Mark-to-market: necessary evil?

Your house is burning. It is causing destruction of value. Because of your burning house, neighbourhood houses are also burning. There is a lot of destruction of public property - telephone wires, electric poles, roads, water pipelines etc. etc. The local municipal fire tender is fighting the blaze, but is losing the battle. Then, in one fell swoop, the mayor of your town manages to solve the problem of value destruction. How? She mandates - the burning of a few buildings is no longer is classified as fire. No fire, no destruction of value. Simple!

This is of course an exaggerated example, but to me it seems fairly analogous to what the US Congress is trying to do by forcing the Securities Commission and the Accounting Board to change conservative rules for carrying the value of assets on the balance sheet. Agreed, mark-to-market accounting rules are causing banks to take massive write downs, therefore requiring equity infusions. But changing the rule just because it is no longer convenient seems to me to be a travesty of facts. As an investor, I would want to know exactly what value my assets currently have, if they were to be liquidated today. I should not be able to hide behind illiquid or opaque markets. Because if this loophole is created, there is no way of knowing where it will end. Who is to say that a few more Enrons / Satyams / Hexawares would not continue thriving? Today these rules are causing taxpayer funding of tottering institutions. But the absense of these very rules may not even allow the rot to show any symptoms. In the absense of symptoms, the patient (or the institution) could just roll over and die suddenly, with little warning.

The truth, however bitter, is infinitely more palatable than falsehood! I hope sense prevails all around and politicians do not create a bigger mess of the already humongous mess that is the credit crisis.

The ugly side of media

B-school placement season has just ended in India, and the media is full of ugly and inane stories on the fall in salaries on campus and the dramatic cut in the number of zillion dollar salaries. To me, this seems intrusive, misinformative and vouyeurism of the worst kind.
Firstly, there is something obscene in the media's obsession with salaries of freshly minted b-school grads. Speaking strictly from my experience, there is very little correlation between first campus jobs and eventual success in life. The placement process is so screwed up that the biggest factor in the decision making of a student is peer pressure and posturing. There is really no focus on area of interest, skills matching or and other long term parameter. I really think that b-schools should stop publicizing salacious details of pay packets, if only to stop the media's attention on short term and meaningless metrics of success.
Secondly, the poor students who are graduating this year are most likely under tremendous stress as it is - from family, friends, former colleagues and most of all their own expectations. Why gloat on their agony for this kind of stupid journalism? I just dont get it.

Chaman-e-bahar

My cute cousin (born and brought up in the US) primarily uses English as a medium of communication. On a recent visit to Hindi speaking relatives, she mentioned politely - "Aap ka chaman bahut accha hai". This had me in splits for quite some time. Technically, of course, she is absolutely right - literally translated, it means that your garden is very pretty. But having spent a substantial part of life in the hostel of an engineering college, I usually associate the word chaman with either 'ujda chaman' or 'chaman charlie' or the not-to-be-mentioned-on-a-family-blog 'chaman ch****a'.

There are quite a few Urdu words that are quite poetic and beautiful in their meaning (or even saying). 'Junoon' is one of my favourites. The English version (viz. passion) somehow just does not capture the madness or the obsession of junoon. Another quaint phrase is 'nosh farmayein' (try /sample it). One of the abiding memories I have of Ustad Bismillah Khan (on an interview on TV) was his use of 'Ama miyan', which somehow captured a lot of warmth and grace in it.

BTW - I did not know till some nifty searches on wikipedia that Urdu itself has its roots in the Turkish word 'Ordu', which means army encampment. The language started in the encampments off the Red Fort in Delhi c.1500 AD and was called Zabaan-e-Ordu (the language of the Urdu bazaar), soon to be shortened to just Urdu. Strange that something so poetic and charming has its origins in the violence of the military!

The Billion Perspective

With fiscal stimuli and bailout packages running into many hundred billions of dollars, the following perspective helps (courtesy Business Standard):

1) One billion seconds ago, it was 1959!
2) One billion minutes ago, Jesus Christ was alive!
3) One billion hours ago, humankind did not exist!

If you become a billionaire, and spend Rs. 50 every second of your life, and not earn anything on it at all, you will not run out of money for 50 years.

Amazing!

The stimulus panacea

Going by conventional 'wisdom' (an oxymoron if I ever saw one!), there is an easy solution to the world's current ills. 'Stimulus' and 'Bailout'. To me, this looks analogous to an easy cure for alcoholism: whisky and vodka.

Real estate 'developers' in India have been very busy developing their (undeclared) bank accounts at the public's cost. Having dealt with a number of them myself, they seem to me to be cheats to the last guy - exorbitant pricing, late construction, totally unethical behavior are not just rampant, they are even expected by the consumer. They live by the maxim - what's mine is mine and what's yours is also mine. Their demand, therefore, that the government break laws and allow them to build more crappy and super expensive stuff (as a 'stimulus' you see), strikes me as the pinnacle of venality. Or look at the media industry. When the times were good, they were raking in the advertising dollars. Now that the economy is slowing down, they run to the government asking for 'stimulus'. Or infrastructure players (a certain airport developer comes to mind) who have asked for (and got!) higher consumer cesses in a manner which is illegal (according to the original contracts), unethical, and against business principles (oh, people not flying? simple way to get them to fly more - charge them heavily to use the airport!! Duh???)

This is a happy marriage of capitalism and socialism: capitalise all profits and socialise all risks. The fact that there is a huge moral hazard at play seems to escape everyone. Hello? I thought that risk was an essential cost for getting return. Business cycles were an undeniable part of life. But suddenly I find a slew of 'expert economists', abetted in no small measure by the media, sprouting out of the woodwork, expounding on their interpretations of Lord Keynes' theories.

To me, this is nothing but avarice, pure and simple. It is not my case that genuine government intervention is not required in industries which are suffering for factors outside their control. Export oriented industries for example (textile, gems and jewellery, fisheries) are having to lay off thousands and thousands due to events in other geographies. Help in the form of temporary loans, tax relief etc. is very much in order. But please, let us not allow all kinds of fly by night operators to pile on and grab taxpayers' monies in the name of 'stimulus'.

What we need is more accountability, and an ability to take the rough with the smooth. Not 'Bailout'.

Joker in the Pack

I finished reading 'Joker in the Pack' today (actually that is a mis-statement). I began and ended within 3 hours.

This is a book jointly written by two very recent IIM alumni, and since a) I got a lot of mixed comments about my earlier post on the shoddy quality of IIM life books and b) since this is a half decent book, I humbly recommend this book.

Please dont expect any fundamental insights about life, or any masterpiece of literature. Instead, this is a brutally unvarnished, picture perfect mirror of daily life at IIM Bangalore. The book is entirely like its protagonist, a 'fighter' who comes out ok in the end. It is so accurate in its descriptions of places, people, processes and (above all) placements, that it brought back bouts of nostalgia :-). Long live IIM Bangalore!! (and its survivors)

Chappal maro campaign

I am scarcely able to keep my temper when I hear of the latest shenanigans of the Sri Ram Sene. Their utterly logic-less, cowardly (and probably impotent) chief has become a talking head and a spouter of 'wisdom'. I do not want to give the a**h*** any publicity whatsoever. Even taking a cynical view of things, I think this guy is the prime example of the virus that will eat this country away. He (and his ilk) needs to be eradicated quickly, clinically and remorselessly.

I would love to personally throw my dirt smeared chappals at this guy, but since I am not in his vicinity, I can do my bit by supporting this campaign. Long live pubgoing, 'loose' and 'forward' women!!

Beautiful Kashmir III

The last instalment of Gulmarg photos (courtesy Economic Times)

The cable car, general scenery and a sunken truck:

Caught in the middle

Statutory warning: the thoughts in this post are a bit muddled.

Today we part fired our car cleaner. The guy was taking life very easy despite earlier warnings, and today the wife asked him to stop cleaning (or pretending to clean) her car. The guy protested a fair bit, and in his ramblings, mentioned that he was cleaning only our cars, that he had a job which gave him holiday on Friday, and that he should be given advance warning.

It so happens that the latest Perry Mason mystery that I've finished reading had a character who became rich by being a prospector in the Klondike. He lived a hard life till he struck it rich by the sweat of his brow. It kind of brought alive the passion of life in the early history of America - a true meritocracy where one made it (or did not make it) depending on their own skill / luck / hard work.

These happenings set off a chain of thought in my head - the car cleaner will now look for something else to make up for his lost income. And then I thought, this is what most people in our country actually do - try to figure out what will make them more money. Whether you take the bottom-of-pyramid guys like the aforementioned car cleaner, or scions of rich businessmen. Of course, it is a bit unfortunate that the former do this to fulfil their basic needs for food and shelter, but the point remains that a very very small percentage of people actually really care about holding down their jobs (which they may or may not like in the least).

Having observed various acquaintances in tier II towns, I find the same trend. No guy from any rich family, or a family that is not historically highly educated, that I have met ever spends time thinking about which job to try and get - they spend their time thinking which business they should be doing - how can they create wealth. In a perverse way, this is true for the very poor also. Only the middle class dude builds his entire life around, and indeed even defines herself, by the job they are holding.

The removal of this mental restriction from the educated middle class minds, in my humble opinion, will set the stage for a truly booming and inclusive economy. It will also possibly lead to more satisfying lives for all of us.

Beautiful Kashmir II

More pictures (from our camera this time).

Alam's dad's home - we really basked in the warm hospitality

Dragon tree next to the house

Multiple layers of clothing - brrrrr

Chai stop

Enroute to Gulmarg

Beautiful Kashmir

Photos from a trip at the end of 2008 (courtesy Juhi and Alam)

The beautiful Dal lake:

Mr. and Ms. Pathan:
What doesn't kill me makes me stronger :-)
The snow was thicker than 4 feet!

Thought on mortality

Suppose my epitaph says: He did nothing spectacular

Would it be complimentary (ie for this blog) or derogatory (ie the literal meaning)?

Watching the watchmen (or commenting on the commenters)

One thing I have perused religiously is the 'discussion forum' at the end of each article on rediff.com. These learned fora for knowledgeable, measured and gentlemanly debate and discussion never fail to either make me guffaw or cringe in disbelieveing irritation.

Here is an interesting read on the phenomenon: http://www.rediff.com/getahead/2007/oct/24sidin.htm

Names that delight

I love Russian names. They allow me to rollllll my tongue over each syllable, and enjoy the sound to the fullest.

Example: I would love to live in Vladivostok. Vladddd - veeee - vostokkkkk
Or be friends with Anastasia Myskina. Mysssss-keee-na. Or Kouuuur-neee-ko-vaaaa
How about Oleg Deripaska? Dereeeeee-passss-kaaaa
And best of all: Yelena Schvelenko

Other suggestions welcome

Tiger

My first post in the-year-of-redemption-that-never-came aka 2009 is thankfully about a good thing. White Tiger.
I must confess at the outset that from the broad outline of the story, I expected this to be a preachy, bleeding heart kind of book. It won a Booker? Oh, it must be reaching out to the Slumdog kind of audience. How bad is India, how miserable its people (disclaimer: I have read Q&A but haven't seen the movie, so this is an immature and potentially baseless comment). Thinking so, I had all but given this book a miss.
Till I was handed over a copy by Mom, with a must read recommendation. The wife read it, and was all praises for it. So I started reading it too. And I was hooked!!
I could not put it down and had to finish it very very late at night. It is not preachy in the least. It is an interesting account of potentially millions of true stories that happen in front of, ahead of, even all around me. It makes me sympathise with the totally amoral protagonist. I root for him. I even identify with him.
I am ashamed about the totally true description of society as a chicken coop. I admire the author for getting into the head of the protagonist and writing what seems like a fantastically authentic account of his life. The best part about the book is that it is essentially a happy story. It fills me with disgust, and also with hope. Aravind Adiga fully deserves his award. May he win many more.
In real life, I hope my generation sees many White Tigers.

Misfortune

On annus horribilis, again: While I am happy to see 2008 go away, I try to put myself into the shoes of these gentlemen, and realize that I should be much happier than I am.

Consider Bjorgolfur Gudmundsson, former chairman of Landbanki and prominent Icelander. He was worth $1.1bn 9 months ago. Today? Zilch. Or Oleg Deripaska. Net loss in 9 months? More than $18 billion. To put this number in perspective requires a lotttttt of zeros.

And who takes the cake? None other than Mr. Ambani Jr. He has lost $30 billion in 2008 (perhaps more precisely, the losers are the poor twits that invested in the Reliance Power IPO or his other grandiose schemes!)
But as always, Indians are top of the list. Together, Messrs. Ambani (Jr. and Sr.), Lakshmi Mittal and KP Singh of DLF have lost $100 billion this year. That is equivalent to more than 10% of India's GDP. So how petty my troubles!

Check out the entire list here for some vicarious thrills

Finito

Finally today, 2008 comes to an end. A spectacular annus horribilis for many, just the ending of which brings a spring of hope in the heart.
I for one, am quite pleased to see the year end, and I fervently hope 2009 is much better. Perhaps it is futile to think that the completion of one revolution of the Earth around the Sun (from an arbitrary starting point, to boot!) will change anything. But a new year is always a good time for cleaning up the slate, making new beginnings, and letting go old misfortunes.
I dislike 2008 for many reasons, but primarily because I wasted it. I just went through routine the entire year, and truth be told, was happy to be swept by inertia. No new beginnings, no exciting plans made, just plain humdrum existence. At the end of it, I have nothing to remember - except bad memories, perhaps. Work, family, fitness, finances, self awareness, social activity - 2008 saw all these aspects of my life deteriorate.
I hope to change all this in 2009. Setting myself 3 specific tasks, I will endeavour to make the year count, so that this time next year, I can look back and not feel lost.

Prescription for an epiphany

1) Go for a picture perfect holiday to Gulmarg (with lots of snow everywhere) with great friends
2) Return to a precious few days of holidays still left
3) Sit in glorious sunshine
4) Down a (large) can of beer
5) Read a delightful book

Realization soon dawns that god is in his heaven, and all's right with the world!!

6) Spread the word (through your mobile device) without leaving the sunshine

Vindication

Ratings agencies these days are not credible at all. Still, it feels good to be vindicated!
Check out this and this
And now I quote:
NEW DELHI: Blaming RBI's earlier tight monetary policy for contraction in India's industrial growth, Moody's on Friday said deceleration in
manufacturing output is a concern for overall economic growth. "Despite global market turmoil, India's central bank continued to tighten monetary policy until July...the moderation in demand is a result of the tight monetary policy settings in the first nine months," said Moody's Economy.com, a subsidiary of Moody's group. Pointing out that loosening cycle of monetary policy by RBI began only in October, Moody's said, it might not have led to an immediate rebound in domestic consumption. "As such, manufacturing orders from the domestic sector likely remained modest in November and December," it said. However, the RBI had yesterday stated that monetary measures taken by it were "appropriate". Industrial growth turned negative in October for the first time in 15 years, as manufacturing, which comprises around 80 per cent of the industry, shrank to 1.2 per cent growth in October from a whopping 13.8 per cent a year ago.

Query

Enough has been written and said about the events of last week in Mumbai. I have only one bit to add - something that puzzles me quite often.

If India thinks most of the recent terrorist activities on its soil have been directed by Dawood Ibrahim from his location in Karachi, why does it not assassinate the guy? What will it take - a focussed, small contingent, similar to a rapid strike force. A lot of other countries armies have such targetted armies (heck, even the inhuman terrorists did). Kill him. Whose permission are we waiting for?

Frankly, I feel embarrassed every time our PM gets on national TV and bleats about 'Pakistan's complicity' or Dawood Ibrahim's hand in 'dastardly acts'. Perhaps he can learn a thing or two from George 'Dubya' Bush - never mind all the fun everyone likes to make of him, he was able to ensure that there was no terrorist strike on the US since September 11, 2001.

We can choose to continue living (actually dying) like we are, or we can do something about it.