Failure vs Mistake

The difference between a failure and a mistake

A failure is a project that doesn’t work, an initiative that teaches you something at the same time the outcome doesn’t move you directly closer to your goal.

A mistake is either a failure repeated, doing something for the second time when you should have known better, or a misguided attempt (because of carelessness, selfishness) that hindsight reminds you is worth avoiding.

We need a lot more failures, I think. Failures that don’t kill us make us bolder, and teach us one more way that won’t work, while opening the door to things that might.

School confuses us, so do bosses and families. Go ahead, fail. Try to avoid mistakes, though.


United States of America Long-Term Rating Lowered To ‘AA+’

United States of America Long-Term Rating Lowered To ‘AA+’ On Political Risks  And  Rising Debt Burden; Outlook Negative

· We have lowered our long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’ and affirmed the ‘A-1+’ short-term rating.
· We have also removed both the short- and long-term ratings from Credit Watch negative.
· The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.
· More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
· Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.
· The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.


Greater Noida Crisis : The Economics Behind

Greater Noida Crisis : The Economics Behind

Greater Noida crisis are making waves in almost all quarters of the society. I mean the  government, judiciary, politicians, real estate power brokers, banks & financial institutions, investors (common man) and of course the Farmers.

One fine day the court decides that the compensation given to farmers is not justified and the state government has taken their lands on some false pretexts.

Lets look at how the money changed it hands during the whole transaction –

Land Flow chart

FARMERS ————————> GOVT ———————–> BUILDERS ———————–> INVESTORS

Farmers gave land to the government against money, govt sold this land to real estate builders against money (& say bribes) and then the real estate  companies sold their projects i.e land divided into apartments to the Investors. These Investors borrowed money from the Banks to finance their deals.

Banks lend both to Investors & Builders, as they were authorized by the Govt.

Money Flow Chart

FARMERS <———————– GOVT <———————- BUILDERS  <———————— INVESTORS

(builders  & investors : borrowed money from banks)

Investors Money = Personal Savings + Investors Bank Loans

Builders Money = Investors Money + Builders Bank Loans

Govt Money = Partial of Builders Money

Farmers  Money = Partial of Govt Money


In-depth balance sheets –

Builders Books should account for the Investors Money, Builders borrowed money from bank for the project, Land Cost, Bribes to Government Officials, Actual Project Cost (to be few majors).

Builders Profit = Investors Money + Bank Borrowed Money – Land Cost – Project Cost – Commissions

(Commissions here include bribes paid to Govt Officials for allocating land & commissions handed to agents for selling their properties)


 Case Analysis :  Judiciary says return the Framers Land

Government will return the Land Cost to the Builders. Now the main concerns are –

1. will Govt also return the commission / bribes they received – NO

2. money given as commissions to agents will also not come back.

3. money already invested in starting the building work, will not come back. (which includes Investors Money  and Bank Borrowed Money)

4. now the money left is not enough to be returned back to investors and the bank. (builders profit is directly proportional to investors money, now he is in a fix. if he sold flats at high rates, he needs to return the same money back or if he sold the flats in nominal rates, he still needs to return back).

5. builders are in a bigger problem here. however the kind of people they are, its extremely difficult to extract out the Investors money. they are in such a grave problem, that they cannot do anything but to delay the payments, or give back a small token of money.

6. investors who are the common people will be crushed. they have already taken loans, they EMI’s have started (some cases) and they see no future.


What is going to happen ahead –

1. farmers can’t use these lands for agriculture again. that’s why they sold in the first case.

2. farmers said the Govt took land at a very cheap rate, they have never denied the fact – they are open for re-negotiation.

3. after the political situation settles down a little, they are going to re-negotiate.

4. Govt will again sell the same land at revised rates to the Builders, they will again receive their commissions.

5. Builders will further pass on their new cost to apartment owners on pro rata basis.

6. in the end the investors, will be required to pay more – whether he likes or dislikes. (as this is approved by the Government)


Money invested in the supply chain is going to yield better results be it Banks, Builders, Government, Farmers. (quantum is huge)