Ok This is not about Friedman’s book…it is just that last week I got confirmation of this!

In a complex world with a lot of barriers to information flow, it was possible to make money on information arbitrage. Not sure how many readers will believe that in the 1990s it was easy for foreign banks to know which branch of a psu bank had how much balance earlier than the HO of the bank. Some of us have seen this information arbitrage making tons of money for the foreign banks.

Last week a person in the financial services business took a VRS at the age of 55 years. He was extremely well paid, had decent relationships, and had earned nice amounts of money for the organisation that he worked for. However in the big world of finance he is now unable to find a similar job – he has spoken to the whole world. From a CTC of X, his best offer is X/6!! This from a person who kept telling him that the markets are now in a recovery mode!

Also met a businessman with international operations. As a manufacturer in engineering goods and a trader in many products, he was worried and a little resigned to some changes. His customer knew the prices in China, Indonesia, and Mexico. All this was available on a click of a button. The client was willing to place an order, but this businessman was not sure whether the client will stick to the prices, if prices fell before giving delivery.

This guy was actually losing money in manufacturing, and his trading was not doing too well…luckily he is 64, and has a daughter who is not interested in the business, so he is likely to sell it off!!