Thursday, September 18, 2008

Greed and the credit crunch

The fairy tale ended for Lehman brothers! Such a sad ending indeed, just the way Elliot thought it would ‘not with a bang but with a whimper’. My heart does bleed to see big brands going belly up, but bleeds harder to see once well paid, employees cast away overnight. It is funny that there was a job posting for a ‘quantitative specialist’ at Lehman on public job sites as late as 15th September. Does this say anything about the disconnect between the top and the grass root levels in the company? Or is it that some HR who was not well versed with the status of the company scheduled an automatic re-posting of the job! What ever it is, it is sad. For me it is sad because Lehman was so big, so big that I always dreamt of being able to work, after all I am a brand-o-phile. I love big brands, brands that command respect, recall value and command a following. (Somehow I don’t like coke-a-cola, even though the brand meets all these criteria)

So there it goes Bear and Sterns, Lehman, Meryl Lynch, all of them big investment banks.

So how they did they all come about it? McCain and Obama say they were greedy corporations and we should not be sympathetic to them when they fall prey to their own greed. Interesting, I wonder if they ever held stocks in any of these banks! They were greedy no doubt, but what does it boils down to? These banks are not some machines, some faceless creatures greedy for more; they were owned by stockholders, investors like you and me, very human indeed. So why did these banks grow greedy? Because investors demanded they do, else they would be prone to hostile takeovers, and the top management would loose their jobs. So they do everything to maximise profits. After so many complex theories about behaviour of firms and managers, it all still boils down to profit maximisation.

Look at Goldman; it is no doubt the strongest of all the investment banks (now that only two remains) It is fundamentally solid, its competitors have been wiped out, so their revenues and business opportunities will definitely improve. Most importantly they are good in what ever they do. They have the best of brains and they keep exporting their brains to all branches of the industry. They still eked out a profit during such turbulent times, their revenues grew, but. But their stock prices are falling in the stock markets because of lack of confidence on part of the investors. So people like me and you are selling Goldman shares faster than there is buyer for the same. So what are we as a group of investors doing, pressurising a firm to make huge profits, a modest profit is no good.

It is at such points that the firms are forced to take irresponsible risks after all, higher the risks higher will be the gains. The unlucky ones though will loose the bet and the lucky ones get away with it. Lehman proved to be unlucky. So whose greed are we to blame? I did say the investors, and the whole capitalise system that has an unshakable faith in the magic of markets and the invisible hand!!!

The second point is the greed of individuals. The whole crisis started with the housing markets when people started buying one, two, three and god knows how many houses on mortgages on the belief that the values of the houses will keep increasing and that they will be able to pay the mortgage every month. Bad planning and extremely risky behaviour and the banks encourage such behaviour by lending crazy to such customers. So they went belly up first, took with them mortgage lenders like Country-wide( they should thanks their stars that BofA brought them, otherwise they did be out there on the street long time back) Indymac and later Bear & Sterns, Lehman and Meryl Lynch!

It now threatens the whole system.

My only question is how legitimate is the accusation of McCain and Obama that investment banks were greedy and they deserved to die? It is a sort of judgement debated in G.B.Shaw’s Doctor’s Dilemma! But how far is it acceptable?
The greedy millionaire investor in a rich custom made suit might what be in the minds on Obama and McCain as they speak of greedy corporation, but it is not a very narrow view? Were not we at fault, as individuals, as customers, as greedy investors, as a part of financial markets? Did we not invest in products we hardly knew but someone told would maximise our returns? Did we not buy additional houses because we though housing prices will go up and it will earn us a quick buck? So how should we blame? Ourselves? Or should be start searching for a scapegoat? Like say Lehman now that it is gone. If there were no buyers for pricey homes, no one would have built it much less sold it! If there were no buyers for risky securities, there would have been no securitisation, no subprime and Lehman would still be nearing their 200th anniversary. (You never know they still might, I cant believe they are gone, I still feel they will come out of Chapter 11, to occupy the office space they have leased till 2033!!!)

So who is the root of all these mess? For me, it is us, collectively, our collective greed to make the extra buck over everyone else. So we all should learn our lessons alright.

The lesson is frightfully simple. Never stretch beyond limits. Never go after investments that claim to double your investment in six months, or even 2 years. Anything that earns a little over inflation should be the bet. Those expecting beyond this should be ready to burn their finger in choppy waters and not whine about ‘greedy corporations’, ‘regulatory failure’ or ‘government intervention’. It is ‘us’ who needs to learn a lesson rather the ‘greedy’ corporations. If not for us, there would be no greedy corporations!

Friday, September 12, 2008

Religion and Secularism

Respected journalists like Mr Kuldip Nayyar should not be writing irresponsibly as in the case of this article. How can he wonder why Orissa government has not been dismissed by the central government? Does this not go against the very spirit of democracy? Why should the central government act against a legitimately elected popular state government?
There are problems every where, economic, communal, political etc. The only thing we can we proud of today is our robust democratic set up, which has survived all onslaughts. Efforts indeed should continue to strengthen the process and make sure all our voices are heard. People who ardently support ‘secularism’ (as they themselves define!!) should remember that as religious communities, Hindus are fighting retain their own identity amidst the extremist Islam and well funded strategic ‘harvesting of souls’ of Christianity. ‘Secularism’ would have mattered to all Indic-religions be it Sikhism, Jainism, Buddhism, Animism etc had it been a level playing field, which it is not. Let mongers of ‘secularism’ figure out that it is definitely not intellectually fashionable to call for secularism, while ignoring how sadly people practicing ancient Indian religions are being treated in their own country, no vote banks, no subsidies on pilgrimage, no money flowing from abroad, no muscle power, no bargaining power but a helpless and discontented set of people. The fire that burns deep within is what had led to the Ram Janma Bhoomi Movement, now the Amarnath Movement and violent spin-offs of the same discontent is the violence in Orissa; the more educated but equally discontented set of people end up commenting on the internet, just like me. After all, every article echoing ‘secular’ ideas attract hundreds and thousands of such comments. In short there is discontentment every where. If there has to be communal peace, concerns of the larger population should be addressed before blowing the bugle of ‘secularism’. There cannot be peace without people practicing Indic religions finding a political voice addressing their concern. It is a pity that such a fragile space is occupied by hate mongers like Praveen Togadia and likes.

How else would any community feel when their people are killed mercilessly by some mentally unsound group of people trying to establish a medieval Caliphate that no longer exist that make their women wear tonnes and tonnes of clothing but feeds them feebly?

How else would any society feel when their people are killed by instruments of missionaries for having questioned their practice of conversion?

How else would the society feel, when a distant European nation (Italy) summons the diplomatic attaché to lodge a protest the violence against ‘Christians’? What right do they have? Just because a women born in Italy is pulling the political strings in India does not give Italy the right to question us. Besides are not Christians in India, Indians firsts and their religious identity comes a distant second? Why should their religion become their primary identity? What right has Italy to bestow Indian Christians a primary identity of their religion?

What else how any society feels when Hindus are persecuted everywhere in the very subcontinent, in Bangladesh, in Pakistan and now even in Nepal where as minorities in India are a pampered lot?

How else should those Sindhi and Punjabi refugees and more recently Kashmiri pundits feel who were forced to abandon their homes and everything they had but their lives to start afresh else where as paupers? Is it that their fight and their sacrifices are not of any value today?

Then there is an old pope, a holy man, may his soul rest in peace, who comes to India and declares that they need to harvest more Hindu souls to please his Abrahamic god, which is unable to bless people who believe in other forms of god!!

Then the missionaries point out that caste system in India is a bane and they need to convert everyone to create a homogeneous society. But paradoxically a Dalit after conversion becomes a Dalit Christian not just a ‘Christian’, so he goes to different church and gets his son-daughter married to other Dalit Christians and what else gets a Dalit Christian cemetery to wait for the judgement day. How did his social status improve by conversion?

Then there are tribal population. They are told that when they convert to Christianity and they wear the crucifix, no wild animals will attach them, no disease will harm them. Being gullible they do convert, but will their live improve significantly? No. The conversions just effective tear the tribal fabric of society. After all tribal societies are more favourable to women than is the main stream society; they don’t stifle their infant daughters or burn their daughter-in-laws. They live in harmony with the forests, an eco-friendly way of life, unlike us in the main stream society. Their indigenous knowledge base is far more exhaustive than what we perceive. These conversions are resulting in nothing but destruction of a balanced society, making enemies of brothers. Adding fuel to the fire is the well greased funding of such missionaries who in the name of hospitals, education indulge in conversions?

How should a society respond to such challenges? How should a multi cultural and multi religious society deal with the onslaught of mono-cultural Abrahamic religions?
How should we make sure that our religious space is well guarded? And we still have the liberty to remain as multi-cultural as possible? If we are to remain secular, we should be allowed to remain as multi-cultural as we have been through ages, worshiping hundreds of gods and believing that we can worship any of the millions of gods in any of the millions of ways but still be able to attain salvation, unlike the secularists who seem to support sections promoting a ‘one-god, one-way of worship and that is my way’ kind of religions.

In this light the reaction to Godhra, Mumbai riots, Amarnath Movement, Orissa violence are all different expression to the same feeling of insecurity, discontent. The need of the hour is a sane but brilliant voice to address such grievance. In the early 20th century, decades of imperialistic contempt for Indic religions and social fabric had translated into feelings of insecurity and inferiority, leading to similar social milieu. Back then Swami Vivekananda, a brilliant man grew to be the voice of the majority, motivated the society and instilled a sense of pride that they so much lacked. That is what we need today, Swami Vivekananda ver. 0.2; a brilliant voice, who cannot only convince the world that we are good just the way we are, but instils in us a sense of pride, and be our voice. A person much beyond the considerations of political equations and vote banks who understands the seething discontentment and is capable of channel the discontentment into something constructive