Friday, February 29, 2008

Ways to Reduce Risk in the Globalised Financial Markets

Consider this. A person wants to achieve a particular goal. He invests his resources in the way of time, effort, and money, to achieve that goal. But, because there are many uncontrollable external factors affecting the outcome, he cannot be sure that his investments will lead him to his goal. So, if he does not reach his goal despite his investments of time, effort, and money, his investments will be worthless. The chance that this may happen is “risk”. Thus, in order to reduce risk, he must predict the uncontrollable external factors better and align his efforts accordingly. And that can be done by acquiring more information on the external factors.

Financial risk enters the economic system when companies decide to make financial investments in their businesses. These companies face the risk of losing the invested money, if their investments do not meet their goals. This risk is the fundamental financial risk of the economic system. All the other financial risks are “derived” from this risk. The risk that shares, bonds, mutual funds, loans, insurances, reinsurances, securitised debt obligations, commercial papers, and the more exotic instruments face is that the business investments that their money is ultimately funding might not meet their goals. For example, financial risk in the system may flow from the investing company, to the bank that lent it the money to make that investment, to the insurer that insured the bank’s loan, and finally to the shareholders of the reinsurer that reinsured the insurer’s insurance. And if the government bails out the reinsurer from its troubles, it simply passes on the cost to the taxpayers. But, in the very end, somebody has to bear the risk and pay the cost.

As mentioned above, in order to reduce risk, one must predict the uncontrollable external factors better and that can be done by acquiring more information on the external factors. In today’s globalised financial markets, four things complicate that process.

First, as risk flows from one entity to another in the financial system, as illustrated in the example above, it becomes more difficult to measure, especially for the entities that are farther in the chain. As the investing company is directly involved in the business project, it has the most amount of information about the risks associated with that project. But the successive entities have a decreasing amount of information about the same. Thus, they cannot predict the risk well.

Second, through a discipline named “financial engineering”, many financial institutions have been able to create mind-bogglingly complicated financial instruments by “mixing-and-matching” and “slicing-and-dicing” the underlying assets. Many a times these “assets” are nothing but some loans, such as subprime mortgages. It is arguable that the people that buy these exotic instruments have no idea about what they are really buying. Which leads to a scenario where nobody has any idea about which business investment his money is ultimately financing. And if you have no idea about what you are investing in, how would you calculate the risks associated with it?

Third, the actual risk gets exaggerated through the practice of speculation. Things may not be really bad, but the fear of losing money makes people overly cautious, which starts a self-feeding cycle that makes things worse. It’s akin to a bank-run, where a false rumour that a bank will go bust leads to a disproportionately large number of people claiming their deposits with the bank, which results in the bank actually going bust.

Fourth, and perhaps the most important thing that complicates the process of risk calculation, is that the financial returns to the individuals and the institutions “managing” the moneys are disassociated with the financial returns to the individuals and institutions that actually “own” the moneys, aka the end investors. For example, the returns that the asset management companies and their managers earn are completely disassociated with the returns that are earned by the investors employing their services. This leads to a moral hazard on the part of the asset management companies and their managers, where they start focusing on maximising their benefits as opposed to their clients’.

For these problems, I propose two solutions that will reduce the risks in today’s globalised financial markets.

First, instead of paying the financial institutions and their managers the same amount of money irrespective of their performance, decide a percentage of commission and pay them exactly as per the rate of return that they have earned on the funds managed by them. Financial companies and their employees would be a lot more responsible in making decisions about the funds they manage if their own livelihoods were at stake.

Second, create a stabilisation fund for each individual market. The amount of money in each of these individual stabilisation funds should be a pre-defined percentage of the total size of the respective markets. The percentage for each market should be decided separately, based on the amount of volatility that market experiences. This fund should be employed in the market when its regulators think that a speculative “bank-run” type situation has kicked in the market. This measure will greatly help in avoiding the collapse of financial markets and in providing security to the investors. The money for such a fund should be pooled in from the market participants themselves, on the basis of the fairness principle.

The above mentioned solutions strike at the roots of the problems facing today’s global financial markets , viz. inaccurate decision making by the employees of financial institutions because of the lack of an efficient reward system and high volatility in most financial markets because of the lack of a sane and stabilising player. I speculate that these solutions will help combat the issues effectively.

Thursday, February 21, 2008

BRAND EQUITY

Like me, do you get the feeling that our world view is a mosaic of different brand filters? Let’s consider a scenario:

Anamika meets Rajiv for the first time on their first date. Rajiv takes her to a coffee shop mentioning how he loves the ambience there. As they sit down, Rajiv places his cell phone on the table. Anamika checks the time on her watch and fishes for her cell phone from her bag and calls up a friend. Meanwhile Rajiv is checking out the menu stretching out his legs with his boots on. He steals a glance at Anamika looking cute in her pink top and jeans. Wearing his faded jeans and his favourite black shirt, Rajiv feels pretty comfortable on his first date with her.

Anything out of the place? Maybe not at first glance. Take a look again.

Anamika meets Rajiv for the first time on their first date. Rajiv takes her to a Cafe Coffee Day coffee shop mentioning how he loves the ambience there. As they sit down, Rajiv places his cell phone on the table, a Nokia N92. Anamika checks the time on her Titan Raga watch and fishes for her cell phone, a Motorzr from her Gucci bag and calls up a friend. Meanwhile Rajiv is checking out the menu stretching out his legs with his Woodlands boots on. He steals a glance at Anamika looking cute in her MNG spaghetti top and Levi's jeans. Wearing his faded Red Tab jeans and his favourite black Diesel shirt, Rajiv feels pretty comfortable on his first date with her.

The point is this. Have you ever had the feeling you were trying to possess things you didn’t really need based on promises that are intangible at best? That someone else was creating wants you didn’t have before? Welcome to the surreptitious world of brand marketing. I am talking about brands that have made us want to possess things we didn’t need based on what they said those things will do to us. “Eat this and you will stay slim”, “wear that and you will be the hottest thing around”, “spray this and you will be irresistible”.

That is not to say all brands are ‘evil’. A brand is a promise. A promise of either physical, emotional or(and) psychological benefit(s). And there are many brands out there that have lived up to their promises. What I am talking about is those brands that have told us we cannot be what we want to be if we do not use their products/services. A brand that tells a girl she cannot be an air-hostess if she doesn’t use their fairness cream, a brand that tells boys they are losers till they start using that brand of deodorant…..you get the idea.

We are all beautiful people and we do not need some brand to tell us we are not good enough. We are free people. Free to make choices…free to question things. We are all free people and we are all curious as hell!!

Curiosity is one of the most basic instincts amongst us humans. We all have wondered where babies come from, if the face on the moon is indeed that of an old man and if the big bang was for real. Each of us continuously questions the status quo and why it needs to be that way. It’s an exciting journey, one on which WE choose our thoughts and our wants, not someone else.

Saturday, February 16, 2008

Market corrections: US slowdown or ??????

The sharp corrections in the capital markets world over during January 08 are attributed to the concerns over a possible US recession and its spill over to the global economies. By now there remains little doubt that US economy is headed for a steep decline. First it was the sub-prime mortgage crisis and credit card defaults, now huge losses by Citi group and Morgan Stanley. The signs are getting clearer as the days pass by. Few will argue that this seemingly imminent recession will have its implications on other economies, both developed and emerging. They will too bear the brunt of US slowdown, given the interconnectivity of global economies in this liberal era. But no one seems to be sure as to what extent a US recession will hit other economies. Particularly for India, analysts seem quite positive. Most of them believe India’s domestic consumption driven economy will sail through this turmoil. Some even thinks India will benefit from a US recession as more jobs will shift towards India. Here lies the contradiction as to then why India’s bourses took a greater plunge than Dow Jones on concerns of a US slowdown??
According to financial market data provided by S & P, India was the fourth worst hit market during Jan08 with a correction of 16%. The loss was 12.44 for the emerging markets against 7.83% for the developed markets. 16 of the 26 emerging markets posted a double digit loss. Whereas the Dow Jones corrected by only 6.07%. This clearly indicates there is more to it than what meets the eye. Asian markets, it seems, are being played into the hands of western FIIs. Otherwise why would all asian markets rise and fall in rhythm? If the FII flows to India are at an all time high, so would be the withdrawls. It’s a natural cycle. So whether a US slowdown or not, markets will correct sharply in between scaling new highs. The 'Monkey business in village' story relates to the asian markets more now than ever.

Aamchi Mumbai - not any more ???

Allow me to move away from the heavy dose of economics to realpolitik.

The trigger was an article on CNN IBN which said that strong regional undercurrent is taking shape in Bangalore too. Well if events during the past few weeks in Mumbai are an indicator, I am sure that something similar is waiting to happen in Bangalore, Chennai, Delhi and other metros of the country.

I have never stayed in Mumbai for a long period, I have mostly been in and out of Mumbai (erstwhile Bombay). But I have definitely read about the character of the city, the resilience it has shown time and again. Be it the serial blasts in 1993 or 2007, Mumbaikars (residents of Mumbai) have always risen to the occasion without batting an eyelid. But the regional/ linguistic comments by some self proclaimed leaders and the disturbances that followed, have forced many people to think. The fact that such blatantly regional rhetorics went uncensored by other political parties (for initial few days) is more appalling. What followed was a national shame. Whats even worse is that the state administration allowed it to spill over. The nonchalance and immaturity of the administration doesn't even deserve a mention. Our forefathers had dared to dream about a unified nation, they had dreamt about the country INDIA and not the states. Whenever I will sing the National Anthem I will always remember that there is something that has gone wrong.

Punjab Sindh Gujarat Maratha
Dravida Utkala Banga
Vindhya Himachal Yamuna Ganga
Ucchala Jaladhi Tiranga


Maybe but Not anymore.

But being an analytical person, I tried to go into the reasoning behind the sudden regional rhetoric that are finding favor with the politicians. Not long ago, Delhi CM Sheila Dixit had remarked that "everyday 668 new people come to Delhi". The sums up the problem which Big Cities in our country are facing. The infrastructure has been stretched to the extreme, the culture of the city is getting affected, crime is increasing and many more ill effects of huge migrant population. But that calls for some brainstorming and not slogan shouting. Given the myopic politicians that we have been blessed with, it doesn't require an IQ of 150 to foresee the aftereffects of the regional rhetorics of Raj Thackeray. Politicians in other states are going to adopt similar stance and play on the insecurity of the ignorant and vulnerable minds.

Lets just hope that the ever abstruse "better sense" prevails over our politicians and their audience.

Thursday, February 14, 2008

Japanese test matches

My experience of solving a sudoku puzzle in the form of a cricketing metaphor. Hope some of you fellow cricket fans can relate to this.

Scrapping through a tough as nuts sudoku grid comes close to a Test Match experience on Aussie soil.The initial opening conjures up visions of a sheep-like Indian bowling attack of Venkatesh Prasad and Javagal Srinath trying hard for that opening breakthrough against a bullying Hayden and a resolute Langer on a cold Boxing day morning at the MCG. The sparsely populated sudoku grid seems to be jeering at your ineptitude like a thousand Aussies spitting curses at a boundary posted Indian fieldsman on his first trip Down Under. It is hell and you are living it.


And then, the joy of finally getting a number on the grid brings with it a calm reassertion of self-belief. Heh, we got started. One number on the grid leads to a few others, closely resembling an out-of-form Ponting leaving without troubling the scorers. A surge of confidence as the grid appears a little less menacing and the Indian fielders begin crowding around the bat thinking they'll run through the Aussie lineup in one session. Not to be, my friend, not to be.


A partnership follows as the sudoku grid unravels itself to hold mysteries unfathomable by your mentally challenged self. Self-doubts arrive in bigger numbers. Field changes, bowling changes - read that travelling to different parts of the grid in an attempt to see loose ends. Gritty thought soon turns into desperation. Time ticks on..the runs flow. Much head scratching, back itching and team discussions with the inner self. Images of an untiring Kumble toiling on an unresponsive first day pitch. And finally the breakthrough arrives. Hayden departs and few others follow in his wake. The grid starts populating fast.


And then come the tail-enders. These doughty digits represent the last stand of the grid. It is easy to mess up a grid you worked hard to fill in the smug overconfidence that underestimates these vanguard warriors. Insert more pictures of Mitchell Johnson and Stuart Clark pushing up an already behemoth Aussie total to even more imposing proportions. More itching before the grid's last shreds of resistance collapse.

1.5 Hours. On a sudoku grid. An Indian cricketer's Australian baptization. It's all the same.

Tuesday, February 12, 2008

India's thmpatic win against the aussies...

The win against australia on 10th Feb at the MCG established beyond doubt that India does have that potential to challenge the world champs on any kind of pitch. The fact that Sunday’s convincing win was after a long hiatus of 21 years on that ground is indicative of the strides Indian cricket has made. But then, talent has never been india’s problem. If one has observed properly, India has always had world class batsmen in its armory. Performance apart, Indian batting line up has always looked strong on paper. One would argue that I am looking at the wrong aspect wrt Sunday’s win. It was mainly due to some world class bowling by the India’s current pace trio Ishant, Pathan and srishant. Even harbhajan was quite tactful and showed some great cricketing sense. Ishant, in particular, has been in tremendous form throughout this Australia tour. He was instrumental in the perth test win where he scalped the wicket of inform Ricky Ponting in their second innings and set the tone for India’s win. I fully agree with this conclusion. I don’t want to take any credit away from this young yet tough breed of bowlers India has produced. Still I would say that batting is and will remain India’s stronghold for times to come. The main obstacle in way of India’s getting to top despite abundance of talent is their tendency to succumb under pressure. In my view India has had such solid batting strength as would make any target achievable on any kind of pitch or would consistently set 300+ target. But the same bunch has been found to get bundled out for less than even 150 quite often. It’s a common sight watching Indian batsmen finding it hard to play their natural game after India looses some early wickets. The consistent failure of the batting has put pressure on the bowlers to take the charge and often worked India’s way. But in the long run India will have to depend on its core strength. Since last so many years India has not been able to produce a single world class bowler. But many of its batsmen are among the top run grossers. Six or seven out of eleven would be having atleast one century in their name. even then it is not a coincidence that on one day they can chase mammoth targets but the next day they all r struggling at once. Indian cricket team surely needs mental toughening if they r to perform on a consistent basis. Had Ishant got nervous after being hit for 18 in that over or had Rohit or Dhoni crumbled when Australians were trying to make inroads after India lost 5 wickets, it would have been the same old story.
The professional cricket has evolved much. With the kind of cricket that the Australians are playing, you need to be physically and mentally very fit to push them from the top. Talent alone would not suffice at all.

Monday, February 11, 2008

Property rights in India

Microfinance initiatives in India are being seen as the next big thing in terms of inclusive growth. In terms of inclusive growth, any microfinance organization aims to provide financial services to rural poor (part of the informal economy) in a way that they can afford it and pay for it. Theoretically, the rural poor are being made to participate in the economy and partake of it.
The biggest challenge to microfinance initiatives, like any other enterprise, is to get return on investment. Typically such an initiative would function in many ways similar to a bank. However, the biggest challenge comes from pushing the poor to have enough savings and assets to repay their loans. The cost of financial transactions incurred can be recovered if the net savings go up. In the event that the net savings are low, any asset that the poor have is placed as collateral so that they can repay these loans. As is the case in India, rural poor save by funding their own enterprises or selling their produce to retailers/middlemen. Typically such savings go on to repay their loans over a long period of time. Yet, it seems to me that the business model is such that microfinance initiatives would stand to make a lot more profit if land/property rights were granted across states in India.
Around 28% of India's population lives below a common denomination called the poverty line. Around 60% of India engages in agriculture which only contributes 28% to the GDP. Land use is inefficient and often land ownership is ambiguous because of title disputes and a feudal history.
Amidst all this, one wonders that if the rural poor got land ownership rights and title deeds, such land could well be used for other purposes or even as secure collateral. This is certainly no pipe dream, considering initiatives of this kind have succeeded in a couple of states across India, particularly Gujarat. In this enlightening article, Swaminathan Iyer(of Swaminomics fame) writes :
"Yet, in one state, SEZs are coming up rapidly, with no agitations, no disputes - and hence no newspaper headlines! This is Gujarat. It already has five functioning SEZs, with 12 more ready to start in 2008.
The Gulf of Kutch is the only coastal area in India with low rainfall. Farming is tough, so farmers are willing to sell their land. The state government itself owns vast wastelands, mud flats and marshes along the coast. It has been selling these to developers (like Gautam Adani at Mundra), without displacing farmers.
Even in central Gujarat, where land quality is high, farmers have proved willing to sell. The pharmaceutical SEZ of Zydus Cadila has acquired 110 hectares, paying around Rs 10 lakh/acre. In other states, industrialists say they cannot get contiguous land through voluntary purchases: a few farmers will refuse to sell. The experience in Gujarat is that even farmers who say no initially will say yes if offered a sufficiently high price. Developers should pay this very high price to a few farmers and get on with the job. Why look to the state government for acquisition, which takes two years or more? Time saved is money saved."
As Iyer mentions, Gujarat's experience cannot be faithfully replicated in other states - say Bengal, Orissa. However, ownership of land allows a rural farmer bargaining power. The land could be sold, mortgaged or used in any way fit to push up one's credit. Land that remains in agriculture then needs to be efficiently used to push up yield - India's yield being only 30% of the average highest world yield.
As India's GDP grows, people inevitably move from the primary sectors (Agriculture, mining or foresting typically) to secondary (manufacturing) and tertiary (services) sectors. Accordingly the contribution of the primary sector to the GDP goes lower as a country's economy grows. As economics plays itself out, land ownership rights will be quintessential to allow the rural poor to move into other sectors and partake of a bigger piece of the pie.
I'll hopefully follow up with the kind of initiatives that could be taken to resolve land ownership disputes in the Indian context.

Sunday, February 10, 2008

Sky Diving - The Jumps (with Photos)

All excited - I got on the flight from Mumbai to Ahmedabad on Friday.
Was met by Sourin, Narottam and Harnish at the airport and we were
off to Deesa.
Met up with a few more trainees in Deesa - mostly from the army.
Nothing much to say about that night - don't remember much of what
happened as it was all wiped out by the experiences next day.




Got up early morning - had breakfast - and went to to the Deesa
airfield (with a slight detour as we lost the way and reached a dam
instead).





The winds were perfect - the weather was absolutely clear - just one
small hitch - our plane was stuck in Ahmedabad as it could not get a
take-off slot :-( -- then started a long wait - a few warm-up
exercises and another loong wait. Finally the plane touched down at
11:35 AM




By now the winds had become faster and all the first-timers were told
that we would have to wait till the winds died down and were to watch
the experienced jumpers and learn by watching them. To cut a long
story short - watching them was very informative - but by now we were
getting impatient and waiting for our turns. Finally I got my name
into the 7th Sortie - I was to jump second.


I was excited - got my parachute on (fit-chute) -- and was ready for
the jump. Soon I got into the plane with Surya sir and Narottam -
perfectly normal till now. Then as the plane started going higher - my
heart-beats started getting faster - I was actually afraid - it was
the beginning of a sheer terror an almost panic and I could not
believe myself - it was like one part of me is terribly afraid - and
the second part is looking on and wondering why he's afraid. We
reached a height of 3500' and Narottam jumped first - I got into
position - the position being keeping one foot on the strut of the
plane, the second inside and looking straight. I looked down - and
almost panicked. Surya sir tapped on my back and shouted 'GO'. Against
all instincts - against everything I ever felt - against my TOTAL fear
- I stepped into thin air and made the exit position.




Took a few tumbles and heard my parachute opening above me. As soon as I jumped
out the fear vanished (at least for the time being) - I was out of the
plane - I was safe (i.e. alive) and I was back in a state when the
panic was not controlling me anymore. I looked up and saw that the
lines of my chute were twisted as I had tumbled - I took hold of the
risers and pulled them apart to untwist - got my bearings and started
experimenting with the canopy - left turns - right turns - and finally
landed safely and nicely (about a 100m ahead of the target). It was
all amazing. But whenever I thought of the time I jumped I felt the
panic come back immediately - it was almost as if a fear was the only
thing !! I could not believe myself - on one hand I was telling myself
that I loved it had a lot of fun blah blah blah -- on the other hand
there was nothing but terror at jumping again.







Imagine stepping into that


I had brought the cash for the second jump thinking that I might go
for it if I enjoy a lot - I had enjoyed a lot - but found myself
making excuses for not jumping again - its too expensive - how will I
get to Ahmedabad - etc etc. However deep down I knew I was panicking -
I had managed to control the fear once in the air - but now it was
getting hold of me and I knew that if I did not jump again today - I
would never sky-dive again. I controlled myself again - paid the money
- asked them to get me on the earliest sortie possible. I took the
second jump not just because I had enjoyed the first one - but because
I had to control this fear.












I was on Sortie 11 - went up again with Surya sir and Jitin - again
jumping second. This time I kept calm - kept repeating the exit drill
in my mind - "GO - jump - slipstream position - 1000 - 2000 - 3000 -
4000 - 5000 - check". I fumbled a bit while coming into position - got
my wrong foot ahead at first - corrected myself and jumped at the word
"GO". This time it was perfect - there was no fear - a certain amount
of anxiety - but not the shear panic I had felt the first time - I did
not tumble - the chute had opened perfectly - I had time to experience
the flight - I tried 360 degree turns - made a full circuit pattern
for landing and landed safely. It was the most amazing experience till
date. Best of all I knew I had conquered my fear - I knew that now I
would be absolutely addicted to sky-diving. I was part of this group -
and not an outsider looking in.

















The entire experience was a learning experience - not just about the
art of parachuting - but about myself.
Photos below:



2008_02_09 Parachuting - Deesa

Friday, February 8, 2008

US sub-prime crisis and India

Disclaimer: All views expressed by the author have evolved out of analysis and might suffer from paralysis. You are free to take your stand. :D

The hot topic as it may rightly be called. Economists world over are busy number crunching the illusion fall( or may be coming down to ground reality) of banks under the term,"Sub Prime Crisis". Well for my dear readers who are like me ( need things to be simple to get striaght in head :)), the crisis relates to increasing number of defaulters and foreclosures of home loans in US. The sudden increase of defaulters has led to an increase in availablity of houses and hence the lowering of property values. The general life style of US is based on hypes and valuations, so as they say, take risks, you will spur and you will fall down equally well, but you will enjoy both.
The idea here is high risk loans which fell on the wrong side. Stocks, securities and properties work on valuation mechanism. The fall of value is directly related to demand and supply. There were too many MBAs diversifying the portfolio of credit lending to make the share of sub prime lending in home loans reach to a proportion of one fifth and all calculations failed when risk anticipated turned into reality. This was just to give a brief context on the problem at large.

The question is, how does it impact India and other Asian developing countries, considering that this is an era of globalization and US' Godliness has been diversified, however, it still remains to rule because of its high risk taking appetite.
Things which are bound to be impacted-
Impact on IT? Oh yes. I have been involved in this industry for sometime now and i can say that around 60% of revenue for most of the big IT companies comes from US clients and Banks INVEST on quality and technology in quest to go global. While sectors like energy and utlity and retail are picking up, banks still remain to be the big HUB of investments in IT. To add to it, banks outsourced a lot of processing to India, so BPO busines is BADLY hit. So, a) reduction in customers ( to an extent). Falling value of US dollar would mean reduction in profit margins for IT service companies. So, b) Reduction in profit earned and that drives stock values in simple terms. Suddenly, the organizations are crying for improving productivity, reason, bottom line is what can be impacted, they really dont have control on top line. I dont count it as negative though, its a balancing act. Anything that grows leaps and bounds has to come back to ground reality and normalize. So, probably we are maturing and we will do balancing act to diversify our client portfolio to diverse geographies and most importantly understand the value of domestic business and drive demand from local industrialists. IT impacts a major part of middle class population, their purchasing power and hence the domestic needs. IT is one of the best pay master for youngsters, so yes middle class will be impacted, they might not come on ground, but the luxuries will reduce.

Things which are bound to balance-
Well, i do want to thank Tatas and Birlas and Reliance. We will survive and will be impacted mildly( if the assumptions go right) in the game because they have invested in food, shelter and clothing business. We as a nation invest in steel, we manufacture cars, we build infrastructure raw materials, and we export clothes. And here, we dont look at margins only, we look at volumes and geographies. We trade with Sri Lanka, singapore etc etc( which IT is waking up to do now). They have made right use of globalization by diversifying their organizational business portfolio to keep IT a part and reinvest its earnings in expanding the busiess on basics which can not be ruled out for life. So, we come in business which trades in salt, grains, clothes, wire, phones, steel and since we are a poor uneducated nation, the economy at lower end does not know what US mortgage is, they never even had a bank account. How does it matter if US falls or awakes, we will still live. May be we will reduce our two cell phones to one because banks dont give us loan anymore, but then what the heck, we never had a phone to start with.

So, guys the answer is yes, we will be impacted. IT is not all that rich till US comes out and IT companies diversify their client profile by taking a hit on their profit margins. And sadly, these guys pay well, huh! BUT, i will love to call it a balancing act. This is about a bubble that bursts. We get slightly impacted, but our economy gets chance to diversify and decrese geographical dependency to make optimum usage of globalisation. Only sad part is, we react, we dont pro act. Never mind!! everything that happens over next two years will take us more and more towards sustainable growth and development, might be a bit slow but yes, steady. :)

Thursday, February 7, 2008

The American 'decline'

Interesting perspective on the American economic decline. To quote this statistic:

In his 2006 book "Überpower," German writer Josef Joffe makes the following back-of-the-envelope calculation: "Assume that the Chinese economy keeps growing indefinitely at a rate of seven percent, the average of the past decade (for which history knows of no example). . . . At that rate, China's GDP would double every decade, reaching parity with today's United States ($12 trillion) in thirty years. But the U.S. economy is not frozen into immobility. By then, the United States, growing at its long-term rate of 2.5 percent, would stand at $25 trillion."

Full text of the article here.

Friday, February 1, 2008

Sydney Chapter –ISB Class of 2009

Mita and Sarang and I met for the Sydney-ISB Class of 2009 get together yesterday. It was a rainy Thursday evening and we were tucked away in a Starbucks, talking about ISB life in general and sharing our excitement!
Compared to the massive get-togethers of Delhi and Bangalore, Sydney had a small one but we were very excited to meet someone involved with ISB living so close by! I am sure there are a few alumni in this city too; now we should probably catch up with them another time. It is cool to note that ISB links run far and wide and has only corroborated my faith in the international roots of ISB. I can only add the best is yet to come, when we are all one big party in I S B!