“With Greece on the brink of bankruptcy and the RBI Governor warning of a 1930s like great depression if central banks around the world keep printing money instead of creating real growth, is it going to be really as bad as it sounds? Well, the last time Mr. Raghuram Rajan predicted doom, the situation was upbeat and most wise men disregarded his warning – some even going as far as calling him a Luddite. This time, however, the situation is not all that bright and due to his previous prediction he is being taken a tad more seriously. I really hope that he finds a solution to isolate India from the impending crisis.
Another shocking piece of news is that Uber Technologies Inc. generates $470 million losses on revenues of $415 million and is being valued at $50 billion. When an investment banker friend of mine told me that blood on the Balance Sheets attracts investors, I thought he was joking! Obviously not! The reasons for these losses are being given as the aggressive spends to promote the service in China and India. However, a closer look at the business model reveals that at least in India they have been buying business. The drivers are paid significantly more per trip than what the customer is charged. What will happen when they try to charge more from the customer or pay their drivers less. I don’t think it’s too difficult for either of them to switch loyalties! Enjoy the ride at Uber’s expense.
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