My (s)crap book

News not getting their due

2009-04-26T02:06:00.000-07:00

Agreed, its election time and IPL. But there are a few big items thats not getting their fair share of attention at all.

Sri Lanka: Indians tend to dismiss Lankan Tamil cause as a terrorist struggle. After the bittter exit of Indian Peace Keeping Force and the subsequent assasination of Rajiv Gandhi at the hands of LTTE, there are plenty of reasons to be circumspect about poking into the fire again. But these are no ordinary times. An estimated 30 - 40 thousand tamils are trapped in an area of 10 square miles at the hands of LTTE. On the other side is an unremorseful Sri Lankan army determined to squash LTTE at any humanitarian cost. Sending foreign ministers and making public statements condemning the Sinhala majority Government is as spineless a response the government could've mustered. Where is the emergency UNSC meeting? Where are the UN observers and the threat of sanctions? Where are the peacekeeping forces to stop the military advance endangering lives of so many people? There are so many domestic issues in Tamil nadu. But I completely support the regional parties' stand that the Government has failed to stand up to the interest of minorities in the neighboring state, when it could've shown better leadership. The media apathy to the issue which is as serious as Darfur is appaling.
Shanno: The 10 year old girl who studied in the corporation school in Delhi after her teacher made her kneel down in the hot sun with 7 bricks on her back for over two hours. Her crime? Failure to recite alphabets. The west is bashing US over human rights abuse in Guantanamo bay over torture meted out to criminals. But in one more instance of Government apathy, Law minister suggested that a change in mindset was necessary before change in laws to deal with such situations. Its time the change in mindset comes from top. Where are the sacking of Government officials accepting responsibility? The death of a 19 year old medical student at the hands of his 4 seniors, oestensibly called ragging is another phenomenon which only catches the media and politiccians attention when someone dies. There are cries of shock and horror, promise to deliver justice and even possibly some suspensions. But things get back to normal after a few days. Is there anything to suggest things would be difficult this time around?

What does your blog say about you? Part II

2009-03-14T10:34:00.000-07:00

Typealyzer.com apparently answers the question with a warning- your writing style may have nothing to do with your self perceived personality. When I last checked, this was the description typealyzer gave for my blog.

ISTP - The MechanicsThe independent and problem-solving type. They are especially attuned to the demands of the moment are masters of responding to challenges that arise spontaneously. They generally prefer to think things out for themselves and often avoid inter-personal conflicts.

The Mechanics enjoy working together with other independent and highly skilled people and often like seek fun and action both in their work and personal life. They enjoy adventure and risk such as in driving race cars or working as policemen and firefighters.

Now the same site gives this description.

ISTJ - The Duty Fulfillers. The responsible and hardworking type. They are especially attuned to the details of life and are careful about getting the facts right. Conservative by nature they are often reluctant to take any risks whatsoever.

The Duty Fulfillers are happy to be let alone and to be able to work in their own pace. They know what they have to do and how to do it.

I dont normally check out random sites which measures your love quotient, personality scores etc. But the endorsement of typealyzer was given by no less than Greg Mankiw the respected economist. But I could think of a few reasons for the change

I've somehow changed and become less fun and more facts.
I havent blogged enough for the site to give stable results (the difference between ISTP and ISTJ is just one letter)
I've quoted too many people in the recent posts and it affects the results (analyzing their personality?), especially taken together with the second hypothesis.

May be its just good timepass. Check it out. Let me check if this post affects the results.

My London trip

2009-03-08T08:42:00.000-07:00

London is only my second foreign trip, the first one being a 2-day trip to Bahrain. My sister was onsite for her Genpact (an outsourcing company) project for about 6 months, and although she was totally tied up with her work there, it was her initiative to make us (my parents and me) stay with her and sight see London for 2 weeks. Bless her heart! I couldn't have afforded a London trip on my own.

There were snowstorms the week before we arrived, and frankly we weren't sure if how much we could cover. Thankfully, although it was near freezing while we were there, the sun was shining and there wasn't one cloud in the sky.

The nearest place was Kew Botanical Gardens, with an admission fee of £13 per person (about Rs. 1000. the entire period we were there, we couldn't help converting everything to Rupees in our head) It is spread over 300 acres, and was once a picnic and hunting ground of the Kings of the yore, along the banks of Thames. I found the Charlotte cottage right in the middle of the woods quite charming. We walked for 6 hours, interspersed with only slight amount of rest. In fact, we walked a lot during the trip. I was amazed how my mother at her age had the energy to come home and do household chores after all that walking.

The next visit was the Natural History Museum and Victoria and Albert Museum at South Kensington (London is the city of Museums. I must've visited more museums in 2 weeks than I did the entire life) The best things in London are free. Museums are one of the few things in this world that cannot be digitized (Can you imagine a three dimensional experience of exhibits in the internet?) Victoria and Albert Museums have the best collection of Jewellery in the world. My parents and I initially searched for the Kohinoor, not realizing it is in the Tower of London.

The National Maritime Museum and the Royal observatory at Greenwich (where the famous Prime Meridian runs) is perhaps the most interesting part of my visit. The Royal observatory have the following story:

In the olden days, the sea travel was considered dangerous, because the sailors lacked navigational tools. The latitude, how far north or south of the equator one is, is relatively easy to find by the height of the Sun at midday or (in the northern hemisphere) by the height of the pole star; sailors had been finding their latitude at sea for centuries. The longitude is a measure of how far around the world one has come from home and has no naturally occurring base line like the equator (Imagine a sphere, you can always draw the equator, but can you say which one is the central meridian unless explicitly defined?). The crew of a given ship was naturally only concerned with how far round they were from their own particular home base.

In theory, two approaches are possible- either find the time accurately at sea; Knowing the time at Prime Meridian, and knowing 4 mins correspond to 1 degree helps fix the longitude. The other approach is this. If an accurate catalogue of the positions of the stars could be made, and the position of the Moon then measured accurately relative to the stars, the Moon's motion could be used as a natural clock to calculate Greenwich Time. Sailors at sea could measure the Moon's position relative to bright stars and use tables of the Moon's position, compiled at the Royal Observatory, to calculate the time at Greenwich, by which they know how far East or West they are from it. This means of finding Longitude was known as the 'Lunar Distance Method'.

Pendulum clocks which measures time accurately on Earth fares dreadfully under unstable conditions at sea. So Harrison worked on the most accurate clock at sea, while Flamsteed worked on the Mapping of the stars. Both approaches were eventually successful.

A few things an Indian would notice about London. Its public transport system is great. Not only are they well networked, but also the directions are so clear a child would find its way around. The credit crunch is visible in atleast one way- On the last day, we were shopping at Hounslow. Most of the shops were displaying 'Credit crunch prices!!!'. A couple of things were really cheap- Chocklates and Shirts. We hoarded them. People everywhere were precise and helpful with directions, not the usual take the right and go straight and ask someone there. I didnt find any signs of racism, although it could be because I'm just dumb to take note of any. Anyway, Indians are racist when it comes to Black people. Ask any African tourist who has visited India.

My mom was clad in Silk sarees and Golden ornaments and attracted attention everywhere. In Windsor castle, my mother and I had an argument over how to use the audioguide. I asked the lady at the counter to arbitrate. She smiled and said, Mother is always right. Mother is king!! (No. She did not say Queen) Oh boy! I think my mother would mimic the line if I argue with her over anything, ever.

London pictures here.

Spot the odd one out

2009-03-06T07:59:00.000-08:00

Gandhi's glasses, like success, have many fathers. I don't know which one is more hilarious - The fight between the Government and the dashy millionaire over who would take credit for rescuing Gandhi's memorabilia for a not small sum of $1.8 million, or the owner Otis' solemn pledge that he would stop Gandhi's auction if India spends more on health care than on defense.

If Gandhi's items were acquired by legitimate means by the owner and auctioned through a legal contract, India has no right to waste precious taxpayer money going for it or use other means to coerce the owner to give up his right. The diminutive man must be turning in his grave that his memorabilia went to someone who is an antithesis of austerity.

Consider the problems India faces. The country is plunging to its worst slowdown in recent memory. It is painful to see India in international news for all the wrong reasons (latest one here) The pace of infrastructure projects implementation is debilitating, when the west is trying to manufacture growth using public spending on not too dilapidated highways and Broadband services. Justice system is in a state of decrepitude - By Delhi high court's own admission, it would take 466 years to clear its backlog, while the lawyers in southern city of Chennai strike work for issues like violence on Sri Lankan Tamils. Not even the ignominy of Mumbai attacks has galvanised the Government to come up with a concrete plan on internal security. Oh, and the Government or Vijay Mallya, rescued Gandhi's glasses in a major show of diplomatic victory. Spot the odd one out.

The Great Crash, 1929 by John Kenneth Galbraith

2009-02-14T13:10:00.000-08:00

The past does not repeat itself, but it rhymes - Mark Twain

Crises serve a useful purpose - Regulation is a poor substitute for good memory. People after a big crisis become fearful of excesses that regulation try hard to limit. Excesses might come in different forms after a few decades, for there is nothing more predictable as human desire to make money without effort. But memory serves the same purpose as SEC, in a far more effective way.

Refreshing memory was the main intention of the author when he wrote the book in 1950s. Half a century later, as a crises of comparable proportions looms, it is worth considering the aspects of the Great crash which rhymes slightly with the current one.

When people talk about the great crash, they say it merely precipitated the already weak economy. By most standards, the real economy had slowed down. The stock market crash merely made people realize what thin ice they were on when they were speculating high stock market values.

But that's underestimating the effect of stock market crash, argues Galbraith. During that time, the top 5% of the income earners controlled more than 30% of the wealth. Any crash which wiped out the wealth of these 5% was bound to affect the real economy. But how did it crash? Like most if not all crashes, the answer is Leverage.

In 1920s, Investment trusts, similar to Mutual funds today, operated on a holding companies model taking stakes in a host of operating companies (Montgomery Ward, American Telecom etc), and issuing securities to finance the acquisition. At the height of the boom, the market values of these holding companies sold at 2 or 3 times the market values of the operating companies they were holding! That's the first stage.

How do you act on this premium (ostensibly attributed to the financial genius of the managers of the trust in picking the right stocks and achieve diversification) ? The traditional way of issuing bonds, preferred stock etc achieves leverage to some extent (Assume a 100 Rs investment in stock portfolio financed by a 50% investment. A 1% rise in value to 101 results in a 2% rise in equity (50 becoming 51)) But that's not enough when you are a financial genius. The holding companies started spawning even more holding companies and so on and so on and the final link in the chain was the operating companies. The companies also held stakes in holding companies of other institutions (the author calls it financial intercourse) creating a structure which could bring the whole system down in times of crisis.

The second cog in the speculation wheel was the amount of broker loans (loans taken by brokers in the call market to finance purchases of stocks). Unlike the period of early 2000s, the money was by no means cheap. At 12%, it would've enticed the money lender in Mumbai. But such was the nature of speculation that the brokers were willing to finance stocks at that rate, and the world was willing to finance them.

In hindsight, the speculation had to come to an end. When the investment trusts did come under selling pressure, in a bizarre display of self delusion, the trusts started using the excess cash they had built up during good times to support their own stock. By the time they had realised the futility of trying to support the stock everyone wants to dump, they had burnt through all their cash and was left with nothing to pay up their debt. When they were forced on a firesale, for the first time in history, people realised that there need not be a buyer for every seller at any price. The market went on a free fall.

There were some auxiliary reasons why the recession became as severe as it did. In the present day current crisis, at least for a time being, the American economy was sustained by a surge in exports as the crisis, combined with high oil prices weakened the dollar against all major currencies. But 1920s America wasn't that fortunate. America, at that time was a creditor economy (lender and exporter to the world). In the balance of payments equation, the current account (Exports and imports) and capital account should by design balance. In those times, most of the economies of the world ran a huge current account deficit (imported more from US that they exported) The only way they balanced it was by borrowing more from the US. Most of the loans were made to Latin American countries which had domestic instability and credit risks (nothing changed till date). As credit became tight the loans came down sharply. The only way to keep the Balance of payments in balance was that the imports from US had to come down. This deepened the crisis.

The author agrees that the Economic knowledge at that time was poor in dealing in the crisis of that magnitude, and that some of the actions deepened rather than alleviate the crisis, (the rules which forced the Government to balance federal budgets and cut back spending during crisis, the Smoot Hawley Act that smacked protectionism, the Fed inaction leading to multiple Bank failure etc) which makes the Depression of 1930s unique in some ways. But his ideas behind the crisis, the basic human desire to make money without effort, to suspend disbelief when the going is good and even actively seek justification for the new found prosperity (Noted economist Irving Fisher made the infamous assertion 'the stock market had reached a permanently high plateau') remain true of every crisis.

P.S: There is an interesting observation. President Coolidge in his state Union address in 1928 said 'No congress has ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than the current one...' Historians have chastised Coolidge for his false optimism that had prevented him from seeing the looming disaster. This, says Galbraith, is grossly unfair. Historians rejoice in crucifying the false prophet of the millennium. But they never dwell on the man who wrongly predicted Armageddon.

Could what be true of Coolidge be true of Greenspan? Was it wrong to let the good times last, especially the one which had lasted for more than a decade? (Even if he didn't do what William McChesney Martin, Jr., the longest serving Fed chairman (not Greenspan like many believe!) famously quipped 'the job of the Federal Reserve is to take away the punch bowl just as the party gets going'?)

Nehru, A contemperary's Estimate

2009-02-04T09:36:00.000-08:00

The notion of Nehru spending halcyon hours relaxing with the peasants or Nehru's affection for children are comically off the mark, claims Walter Crocker, the Australian high commissioner to India in his biography of India's first and longest serving Prime Minister, written shortly after his death. Of the dozen or so biographies written on Nehru (the man himself wrote not one but three autobiographies! An Autobiography in 1936, Glimpses of World history and Letters from a father to his daughter in 1940s), none is more critical of him (although the affection and respect for the man shines through the book), which is remarkable considering the book was vetted by the Australian Foreign ministry and a few inflammatory references were apparently removed in the best interests of India-Australian relations.

The book sometimes smacks sarcasm ('typical Indian attitudes') to being downright critical, but is nonetheless engaging. It is even funny occasionally, like the reference that senility had gotten the best of even a balanced man like Nehru.During the Jalianwala memorial day, at a time when Russians had recently sent astronauts to space, Nehru spoke glowingly of weightlessness of space and his vision of Man's conquest of nature to an audience of illiterate peasants concerned about their next square meal. It harps on his famously short temper; During an occasion of modernization of villages through self help which quickly turned into a 'typical Indian function' of speech making starting with the President's speech being telecast from the Rashtrapathi Bhavan. He went on and on; irreproachable platitude following irreproachable platitude till Nehru grew restive. After the President's speech, Nehru stood up angrily, denounced speech making, vetoed further speeches and led the crowd to a place and asked then to dig a drain.

But the book is mostly about the main issues of the day. On Kashmir, Crocker minces no words saying India went back on its promise of holding a plebiscite to decide whether Kashmir accession would be whether to India or Pakistan, just after 1947 war. This, Crocker suggests was perhaps due to suspicions that such a plebiscite may result in Pakistan's favor.

On Goa (then Portuguese colony), the author charges India of unprovoked attack on a region which had no military power worth its name, under tenuous logic of the peninsula being integral part of India (he says Spain could use the same argument against Portugal, for example). Here too, he says a plebiscite could have gone against India, mainly because of the prosperity and more efficient administration of Portuguese.

On China, however, he is more forgiving of, even sympathizing with Nehru, as he wonders why China, in spite of the support it received from India on a host of issues (India gave up the special position it inherited in Tibet from the British and acknowledged Tibet as a integral part of China; India was the first to recognize the nacent communist regime; India actively lobbied for a permanent position for China in the Security council) chose to go into war with India over a petty boundary dispute.

Walter Crocker is prescient on a host of things. Like his forecast that when dust has settled, Nehru's achievements would be scaled down (Even he would be surprised at how far it has fallen). Or his prediction that Nehru's zest for equality for the masses with such haste has made it impossible for a higher caste Kashmiri Brahmin to ever become a Prime Minister of India (Nehru destroyed the Nehrus), and that the future would be dominated by members of the lower castes who would be voting majority as against the detached-majority-upper-castes.

But he was wrong in predicting the demise of India's democracy. The author while acknowledging that India's capacity to survive says chances are in favor of tyranny and oligarchy (an suspicion voiced by even the ardent optimists of the time). India's chaotic stability has endured till date.

While it is impossible to compress the life of a man in about a couple of hundred pages, much less a complicated man like Nehru (There were two men in Dr.Jeckyll and Mr.Hyde; there were more like twenty in Nehru), the author presents a riveting account a man who is done great injustice by a one-sided portrayal by his hagiographers

Why men are smarter than women

2009-02-01T03:28:00.000-08:00

Lawrence Summers is considered one of the smartest economists of the world today. But his provocative but politically incorrect talk (In an age where political correctness borders on the ridiculous when it comes to gender, race etc.) at the NBER cost his Presidency at Harvard University and possibly a chance to become the current Treasury secretary. (I couldn't locate the original transcript of the talk anywhere. The NBER link is gone now)

Summers in his talk said innate differences in ability could explain why women are underrepresented in higher engineering and PhD programs. But what he was mentioning was not about the absolute differences in IQ, but their variances.

"If one is talking about physicists at a top twenty-five research university, one is not talking about people who are two standard deviations above the mean...But it's talking about people who are three and a half, four standard deviations above the mean in the one in 5,000, one in 10,000 class. Even small differences in the standard deviation will translate into very large differences in the available pool substantially out"

Studies have indicated that Men have higher variances in intelligence than women. This could mean at tail of the spectrum (dumb and the smart) men would outnumber women and at the extreme ends the difference would be stark.

What about average IQ? While some studies have said the average difference is miniscule, the recent ones does say that the difference could be significant. Santoshi Kanazawa, the evolutionary psychologist at LSE offers this explanation at his blog. Since taller people are smarter, and men are on average taller than women (this no one would deny), it could be the case that men are smarter than women, not because they are men, but because they are tall. He goes on to state that controlling for height, women are slightly but significantly more intelligent than men.

So why are tall people more intelligent? Heck, We could go on like this.

Are you one-handed?

2009-01-18T07:59:00.000-08:00

VoXEU.org, as the name suggested is a EU assisted portal set up by the Centre for Economic Policy Research (www.CEPR.org) in conjunction with a consortium of national sites. Vox aims to promote research-based policy analysis and commentary by leading scholars. But the website forces the authors to limit the commentary to maximum 1500 words a piece, making it accessible to a commoner.

There are perhaps a hundred explanations for the crisis in its aftermath (and before the crisis too, but who listens when the going is fine?) but a couple of ideas are worth highlighting.

Why did the Fed pursue a loose monetary policy for a long time?
It is said rightly that Fed kept a low interest rate regime for too long, contributing to asset bubbles. But why did it do that? Axel Leijonhufvud, Professor of Economics at UCLA, attributes the failure to inflation targeting, which is long heralded as the central bank's main job. In spite of the loose monetary policy, inflation stayed low for almost 5 years, because the developing economies kept their home currencies from appreciating and flooded the US markets with cheap imports.

Axel goes on to argue that while the imports kept the core inflation down, the Fed didnt recognise the asset price inflation it helped create(Alan Greenspan called it Asset froth instead of bubble, the typical George Orwell-coined-doublespeak).

In Age of Turbulence (the book was released when its author Alan Greenspan still had a reputation) Greenspan says how disturbed he was seeing the long rates (10 year GSec rates, the market's inflationary expectation) go down when the Fed started to tighten Monetary policy in June 2004 (He thought the fall was because of a global disinflation phenomenon, owing to rising productivity which put a lid on wages. He says and I quote, '..One recent evidence is the extraordinary number of labor contracts with 5-6 years maturities. We never had labor contracts of more than 3 years duration in the past 30-40 years').

To see how liquidity creates asset bubbles, we should recognise that financial market works differently from a Bread market, in that the demand and supply doesnt balance by price discovery, but the effects of high prices and high leverage are reinforcing. A typical investment bank had a capital of 1$ and borrowed $24 to buy assets worth $25. (the leverage of 24 might look eye-popping, but Lehman Brothers operated at a peak leverage of 32 in the First Quarter 2008). Assuming the assets earned 0.5% more than liabilities, the Return on equity was 12.5%. Since everyone chases the return, the spread of 0.5% narrows significantly, characterized by low risk premiums.

The only was to maintain RoE was to either hoard up more leverage, or chase riskier asset classes. Either actions have a reinforcing effect on prices. This is different from Bread market where the demand cools when prices rise.

Leverage works both ways- a drop in about 20% value in a portfolio where 20% of the assets are in MBS can wipe out capital (Case shiller home price index was down 23% from 2006 levels).

The solutions suggested aren't path breaking- more capital and more reserves to constrain leverage, but that's not my point. What do you do when you read two interpretations for the same phenomenon and both looks fine at that moment? Am I suffering something similar to Harry Truman's one-handed-economist syndrome?

What is your most hated phrase?

2009-01-14T07:08:00.000-08:00

The oxford list of most hated expressions must be dated. Here are the few economics jargons (although becoming layman expressions nowadays) I find annoying.

My top 10.

Too big to fail (Best left unsaid)
____ gets worse before they get better (Fill in the blanks)
Pump priming
Stimulus (Even a half percent cut in excise duty of an esoteric product is being bandied as one)
Animal spirits
Greed and Fear
Bailout
Bottoming out
Panic out there
Monetary policy is losing traction

Am I missing out (so many outs!) on some obvious candidates?

University of Chicago on Credit crisis II

2009-01-13T07:38:00.000-08:00

As I said, the crisis can be broken into four parts, origins, Liquidity crisis, incentives and the policy responses. The first two were covered here.

Incentives

Creating liquidity in the otherwise illiquid subprime mortgage market, an otherwise noble goal, created perverse incentives for the lenders. Amit Seru, Professor at the University of Chicago did a research on the both the number of loans originated and the default rate around the FICO score of 620. FICO measures the credit worthiness of individual borrowers and a score of 620 and above is considered eligible for guarentee by Fannie/Freddie. An analysis of the origination of loans around 615-619 and about 620-624 showed a sharp spike in loan origination at around 620.

Since the lenders were eager to get the borrowers at that threshold, this jump could probably be explained. But what is more interesting is that the probability of default against the FICO scores. Normally it should have a negative slope- higher the score, lower the probability. What the results showed was that there was a jump in default at a score of 620, implying the lender did not do the due diligence because he knows that for scores above the threshold, the loans can be securitized and sold off. It could also mean that the borrowers know the threshold themselves and cheat their way to get just above 620 to qualify for a loan.

Assuming the second reason, while plausible but hard to detect, is not a major factor, it is safe to conclude that ceteris paribas (loan contract terms especially remaining the same), the incentives play an important part in due diligence.

Fiscal response to the crisis

Anil Kashyap, the delightfully articulate economist (Have you read this?) is an expert on Japan. He makes a convincing case for things to avoid in a response to the crisis which has an eerie similarity to the present one (Or for that matter, most crisis have the same cause- falling house prices- When would people learn that anything that rises can fall?) Japan is famous for its lost decade because the government failed to recapitalize the Banking system for a long time. The Government initiailly tried to deny the problem. They tried to hide the bad assets by creative accounting rules - Banks were allowed to chose which ones to carry at market values and which ones at book values!! In November 1997, when multiple large institutions failed (sounds like deja vu) the government got involved in half hearted recapitalization (The amount desired by the strongest bank was given to all banks as part of recapitalization)

These attempts shows valuable lessons for the current crisis. The strong banks are likely to ask the government to buzz off when offered capital, fearing Equity dilution of the existing shareholders. But it is advisable to recapitalize strong banks (or even encourage private funding). Its critical to stop dividend payments by the newly recapitalized banks, which are frankly money laundering of tax payer money. Better still, stop dividend payments done by all banks, strong and weak for 3 years, in order to nullify signalling effects associated with dividends.

The site is new but its well worth the read.

Podcast, my new fad

2009-01-12T08:49:00.000-08:00

Since I spend almost 3 hours a day commuting to work in the congested Mumbai roads, and speed read both my newspapers in half the time, I guess there must be something better than listening to the same songs in my ipod everyday.

I never realised all the news agencies/magazines/Business schools distribute surprisingly good analysis on variety of topics for free. Podcasts from Chicago Booth and Economist are very good. Bloomberg has some good pieces too.

I don't know how long this would last.

How do you forecast GSec rates?

2009-01-11T01:47:00.000-08:00

Why do i care? Because my boss asked me for a simple model which predicts 10 year yields. Why do you care? Since you are reading my blog, may be you have some interest in the random thoughts running through my brain. So bear with me.

I did what everyone does. Google. The paper written by my Economics prof Rudra (say Rudro, he is very particular about the pronunciation) takes into all sorts of macroeconomic parameters, takes the data from a particular time period, generates the important factors that affect 10 year yields, creates a linear equation with a lag, makes an out of sample prediction for a period of 8 months (8 data points), calcualtes the RMPSE (root mean predictive squared error and compares that with RMPSE with a model generated with a trend line and says what the improvement is.

Cool. Next I asked our economist team here if they have done any econometric forecasting like that (I havent taken any econometric courses to replicate the method). Not only have they not done anything like that, but the guy says the forecasting of long term yields is rubbish, as the rates are entirely based on expectations and not based on history. In any case, the volatilty is unprecedented.

It is a universally acknoledged fact that NOW is always somewhat unprecedented. But as long as you take the right factors, you should still be closer to the truth. After all, expectations do not come from the heavens, but based on the data available. I would use my limited knowledge. All I want is a simple model.

I took exactly the same data (BSE100, REER, M3, WPI, Oil prices, IIP etc.) I dont have the tools to account for multicollinearity (two X factors are correlated) but I can still filter the factors based on t-statistics till all the factors in the regression equation have low p-values. Also, forecasting requires that I take all the inputs with a lag.

After 2 iterations, I filter down to just 3 factors - REER(t-1), IIP (t-1) and GSec (t-1). Based on the out of sample forecasts the actual and forecasted came close (forecast period Mar to Oct 08).

To be fair, the last month was unprecedented. The yield fell practically over 200 bps (from 7% in November end to low of 4.86% in December end) and then rose 120 bps last week. The fall of 200 bps was expected; The additional government borrowing of Rs. 5000 crores which pushed the yield up 120 bps was unexpected. Any model however correct (I asked the economist to check and if possible refine it) has to be supplemented with Qualitative data. Inspite of this, and the recent discredited models of credit rating agencies and Taleb's wide popularity, I think a model gives the relationship between variables elegantly in a way no amount of theory could.

University of Chicago on Credit crisis

2009-01-11T00:35:00.000-08:00

Initiative on Global markets have a surprisingly good 4 part lecture on Credit crisis each dwelling on one aspect of credit crisis - the origins, the liquidity crisis, incentives and the policy responses- lessons from Japan. While the conclusions reached are fairly conventional wisdom, the rigor of the research is something of note.

Mortgage crisis
Amir Sufi divides the areas into Prime and Subprime Zip codes (those areas where more than 60% of the loans originated by subprime borrowers are Subprime zip code areas while those with more than 60% prime are prime zip code areas. The growth in loans in subprime zip codes are about three times the growth in Prime areas between 2002 and 2005. There is a precedent in this even between 1999 and 2001, so he chose to see if there is any difference between then and now.

The factors why the loan growth exploded can be a) income growth in subprime is greater than prime areas; b) House price expectations were relatively higher in subprime and c) securitization was higher in subprime, with the associated incentives (as suggested by conventional wisdom)

If a) was indeed true, there seems to be a fair case for the growth in subprime loans. In fact between 1999 and 2001, that was indeed the case. Between 2002 and 2005, the growth in income was about 4% for subprime while for prime borrowers was 8%. Even then, if there is a possibility that the subprime borrowers crossed a threshold to qualify for a homeloan so the home loans exploded (its a similar case with demand for cars in India- a once an income threshold is crossed, the market explodes) So Amir takes only the zip codes where there is a negative growth in nominal income and sees the relation between loan origination growth between subprime and prime growth. Even there, the loan growth is starkly higher.

So the second explantion for the loan growth, higher house price appreciation for subprime borrowers does have some evidence. But it may be the case that the price appreciation happened precisely because of loan origination growth. It is difficult to disentangle the effects between the two variables when causality is the case. Which makes it all the more curious that rating agencies put the house prices on the RHS of the equation for giving the ratings for securitized debt.

There is also strong evidence for the third relationship but it is taken up in the third part. The moot point is micro trends are important for predicting a crisis- how did loan origination grow faster in a segment which has seen slower or even negative growth in income compared to prime borrowers, as was seen as early as 2004? The other conclusion is its important to not treat house prices as exogenous.

Liquidity crisis
Doug Diamond says Banks, investment banks and hedge funds are by nature, highly levered institutions. It is impossible for investors to check the quality of assets of a bank as compared to say, a car company. Which is why both Equity and long term debt is in short supply for a bank and they rely on deposits or wholesale funding.

The more difficult it is to judge the quality of assets, the more levered the institution. That is why Bear Sterns or Lehman have leverage of about 30-35 while even Goldman Sachs had to be satisfied with a modest 20 times leverage. And the funding for the investment banks is almost entirely overnight, because they cannot monitor what the banks do with their money even less than a commercial bank. The investment banks can rapidly alter the risk profiles on a daily basis since they have a trading portfolio as compared to a loan portfolio of a commerical bank whose risk profile is sticky. In this scenario, the only bargaining chip the investors have is that they can stop rolling over short term money. It keeps the investment banks in check, but it also increases the risk of run, which is costly for both the borrower and the lender. If it is costly, why does the investor do it? In times of uncertainity, the investor knows if he doesnt pull out, someone else will and they would get the 100 cents on dollar while he potentially loses some because he was patient.

This is what happened with Northern Rock, a fundamentally solvent bank with no exposure to US subprime but got its funding mostly from ABCP market. With that market crashing because investors stopping to rollover funds for anyone with any exposure to Mortgage assets (Northern Rock assets were mostly in UK prime segment). The fear of solvency was enough to start a run on the bank which became a self fulfilling prophecy.

When the bank fears a run because the capital has become low, it can either raise capital or dump assets to bring down the leverage. Banks usually opt for the second because the first may take time or prove difficult. But there was no market for these assets because of two reasons. First, if the investors think if they dont buy assets today worth $5 today they can get it even cheaper tomorrow (perhaps $2) they would stop buying it. Two, if other instituions think if they buy these assets cheap, they have to mark their similar investments down which results in their capital levels getting low, they wouldn't buy it. This is what TARP 1 wanted to correct; Paulson thought if the government becomes the buyer of dodgy investments of the last resort, the lower bound can be made $5 or even the hold to maturity value of the asset, so that the actual payout by the government may not happen at all, and the instituions may appear solvent. But the more direct approach is to direct equity into the troubled banks so that they need not firesale the assets at all. TARP 1 went into rough weather.

The lecture discusses the effect of short term debt remains the same for every crisis, right from Bank runs of 1930s to current one. The solution proposed then was to insure all short term debt for 90 days, conduct audits for all banks, differentiate good banks from bad, inject equity into good banks, merge the average ones, and let the bank banks go through resturcturing through the FDIC route. Now that the liquidity crisis have largely eased as the Fed is lending to everyone, we may not know how that would've worked.

The other two aspects we can see later.

Firefox is better than chrome

2009-01-09T07:00:00.001-08:00

I had stopped using firefox when google released the beta version of chrome. But now I realize its still some way to go in terms of speed and performance.Some pages take eons to load and sometimes it just gets hung. That every window is a seperate process is only quantum of solace. What say?

What does your blog say about you?

2009-01-07T10:03:00.000-08:00

Typealyzer.com apparently answers the question with a warning- your writing style may have nothing to do with your self perceived personality.

I thought I would do better than a mechanic. Heck, even Paul Krugman and my friend are mechanics.

Satyameva Jayate (Truth shall triumph)

2009-01-07T07:57:00.000-08:00

If you see one cockroach scurrying in the light, there are probably a dozen in the shade. When Satyam (Sanskrit word means truth) board accepted a proposal to buy the family firm (Maytas, no prize for guessing the similarity) of promoters for a whopping $1.6 billion, there was so much hue and cry with people wondering why the board members (including the independent directors) bowed to one man who had barely 5% stake in the company. As it turns out, they were indeed acting in the best interests of the company. An overpaid asset is worth more than a fictitious one. So much for shareholder activism.

It might seem like a double whammy that just when the apocalypse predictions about the world are coming true, there is a big wave of frauds hitting the markets. But as Warren Buffett once said, "You only find out who is swimming naked when the tide goes out". If luck can run out for Bernie Madoff after running a con operation for decades, what hope does Raju (Satyam chairman) have? In fact, there are reports that SEC was indeed warned about scandal as early as November 2005, full two years before the revelation (?!) Who knows if Krishna Palepu, the esteemed Harvard professor, independent director at Satyam and a leading authority on Corporate governance knew this all along? Or for that matter, how did PwC audit a non-existent cash and Bank balances?

Eventually, Satyameva Jayate. But be wary when you switch on the light just yet.

FAQs on credit crisis

2008-09-19T13:59:00.000-07:00

This is so good you ought to read it.

http://freakonomics.blogs.nytimes.com/2008/09/18/diamond-and-kashyap-on-the-recent-financial-upheavals/

Update: http://freakonomics.blogs.nytimes.com/2008/10/15/everything-you-need-to-know-about-the-financial-crisis-a-guest-post-by-diamond-and-kashyap/#more-3183

Hey Ram

2007-09-14T13:57:00.000-07:00

I’m not as religious as my parents. But I will consider sacrilege any suggestion that the characters in Ramayan dont exist; Even if it comes to support a legitimate cause, a simple dredging activity to build India’s own Suez Canal.

I’m all for sethusamudram, and even if it doesn’t bring the economic benefits similar to panama or suez, to protest the project on religious basis doesn’t appeal to reason; Surely Ram, the noble and benevolent god will approve the actions of us mortals. As for as cost benefits go, no large project is without some costs.

But when someone suggests the mythical bridge is not man made but a natural formation in the Indian ocean because the builder Ram doesn’t exist, I can only think with my heart. I can only think of the fatwas that gets issued for prophet cartoons, the fatwas for Salman Rushdie and Taslima and countless others who have dared to suggest far less; Hindus are as spineless to blasphemy as India to terrorism. I’m frankly surprised by how strong my emotions were, for am I not the educated elite? Perhaps this is why a party like BJP gets voted in spite of the countless loons in its ranks. You only need a pea-brained congress to create a BJP.

The sad part is the project will get delayed for all the wrong reasons once again. In times like these, I wonder if democracy and freedom of expression is a hindrance. Look at what the Chinese are doing to the sacred Mekong. They may end up damaging the habitat, but no one can accuse them of one thing – inaction.

Life @ ICICI bank

2007-07-28T00:20:00.000-07:00

That’s where I got an offer at campus. Campus life officially ended at 17^th of March with a glitzy convocation. I had done well academically after an ordinary first year and like everyone else in my batch, felt on top of the world.

After a period of rest and ennui, I joined the bank officially on 22^nd May. I had 3 week training at IFMR, Chennai and actually joined dept in mid June.

Okay, enough of timelines, as if I’ve undertaken a world quest. I’d asked for a risk profile, and they had assigned me in credit risk. At IFMR, people from different departments gave an overview of their depts. Following an unflattering portrayal of credit risk group by a person working there, I developed cold feet. Upon returning, I discussed with my group head (a nice gentleman) in my first meeting and got my profile changed to market risk.

Seat is a problem in every organization. The next batch of trainees’ had gone to IFMR, so I thought I’ll occupy one of their seats temporarily till the secretary scavenges me one somewhere. After 3 weeks, no seat. Fine. The problem was there was no seat literally. In the mornings, I used to go to the corporate library and exhaust all the papers and magazines and then go for lunch. After lunch, I’ll go to my boss’ cabin for 2 reasons. One, otherwise he would forget I exist. Two, bug him for a seat. Then, I tried to read all the big documents that I’m supposed to read and when I got bored, I frequented Learning matrix (It’s a place to learn new modules related to banking Eg. Anti-money laundering).

You can’t have an MBA drawing hefty pay (according to them) and not give him no work right? So, in the 4^th week, my boss started giving me small work and said they aren’t tight deadlines. But that still needs a computer. Hey, you are talking to a professional, an organization man. No problem, I told my boss. There is a Bloomberg terminal (Have you seen one? It has a twin monitor and a colorful keyboard. Sells information like Reuters) I started working on it. When someone wanted information from it, I worked on their computers. Since I needed the half finished data, I used to mail it to myself (you can’t copy from computer- IT security) Like this I worked back and forth, forth and back…

One day, Bloomberg terminal crashed. No one left their seats to collect data so that’s it.

After 6 weeks of sustained pressure, I got a temporary space without any computer, telephone or drawers. Mission workstation. That’s on next episode.

Even IIM needn’t automatically guarantee success

2007-02-03T11:59:00.000-08:00

Getting a good CGPA is pain you know. Attend classes (no proxies), take notes, make presentations, and class participation, study. Sacrifice sleep, frequent eat-out, parties, free-riding etc. Why shouldn’t it form part of your resume for final placements? After all, committee selection is done by seniors, the rookie HRs. Win contests, well, one elusive cherry for the majority. In the end, acads is one area where rewards are commensurate with efforts. Good CG reveals a lot of positive aspects about a person- commitment, desire to excel, hard work, consistency etc.

Does good CG guarantee jobs? I don’t know. It definitely is important for shortlists to good companies and decider for marginally better ones. Converting is your talent.

Disclosing to select companies doesn’t make sense. If 8+ CGs can tilt the balance in slot 0 companies, 7+ CGs tilt in slot 1, 6.5+ CGs in slot 2 and so on, ceteris paribus. How do you know when anything can become critical? Why should a bunch of cool-dudes stop loser-muggus from getting even a tiny edge? I’m not passing any judgments on low graders, for the moment, let’s talk evidence.

IIM doesn’t select its students by first-cum-first-serve basis, does it? In fact IIM-A, the goliath wants consistently great acads for final selection even if you clear one of the toughest competitive exams on earth. Personality and interpersonal skills can wait. Merit is the raw material.

It’s not as if people didn’t know the importance of CGPA. The fact that this will happen was told by Profs right at induction. It can be argued that a relative grading system ensures that someone will get 4 no matter what. But a person cannot screw up all courses if he works, he has only himself to blame otherwise.

If disclosing CG means multiple offers and possibility of entire batch not getting placed in record time, so be it. No one should assume that admission to any institution, even an IIM, guarantees success.

PS: I don’t have a great CG, only a disclose-able one.

Which is better, lot of attention or no attention?

2007-01-31T14:39:00.000-08:00

Tata acquires Corus for a whopping price, so India has arrived! Indian media goes gaga, British papers cannot stop talking about BRICs and so on.

In the middle of madness, I wonder if we are missing a point. How do we know we have arrived? By generating attention? Till 1960s, we lived at the mercy of the Western donors for food. Aid used to generate a lot of media attention (We were proud we got aid!) But after Indo-Pak war in 1965, when Nixon administration stopped food aid, we were forced to modernize our agricultural systems and within a decade, went from being a food importer to exporter. Food aid no longer hogged attention.

As we grew, we cut down all aid which came with caveats. When tsunami struck in 2004, we were an international donor country in spite of losing almost 100000 people and billions of dollars of wealth. When we turned down aid from the west, it generated a lot of media attention. Now barely anyone thinks about foreign aid for rescue.

When Vajpayee signed an epic Nuclear cooperation agreement with Bush (precursor to the current Nuclear deal), some media critics said he is turning India a junior partner to US. We were junior beggars when we were getting aid. Now junior partner seems like a stigma -Signs of change.

A couple of years back, I used to see a M&A deals with deal size of less than a $100 million being splashed in headlines of all national dailies. There was only one Indian MNC, the Aditya Birla Group. Now, anything less $500 mn is relegated to middle pages. Amtek Auto, a nobody till an year back, has presence in a dozen countries today.

Ah, Tata Corus! But in a few years, those kinds of deals would be so frequent no one would care. That’s the time would we have truly arrived. That time beckons.

A little sunshine?

2007-01-31T14:02:00.001-08:00

Last couple of weeks has been great. I won a “National” level contest (at least on paper… in final stage all teams were from my institute only because teams from other institutes couldn’t make it), got a shortlist for one more, my grades shot up last time, Gravitas 2007 is a blockbuster success with articles from President of India and top industry honchos, got (rather stole :)) airtime in Zee Business about Budget 2007. At this rate, I’m beginning to feel that the paper I sent to World business dialogue at Cologne, Germany on Changing Societies might get selected (Please god, STRETCH MY LUCK!!!!) I’m so exited I can’t feel the ground. A little sunshine in otherwise mundane life?

Service manufacturing or Manufacturing services?

2007-01-06T10:40:00.001-08:00

Ford is remembered for his production genius. But he was actually a marketing genius. He figured out that if he can make Model T cheap, he can sell millions of cars to American public and make a lot of money. His production is the result of his marketing acumen, not the other way round. Thus born the assembly line that Charley Chaplin makes fun of, in the movie of same name.

Overtime, the production system is being perfected to such an extent that any job can be broken into separate parts and studied, what Taylor did in scientific management. This led to phenomenal productivity although it assumed worker is also a machine (alternative was Hawthorne studies which said happy worker is productive worker)

But services were a different ball game. How can you increase the productivity of a knowledge worker? But that is exactly what the BPO companies are doing. They have deskilled every aspect of the work, creating standards for tasks like answering the customer call to creating research reports, Financial statements etc. in the process driving down costs for big companies. The companies like Asian paints have the practice of checking the workers’ lunch boxes before they leave after work for expensive parts, while BPO companies have eliminated paper, banned mobiles during work and scan employee mails and implemented a thousand other policing strategies to protect equally expensive data.

Not just BPO, even SAP, which was once considered the domain of consultants have been deskilled to such an extent that office boys do the entry now. Standards have been created for every application, be it mining data or preparing chef’s special soup. Due to this, services are slowly acquiring the flavor of assembly line manufacturing, creating a similar productivity revolution.

If service is becoming manufacturing, what is manufacturing becoming? In olden days, modern factories (GM tried unsuccessfully to build an automated factory at a whopping $50 billion) were a sign of triumph. Not anymore. The less the company produces the better. GM is now an assembly line with all functions from design to manufacturing of complex parts being outsourced to Chindia. What is it left with? After sales service, of course. The companies are discovering that a lot of money can be made with maintenance and service contracts.

So, with the line becoming thin, what is the end? Infosys BPO CEO reckons people especially in developed countries who had been long doing what was once complex jobs may suddenly find jobless unless they learn newer things, or work in India!

Have you tried Yahoo! Answers yet?

2007-01-01T13:29:00.000-08:00

It is a wikipedia type service only that people answer your questions, not just share knowledge on general topics. I had a very specific question about Art, and was fed up googling and thought why not give it a try. An Art consultant with a Bachelor of Fine Arts degree answered the question in less than two hours!! (wikipedia.org/wiki/Bachelor_of_Fine_Arts)

With Google spreading its wings everywhere and gobbling every bright idea that emanates anywhere (youtube being the latest), I thought it’s only a matter of time for Yahoo! (I’m a fan of yahoo. I think the new yahoo beta is an ultimate mail interface) to get gobbled up. But no, time and again they have proved they can come up with a few aces and beat Google at its own innovation game (Google answers is a failure). Way to go!

What the year taught me

2006-12-30T10:40:00.000-08:00

The trick to answering that question is knowing what you are and what you were, which I’m not sure I do. A close friend may notice something.

We had an exercise in one of our courses in which we were put into a group and ask each other to tell what the person’s first impressions were about the other. What do I come across as first up? An intellectual! What doesn’t make me laugh is an impression that I’m sarcastic. Well, may be, but never intended to bite anyone.

I’m not proactive. I always believed in sanctity of the system, whatever that means, and followed it. I thought may be that will change. Not a bit.

I thought may be my stupid jokes will be sobered by the purported superior education. It didn’t because there is no need to, as long as it tickles one funny bone, one beneath my skin.

One thing I learn t is that the results i get depends on my mood which tends to swing from wild euphoria to gloom. I’m sober as write this line though I don’t know why. I also don’t know why I become cold in the presence of my gregarious sister though I cannot stop talking about her to everyone I know. I don’t know how I managed to get over my lovable granny’s death so quickly and say ‘her time had come’ to my astounded relatives when I was only 9.

I can’t be that bad, can I? The year should’ve taught me something. May be I do things I can, complaining less frequently. May be that’s why I walk around in circles less, when the deadlines approach. And I speak out more than I ever did. Because its one of the few things I’m good at.

Happy New Year.

Hail Gravitas!

2006-12-04T08:21:00.000-08:00

Gravitas

Pronunciation: 'gra-v&-"täs, -"tas

high seriousness (as in a person's bearing or in the treatment of a subject)
Name of our institute publication.

Our communication professor is the Editor with 6 people on board. (3 seniors and 3 first years). Last year was its inception. They had dabbled with some magazine sometime back and dropped it later. Anyway, last year it was close to institute fest when we came up with the idea (my seniors to be precise) and we discussed endlessly as to what the end product will look like and who will find it useful. After dismissing journal like stuff (our institute has one called Metamorphosis, but no one cares to remember let alone read). Magazine is too juvenile to be taken seriously. So we zeroed in on the sweet spot, an Indian HBR.

Next was the name- we discussed Ergo (doesn’t it sound like a burp?), Citius Altius Fortius (unreadable), Chrysilis (what’s this fixation with Greek names?) etceeeeettttteeeerraa..Gravitas (C’mon! Let’s move on to more important things)

Next was to decide who will write and who will read. If we want industry captains to read it, why not ask them to write? Great. Things started to move on pretty fast. We decided a theme and possible list of speakers who embody them ask them to write and bingo! Pops the magazine.

Well, it didn’t go quite that way, because the toughest part was the last one. Anyway, our revered editor pulled the first edition herself- did the convincing. We, on the other hand, did the donkey work- proof read, designed, published, distributed, and wrote a thank you note (Boy! Was she paranoid about that part?)

Second edition is slightly different- we still have a theme ‘Indian roots, global ambitions’, still zeroed on the speakers (industry captains, sportsmen, politicians, writers, economists), the only little part we are supposed to do is convincing. You call the secretary, talk talk talk and we get the article, right? WRONG! I did try it last year with no success. Tried 6, converted none. Somehow everybody had gone to China. (China is definitely a threat)

This time I tried the same people. Rang the secretary and said hello Mr. Das. How do you know my name? I talked to you last year also, remember? Well, the other end is sympathetic this time. Yesterday’s rejects are today’s converts. Today’s, tomorrow’s converts and so on.

Lesson 2- Mr. Secretary? Yes saar (sir). Tamizha? Amam. How did you know? Never mind. Mother tongue worked!!!

We have only 2 articles till date (and a few commitments) and one and a half months to go. I’m still apprehensive. C’mon buggers! Let’s do exactly that.

Happy b'day America

2006-11-21T14:26:00.000-08:00

US recently had its 300 millionth baby, the last 100 million was also its fastest. While European union, Japan, Russia and to some extent China are on a suicidal spree (shrinking population in the next few decades), US population is expected to cross 400 million by as early as 2043 (Economist). This will help avert problems that will plague others (social security, insufficient workforce, culture clashes with immigrants etc.) and fortunately/unfortunately, US dominance may not wane anytime soon.

I’m gratified

2006-11-21T12:31:00.000-08:00

I just had a casual conversation with a batch mate, a relative stranger. The person would love to work with me because I’m a workhorse (word of mouth). Boy, I felt wonderful.

Is extravert-introvert siblings a myth?

2006-11-21T12:06:00.000-08:00

We read stories which portray diametrically opposite siblings. Is it a cliché which was invented to base a juicy story? Studies have confirmed that this is the norm.

The phenomenon is called sibling de-identification, popularized by American psychologist Feinberg, says this occurs predominantly in siblings of same sex, have limited age differences and those who are immediate ones (the first and third sibling tend to be similar than first and second, say). The second one tries to pursue different courses, enjoys different genre of movies, have different hobbies, which is acceptable. But what is surprising is that they have a very different personality traits even though brought in exactly the same environment- the second one is reserved if the first is enterprising, short tempered if first is warm, takes quick decisions if first is contemplative etc. Research shows the second girl of the family tends to be tomboyish and lacks feminine interests like dance, reading romantic novels etc.

Why does this happen? Siblings compete for parents’ share of attention and love all the time, which leads to friction (prominent cause of sibling rivalry). Over time, they (mainly the second one) try to differentiate themselves from the each other. (In marketing terms, they tend to carve out and operate in separate niches so that they don’t have to compete for the customer (in this case the parents) directly.) So, by having different personality, they unconsciously establish they are unique in their parents’ eyes.

I have a sister, 3 years older. She is the smarter one who pursued a lot of things- carnatic music, veena, bharatnatyam in addition to being a CA/ ICWA/ ACCA and god-knows-what-else. My relatives used to praise her in my presence and it always made me squirm. May be I am little reserved and short tempered (Ah, I hate to admit it!!!!!) and used to pick fights with her for no reason. It always gave me perverse pleasure. Now I feel I wasn't wrong. I was just a victim of Sibling De-identification. Hahaha.

Do you have any experience like that?

Why can’t world be a melting pot?

2006-11-17T12:18:00.000-08:00

Just the other day, a sikh boy was beaten up and his long hair was cut off by a bunch of Scottish thugs. Punjabis in America are still mistaken as Arabs and looked upon suspiciously. Lower class Dalit women are paraded naked by upper class villagers at the slightest excuse in some Indian villages. Some Indian states previously imposed legislations stating only natives will get employment there. Some of my friends routinely taunt me that south Indians (like me) are not patriotic enough, because most of the famous freedom fighters (event dated 6 decades) are from north. When I grew up I used to hear this term ‘melting pot’ and wondered what's cooking, sorry for the pun. Thankfully people have long forgotten the term.

Why don’t cultures reconcile, let alone blend, even after decades? May be it is because of basic human psyche to be comfortable only with what looks like us, what we recognize. We trust things that we know and vice versa. Familiarity does not breed contempt; on the contrary, it inspires trust. To trust them/those is to gratify ourselves, in some way.

That is why advertising works. We hesitate to buy anything not advertised even if it’s cheaper (or especially if it’s cheaper- what will my friends think of me if they see this toothpaste?). It is another matter we never admit that we bought anything because of ads; At best we may admit that we bought something because other ads suck.

Now that we know that we can’t blend or possibly even reconcile fully, can we at least coexist peacefully? Fortunately, we have done it so successfully that we almost forgotten how significant it means. Because, the reason Pakistan lost its eastern part (now Bangladesh) was not because India fought for its independence, but because, the urdu speaking Pakistanis considered the Bengali speaking Bangladeshis culturally inferior and treated them as such. In India, Nehru sought to impose what he considered the superior language (hindi) on all states and had to drop the plan owing to stiff resistance. If he had succeeded, who knows what might have happened.

Folks! We are one!

2006-08-16T15:44:00.000-07:00

Plagiarism claimed its first casualty. For those people who didn’t know the seriousness of the offense, Professor Rocky gave a shock. May be forcing the student council resign because its members were involved in this was not a grave punishment in hindsight (may be there is more in store), it sure is a start. Professor had a personal grudge which he doesn’t hide too well (institute party disturbs his daughter study for board exams-he requests student council to reduce decibel levels-council choose to ignore-he has a grudge) but plagiarism is not an offense that can be washed away by that. We cannot be a great institution by having brilliant students alone, a dose of high standards is definitely required. Result: Council resigns.

But what did perturb me was the fact that committees (Interest groups, clubs etc.) chose the occasion to settle their scores with the council. We have a system where committees are responsible to the council and council to none. You can’t just blame the council members as autocratic, the system breeds autocracy. The committees call a meeting and does a council-bashing (even if some of the grievances are genuine), under the guise of how to improve the system. We even have a moderator who writes down the wrongs of the council. Call it timing the meeting.

I’m not an ardent admirer of council; I will even say I’m indifferent. I came here to learn something in 2 years, not be part of politics. But hell, we elected the council, and we are responsible if it turns out like this. And these members are our own folks, who made a mistake (along with 2 dozen others) and have been humiliated by a professor who had a grudge (Professor didn’t disclose the names of 2 dozen other people), and we choose to embarrass them, to hit a nail in their coffin hours after that nasty public disclosure. Folks! Remove the veil of committees and councils; it’s never us vs. them. We are just a bunch of students who came here to be a part of a memorable batch.

May be its time to move on, to elect a new council but more importantly put a system in place for checks. Our nation has a vibrant democracy, why can’t our institute have one? Why don’t we have the runner up in the council election as an opposition member, to question the council about things like spends, activities, and rationale of their decisions and make them public (organized bashing!)? Why not have disclosures after 6 months about these things along the lines of Parliamentary budget session? If its there in the constitution, its time to follow it in letter and spirit.

Why the fuss?

2006-07-11T02:54:00.000-07:00

I’m one of the few who missed the final. So when everyone talked about head-butting (I had graphic thoughts in my mind!), I looked it up in wikipedia. Do you know what example they quoted? I don’t know if the world is flat, but it sure is fast!

What he did cannot be condoned but sportspersons involving in verbal abuse or clashes is not uncommon. Maradona is known for his mercurial character and violent acts on field. Australians are so notorious for sledging in the game of cricket that they developed it like an art. Because of the occasion, the press employs lip readers to find out what provoked the great man. It’s called public interest reporting.

Too bad the story has put a shadow on the glorious run the Italians had throughout the world cup. Normally notorious for underhanded tactics to win penalties, Italians played with compact defense and great goalkeeping. Let’s cheer them for the entertainment and salute the man who treated us with his ball skills.

What do Nostradamus and Akbar have in common?

2006-06-28T11:50:00.000-07:00

Akbar is our strategy professor, not the mughal emperor. Do you know how strategy cases work? We study a case; discuss it in the class while he acts a facilitator and then discloses what actually happened later. Tell you what; what happened later will be exactly what we had predicted. Oh boy, are we budding Nostradamuses!

Just the other day, Spanish reporters quoted a Nostradamus prediction that Spain will win the world cup. Alas, they were kicked out of the tournament (This is my best pun yet!!!!) the same day by zidane and his men. So Spaniards brought a heapful of embarrassment not only for themselves but for the otherwise successful prophet as well.

So what’s the connection? The reason why we get our predictions right and Nostradamus his is because we know the outcome. Nostradamus cannot predict things which haven’t happened already. Ably led by Akbar, we would always zero in on the right alternative although other two looks equally good on case-sheet.

That brings me to the question. How did Nostradamus predict a lot of things that did happen already? I could think of only one answer. He simply wrote too much. And more importantly, he was cryptic. So it’s easier to retroactively re-engineer his prophecies. (Beat that for jargon!)

May be I’m a pessimist. May be this is the best way of teaching. Or, perhaps we should discuss a case whose outcome is not known presently and see what happens after a few months. Would that be more interesting?

Who cares about bacteria anyway?

2006-06-11T01:12:00.000-07:00

Just the other day, BBC showed an expose of the counterfeit drugs in India and its operations. India is the world’s fourth largest pharmaceutical industry and the leads the counterfeit market. The footage shows interviews by two such manufacturers on how they work, bribe and network. (Tehelka could use a better video for secret filming. The BBC footage would’ve passed off as a normal interview but for the status message at the bottom).

One manufacturer even shows his unit and 40 qualified technicians skillfully preparing the potions. They are as good as the best in the industry, he avers(Which industry?). Other manufacturer, a woman, says she can prepare any combination and deliver it anywhere- Professional service guaranteed!

It’s unfortunate and disheartening that (at the risk of sounding immodest) a supposedly well informed urban educated ‘elite’ like myself have little clue of how big a problem it really is. (What does an elite do anyway other than blog it and discuss it endlessly?) Tuberculosis kills more Indians every year than any other infectious disease known. Why? The counterfeit drug with half to quarter the content of active ingredients in a genuine tablet (it translates to 200-400% increase in margins for manufacturers) increases the resistance of the pathogen stains for real drugs. In some cases, the active ingredients are substituted with paracetamol for cost cutting (aren’t we good at this?) One cannot but feel outraged that the woman says all this with such impunity.

The law awards death sentence for counterfeit manufacturers, but not one manufacturer has been caught so far. Perhaps it’s because of the difficulty to treat them at par with mass murderers (which they are), the system is happy to accept the bribes and leave them off the hook.

One would imagine exposes and the TRP it brings would make it a commercially viable option, if not a media’s responsibility to the society’s well being. But it’s bewildering that exposes are practically absent. Indian media gives more airtime to AIIMs and IITs strike against reservation or Finance Minister’s rhetoric to sooth the market (Is there any other country whose FM worries about stock market more than wasteful spending on education?). Which suits us fine- bright young students hitting the streets against the government looks better on TV than some unknown manufacturers increasing the resistance of pathogens and responsible for the deaths of poor sick patients in some corner of the country.

Who cares about bacteria anyway?

Hail reservation!

2006-05-18T11:34:00.000-07:00

Human resource and development ministry is one every national party secretly wishes to abolish. Murli Manohar Joshi tried to write history books and reduce IIM fees to curb its autonomy. Arjun Singh's recent move to get 50% reservations for minorities in prestigious institutes like IITs and IIMs and medical colleges faces upper caste backlash. Surely HRD ministers have a knack of putting Governments in a fix only a few ministries can match.

So what if 50% seats are reserved for minorities? IT firms aren't recruting from IITs but hordes of second and third tier colleges and the industry is doing fine. IIMs total strength is 1400 but India inc is not complaining. There might be concerns about quality, but in the bigger scheme of things, the impact is marginal.

Everytime, reservations issues crop up, the standard excuses crop as well- The system discriminates a poor brahmin to an elite dalit bureaucrat, it affects quality, reservations have been in place for too long with little results and lastly, give them opportunities in education, not seats or jobs. Lets see it one by one.

First one- affirmative action is intended to target those segments of population which has been deprived of opportunities for long so that social imbalances are corrected. The issue needs to be dealt with independently of reservation on basis of economic imbalances.

The system doesn't place minorities in IITs. It only relaxes criteria for them- its like having a shorter boundary for a OBC cricket player- he still has to get the runs himself.That is why inspite of reservations, institutes find it difficult to fill them with actual minority candidates.

There is no reason to think reservations must've delivered after 6 decades- see the endless potholes, frequent powercuts, traffic jams. Don't be too hard on the poor system;it never works.

As far as giving them opportunities than reserve jobs, the former is taken care by the latter. Its very difficult to correlate the rupees spent on opportunities and the results. If a way is found, its the best way to go about it.

Hail affirmative action! Thank god minister's move is after I got into IIM.

Musings from munirka

2006-05-12T08:59:00.000-07:00

We have a serious problem, my guide tells me, we find it difficult to sell the resin during lean months. I’ll reserve my strong emotions for worse disasters. I nod my head gravely anyway.

The summers project started a month back, with an orientation session. A whole session went off with the company history. One Lala Shriram who founded DCM, gave birth to three Shrirams who in turn gave birth to well, lot of shrirams. They fought among each other and gave birth to even more shriram companies and here we are, he showed one corner with a laser pointer. Thank god for flowcharts, it might well have turned out a disorientation session. I already had first three pages of my report ready.

Tell you what, there is a saying in tamil – oru paanai sotrukku oru soru padham. (How do you know whether the rice is cooked? Sample one grain and see.) It couldn’t be truer with my survey. I could’ve written the whole report after meeting one consumer. They are all the same. The good thing is I chose my time to work and when to go to office.

I frequent my relatives place here during weekends to eat south Indian food and well, keep in touch in the process. Wherever I go, I’m asked to advise the kids- Jyotika, anna is brilliant and hardworking (I know) so ask for his advise. The kid comes to me and looks at me like I’m some…whatever. Where do you stand in class, kid? Last time, I missed the first rank, she avers. Hmmm, how can you miss first rank? I shout at her. What comes around goes around. Hahahahaha. Thankfully, she didn’t ask the same question.

No one is perfect

2006-03-13T13:18:00.000-08:00

You know orkut, right? Communities are a popular feature in orkut. From 1984 borns to I-love-to-sleep (!), there are thousands of communities spawning everyday.

So it’s only natural that there are a few hate communities. I’ve been getting mails saying such and such community (India sucks, I hate India etc.) exists and please report as bogus. It’s a way to show patriotism. Some people even discuss it hotly.

Great. If this is a fight, its worth shying away from. One, It’s very easy to start a hate community (one person is enough) but difficult to stop one (50 votes as bogus required to take community off). And there are I-hate-Pakistan communities too, so we don’t hold a moral high ground.

I don’t mind reporting them as bogus, but I wanted to know what they have in their forums. After all, sustaining a hate community is a tough job, isn’t it? How long can you rail a nation with same hatred unless you are a brainwashed terrorist? Some of the owners and members are well educated, so what do they discuss?

Surprisingly, I found a few valid objections. Some posts talks about female feticide, which is a matter of shame. India has an abysmal sex ratio of 931 females per 1000 males, and it is pathetic in modern states of Haryana and Punjab (860/1000). Southern states fare much better, particularly Kerala with a positive sex ratio of 1031 per 1000 males. Contrary to popular belief, Muslims are a more tolerant lot than Sikhs and Hindus when it comes to female feticide, which is shown by sex ratio classification by religion.

Other is about the high incidence of Aids which threatens to harm the productivity of a growing nation in the future if not checked. Low Female literacy finds a mention as well.

The language is reprehensible, but the objections are sound. It’s a totally different picture from what the Indian media gives- burgeoning economy, unstoppable stock market and more recently, a nuclear deal. Bad news never gets the same publicity.

So do I justify these groups? Hardly. Its time we recognize that we are a truly great nation not because of our culture or history; but because we have a working democracy and strong institutions for a place that is so diverse even in mindset. Once we do that, we get the courage to take criticisms, even hate writings in stride. We get the courage to seek harsh truths even in them.

That’s what a mature democracy does- reality check.

Game theory and Pecking order

2006-02-20T00:32:00.000-08:00

Only recently did I come across game theory and all its applications. Nowadays I see it everywhere. Pecking order is an application I read recently.

Pecking order is a theory of corporate structure. It says firms follow an order for pecking money- internal finances first, then debt and issue shares as a last resort. Debt is always preferred over equity, no matter what.

The theory assumes asymmetric information- managers know more than investors. This is easier to see. When a big announcement comes, share price spurts. If investors knew as much as managers, this would not happen. Investors would’ve bought all shares in anticipation.

When manager thinks shares are undervalued, he should prefer debt- why issue more shares when they are traded at below fair value? On the contrary, they prefer equity when shares are overvalued- make hay while the sun shines.

Why then do they prefer debt always? The answer lies in game theory, the theory of choices where decisions players make affect one another. Suppose the firm issue equity to raise money (to make hay). Investors anticipate trouble and share prices fall, sometimes more than what it should. On the other hand, when debt is issued, share prices rise.

Now manager anticipates this behavior and considers he is better off issuing debt, even if shares are overvalued. Why not let bad news go to investors through other channels? So he issues debt no matter what. But does share prices rise? Not always. Why? Investors anticipate manager’s behavior, so they have no clue as to whether shares are over/under valued.

The conclusion of game theory reinforced in this example is this: A system where rational players operate rapidly evolves to a point where no one is better or worse off.

Blogger’s dilemma

2006-02-16T09:05:00.000-08:00

Let’s cross-link our blogs, my friend tells me. What does that mean, I ask him. You put my link on your blog and me, you. So what happens? We will get each other’s readers. It increases our hits.

Confused, I ask him. Increase hits? Why should we increase hits? If we increase hits, it means our blog is popular, he explains. Hey, I can understand what it means, but is that the reason why we blog, to become popular? He seems exasperated. Well, hmmm, if you don’t want popularity, why don’t you have a personal diary instead? I couldn’t think of an answer, and said as much.

We moved on to other things. After a while I tell him, I don’t blog regularly. How will I increase hits, even if I crosslink? Well, if you want to become popular, you have to blog atleast once in two days. Put your link in orkut groups, chat messages and mailgroups…learn to network, he advises me. I thank him for the enlightening discussion.

A blogger’s dilemma is this- he blogs because he wants others to read it, but the more readers he gets, the more pressure he is under…what can I change to make this post more readable?, This is interesting, may be posting this will get me more hits, etcetera. Suddenly, there are no uninhibited feelings, ideas, and thoughts; only conformity.

So what is my final take? I write blogs because I do want others to read it. But I don’t like to push it. I don’t like to worry about losing readership just because I don’t blog regularly.

When someone stumbles onto my blog, reads it and puts a comment ‘nice one’, I do feel pleased. In fact I used to get a lot of 'nice ones' before. Unfortunately they were invariably follwed by messages like how to enlarge your, well, stock returns.

How about Casio sponsoring Exams?

2006-02-10T00:32:00.000-08:00

Mid term exams of term3 started today. Financial management II. I could have taken the exams last term and still performed the same way. There was nothing conceptual, all calculations.

NPV (net present value) is the most basic of all financial calculations; and the most intensive. There is supposedly a table which simplifies the calculation, but the professor thought we had enough time. So there we were, doing NPV for 20 years for different rates, by trial and error. Imagine using both hands on calculator

May be we could have casio sponsoring our exams. We can even have commercial breaks ‘You will solve the next question after these messages from our sponsor’. The way papers are being set, that looks a distinct possibility.

How do Chennai-ites quarrel over water?

2006-01-26T05:30:00.000-08:00

Game theory and its implications is one subject that never fails to amaze me by both its simplicity and profoundness. The recent Nobel Prize in economics awarded to Robert Aumann, a mathematician based in Jerusalem and Thomas Schelling, an American economist for their work in game theory highlights the richness and diversity in this subject.

Game theory is a theory of choice, where decisions players make affect one another. Aumann’s contribution is that cooperation between players is possible if the game prolongs infinitely often, but players compete if the game goes for a finite period of time. How?

Coming from a water starved city like Chennai, let me quote a normal quarrel that happens between neighbors: the bore-well problem. Suppose our neighbor installed a bore-well and a booster pump, which sucks up water twice as fast as the normal pump. When both of us had normal pump, we got 10 liters of water each. Now that he has a booster pump and we don’t, he gets 15 liters and we get none. (Assuming 5 liters gets wasted when booster pump sucks water furiously).So we have no option but install bore-well ourselves, and now both of us end up getting 5 liters each. (5 liters wasted per pump)

In the long term, this is a suboptimal solution (5 vs. 10). So we enter into an agreement where either of us won’t switch booster pump unless the other person switches it on the previous day.

Thus, if the game goes on infinitely, the players cooperate. What if the game is for finite interval? Suppose our neighbor vacates his place next Sunday, he will switch on the last day, because he has no motivation to do otherwise. Anticipating this, I’ll switch the motor on Saturday, which he anticipates on Friday…and the entire thing unravels.

Schelling’s work is on the formal theory of deterrence and retaliation, where paradoxically, the player is better off by making his response uncertain. The Spanish general Cortez who colonized Mexico burnt his boats on arrival demoralizing his adversaries because they knew that his army could not retreat.

The works of Aumann and Schelling demonstrates the subject’s breadth and depth.

I love orkut!

2006-01-18T06:04:00.000-08:00

Do I have to tell you what orkut is? It’s popular software for networking with friends. As I am a slow adapter to new technology, it took so long for me to appreciate it. Appreciate? I couldn’t have enough of it. Met some long forgotten school friends, and felt we were never away.

Profile? Naah, I don’t believe in writing about myself. After all I have a blog to do that. But one thing I like about orkut is the testimonial. People don’t just love, but crave to hear what others, particularly their friends think of them. You may not be Wordsworth, but do write a couple of lines about them, good and bad. They will really appreciate it.

Happy scrapping!

Big is beautiful

2006-01-17T09:55:00.000-08:00

We live in an era of transnational, the likes of Wal-Mart, Exxon, Microsoft and Toyota, (mega institution is one which earns more than 10 billion dollars in revenues annually and has more than 100000 employees worldwide). In the last few years, the trans-nationals have managed to earn more revenue per worker than the smaller companies, and improve its profit margins dramatically. Companies like Microsoft and Exxon has managed to improve its profitability without any drastic increase in workforce, while companies like HSBC, GE, Toyota and IBM has managed to increase the profitability faster than the increase in workforce. There are 4 companies (Toyota, GE, Citigroup, and IBM) that employ more than 200000 people and earn 20000 dollars or more per employee (McKinsey studies). These companies have managed to overcome the complexity that comes along with size and grow faster their smaller peers. How?

The companies previously were leveraging their scale and scope to control supply chains and means of production. Ford, which took economies of scale to an extreme, at one point of time owned rubber plantations in Amazon for tires, rail wagons to transport them, tire, steel and assembly plants and planned eventually to sell and service Ford cars (though they never did). This proved a disaster.

Now companies are not just selling of their loss making units, but selling off their reasonably profitable ones as well, in preference to their high margin businesses. Citigroup sold off its cash cow Travelers insurance business to Met-life to concentrate on their core banking business. GE, which were traditionally manufacturing, gathered sufficient experience in financial services and now predominantly a services company. So is, IBM, which is moving away from manufacturing (at one point of time, it got a measly 1% ROI on its manufacturing business) to business consulting. It is rumored that in Japan, Toyota intends to market its manufacturing consultancy to non-car companies.

The more significant move was to find and tap the knowledge base of the people. Rockefeller found it difficult to find people who knew even basic accounting and awareness of most commonly used business terms. That is hardly the case today. Companies are trying to make sure they make the systems simple and management decisions consistent so that the ideas of employees aren’t lost in the bureaucratic maze.

The big is beautiful in India too, it’s the big Indian IT companies like Infosys and Wipro that are clocking faster growth in workforce and bottom-line than their smaller counterparts.

What do mega-institutions mean to India? IT companies are thinking about relocating abroad due to skills crunch, even when there are 5.3 million unemployed grads at home. If Infosys has any chance of becoming an Accenture or IBM, the government must make sure that there are employable graduates in the country. Already, the services are raising their headcount faster than any other sector. It’s high time the supply steps in.

Cheap workforce like China’s is not the recipe to superpower status, quality workforce is.

Evolution of CP

2006-01-14T12:34:00.000-08:00

CP means class participation. You may think that it’s such a frivolous topic and the person must really be jobless to write on it. But it will amaze you that it’s one of the hottest topics in IIM.

If you have a question, you raise it, don’t you? It’s much more complicated than that. One, we have a system that rewards CP albeit a small cut in total (5%). Then you have a suspicious bunch of fellows who frown on anything more than acceptable level of CP (though the question of what is acceptable is as yet unresolved); To complicate matters further, a professor who mistakes CP as interest in his class and addresses the rest of the session to you, so there is loss of opportunity to do productive work, like snooze.

What do you do in this dynamic environment? This must be the evolution of CP.

Stage 1: Dumb/Passive CP: This is the lowest level. Here, you do a CP to clear your doubts. Unfortunately, yours truly is at this stage. ‘Sir, I don’t understand this’, ‘Could you repeat that?’ and so on. The advantage is that you don’t face jealous friends, if anything you get a lot of sympathy. Poor chap can’t get this one. Disadvantage, showing ignorance is nothing to be proud of.

Stage 2: Frivolous CP: At least here, you recognize that you want the cut, but you make such frivolous comments which annoy classmates. Whatever question is posed, you give a lot of chaff.
Advantage: Most of the time the prof is confused. He neither accepts nor rejects what you said. Disadvantage: Face the wrath of your buddies.

Stage 3: Intuitive/perceptive CP: Here you try to predict what prof is about to say next, and ask the question ‘what about…’ whatever he was about to say. Now, prof is real impressed. But if you can predict his next line, so can others. They will sulk, if not annoyed.

Stage 4: Strategic CP: Here, you paraphrase what prof said or agree with him without making it too obvious. Eg. When communication prof said ‘Write clearly and precisely’ Tomer replied ‘Yes Sir, this is something everyone say but no one follows’. As such, you can’t call that a CP. You tend to ignore it. So there is no ill will among the buddies. But, at a psychological level, you reaffirm what professor said. He doesn’t reply, but forms a very positive view of Tomer. This is the highest level of CP which everyone should try and achieve.

Happy new year

2006-01-06T06:57:00.000-08:00

Well, it’s been almost a fortnight since I wrote something. As if I do nothing more than stay in my room and vegetate. It’s almost true, but I did do something this Jan 1st.

A 21 year old going on a pilgrimage in south India on the new year eve instead of partying all night may sound too conservative, or price you pay for being born to a religious parents, or is it?

Temples aren’t just places of worship. They are a gentle remainder that we mortals, who revel in our technological achievements, couldn’t build things which last a century or a plane crash; Remainder that we mortals aren’t capable of thinking beyond our present, leave alone a millennium; that we still aren’t able to bring the best out of human potential that a Rajaraja chola could. Mere rewards couldn’t have produced these temples.

Some ‘experts’ say that the kings in south India amputated the architects after they constructed these temples, so that they couldn’t be replicated. It’s hard to believe that any of these masterpieces could have been constructed in a cruel ruler’s time. You can control a man’s hand, not his spirit.

We visited our small ancestral temple at thandanthottam near Tanjore, which finds a mention in Sundarar padigams (hymns) which dates the temple to atleast 8th century AD. The temple is now dilapidated and cries for attention, and only recently has some work started. Rich temples like tirupathi should donate funds to such temples, instead of going on building newer temples, which are basically cash cows for them.

We then visited Tanjore Brihadeeshwara temple or big temple as it's popularly known, is one of the architectural wonders of the world and Unesco’s world heritage site.

What is so special about this temple? The 10th century temple (shown in picture) is constructed in such a way that its shadow doesn’t fall on the ground, no matter what time of the day it is. Also, the cupola (dome) is carved out of a single stone weighing 82 tonnes moved along an inclined plane 6 kms long.

Nandi (the bull facing the temple in the picture is 12 feet high, 19.5 feet long and 18.25 feet wide and carved out of a 25 ton stone.) is the vehicle of Lord Shiva, and supposedly the head of the ghosts who worship him. All temples before this one had a small nandi. Legend has that Rajaraja chola wanted a temple and a nandi that is mighty, because no ghosts fear a puny nandi! So the temple rightfully came to be known as big temple.

So my pilgrimage is not essentially one of religious nature, but that of a curious visitor who has never become used to such marvels as to not gape in amazement. The pictures painted in the inner walls had long stood the test of time, but when I went there, there were scribbling on the pictures like X loves Y, Z came here on so-and-so date (!) by our mortal peers, who wanted to immortalize their whatever. May their souls rot in hell.

Happy new year.

Presentation week

2005-12-22T04:54:00.000-08:00

The DWO presentation and its run-up was a hopeless one. We hadn’t got the report ready by the time we had our presentation, we over shot the time by whopping 20 mins (twice the stipulated time- at least, everyone overshot by similar margin).

The presentation itself wasn’t bad. We had used rhetoric language (what else do you use in a HR course?) in some of the slides, and the professor asked, ‘these are all well, tell me the mechanics?’ Everyone tried explaining, and he wasn’t happy. I tried this- ‘Sir, we’ll design systems which will elicit the desired response from our employees’, which in effect means saying nothing. But the professor seemed to be quite satisfied with the reply. Whoosh goes the logic.

There were minor quibbles after the presentation and I stayed away from it.

Economics presentation was much better. We had put in our presentation this bullet- the change of the base year is one of the reasons why our fiscal deficit shows a smaller figure than it actually is’. Prof asks how. Ramanan said something which the professor dismissed summarily. After the presentation, I asked him how it really happens. Professor says ‘It’s really hazy. Why don’t you mail me the source so that I can figure it out?’ Ah, the self-righteous souls.

Marketing presentation, well Sounak thought Shakti was in our group (he generally is) and prepared his slides. But alas we realized it only the last moment. I was given the task of saying the part impromptu. I managed it anyway.

Its Operations management course again. Well, the senile old man at least gave a Quantitative, application oriented paper last time. This time it was qualitative (lacks quality though).

We knew it was qualitative this time; we tried to mug Deming’s 14 points, 5S principles, 7 tools of TQM, few models etc. etc... I generally make all course notes in the same book. On some days, I hadn’t written the subject name on top of the notes, and yesterday, I had a tough time figuring out if the notes belong to OM or DWO (HR subject).

Questions? Features of TQM, TPM, well, the professor must be bored himself when he sat down to set the paper. So are we.

What is it to be a HR man?

2005-12-15T05:29:00.000-08:00

I did a mediocre BE and had no strategy in my mind on how to pursue my goals, because there weren’t any. My mom said ‘Go do MBA’ and that resulted in a paradigm shift in my life.

I applied SWOT analysis on myself and scored high on 20 of the 23 variables I considered. Then I prepared a managerial effectiveness model and was better in global awareness and communication model, but scored poorly in self management competency. I then proceeded to get a 360 degree appraisal involving all stakeholders, to get both a subjective and objective analysis of myself.

I realized that the external environment was very complex that collaboration and not competition that is necessary. Therefore I was tempted to form a cross-functional team in my CAT exam hall to pool the skill sets and form a synergistic and organic relationship for handling complexity, like the CAT paper. But in a complex environment, ethics is more important than ever. So I did a cost-benefit analysis for competition vs. collaboration by a new model that I developed in the exam hall, and found that….

Sounak: Wake up, why are you sleeping over the DWO (Designing Work organization) book?

Everyone heading for second floor!

2005-12-15T04:45:00.000-08:00

A couple of stex (student exchange) girls have come from Paris, and do they look gorgeous! What happens when they have trouble configuring the internet? Hey, no problems- I can lend a hand. When I went there, they, my classmates, were lined up in their rooms falling over each other to help the girls. I have a question.

Why doesn’t everyone except me have any suave? IIM ka naam roshan karenge!

FIIs are cold money!

2005-12-12T12:44:00.000-08:00

Alright, once upon a time, there was a stock market marred by scams, insider trading and low depth. The government arrested bad guys, infused transparency and it coincided with a growth story. Lo and behold! Investors swarm like bees, the market never seems to cool off and aren’t we happy!

We would have, but for the government that is more tense and skeptical than ever, thinks that a lot of money is chasing a few papers, and even thinks about putting a cap on FII investment. And what’s the purported reason? FIIs are hot! err…. hot money.

Nothing is farther from the truth. True, every investor wants a good avenue for investment and will book profits when opportunity arises. But they aren’t hot money. One, they have invested mostly in blue chips and fundamentally sound mid caps, which don’t give return in the short term. Second, most of the newer FIIs are pension funds and Japanese investors, who have a longer perspective than even our own mutual funds. Third, they control so much stake (30-40% of the free float) that if they happen to pull out at once, the biggest losers will be they themselves.

Contrast this with our retail investors. Even when the sensex was rising, the market breadth remained largely negative. Why? Our retail investors try to ride the tide called penny caps which rise in a boom and end up losing a fortune. The government expends a lot of energy trying to track money and insider trading and even putting a cap on FII flows, to protect the investors from the fallout. But should the government try to protect the investors from the stupidity they themselves are responsible?

The only panacea for the market from overheating is to divest the PSUs to infuse quality paper in the market, and give the foreign investors to participate more in the debt market. Give them a chance to stay when the Feds hike rates.

Discouraging FII from participating in the growth story called India, while exhorting them for 150 billion dollars investment is one step forward, two backwards.

Incredible Rajnikant!

2005-12-12T12:05:00.000-08:00

You got to read this

I love him for what he is.

http://people.indiatimes.com/quickiearticleshow/1328104.cms

Don't let Economics override Technology

2005-12-07T09:26:00.000-08:00

Middle path may be good for spiritual sake (heard of Raja-rishi model?), but when it comes to regulatory policies, it is not just frivolous but dangerous too. One such policy now is the government decision to have a combo of entry fee-revenue share model for 3G spectrum allocation. The rationale seems to be having an entry fee small enough for encouraging competition but high enough to avoid small inefficient players throwing their hats.

The underlying premise for entry fee is this- spectrum is scarce resource, so the government should give a strong dis-incentive for inefficient usage. So far so good, but something seems amiss- economics seems to have overridden technology.

Technology is fast making spectrum a scarce to an increasingly abundant resource. You may think that radio signals kind of bump into each other, so the electromagnetic spectrum has limits. Actually, it’s not the transmission that poses problems (though signals get weakened with distance), but the receivers aren’t sophisticated enough to differentiate one signal from other. This problem is getting fixed.

Wide band spectrum and spread spectrum (used in CDMA) is just one way of circumventing it- instead of confining the signal to a narrow band, spread the signal over broadband so that it mimics a guassian random signal, and have sophisticated error correcting receivers to decode them.

One of the emerging technologies is mesh networks. In this, the signal is passed through a network of receivers which receives the signal and passes them to adjacent receiver, giving the counter-intuitive result that the channel capacity increases with the number of receivers.

One more technology involves having cognitive ‘smart ‘radios having super-computing chips to receive the signals, which dramatically increases the signal capacity, as it decodes spectrally-close signals.

These and more are evolving, which will make the existing technologies obsolete. An entry fee may bring small fortune for the government, but decreases the Indian companies’ ability to adopt newer technologies when they arise. Revenue share model, where companies pay as they use would have been more appropriate.

Long live the middle path!

Nothing ails Indian industry like conflict of interest

2005-12-04T10:16:00.000-08:00

So there are reforms, competition and end of monopoly of PSUs in the Indian industry. Or is it?

A double standard, euphemistically called the conflict of interest still permeates in different forms. Take the case of telecom industry. TRAI, the regulator has been kept out of important decision like the interconnectivity issues in mobile phones with the minister vesting the powers with DoT, the biggest telecom provider. TRAI has been fighting this in Supreme Court for quite sometime now. While there was quite some heartburn in industry quarters over TRAI’s arbitrary handling of WLL issue, an arbitrary regulator is, dare I say it?- better than an arbitrary politician.

In oil, the government tried to inject Director General of Hydrocarbons, the head of upstream regulator into the board of ONGC, the state major. It was only after ONGC supreme Subir Raha threatened to resign did the government dropped the decision.

In banking, the regulator RBI holds a majority stake in SBI, the biggest Indian bank. Is this why foreign banks are prohibited to open more than their allotted number of branches? I don’t know, but it’s a food for thought.

There are innumerable instances like these, but the bottomline is- till there is a conflict of interest in the legislating body (government) also controlling the industry (via PSUs), it will permeate through the system. After all, the government owning a majority stake in PSUs puts the ministries in a fix- while the official position is reforms; they are responsible for the profits of state owned enterprises as well.

While the government has every right to protect the interests as a promoter, the correct approach is appointing more independent directors to manage the companies efficiently- not stifling the growth of industry by arbitrary decisions.

Multi-level marketing or Multi-pain marketing?

2005-11-29T10:48:00.000-08:00

There was a talk by the Amway MD on direct selling. Only one word could describe it- fabulous. It’s amazing how the industry interaction committee manages to bring in such speakers time after time. Hats off to you, folks!

The same couldn’t be said about the company. True, the direct-selling company has thrived for the past 46 years- no mean achievement. I believe it has done so because it has played on one unchanged aspect of humans- if there ever was one- greed.

I didn’t have an opportunity to see the Amway presentations that used to happen regularly in Chennai, but from whatever I heard; these people make such tall claims about compensation that you could drive only Merc and nothing else.

Is it that bad for a company to advertise itself to attract IBO- independent business agents? Not at all, and that’s not the aspect that I want to highlight anyway.

What else, then? Have you heard these hardcore investors talk? They somehow come to stock market the third minute of any conversation which will make you crawl for cover. Amway agents are worse. They start their propaganda first up, and won’t let you till they get an answer. They are the most hated people on earth; insurance agents come a distant second.

And how true are their claims? If you are aggressive, you may taste some success, but even if you do, what’s the point of making money on someone’s expense? And no profession unnerves such a lot of people to make a few bucks.

Amway products? My dad tried only one product- Amway car wash (a small bottle costs Rs.400). Dad was happy with the quality. But then Amway takes premium products to an extreme. My dad’s friend bought brand new Amway underwear with some special qualities which costs Rs.250. Without dwelling too much into the qualities, let me just add that his friend thought it was too costly to wear.

The concept is good- train some entrepreneurs who will be not just salespeople, but business partners who will get compensation based on not just their sales, but how many entrepreneurs they bring in. Unfortunately, it’s a perfect recipe for greed, generating multi-pain marketers.

What do you do in your free time?

2005-11-26T22:12:00.000-08:00

Incredible, isn’t it? A fortnight ago, I would’ve never thought that I would get some free time. Thanks to mela for index, I’ve two days off. I’m not part of any team there, so there isn’t any task to do. I thought I’ll doze a couple of days off.

Ah, easier said than done. Why not write a short paper? There’s no point trying my hand at fin or mark one. I chose a strategy paper- its easier to fool around- I did. Strategies for the Indian pharma firms in the post-product patent regime. There’s no dearth of information- there’s FICCI, CII and Mckinsey reports. It took longer than I thought, 10 hours in all. It’s tough to do it single. I ended up with a headache and finger-burn.

The theme is simple. Indian firms can’t copy drugs anymore- euphemistically called applied research! They have to invest like hell in R&D in basic research- some of them already doing that. Cost arbitrage is a short term measure- there are opportunities. Pfizer and Merck are outsourcing manufacturing, part research and clinical trials to India. In future, when countries like China start developing their human capital, these opportunities will cease to exist.

The constraints for the Indian firms are the financial muscle of the big majors. Therefore the strategies like generics exports and others are but a means to achieve the end- put a new drug on the market, which no Indian firm has done till date. It is important not to lose sight of this long term goal.

I’ll be lucky to go to the next round- only five entries get through. But then, philosophically speaking, the effort can be as satisfying as the end.

Just another hit, or is it?

2005-11-23T08:52:00.000-08:00

A manager of a distinguished petroleum company, the Indian oil corporation, blacklists a petrol pump for selling adulterated oil. The pump starts selling petrol on the sly, after a few days. When he tries to stop it, he gets five bullets on his chest. What if he happens to be my alumnus of 2003 batch? I’ve never heard of him, and, aren’t we used to murders?

The 27 year old Manjunathan happened to be one of the few bright spots of our country who dared fight our rotten system. A system controlled by corrupt officials-politicians-mafia nexus, a system which lacks transparency and accountability, a system which takes eons to punish offenders, a system people are so used to, that it fails to tickle them anymore than when Satyendra Dubey, an IIT engineer was killed by mafia when he whistle-blew the corruption in the national highway project an year ago. A system where there is no place for men of integrity, much less courage.

So what’s the purpose of more petitions or even a peace march which we are planning? Customary? Just to show that we are alive and kicking? I guess not.

There is only one alternative to this rotten system. We students, who will refuse to get brow-beaten by such acts, refuse to escape this by the time-immemorial-bushland offers, and strengthen our resolve to fight them. It’s no time for dejection, but action. Rest in peace, whoever you are.

Mr.Cool loses exactly that!

2005-11-18T08:43:00.000-08:00

Once upon this time, there is a Mr.Cool in our batch, who gives a lot of CP (class participation). Notwithstanding the criticism about the quality of his questions, one might appreciate his desire to learn by asking questions. That too to the extent of doing CP after the Prof himself overshoots his 1 hr by more than 5 mins, shrinking our break and stretching our patience.

What happens over time? Patience wears out, and something seemingly innocuous can become aggression, fast. Like a birthday bum, when Mr.cool had none. (I mean no b’day, I know what you thought).

For a guy who never lost his cool, his voice broke and got frustrated that no one shares his desire to learn, and that his questions are value addition to everyone in class. Hmmm… may be that’s a distinct possibility, but I feel very few share that perception, especially when the class is stretched. I felt almost sorry that the bloke was meted out what he got.

I am a nobody to pass a judgment, but the moral of the story is- Don’t let anyone any opportunity to take their frustration on you, because you bet they will.

What day comes after Saturday?

2005-11-16T11:34:00.000-08:00

The mid term ends. After every paper I had said to myself ‘I’ll make up in the end term’. After all, I said a similar thing after my quizzes too, ‘I’ll make up in mid terms!’ Life goes on.

I don’t remember when I last had a Sunday. Last week it was placements, last to that was an extra classes, plus the mid terms eve, the only way I know its Sunday is when I get the appropriate newspaper supplement.

The mid term papers weren’t so bad; if it is; it’s bad for everyone, so relatively I’m not that bad off. (Whoa! The last line will qualify for PhD in verbosity! Blame my marketing and organizational design papers for that)

From this year CAT exam is going to get tougher. And number of seats in IIMs is being raised to 1400- which means still less than 1% of the 150000 entrants make it here. Hmmm... Sometimes life moves too fast to look back at your own achievements.

It’s been a while since I read anything worthwhile. Slow down your pace, life! Let me catch up.

Summer internship process

2005-11-10T05:14:00.000-08:00

It’s finally over. What you see is a few IIMs getting placed in slot 0 with hefty packages. What you don’t is a majority who has to slog for 3 days flat out not knowing when it will get over, if it does. And a bunch of seniors who ran around satisfying weird needs of the obstinate HRs. Or for that matter, tons and tons of RG docs (resource generating documents) about the company. The last 3 days have taken a toll on everyone.

I screwed up a few interviews- one interviewer asked me what my group discussion topic was. I’d done close to 10 GDs that day, and had no clue what the topic was, and said as much. Another interviewer asked me, are you tired? It was 12 in the night, and I hadn’t slept for 18 hours, what do you think? I managed an artificial smile and asked him, aren’t you? You bet he was. He started telling me about how hard it was to shortlist 80 from 250 applications and do two rounds of interviews. Stop whining and get on. I managed to nod sympathetically. How many process have you gone through till now? I said around 8. He asked the name of the companies- I could recall around 4 or 5, but he pressed for all names, so I just took out the checklist I had from my coat pocket and read out. An embarrassed interviewer didn’t ask me, why our company!!!

Though around 70-80 companies came, only a small fraction shortlisted me, and I went through all the rounds of even smaller fraction. For three days I woke up at around 6 and went to bed as late as 1 in the night, only to wake up at 6 again. Damn it, I had no time to wash my socks. I thought, if worse came to worst, I would just take off my shoes in the GD and put everyone in a trance, and it would have been the elusive chemical weapon that Bush couldn’t find in Iraq!

Sounak was no better. The poor guy had calls right from day 0, and still managed to drag on the whole thing to day 4, and was even more tired and sick of the whole thing. He was sleeping before he was dragged to a couple of interview rooms, and I couldn’t imagine what he did there.

A few guys just broke down on the third day, after getting kicked out by one company after other. Some people tried to show that they didn’t care and went on watching Tom and Jerry shows, others porn, oblivious to the crowd there. I believe it’s another form, denial.

I managed to hang on to a company called DCM Shriram, an unglamorous fertilizer company for a rural marketing project. I’m glad it’s over; it may even be more interesting than I imagine, what the hell.

Get your dream company!

2005-11-03T05:14:00.000-08:00

Some of us have been shortlisted, some waiting to be one. Here are some suggested answers to some clichéd questions…

Q. Why our company?

     Some of us are desperately waiting for a shortlist, and this one assumes the contrary. Don’t take slight at that. We can say something like ‘your company is 3 blocks away from my home in chennai’ or ‘you shortlisted me’, but that wouldn’t sound too smart, will it? Try something like, ‘I went through the vision and mission statements of a million companies, and tried to match with mine. You proved lucky!’

Q. Where do you like to be seen five years from now?

     Ah, if only I knew where I would be few days from now! You can say something like, ‘Be your boss’, but it wouldn’t get you anywhere. Try ‘I want to be the receptacle of ideas, paradigm of probity, and engine of growth, the piston of change, steering the people along’. It will make you sound smart, and if the company makes cars, who knows?

Q. What are your strengths and weaknesses?

     ‘I am a hopeless workaholic’ is one that’s been tried for years. But I tried this in my XLRI interview ‘I dream that I am the PM of this country and change its fortune’ for both my strength and weakness. Strength, as you dream big, weakness- you are disconnected with reality. Find something like this which will leave the interviewer confused.

Who cast shadow on the festival of lights?

2005-10-31T10:10:00.000-08:00

Three days since three blasts in the heart of Delhi, the images fail to vanish. Imagine two families fighting over the charred remains of what they think is their kid. This festival of lights is surely darker than the rest.

Things move on. Let’s salute the resilience of this great nation. (I may be wrong. It’s more resilience than thick skin). Happy Diwali.

This is not fair!

2005-10-31T00:39:00.000-08:00

We had an Operations Management surprise quiz today. Remember that old spiritual Sahay? That prof’s quiz. People wrote ‘OM’ (a spiritual symbol) at the top of the answer sheet (some wrote it on all sheets!). I first thought it was the abbreviation of Operations Management!

This is a deliberate attempt to create a perception bias in the mind of the professor. This is a grossly unfair means to get a few more marks.

WHY DIDN’T I GET THIS IDEA? THIS IS NOT FAIR!!!!

Don’t mistake thick-skin with resilience

2005-10-29T23:51:00.000-07:00

Another day, another blast. What if that happens to be three timed blasts, in the busiest areas of New Delhi, paharganj and Sarojini nagar, (thankfully one averted in chandni chowk). The government as usual condemns the incident, there are meetings and press conferences, office and institute chat, and it will all be forgotten in a few days. After all, aren’t we resilient?

The terrorists may be nabbed, put to trial, may not be convicted thanks to brilliant lawyers like Ram Jethmalani who are bent on satiating their ego by appearing in such high profile cases. Even if they are convicted, there are always the ubiquitous human rights groups who will plead for less punishment, and there is our President who is so considerate to pardon hardened terrorists.

The feeling of helplessness and apathy has penetrated our collective conscience that we have even ceased to react to such acts. I have doubts if we are resilient. It’s just that the random terror happens all the time that we have become indifferent to it. The Delhi-ites who saw their fellow residents torn into pieces would probably say, thank god it wasn’t me.

The human rights activists require special mention. After all, they were the ones who condemned the encounter killing of veerappan, the sandalwood smuggler who killed more than 100 constables in duty, destroyed sandalwood ecosystem, and killed hundreds of elephants for their tusks, all with the backing of political class of course; the activists who don’t see the human rights violations of terrorists and smugglers.

What should be done? Army is not supposed to go after terrorists. It’s the jurisdiction of police. Khalistan terror in Punjab in the 1980s was even worse than Kashmir one. All it took was one bold chief minister Beant singh, (who had the backing of then Prime Minister Rajiv Gandhi), and one super cop KPS Gill who didn’t care about human rights of terrorists, to root out terrorism from the face of Punjab.

We don’t need condemnation, Mr. PM; unleash state-sponsored terrorism against terrorists.

World 2150 - part II

2005-10-28T11:07:00.000-07:00

First we will see how the India and China become the twin powerhouses.

Reason 1: Countries found lesser need to manage currency.
The manufacturing boom in china and service one in India started with the low end work in the early 90’s. To sustain the low cost advantage for their software and manufacturing exports (weaker the currency, cheaper the exports), the Governments in these two countries managed their respective currencies.

But as these industries grew bigger, they moved away from cost competition. China’s spending in their universities were starting to bear fruit, as the R&D boomed in the early 2010s, while Indian software firms moved away from back office operations to complex data mining and analytics. As this started to happen one curious phenomenon occurred- Bangalore got bangalored!

The software companies started outsourcing their low end back office operations to first tier-2 cities, then to smaller towns like Meruts and Gobichettipalayams, which had low cost advantage. This was the result of the massive investment in human capital in small towns a decade back. This resulted in growth permeating in every corner of the country.

Companies now competed on quality, not cost as they did earlier. Exports needn’t be cheaper, the forex reserves which previously had bloated on account of weak yuan/rupee, suddenly evaporated, and US was found wanting. Why?

The biggest blunder of Dubya wasn’t stem cell research or even Iraq war, but TAX CUTs!

A series of mistakes snowballs into a catastrophe. Bush tax cuts encouraged the US customers to buy like hell. This is how the US business cycle which would otherwise in the recession phase went into the biggest growth phase ever. But it was built on weak foundation, credit.

When lender lends a million, he is the boss. But if he lends a trillion, you know who the boss is. Asian countries amassed a huge forex reserves unleashed by the bush dollar tsunami, and the reserves ploughed their way through to US by way of T-bills. This was the source of consumer credit.

By 2005, there were already enough things to escalate oil prices, iraq war again, hurricanes Evan, Charlie, rita, and the biggie Katrina. These became a regular feature in the coming years, and the oil prices hit the roof. How did it bring the downfall?

Asian nations dependent on oil found the import bill too hot, their forex reserves declined. Less forex, less credit.

Even the tax increase couldn’t salvage the situation, as the economy fell into a debt trap. Company after company filed for bankruptcy or takeovers, which saw Tata motors, mount a successful takeover bid for Ford, CNOOC gobbling up Conaco Philips and a host of big ticket takeovers.

Note: Some of them are a bit exaggerated; but you can’t prove/disprove me, can you?
End of part 2

World 2150 – part I

2005-10-25T10:32:00.000-07:00

Ladies and Gentlemen: Welcome to the Annual global conference on ‘How the businesses evolved in the last 150 years’. Let me present you a chronological order of how we have progressed.
2000: The national boundaries were fast disappearing. To quote Nanadan Nilekani, the great Indian entrepreuneur, ‘The global field is being increasingly levelled’. How nostradamic that statement is!

Businessmen had increasingly moved away from competition to collaboration, the divide between the fat and small corporations were increasingly thinning. In fact the logic of economies of scale was increasingly being questioned. The fat corporations like Microsoft or GM weren’t revered anymore, with the exception of corporations like Toyota or Google which continued to innovate. They were instead seen as dinosaurs, whose might suddenly became its weakness. In its place were corporations like Tata motors, Acer or Hyndai or LG, those nimble footed Asian organizations who were suddenly growing bigger and started spreading their control. In fact the first signs were felt when Chinese hardware major Lennovo acquired IBM.

2020: India and China had truly emerged by then. It had to be, considering how the once mighty US imperialism as now the historians call it, had fallen, just like the British imperialism of the 19th century! One empire succeeds other, now the Asian one. Let us see how.

For long, US dollar remained stable and was the backbone of world economy. Research and innovation sustained the US economy till 2000. But the fall can be attributed to one person- George W. Bush (Muhammad-bin-Tughlaq incarnate!).

He started one scheme after other- tax cuts which only made rich richer, flawed social security scheme that tried to wash the government’s hand off its responsibility, and the biggest mis-adventure of all time- Iraq war, and the then popular term bodybags.

But the US economy was resilient all through this, primarily because the Asians fed them with dollars by way of huge forex reserves. The interest rates remained benign, and the American consumers were borrowing like there is no tomorrow. But all through this US managed to grow at a great rate of 4-4.5% year after year. So when did this bubble burst?

We will see this in next issue.

Things I didn’t write in my summers form…

2005-10-25T10:02:00.000-07:00

How do you interact with people whose backgrounds and value systems are different from your own?
As if their value systems were like my own.

How do you interact with people whose backgrounds and value systems are like your own?
As if their value systems were different.

How do you interact with people whose backgrounds and value systems are like your own and different from your own?
The same way.

Deadlines

2005-10-24T10:22:00.000-07:00

Paune barah bhaje, sab log cc chale.. what’s going on?
Jab who cc chale, saari printers phate.. what’s going on?

Why do i feel an empty space?

2005-10-22T11:57:00.000-07:00

Statutory warning: Don’t read it. It’s a sure depressant.

Most of the term I marks have come. I’ve done okay in some, not so okay in others, brilliant in none. What the hell, aren’t all IIMs get placed? Still makes me a bit sad.

Summers are round the corner. The more I hear the alumni talk, the more the PPTs I attend, the more humble I feel. (To quote Churchill, I’m a humble person who has a lot to feel humble about)

The summers forms are eating a lot of time, and I never seem to have any for the reading a thing, completing an assignment, or doing a host of things I get advice about, be it research companies or increase business awareness (it’s funny I crib when a lot of people do even more in their 24/7/365).

I’m cursed with an expressive face and a whimsical temper, so it’s clear to those close to me that I’m not my usual self (And it makes me sick every time they say that!).

I’m a laidback person, and I’m not used to this, damn it! (Whatever ‘it’ is). Give me a break. May be I’ll.

Things I didn’t write in the summers form...

2005-10-21T11:09:00.000-07:00

Qn. Tell me an instance where you did a seemingly impossible task. What was the outcome?
Ans .Filling up your form. You have to tell the outcome
Qn. Have you ever be tried in a civil/criminal court? If yes why?
Ans. Yes. Once a poor chap asked me this question and got me a 10 year suspended jail sentence for attempt to murder
Qn. Please detail any achievement/experiences that is special to you?
Ans. Once my sister and I had a big fight over who will get the last special masala dosa. I suggested to my sister to let mom arbitrate it, and I’d successfully eaten it, while she was gone to complain, after overcoming all obstacles.

GD capsule 7

2005-10-20T11:48:00.000-07:00

Theme: Textiles
To what extent will the end of quota regime really benefit India?
Background: The Multi fiber agreement came to an end this January 2005. Prior to that, west sourced more than half of their textile imports from Latin-American and Caribbean countries, though they didn’t offer cost advantages like Asian counterparts. (End of MFA had been one of the principal demands of Asian countries at the WTO for a long time)

According to a Goldman Sachs report, China is set to capture 50% of world textile market in 2015, while India’s share will triple to 16%. But the road is not without hiccups.

Though the decision to end MFA was taken at WTO as early as 2001, the Indian companies had woken up to reality and went for capacity expansion of their plants only when the deadline was nearing. This is in sharp contrast to the well oiled Chinese machine, which employs whole towns to produce just one product, to reap in economies of scale.

Also, it looks increasingly difficult to china in mass production, which not only has low cost of labor (prices of Chinese goods is less than the cost of producing them in India) but gives subsidized power (cost of power Indian equivalent of 2 paisa/unit!) and host of concessions to its industries. But India can compete in different turf- home textiles.

I reiterate this point once more- If China has cheap manpower, India has cheap brainpower (see outsourcing). Home textiles are one area which requires less manpower and more designs. This is why US textile industry has managed stay afloat in this segment. The government has provided the industry with cheap 3% loans for capacity expansion, so it’s possible to compete in this capital intensive segment.

Siva's dictionary

2005-10-20T08:23:00.000-07:00

Pain: What you feel when you have to fill summers form
Scarce resource: synonym of CV point
Spin a yarn: What you do when you get incomprehensible questions
Pun: When you spin-a-yarn around man-made fiber project!
Blood Pressure: indicator of closeness to submission deadline
Ecstasy: What you get when deadline is extended at the very last minute

Just a thought….

2005-10-18T04:04:00.000-07:00

I had a question in financial management quiz. Your grandpa is 60 years old. He is investing a sum in the bank at so and so rate compounded. What amount should you take every year such that there is no balance left after 10 years? If grandpa is 60 years old, would I be that old to solve this problem? Or, would the bank allow me to take his money?

GD capsule 6

2005-10-17T09:58:00.000-07:00

Theme: Agriculture
News: This quarter, GDP grew at 8.1%-manufacturing-8.9%, services 11.3%, agriculture-2% making India the second fastest growing economy, next only to china. Agriculture once again proved a drag on GDP growth
Background:
Agriculture employs around 60% of the workforce but contributes only a fifth to the GDP (Indian GDP figure is around 600 billion dollars) whereas the corresponding contribution from services is more than 50%. The successive governments have largely ignored agriculture after the green revolution of 60s. More than investment, the country needs focus.

For example, we have one of the worst storage and transportation facilities in the world. We lose almost 40% of the produce in godowns. Plus lack of storage means farmers are forced to sell their produce at lower than market rates. Let commodity markets and e-choupal expand!

Also, the perverse government subsidies on wheat and rice have caused a glut in foodgrains. The policy dates back to 60s when there was a shortage, but it has outlived its usefulness. The government can continue subsidies, if it changes the crops to cash crops suitable for exports. Any one responds to incentives.

Agriculture needs a new focus because, not only a slow growth drags down GDP, but also a sufficient growth in agriculture means increased demand for other products as well. For example, FMCG and durables industry does well whenever there is a good monsoon.

How (not) to answer in an interview?

2005-10-16T13:33:00.000-07:00

I had a mock interview (2 mentors) 12 at night today. We were told to mail our CV and a functional area along with two preferred companies so that they can do a focused interview. I wish I could be choosy about the functional area for now. I’d put marketing anyway (because most companies are marketing)

Mentor: Why is marketing important?
I: Organization exists for creating value for customer. So marketing is very important.

M: So you say finance is not important?
I: Do a volte-face. Finance is the backbone of any firm as firm exists to create value for shareholder!

I’d toned down my deep voice just to show (off) that I’m Mr.Humble.
M: Are you not meek for a marketing manager?’
I: No. The old management paradigm is that companies try to sell aggressively the products the firm produces but the new paradigm (I like that word. Makes me sound smarter than I actually am!) is whatever….

M: What’s the difference between customer and consumer?
I: Hmmm… I don’t know
M: Try
I: Okay. Consumer is the one who consumes one’s goods and services and customer is an all encompassing term that includes all the stakeholders of the company
M: Who is a stakeholder?
I: One who has a stake in the company.

The two mentors look at each other and think the time is up.

PS: I met a senior Jassi who was supposed to interview 10 people, but only three turned up. A couple of them even dared call him up and give him a silly excuse like preparing for P&G case. One fellow who had acknowledged Jassi’s mail at 8 pm called him up at 12 and said he didn’t see the mail. It seems I’m living in a utopian world and in reality the legacy is not that rich after all.

Why the students here leave a rich legacy...

2005-10-16T04:57:00.000-07:00

Summers are fast approaching. For us lesser mortals who don’t have either a good academic background or any work experience, filling two pages of resume is daunting, to say the least. Or for that matter, being interviewed by sharp eyed HRs.

This is where the seniors come. I’ve done my schooling and undergrad, but nowhere have I seen this level of mentor-protégé relationship. May be B-school is a different ball game, or that this happens everywhere, so why not here? Whatever it is, it’s great!

It’s not just the formal placement committee that’s taking up all the initiative, but seniors go out of the way, just to make sure that we don’t mess things at the D-day. Like my tam seniors who hold mock GD/PI sessions with ruthless feedback, or sigfi forums (must see it sometime). Some may feel that too much of such things may prove redundant, but I see the noble intention of these seniors who have nothing to get in return.

This is a rich legacy, which we will give to our juniors next year, and it’s something we can be proud of.

GD capsule 5

2005-10-15T06:35:00.000-07:00

Theme: Stock market

Is this Bull Run sustainable?

Yes, because

Strong earnings of the companies in the recent years will sustain the momentum

The index heavyweights like ONGC, ITC and RIL still trading at modest valuations

New FIIs from Japan have started investing only recently with a long term perspective

No, because

Oil prices if remain high for a longer period, may slow down the global economy and affect Indian share market

The risk of feds hiking the interest rates. Why? Interest rate hike may strengthen USD and investors may respond by pulling out money from emerging markets like India.

The weakening rupee is not helping the sentiment either

A lot of mid cap stocks are overvalued and the market should expect a correction

Indian market is overvalued when compared to other markets like south Korea, Brazil and South Asian tigers

Conclusion: The only thing that’s certain about share market is that it’s uncertain. So both schools of thought are valid and good fodder for GD

My best friend’s (sister’s) wedding

2005-10-13T10:57:00.000-07:00

Thank you, Vipin Prakash Aggrawal! I attended a preview of a North Indian wedding of vipin’s sister at Merut , a small town in western UP (remember 1857 war?). And it looks like the city has seen no development since1857 (technically called preserving the ancient roots!!).

We cancelled the train ticket and went to bus stand (to gain time), only to see that the bus had left. So we took the train ticket again and went to station only to find the train delayed by three hours. By the time the train had come, we had discussed past, present and future, classmates and profs, romances, courtships and failures and hmmm.. money. Thanks to some great planning and divine interventions, we managed to travel the maximum possible time and reached home at 11:00 AM of his sister’s wedding day.

The chief guest of Namrata Aggrawal’s wedding, our own buddy, went straight to hotel where Baraat took place stenched in sweat and scent, (no time to bath!!). I did a crow bath and followed suit. So there we were, two crumpled looking IIMs in new clothes.

Nitin Aggrawal (brother) was short of men, and yours truly had great time welcoming groom’s relatives. He didn’t know who were the ones and who weren’t, so ended up parading a few unsuspecting strangers to the hall.

The next was some ceremony where the groom’s relative decorates the bride. But isn’t she is already decorated, I asked Vipin. Yeah, he said, decoration used to be done by them, but nowadays its token symbolism for the video. Ah, the perils of outsourcing!

Vipin was busy with meeting people, and as I was jobless, I eavesdropped a few conversations- Sumit’s (groom) friends saying something about Waitlists and RACs and whatelse, and sumit (as expected) blushing at regular intervals. Yawn, change the channel.

I learnt that there were a couple of army majors. So I went upto them, made them at ease (you guys are doing a great job in jammu evacuation!) and started implementing my only-the big-apple-gets-hit principle (Doesn’t episodes like manorama erode army credibility? What do you say about stats that show court martials have gone up in recent years? Or for that matter, hasn’t the soldier’s motivation reached its nadir in Kashmir, as shown by increasing suicides?) One fellow got a little nervous (so did I!) but other was measured and logical (manorama, an isolated incident blown up by media and politicians, court martials show transparency and decisiveness, motivation is personal and not easily measurable.) Well said, Captain Ravi.

Vipin introduced me to a gorgeous friend of his, Ruchi, and we spent the rest of the evening chatting like old buddies. Other ceremonies like reception, circling the fire (forgot the name) were text book like.

Namrata bade Al vidha to her family, Vipin cried loudly and made funny noises so I encouraged him to continue. All in all, it was wonderful time at Merut.

GD capsule 4

2005-10-13T09:39:00.000-07:00

Theme: Corporate governance, oil prices
News: Essar and IBP, the oil marketing companies, are reducing their retail outlet timings to reduce losses
Background:
With spiraling crude prices, oil companies are losing money because they are not allowed to raise prices due to so called administered pricing mechanism. This results in companies selling petrol at huge losses. So much that they are better off not selling them. This is the reason why the aforementioned companies are cutting their outlet time to limit losses.

How it relates to CG (corporate governance):
CG in part means the companies act in the best interests of all shareholders, including minority ones. The government (majority shareholder) decision to maintain price even in the light of oil prices has seriously eroded the retail investors’ wealth. Sebi, which is so bent on preaching CG and the role of independent directors to protect small shareholders, has turned a blind eye to this large scale cheating by none other than the govt.

Why is freezing the domestic prices bad for the economy?

The oil companies are the biggest tax payers in the country, and keeping them in red implies less money in the government corpus and less money for social schemes

There is no motivation for the companies and the people to adopt efficient technologies. Brazil long suffered from oil shocks, adopted ethanol run engines and has reduced its dependence on oil

What do you say of a bank that has missed the bus (India)?

2005-10-13T09:31:00.000-07:00

I thank placement committee for doing such wonderful work for the students. It’s a fine committee, pun intended!

As a part of summers PPTs (pre-placement talks), we had an Australian investment bank Macguarie Bank today. Like all i-banks, the talk focused a lot on compensation, profitability et. al. I’m not sure if all was that impressive. Why?

For all the size and presence all over the world (a 11 billion dollar company), the bank has no presence in India till recently. For all the explanations they offer, it shows a lack of judgement on their part. If sacrosanct IIMs haven’t heard of this name, it’s doesn’t reflect that good on the organization, does it?

They are an advisor-investor rolled into one. I raised the issue of conflict of interest there. If we put money to back up the investment advice we give, doesn’t that add credibility, they reply. Fine, but there are a few things to consider.

If it does add credibility, why doesn’t Goldman sachs or JP Morgan do that? The advice is sought not just for what you give them, but more importantly, how you got to that conclusion. That is why GS doesn’t need to back its claims with money.

Not all advice turns out correct. Investors know it. (Of course, if you keep giving them bad advice, you are unlikely to get business) But I’m not sure if investors care if you put money along with them or not. If they lose money, they wouldn’t appreciate that you are losing with them too.

But there are a few things I liked about the company. One of course, the fact that the company is making a lot of money. Two, there is no history of retrenchment. Considering the way things turn out in I-banks and consulting companies, this is impressive indeed.

All said and done, why do I care? They are going to take one or two people- bright IIT grads. Let me better make my CV good for other companies.

GD capsule III

2005-10-09T06:30:00.000-07:00

Theme: FDI

News 1: US ambassador Mulford says "Failure to follow through in raising the cap (in insurance from 26 to 49%) is increasingly seen by investors as a breach of faith”, adding that "if India wishes to regain its credibility in the eyes of foreign investors this promise of 49 per cent FDI needs to be delivered sooner than later". Left reacts strongly to this comment (US dictating India policy). IRDA (insurance regulator) comes in support of insurance cap hike.

Reason: India promised hike ‘upto’ 49% in insurance in 2001. Technically, there is no breach of promise. But investors normally assume that countries follow up on these claims sooner or later. That is why so many companies like Aviva, AIG etc. set up shop here. That Left makes so much noise only shows its xenophobic character.

News 2: China attracts more FDI than India. Therefore India’s FDI policy should be more investor friendly. How do you counter it?

China’s FDI figure is not because of foreign policy, but due to NRC (non resident Chinese) investment in china. Without taking that into account, MNC investment in china is not much higher than India.

India doesn’t follow IMF norms when it comes to FDI. This one is a little complicated. But you can visit the link if you want to know why. http://economictimes.indiatimes.com/articleshow/1016361.cms

Conclusion:
Though good investor climate and reforms are a must, don’t expect quantum leap in FDI into India if you do it.

Siva’s dictionary II

2005-10-09T04:39:00.000-07:00

Vomit: Indicator of institute party success
Amusement: what you get when you see a person vomit all over a car
Frustration: what happens when that car is yours

Earthquake is an opportunity

2005-10-08T23:16:00.000-07:00

The recent report says 18000 estimated dead in Pakistan and POK (Pak occupied Kashmir), and around 1000 in India. Our hearts go out to them.

There could be no better opportunity for the next level of thrust to the sagging CBMs (confidence building measures) and to build goodwill with our naughty neighbor.

Indians and Pakistanis are not just tired, but sick of militancy and political games played to get one up over each other. My friend just remarked, ‘Quite a number of the dead will be militants’. Perhaps, but the majority is innocent civilians, women and children who have nothing to do with the complexities of Indo-Pak hassles and who just want better jobs, education and basic amenities.

So there is some thaw in the relations in the last few years, but the pace of the peace process is frighteningly slow. I am not sure how tier-2 (experts, chief secretaries meet and army commanders’ flag meetings) and tier-3 (Shabana asmis and Asma Jehangirs hugging in full media glare, Bollywood films shown in Lahore) diplomacy will work because, to quote a Einstien cliché ‘The problems cannot be solved at the same level at which we created them’. And Indo-Pak is the baggage of the political leadership of two countries, not people. The will and the initiative should come from higher level, media gimmicks won’t work.

If you still harbor some hatred towards Pakistan, I have a question- whom do you want to be equated with – Pakistan or China? Lets get on.

GD capsule II

2005-10-08T04:21:00.000-07:00

Theme: Energy security, reforms
News item: India imports coal (To put it other way, Kuwait imports oil!)
Background:
Our proven coal reserves are 92 billion tons and rising. One-third of this can easily be mined. Yet, our annual production at around 400 million tons is grossly inadequate to meet the needs of even existing power stations. In past decades, India used to export coal, mainly to Bangladesh and Nepal. Today, our power plants need to import over 10 million tons to utilize capacity fully.
How it relates to ….
Energy security

Discussions on energy tend to focus on the price of international crude. I have two points to make on this.

There is precious little that India can do to affect prices, whether they stay at their current levels or even if they rise above the US $70 mark.

Please remember that oil accounts for just about 30 per cent of India's energy needs, less than a third of the total. So what makes up the rest? In a word: coal. Well over half of India's energy requirement is met by coal.

Reforms
Privatizing mining would pump in resources and create jobs, but apparently everyone who objects to this sees nothing wrong in buying privately-mined coal from abroad. And of course lack of domestic coal also leads to greater dependence on imported petroleum, the costlier option.
And how do we import coal? Not through an open market system where everyone tries to get the sanest price, but through the Government of India deciding that a single nodal agency will do the job for everyone. (MMTC [Mineral & Metals Trading Corporation of India] is most likely to get the job.)

Courtesy: ET, rediff.com

Siva’s dictionary

2005-10-08T03:16:00.000-07:00

Showing off: what a person does when he asks a question to prof, waits for 30 secs for prof to babble, and then proceeds to give his answer

Emotional balm: What a person gets, after he gets kicked out by prof and then smses this author, ‘please write this in your blog’

Director: One who has no work. (I got this confirmed when the aforementioned person before getting kicked out, was told by prof ‘go meet the director before coming to the next class!’)

Confidence: when told by your Group Discussion mentor, ‘good, you were visible’

Overconfidence: When told by the same mentor in the next GD, ‘bad, you try to dominate’

Siva’s dictionary series kicks off today.

GD capsule I

2005-10-07T06:23:00.000-07:00

Theme: Corporate Governance

News Item:
Government tries to inject the DGH (director general of Hydrocarbons) into the board of ONGC. ONGC chairman Subir Raha threatens to quit citing conflict of interest. Law minister comes out in favor of Subir.

Decoding the matrix:
DGH is the proxy regulator for upstream oil companies i.e. companies in exploration and refining (there is no clear cut regulator appointed for them). The regulator who also is in the board is a clear cut case of conflict of interest because if DGH issues any directive to oil companies, Reliance may doubt its integrity.

How this relates to the theme:
Corporate governance, in part means the promoter (in this case the government) doesn’t interfere with the management in any way. Unfortunately, there is a lot of interference of ministers (favoritism and nepotism) and government itself is doing just this. Only this time, Subir Raha has dared to show some spine, a rare commodity in the anatomy of the Indian Bureaucracy. Fortunately, with law ministry and Sebi coming in his support, the government has deferred the decision.

Psycho Babble III

2005-10-07T05:58:00.000-07:00

It’s been a month since we were down with food poisoning. Most of them who cared for their peers would have probably forgotten their faces by now (ours a big batch of 300). But the care shown by them is still fresh on my mind.

I have something to give back to you. As the summers are fast approaching, GD/PI process starts all over again. I will write on some general topics with this focus from today. Don’t expect a goldman sachs report. But I do promise something that is readable but more importantly USABLE. You can tell me how I can improve it. Or you may tell me something important that I have missed.

To genuinely care and make a difference may be high sounding, but yeah, everyone should try to do something like that. I hope you find this useful.

Review of 'The World is Flat' by Thomas Freidman

2005-10-06T11:53:00.000-07:00

Indians (I guess its universal) have a tendency. We are very interested to know what foreigners think of our country than what we do ourselves. I am no exception. So when I read that a NY Times columnist wrote a book on India, (with globalization thrown around it!) you bet I was interested to know more.

So I did. Thomas Friedman is a three-time Pulitzer prize winner and one of the best American columnists(My top slot goes to Paul Krugman). And the first thing that strikes you is the amount of effort that went into his book. Authors worldwide have this tendency to use a lot of anecdotes and less of sound research into their columns/books (Yours truly sure has). Not Tom. He has traversed Bangalore in India to Dalian in china to Taiwan to what else. And the quality is manifest in the book.

This book is about history of globalization in the twenty first century (History? an awfully short period at that!). Tom identifies ten major happenings that leveled the playing field.

Some of them are damn interesting- Netscape IPO is one of them. He argues the free distribution of the first browser has flattened the information field. Organizations could no longer have a monopoly over them.

Blogging has a mention. He argues that people no longer have to yell at their televisions to get heard. They got a medium. Also the proliferation of online journalism means the reach of journalists is no longer the function of the size of their daily, but purely the quality of research they put- sooner or later they get a big audience.

There are thousand other things I could write (some of them like outsourcing is too clichéd!), but reader, get yourself a copy today. You can have a tab on this world even if you have just woken up from a long slumber, as long as 5 years!

Recipe of a diversity curry

2005-10-05T11:20:00.000-07:00

We had our first Designing Work Organization (that’s an awfully complex title) class. Professor Anjani Kumar is a former VP, HR dept of GM with 30 years industry experience. Bless his soul. We need more mangers and less academics as professors.

The first assignment is to cook a diversity curry i.e. a diverse team of ten members each that simulates a work place, come up with a viable project proposal and present it. As the author is a rare commodity, a south Indian in this northern city of India, he’s in a happy situation where three teams want to sign him up. At last he succumbs to the charm of Nitika-tikki-Nagpal.

What happens when there is an incentive for coming up with maximum diversity? I think we will all cook up a diversity curry in the coming days. Guys who have stayed put in Delhi, calcutta for a few months may become the ‘residents’ of those cities, guys who have done mechanical or comp science engineering may become manufacturing or IT buffs, guys who are aged 21 years,11 months may become 21 and those with 22 years 1 months, 23. Plus a host of innovations I couldn’t think of. Ah, how humans respond to incentives! (I read a book, Freakonomics recently. It talks of this theme)

I sometimes try to put a proactive face, but I am a lazy chap; too lazy to even apply for institute committees when it called for applications then. Now, I have responded to a couple of Expression of interest emails (industry interaction committee and media relations). It’s better late than never. And it’s better to get rejected than not try. I’ll bore you to death with more such clichés in the coming days.

Only the big apple gets hit

2005-10-04T09:14:00.000-07:00

It gives me a pleasure that some of my friends take my blog seriously and pull me up for writing not-so-good-things about IIM. Thank you. But why do I write only those and neglect a thousand good things about this institute?

Americans, I would say is the most self effacing race on earth. For the thousand good things they have done to this world, they only pick up the occasional bad things and laugh at their own follies. What does this do with my question?

My point is, mature institutes, like mature nations and individuals, know their strengths and weaknesses. We don’t have to cringe about our shortcomings, but neither have we strut on our good things. If IIMs and Americans gloat on their successes, the typical response would be ‘Why not? After all they are…’

My mom is a BSNL engineer, complains about the unethical practices of reliance telecom all the time, but that doesn’t stop dad or me from buying Reliance shares. Why? For all the bad things reliance does, the bottom-line is profits.

What is the bottom-line of IIM? It is not the infrastructure, faculty or location; a lot of Indian B-schools have them, thank you. The bottom-line is the talent it attracts. Students pass out of IIMs, make a name for themselves and build goodwill for the institute, companies get attracted like bees, and so does talent, year after year. It is a virtuous cycle.

As long as this happens, not a thousand bad things I write (are they that bad?) would make any difference to this institute. That I write what I do is only natural. After all, only the big apple gets hit. And IIM is one.

Note: I will try to make my future posts less pungent, but please, let me take names. After 10 years, if I see my posts, I want to see sahay. Mr.X won’t ring a bell!

What is the similarity between operations Mgmt. and Cow?

2005-10-03T09:23:00.000-07:00

Once upon a time lived a teacher, lets call him Mr.X, who was very good talking about cow. He used to teach children ‘Cow is a sacred animal. Cow gives milk and dung and host of others….’ An inspector who visited the school at that time was suitably impressed and recommended promotion for Mr.X.

When the same inspector visited the school next year, he found Mr.X teaching the same cow to the same children. An annoyed inspector asked Mr.X to talk on coconut tree instead. Mr.X thought for a moment, started ‘Coconut tree is a tall tree. Tethered to it is a cow. And Cow is a sacred animal….’

I thought this was a witty prank till today when I met Mr.X himself, Professor Sahay. A learned man in his sixties, Sahay loves to talk spirituality, culture and you-guessed-it-right, cow.

So he did, started the class with a Sanskrit slok and then it was cow all the way. Psycho Babble: ‘Like a cow that masticates the food it eats, one should reminisce knowledge to retain it’. Operation problem: If 6 cows graze a land in 3 days and 3 cows in 6, how many days will one cow take? He promised more cow problems tomorrow.

I have met a lot of interesting Profs, and this one tops them all.

What can India learn from Bangladesh?

2005-09-28T08:45:00.000-07:00

What the hell, you might ask. After all, Bangladesh is a failing democracy, run by a government which cannot guarantee safety to the opposition leaders, madrassas corrupting young minds possibly with funds from ISI and Al Qaida, a government whose allies are Muslim fundamentalists who profess hatred against India and the west, what can India possibly learn from Bangladesh?

The recent UN human development report, which ranks countries based on infant mortality rates(IMR), female literacy, freedom and a host of other factors, has ranked India 127 out of 170 countries, way below Bangladesh. How a country which is economically weaker than India has managed to do so well socially? The answer partly lies in Grameen Bank, which is the first implementation of micro-credit in the world.

Mohammed Yunus, the Harward educated economist tried in vain to get the nationalized banks to lend money to the poorest of poor, and decided to start his own bank in 1983. Today Grameen bank has branches in 46000 villages and has lent over $4.5 billion, mind you, against no collateral, but has good debt recovery rates. It has stressed on women empowerment in a predominantly patriarchal society.

The results are for everyone to see. Empowered women tend to have fewer children, educate them, and are more responsible than their male counterparts when it comes to repaying debts. Bangladesh spends much less than India on education but boasts of higher literacy rate and lower IMR.

Does it mean there aren’t any micro-credit schemes in India? There are, but nowhere near the scale of grameen bank. Lending to women SHGs(self help groups) has proliferated, but the focus is still on trickle-down approach, like the much touted Bharat Nirman scheme with a cost of, hold your breath, Rs.174000 crore. There have been such schemes in the past (every time a PM visits NE region, announces a multi-crore deal). The premise is simple. Investment generates employment and other benefits like literacy and social benefits accrue due to money multiplier effect, the basis of Keynesian economics. But it has failed miserably. Why?

The potential for corruption associated with such expensive schemes is not the reason, but the very fact that our systems are so inefficient that the money allocated for spending on such projects are returned to the exchequer. ET ran a story of how Rs.5000 crore money collected for sarva shiksha abhiyan, by imposing a 2% education cess on goods and services, remained unspent even after one year of announcement. So is the case of Bimaru states returning the money allocated by planning commission. With such a history, Chidambaram need not worry about raising money. They are rarely spent anyway.

Lending tiny amounts is not cost effective and the government should do more than exhorting public sector banks to lend without offering sufficient incentives (to my knowledge) to do so. Putting money is alright, but the government should put money where the mouth is.

Home sweet home

2005-09-24T23:16:00.000-07:00

Ah, finally home. It’s a nice feeling, isn’t it? After three months of dog work in a secluded place.

The flight was a hop- Lucknow-Delhi;Delhi-Chennai. And I didn’t had to disembark at Delhi. I got to see the activity in the flight before the passengers board – airhostesses with their quick touchups and lipsticks, an army of men doing what I thought was cleaning- very amusing indeed.

I had to put up at hostel for one day as I’d taken the apex for 24th instead of 23rd and couldn’t pre-pone it - I couldn’t get a refund. It’s tough to spend a day at IIM doing nothing, I MEAN NOTHING! So I went to the library and flipped through one Principle centered Leadership, by Stephen covey. Have you read his 7 habits of highly effective people? It’s a must read. This one was too similar to that. Got bored in third chapter itself.

Tried to get one book, Freakonomics, suggested by one blog friend (new avatar of pen friend!) Couldn’t get that. I’ll try when I get home.

Talked to my sister who is in London via voice chat. I am a little conservative, but I must admit that the technology is fabulous.

So if you think I spent the day usefully after all, you are mistaken. For most part of the day, I was counting the minutes. Everyone had left the 23rd afternoon itself. To rub salt, there was my special room mate who kept telling me that I have the entire hostel to play the next day. I asked him to get lost but alas, he didn’t get the cue and continued rambling about how lucky I am to get such a wonderful opportunity. He got the harshest verbal thrashing of his life.

Well, I try to make the place come alive wherever I am, but I do have this nasty temper. Hey, there is a limit to even banter, isn’t it? I was a little sad to having him leave with the sourest of moods. Have a nice vacation, mate. And don’t think about me.

Why do I write serious stuff?

2005-09-24T23:13:00.000-07:00

I am not a serious guy. I crack wits all the time, and sometimes I’m the only one who laughs. When others do laugh, sometimes I get the feeling that they laugh at me, not my jokes. And I had no way to check. Till I started blogging.

When you like my write up, you come back, don’t you? It’s in a way, in psychological terms, self monitoring. So I started mimicking calvin and hobbes (I’m too small to have a style of my own). And writing wit is a very tough job. An occasional post may come out good (like manac presenta(sham)tion); doesn’t happen all the time.

So why not write serious stuff to fill the gap? What should I write? Psycho babbling (like this) all the time will only drive you away. I have this USP, reading editorials. I think I started this much before the gyan given by TIME or IMS or whatever. So I started choosing a topic, write whatever I had read on it, and give an occasional opinion (as if I am Alan Greenspan).

How does it help? One, it helps me refine what I think about that topic. Two, it gives me a little satisfaction that I share serious stuff in simple digestible words (I hope).

What can you do? I don’t ask you to post comments all the time, but I do ask you to comment on serious stuff. May be you can tell me what I haven’t thought on that topic.

Footnote: When you read this post, you may get the feeling that I AM A SERIOUS GUY!

Term I ends today

2005-09-23T06:29:00.000-07:00

It seems like yesterday that I was vegetating at vinay’s (my best friend) house when a mail that said ‘very urgent’ (regarding IIM admit) came and put my career in an F-1 track. The term I (first of six) is over already.

Lucknow is a place I’ve never been, met and acquainted with colorful and gregarious north Indians, started doing things (like blogging) which I am not sure I would’ve done otherwise, and found things about myself which I never knew before.

I know the purported air that surrounds us, the mixture of admiration-envy-indifference the society attaches, the expectations of companies…. Our life will never be the same, will it?

I came here with modest expectations, finishing the course without hiccups, build a few good friendships, get a reasonably good job, and on the whole, enjoy my stay here. So I don’t find the rationale of crossing the line in the exam hall and getting a better CGPA which some of my more ambitious peers share. This is not to suggest that I’m the most perfect of them all. I have done it before, and never felt good afterwards. I hope I never find any situation so desperate as to cross the line.

Talked about economics and operations right? What about the other exams?

IT Management

The prof is a little weird. Gives a 3 part question
Part 1- Write a question
Part 2- write the marking scheme
Part 3- write the answer. Great. I was so tempted to give a question, ‘what is the full form of ITM’ for 5 marks.

Organizational Behavior

We had this question. Write the precise title of your project and write the objectives and findings. Alas, none of the other members of my group knew the exact title, though most of them did contribute to the project work. This was the case in other groups also. I heard a lot of ‘title, title’ murmurs in the hall. I found it almost funny.

Outsourcing: Is India stealing U.S jobs?

2005-09-21T09:08:00.000-07:00

Yeah I know. It has become such a clichéd topic that every tom, dick and harry (another cliché!) writes on it.

Just the other week Government of India has approved IA proposal to buy 43 planes from airbus at 2.2 billion USD when Blair came to Delhi. This comes on top of Air India plans for 50 jets from Boeing for $6.9 billion; private airlines like kingfisher and Spicejet plans worth one billion dollars each for Airbus and Boeing respectively; plus options for many more. This doesn’t relate to outsourcing. Or does it?

For the entire cry over India and low cost countries stealing jobs from the west, every jet Indian carriers buy creates hundreds of jobs in these countries. With airlines like Northwest and Delta airlines filing for chapter 11, others barely managing their existing fleet, the two majors had come under severe stress to stay in business; till the flood of orders from the land of Bangalore.

How true is the paranoia of outsourcing? AT Kearney estimates that for every dollar US put in India, it gets 1.12 dollars by cost savings and India gets 33 cents. The increased profitability means more money to be invested in new ventures, more returns for shareholders (70% of US households invest) and more employment generation.

During 1980s when Japanese were buying a lot of real estate in US, there was a great outcry. That fizzled out. Only now the threat is real, looking at the way the dragon is spreading its wings. The threat is both for India and US. What could be done?

It seems almost impossible to compete with china in low cost manufacturing. But India can compete in a different turf. Cheap brainpower. The auto ancillary industry, which involves designing and auto cad are demonstrating that they can more than match the dragon. Bharat forge’s recent US and European acquisitions are worthy of note.

Where does US come here? US has the technology, India with its engineering professionals represents cheap but skilled labour. It is easy to see one plus one is more than two.

The success of any economy lies in the ability of its companies in moving up the value chain. The pharma sector, which has long been thriving on reengineering and poor patent laws, has started putting a lot of money in R&D. So has software, which has moved from call centers to analysis and research. Proponents of outsourcing assume a zero sum game. India wins, US lose. The whole economics is based on scarcity.

Scarcity is not in the pie, it’s in our mind.

Term I- End term exams start off with a whimper

2005-09-20T09:04:00.000-07:00

Economics paper was designed to be written like an economics paper. Write the economic dimensions of so and so case. Write about how tax increases effect on the government exchequer. I could have studied operations management thoroughly (sigh).

Not that it could’ve made any difference to my performance efficiency though (operations is over, damn it siva). It was a shade better; engineers prefer maths to theory, don’t they?

Adhiraj-I-won’t-write-the-name-Banerjee does it again! I thought human beings were so narcissistic that the first thing they write on any paper (not just the answer sheet) is their name.

All blogs are blocked within IIM. Worse, all blogs are put in the same category as porn. Blocking freedom of speech? Not that it will stop the author anyway.

Psycho Babble II

2005-09-18T01:50:00.000-07:00

Don’t get drowned in pressing things

There are always reports to be made, presentations to be done, textbooks to read. There are always a countless things to do, and they are the most inviting. Why? They demand action, they are NOW! DO THIS. It is very easy to get drowned in them, lose focus of what you really want to do, end up firefighting forever. At the end of the day, you may get satisfied with what you have done today, only to worry about what’s to be done tomorrow.

So how can we break out of this endless cycle? We can always find time to invest in ourselves. We can devote time to do two things- what we feel good, and things that will do us a lot of good.

First one- How often do we consider doing things which we really like, be it as simple as novels, sing, paint, write or whatever we are good at. What stops us from doing it. One of my friends asked me how I get time to blog amidst my busy schedule. Well, you read because it shows well on your acads, you do projects because your prof asks for it, (may be bath and brush because others ask you to!), what about giving one hour for yourself?

Second one- Consider reading papers. How much time do we devote per day, and how frequent do we do this? How about calling up our friends and relatives, investing in people?

It is easy to pass them on, procrastinate. These are things which don’t say NOW, though we all know the benefits we get from them, be it hone your skills, increase knowledge base or get benefits from ‘emotional deposits’ (to quote Stephen covey).

So why do I write blog? I need a little space for myself, but more importantly I CRAVE FOR A LITTLE PAT ON THE BACK! Heck, everyone do.

Lastly, hmmm.. Read the first line.

What is a self analysis test?

2005-09-17T06:54:00.000-07:00

Long long ago, the rishis wandered Himalayas and did tapas to find about themselves. Fast forward 2005; we are doing the same in a computer that too in one hour!

There are a lot of heads-personality, group-dynamics, leadership etcetera. All on a 6 point scale – given a situation you disagree- strongly, moderately, slightly, one neutral and three agree.

How are the questions? There is one test- how good are you at building a team?
The questions are like this

I encourage team members to balance autonomy with interdependence among other team members.

Hmmm… I guess I slightly agree.

I encourage the team to achieve dramatic breakthrough innovations as well as small continuous improvements.

Hmmmm…

I diagnose and capitalize on the core competence.

I’m neutral (I don’t understand one word of this, damn it)

So how do you analyze the scores of these tests? Fast, the deadline is only two hours away. So I write, ‘…By analyzing the scores, I believe that I could make paradigm shift in the way I deal with people that will result in not just evolutionary but revolutionary changes that will help me handle the tempestuous challenges facing this world.’ Take that, sailu (prof)!

Footnote: There were a lot of printouts spewed by the printer that people didn’t know whose score-sheet was which. Clement saw two score-sheets wondering which was his, took the one which looked better. May be this is what is called personality conflict.

Management Accounting presenta(sham)tion

2005-09-15T07:07:00.000-07:00

Well, this is easily the best presentation of all time. You have to see to believe how a Professor can make 20-25 year adults run for cover.

The whole affair was reduced to a viva-voce, and how I hate them! People come, customarily open the ppt, if you answer Professor Bansal’s one question, he says ‘Thank you’ and you are done. But if he says ‘thaenk youuu’, you know what it means.

Rahul-bubbly-avasthi strolls confidently, opens his company ppt, ‘Sir, Zuari Ltd is basically…’ ‘I know what zuari does. Do you have cash flow statement?’ Hey, we weren’t supposed to put them in ppt. How can you see those small figures in a ppt slide anyway?
Avasthi meekly replies ‘No sir. But..’. ‘Thaenk youuu’. Strike one.

Vikas Pasrija: Prof: ‘Do you have cash flow statement?’ ‘Yes sir .I do’. Oops! Downloaded the wrong file. ‘Thaenk youuu’. Strike two.

Amol: Sits in the last bench. Didn’t know that his group had been called. Runs to the stage. Irritated prof, ‘Are you not interested? ‘ ‘Ssss….Sorry’. ‘Alright. Show me cash flow statement’. ‘Hey. I was supposed to do group presentation’. Thaenk…

Myself: Goes to the stage. Blurts out, ‘Sir, mine is an exports company’. Prof retorts ‘Do you know the foreign exchange policy?’ Ha haa. Bach gaya.

Bandaru: Poor chap. Couldn’t find the file. Nervous Bandaru frantically searches the ppt in the cluttered desktop. (Imagine having 60 ppts with most of them having the same name ‘Accounting policies of so and so company’). Theank youuu.

Pranshu Gupta: She has the same problem as bandaru. Prof waits patiently. Not fair at all, Professor.

Gives a break. Everyone runs like hell to add cash flow statements, B/L and P&L statements.

Murphy’s law: If you perceive that there are four possible ways in which something can go wrong, and circumvent these, then a fifth way, unprepared for, will promptly develop.

Example-Puneet Bansal: Chap thinks he covered cash flow analysis, P&L, B/L.
Prof: ‘Can you show the company’s board of directors?’ What the hell.

I could remember only so much.

Learn to write a formal letter

2005-09-14T11:47:00.000-07:00

To
The unsuspecting reader
Wherever you are

From
Yours truly
My blog

Sub: Economics project presentation

Sir
Ref: Article ‘Market survey means freakin’ out’

With reference to the above, kindly refer to the below (oops! Here goes my formal letter)

As you may/may not be aware, my group had eco presentation at 18:30 IST at Class room 107 of one and only IIM L. The duration of presentation was 30 mins and 6 people shared the time.

We started with the definition and history of man made fibers viz yawn err… yarn and the like. The discussion then went forward to demand and supply for the past 15 years. Actually we didn’t have data before 2001. So we put the demand forecasted in 1990 for the next 15 years as the historical data! The international market vis-à-vis Indian ones were analysed (vis-à-vis is a term economics prof likes. So we peppered our presentation with vis-à-vises)

The group took off like a cat on a hot tin roof (sidhu! forgive me). Four people finished their part in ten mins. Make it long, make it long were the whispers on stage. Then came our own market survey which we forgot to take. Sounak didn’t disappoint. Simple strategy, slow down the pace of words. Soooo, ouuur neeext isssssue waaas……Good going mate. ‘In graphs, he used 47,13,8,9.5% pie chart distribution (when others used 80,10,10% drab distributions) to make it look real. Cute.

Cometh the hour, cometh the man! Yours truly comes last and makes a lasting impression (I wish). Agenda: Textile quota regime and government policies. 10 full minutes left.
Why not start with history of quota regime. My heart errr.. talk will go on ……

So what happens after ppt? Question and answer session. If no one is interested in questioning, why doesn’t prof leave us? ‘ Mr.Serious Sam, Why don’t you ask a question?’ Sam wakes up. Hmmm… ‘Sorry sir, I came late to the class’. That’s a good question.

At the end of these, all we needed was a lecture on communication from Prof. If anyone talks on communication again, I’ll die.

Yours whatever
Sivananth

Psycho babble

2005-09-13T06:14:00.000-07:00

So I’m here for two months. What have I done?

The going is the same as in college. Chill out the entire term, cram in the last week and those who do the most end up having the last laugh in exams. This is how the system works every where and IIM is no different.

What’s the point of doing this in IIM? I could’ve worked in Wipro, done well and get promoted in three years to a team leader, say. I could’ve made a more confident person, capable of doing something worthy in my field. Instead I’m doing some worthless courses that no one would use anywhere, churning out stupid reports that I myself wouldn’t give a second look and being extremely busy without being any effective.

So why am I here? Everyone says IIM is a cash cow. I once thought that it is so good a value addition that cash behooves the same. But I seriously doubt it now. It’s only that companies have this high esteem on us unworthy souls, give us those opportunities to excel which wouldn’t be given to ‘lesser’ mortals and most of us do excel. In psychology it’s called a self fulfilling prophesy. You become what others believe you are capable of.

All’s not bad. There is this IIM culture. It means you constantly try to learn new things that will make yourself more useful wherever you go. You take advantage of opportunities around you and go on refining your USP (the marketing jargon means unique selling proposition) and in effect try to live up to the aura that surrounds an IIM for the people outside.

I haven’t done much. I’ll try. So should everyone.

PJ (poor joke) of the day:

How do you wish god when he goes to office?
Khuda office!