Why QE will not resolve the world's economic woes

Eight years back, the US sub prime mortgage crisis led to a global financial downturn. As many western economies went into recession, their central banks resorted to all available monetary tools to revive the economy. The immediate aftermath of the crisis led to a freezing of liquidity in the global financial system. As the US federal reserve reduced interest rates to near zero and announced plans to purchase billions of dollars worth of bonds (read: announced plans to print billions of dollars of currency notes), it was the obvious countermeasure to ease the financial system and prevent an economic crash. Eight years later, the interest rate is barely above zero. The stock market has had a multi fold rise bull market in the past 7 years. However, GDP growth is abysmally low. The situation is even more alarming in Europe where the ECB has brought interest rates down to negative, but inflation and GDP growth are hovering around zero.

Economics is one of my favorite subjects, The events in the last 7 years have defied most macroeconomic concepts that I have studied. 

• When a country reduces interest rates, its currency value decreases. Proven wrong: The USD has consistently and significantly increased in value against all currencies in the past 7 yrs.
• When a country's debt and trade deficit increase, its currency value decreases. Proven wrong again: US govt debt levels and trade deficit is rising at unsustainable levels, yet the USD continues to grow stronger.
• Lower energy and raw material prices will boost economic growth. Proven wrong: The crash in global commodities has led to grave concerns about global growth.

The world of global finance and macroeconomics is indeed strange. Anyway, let me come back to the topic of this post.

QE will not revive global growth
The past 7 years of QE (Quantitative Easing) has pumped trillions of dollars into the market, but resulted in very little economic growth. 3.5 Trillion dollars have been pumped into the economy resulting in GDP growth of around 8%. During the same time, the US stock market has risen by an astronomical 175%! This tells me that the money went into inflating asset prices rather than into real economic activity. Companies have been borrowing money to buy back shares, increase dividend payouts or other such measures to boost their share prices. Not a lot of money has gone into building facilities/factories, expanding capacity, and other such "real" investments in business expansion. The primary reason for this is that businesses don’t have long term confidence on the economy to make bold decisions on business investments. That is natural when an economy is recovering from a crisis. In a similar situation, countries like India, China or Russia will see the government take center stage in reviving economic activity through infrastructure and other projects. I am disappointed that this did not happen in the US. The government could’ve spent money on NASA, R&D funding, upgrading their military or improving the infrastructure. Even a developed country like the US will have opportunities for infrastructure improvements. Such activities will put money in people’s hands faster and in turn improve spending, confidence and economic growth. Perhaps political reasons constrained the government from stepping up federal spending. Basically, the government decided to rely solely on Monetary policy stimulus to pull the economy out of trouble, and refrained from using any meaningful Fiscal stimuli. To me, that is a risky move and could prove to be a costly mistake.

Future Outlook

The future outlook for the US economy is bleak. Loose monetary policy has its limitations and there is a lack of political will to engage in fiscal stimuli. The economy is set to start gently rolling down a slippery slope. 3-4 years down the line (maybe earlier), the slope will seem more like a cliff with dire consequences. Only two things can save the US economy: One: War – US engages in a major military conflict that can revive the defense and construction sectors, which will have a multiplier effect – or Two: A massive recovery in Chinese and Indian economies which can have a multiplier effect on the overall global economy and the western economies ride the wave and pull themselves out of trouble.

Frankly, the US will be much better served if the government takes up Fiscal stimulus measures to help the economy. If there is one country in the world that doesnt have to worry about increasing fiscal deficit having any impact on their credit worthiness, its the US. They will be "not smart" to lost this opportunity.

P.S.: I began writing this blog on March 10th after the ECB reduced interest rates further into negative territory. That move by ECB triggered several conversations within US about the possibility of negative interest rates by the US Fed - which is crazy! Recently I saw an article from Ben Brenanke that mentions the limitations of monetary policy and the need for fiscal measures. While my post is more generalized, Ben's article will have more specific details for those of you that are eager for such information.

2050 Predictions: Back to the Future

As an IT professional, the buzz word that is most widely heard these days is "Digital". There is a lot of talk about fundamental changes happening in business models across industries, powered by new digital paradigms like mobile, cloud, social, etc. Indeed, there are some amazing things happening. For example, life insurers are beginning to use FitBits and medical records to adjust policy premiums. Even more drastic innovations are happening in other industries like pharma and retail. Some of these innovations were unimaginable 10 years back.

This started me thinking about how rapidly our world is changing and the kind of things I will see in my lifetime. My father could not have imagined 'cell phones' when he was my age. Today, he has Facebook and Whatsapp installed on his smartphone. So, if you are in your 30s now, be prepared to experience things in your lifetime that you cannot possibly imagine right now. In this blog, I will take a shot at predicting some things that would happen in my lifetime. Hopefully I will revisit this blog after many years - If Google and this blog still exist - to self validate and have some fun.

By 2020:

• The world will see the next major financial crisis since the 2009 sub prime led crisis.
• US Social Security benefits will begin to be denied/substantially reduced for folks retiring after 2030
• Amazon Prime members can order McDonald hamburgers online
• Congress party will lose its second consecutive general elections and the Gandhi family will finally be dislodged from its leadership

By 2030:

• Cyber warfare will be a full scale division of any armed force - equivalent to the Army, Navy and Airforce. Major military conflicts will begin with cyber attacks first.
• Google will be the largest defense contractor for US military
• Cell phones will be embedded inside people's skin and we will all be a part of the Internet of Things
• All cars in developed countries will be driverless by default

By 2040:

• Arab states will run out of oil and their economies will be crippled. They will resemble parts of today's Africa.
• Solar will be the single largest source of energy
• First major military conflict between US and China
• After almost 100 years, nuclear weapons will again be used in a military conflict
• Life Insurance will be obsolete as genetic breakthroughs will predict health risks and life expectancy with great accuracy, making insurance unnecessary
• Genetic engineering will enable "designer babies" to be created for people who can afford it

By 2050:

• Man will have colonized Mars. Leading nations will have permanent bases and begin marking territories in the new "Land of Opportunities". Mars will also be a "hedge" for nations planning nuclear war.
• Genetically engineered human beings will be created in a massive scale by the Chinese government to create a superior race
• Majority of Earth will be free of pollution as the world will be driven by eco friendly renewables. Surroundings will generally be pristine except for poor countries.

By 2060:

• I will be 77 years old, so I don't really care :)

If you are reading this post, let me know your thoughts on any of the above predictions or share a prediction of your own.

Why the media reaction to Trump’s Muslim remarks is not justified

Disclaimer: As of today, I do not support any candidate in this presidential race. I am not even eligible to vote in US elections as I am not its citizen. This article is not a political view on the race itself. Instead, it a perspective on the reactions of the mainstream media and public figures.

Earlier this week, Donald Trump suggested a ban on Muslims entering the US. What followed was a widespread backlash in national and international media against his remarks, which were termed “racist” and “fascist”.

A couple of days back I read the article on Washington Post and watched the videos in which Trump made these remarks. What he suggested was for a temporary ban on Muslims entering the US until the authorities could figure out how to ensure the safety of American citizens while allowing immigrant and non-immigrant travelers into the country.
First of all, what Trump is doing is political posturing in view of the electoral race. Election campaigns are filled with candidates taking extreme stances in order to occupy mediashare and mindshare. This should not be taken too seriously. If Trump were president today, he will most likely not execute such an extreme plan. 

Trump’s proposal may not sound as extreme if there were to be a serious escalation in terrorist activity on US soil. Actually, Trump’s proposal has a historical precedent. During world war II, Japanese Americans – including US citizens – were incarcerated as the US feared an attack from imperial Japan. Incarceration of US citizens just because they were of a certain ancestry is a much more extreme step. However, it was deemed a necessary step at that time when the US faced grave dangers during the war.

Basically, desperate times require desperate measures. Today, the US is not in a desperate state. No president, even Trump, will execute an order to ban Muslims. But if there were to be another 9/11 type of attack, be rest assured that at a minimum all refugees will be put on hold. Trump’s remarks were aimed to invoke the worst fears of the public and make himself seem to be the candidate with the strongest will to keep the US safe. I believe he succeeded in doing that. Despite what the mainstream media may portray, the average person would agree with Trump’s views. Not many would tell you so in public due to fear of being viewed as politically incorrect. But if you do a secret ballot, they would vote for Trump on this.

Let me clarify that I am not supporting Trump’s views (Hey, I am sharing this in public and would not want to be politically incorrect, right? :). But his views will resonate well with the average American voter. The media backlash is just an effort by editors and journalists trying to show their political correctness, but it will not deter voters. I expect to see a jump in Trump’s poll numbers following this issue. Let’s see how good my political acumen is :)

Lacking Imagination

As a school kid, I was introduced to the world of books by my father. I used to go with him to the library and started reading. I was an avid reader of fiction. I had a fascination for novels and I enjoyed novels of Frederick Forsyth and Jeffrey Archer. The reading habit continued till my college days. I remember going to book stores in malls and staring at the collection of so many books, disappointed only by the price stickers. I imagined how I will be able to buy as many as I wish, once I got a job and started earning. All this was about 7-8 years back. Today, my habits have changed. I must have read less than 10 novels in the last 5 years. As of now, I have two unread novels lying in my house for more than 3 months. When I pick up a book, I am not sure anymore if I can complete the novel. There is a very good library near my house, with a fantastic collection of books. Yet, all the time, I go there just to pick up DVDs. I spend all my free time in front of the laptop or TV or on my wife's iPhone.

Why did all this change happen? When I think of it, I don’t think I am the only one experiencing this. I think this is a general change in human behaviour in the past decade or so. Newspapers and magazines around the world are seeing falling sales. Everyone is moving to the digital media. One can hardly see a few libraries these days – at least in India. Whatever is left, are government sponsored ones.

If you look at the list of the highest selling books of all time, there is only one book among the top 20 best sellers, which was published within the last 20 years. (source: Wikipedia) In case you were curious, that book is ‘The Da Vinci Code’. All other top sellers were published more than 20 years ago. Do these figures mean that we do not have good writers today, as compared to yesteryears? I don’t think so. What we do not have today, are good readers.

I believe the reason for this drastic drop in readership is the reducing ability of the average human mind to imagine and visualize. Digital media has taken over our senses. At first it was TV and movies. Today we are surrounded by PlayStation, Youtube, Smartphones and a variety of other digital devices. Our lives have become much more ‘visual’. These have taken over our senses and has reduced our mind’s ability to picture something on its own. Part of how someone enjoys a book is the way we can visualize the scenes described in the pages. As compared to 10 years ago, my mind today finds it more difficult to do these visualizations. My sub conscience signals me to instead insert a DVD and watch a movie, because the visualization is already there for me to consume and ingest.

Future generations of children will not be taught with text books. They will have a much reduced ability to visualize what they read in books. Everything will be taught through digital media. I know its already happening in many schools, but this will soon be mainstream.

The long term effect can be that future human species will have lesser imagination and creativity. But we may not be able to recognize it. Take for instance, today's popular Indian musicians like AR Rahman and Harris Jayaraj. Almost every song they compose is a hit. I remember in my childhood days (1990's), in an average movie, out of 5 or 6 songs, there will be 2 very good songs that become big hits. The rest will be mediocre. Today, I see that most songs in most movies sound good. There aren't many instances of a drastic drop in quality. Is it because today's music composers are better? No. Today's musicians can leverage technology to mix and reuse older compositions to 'create' new music which will please the ears. In software industry, we emphasize a lot on reusability of knowledge assets to improve productivity. Our musicians of today have mastered the art of reusing creative output. This probably sounds paradoxical, but this is what is happening.

Coming back to my point, I believe the human species will evolve into a less creative race in the future, say 200 yrs from now. This itself will not hurt us, because we'll have enough historical data (reusable components) that can be leveraged by our scientists, industrialists, politicians and artists to keep evolving. But what happens if a small subset of our population is forced to suddenly relocate to a different planet? Or if our planet experiences a catastrophe that destroys our historical records? Something like what we see in sci fi movies. Can we survive from such a setback with a mind that is half as creative as compared to the generations of Newton, Einstein, Picasso and Lincoln?


P.S.: Looking back at my post, especially the last 2 paras, I am happy that I still have some creativity left in me :)

Is RBI's (in)action justified?

Yesterday, on June 18^th, the RBI in its mid quarter review, left key rates - including repo and CRR - unchanged. This has clearly disappointed the industry and stock markets, which were keenly expecting rate cuts to support sagging economic growth. With the country in Stagflation – a state of low economic growth and high inflation, the RBI must’ve been in a tough dilemma. The rule of thumb in economics is that lower interest rates encourage economic growth, while higher interest rates help slow down growth and thus control inflation. Having left key rates unchanged, the RBI has taken an anti-inflationary stance, rather than a pro-growth one. RBI’s statement seems to indicate that it believes that in the current scenario, interest rates will have minimal impact on reviving economic growth. RBI has sent out a clear message that it is for the government to do more to encourage growth through policy reforms.

There has been contrasting commentary in national media, both for and against RBI’s decision. The RBI (and those who support its decision to leave interest rates unchanged) has argued that the current stagnation in economic growth has little to do with high interest rates and that, reducing rates now will have little, if at all any, impact on spurring growth. It has pointed out that fiscal reforms and bold policy decisions by the government is needed to improve investor sentiment. Also, with inflation still stubbornly high and with the steep depreciation of the Rupee, RBI feels justified in not lowering interest rates.

Following are the main arguments of the RBI:

Need for fiscal reforms – Basically, RBI wants the government to take steps to reduce fiscal deficit and current account deficit. In other words, the government’s debt needs to be reduced. Today, the government is borrowing so much money, that a significant portion of all the money available with banks for lending are being lent to the government. And since the government is not making any surplus, its debt burden is getting bigger each year. So, every year a greater proportion of banks’ available credit is given to government. This is leaving banks will less money to lend to the private sector. This phenomenon is called “Crowding Out” of the private sector by the government. The argument is that, rather than reducing interest rates, the government should take steps to reduce its debt burden. This can be done by reducing subsidies and by selling state assets (disinvestment of PSUs). These steps will release more credit into the banking sector, which can then lend more to private sector industries, thus encouraging economic growth.

Addressing supply side constraints – Inflation can be driven by supply factors or by demand factors. This means that, either low supply or high demand will cause inflation. RBI feels that inflation in the current scenario is being caused more by supply side constraints. Examples include: Inefficient storage and distribution of food grains, Lack of cold storage and warehouse facilities leading to lot of wastage and losses, especially in vegetables, fruits, meat and poultry products. Sometimes the government’s MSP (minimum support price) policy leads to skewed production of food grains, where we see surplus wheat and rice production, but shortage in edible oil and pulses. Also, lack of infrastructure – roads, railroads and electricity – lead to increased cost of distribution of goods across the country. RBI feels that, if government takes steps to address these supply side constraints, the overall productivity and efficiency of the economy will increase. More goods and grains will reach the end consumer at a lower price, thus helping reduce inflation.

Minimal impact of interest rates on economic growth – The RBI states that effective bank lending rates today are slightly lower than during the 2003-08 period, when the country witnessed strong economic growth. Hence it argues that interest rates alone cannot be blamed for today’s low growth.

I am not an economist or an expert in financial matters. However, with my basic understanding of the subject and using my common sense, I present my take on this issue:

I agree to the first two arguments mentioned above. The government needs to take up fiscal reforms urgently, to ensure India’s macroeconomic health. Also, government should take policy steps to address supply side constraints. This will help bring down inflation in the long term. However, we’ve all seen that in recent years, the government has been unable to enact any major policy reforms. Without getting into the politics of the issue, let us for now accept that at this juncture, we cannot expect any big reforms from the government. We need to accept this as a fact. India’s fiscal scenario may not improve significantly at least until the next general elections, which is two years away. In this scenario, monetary policy is the only tool that can be leveraged to control the economy.

Inflation is definitely the RBI’s and the country’s biggest concern. In the past 5-6 years, price increases for the common man have been severe in food items like vegetables, poultry, food grains and fruits. This increase has been greater than the general increase in wage levels. Hence, inflation cannot be blamed purely on higher purchasing power. The problem lies in a lack of modern infrastructure for storage, transportation and distribution of food products. This systemic inefficiency causes huge loss of food production and reduced availability to the end consumer. Also, fragmented agricultural land ownership and lack of irrigation infrastructure and usage of archaic farming tools lead to less the optimum production. Hence there is a demand supply mismatch and consequently increased prices. The solution is obviously to build the required infrastructure. There is no other easy, short term solution to address the problem of food inflation. Building the required infrastructure requires a lot of money. One way to get the money is FDI. FDI in retail has been blocked due to political reasons. If we want to attract capital in agri infrastructure and core infrastructure areas, the least that can be done is lower interest rates.

If we have a loose monetary policy in this country, corporates will have greater access to capital. With more money available to them, corporates are most likely to invest in expanding their business. While this will create inflationary pressures, it will also help create more jobs. Sooner or later, cheap money will go to core infrastructure building activities. With government support, this should happen sooner. But even if government does nothing, money will eventually be deployed in building infrastructure. Again, this will create jobs. Eventually, with enough infrastructures in place, the country’s productivity levels will increase and help reduce the demand-supply gap that exists today. Infrastructure will also enable greater exports and will attract FDI. FDI will mean more money that can be deployed to further build infrastructure, thus establishing a virtuous cycle. Meanwhile, the slightly higher inflation will be compensated by the higher number of job creation.

My argument is that, in the absence of strong government policy making, the RBI needs to maintain a loose monetary policy. This is imperative for economic growth. Higher economic growth will create market pressures that are strong enough to eventually divert money and intent towards building infrastructure. Better infrastructure will be the key to resolve supply bottlenecks, boost productivity and ease inflation. High interest rates can be used to control inflation eventually. But it will also bring industrial activity to a screeching halt. This will significantly hurt jobs creation. With India experiencing a ‘demographic dividend’, it is extremely critical that our young population has enough jobs to occupy themselves. We will have to bear with the pain of inflation in the medium term, if it eventually results in an infrastructurally capable and vibrant economy.

There are numerous policy reforms and initiatives that are possible and should be enacted by the government to support economic growth. And we should continue to put pressure on the government on these issues. However, I believe we have a way out of this mess created by our politicians. And that way is monetary loosening. 

Power of the Fourth Estate

The past 10 years have probably seen more Indian politicians being jailed as compared to the previous 50 years. Corruption and crime have always been mixed up with Indian politics. The public has over the years come to acknowledge that Politicians and other influential classes can get away with almost anything. In the 80’s and 90’s, it was unimaginable to have a minister or even a MP/MLA to be arrested. This general public perception is slowly changing in the past decade or so. Lalu Prasad and Shibu Soren are two prominent political figures who went to jail in the early part of last decade. In the spotlight today, are politicians and business leaders arrested in the 2G scam. You also have the former Karnataka chief minister and other ministers being arrested. One suspects that, with all their money and influence, these high profile accused will manage to get acquitted in the end. Nevertheless, all these arrests have shown that the Indian law & justice system has enough life left and if nurtured, can truly make life easier for the general public.

So, what has brought about this change? Despite systemic corruption and money power, how has the law been able to bare its teeth so often in the past decade?
There could be many reasons pointed out – like higher social awareness and better education. But I think the single most important factor leading to all these arrests is the private news media – especially TV news channels. Niche players like Tehelka started off the trend of investigative journalism armed with hidden cameras and phone tapping. Mainstream media has wholeheartedly adopted this method to stay competitive in this era of BREAKING NEWS. Every political party has its own news channel and its way too eager to expose corrupt politicians belonging to other parties. Channels are competing with each other to be the first to expose the next big scam. Had there been 3 or 4 channels, money and power would have been enough to control them. Now there are too many dogs to feed. It’s not possible anymore to control the news media collectively.

Perhaps the single biggest mistake committed by Indian politicians, which hurts their own tribe the most, has been the privatization of TV news broadcasting. Its probably one of the best things done for the Indian public – inadvertently – by politicians. Anna Hazare’s voice would not be nearly as strong as it is today, without the private news channels airing his every word. If I were a politician, and looking for ways to control this menace, the solution would be to reduce the no. of media companies to maybe 10% of what they are today. This can be done by encouraging mergers and acquisitions in a big way. One sure way to do that would be to open up this sector to 100% FDI. God forbid, that should not happen in India. Otherwise, within a decade, we will have just 3 or 4 holding companies running all news networks across the nation.

Anyway, as of today, we have a strong media capable of The judiciary has shown that there are significant pockets of integrity and courage left in the highest courts in the land.
So, let’s see what we have now. We have a strong media. We have a good judiciary, which has been severely damaged, but not irreparably. We have a fledgling economy, which is miraculously continuing to do well, thanks to the ingenuity of our entrepreneurs. One area where we are failing is education, which continues to grow, but too slowly. If our economy continues to do well for another decade and if we can strengthen our judiciary and education system, India is all set to enter the league of developed nations in my lifetime.

Returning to Chilka - Nostalgia and excitement

I just realized that I havent put a post about one of my happiest times in recent years. I am talking about my trip to Chilka towards the end of last year. Chilka is the place I love the most. I had a happy childhood there between 1991 and 1995. For the first time I stayed with my own mom and dad (my early childhood was spent with my grandma). I learnt Hindi there. I made the first of my ‘best friends’ in life there. And that was the only time in life when I lived life in full flow. If only I had continued there for the whole of my adolescence, I might’ve been a very different person now. Definitely not so shy! Me and my friends were so full of pranks and mischief back then…

Guess I’ve digressed a lot from the original intent of the post! Coming back to this trip in Oct 2008. There are times we all feel a bit lonely and think of old times and forgotten friends. I was going through a similar phase last year. I suddenly got back in touch with my childhood buddies from Chilka – Rahul, Santosh and Subhasis. Couldn’t track down Gulshan and Naveen – the other 2 guys in our old ‘gang’. After a couple of calls with my old friends, I thought of meeting up and how nice it would be if we all got together in Chilka. All of us, except Santosh now live outside Orissa. So we had to plan in advance for this. Though everyone seemed eager, it didn’t quite work out as planned. Rahul and Subhasis cancelled their plans due to professional commitments. Santosh and I decided to go ahead rather than wait for another opportunity. I was going through a torrid time at office and thought this trip would recharge my batteries.

It was a lonely 18 hour journey to Balugaon-the nearest station to Chilka. I didn’t know what to expect; meeting Santosh after nearly 15 years I didn’t expect a smooth resumption of an old friendship. And I wasn’t sure how much Chilka had changed. I reached the Balugaon station at dusk. Just as the old times, there was a power cut and the station was dark! As I got down with my luggage, I saw a handsome and confident looking guy in a black t-shirt approach me quickly and punch me on my chest. It took me a second to realize, then I smiled and we hugged each other. All the awkwardness I had thought of during my journey evaporated immediately. Santosh had biked all the way from Bhubaneshwar (5-6 hrs drive) and was completely drenched in rain. Though my dad had arranged for transport from the station, he wanted to be there in the station to receive me. As we left the platform and reached the station entrance, I could see that not much has changed in this part of the country in the last 15 years. Power cuts are still a part of daily life. The roads are still bad. Buffaloes still block the way. The only change seemed to be an increase in the highway truck traffic. We went to Panth Nivas guest house on Santosh’s bike. He had booked a 4 bed room anticipating that Rahul and Subhasis would also come. We freshened up and went outside to Chilika Dhaba for a genuine dhaba dinner. After dinner we chatted about how great it would’ve been had all 4 of us gotten together. We had so much to talk about and share with each other. We spoke about a few things that night, trying to bring each other up to date with the most important happenings in our lives. We slept late, but decided to get up early and catch the sunrise.

That meant getting up a 4.30 am. And we did get up that early! It was still dark outside. We took the camera, put on our clothes and left the guest house. We jumped over the fence and walked in pitch darkness towards the lake. The villagers were just about waking up – most were still sleeping. Some kids were experimenting with fire and cigarettes while their fathers were still sleeping. The buffaloes were still sleepy. We reached the banking of the lake and sat down waiting for the sun to come out. It was pitch dark and a bit cold. Slowly the sky transformed to purple and deep blue, signaling the arrival of dawn. I was reminded of an old hindi poem I had learnt in school. The poem described how the colour of the sky changes to various hues as the sun comes over the horizon. After more than half an hour the first specks of orange appeared in the sky. It took us some more time to realize that we would not be seeing the sunrise over the lake that day. It was just too cloudy! But we did stick on for another hour and enjoyed the glorious morning. I took some nice photos. We watched the serene water slowly being taken over by dozens of fishermen in their small and unique boats. As it grew brighter we noticed ducks feeding on weeds at the banks. The villagers had woken up and the day had well and truly started. Santosh tried to bargain a deal with one of the fishermen for some prawns, but we didn’t get what we wanted. We were hungry and walked back to the guest house for breakfast.

Breakfast was good – poori and aalu and some tea. We then left for INS Chilka. We gained entry into the INS, thanks to Santosh’s uncle who worked there in the MES. We went straight to our school. As we approached the school, the smell of the grass and the trees was simply intoxicating. I saw that the school had been recently painted and it was a beautiful yellow with colourful logos of Kendriya Vidyalaya. Beautiful flowerpots were decorated in front of the school. I noticed that the old cycle stand was still there. Santosh was speaking to the watchman about letting us inside for some time. I just stood there and observed the surroundings. I saw the kids in their neat uniforms and walking in a queue formation as the class monitor led them back from the playground to the class rooms. I saw the smile in their bright little faces. That was a very intense moment for me. I was close to tears with emotion. I was happy, I was nostalgic, I was on a high. Though I haven’t taken drugs, I guess that particular moment felt something like that. Very intense, very happy! Those 5-10 minutes was sooooo good! I was rudely interrupted by a phone call from my office. Curse the mobile phone! Anyway, Santosh soon convinced the watchman and we went inside to meet the principal. The principal wasn’t in, so we met a senior teacher and got the permission to be in the premises and visit the classrooms during lunch break. We went to all our old class rooms that we had used during 5^th, 6^th and 7^th standards. Most of the kids were too shy and ran away from us. Some of them, mostly girls were having lunch inside the classrooms and couldn’t escape us. We chatted with them. They asked us a few silly questions and giggled stupidly. We unsuccessfully tried to convince them to share their lunch with us. As we moved slowly to the higher classes, the kids were more forthcoming and were curious to find out who we were. I had long hair at that time. Some of the kids called me Ishant and the name caught on with the other kids! We chatted with some of the existing staff. We went to the art room and saw the paintings of the current students. The library room was pretty much the same. We spent quite some time in the school. Finally we were thrown out as the kids’ excitement caused too much noise and some teachers got annoyed.

We went to Santosh’s uncle’s house for lunch. Aunty had made an awesome lunch and we really enjoyed it. After a nap we took bicycles and started to explore the INS. Simply riding the bicycle through the roads was amazing and full of nostalgia. We met an old class mate – though I had no recollection of him. Santosh spoke to him and we setup a daaru party that night. We were joined by another class mate. The other 2 guys weren’t in a stable job and weren’t doing that well in life. I was ashamed to even tell my real salary to them. It seemed to be too much money, to the point of being disgusting. I put aside the awkwardness and tried to strike up some lively conversation. The liquor for the night was something called “Panga”. It was supposed to be rum, although it tasted mildly sour. And it was packaged in a plastic bottle!! For a moment I was reminded of vague news stories about illicit arrack casing deaths and blindness. But my friends insisted that this was a ‘trusted’ brand in the local market. So I took a leap of faith and finished my first round. We had a lively evening. I guess Panga wasn’t all that strong. Because even after a quarter I was confident enough to take the bike and ride triples in the unlit and crumpling highway to drop a friend home at midnight.

The next day Santosh and I went to Kalijai and Narayani temple. But I was really waiting to go back inside INS and see my old house. We went there in the evening in fading light. We spent some time there. We then went to Apsara theatre. Since it was a weekend, a movie was playing – A Wednesday. We bought the tickets – whole of Rs 8 each! Before the show started we decided to check out our ‘old’ school, which was now being used as a Kinder Garden. We jumped over the compound and in the fading light checked out the class rooms and assembly ground and the old Imli ka paed which had borne so many stone hits from us kids and was still standing tall.

As we reached the station on Sunday morning to board my train, the trip seemed to have been too short. But that’s how good things in life are, aren’t they? This trip was a beautiful time in my life and the memories will remain treasured for the rest of my life.

Pictures: Please click here to see some nice pics of the dawn sky and more.

Saina Nehwal - A true sportstar

Saina Nehwal is one of the best sporting talents that India has produced. At the age of just 19, Saina has achieved great things in her chosen sport and has truly arrived at the Big league in international badminton. Saina is not another superficial creation of the media. Indian media is famous for over-hyping and haloing any sportsperson who is worthy of 2 minutes of prime time television. Take for example, Sania Mirza. Sania is undoubtedly the best ever female tennis player from India. But when it comes to the world stage, she is at best an average performer who seldom indulges in giant killing. But our media would make us believe that on her good day Sania can beat even Venus Williams. Well, she definitely can’t – unless Williams is playing left handed and is not wearing shoes.

Things are quite the opposite when it comes to Sania’s namesake – Saina. Few people in India would’ve heard this girl’s name. Maybe she is not sexy enough for prime time television and newspaper front pages. But she is certainly the brightest star in Indian sport (non cricket) at the moment. Away from the media glare, Saina’s career has shown a steady rise ever since she won the national badminton championship 2 years back. Saina has regularly beaten the top 10 players and has been consistent in the big tournaments. Her current world ranking of No. 7 would underline that this girl is truly a world class achiever.

One wishes that this real achiever gets the attention and recognition that she deseves. Saina, in all likelihood, will continue to bring great laurels to India and make us all very proud in the years to come.

Global Warming

I was watching a documentary called “The 11th Hour” on HBO yesterday. It was a powerful document on Global Warming. Although many of us are aware of global warming and its effects at a superficial level, most of us do not realize the extent and the imminence of the danger facing our planet and the human race. Man’s scientific and technological advancement over the past century has almost irreparably damaged a beautiful ecosystem that was built over millions of years by Mother Nature. We have destroyed oceans and forests beyond recognition. Our chemicals have changed the basic composition of most of the soil in the world. Our wasteful consumption of resources is leaving less and less for other species to survive on. In fact, over 50,000 species are getting extinct from this planet every year. Human beings can be blamed for much of this. If things continue unaltered, there is a real danger that the quality of general human life will be irreparably damaged within our lifetime.

One must watch this documentary to learn some astonishing facts about the ruthless and mindless destruction caused by humans to this planet. The documentary tries to explore the core reasons behind such actions by the human race, which is after all, supposed to be the most intelligent and sensitive creature. However, we are also a race that is infested with greed and short-sightedness. Corporate money and corrupt governments have ensured that short term financial profits prevail over the long term survival and quality of life of the human race. But then, aren’t the men running corporations and governments not aware of global warming? Aren’t they aware of the mess they are creating? Aren’t they worried about the future of their grandchildren? Of course they are. But they are unable to make the connect between their actions and its impact on nature. But hey, these guys are well educated and highly intelligent. Then why is it that they refuse to accept the obvious and act appropriately? It all seems a bit illogical, isn’t it? The answer lies in the way we live Life today.

From the Bushmen of the Kalahari and the tribes of the Rainforests to the bourgeois of urban India and high street Manhattan, the way man lives and sees life is immensely different. Urbanization has caused man to move further and further away from nature and into an artificial ecosystem. It’s a system which has all material comforts and ‘protects’ man from nature’s harshness. Automobiles, air-conditioners, fertilizers, pesticides, deodorants, polythene, mobile phones, all of these make the world a ‘better place to live’. We have become so enamoured with our own inventions and creative ability that we seem to think that we are no more dependent on nature. We think that human technology will provide all the security and happiness than a man needs. All the material comfort around us have numbed us so much that we refuse to see how dependent we still are on nature. Somewhere down the line we have stopped respecting or loving all other creatures in this world. If we move outside the cities and move to the village and to the jungle, people still retain some sense and understand the connect between man and nature. Junglemen and villagers still worship nature and respect other creatures. But cities are where the money is and the power is. In today’s typical metropolis, one cannot afford the space for a garden. One cannot see the stars in the sky owing to pollution. One does not hear birds chirp. One does not see milk being extracted from cows. Perhaps the only way a city resident is connected to nature is through National Geographic channel! One would have heard of the term “out of sight, out of mind”. This is exactly what is happening to us. We have lost touch with nature because we don’t see it in action in our day to day lives. We don’t love or respect other creatures any more since we don’t see their contribution to our survival. We continue to waste electricity and burn petrol, the only concern being the electricity or petrol bill, rather than worrying about the melting polar caps or rising levels of asthma and cancer.

Social awareness is the most essential weapon needed in the arsenal to begin an effective assault against global warming. But we don’t have enough time for a ‘bottom up’ approach to work. We need socially conscious leaders who can give a push from the top. I sincerely hope that Barack Obama is one such leader. America has to lead the way in fighting against global warming. And countries like China and India cannot afford to sit on the sidelines claiming to be poor nations. Inaction will prove much more costly. Concerted government regulation is the only way to move forward. One has to accept the fact that Corporate Responsibility is an oxymoron.

Seven years of Obama’s reign could be a watershed moment in the fight against global warming. And as individual men and women who are from a well educated background, we too have our moral responsibilities. We can start with becoming aware of the nature around us. Let us swithch off the TVs and the laptops and start enjoying the sunrise, the full moon, the twinkling stars, the cool trees and the chirping birds. Lets go out to the mountains and woods on the weekend rather than to the multiplex or to the disc. The more we fall in love with nature, we would subconsciously be more responsible towards nature. When that happens, the first battle would’ve been won and we would’ve conscripted ourselves into the army fighting against global warming.

If you think I sound exaggerated and that there is no need for alarm, then please download and watch “The 11^th Hour”.

Trip to Wayanad with some old friends

It was like a dream come true. Twelve college mates getting together after almost 5 years. For two days, we all went back to our engineering hostel days and lived life as if we were 5 years younger. It was wonderful…

 

The coordination for the trip happened through a number of calls mainly anchored by Mr. Pandian. By the way, Mr. Pandian is our dear friend, who happens to be the only person to be in regular touch with all the twelve guys throughout. Among his various ‘talents’, Pandian is also very mature and responsible and we all owe it to him for making this trip possible. As part of planning for the trip, we had a number of conference calls. And these calls were great fun- imagine 10 old friends getting into a conference call and people trying to pull each others’ leg. Before I get into the details of the trip, I should not forget to thank Mr. Janakiraman, who was brave enough to put in his own money to book the train tickets for all of us. Knowing Janaki’s nature, we were all genuinely surprised that he would trust us all and actually put in his money. This didn’t stop us from pulling his leg throughout the trip.

 

The trip was to be in the 2^nd weekend of December. For my room mates and myself, the 

adventure started even before the trip began. We had to rush to the railway station praying to God and we managed to catch the train with about 5 minutes to spare and huffing for breath. Some of us took a couple of minutes to recognize each other. Four years is a long time, and a few of us had changed considerably in appearance. I cannot describe the feeling, but I felt very very good and very young when I suddenly met so many old friends – many of them after a gap of four years. The entire train journey was a lot of fun, but maybe not so much for our poor co-passengers who had to contend with a lot of boisterous noise and crass language.

 

We reached Calicut at around 4 am the next day. It was pretty cold. We caught a bus to Kalpetta (a place in Wayanad district), which was to be our base for the next 2 days. We checked in to the hotel at around 7 am, freshened up and made plans to go mountain trekking. We had a brief taste of mallu food and tea during breakfast and made our way towards Chembra peak. We reached the base at 11 am and were told that it will take 6 hours to scale the peak and come back. Knowing the fitness levels within the group, we didn’t have much hopes of scaling the peak, but nevertheless, we started on our way in high spirits. The scenery was breathtaking even at the base, which was a tea estate. The group was fully equipped with digicams, which didn’t help in speeding up the ascent. Two people stood apart in the group due to the quintessential mobile phone being a permanent attachment to their ears. Mr. Prabhu was talking to his fiancée, which is understandable. Mr. Shiv Narayanan was apparently talking to his company sales team which was handling a product launch. But it was a little strange that there were reports of Mr. Shiv using terms like yes babe, miss you, dating, etc while taking to his sales team. Anyway, moving on from scandals, lets get back to the climb.

 

Excited as we were, we knew that not all of us will be making it till the end. The first casualties were Prabhu and Shiv, who stopped about 1 km from the start. There was speculation from some quarters that they stopped because beyond that point, the mobile phone signal coverage was inadequate. Well, I am not someone who likes to make fun of people, but it did give Prabhu the chance to catch his breath and explain to his fiancée how he was braving the conditions and continuing to climb steep cliffs. I am sure she would’ve been impressed. After some time, Shiv took the tough decision to stand up and continue the climb. Its another matter that his mobile ran out of charge at that point.

 

Midway through the climb, we reached the Heartin lake. It was a small lake- more the size of a pond - in a beautiful heart shape. We took a refreshing break and had an extended photo session in the lake surroundings. From thereon, the climb was quite steep and challenging. The higher we went, the more breathtaking the view was. It was a 5 km climb and I think the group went up till about 4 km. It was difficult, with people having to help out and manage with the slow movers. I, along with Vijay and Janaki took the liberty to leave the group and go another half kilometer further upward and we were rewarded with some truly breathtaking vantage points.

 

We returned to the base by around 4 pm. We learnt that in our absence, our immobile Prabhu was taken for a lifeless rock by a group of insensitive girls who refused to recognize that he was a living creature while making their way through the path. After consoling our distraught friend, we planned for the rest of the day. we were very exhausted and given a choice, I would’ve gone straight to the hotel and crashed. But as it happened, we next proceeded towards Soochipara waterfalls. We reached the waterfall with about an hour of sunlight remaining. It was my first time at a waterfall and I took the opportunity to take a bath. It was thrilling, what with the slippery stones making it a real adventure to cover even 50 meters towards the waterfall. We thoroughly enjoyed – not only the force of the water, but also the scene created by a group of mischievous girls. As we made our way back to the Jeep, I was at the point of extreme exhaustion. We went back to the hotel and I checked my weight to find that I had lost 1.3 Kg of body weight from morning to evening. It was an indication of extreme fluid loss. We took the cue and went into the hotel bar. A bit of brandy and a heavy dose of mallu non-veg food refreshed our bodies before taking to the bed.

 

The next day, we checked out of the hotel and left for Kuruva Island after breakfast. The island had a fairly dense cover of trees and had several streams of water running across. It was a water trek, in which we had to cross the streams, where the water levels varied from knee deep to hip deep (although some would say it was waist deep, its really their problem that their underwear got wet…). The scenery was really cool – and it consisted of more than just Mother Nature.

 

We went back to Kalpetta for lunch and after another heavy round of non-veg attack, we left for Calicut to catch our train. We did some last minute shopping for home and caught the train. The group was much more sober during the return journey, partly because we were exhausted. We browsed the photos that were taken and reminisced the two days of unbelievable fun we had. Morning arrived, Chennai came and we departed on our own ways, back to the life we had been living. The trip was over, but it helped form some of the golden memories in my life. 

Future of Cricket

When we talk about football today, most people will think of the English Premier League or the UEFA Champions League. If you ask someone which is his favourite team, most likely he will say Manchester United or Real Madrid or some other European club name. Football today is synonymous with club football. International matches are once in 4 year rituals like the FIFA world cup or the Euro Cup. Of course there are international friendlies and Olympic qualifiers that happen once n a while. But even in these matches, one rarely sees top international players, since they are occupied with more important club commitments. For football fans, its all about club allegiances. Many an Englishman will adore Portugal’s Christiano Ronaldo, but will loathe a Steven Gerrard who plays for a rival club. Club allegiance/rivalry is much more prominent today rather than nationalistic patriotism which is put on display once every 4 years.

 

For us cricket fans, thankfully the situation is quite different. Or is it?

Well, most of us Indians still identify our favourite team with the colour Blue. And most Australians cheer for the Baggy Green. We all love to watch Hayden vs Zaheer, Bhajji vs Symonds or Yuvraj vs Shoaib encounters on the field. But one wonders for how long. The IPL today is a 6 week annual tournament. Come year 2015. Imagine that the IPL is held over 40 weeks with 15 teams across India. Imagine similar leagues being played in England, Australia, Sharjah and South Africa. To add to this, we will have the so called Champions League, in which top teams from these elite clubs will compete to decide who is the best in the world. Of course, we will still have the World Cup and maybe even the Champions Trophy. After all, they are a once in 4 year commitment and it will give cricketers a chance to play for their country and realize their dream.

 

If you think that the situation I’ve described above is far fetched, then think again. Almost every decision in this world is taken based on economic logic. Every cricket board worth its salt, will take that course of action which is most profitable to itself. Over the past 2 years, it has become clear that 20-20 cricket is the most marketable form of cricket. Clearly it is the future. And the great Lalit Modi has proved that profits can be maximized by adopting the private club franchisee route. The IPL model is already a grand success with all involved making money and the audience is also apparently overjoyed. TV advertisement rates are the highest for T-20 than for any other format. Stadium tickets are equal to, if not higher than ODI matches, even for IPL (which is technically club cricket). Many IPL franchisees have made profits in the first year itself and all teams are expected to make profits from the 3^rd year onwards. Above all, the BCCI’s coffers are overflowing. All this, just from a 6 week tournament making its debut.

 

It is only a matter of time before people forget the Ashes, Border-Gavaskar and India-Pakistan series and instead talk about Chennai Super Kings Vs Bangalore Royal Challengers and Delhi Daredevils vs Mumbai Indians. Cricket as we know today will not exist 10 years down the line. Our children will know and follow cricket the way football is followed today. Is there a way to prevent this? I wish there was..

Obamania

Like so many others around the world, I am at awe with Barack Obama. Not least by his oratorical skills. This man is amazing. He’s gifted in his speech, his intelligence, his courage and of course his charisma. I haven’t watched much of Nelson Mandela, Mahatma Gandhi or Winston Churchill tapes. But Barack Obama could be remembered as one of the modern political greats and compared with these yesteryear greats in the years to come. The funny thing is, Obama has only just won the election. He has only just entered the stage, but the applause from the crowd would seem to suggest that the play has reached the climax. At the risk of repeating what the media all over the world is saying, there is an ENORMOUS amount of hope pinned on Barack Obama. Looking at people’s expressions during his victory speech, one wonders how can so many people have so much hope from one man? And how can one man possibly meet the expectations of so many? He is not Jesus Christ. He is only a political leader of a less than perfect democracy. Yet, even Obama isn’t doing anything to play down the expectations. In his victory speech he only underscored these hopes. For the sake of the American people and for Obama himself, I hope he can meet a great deal of these expectations. But honestly speaking, I have no idea how he can do that. Meeting expectations in good times is difficult enough. But making people happy in these tough times… oh boy… Good Luck Mr. Obama!

What’s more interesting is that, perhaps for the first time, almost all nations of the world seem to be rejoicing an American president elect. Obama should partly thank George Bush for this international goodwill that he’s receiving. Well, after eight years of bull shit, the world would’ve been sure that things couldn’t get any worse in the White House.

The world in general needed an honest and intelligent leader in these turbulent times. Obama will be the right guy to create “win-win’ situations for everyone. From an Indian perspective, I think the Indo –US Nuke deal might suffer. This deal, at a higher level smells of American double standards and hypocrisy. Unlike some opinions, I believe the outsourcing industry will remain unscathed. Obama is smart enough to understand its economic logic. And economic logic always wins over politics.

Having seen the drama unfold over the last several months, I hope to see over the next 4 years, if one man can change America and the world for the better. I hope to see peace in Afghanistan and in the middle east. I hope to see an end to American political hypocrisy. I hope to see real economic and social prosperity. Am I audacious with my hope? Well, then so shall I!

Just before concluding, I was thinking who could be the best analogy for Obama. I could think of no one better than Rajnikanth. When all the chips are down and the world is at the mercy of the bad guys, all it takes to restore things is one man- Rajni, the Superstar. In the current scheme of things, people’s expectations from Obama is very similar to what the audience expects from Rajnikanth when he enters a scene. And Rajni never fails his fans!!

NM Memoirs

Another phase in my life is coming to an end. Two years at NMIMS, Mumbai, doing my MBA. Looking back now, it has been a happy two years. Of course there have been good and bad times. When I first came here, I was disappointed- with a lot of things. My college lacked in a lot of things. But it also gave us a lot, which one sees only when the college days come to an end.

I shall try to talk about my most pleasant and unpleasant moments here. My first year here was difficult. I was initially disappointed with the college and hostel infrastructure. I also had difficulty adjusting to the food and the climate. Also, the people were different. I was interacting with north Indians after a long time and it takes some time to adjust. Added to this, I fell sick quite often- probably not adjusting to the Roti & Dal diet after a long time. The most difficult aspect for me at NMIMS was interacting with North Indians. It sounds kind of silly, but after these 2 years, I strongly feel that I am much more comfortable with south Indians around me. Of course I’ve had a few good friends from Northern and Western India (not least my room mates). But, in general, I’ve found it much easier to build a rapport with South Indians. It probably because of the obvious difference in personality between north and south Indians. This difference is kind of accentuated in girls. That probably why I never was comfortable with girls at NM. The matters were made worse by the fact that there was not a single Chennai girl in my batch L.

When I look back, the most enjoyable times of my life have been the three years in Chilka, the final semester in engineering and the 2nd year at NM. Being in Mumbai and away from any relatives, I got introduced to some of the materialistic vices in life- and I don’t regret it at all. The 1st year freshers party, the nights in Asiad and Harish were really enjoyable. The daaru parties in hostel were rocking too! The freedom that I got after the repressive atmosphere in my engineering college was very refreshing. It helped me feel mature and grow up. Most important was probably meeting some good people who will be my friends for a long time..

The last two years have been a break from life- from responsibilities, work, routine, etc. I have cherished these years for that. So many new experiences, new lessons and new friends have made these years worthwhile. I have truly enjoyed these years. The experience of doing MBA from NMIMS is truly unique. It is different from any other b school in the country. The spirit of NMIMS is unique and special and I am proud of being a part of it.

Note: Most of this article was written during my last days at NM. Some part has been added more recently.

Savings and Investment- Part 1

Before starting with this post, let me warn you that I am not an expert in investments and I do not claim responsibility for any actions taken based on this post. This applies for all my blog posts!

This will be a two part post. In the first post, I will give some fundamental ‘gyan’ on savings and the characteristics of basic asset classes. In the second post, I will try to give an idea on how exactly to proceed with things on the ground.

Savings Account
All of us earn. And all of us spend. Most of us manage to save something at the end of the day, which we put into banks. But, is putting money into banks really saving? Technically speaking, it is not. All of us have savings accounts, which generally give an annual interest rate of 3-4%. The actual inflation rate in India today is around 10% (Don’t go by the govt’s WPI figure of 8%. CPI is the worldwide standard, which is not measured in India and is typically 1-2% above WPI). This means that the value of the money you hold in your pocket is decreasing by 10% every year. i.e., if Rs.100 can buy you 10 chocolates today, the same Rs.100 can buy you only 9 chocolates after 1 year. So you know that high inflation is a real killer of money value. Most of us get a salary raise every year. Let’s assume that on an average we get an annual raise of 15%. Let’s also assume that the long term (over a 20 year period) inflation rate (CPI) for India will be 7%. This means that, in effect your salary increases by approximately 8% year on year. That is a pretty decent number. But consider your savings. Let’s assume that you save 20% of your salary every year and leave it in your saving account. This amount will grow nominally by 3% every year. In real terms, you have actually lost approximately 4% of your savings. If your annual salary is Rs.5 lac, a devil called Inflation just ate Rs.4000 of your hard earned money. You would have been better off spending those Rs. 4000 on buying yourself some new clothes rather than see it vanish into thin air like this! So you now know that Savings Account is a bad guy and you should limit your association with him. But Savings Account is a necessary evil for all of us because he is the most liquid asset apart from cash in hand.

Fixed Deposit
Today banks give 8% on FD. Considering that inflation is 10%, this is a slightly better choice than a savings account. But the downside is, FD lacks in liquidity. Since your money is locked-in for a fixed period, you may not have access to your money when you need it.

Gold
Gold is the traditional inflation fighting tool. Over the years, the price of gold has managed to keep pace with inflation. If you want to protect your savings against inflation, then gold is one of the safest bets. But due to the emergence of bullion/commodity markets, gold prices are bound to fluctuate; but over the long term, gold inevitably keeps pace with inflation.

Equities
Now, lets come to the interesting part. The asset classes that we’ve discussed till now are conservative with little or no risk of loss in face value. But with no risk, comes no reward. Equities or stocks, are an exciting asset class which actually help your savings to grow. Investing in stocks is like giving your money to a businessman who will use it to build and grow his business. When he makes a profit, he gives you a share of it. As we know, at all times, there are businesses that make profits in the economy. Hence there is always money to be made by investing in stocks. But again, like gold, stocks are affected by traders and speculators. Hence their prices do not always reflect their true value and they are vulnerable to short term volatility driven by “market sentiment”. This implies that there is risk involved even when you invest in a good business/stock. Knowledgeable investors will always make money in the equity market if they stay invested for the long term. Trouble is-most of us are not knowledgeable investors. So it makes sense to take professional advice. Go to Mutual Funds and stick with a fund for the long term. You will be rewarded.

Real Estate
How can one ignore this asset class. Everyone dreams of owning a house. There are some of us, who are lucky enough to afford a second or third home. For people with such kind of surplus money, real estate is a good option to have. During times of economic boom, returns from real estate can be mouth watering. But there are many risks associated with real estate. Lack of liquidity is the biggest risk associated with owning property. But if you are smart with your decisions and not too aggressive, buying property with your surplus money is a good thing to do. But again, remember that you are not an expert real estate dealer; So be conservative with your choice and stay invested for the long term.


This brings us to the end of this part. In the next part, I will dwell a bit on some of the more sophisticated saving/investment instruments and also hopefully give some broad guidelines on managing your savings.

Need your suggestion!

Long time no posts.. I've been very lazy. Sometimes I have the time and inclination to write something, but not much clue as to what I should be writing on. So, I am asking for help from YOU, the reader of my blog. Suggest any topic, and I will try my best to write a post on it. Please help me out- Any topic under the sun!

Abstract

• Sometimes trying is succeeding.
• The greatest leap is the leap of faith.
• When your heart wants something badly, you can’t listen to the mind.
• I live to enjoy the journey; because the destination will last but only a moment, whereas the journey lasts a lifetime.
• God, give me the courage to do what I must; and the intellect to not do what I shouldn’t.
• Pink Floyd: Don’t give in without a fight.

My favourite sports personalities

In this post I will talk about the people in sports that I have most admired in my life. I will divide the list of people I like based on the sport they belong to. As an Indian, it is obvious that I should start with Cricket.

Cricket:

Sachin Tendulkar- I started watching cricket from the 1992 world cup. That was the first world cup for the young star Sachin. Those days, Sachin was called “The little big man from Bombay”. He was the favourite among the commentators. Though India didn’t do well in that world cup, Sachin’s performance was well noted by the world. He was marked as a star for the future. And what a star he has been since then..

Mohammed Azharuddin- Despite the match fixing allegations and other scams, I have always enjoyed watching Azhar play. Not just his batting, but also his fielding. He was India’s best fielder for a very long time. I would really love watching him run between the wickets- he was such a wonderful judge of runs. He would almost never get run out.

Steve Waugh- I like Steve Waugh for his never say die attitude. He is one man you can trust to bat for your life. I cannot remember having seen a better fighter in world cricket.

Sourav Ganguly- To me, The prince of Calcutta was the best ever captain of India. The 3-4 odd years that Dada and John Wright were together, was the time I loved watching Indian cricket most. It was a time when the Indian team was characterized by determination, courage and a bit of arrogance. The Natwest Trophy final will remain etched in my memory. Apart from his captaincy, Dada is a fine batsman too and is a delight to watch when in full flow. If there is something more remarkable than his batting and his captaincy, it must be his grit & determination which he showed in ample quantities by making a successful comeback to the national side against all odds.

Tennis:

Michael Chang- He was never a very successful player. I think he won a couple of grand slams, but that was about it. I doubt if Chang ever made it to the No.1 spot in the ATP rankings. What I loved about this guy is that he never gave up. He would chase down every ball. You would hardly see any winners hit by his opponents. Chang would invariably reach every ball in this side of the court.

Formula One:

Frank Willaims- Though he is not a driver, I have been really impressed by this guy’s passion for racing. This has not been the easiest of times to lead an independent team in F1. The past decade has seen more than half a dozen independent teams exiting from the sport as manufacturers started to show their money power. At the end of 2006, most F1 pundits wrote Williams off, stating that it was only a matter of time before the team was sold off to another manufacturer. But old Franky stuck it out though the bad times. Today he has been finally rewarded. His team is fighting in fourth place in the world championship and also has one of the most promising stars of the future- Nico Rosberg- in its ranks.

Fernando Alonso- His reputation may have taken a beating after his unceremonious departure from McLaren last year, but Fernando Alonso remains my favourite driver on the circuit. 2005 & 2006 were the best years F1 has had in a long time. The battle of Alonso Vs Schumacher was just too good- especially in 2006. Even the mathematically closer 2007 championship did not match the intensity of the 2006 battle. If one were to ask Michael Schumacher to tell off the record, who is the best F1 driver at present, I am sure he would say its Alonso.

Basketball:

Michael Jordan- I watched basketball for 2-3 odd years around the years 1996-99. It was Bulls Vs Jazz in the NBA playoffs finals. It was my introduction to basketball, and I loved this guy, Michael Jordan. He was in complete control of whatever he did. He was cut above the rest. And the commentators were saying that this guy was actually making a comeback after a few years of sabbatical from the game. It was amazing. Come crunch time in a game, and Jordan was the man to give the ball to. His fadeaways and slam dunks are legendary. Unfortunately for me, my love for the game faded away as soon as Jordan left the Bulls and the game itself for a few years.

How about a world without cellphones?

Hypothetical situation:

Scientists in one the most advanced European research centres have finally gathered enough evidence to prove conclusively that communication waves generated by mobile communication devices including cell phones are harmful to the human body. A ten year old research has yielded a result that states that exposure to such signal waves increases the chances of cancer by 50% and brain tumour by up to 20%. In other words, if the world stops using mobile communication devices, the occurrence of cancer might come down by as much as 50%.

Back to Reality:

Almost since the beginning of mobile phones usage by the general public, debate has raged about their impact on the health of the users. Mobile phone manufacturers claim that there is no conclusive evidence that cell phone usage causes any physical harm. Today, it is generally accepted that cell phone usage should be restricted; long calls should be avoided; and usage of handsfree is being encouraged. People know that cell phones can be harmful and hence the above measures to reduce one’s exposure to the waves. But no one knows for sure as to exactly how harmful these waves really are.

Now let’s imagine that the hypothetical situation stated in the beginning of this article actually happens. For some people this might be reason enough to ban all cell phones in this world. But it is highly unlikely that such a discovery will ever be known to the world at large. There is simply too much at stake for the corporates that are in the business of mobile communication – manufacturers, service providers, software providers, et all. And it is not just the greedy corporates so to say, who would ignore such a finding. What about people like you and me and what about the way businesses function the world over today? Will today’s CEOs be ready to part with his Black Berry? Or would the Dalal Street trader retain his sanity if his mobile phone service provider were to shut shop?

Aren’t we all so very dependent on mobile technology today? Imagine two worlds- one is the present world with cell phones and another one without cell phones, but you will have 50% less chance of getting cancer. Which one will you choose? Well, I know it s a tough choice!

I like

Formula one, cricket, ar rahman, pink floyd, smirnoff, pink floyd+Smirnoff, kids- especially little girls, strategy computer games, relaxing at home, sipping beer in goa, mani ratnam, chilka, people who appreciate my sense of humour!, mom’s innocence, my unicorn, businessline, Frederick forsyth, Fernando Alonso, colour of the dawn sky, bawarchi briyani, wangs kitchen, besant nagar beach, mani’s, playing TT in GR Jani, IPO listing gains, rajnikanth, choosing a book from the library, ilayaraja

Mallya's leap of faith

Vijay Mallya is undoubtedly the most flamboyant businessman in India. In the Indian press, he is often compared with Richard Branson of Virgin. He leads a colourful life and is a successful businessman. His spirits group- United Breweries- is an industry leader. He also owns ‘Kingfisher Beer’, which is a reasonably known international brand. More recently Mr. Mallya has entered the airline industry. Doing well in this segment will be much more of a challenge as the competitive landscape is extremely tough right now, and the stakes are much higher.

When Mallya’s Kingfisher airlines entered Formula One earlier this year as a sponsor to Toyota F1 team, it seemed to be a good, measured move which would enhance the brand visibility of his airline just as it was about to start services in international routes. But Mallya’s latest move to buy the Spyker F1 team is a much bigger move and an extremely ambitious one. It is to be noted that Mallya will use his own money - rather than involve any of the shareholders of his publicly listed company- for buying and running Spyker. The kind of money involved here is huge. Buying the team will cost around 80 – 90 million euros (450 crore Indian Rupees). In addition to this, the operations of the team will have to be financed. Considering that Spyker is presently a loss making entity (it made a loss of around 30 million euros in the first half of this year), this will be a very costly affair. Moreover, Mallya will be hoping for a turnaround in the team’s fortunes in another 1-2 years. This will be the most difficult part. Teams like Toyota and Honda have proved that money cannot guarantee success in this sport. And anyway, Mallya can never hope to match the budgets of the manufacturer-backed teams.

My guess is that, having entered the deal, Mallya will stick on with Spyker for 2-3 years and control the financial bleeding of the team. He is smart enough not to believe in miracles. He will try and minimize the bleeding of the team financially. He will utilize the 2-3 years to build a well-known brand out of his airline. He will try and bring in an Indian driver and use him to endorse his company. He will also try and make sure that an Indian Grand Prix happens- latest by 2009. At the end of these 2-3 years, Kingfisher Airlines will be known world over and Mallya would’ve achieved his objective. At the end of this period, Mallya will start looking for a good price at which to exit his ‘investment’. Inevitably there will be another corporate entity somewhere which would want to utilize Spyker’s (or whatever it will be called then) services for achieving its own corporate objectives, and the story will continue thus…

Things could go wrong though, if Spyker’s financial bleeding cannot be stopped without severely hampering its competitiveness. Mallya is rich, but he is not stupid. He is not a Roman Abramovich, who is spending his personal fortune on a soccer team to simply amuse himself. Mallya’s move is strictly business oriented. This is a calculated gamble that he is making. He is hoping that the money that he will bleed in Spyker will be compensated by making Kingfisher the airline of choice for flying in and out of India. But this is a risky move since Mallya is totally inexperienced in running an F1 team. I doubt if he has ever owned any motorsport team.

Mallya is going for all or nothing here. He is entering untested waters and the only reward that will justify his risk is if his airline becomes the number one Indian carrier in international routes. Here’s wishing Mr. Mallya best of luck in his leap of faith!

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