Thursday, September 25, 2008


As mentioned earlier, I quite enjoyed Rock On, the movie. This was primarily because of its songs. In a smart move, the movie ended (just before the credits) with an exhortation to the lines of 'Don't download the music, buy the CD'. This was, in my humble opinion, a spectacular marketing stunt. I was just making a mental reminder to myself to get the songs, and I determined then and there that I would buy the music instead of filch it off the internet.

Thus began my travails. Most of my music listening happens in the car, as I drive. I have only a cassette player / FM stereo system installed, so buying the CD was not really warranted. I have searched, so far, in no less that 4 music stores - and have not found the CD, let alone a cassette. The wife has tried obtaining the music too, unfortunately with the same fate. Dont know if it is luck or poor distribution on the part of Big Music (the company that bought the music rights of the movie)

I have since (shamefully, I must confess) downloaded the songs from the internet, and the wife has burnt a CD which she keeps in her car (she has a magnificent 10 CD changer there). Yet I am condemned to scour the FM channels for the songs of Rock On. I remain hopeful though!!

Wednesday, September 24, 2008

From the lair of Liar's Poker

This blog usually carries the (often opinionated and usually incorrect) views of the author. However, sometimes there are articles that capture succintly the essense of what the author wishes to communicate. One such article is this one, written by Michael Lewis (author of Liar's Poker, The New New Thing, Moneyball and other books).

Highly recommended! And good for a laugh today.

Monday, September 22, 2008

History in our midst

This weekend, the wife and I decided on impulse to soak in a bit of the culture that surrounds us, which we always overlook. So we stopped by the 700 year old Tughlaqabad fort right in the middle of the city. And were amply rewarded for our efforts. The pictures (unfortunately taken only from a camera phone) tell a much more eloquent tale:
The fort was built by Ghiyasuddin Tughlaq in AD 1321. At that time vast and powerful, it encompassed an entire city within it, including water tanks, palaces, and the commoners' dwellings. The tomb of Ghiyasuddin, his wife and son - the (in) famous Mohammed bin Tughlaq - still lie in the fort in an exquisitely beautiful marble domed mausolem that is surprisingly very well maintained. It truly is an 'oasis of peace'. Highly recommended to those in / around Delhi

Sunday, September 21, 2008

The end of capitalism?

One aspect of the much analysed cataclysm in the financial markets that bothers me is the implicit admission by the US administration that capitalism is dead. When the times are good, the capitalist makes money. When the times are bad, the public bails out the capitalist with a mega size cheque. Ok, this is an extreme statement. The public is buying the junk that is killing the capitalist. Actually the public is doing it so that 'markets can function'. Well. Hello. As per me, this is also part of capitalism - creative destruction needs to happen. It must not be stopped.

Per me, some of the consequences of the US administration's actions will last a lifetime - a) the world has seen the birth of the largest market manipulator ever - the US government. Ban short sales. Pour in the billions. Go after sellers. Where was this concern when firms were levering themselves up 30 times? (I kid you not - Lehman had $600 billion of debt, and $26 billion of equity!!). I wish I could get the same treatment - I will lever my meagre networth 30 times, make money when I can, and if I lose it all, I will look forward to Uncle Sam to capitalise me. What this tells every speculator is that everyone loves a rising market. So go ahead and plunge!!
b) who ultimately pays for this mess? Partly, the US taxpayer - he gets taxed more so that the US can fund its GIGANTIC fiscal deficit. But ultimately, 'Helicopter' Ben can just print more US dollars to bridge any gap between revenue and expense. This depreciates the dollar, screws exporters in (for example) India, spikes oil (and other commodity) prices, fuelling global inflation, so again screws India, and reduces the value of Asia's massive dollar reserve holdings (screwing, yet again, good old India).

I still think that the market will win out in the long term - such market manipulations will postpone the inevitable in the short run, but in the long run we will still see the necessary de-levering required to restore balance to the markets. But in the long run, we are all dead. So let us leave these minor problems for our children.

Wednesday, September 17, 2008

Bitter medicine

I wrote about the need for character in these troubled times, and hours later 'Helicopter' Ben obliged (would love to claim some credit for it!!). The US Fed has (rightly and bravely, in my humble opinion) ignored the 80% probability of a 25 bips rate cut that bond traders were betting on, and kept rates unchanged. While this probably means more pain for beleagured over-leveraged entities (like AIG?), it is good for the markets in the long run.

If I remember right, this (and the decision to let Lehman sink) is the first time that the Fed has signaled that it is walking away from bailing out failing institutions using taxpayer's money. This is good since it removes the obstacles from the forces of capitalism's 'creative destruction' - weaker firms will fail, painful de-leveraging will occur, and the business cycle will continue. Certainly this means more pain in the short term, but the writing on the wall is loud and clear - if managements of financial firms suffer from the same hubris or lethargy in dumping toxic assets / raising capital that Lehman did, then they too will suffer. This is good because it will prevent the buildup of insanely easy credit the next time around. Prevent? Maybe not - but it certainly should make a comeback more difficult.

At the time of writing this, the Dow Jones index has greeted the fed announcement with a knee-jerk 100 point drop. Looks like the behavior of a sulky child to me.

Tuesday, September 16, 2008

Crisis and opportunity

By most parameters, we are bang in the middle of tough times. Bombs explode at will in our metro cities and kill and maim innocents every few months. Fear stalks every move, even an innocent stroll in a busy market. Two of the top 4 investment banks in the US (and most B School students' employers of choice) are history overnight. A lot of friends / colleagues / batchmates are out of jobs and the outlook looks bleak for a lot more. Cassandras are calling it the beginning of another worldwide great depression.

One cliche I have always heard is that the Chinese symbol for crisis is made of 2 parts - one signifying danger and the other opportunity. While current times do seem like they are loaded with danger, it seems very difficult to find the opportunity anywhere.
To find and exploit opportunities needs character. Where will we find character?

We cannot look for it in the government in India, which has tried to stem the scourge of terrorism but has not been very successful. We certainly cannot look for it in the home minister, who keeps parroting inane homilies every time there are lives taken. We cannot look for character in the shenanigans of the US Treasury or 'Helicopter' Ben Bernanke, who have tried to bail out falling giants, but are finding the going very tough.

That leaves us. All of us, Indian or otherwise, citizen or police, consumer or producer, have to show character and last out these tough times. Because, like all things natural, times will change, and the situation will improve. It is a question of riding the storm out.

Thursday, September 11, 2008

Wednesday, September 03, 2008

Aargh!!! Not another...

Another day, another irritant...

I woke up to this (courtesy Mint) - not my idea of a great start to the day.
In a nutshell, the issue is thus: India is suffering from a major power shortage crisis.  The only way out of this crisis is more power generation. The government has tried (for 61 years now) and has realized that it cannot build generation capacity fast enough. Enter private power producers. These guys will put at RISK (this is a term that ALL bureaucrats should be drilled with - in fact, there should be a separate section in the IAS exam on risk and reward) millions and millions of dollars, and produce electricity.  They will try to lock in long term offtake contracts that gives them adequate return for the risk they are taking with their millions. Electricity cannot be stored - if not used, it goes waste. For this reason, they keep a small percentage of power uncommitted so that they can sell it in the spot market to overcome any sudden requirements. For this, there is a market mechanism to determine rates that these producers get - it is a simple auction on an electricity exchange - the buyer sees prices, and decides if he wants to buy (if so how much) or no.

Enter Mr. Bureaucrat. He is all-knowing and all-powerful. He thinks he is smarter than the market. He is in addition, a bleeding heart. He says - from now, you cannot charge more than Rs. x per unit. He justifies it thus - How can an MPP developer sell power at Rs8 per unit while it is only costing him Rs2 to generate" The learned gentleman does not realize that there is a risk that someone is taking that needs a reward. In any case, how does he justify the cap of Rs 6 per unit?? So he is saying - you can make 3 times your money, not 4 times. I am the arbiter and judge of this, and not the market. This is because I am smarter and wiser than the market. 

Is this bureaucrat going to guarantee offtake? What if there is no demand for power, or no transmission capacity at a particular time from the power plant to the user? Then the producer makes electricity for Rs 2 a unit, and cannot sell it. So the money goes waste. Will this generous gentleman then assure offtake?

The net result - government intervention in pricing will kill private investments in power generation or power trading. India will continue to be condemned to live the life that its bureaucrats thinks she deserves. 

It would be comic if it were not so pathetic. 


I am writing this post from the all new Chrome - Google's new web browser. Right now (in ten minutes of use) I cannot figure out how it is different (or better!) from the Internet Explorer - except the fact that I need to re-install some plugins that I had on IE. 

Full report in a couple of days!!