Similarities between 2008 Financial Meltdown and India 2013

One of the reasons attributed for the Financial meltdown of 2008 was the short sighted behaviour of the CEO's and other Senior Executives of the Financial Institutions world wide, who put personal short term goals ahead of the long term health of the Organization and the Economy. In order to earn performance linked fat bonuses, they turned a blind eye to policies and products that were doomed to fail. So called 'innovative' derivatives that were churned out by these Financial Whizkids were aimed at attracting customers in the short term, but not taking into consideration the impact in the long run. Most of them were, in a way, akin to Ponzi Schemes. Prudent Financial Discipline was given a go by, and mortgage loans were given to people who couldn't afford them, creating a Real Estate and Housing bubble that burst at the first prick made by a small needle. How the behaviour of these individuals brought their companies down and took the global economy with them is history.

There is a striking similarity to the 2008 Financial Market scenario with what is happening in the Political front in India during the last few years. Congress and UPA has taken a very very short sighted view to somehow get back to power. They have splurged public money, not on Planned Expenditure, but on welfare schemes that are leaking and are totally unproductive. The avowed objective is to win votes at the cost of the nation. There is no long term vision. Minority (read Muslim) pampering has reached absurd levels. Muslim youth cannot be arrested as per the Home Minister of India, while Karnataka Congress Chief openly exhorts Muslims to not repay loans. How Akhilesh Yadav, BSP and Congress turned a blind eye to the equally guilty Muslims in the Muzzafarpur Riots is known to all. It is a game of one upmanship where the loser is the Country. Fearing negative reaction from Muslims, the Defence Minister craftily declares an invasion by Pak Army as one done my Terrorists dressed in Pak Army Uniforms. The PM is uncaring if our Jawans are beheaded. MNREGS, Loan Waiver, Ordinance against MP disqualification and finally the thoughtless creation of Telengana is tearing the Country apart. For a few seats, Congress, which sat on Telengana demand for more than a decade, came out with a hastily pronounced decision, without arriving at a consensus. And the result is for all to see. Contrast this with how NDA under Vajpayee created Chattisgarh, Jharkhand and Uttarakhan, without any ripple. 

One can just hope that, while no one could save the Global Economy from crashing in 2008, at least the electorates are wise enough to throw the Congress and UPA to the Bay of Bengal in the 2014 elections.

Time to hit the Lecture/Seminar Circuit again?

For nearly a decade and a half, I was associated with Training and Teaching, though I was not a full fledged academician. I was holding regular jobs in the field of Strategy, Investment Banking, New Venture Advisorywhile also heading middle level companies, including mine.

 

But there was always a stigma associated with it. In the course of my job, whenever I gave sane advise to my own Directors or to the Clients, it was always shrugged off with a "Ah! the Professor speaks" meaning my advise is more theoretical than having any practical value, and hence invariable ignored. Posterity proved in many cases my advice, if taken at the right time, would have brought more profit for the other party. Of course, not all my advises were spot on. I had my own share of bloomers, which is par for the course.

 

When I moved to Muscat in 2010, I took a decision to give up teaching and training to concentrate on my Consultancy Business. It was a very painful decision as I really enjoy teaching. It is 3 years since I moved to Muscat, and people here listen to me with more of an open mind than when I was in Kuwait.

 

This is unfortunate. Decisions taken with a theoretical background tend to be more correct than not. I have seen this in the case of recruitment of staff. Whenever I have been forced to give a go by to my recruitment process and guidelines, due to pressure of having to fill a post, I have suffered, getting stuck with people with poor attitude. Ditto in the case of Company deviating from the Strategy developed and try to be opportunistic, without doing a proper evaluation and risk assessment. Intuition and experience counts, but backed by solid theoretical foundation, they are unbeatable.

 

It is also one of the reasons why Consultants go to great extend to do lectures, or teach in Universities.

 

Maybe the time has come for me to hit the lecture/seminar circuit again!

Manmohan Singhs Survival Strategy during the past Decade - Blind-Deaf-Dumb

See No Scam, Be Deaf to People's Cries of Anguis, Speak Nothing

Closing a hole with darkness

I am sure I will be pillored for writing this.

 

Recently, Supreme Court passed a 'verdict' barring convicted lawmakers from continuing in Parliament or State Assemblies. This has been welcomed by almost all, except those politicians who face imminent conviction.

 

Much water has flown since. First the ruling party, under pressure from Lalu and Rashee Masood and a handful of others, decided to introduce a bill in the Loksabha to overturn the verdict. But it proved to be non-starter. Then the Government, ill advised, tried to take the Ordinance route. This was scuttled, first by BJP and Left, then by the President before 'Dumbo' entered the picture with his irresponsible press conference.

 

The subsequent events should not cover up the root cause. The Supreme Court was wrong in pronouncing the judgement.

 

We have a legal system which states that every person is 'innocent till proved guilty' (It is another matter that we have a mobocracy, led by TV Anchors and Media, that pronounces everyone 'guilty even if proved innocent'). Take the example of Laloo Prasad Yaday- He has been convicted by the CBI court in the Fodder Scam (well and good, though it took them 16 years to arrive at this verdict,during which he enjoyed all the perks of office and more). But this is only a lower court. He is free to appeal in the higher courts, including the Supreme Court, and he can even go scot free. If he that happens (after 10 years or so) then all of us would have been unfair to him. Right?

 

Supreme Court is reluctant to attack the Root Cause - the inordinate time it takes to arrive at a verdict. Why verdict, even the first trial date is more than a decade after a case comes to the court. Add to this, the shoddy job done  by the Police across the country, resulting in 90% of the people getting acquitted for want of evidence. Is there any wonder people are becoming more arrogant?

 

Take the case of P Chidambaram's election from Sivaganga, that is being challenged. It is obvious to everyone, except our Courts, that a fraud was committed and results were manipulated. It is almost 4 1/4 years since the election, but the case has not even come up for hearing!!!. And PC has worked as Home Minister and then Finance Minister during this period. If his election was null abinitio, then whatever decisions taken by him during the past 4 1/4 years are null and void. But......?

 

This is true of most of the cases. Also, the accused are denied of their right to clear their name and are permanently under suspicion, which is unfair.

 

Supreme Court has not come up with any concrete plans to speed up the justice system, and various Police Reform suggestions are gathering dust.

 

The current Supreme Court verdict on disqualification of politicians on being convicted, while popular, is a grave mistake and akin to closing a hole with darkness.

 

 

You can Fool..................................

I wish someone would tell to the Dumbest Guy bar None in India the following quote from Abraham Lincoln;

 

"You can fool all the people some of the time, and

some of the people all the time, but

you cannot fool all the people all the time"

 

Two months ago, the Supreme Court comes down heavily on MPs and MLA's who are convicted but continues to enjoy holding their position. Instead of using this as an opportunity to cleanse the political system, the Government comes up immediately with the idea of a law to circumvent the SC verdict. The speed with which the Government moved is astonishing. If only the Government took decisions that fast pertaining to so many issues pertaining to the common man!.

 

The proposed law runs into rough weather in the Parliament and it was left to be debated by a Parliament Select Committee, as it should be. There is no hope of this law getting passed before the next elections, as things stand.

 

With Laloo Prasad Yadav's and Rasheed Masood's verdicts due by the end of the month, the Government (read Congress) takes the Ordinance route. Any Ordinance has to be passed by the Parliament in 6 months time. But by then Laloo and Rasheed would have been safe, and it would be left to the new Government to take a call on this. In all likelihood the ordinance would have lapsed.

 

BJP and Left had serious reservations (more as a political strategy- they have nothing to lose by opposing the ordinance). They meet the President, who himself had more or less made up his mind to return the Ordinance for reconsideration, once MMS was back from US. He didnt want to embarrass the PM of the Country while abroad, and rightly so.

 

Return of the Ordinance after the Opposition had met the President would have been a body blow for the Congress and the UPA. And the purpose for which the Ordinance was issued, viz. to save Laloo and Rasheed, would not have served, as the Government has to be seen to be reconsidering the Ordinance, Cabinet has to approve and then again it has to be resent to the President, who cannot refuse to sign the second time around, but can sit on it. The Ordinance was anyway doomed.

To save face, Congress scripted the comedy of Rahul Gandhi, attending a Press Conference hosted to 'support the Ordinance', make a cavalier statement denouncing it, embarassing the PM while he was abroad, and walks off without waiting to take any follow up questions. He didnt want some smart alec reporter (and there are still some with a bit of back bone) to ask the obvious questions - "What the hell were you doing these last 2 months when the whole issue was being debated in the political circles? Why didnt you raise your objection then? and Can you guarantee not giving seats to Criminals in the next Elections?"

 

Sonia and Rahul have done irreparable damage to the office of the PM. They have demeaned it to such an extend that if MMS had even an iota of Self Respect, he would put in his papers on his return. There was a big hue and cry when Rajiv Gandhi, insulted the then Foreign Secretary A P Venkateswaran, in a Public Meeting. But our media is silent on Rahul Gandhis immature, irresponsible outburst. Here is a guy who is dumb, drunk with power, has absolutely no accountability, refuses to take any responsibility, and doesnt care a fig for the people. He is also not in India for majority of the time, and God only knows what he is doing when he is abroad. How long do Congress think they can fool the people?

 

Arise! Awake! Indians and throw this Anti-National Government and Party out

Invading Armies have a bad habit. When they are forced to retreat from an occupied country, they leave behind them a trail of destruction - it is called the scorched earth policy.

 

Iraq purportedly burned the oil wells in Kuwait in 1991 leaving behind raging fire and pillowing smoke. (Though there is another version to this which claims that Iraqis actually did not do this, but the Kuwaitis on taking back the Country lit fire to some old unproductive oil wells to claim damages from Iraq- let that be)

 

The UPA 1 Government did not think they will be returned to power in 2009. They decided to leave a scorched economy behind them with the fervent hope of putting the next Government (Ostenably a non-Congress one, as per their assessment) on the mat. Towards this end, then announced a massive outlay for the Rural Employment Guarantee Scheme (knowing fully well that it would be a severe drain on the economy) and the Rs 60,000 Crore Farm Loan Waiver Scheme (which was never intended to benefit any farmers). Many acclaimed these schemes, not bothering to read between the lines. The MGNREGS was meant to be implemented over the next 5 years, while Farm loan waiver over the next 4 years - clearly indicating that while UPA 1 took the credit, the next Government would have been forced to carry the can. This was apart from the massive subsidies given to the Industry as a stimulus package. The ideal scenario envisioned by UPA1 is what is being played out now - deficit spiralling, inflation uncontrollable, growth stunted, unemployment on the rise and economy in a bloody mess. And the blame would have been on an opposition government. This would have given a solid platform for Congress and UPA to claim the right to set right things that have gone wrong in the 2014 election and opposition would have been totally discredited. Clever- right?

 

But by a quirk of fate, UPA was reelected and to their horror had to set right a mess that they created in the first place. They just did not have a contingency plan in place to tackly this and the rest, as they say, is history. UPA 2, ravaged by Corruption Scams and the consequences of the UPA 1 disastrous policies, blundered on, taking India back to the 1980s.

 

But Congress and UPA (they are synonymous) appear to have not learned the lesson. All intelligence inputs have indicated that UPA and Congress would struggle to touch the 150 mark. Rajastan, Andhra Pradesh, Tamil Nadu and Gujarat, which gave them most seats are the States where they expect to be thrashed.And there are no States that can make up for the seats to be lost here. More or less certain that they will lose power, they are back to playing their dirty tricks on the economy and gone ahead with a plethora of non-productive schemes, i.e - Food Security Bill (it is amusing to note that Congress was single handedly responsible for destroying the Public Distribution System across the country. Now they are replacing the same a new one. How ironic!), widening the scope of the leaky, inefficient MGNREGS (which has pushed farm labour input cost up, apart from making rural labour lazy - did you listen to the 'Prince Dumbo Rahul Gandhi' statement? - Work for 100 days, eat Roti and Vote Congress. A future PM (god forbid) asking a productive asset to idle for 265 days!!!! How is that for increasing productivity?. But then what does he know about productivity), creation of Telengana (ensuring unrest in the region for decades to come), announcement of 7th Pay Commission (without tackling the need to make the Government functioning leaner and linking pay rise to productivity) that is expected to create an additional financial burden of 1.5% of the GDP, when the Country is already reeling under massive fiscal deficit and finally the passing of the Land Bill, that will ensure that no major projects are able to acquire land for ages.

 

Apart from looting the Country all these years, Congress and UPA are hell bent on ensuring India do not progress at all in the coming years. If this is not being anti-national, I dont know what else is.

 

The only way out is to give such a thrashing to Congress and its allies in the next election that the party disintegrates totally.

 

Indians! Arise! Awake!

Don't be an Abhimanyu in Business and Life

I sacrificed 17 years of my Work Experience when I joined somewhere at the lower end of the ladder in an Investment Bank in Kuwait. I was known as an Educationist and this was hampering my career in Kuwait, where one can easily get type cast. Once an Educationist, always an Educationist is the motto in Middle East. There is no talk about transfering the knowledge of one sector to another.

It is another matter that I grew up very fast in the Investment Banking Sector, partly due to favourable market conditions, partly due to the Company registering phenomenal growth in the Private Equity Sector and partly due to good fortune. I have never looked back since. Though I have moved away from Core Investment Banking, I still think and act like one, and have not forgotten the lessons I learned during my stint as an Investment Banker.

Though I had been an entrepreneur once in the past, having been a franchisee of NIIT, I need to admit that it came too early in my career, at the age of 29, when in retrospect, I have to admit, I was not ready for the task. I did not have a good grasp of Finance, Costing, and was poor in man-management. I also thought there will be sustainable growth, and the higher revenue will justify the higher cost and paper over other cracks. When the inevitable downturn came, and the growth plateaued, I didnt have too many answers. And to boot, I didnt know where I went wrong.

I got the answer to this riddle during my stint as an Investment Banker. I am a sucker for new ideas, and whenever I get a good hair brained scheme that requires funding, I used to champion the cause and take it to my Chairman, explaining to the virtues of the project and the profit that will accrue to the Company. He will listen patiently and ask just one question 'Rajaaan, what is the exit?'. I didnt know initially what he meant. But later on learned that Investment Companies enter at an early growth phase, add value and exit when the time is right, making a tidy profit. The exit option is always important. This was drilled into me time and again. These days I dont encourage any investment proposal without a clear exit strategy.

Be it in business or in personal life or professional life, always have an exit strategy before you enter.

Remember the story of Abhimanyu, who learned while in the womb how to break into Chakravyuha, but did not know how to exit, and paid for it with his life. Whenever I have an itch to start a venture without considering the exit, I remember these stanza,

Veenithallo Kidakkunnu Dharaniyil
Kshonithavumanijallo Siva Siva
Nalla Marathaka Kallinotothoru
Kalyanaroopan Kumaran Manoharan