31 July, 2011

Misuse of a sacred right

The right to free speech is a right whose value you only appreciate when you don't have it. This blogger has experienced what it is not to have that right - where every conceivable & useful global site on the internet is blocked, where any non state controlled TV channel is simply unavailable and where the press is just plain awful. As it would be for any blogger, the right is a precious one. There is the usual saying, I don't like what you say, but I'll defend your right to say it. But is the right to free speech as absolute as it is thought to be. Should it be ?

No right is absolute. Even in America, where the First Amendment protects free speech,  Jutice Holmes Jr in Schenk vs United States observed that shouting Fire falsely in a crowded theatre will not be protected by the First Amendment. In many European countries, denial of the holocaust is not permitted. Recently incitement to religious hatred has also been brought under the ambit of no nos. In India, writings which are seen as offensive to any community and are likely to cause violence are banned.

In the United States, by and large anything goes. And the right is jealously protected, as it should be. In the good old days, you could stand on a soap box and rant for all you want. Or you could find your way into a newspaper. Your audience was limited. But today, any person has an instantaneous global audience. In such a world, does anything go ? Should anything go ?

What about the extremism heard on radio and read in books in the US and the often thinly veiled incitement to violence. What about some notorious imams, who use the precher's pulpit in many parts of the world to declare jihad. What about the deliberate provocation by crazy outfits like the Shiv Sena in India who threaten violence against anybody it doesn't like ? Should their rights of free speech be curtailed.

I ask this, because I saw a video of the sort of right wing extremism that seems to be on the increase in the US. Watch this video (its 20 odd minutes long, but its highly disturbing, to say the least) - my attention to this video was drawn by the blog The Peking Duck. Some deranged idiot takes a leaf out of such rantings and goes and causes serious damage - its not OK to say that it was purely the madman's fault. Something like this has indeed happened in that awful incident in Norway. That crazy seems to have been inspired, amongst other things, by extremist bloggers such as Pam Geller.

We want to wage war against the madrassas that preach hatred and violence. I am not sure that the talk radio extremists are not dangerously close to treading on similar territory. 

The right to free speech is a sacred right. It should not be misused. When it is misused, the remedy is not a government action curtailing the right. But equally, society cannot stand by and watch the right misused. Societies world over have a moral duty to tame the extremism that seems to be increasing in the media. We should not sit quietly and allow our precious right to be misused by a few. Remember, words do kill.

30 July, 2011

Who is Deven Sharma ?

If I told you that the most important person in the world now is Deven Sharma, you are most likely to be flabbergasted. Deven who ?? I am absolutely certain that not one reader of this blog has heard of him before. In fact I am sheepishly admitting that I had not heard of him either, one week ago. And yet for the next one week, he may actually be the most important man in the world.

Of course, this is hyperbole. But then what is journalism (ha ha) without some excessive exaggeration of reality. You can debate about the "most important man in the world" bit, but the actions of him and his organisation are certain to affect the world very profoundly in the week to come.

Deven Sharma is the President of Standard & Poor's one of the world's three premier credit rating agencies - Moody's and Fitch being the two other. In a short while, all the three agencies have to take a call on downgrading of America's Tripe A rating.

The drama in America on the debt ceiling goes on. This weekend, it has to come to a climax.  There is still a real possibility that the debt ceiling will not be raised, which means that come Tuesday, America will be in crisis, as will the rest of the world. This must be the outcome the three credit rating agencies must be secretly hoping for , as it makes their decision easy and non controversial - an immediate downgrading of America's debt. But the greater (barely) possibility still is that some highly sub optimal deal is struck and the ceiling raised. At which point the rating agencies have a problem on their hands. They need to decide.

The grapevine is that Moody's and Fitch are likely to preserve America's triple A rating. But S&P is tending more towards a downgrade. Deven Sharma and his team then have an important decision to make. If they downgrade, that symbolic act will probably be the last straw on the camel's back and financial mayhem is likely to follow.

The rest of the world has already downgraded America's debt in their minds. But everybody is waiting for that last straw before they can stampede. Something symbolic that will then trigger a chain of events that will be felt throughout the world. 
How has it come about that a hitherto unknown Indian American holds the key to what might happen to the world very shortly. OK may be "just a little" exaggeration, but I am afraid, not far from reality.

25 July, 2011

The succession at Deutsche Bank

Does nationality still play a major part in deciding who should become the Chairman or Chief Executive of the company. It shouldn't, right? But of course it does. Except, to its eternal credit, in the United States of America. A country pretty much devoted to meritocracy and where, by and large, only merit counts. It doesn't matter where you are from or whether you are white or black or yellow or grey or blue. Perhaps to a large extent in the United Kingdom as well. But that's it. Everywhere else, it seems only a local can be a boss.

Consider the succession saga at the mighty Deutsche Bank in Germany. The current CEO, Josef Ackermann is expected to be kicked upstairs to the Supervisory Board. A new CEO is to be appointed. There is general consensus that the best candidate is Anshuman Jain. The problem is that he is Indian, not German. And to add insult to injury, he reportedly does not speak much German either.

This apparently won't do as the boss of Deutsche Bank will have to have "close contact with Germany's political and business elite" whatever that means. Yes we know what it means. Cosying up to the power lobbies and doing backroom deals. Is that how business really ought to be run ??

Yes, I know Deutsche Bank is very German and very special to Germany. But it might have esaped attention that the bank is now a truly global bank. It has some 100,000 employees and operates in 70+ countries. Its listed in Frankfurt and New York. For such a bank, the best man ought to lead it. The best man means the man who will run the bank the best and maximise the returns to its shareholders. Not the man who can wink wink, nod nod with politicians.

Of course, that's Utopian thinking. On Tuesday, the bank is most likely to announce co CEOs - with Anshu Jain running the bank and Juergen Fitschen presumably maintaining the "close contact". Nice compromise and life goes on. And this is exactly the sort of a thing what would happen in France or Japan or China or India.

Now do we understand why Amercian business is where it is. The Chairman of Coca Cola was born in Turkey. The Chairman of Pepsico was born in India. The Chairman of Colgate Palmolive is British. The CEO of Citigroup was born in India. The CEO of Alcoa is German. Senior and middle management in US companies is like the United Nations.

Meritocracy is not just the best policy. It should be the only policy.

24 July, 2011

Waltzing Matilda

It's an Australian winning the Tour de France for the first time ever. Just got off the telly watching the final stage of one of the most gripping of races for many a year. On a bright sunny day in Paris, against the wonderful backdrop of the Champs-Élysées, the sight of Cadel Evans winning the Tour de France was a moment to savour.

Apologies to the readers who are not sports fans, for the second consecutive sporting post. But this was a special race and a special result that I simply can't resist posting about. The Tour de France is the world's premier cycling race. Has been so for 100 years. It is run over 3400 kms and in 22 days. One of the greatest endurance events in the world. On flat stages, cyclists clock average speeds of 50 kmph. Steep climbs have to be negotiated and on the descent, crazy speeds of 90 kmph are reached. The majesty of the towering mountains of the Alps and the Pyrenees provide the backdrop. As does the beautiful French countryside. And some gripping sporting action.

Alas, for the last few years, cycling as a sport has been hit by massive doping. Almost every rider seemed to be doping and many a big name got caught and banned. The sport seemed virtually doomed. But this year, the Tour de France was almost dope free - only one rider got thrown out. Speeds came down and it was an open open race. Any one of 6 or 7 could have won it , virtually until the penultimate day. Extremely competitive it was and every day had a plot with the outcome  not certain till Saturday's penultimate stage. Stirring stuff.

The sport seems to be dominated by Europeans. A few Latin Americans are seen. No African or Asian even rides the race. The Amercians have a peculiar situation - not many ride the race, but two great winners in the past - Greg LeMond, and the sainted Lance Armstrong, have been peerless and flown the flag for America. But the Spaniards, the Belgians, the French, the Italians, the Germans and the Dutch are seen all over the race.

But today , it was a day for Australia. Cadel Evans, almost the only Australian cyclist of note, won the Tour at last. He had finished second twice before. He is 34 and old in the sport. His time seemed to have past. But not this time.  He was very brave in Alps and his performance on Thursday and Friday was majestic. But he still wasn't in the lead going into Saturday's time trial. How he blew them away and won it with a supreme effort, will be the story of this year's Tour.

Australia may not go mad tonight, but overjoyed it surely will be. Its a great sporting nation, full of heroes. But even in that elite company, the achievement of Cadel Evans is something special. Australia is not a powerhouse in this sport and by sheer grit and dedication, and after so many disappointments, Cadel stands on top of the world on one of sport's greatest theaters.

Can I hear the strains of Waltzing Matilda in the background ?

17 July, 2011

Go ladies, Go

If you are a sport's fan , you are somewhat spoilt for choice today. If you fancy sublime South American football, the Copa America is on in Argentina. The final day of the British Open golf, with all the hype surrounding the next Tiger Woods - Rory McIlroy may be your choice. Or the majestic Tour de France, the world's premier cycling event, thankfully free of any doping scandal so far. But my pick of the day is none of this.

You may be forgiven for not realising that the World Cup football final is on today. Yes, right. World Cup Football. Rub your eyes again. Yes. Its the Women's World Cup football final.

Before you groan and switch off, just consider the fact that the Women's World Cup has produced more drama, excitement, heartbreak, and joy than the boring Copa America going on at the same time featuring the likes of Lionel Messi. 

Women's football is something of an anachronism. If you have watched a women's game, it is played at roughly half the pace of men's football. In no other sport is the gap between men and women so obvious. Other sports try to make women wear short skirts to attract viewers (shame on you, badminton). Women in football wear the same awful shorts that the men wear. They aren't good looking - there are no Maria Sharapovas in footballs. So why should you get all jumped up about a sport where "there is nothing to see".

Here's why. The referee hardly blows her whistle in a women's football game. The game flows. There are no crunching fouls, no head butts, no cynical theatrical posturing. There is plenty of skill, even if the game is at half the pace. They play as a team - there are no huge heroes although Marta of Brazil has a cult status similar to her more illustrious male counterparts.  And therein lies the beauty of sport. Its not just the sheer standard or professionalism that matters. Its the joy and excitement it can bring, even if the standard is just club level.

The World Cup has had its many moments of drama. Germany was hoping to win for the third consecutive time and that too on home soil - but they were beaten in a gripping classic in extra time. Brazil, a perennial favourite was beaten on a penalty shootout in the semis in another nail biting encounter. And two wonderful teams have made it to the finals today. The United States, a powerhouse in the game, but not doing very well recently, made it against the odds with grit and determination. In a land where sport is at a sorry state with the lockouts of the NBA and the NFL, the ladies have brought great cheer. And what of the other finalist ? Nobody gave them a hope. After every game, they hold a banner "To our friends around the world, thank you for your support". Post the recent tragedies in their country, there was always going to be public support, but even after they dumped Germany in that historic game, they are being supported by Germans - such is their charm.

TV ratings are through the roof. Germans, the most  masculine of nations, and probably the only country where the natives call it the Fatherland instead of Motherland has embraced the World Cup totally. TV ratings in the US have zoomed with a public charmed by the story of ordinary athletes, not multimillionaires, achieving glory. But in the land of the rising sun, nobody even knew there was a tournament going on when it started. But, with each win, the momentum has snowballed. The vagaries of time zones means that the final starts at 3.45 AM Japanese time. You can bet there would be many up and cheering the Nadeshiko with bleary eyes.

Its Japan vs the United States tonight. Its Christie Rampone vs Homare Sawa. For once, I can't bear to see either team losing.

15 July, 2011

What will happen after the world ends on Aug 2

The end of the world is near. On Aug 2 to be precise. Repent and thou shall be saved.

Every year, some nutter prophecies the end of the world on some artificial date and his followers prepare for Armageddon. Come the day and nothing happens. We live on till the next prophecy. Is this what is going to happen on August 2nd, the latest doomsday deadline ?

Somewhere on August 1st or so, America will reach its legally approved debt ceiling of $ 14.3 trillion. Ninety times in the past, this ceiling has been raised by the US Congress and the Senate and life goes on. This time however, there is a real possibility that it may not be raised. Hence the doomsday.

Do I see you yawning ? Surely some technicality of American debt ceiling cannot affect you and me. Who cares ? Unfortunately you should. You should care very much, wherever in the world you are. It won't be the end of the world, but you will have a vision of what the end of the world might look like. For this is what will happen if the antics of the lawmakers in the US continues.

In August, the US will have revenues of $172 bn and expenditure of $ 307 billion. Pause for a moment and read this again - this is the level of madness at which the Americans have been operating. (Its a sobering thought that every major country in the world, barring China, has been equally mad; India is at the top of the madness stakes). So come Aug 2, if it cannot borrow anymore, the US can spend only what it receives ; therefore $172bn. So where does it cut.  The top five spending needs are Medicare and Medicaid $50 bn, Social Security $ 50bn, Defence $30bn, Interest $30bn and Unemployment benefits $ 13 bn. All these themselves add upto $ 172bn. There's no money for anything else - paying salaries for government, or even turning the light bulbs on at the US Congress.

So cut everywhere it has to. When it cuts Social Security or Medicare, there will, metaphorically, be  riots on the streets. When it starts to touch interest payments, however, is when the global impact will really come. For that will mean, the US defaults on its debt. But well before that, the US credit rating will be cut. Lenders will not lend anymore, or if they do, will demand much higher interest. Global confidence will be shattered. The dollar will sink.  Markets around the world will violently swing and I guarantee you, its impact will be felt everywhere, even on you and me who are a million miles from America.

You would have thought that the wise men in America, who know all this, won't be so foolish as to let this happen. Unfortunately, these days, nutcases, exhibiting the highest sense of irresponsibility, have come to positions of power in the US. I am a diehard fan of America and Americans, but I have been wringing my hands at the amazing levels of depravity to which American politics has descended to.

I urge you to read everyday on the drama that's going on in the US on this debt ceiling issue. Its a real concern for the world - not just America. It affects you in a profound way.

10 July, 2011

Brightly fade the stars

The first powered human flight took place in 1903 when the Wright Brothers took their flyer to the sky and flew 120 feet in 12 seconds. In just 58 years after that momentous event, mankind took to space - Yuri Gagarin made that historic spaceflight in 1961. Just eight years later man was on the moon. (just a pause to note that virtually every reader of this blog was not born when Armstrong placed that first footstep on the moon). In 1971 and 1972, Pioneer 10 and 11 probes were launched which flew by Jupiter and Saturn . They are still flying somewhere, but we have lost contact with them.  In 1977, the greatest mission of all - Voyager was launched. Past Jupiter, Saturn , Uranus and Neptune and now past the solar system itself, into interstellar space. 34 years after it was launched, it is still in contact and is mankind's first feeble attempt to reach out to the stars.

After 1977 ?? Nothing. The space shuttle program, which is the only noteworthy achievement since then, was all focused on near earth orbit. Even that is coming to an end. Atlantis , the last shuttle flight is in space now. When it returns back, the space shuttles will also be consigned to the museum.

Mankind has turned inwards. The romance and the fascination for space has gone. We go into space today to launch satellites - so that we can watch 5000 more saas bahu serials (soap operas).  We want to have  a communications system in space so that we can find the way to the nearest bar. We want a spy satellite so that somebody can launch a cruise missile to hit a donkey in the ass in Afghanistan. Better to stop here, before  I go bonkers .

Its all a question of money of course. Who can afford to go to the stars, when there are so many problems on the ground.  Competition between the Soviet Union and the United States, which drove the fantastic achievements in the 60s and 70s is , alas, gone . When long term is defined as up to the next election, who has the patience to wait 1.6 years for the shortest launch window to even go to Mars which would still take 260 days to reach.

Because space technology is so intimately linked to defence technology, we can kiss international cooperation goodbye. Each nation will do its own thing (Its a telling commentary on the human race, that even when faced with the majesty of Jupiter or Saturn, let alone the stars, Americans, Russians, and Chinese would prefer not to talk to each other). The only country even remotely capable of taking the next steps in space is America. With one of the greatest institutions it ever created - NASA.

Money is short in the world of course, but the way mankind chooses to spend its resources says a lot about it. NASA's annual budget is some $19 bn. The US alone spends some $700 bn on defence. Mankind across the world spends close to $1.3 trillion trying to kill its own. It spends $300bn on drugs to get a high. It spends some $100 bn on pornography. And NASA, the only body in the world that does anything meaningful in space has a princely budget of $ 19bn, which will now be cut given where the US is on its fiscal deficit.

I'm afraid, we are entering a new period of the Dark Ages, when mankind is more familiar with the  characters in Harry Potter, but cannot name the planets in the solar system. Where a television programme called Are you Smarter than a Fifth Grader exists and in which only one person has so far won.

On an idle Sunday, lazily browse through the NASA website here , especially the Voyager site and tell me you aren't filled with awe.

09 July, 2011

The colour of money

These days, in India, the flavour of the month is black money.  The ire seems to be directed (thanks to a popular yoga practioner's antics) against black money stashed abroad. Apparently in Switzerland and Lichtenstein. This yoga practioner claimed that if all the black money stashed abroad were to be brought back, it would signal the end of poverty. The Supreme Court, in another case of judicial overreach, is directing the action on naming and shaming those who hold accounts in the aforesaid countries.

A pause to consider what is black money is in order. Black money is that income on which taxes have not been paid. If this is what black money is, in India, it is right under our noses. Forget about Lichtenstein. It is in every house. The largest generator, washer and lubricator of black money in India is the property market.

When I buy or sell a house, or land, I suffer two incidences of taxation. One is the usurious rate of stamp duty. The second is the perfectly reasonable rate of capital gains tax. I don't want to pay both. You see, taxes are somehow a very good thing when imposed on others and a very bad thing when imposed on me. After all I don't earn all that much and its not "fair" that I should be asked to cough up taxes when those politicans and businessmen are making millions. So its ethically very fair that I evade taxes on my propery transaction.

So what do I do ? I buy a suitcase. Stuff it with cash. Formally, on the contract, the property is being sold and bought at 50% of the real value. Voila - stamp duty falls by half and capital gains tax either disappears or is only a minimum. The balance is paid via the suitcase with a wink and a nod, thereby contributing to the sustained growth of the luggage industry. The recipient presumably stores this suitcase in the loft. And when the time comes for him to buy some other property, the suitcase passes on.

I am willing to be provocative and say that every other guy who has bought or sold property is a generator of black money. Everybody in India is on this loot. And its not just the rich. When land is acquired from the "poor farmer"  for a factory to come up, you think he pays his taxes ? Bollocks. His logic - he is "poor" after all; so why should he pay taxes - let the rich pay.

Wealth in India is largely in the form of property. Our own wealth is largely in property. Examine every legislator's wealth and its largely in property. And with evasion of taxes so rampant in the property market, most of us are the creators of black money.

Its an uncomfortable truth. But Lichtenstein can wait. If we want to really unearth black money, we have to pull out and empty our suitcases.

05 July, 2011

Vanity thy name is Chinese Company

Vanity thy name is Chinese Internet Company, went the title of an earlier post of mine here. I should correct this now to Vanity thy name is Chinese Internet Company. How else can you explain the rush of Chinese non Internet companies who want to list in the US ?

There are 900 companies with businesses mainly, or only, in China listed in the US. Compared to that there are only some 2000 odd companies listed on the Chinese mainland. Does this make any sense ? Why are Chinese companies falling over each other to list in the US ? Usual reasons - Greed and Vanity.

Greed first. Anything beginning with the letter C is now hot in the US. Never mind that the investor does not know, or care, whether China is to the East or West of Topeka KS. Anything even remotely related to China must be leading to a pot of gold. Hence the stampede towards China stocks. A scene reminiscent of the wildebeest crossing the Mara river. The expert analysts, investors, fund managers all seem to possess exactly the same intelligence as that of the wildebeest.

Greed is also at the back of sundry bankers and advisors egging on Chinese companies to list in the US. Prospect of fat fees has them drooling.

Vanity is the other side of the coin. For some reasons, Chinese owners and CEOs believe their prestige is enhanced by being a "foreign listed company". Local government officials suffer from the same malady - number of foreign listed companies in their domain seem to be a mark of manhood. Supply side stampede.

Getting your company listed in the US is not a joke. Its a laborious process. So the wise intermediaries have discovered the route of a reverse merger. Acquire a shell listed company in the US and merge your company with that one. And Hey Presto, you are now listed in the US. One quarter of all reverse merger transactions of listed companies in the US between 2007 and 2010 were by Chinese companies.

After the champagne, and after the advisors have pocketed their fees and disappeared, comes the problem. 11 Chinese companies have seen their shares being suspended for trading on NASDAQ. Another dozen or so have been delisted or suspended on other US exchanges

The problem is that corporate governance standards in China are nowhere near the requirements of a US listing. Accounting standards and their adoption are also not in the same league. Auditors are not of the same calibre. This does not mean that the intrinsic business is not sound. Very often they are. Many Chinese companies would be at the forefront of dynamism, growth and profitability in the world. But a US listing is not for them; at least not yet. There is a lot of grey in business in China, especially in dealings with the government. American exchanges require black and white; not grey.

Its far better to list in Shanghai and Shenzhen. If listing somewhere else is a must, there is Hong Kong. There is zero business logic in going elsewhere.  If you want to preen your feathers, then there are other ways of doing it. Listing in the US is a very bad idea.

There is a peculiar fall out to the situation. As the news of Chinese companies getting suspended or delisted grows, the short sellers are shorting every Chinese company . The same wildebeest stampede is now in the opposite direction - every Chinese company must be dodgy; so short them all. I think it would be entirely appropriate that  a few wildebeest be flown from the Serengeti and made to stand outside Wall Street. Bulls and bears are no longer the animals on stock exchanges ; its the wildebeest that's ruling the roost.

03 July, 2011

Kyon nahin aaya kal ? (Why didn't you come yesterday ?)

Consider the following employee employer relationship. The post is set in an Indian context, but it could be true of virtually any developing country.

There is no written contract of employment. The worker is paid below that statutory minimum wage. There is no Provident Fund or Employee State Insurance, both of which are statutorily mandated in India. There is no paid leave. Most often, there is no weekly off. Child labour is acceptable. Physical abuse is not unknown. Sexual abuse is ,alas, not rare. Verbal abuse is often. There is no training for the job. There are no rest breaks. The job is monotonous, repetitive, and physically taxing. There is hardly a word of praise or feedback. Biting criticism from the employer is a daily affair.

The workers absent themselves at the drop of a hat. Attrition is enormous; the worker often just absconds or runs away. Coming on time is an alien concept. The worker tries her best to finish faster and with as less effort as possible - quality be damned. 

The employer is usually a lady - ninety percent of the time. She fervently believes that she is the fairest employer of all and all this unsavoury labour practices, which she incidentally tch tches at,  are done by other amazons , not her. And look at how ungrateful her employee is - she bunked today. The beauty is that the employer cannot do without the employee. And yet, such is the treatment.

The employee is also usually a lady - ninety nine percent of the time.  In her opinion, she is the very epitome of decency and hard work and her employer is the perfect example of a Rakshasi (demon).

This is a gigantic industry. There are an estimated 50 m workers in this category globally - some 10m in India and probably an equal number in China. They are to be found all over the developing world. Minus this industry, half the countries in the world would come to a grinding halt.

You would have thought that in such a situation, there would be huge improvements and advancements. Lots of innovation, technology, good practices, corporotisation, etc etc. Not so. The industry is stuck in a time warp. The only change that has happened in the last decade or two is that the worker now carries a mobile phone, instead of being completely non contactable.

Welcome to the world of the maid.