Era of Fast Forward and Speculation

With intense globalization, several economic theories have gone out of the window….timelines on most of the things have been redefined. 2008 was perhaps a perfect example of how economic order has changed in the world.

 

Everything is fairly fast forward in this era….also there is an added element that plays a very influential role on various factors influencing economies, perhaps the most important role….Speculation.

 

One look at some interesting highlights of 2008 say a story. It’s a year stock market touched a high of 22K and a low of 8K, oil touched a high of $150+ and a low of $40, real estate went from all time high prices to a point where many real estate companies are looking ways to bailout, GDP growth touched a high of 9-9.5% to a low of 6-6.5%. There were also economies like US and Japan, which have gone into almost recession statistically. Few decades back one could have never imagined this entire chain of events taking place within a span of 12months. What would have been a cycle for decade, takes place now within months and years.

 

Now interestingly while there are several real factors like sub-prime crisis, fall in US consumption etc which have contributed to this situation, but a fluctuation of this order can not be explained by just simple demand and supply. There is allegedly a big role played by speculation.

 

Businesses are no different. Each day, each week, each month is important in sustaining growth of an organization. Unlike years back, one can’t afford to relax for a bit. You miss the bus for one month and chances are that year is gone. It’s a lot of energy and sustenance, more than anything else to ensure a successful business. Also environment with its ups and down, with elements of speculation and such other uncontrollables, is not getting any easy.

 

So specifically with regards to India, are we in times where growth is not a possibility for some years? I personally don’t think so. These are times of real test. These are times where one needs to put in huge amount of energy in doing the things right on everyday basis, these are times when you need real business and real ideas, and not just business plans. These are times where brick and mortar businesses where customer value is clearly identifiable, are more likely to exceed. We are still an economy growing at 7%pa approximately, which is not a mean number by any ways.

 

Often people ask me what’s the impact of current environment on business. I reflect back and conclude for past several years, businesses had got used to having very high growth plans, and actually exceeding that with somewhat ease. Now plans are getting realistic and more sane, and one will need to work very hard to come within touching distance.

 

These I personally believe are very interesting times, for many of us who have never gone through such a huge learning curve in such a short span.

 

~~Rohit~~