To be honest I don't give a damn about ICL and IPL. For me, they are simply attempts to make more money out of T20 format. But what bothers me beyond anything was the fact the BCCI - the bastards of Cricket Control of India has audacity to ban all the players who wish to play for ICL. Please correct me if I am wrong here but last time I checked India was still a democratic country where the land where laws are respected and constitution is the only supreme authority. And if that's true then no human being should be objected from taking any legal profession that he or she deems appropriate. But when you play cricket and aspire to represent India then you have to let go the constitutional rights of unbiased employment as well as stomp over the basic human rights of finding livelihood through legal means.
BCCI is a stifling bureaucratic and inefficient organization that doesn't pay taxes to the government. It's highly political, corrupt and vindictive organization that just happens to sit on the possible fountainhead of humongous amount of money that may be generated in India. As if this wasn't enough then lately, the organization is headed by and run by politicians and businessman who haven't played cricket during their entire existence as earthlings. Only redemption in BCCI's excruciatingly arrogant behavior is the selection of team of good standard. Of course BCCI is not responsible for the high quality of cricketers but it is simply because huge number of talented people that aspire to play for the country. the The thing that keeps BCCI off the hot water is the considerably large number unbelievably talented cricketer India generates. So even if BCCI botch up the selection procedure and play politics internally at every corner, the team that they end up selecting plays decent standard of cricket. There are folklores about BCCI selectors and administrators ruining careers.
An important thing to note here is that BCCI gets no funding from Government of India. It's a non-profit, non-governmental organization. It pays no taxes either. But it's just an organization in India that happens to be related to Cricket. Technically, it won't be wrong to say players are representing BCCI rather than India. They are not accountable to anyone. Now considering how wonderfully disastrous Indian government works, people would like to keep BCCI out of government's inefficient hands. But that doesn't mean BCCI will flout the law of the land and behave in absolutely anti-competitive manner. Not just that with its financial might they are forcing governing bodies of other countries to follow this anti-social behavior.
ICL – Indian Cricket League is an organization run by an India billionaire who is a media mogul too. The planned to stage a T20 tournament in India with by establishing a Club structure akin to soccer clubs in Europe. All though they haven’t sold the franchise yet the expectation is that the Club owners will make money by filling stadiums and through sponsorships. ICL owners first approached BCCI regarding using BCCI's stadium. They apparently wanted BCCI’s blessing for this tournament and they were ready to share profits with BCCI too. It didn’t fly well in the life sucking atmosphere of BCCI. First BCCI refused the stadium usage for ICL events. (So, BCCI selected team represent India but their stadiums are private property and not open for public! Am I the only bummer sniffing some illogic here?) And then they disqualified ICL tournament as an official cricket tournament. Now how can one disqualify a cricket tournament that is played purely entertainment purposes? Of course bums at BCCI didn’t realize this initially. Later on instead of rectifying their unnecessary and irrational ‘ban’, they went a step ahead. Well, lot of steps ahead! BCCI declared that any player participating in ICL tournament will be barred from playing domestic tournaments in India. After that they asked employees like Indian Airlines or Indian Railways who field teams in domestic tournament to fire the players participating in ICL. BCCI wont’ allow ICL participants from playing county cricket in England. And the worst is that they are wrangling hands of cricket governing bodies of other nations to fall in line. Now other cricket boards are banning their players for taking part in ICL. This is just too much.
If this wasn’t enough they brazenly copied ICL concept and started their own league, IPL – Indian premier League. The rule is players can get selected for IPL. And if they chose not to then they will barred from any sort of cricket anywhere in the world. This goes smack against law of land. First, who decided BCCI is the sole representative of Cricket in India and if that wasn’t mandated by government of India then second, how come BCCI is deciding who can play what and where?
These questions won’t be asked. Ever! Because the ICL doesn’t stand chance against the staggering amount of money IPL generated before even a single match. Moreover, BCCI is run by a politician who happens to be a cabinet minister in the current government.
No one gives a damn what this lukkhaa blogger has to say. Because he is nothing but a common man for whom these morons staging drama for!
Friday, March 28, 2008
Tuesday, March 18, 2008
Enron and current Credit fiasco
As the credit crises unfolds and more skeletons tumble out of closet I find it amusing that there is an element of surprise at this crises. It’s like something similar to this never happened. Remember the Enron? Anyone? The way Credit fiasco took place and the way it is unfolding is different on the surface but the underlying philosophy and the culprits are the same. Enron had all the ingredients necessary for a Hollywood melodrama with deadly climax and plethora of villains while current credit crises is rather boring in the appearance and no one is sure about the culprit. Yet, there are unmistakable common threads like short public memory, greedy Wall Street and self-deceiving society that believes in continuous growth in everything. These factors seems to be common in these two crises. Perhaps, in all the prior bubble and bursts in capitalistic society.
Way back in 1848, Karl Marx predicted that capitalism will have bubble and burst, that is, cyclical economy. Though, his measure to counter such bubble and bursts were worst than anything but his assertion was dead on the target. Greed is good and it can be satiated only by consuming more. All though, we can say that Adam Smith’s greed is more Socialist in nature but the current format of Greed i.e. American greed is draconian. Both of these crises in essence are hallmark of American style capitalism. Consumers has to consume more, producers has to produce more, year after year, till the eternity. Profits has to go up every year, a company has to show growth ever quarter. Thinking rationally it's not that hard to see that such an unlimited growth is not possible considering the resources are finite. Agreed, tremendous increase in productivity was achieved but that was due to sustained efforts in the fields of science and technology over the period of last century. But Shit doesn't happen in one quarter and yet, corporations are expected to show growth every freaking quarter!
It is obviously going to strain corporations. They do everything humanly possible to put rosy balance sheets in front of Wall Street. This brings me to certain snippets about Enron. Please try to understand that I have no intention of defending Enron or its cronies. But in spite of all the hoopla surrounding Enron, I didn’t read about ‘short term memory loss’ public syndrome often. In 90’s Enron was one of the biggest companies in the world. They were the star of Fortune 500 list and specialized in Energy sector. But there was something fishy. They weren't earning much of money and they forged some really shady deals to cover their losses. Their Futures contracts were based on too optimistic scenarios and in all possibility their cash flow problems were heading for major disaster. Reports started trickling out about these shady deals and false accounting and before you know this multi-billion dollar company went bust. With Thousands of employees loosing their pension and provident funds and hundreds of thousands of stockholders saw their equity getting wiped out, it was quite obvious that the public reaction was so strong that politicians as well as prosecutors were in need to put someone’s head on the table. Enron’s Chairman and CEO were charged and found guilty. Mr. Kenneth Lay, Chairman died of heart-attack before being sentenced and Mr. Skilling, CEO was sentenced to twenty-five years in jail. Mr. Lay and Mr. Skilling were certainly guilty of being excessively greedy and perhaps, they deserve such a stern jail term but I think they were not the only villains of this tragedy. The ‘other’ culprit is still at large and will continue to cause trouble in foreseeable future.
Off many missteps that Enron is blamed for, was innovative accounting tactics। Now, all most all of the companies do certain form of innovative accounting to hide the trash on the balance sheet or to project the trophies (i.e. profits) more prominently. Enron resorted to an accounting technique called market-to-market accounting. The logic behind this accounting goes like this -: suppose a company A signs a deal with other company B that company A will provide certain product over the period of time for certain amount of money. But the exchange of money, in this case, doesn’t happen for years. So what accountants does is to try to project how much profit will be made every year from the deal, had the money is to be exchanged. Enron accountants were aggressive in showing these phantom profits to such an extent that in the year 2000, instead of showing net loss, Enron showed $745 millions of profit. But to Enron’s credit, they stated everything on their balance sheet. The footnotes (an integral part of balance sheet) contained the source of the profit and with careful eye, financial analyst and accountants could see through this tactic. Another indicator that financial world didn’t see or refuse to see was the amount of taxes Enron paid. For Revenue Services you pay taxes only if you earn money. All the cash flow that was to come in future makes no sense to I.R.S. and Enron wasn't paying much taxes
As I said prior, all this information was published by Enron. It’s just that publishing full accounts would take hundreds of thousands of pages. In their effort (which again is a common practice) they bubbled up the reports but in this process they had to smoothen or massage the data and that’s where the trouble started. Most of the common analyst missed this part was either or it was too detailed to understand but when some analyst took a hard look they figured this game out and published negative reports about the Enron. And, rest is the history.
After facing business as well as financial problems what Enron could have done was to admit their shortcomings in public. Their shares would have dropped drastically and Wall Street’s fury would have lead to departure of few high flying executive. But in the long term the business would have been taken care of and balance sheet would have been strong for real. This would have saved pension of thousands of employees as well as billions of dollars worth of equity would have been saved. Of course, this was for long term. What about the quarterly earning? That’s where the problem lies with American style capitalistic model. No matter how poorly the business is running, a company has to show profits quarterly and if that’s not the case then share prices goes down and CEO’s are flagged as if they are criminals. So, CEO’s in turn either cook the books and the deals as in Enron or end up taking unrealistic risk as in host of investment banks in current credit crises.
The sub-prime mortgage crises (i।e. credit market crises) was based on greed and unnecessary risk too. Mortgage firms started giving out loans to people with bad credit which in turn created housing bubble. The risk was high but it was conveniently blanketed with innovative financial engineering. Products were created out of these loans (i.e. securities) and sliced off according to consumer demand. High ratings were given to such risky securities so that they will be sold at high prices. Lending agencies are to blame, investment banks are to be blamed, ratings agencies are to blamed and at the end general public are to blamed because all though, everyone was aware about the bubble consumers kept buying pricy houses that were beyond their means. And, this pack of cards came down quickly when borrowers (i.e. home owners)started defaulting. Lenders couldn’t continue their cash flow to the investment banks who in turn couldn’t sale the existing Securities based on sub-prime mortgages. The investors who had the mortgage backed securities are still trying to figure how much in hot water they are. This lead to confidence crises in the credit market and that is leading American economy right into a recession. This is a very simplistic explanation of Credit Market fiasco. The securities structure and the cash flows are so complex that investment banks are still trying to figure out the mess they created. Fed is taking weird steps in its attempt to stop the capital market’s downturn and job market is bracing itself for long winter.
But in spite of all this, come back after few years and we will be heading towards another downturn। Actors will b new and methods will be more novel and yet the result will be the same
Agreed that US economy doesn’t command as much as clout as it used to be. But unfortunately this translates into more grave situation for the world economy. Other countries (specially, India and China) are following US capital markets step by step and they are about to start their own economic upheaval of insatiable greed, unrealistic risks and very short growth horizons.
Way back in 1848, Karl Marx predicted that capitalism will have bubble and burst, that is, cyclical economy. Though, his measure to counter such bubble and bursts were worst than anything but his assertion was dead on the target. Greed is good and it can be satiated only by consuming more. All though, we can say that Adam Smith’s greed is more Socialist in nature but the current format of Greed i.e. American greed is draconian. Both of these crises in essence are hallmark of American style capitalism. Consumers has to consume more, producers has to produce more, year after year, till the eternity. Profits has to go up every year, a company has to show growth ever quarter. Thinking rationally it's not that hard to see that such an unlimited growth is not possible considering the resources are finite. Agreed, tremendous increase in productivity was achieved but that was due to sustained efforts in the fields of science and technology over the period of last century. But Shit doesn't happen in one quarter and yet, corporations are expected to show growth every freaking quarter!
It is obviously going to strain corporations. They do everything humanly possible to put rosy balance sheets in front of Wall Street. This brings me to certain snippets about Enron. Please try to understand that I have no intention of defending Enron or its cronies. But in spite of all the hoopla surrounding Enron, I didn’t read about ‘short term memory loss’ public syndrome often. In 90’s Enron was one of the biggest companies in the world. They were the star of Fortune 500 list and specialized in Energy sector. But there was something fishy. They weren't earning much of money and they forged some really shady deals to cover their losses. Their Futures contracts were based on too optimistic scenarios and in all possibility their cash flow problems were heading for major disaster. Reports started trickling out about these shady deals and false accounting and before you know this multi-billion dollar company went bust. With Thousands of employees loosing their pension and provident funds and hundreds of thousands of stockholders saw their equity getting wiped out, it was quite obvious that the public reaction was so strong that politicians as well as prosecutors were in need to put someone’s head on the table. Enron’s Chairman and CEO were charged and found guilty. Mr. Kenneth Lay, Chairman died of heart-attack before being sentenced and Mr. Skilling, CEO was sentenced to twenty-five years in jail. Mr. Lay and Mr. Skilling were certainly guilty of being excessively greedy and perhaps, they deserve such a stern jail term but I think they were not the only villains of this tragedy. The ‘other’ culprit is still at large and will continue to cause trouble in foreseeable future.
Off many missteps that Enron is blamed for, was innovative accounting tactics। Now, all most all of the companies do certain form of innovative accounting to hide the trash on the balance sheet or to project the trophies (i.e. profits) more prominently. Enron resorted to an accounting technique called market-to-market accounting. The logic behind this accounting goes like this -: suppose a company A signs a deal with other company B that company A will provide certain product over the period of time for certain amount of money. But the exchange of money, in this case, doesn’t happen for years. So what accountants does is to try to project how much profit will be made every year from the deal, had the money is to be exchanged. Enron accountants were aggressive in showing these phantom profits to such an extent that in the year 2000, instead of showing net loss, Enron showed $745 millions of profit. But to Enron’s credit, they stated everything on their balance sheet. The footnotes (an integral part of balance sheet) contained the source of the profit and with careful eye, financial analyst and accountants could see through this tactic. Another indicator that financial world didn’t see or refuse to see was the amount of taxes Enron paid. For Revenue Services you pay taxes only if you earn money. All the cash flow that was to come in future makes no sense to I.R.S. and Enron wasn't paying much taxes
As I said prior, all this information was published by Enron. It’s just that publishing full accounts would take hundreds of thousands of pages. In their effort (which again is a common practice) they bubbled up the reports but in this process they had to smoothen or massage the data and that’s where the trouble started. Most of the common analyst missed this part was either or it was too detailed to understand but when some analyst took a hard look they figured this game out and published negative reports about the Enron. And, rest is the history.
After facing business as well as financial problems what Enron could have done was to admit their shortcomings in public. Their shares would have dropped drastically and Wall Street’s fury would have lead to departure of few high flying executive. But in the long term the business would have been taken care of and balance sheet would have been strong for real. This would have saved pension of thousands of employees as well as billions of dollars worth of equity would have been saved. Of course, this was for long term. What about the quarterly earning? That’s where the problem lies with American style capitalistic model. No matter how poorly the business is running, a company has to show profits quarterly and if that’s not the case then share prices goes down and CEO’s are flagged as if they are criminals. So, CEO’s in turn either cook the books and the deals as in Enron or end up taking unrealistic risk as in host of investment banks in current credit crises.
The sub-prime mortgage crises (i।e. credit market crises) was based on greed and unnecessary risk too. Mortgage firms started giving out loans to people with bad credit which in turn created housing bubble. The risk was high but it was conveniently blanketed with innovative financial engineering. Products were created out of these loans (i.e. securities) and sliced off according to consumer demand. High ratings were given to such risky securities so that they will be sold at high prices. Lending agencies are to blame, investment banks are to be blamed, ratings agencies are to blamed and at the end general public are to blamed because all though, everyone was aware about the bubble consumers kept buying pricy houses that were beyond their means. And, this pack of cards came down quickly when borrowers (i.e. home owners)started defaulting. Lenders couldn’t continue their cash flow to the investment banks who in turn couldn’t sale the existing Securities based on sub-prime mortgages. The investors who had the mortgage backed securities are still trying to figure how much in hot water they are. This lead to confidence crises in the credit market and that is leading American economy right into a recession. This is a very simplistic explanation of Credit Market fiasco. The securities structure and the cash flows are so complex that investment banks are still trying to figure out the mess they created. Fed is taking weird steps in its attempt to stop the capital market’s downturn and job market is bracing itself for long winter.
But in spite of all this, come back after few years and we will be heading towards another downturn। Actors will b new and methods will be more novel and yet the result will be the same
Agreed that US economy doesn’t command as much as clout as it used to be. But unfortunately this translates into more grave situation for the world economy. Other countries (specially, India and China) are following US capital markets step by step and they are about to start their own economic upheaval of insatiable greed, unrealistic risks and very short growth horizons.
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