April 30, 2007

Where's the cabbage -I ?

This question has had too many answers with varying degrees of contention, satisfaction and perhaps their truth content. However if we are to take a non-analytic view the answer is sheer blatant and all exposed and pervading in front of our eyes.

Just like the circulating molten core of earth which enlivens it, the life on earth in more than what we can afford to believe is surviving predominantly on these two money-churners : advertising and arbitrage.

Where advertising on one hand has the effect of concentrating the money from that vast pool of populace into few hands, or more discretely it is the supply of cash from many to the demand of few, arbitrage on the other is exploited by few who leverage the difference of money values across different markets and thereby sustain the tautness of the demand and supply curve. To put it in other way it's the flow of cash from the supply of few to the demand of many. Maybe these two things don't sound too instrumental in the first glance, but just give a thought -that if half of the world's money is in one or the other way scanned under the mechanisms of these two money-churners, one cannot but shed any skepticism about them. (the other half probably sleeps as a secured money in the pits..)

The power these two things hold individually is too humongous to be grasped unless we get the real hard numbers to put across, but then statistics is something which surpasses dammed lies and hence it's only a matter of self-realization and self-enlightenment.

Through advertisements, whether they entice or create a revulsion in masses for a certain product, one process that always gets initiated is the flow of money. From a pressure-margin business of selling a Re1 sachet of hair oil on television to a completely soft advertisement of social-networking on web to the star-studded apparel commercial asking you to spend more than 1000% of the production cost for a shirt or whatever, the wheel of money game start spinning, streaming trifle amounts through millions of pockets eventually landing in to the hands of few. It's this convergence which is followed up again by a divergence of the cash flow which keeps the moolah rolling. The divergence comes in the form of investments in financial instruments, infrastructure building, generation of new businesses and employment essentially disbursing out the cash packets back to the masses. Surely the influx and out-flux are not the same and that accounts for the rising no of billionaires in the world and acute disparity in the money possessions.

Arbitrage if we go by dictionary definition shows up as a see-saw in the money-park wherein the key players try to cash-on the imbalance in the values of almost anything, yes literally anything - from interest rates to currency to commodities to stocks and what not. Arbitrage is again an immensely pressure margin business which relies on the multiplicative power of the volumes. The torrential sums when multiplied by a fraction of the cent produce millions of dollars as pure profits in a single day and in the process reconcile the difference in the underlying entity. However, just like a see-saw in action the equilibrium is never achieved in totality or eternity in the world of arbitrage(s)

ps: cabbage is the informal term for money

hopefully i'll not ditch the second part of this article [;)]..

1 comment:

Anonymous said...

abe.. what the hell is this?...time kharab kar diya..btw it brought back the memories of CAT2006 RC section..kuch bhi nahi chamka mere ko:)