldn’t get in the way of America – hes about as libertarian as I know, in case you hadnt noticed, but I think theres some truth there.
Which suggests that maybe the Republicans will shock everybody by winning the White House and the boom will continue. But please not Guliani – I know a lot of people like him, but to me, hes just a barefaced liar. Or, perhaps, the Democrats will win the White House and following Bob Uncles observation, this may be the surprise trigger for a turnaround in the continuing wild and joyous markets.
Unless, of course, the current turmoil in the Treasuries market turns into something lasting – unlikely, but in the words of the Great American Saint, Johnny Carson, MORE TO COME
Ive been back in the interim, of course, but somehow this trip seemed more seminal. Maybe it was the sandwich-ness of it – I was 21 years old before I went there and its been 21 years since. Or, perhaps, it was more. Perhaps it was – as my wife says - that I have finally become Indian again and when I refer to the old country these days I am more likely than not speaking about America.
And what a joy it was being back. It had been about three years since we were last there and it seems to be a completely different place. No doubt I am different – who isnt – but America has clearer eyes, a greater sense of joy and delight, and more – much more – money. For all these differences, however, its twin essences – shopping and the search for innocence – remain unchanged, which is probably why I felt completely at home.
But let me begin at JFK. Pravina and I flew in after a long flight – it was the first time in years we did it straight through from India – and, while we were tired, the excitement of hitting New York, as always, had me almost jumping up and down as the plane landed.
The terminal was cleaner than I remembered and immigration – no, Homeland Security these days – was a breeze. We had waited but a few minutes before we were with this stocky guy who took one look at us and said, Youre boyfriend and girlfriend, right? It hit the spot, we chatted a bit about how tough it is to pay the rent in New York and we were through to baggage claim in minutes.
While waiting for out bags, I had to use the toilet – I had forgotten about restroom – and,after a wide-ranging wander, found it, right by the Homeland Security desks. I went in, positioned myself at a urinal and began my business. As I streamed forth, I suddenly saw what seemed to be a fly in the urinal. I wasn’t sure – I was groggy after a 14 hour flight – but as I looked closer, I saw that it was,indeed, a fly – not live, but painted on the urinal at a relatively comfortable aiming position. I leaned across to look at the bank of (empty) urinals and, sure enough, each one had a fly sweetly painted to entertain the just arriving visitor. Welcome to America took on a new meaning.
Delighted and relieved, I found Pravina, the bags and our limo and we sped – well, given that it was around 9 a.m., sped may not be the best word – into town. It was a beautiful day (of course), bright sunshine and wonderfully w-a-r-m. I tried to gab on the phone – I had a US mobile, which I had rented in India – but, true to New York tempo, I got about seven voice message. [I realize now that they used to be answering machines – the same impact, but different.]
We got to the hotel – 60T – around 10, and, unsurprisingly, our room wasn’t ready – check in is at 3. But we were prepared and, leaving our bags, headed down to Reas for a shower. And stepping out onto Thompson Street, turning south to Broome and then left towards West Broadway, the city came rushing back into my feet. It was like I lived here, like I always lived here – except I don’t. I live in Bombay, but, I guess, since I know New York so well, it was like being on holiday in my home town – an extraordinary feeling that few of us get to experience very often. Welcome to New York.
Well, this set the tone for the trip. We spent a few days in New York, then flew out to San Francisco; after a few days there at The Clift hotel – the Redwood Bar is one of the best ever anywhere, by the way – we hopped down to San Diego to visit my cousin Momo and his lovely wife, Mary; then, back across the country to Miami, where I morphed into Ramon (also known to those in the know as Miami Mecklai), where we were joined by Terrelito and Carmelita, who flew across from the Bay Area to be our guides and co-conspirators in silliness; three days in Miami – South Beach, Ocean Drive, Little Habana, mojitos, bikini tops – would make even the most spiritually defaced intellectual believe in God; we left the Ritz Carlton on a cloud to our next stop to visit my aunt and her husband, who had (operative last letter I think) been laid up with cancer in Bradenton, across the state. My aunt, though born in India, has lived in the US for about fifty years, but, in my belief, is the most American American anywhere. Without any thought or doubt, she wears red, white and blue EVERY DAY BETWEEN MEMORIAL DAY AND LABOUR DAY, and just goes about her business. I want to get a video of her doing her thing onto Youtube. Staying with them was about as America as you can get and, since they had hosted me when I first went to the US, a perfect place to taste the American sandwich. Final stop, of course, was Nueva York again. I LOVE NEW YORK.
But I live in Bombay, which is fabulous and where Im back now digesting the America sandwich. Its tasty with, surprisingly, a raft of different flavors, but, instead of going into every detail – spare me the details, I often tell my much-more-skilled daughter – let me just hit a few high notes of observation.
First of all, as I mentioned in passing, the economy is doing great. Everywhere we went, people were out spending more money – much more money – than they used to three or four years ago. Now, I know, I was visiting the high spots and I was on vacation, but Ive lived in America, and I can feel the economic energy. It is high – way up there. When I spoke about it to some people we met on the West Coast – a wonderful Sunday afternoon at Stinson Beach – one of them said, maybe people are seeing the light at the end of the Bush tunnel and so are in a better mood.
My uncle in Florida said the economy is the strongest hes seen it in a long time. He said, you know what Napoleon said about the British – theyre just a bunch of shopkeepers buying from and selling to each other. That’s America in spades, and you know what the British did to Napoleon. He said another interesting thing – he said the best time he can remember is from about halfway through Clintons first term till the end of his second term, when the economy was on a wild tear. And, he said, you know why that happened? Because the White House and the Congress were controlled by opposite parties and the government couldn’t get in the way of America – hes about as libertarian as I know, in case you hadnt noticed, but I think theres some truth there.
Which suggests that maybe the Republicans will shock everybody by winning the White House and the boom will continue. But please not Guliani – I know a lot of people like him, but to me, hes just a barefaced liar. Or, perhaps, the Democrats will win the White House and following Bob Uncles observation, this may be the surprise trigger for a turnaround in the continuing wild and joyous markets.
Unless, of course, the current turmoil in the Treasuries market turns into something lasting – unlikely, but in the words of the Great American Saint, Johnny Carson, MORE TO COME
Subscribe to:
Posts (Atom)