Economics and rhetoric

I'm hooked to the business channels these days... like everyone else, I am mulling fresh long positions or well timed puts.

More recently two sets of mediabytes caught my attention. One, the FM simply telling industry to cut prices, much to the chagrin of low margin producers like two wheeler manufacturers, drawing a very blunt reaction from Rahul Bajaj who simply said "what kind of margins does he think we have" ..... the FM clothed the advice in his rather imitable way .... fake, low, laboured baritone, and an added bit of academic golddust thrown in "this is the classical reaction" said he. This one struck me for its pointlessness, and I can see why some sections of industry were so annoyed with the condescension. The duty of the Gov is to recognise that there is complexity in industry and not relfect on their Harvard glories of a past era, leave alone throw simplistic "classical" phrases to a group looking for depth in thinking.

Then, today on a panel of real estate developers DLF, Parsvanath, Raheja, etc. when confronted with the crisis, they simply refuse to cut prices. The anchor threw last years' profit margins at them.... staggering ... all of them between 40-55%. Can you believe that? These guys have margins at 40-55%. No wonder common guys, even common IT guys cannot afford homes. And these guys simply say that they do not want to cut prices... they'd rather have interest rates at 7% they say, in a double digit inflationary environment. It is no wonder that real estate developers are among the most unpopular vendors in this country.