One of the constant criticisms emerging from recent credit crises is that financial engineering does not do any good to the society. To dismiss the whole work stream merely as jugglery that provides intellectual satisfaction to the brainy and a nightmare to the general public is kind of unfair. It’s like saying anything related to Nuclear reactor is bad. It depends on what you using nuclear reactor for. If it’s for power generation then it’s extremely clean and over the extended period of time costs less but if you are to build weapon then kaa-boom.
The securitization phenomenon – the root cause of the whole crises – is relatively new. It was crystallized in 1960’s and picked up the pace in late 80’s and 90’s. The concept is quite simple and intuitive at the core. If you have $100 to lend then you can loan it only to one person (considering the need is $100) or you can create a security out of it and free up the capital. Once you loan $100 at 10% per annum, the expectation is that you will receive $110 at the end of one year. Instead of waiting for one year, you can sale that loan to a third party for $102. You make $2 immediately while the third party makes $8 over the period of one year. Now you have $102 for loaning out. The cycle continues. This is the base logic. Now add thousands of loans together and then sell that product to the third party. The risk is transferred to third party at certain cost and more money is available for business. Securitization is primarily used in mortgages business, where the loans are given for non-liquid assets like buying houses or cars. The type of securitization I explained above is the simplest format and more complex products are built based on customer needs as well as market conditions. This phenomenon has potential to raise huge amount of capital. It also seamlessly matches people who have money with people who need money making debt a tradable liquid asset. The point to note here is that these assets are not as liquid as stock market or bond market. There is no centralized exchange to
So far so good!
The problem actually started when money raised through investor was single handedly diverted towards housing market. The supply of money was far more than actually needed. In short money became cheap. So, folks started building houses or buying houses in the hope the prices will keep going up and there will always be a buyer. That’s when law of gravity started working. I mean, literally! Home is an illiquid asset. You can’t flip it the way you can play with stock market. In the stock market the maximum loss is the amount of money invested. On the other hand, home keeps exhausting money in the form of maintenance cost and property taxes. So, if you failed to sale the house in time then you are pretty much screwed. Obviously default rates rose sharply. This alone shouldn’t have precipitated into a perfect storm. Both the regulators as well as banks knew that this bubble is bound to burst but they kept playing the game till the end. Bankers kept buying, structuring and servicing extremely complex, highly illiquid securitization products. Rating agencies kept their ratings for such products intact. CDS – Credit Default Swap is insurance in the finance world. As the name suggests, in case of default the seller of CDS pays you the money. AIG kept selling such CDS to practically everyone. The concentration risk became very high for most of the bank and yet the risk management departments in any of the banks failed to raise alarm. Regulators refused to even acknowledge that there is any bubble till the end. The economy, specially the size of US, is very hard to handle in short term. But if problem was identified and measures were taken to divert the flow of money into other sectors like renewable energy then that could have averted the disaster.
It is worth noting that not that all the criticism heaped on financial engineering is wrong. When huge amount of money started finding its way into housing market, size of this work stream vis-à-vis others started growing rapidly. It did not employ that many people nor did create any infrastructure. It was basically castles in the air that still created real gains to the investors rational enough to cash out in time. So when the whole thing crumbled there was nothing left and yet it created disproportionately large ripples across the whole economy. All though the whole housing market is valued in tune of couple of trillion dollars, in a typical fashion everyone wanted to get out at once. The result was that the stock market lost staggering 11 trillions worth of value. With short-term debt notes practically ceasing to exists, it all most brought down many companies to halt. New investment froze and new business floundered. The job loss that started in the banking sector soon engulfed all other sectors. People lost their retirement benefits, pension benefits and of course their investment. Wall Street for all practical purposes ceased to exist as three of the five investment banks either went bankrupt or were bought out. It was chaos for sure.
In the end lot of things went wrong at the same time for such a disaster. And I hope that the field of financial engineering is not made into a scapegoat.
Thursday, December 17, 2009
Thursday, December 10, 2009
'Grand'ulkar
I know I know I was the one who wrote “Endulkar” blog some time ago. Call me a hypocrite or anything but at least I am ready to stand up to my fault. One lesson I learned is that no matter what, one should never write off a Champion. Champions are rarest of rare breed and hard to recognize but then Sachin's case is no secret. All though for what ever it's worth I must say that even in my last blog on him I expressed my admiration and respect for him. The reason for my recent epiphany was his blasting against Aussie in recent One Day international. I think it will be huge injustice to him if we see him only through the prism of statistics. Not that he comes out any less in that department. The staggering amount of runs he accumulated puts him in a rarefied air that’s usually reserved for grand masters of any trade. In fact, he doesn’t even have any other company or competition there. There are good players, there are great players and then there is Sachin Tendulkar.
Statistics is just one aspect of his grand career. To get obsessed by it is like getting lost in the woods and missing out the jungle. He started at the tender age of 17 when most of the kids are busy in doing nothing. Most of the kids are obsessed with some sort of sport or some sort of hobby but that’s the extent it goes it. Particularly in India the focus on education is so intense that if by any chance a kid is gifted with skills in certain sport then he or she is surely won’t be using them. But Sachin was one of millions. His early exploits in his school days were legendary by any standards. The way he scored runs and the way he would hit kids of his age around the ground is part of folklore. Of course he was lucky to be born in the city of Mumbai where Cricket has fanatical following. The city has produced numerous cricketing luminaries of international fame. At one point 80% percent of Indian team would hail from Mumbai alone. This helped Sachin in a sense that he was spotted early and was put on fast-track for Indian team. Still to debut against Pakistan in Pakistan was something. Not only you need talent to face Imran, Wasim and Waqar (it was Waqar Younis’s debut series too) but you need balls to stand against the these fiercest rivals. He had first one in ample and he showed second part quite successfully. Thus a star was truly born. But that still doesn’t truly capture his greatness.
The true greatness lies in his consistency. In recently ODI match against Australia it was fascinating to see him batting with Ravindra Jadeja who was born in 1988, merely a year before Sachin made his debut. For last twenty years he is scoring runs in every corner of the world and against every opponent possible. The sheer amount of travel and preparation would bring down mightiest of travelers. Then add the controversies surrounding game, internal team politics and generational change in the cricketing fraternity and the true character of a warrior starts to emerge. Oh and did I mention the burden of hundreds of millions of people for whom anything less than a century is a failure? The tremendous love showered on him by public comes at a very steep price.
His endurance, his all most religious zeal to score run and hunger to win for India over the span of twenty years truly makes him the greatest. Yes he scored runs but that’s merely a by product. It only shows that he knows his trade well. He is humble and never makes fuss about his status. He still talks in Marathi and still mingles with commoner whenever it’s feasible. Your truly was fortunate to see him up close twice. He was serene, focused and without an iota of attitude. He still carried his own kit and practiced with local kids (who are certain to tell the tale to their grandkids) telling them to throw ball at him as fast as possible. It was quite surprising to see how he remains firmly rooted in ground in such a limelight for twenty years.
I think he deserves Bharat-Ratna. And it shouldn’t be conferred to him when he is too old to walk but right now when he is still thrilling millions with his skills. I feel fortunate that I was part of the generation that witnessed the legend as it happened.
Statistics is just one aspect of his grand career. To get obsessed by it is like getting lost in the woods and missing out the jungle. He started at the tender age of 17 when most of the kids are busy in doing nothing. Most of the kids are obsessed with some sort of sport or some sort of hobby but that’s the extent it goes it. Particularly in India the focus on education is so intense that if by any chance a kid is gifted with skills in certain sport then he or she is surely won’t be using them. But Sachin was one of millions. His early exploits in his school days were legendary by any standards. The way he scored runs and the way he would hit kids of his age around the ground is part of folklore. Of course he was lucky to be born in the city of Mumbai where Cricket has fanatical following. The city has produced numerous cricketing luminaries of international fame. At one point 80% percent of Indian team would hail from Mumbai alone. This helped Sachin in a sense that he was spotted early and was put on fast-track for Indian team. Still to debut against Pakistan in Pakistan was something. Not only you need talent to face Imran, Wasim and Waqar (it was Waqar Younis’s debut series too) but you need balls to stand against the these fiercest rivals. He had first one in ample and he showed second part quite successfully. Thus a star was truly born. But that still doesn’t truly capture his greatness.
The true greatness lies in his consistency. In recently ODI match against Australia it was fascinating to see him batting with Ravindra Jadeja who was born in 1988, merely a year before Sachin made his debut. For last twenty years he is scoring runs in every corner of the world and against every opponent possible. The sheer amount of travel and preparation would bring down mightiest of travelers. Then add the controversies surrounding game, internal team politics and generational change in the cricketing fraternity and the true character of a warrior starts to emerge. Oh and did I mention the burden of hundreds of millions of people for whom anything less than a century is a failure? The tremendous love showered on him by public comes at a very steep price.
His endurance, his all most religious zeal to score run and hunger to win for India over the span of twenty years truly makes him the greatest. Yes he scored runs but that’s merely a by product. It only shows that he knows his trade well. He is humble and never makes fuss about his status. He still talks in Marathi and still mingles with commoner whenever it’s feasible. Your truly was fortunate to see him up close twice. He was serene, focused and without an iota of attitude. He still carried his own kit and practiced with local kids (who are certain to tell the tale to their grandkids) telling them to throw ball at him as fast as possible. It was quite surprising to see how he remains firmly rooted in ground in such a limelight for twenty years.
I think he deserves Bharat-Ratna. And it shouldn’t be conferred to him when he is too old to walk but right now when he is still thrilling millions with his skills. I feel fortunate that I was part of the generation that witnessed the legend as it happened.
Saturday, November 07, 2009
The state of Afghanistan
As the debate over whether US should be sending more troops to Afghanistan rages the real question remains unanswered. In fact, no one is even asking the real question. The question do we need a nation called Afghanistan? What will happen if there is no Afghanistan? Actually you can ask that question about any country? But that will just be a stupid counter-argument. A country can be defined as a society living within same geographic region sharing the common history and culture working towards the common goal of prosperous future. In that sense, Afghanistan can be called as country. Even if we disregard the fact that no one there wants to work for prosperous future, they do share similar culture and history. But the point that tends to get lost it that the notion of a country or nation-state is itself relatively new. It’s a legacy of European colonist and has resulted into huge number of human loss in last sixty years or so. The tribal/nations of Africa especially are paying humongous price.
Afghanistan was never a unified entity. Whenever people talk about Afghanistan the timeline usually goes as far back as to Soviet invasion. For current memory that was the first time Afghanistan played its role as a playground for superpowers to fight. All though only because of Saudi money and American ammunition that Afghans could defeat Soviets, the fact that they won’t budge even in the face of insurmountable odds is quite something. And it may sound harsh but that’s what they like. They like to fight. If not foreign invaders then they will fight with each other or they will invade others (historically, they would invade Delhi). All the talk them having rich culture is kind of mystifying because if war and violence can be defined as culture then they do come out on the top of ‘cultured’ nations.
Afghanistan –known as Gandhar in ancient time, was always considered as frontier post for India. You cross Afghanistan’s rugged terrain and you get passage to reach fertile plains of Ganges. Alexander came the same way and he all most succeeded. The Huns did the same thing all though they settled and got assimilated in the local population. Still Afghanistan was known for higher seat of education. Taxila university was one of the biggest university in the world. But it changed completed with advent of Islam.
The first recorded invasion of Muslim Arabs was in 712 A.D. All though the invaders reached Multan, they turned back after looting. Then it became a frontier for Muslim zealots in their quest to expand Dar-Ul-Islam i.e. Muslim dominion. The region bore the bloodiest brunt. The native population was decimated or converted. The entire infrastructure was destroyed and places of learning were burnt down. Gradually all that’s left was warring and blood thirsty people wanting to and waiting for next fight. What was interesting is that once a Sultanate established their grip on Delhi (there were a factory line of them) the goal would be stop invasion of another foreign invader from the gates of Afghanistan or to stop the invasion of Afghans itself. Mughal Empire’s fight to keep that area under control was largely unsuccessful. Except for the brief period of 1650’s and 1660’s, Mughals were draining their treasury as well as soldiers into abyss.
With the fall of Mughal empire there was brief period of peace in Afghanistan under Nadir Shah dynasty but then they wasted no time in invading India numerous times.
As world started coming under the spell of western imperialism the Afghanistan gradually lost its prominence as gateway to India. Still for British imperialist the threat of Russians descending down the plains of Indus and Ganges was real. And their would do anything to preserve the jewel of their empire. Afghanistan unsurprisingly again became a playground between British and Russian empire. British Empire wanly tried to subdue the lawless and unforgiving tracts. They quickly learned that it’s easy just to position the tribes against each other and maintain the relative inert state rather than to establish a state. We can say that this strategy was largely successful as the area was in relative peace. Post independence i.e. after Indian independence, Afghanistan came into existence, for the first time in last thousand years or so, as a sovereign nation. Still the tribal region along Durrand line, the line that haphazardly divides Afghanistan and Pakistan, was still autonomous.
It wasn’t meant to last for long. Soviet invasion shattered the peace for good, though this time the prize wasn’t India. Afghanistan was merely another country to be won by two warring super powers. Afghanistan paid dear price. By the time Russians depart the Afghanistan was completely destroyed. Million or so people were killed and again, what’s left was unemployed young and middle aged people with lots of guns and ammunition and nothing to do. More importantly the nation of Afghanistan seized to exist for all practical purpose. It wasn’t a surprise that another disaster was waiting to happen.
It was quite interesting to see how these gun-wielding blood–thirsty terrorist, just like their forefathers, again descended onto India creating havoc in the state of Kashmir. The real perpetrators were Pakistanis but the it was no-brainer that these deranged people will soon spread tentacles through out the globe. What no one thought was that the repercussion would felt violently in New York.
That brings us back to US – another superpower – trying or rather, struggling to make the sense of situation in Afghanistan. And unless they think outside the box, Afghanistan would keep draining resources for decades. We need to realize that the concept of Afghanistan as a Nation just can’t take roots in the rough terrain of Hindu-kush Mountains. The best strategy would simply be to divide the country into the ‘tribe-stan’. Given autonomy to all the tribes and let them leave their life as they please. The only think, and admittedly not easy thing to do, is to keep eye on the ammunition that's going in and out of these tribes. This is all easier said than done.Anyone dares to table this idea even for the sake of discussion will face huge uproar from everyone.
Unfortunately, this won't necessarily solve or stem the problem of terrorism. Because the real cancer lies on the other side of the Durand Line and that will be one heck of a tumor to deal with.
Afghanistan was never a unified entity. Whenever people talk about Afghanistan the timeline usually goes as far back as to Soviet invasion. For current memory that was the first time Afghanistan played its role as a playground for superpowers to fight. All though only because of Saudi money and American ammunition that Afghans could defeat Soviets, the fact that they won’t budge even in the face of insurmountable odds is quite something. And it may sound harsh but that’s what they like. They like to fight. If not foreign invaders then they will fight with each other or they will invade others (historically, they would invade Delhi). All the talk them having rich culture is kind of mystifying because if war and violence can be defined as culture then they do come out on the top of ‘cultured’ nations.
Afghanistan –known as Gandhar in ancient time, was always considered as frontier post for India. You cross Afghanistan’s rugged terrain and you get passage to reach fertile plains of Ganges. Alexander came the same way and he all most succeeded. The Huns did the same thing all though they settled and got assimilated in the local population. Still Afghanistan was known for higher seat of education. Taxila university was one of the biggest university in the world. But it changed completed with advent of Islam.
The first recorded invasion of Muslim Arabs was in 712 A.D. All though the invaders reached Multan, they turned back after looting. Then it became a frontier for Muslim zealots in their quest to expand Dar-Ul-Islam i.e. Muslim dominion. The region bore the bloodiest brunt. The native population was decimated or converted. The entire infrastructure was destroyed and places of learning were burnt down. Gradually all that’s left was warring and blood thirsty people wanting to and waiting for next fight. What was interesting is that once a Sultanate established their grip on Delhi (there were a factory line of them) the goal would be stop invasion of another foreign invader from the gates of Afghanistan or to stop the invasion of Afghans itself. Mughal Empire’s fight to keep that area under control was largely unsuccessful. Except for the brief period of 1650’s and 1660’s, Mughals were draining their treasury as well as soldiers into abyss.
With the fall of Mughal empire there was brief period of peace in Afghanistan under Nadir Shah dynasty but then they wasted no time in invading India numerous times.
As world started coming under the spell of western imperialism the Afghanistan gradually lost its prominence as gateway to India. Still for British imperialist the threat of Russians descending down the plains of Indus and Ganges was real. And their would do anything to preserve the jewel of their empire. Afghanistan unsurprisingly again became a playground between British and Russian empire. British Empire wanly tried to subdue the lawless and unforgiving tracts. They quickly learned that it’s easy just to position the tribes against each other and maintain the relative inert state rather than to establish a state. We can say that this strategy was largely successful as the area was in relative peace. Post independence i.e. after Indian independence, Afghanistan came into existence, for the first time in last thousand years or so, as a sovereign nation. Still the tribal region along Durrand line, the line that haphazardly divides Afghanistan and Pakistan, was still autonomous.
It wasn’t meant to last for long. Soviet invasion shattered the peace for good, though this time the prize wasn’t India. Afghanistan was merely another country to be won by two warring super powers. Afghanistan paid dear price. By the time Russians depart the Afghanistan was completely destroyed. Million or so people were killed and again, what’s left was unemployed young and middle aged people with lots of guns and ammunition and nothing to do. More importantly the nation of Afghanistan seized to exist for all practical purpose. It wasn’t a surprise that another disaster was waiting to happen.
It was quite interesting to see how these gun-wielding blood–thirsty terrorist, just like their forefathers, again descended onto India creating havoc in the state of Kashmir. The real perpetrators were Pakistanis but the it was no-brainer that these deranged people will soon spread tentacles through out the globe. What no one thought was that the repercussion would felt violently in New York.
That brings us back to US – another superpower – trying or rather, struggling to make the sense of situation in Afghanistan. And unless they think outside the box, Afghanistan would keep draining resources for decades. We need to realize that the concept of Afghanistan as a Nation just can’t take roots in the rough terrain of Hindu-kush Mountains. The best strategy would simply be to divide the country into the ‘tribe-stan’. Given autonomy to all the tribes and let them leave their life as they please. The only think, and admittedly not easy thing to do, is to keep eye on the ammunition that's going in and out of these tribes. This is all easier said than done.Anyone dares to table this idea even for the sake of discussion will face huge uproar from everyone.
Unfortunately, this won't necessarily solve or stem the problem of terrorism. Because the real cancer lies on the other side of the Durand Line and that will be one heck of a tumor to deal with.
Tuesday, October 13, 2009
la-la world of Rating Agencies
In recent credit crises one of the culprits that escaped scrutiny as well as public wrath was Rating Agency. Rating Agencies like S&P, Moody’s et al played most instrumental role in inflating the balloon and then realizing their mistake played pivotal role in bursting it. And yet no one seems to blame them for anything. In fact technically speaking, they are the sole culprit of the whole problem. We are blaming Wall Street bosses for their financial wizardry that ultimately consumed them, we are blaming investing funds for investing without due diligence. We are blaming mortgage companies for making predatory loans. And then the blame game shifts to which President should be blamed. But one thing’s is true that apart from the mortgage companies like New Century Finance neither investors nor Wall Street bosses did anything with criminal intent. Of course they don’t deserve any sympathy. But when you invest in a bond because it’s AAA and it turns out that the bond is actually less that BBB (i.e. below investing grade)and this discrepancy is because Rating Agency didn’t do their job well then who do you think should be blamed?
Let’s me try to paint little background for readers to see my argument easily.
Rating Agencies like S&P, Moody’s, and Fitch etc. are independent companies that rate anything and everything related to debt market. To rate means the probability of a borrower to return the money with interest and in given time. This way lender know how much risk they are taking and interest is charged based on the risk. Higher the probability of default i.e. borrower not returning money, higher the interest is charged. These agencies base their calculation on the publicly available data as well as by talking to the company bosses for better understanding of the company balance sheet. The calculations involve complex mathematical formulas coupled with equally complex statistics. They take into account years of data across the spectrum and then come up minimum standard that has a letter grades. And the companies satisfying these standards qualify for the grade. Rating Agencies have also increased their gamut by adding everything under the sky. They even rate sovereign nations, unsurprisingly applying different scales for different nations.
In 1970’s government of United States granted a special status NRSRO i.e. Nationally Recognized Statistical Rating Organization- to certain rating agencies. Basically, government said that they trust these rating agencies for rating the debt market. Since then it became a rule for majority of mutual funds – the giants in the investing world – to buy the investment with certain minimum rating from these rating agencies. But the biggest use of Ratings is Risk Management division across the industry. Whether to invest or whether to lend depends on rating grade. With magic wand of ratings, risk management division decides or put restrictions on the business of lending or investing. Even if the rating criteria is internally developed, it still has to match or map it to the external rating grades i.e. NRSRO accredited ratings. And that’s precisely where trouble started. It was simply assumed that rating agencies know what to do and how to do their job. All though these rating agencies weren’t regulated or audited by government.
There is already a substantial argument against basing market behavior on rigid, one dimensional mathematical model. If history is the precursor then the one shouldn’t believe in such models at all. (LTCM, anyone?) As Prof. Taleb notes in his book ‘Black Swan’ in last century only ten days have had more trade than rest combined. And those ten days didn’t usher us into better world! In short humans behave rationally individually and stupidly in herds. But this argument is still raging and in absence of any worthy alternative markets will continue to rely on ratings and risk management models. So, stereotyping inherently irrational human behavior into math numbers wasn’t totally Rating Agencies fault. But giving rosy ratings to Structured debt and loans with shady origins was their fault.
One can discount such a blatant mismatch as a mistake but what’s interesting was the originators of the shady loans (originating, structuring and ultimately sale of debt is a long and complex process and will need a blog in itself to explain) used to pay fees to the rating agencies to find out how to make a low rated debt into high rated debt. In short, students after failing the test would go to t he teachers and pay them to get correct answers and re-submit the test again. The implication of such conflict of interest was felt through out the world as pension funds and mutual funds ended up buying such rigged investment blindly believing in the purity of the rating. And the Risk Management divisions, as mentioned earlier, based their ‘sound’ models on such ratings too. And as it became clear that the debt isn’t exactly of the high quality, the rating agencies decided to pull out the rug all at once. That was a double whammy because suddenly everyone is trying to sale such de-graded investments at once effectively accelerating credit crises. It’s rather banal to compare this scenario with pack of cards. Not that there weren’t fire alarms but they were conveniently forgotten. For example, the rating for WorldCom was BBB all most to the end when WorldCom filed for Bankruptcy then the biggest bankruptcy in US economic history. Same thing was repeated for Enron. Yet nothing happened and show went on.
And show will continue without even a blip this time too. The corrective measure is to actually challenge the existing notion of risk-management and free it from the clutches of morbid mathematical calculations. But that would be a long haul. In the mean time the sensible thing is to regulate the rating industry. Unfortunately, there aren’t any calls for that. They continue to remain de-facto kings in the investment world. With our money at their disposal they surely aren’t complaining!
Let’s me try to paint little background for readers to see my argument easily.
Rating Agencies like S&P, Moody’s, and Fitch etc. are independent companies that rate anything and everything related to debt market. To rate means the probability of a borrower to return the money with interest and in given time. This way lender know how much risk they are taking and interest is charged based on the risk. Higher the probability of default i.e. borrower not returning money, higher the interest is charged. These agencies base their calculation on the publicly available data as well as by talking to the company bosses for better understanding of the company balance sheet. The calculations involve complex mathematical formulas coupled with equally complex statistics. They take into account years of data across the spectrum and then come up minimum standard that has a letter grades. And the companies satisfying these standards qualify for the grade. Rating Agencies have also increased their gamut by adding everything under the sky. They even rate sovereign nations, unsurprisingly applying different scales for different nations.
In 1970’s government of United States granted a special status NRSRO i.e. Nationally Recognized Statistical Rating Organization- to certain rating agencies. Basically, government said that they trust these rating agencies for rating the debt market. Since then it became a rule for majority of mutual funds – the giants in the investing world – to buy the investment with certain minimum rating from these rating agencies. But the biggest use of Ratings is Risk Management division across the industry. Whether to invest or whether to lend depends on rating grade. With magic wand of ratings, risk management division decides or put restrictions on the business of lending or investing. Even if the rating criteria is internally developed, it still has to match or map it to the external rating grades i.e. NRSRO accredited ratings. And that’s precisely where trouble started. It was simply assumed that rating agencies know what to do and how to do their job. All though these rating agencies weren’t regulated or audited by government.
There is already a substantial argument against basing market behavior on rigid, one dimensional mathematical model. If history is the precursor then the one shouldn’t believe in such models at all. (LTCM, anyone?) As Prof. Taleb notes in his book ‘Black Swan’ in last century only ten days have had more trade than rest combined. And those ten days didn’t usher us into better world! In short humans behave rationally individually and stupidly in herds. But this argument is still raging and in absence of any worthy alternative markets will continue to rely on ratings and risk management models. So, stereotyping inherently irrational human behavior into math numbers wasn’t totally Rating Agencies fault. But giving rosy ratings to Structured debt and loans with shady origins was their fault.
One can discount such a blatant mismatch as a mistake but what’s interesting was the originators of the shady loans (originating, structuring and ultimately sale of debt is a long and complex process and will need a blog in itself to explain) used to pay fees to the rating agencies to find out how to make a low rated debt into high rated debt. In short, students after failing the test would go to t he teachers and pay them to get correct answers and re-submit the test again. The implication of such conflict of interest was felt through out the world as pension funds and mutual funds ended up buying such rigged investment blindly believing in the purity of the rating. And the Risk Management divisions, as mentioned earlier, based their ‘sound’ models on such ratings too. And as it became clear that the debt isn’t exactly of the high quality, the rating agencies decided to pull out the rug all at once. That was a double whammy because suddenly everyone is trying to sale such de-graded investments at once effectively accelerating credit crises. It’s rather banal to compare this scenario with pack of cards. Not that there weren’t fire alarms but they were conveniently forgotten. For example, the rating for WorldCom was BBB all most to the end when WorldCom filed for Bankruptcy then the biggest bankruptcy in US economic history. Same thing was repeated for Enron. Yet nothing happened and show went on.
And show will continue without even a blip this time too. The corrective measure is to actually challenge the existing notion of risk-management and free it from the clutches of morbid mathematical calculations. But that would be a long haul. In the mean time the sensible thing is to regulate the rating industry. Unfortunately, there aren’t any calls for that. They continue to remain de-facto kings in the investment world. With our money at their disposal they surely aren’t complaining!
Friday, August 28, 2009
Shut the .....up!
Success has many fathers and failure has none. But in a very perverse manner a contradictory scene is developing on Indian political scene. BJP which lost the election seems to be taking new rabbits out of hat every other week, while Congress, which won the election, seems to be calm. Without usual drama they selected their cabinet ministry and started working as if there was never any election or as if it’s their right to be in the government. On the other hand the leadership in the BJP is crumbling under the pressure of defeat and its cadres are left without any sense of direction and purpose. Moreover, it is embarrassing to see way these ‘senior’ leaders are washing their dirty laundry in pubic. I am not saying there shouldn’t be disagreements but for the love of all that’s sweet on mother earth just shut the fuck up. First you got Uma Bharati then Yashwant Sinha, Murali Manohar Joshi and now Jaswant Singh and of all people, Arun Shourie! What the heck? What bit these intelligent people to run naked in public? I mean really, it’s just really uncool!
I always use to brag that BJP has deep leadership qualities amongst her ranks and file. And most of them are not corrupt and dedicated towards the goal. We had Mr. Vajapayee and Mr. Advani at the helm - two sages of Indian political scene. There is never any question about their integrity, honesty and devotion towards India. And since they have seen every possible up and down in India since independence, it’s just natural that they will usher India into new age of plural democracy and secular development. Then they had second defensive line of Jaswant Singh, Yashwant Sinha, Bhairon Singh Shekhawat, Sikandar Bakhta et all. These folks were not exactly young but experienced, dedicated and for most purposes clean. And as if this was not enough they had third generation leadership emerging in Narendra Modi, Uma Bharati, Arun Jaitley, Sushama Swaraj and Pramod Mahajan. These folks not only had strong popular base (except for Arun Jaitley) but they were astute politicians who are also keenly aware of mood of emerging India. And then of course you have legendry foot soldiers of BJP who for most purposes graduated from RSS. These people were selfless, dedicated and motivated by higher cause.
Was this picture figment of (my) imagination or a mirage that BJP managed to create? Neither is true I guess because looking at BJP’s performance in last 20 years it is hard to believe that they would achieve all this without committed cadre base, sensible and intelligent mid-to-senior level and charismatic top rung. And BJP can’t create mirage of anything. That’s for sure. If they can then this is the best time to do that! So what happened? Where did they loose their common sense? What happened to all the discipline that RSS imparted? The fall has been so swift and so quick that it’s hard to fathom exactly when and where they lost all grey material?
The electoral defeat in 2004 general election was surely a shocker but the party did regroup and string of victories in state electoral (including establishing first government in South India) gave every indication that they are up for power in next general election. But it was not meant to be so. They did cling to their seats but the defeat was fatal. Congress swept through the polls and established themselves for another five years. Instead of introspecting senior members of the party started going berserk. Unless the party changes rank and file drastically, they are going down the drain pretty soon.
First of all, and it may seem extremely harsh, Mr. Advani needs to make a way. He is one of the greatest leaders and statesman that India has produced and surely one of the rarest breed who has capability to galvanize huge mass movements. Unfortunately though He is on wrong side of 80 and even if BJP wins the next general election, there is no way he could lead the nation. He not only loosing the control but it seems that he is completely dumbfounded to see his trusted lieutenants behaving in this manner. It will be sad to see him going in such circumstances. He certainly deserves a lot better. But fresh blood is extremely necessary at this juncture. If new leadership fails then at least they will fail after giving a fair shot. And no, Rajnath Singh can’t be his replacement! There are few choices apart from Narendra Modi. I think Sushama Swaraj fits the bill right now. She is intelligent and most importantly she has mass base.
Second, it is absolutely necessary for them to embrace Hindutva completely. It is the single factor that bought them to power. It was the reason they attracted educated middle class and it is the only viable ideology to attract poor to its fold. BJP, when ruling, showed how Hindutva seamlessly meshes up with development. So the Market and industries shouldn’t have any problems with Hindutva. On the social front though dilly-dallying with Hindutva has caused insurmountable damage. Glaring example is the sorry state of the party in Uttar Pradesh. They pretty much lost Delhi because of it. Uttar Pradesh is the most populace (I am including break-away states for this argument) state in India and has highest number of electorate votes. At one point BJP was winning more than 60 seats out of 89 and now they barely cross 10’s. It’s just pathetic.
Third, as mentioned earlier, they need to shut their mouth-holes. There is really no need to yap. They need to put their heads down and start working again. They have enough strength to win next general election. It’s just they need to stay as a united. If only they keep quite then they will hear the footsteps of inevitable doom. They need to be aware of this and should be scared.
And finally, I sincerely hope their next Prime Ministerial candidate is Narendra Modi. There is no alternative to him. They need to rally around him and he is the best hope at this point.
I always use to brag that BJP has deep leadership qualities amongst her ranks and file. And most of them are not corrupt and dedicated towards the goal. We had Mr. Vajapayee and Mr. Advani at the helm - two sages of Indian political scene. There is never any question about their integrity, honesty and devotion towards India. And since they have seen every possible up and down in India since independence, it’s just natural that they will usher India into new age of plural democracy and secular development. Then they had second defensive line of Jaswant Singh, Yashwant Sinha, Bhairon Singh Shekhawat, Sikandar Bakhta et all. These folks were not exactly young but experienced, dedicated and for most purposes clean. And as if this was not enough they had third generation leadership emerging in Narendra Modi, Uma Bharati, Arun Jaitley, Sushama Swaraj and Pramod Mahajan. These folks not only had strong popular base (except for Arun Jaitley) but they were astute politicians who are also keenly aware of mood of emerging India. And then of course you have legendry foot soldiers of BJP who for most purposes graduated from RSS. These people were selfless, dedicated and motivated by higher cause.
Was this picture figment of (my) imagination or a mirage that BJP managed to create? Neither is true I guess because looking at BJP’s performance in last 20 years it is hard to believe that they would achieve all this without committed cadre base, sensible and intelligent mid-to-senior level and charismatic top rung. And BJP can’t create mirage of anything. That’s for sure. If they can then this is the best time to do that! So what happened? Where did they loose their common sense? What happened to all the discipline that RSS imparted? The fall has been so swift and so quick that it’s hard to fathom exactly when and where they lost all grey material?
The electoral defeat in 2004 general election was surely a shocker but the party did regroup and string of victories in state electoral (including establishing first government in South India) gave every indication that they are up for power in next general election. But it was not meant to be so. They did cling to their seats but the defeat was fatal. Congress swept through the polls and established themselves for another five years. Instead of introspecting senior members of the party started going berserk. Unless the party changes rank and file drastically, they are going down the drain pretty soon.
First of all, and it may seem extremely harsh, Mr. Advani needs to make a way. He is one of the greatest leaders and statesman that India has produced and surely one of the rarest breed who has capability to galvanize huge mass movements. Unfortunately though He is on wrong side of 80 and even if BJP wins the next general election, there is no way he could lead the nation. He not only loosing the control but it seems that he is completely dumbfounded to see his trusted lieutenants behaving in this manner. It will be sad to see him going in such circumstances. He certainly deserves a lot better. But fresh blood is extremely necessary at this juncture. If new leadership fails then at least they will fail after giving a fair shot. And no, Rajnath Singh can’t be his replacement! There are few choices apart from Narendra Modi. I think Sushama Swaraj fits the bill right now. She is intelligent and most importantly she has mass base.
Second, it is absolutely necessary for them to embrace Hindutva completely. It is the single factor that bought them to power. It was the reason they attracted educated middle class and it is the only viable ideology to attract poor to its fold. BJP, when ruling, showed how Hindutva seamlessly meshes up with development. So the Market and industries shouldn’t have any problems with Hindutva. On the social front though dilly-dallying with Hindutva has caused insurmountable damage. Glaring example is the sorry state of the party in Uttar Pradesh. They pretty much lost Delhi because of it. Uttar Pradesh is the most populace (I am including break-away states for this argument) state in India and has highest number of electorate votes. At one point BJP was winning more than 60 seats out of 89 and now they barely cross 10’s. It’s just pathetic.
Third, as mentioned earlier, they need to shut their mouth-holes. There is really no need to yap. They need to put their heads down and start working again. They have enough strength to win next general election. It’s just they need to stay as a united. If only they keep quite then they will hear the footsteps of inevitable doom. They need to be aware of this and should be scared.
And finally, I sincerely hope their next Prime Ministerial candidate is Narendra Modi. There is no alternative to him. They need to rally around him and he is the best hope at this point.
Friday, July 31, 2009
Hindutva and Youth
India has the fastest growing population of youth under 25. According to recent estimate more than 40% of Indian population falls in this bracket. So it’s just natural that they will be the one driving India’s future. As India increasingly embraces capitalistic ethos the consumption based culture will take deeper roots. I think this phenomenon, in particular, will provide biggest resistance to the spreading of Hindutva ideology. Forget about anti-Hindu media and Christian missionary supported national parties, the youth with insatiable thirst to buy newer cell phones, bikes and clothes may prove hardest to sell to the nationalistic concepts based on Hindutva.
At the same time the understanding about Hindutva philosophy is increasingly getting muddled because of activities that, in reality, has nothing to do with Hindutva. I think if we try to be true to the comment made by Supreme Court of India “The court came to the conclusion that the words "Hinduism" or "Hindutva" are not necessarily to be understood and construed narrowly, confined only to the strict Hindu religious practices unrelated to the culture and ethos of the People of India depicting the way of life of the Indian people” then we can attract more followers. The current youth population is nationalistic in every sense but their priorities have shifted drastically and we need to explain them the Hindutva in a language that they understand.
Sadly, the word Hindutva is usually associated with hooliganism. Shiv-Sena for example is known more about bashing parties and beating people on Valentine’s Day. The recent incident in Mangalore presents the whole concept in very poor light. I don’t think Hindutva is about not celebrating Valentine’s day or not going to pubs. I myself find Valentine’s Day etc. incredibly stupid but that doesn’t mean I have any right to resort to violent acts. Freedom of expression is paramount and should be protected at any cost.
Attacking MF Hussein’s paintings is a different scenario though. Because he offends the sentiments on purpose and law agencies or government doesn't take any action against him on purpose. If he paints paintings of Jesus Christ and Mother Mary in compromising positions or if he paints any picture of Allah then that's fine. His freedom to express his art should work both ways!
But such mundane stuff doesn't necessarily has anything to do with Hindutva either. Hindutva is a philosophy with wider spectrum. So, first, we need to distinguish between this kind of macho-Hindutva from real Hindutva.
The rise of capitalism, as mentioned in the beginning, is impossible to stop. . For the first in last couple of centuries Indians are finding opportunities to lift themselves out of poverty. And they are not going to stop for any ideological principal. Is Hindutva against Capitalism? I am not sure if it is related to any certain economic models. Any economic model as long as it benefits India and Indians is welcome. In current scenario, capitalistic economic model is proving boon to India (The situation may change in future but we should deal with it in future only)
I f, under the guise of Hindutva, organizations like Swadeshi moments attacks this model of economy then we are surely going to loose more base. Such ideology all though may sound legitimate to certain sections of the society should be dissociated from Hindutva.
Once we take out real Hindutva out of these incoherent and confusing acts done by organization related to Hindu politic then it will take spread for sure. Of course, that won't be it. But then we will be in a position to fight the real battle with staunchly anti-Hindu media and leftist academia.
At the same time the understanding about Hindutva philosophy is increasingly getting muddled because of activities that, in reality, has nothing to do with Hindutva. I think if we try to be true to the comment made by Supreme Court of India “The court came to the conclusion that the words "Hinduism" or "Hindutva" are not necessarily to be understood and construed narrowly, confined only to the strict Hindu religious practices unrelated to the culture and ethos of the People of India depicting the way of life of the Indian people” then we can attract more followers. The current youth population is nationalistic in every sense but their priorities have shifted drastically and we need to explain them the Hindutva in a language that they understand.
Sadly, the word Hindutva is usually associated with hooliganism. Shiv-Sena for example is known more about bashing parties and beating people on Valentine’s Day. The recent incident in Mangalore presents the whole concept in very poor light. I don’t think Hindutva is about not celebrating Valentine’s day or not going to pubs. I myself find Valentine’s Day etc. incredibly stupid but that doesn’t mean I have any right to resort to violent acts. Freedom of expression is paramount and should be protected at any cost.
Attacking MF Hussein’s paintings is a different scenario though. Because he offends the sentiments on purpose and law agencies or government doesn't take any action against him on purpose. If he paints paintings of Jesus Christ and Mother Mary in compromising positions or if he paints any picture of Allah then that's fine. His freedom to express his art should work both ways!
But such mundane stuff doesn't necessarily has anything to do with Hindutva either. Hindutva is a philosophy with wider spectrum. So, first, we need to distinguish between this kind of macho-Hindutva from real Hindutva.
The rise of capitalism, as mentioned in the beginning, is impossible to stop. . For the first in last couple of centuries Indians are finding opportunities to lift themselves out of poverty. And they are not going to stop for any ideological principal. Is Hindutva against Capitalism? I am not sure if it is related to any certain economic models. Any economic model as long as it benefits India and Indians is welcome. In current scenario, capitalistic economic model is proving boon to India (The situation may change in future but we should deal with it in future only)
I f, under the guise of Hindutva, organizations like Swadeshi moments attacks this model of economy then we are surely going to loose more base. Such ideology all though may sound legitimate to certain sections of the society should be dissociated from Hindutva.
Once we take out real Hindutva out of these incoherent and confusing acts done by organization related to Hindu politic then it will take spread for sure. Of course, that won't be it. But then we will be in a position to fight the real battle with staunchly anti-Hindu media and leftist academia.
Sunday, July 19, 2009
Aftermath of Persian Elections
The fiasco in Iran seems to be finally over. I am not sure what and if it changed anything. We have an Islamic regime that barks at pretty much everyone. I must say that the regime probably does not reflect the general consensus in the country and that majority of the Persians do have sane mind. But anyone who denies existence of Holocaust must immediately be admitted to the mental asylum and arrested if that person is a head of the state. I can understand he wants to cater certain audience and he sincerely believes that his rants gives him certain aura but what he doesn’t realize is that his aura is aura of foolishness. But enough has been written about this madman.
The elections in Iran are different that how democratic elections that take place around the world. Persians do have right to vote and they do have candidates to choose from but the mandate can’t be used for quite a few matters related to the state and governance. For example, whether Persians believe that Israel should be wiped off the earth is irrelevant because the Revolutionary Guard - the powerful quasi-military institution in Iran, truly believes in ‘Zionist’ theory and that’s all it matters. The mandate of the people can be used only for intra-state governance. And even then the policies can’t step outside the gamut of Islamic principals.
The elected President then appoints whole bunch of officers through out the country increasing his strong hold over the bureaucracy. He is counseled by Revolutionary Guards as well as another of the religious council that sits between President’s arm of government and Revolutionary guard. And top of all this sits the Grand Ayatollah –the supreme leader, the ultimate arbitrary of all matters related to state. His words can not be doubted or his decisions can not be questioned. He sits above politics and yet he is heavily involved in all sorts of politics. He can dismiss anyone including the President. Like a King, he is not accountable to anything and to anyone. Though, the grand Ayatollah has not exercised his power frequently. At least, not visibly!
Whether Iran wants to hate US and UK is their choice. They don’t have to love western civilization nor do they need to embrace the western culture. If they want to be an Islamic republic and they should be an Islamic republic. Their grievances against UK and US are quite legitimate. Earlier in the days of Colonism and later under the guise of anti-Soviet build-up, these two western nations have messed up Persia quite unnecessarily. They were pawn for British Empire against Russian powerhouse and with the help of CIA, they overthrew democratically elected President in 1950’s. Later on they supported highly unpopular Shah Dynasty till 1979. But then whole of bunch of countries in the world were used and worse persecuted by British and American empires. Because that’s what Empires do. Similar case can be build against Turkish Empire or French colonial policies in Africa. Spanish empire! Anyone? The list is endless. But very few countries actually keep grieving. They rant, yes, but then they move on. They embrace capitalism whatever way is suitable and they try to attain progress. I think that’s where this proud civilization is slipping. And it is quite feasible that this frustration bubbled up through widespread protests.
At the same time we need to be little skeptical about the coverage in western media as well as relying on Facebook or Twitter. The protest seems to be or at least, recorded only in Tehran. The city’s the capital and metropolitan in every sense. And as is the case most of the world, the populace of big metros is usually more liberal. So, eruption of discontent in Tehran doesn’t mean folks in the other cities or in the countryside are sharing the same concern. But then, just to augment the contradiction further, protests in Tehran has been disruptive in the past. So, does recent protest has potential to herald Iran into another era of confusion and chaos? No one, including Persians themselves, knows the answer.
The protest was handled quite humanly if compared with such instances from the past. And in the face of strong warning, the protest fizzled out quietly. There seems to all most negligible use of force and very few people loosing lives. Of course, any loss of life is deplorable. But that’s how protest stuff works. The point is that Iranian rulers need to realize that they can enhance their own status and elevate their own country if they take this protest seriously. It’s absolutely retarded to keep blaming on western nations because even after the way this country is governed, if UK is still in the position to create mischief then all the Ayatollahs & Co. should resign in shame. The protest was genuine and they were peaceful. They simply wanted a recount, a legitimate request in any democratic institution. By calling them "dust" (who writes speeches for Ahmadinejad's?) or worse traitors is nothing but silly. Again they should not worry about what international media has to say. But to dismiss the huge protests on Tehran streets is showing cracks in the authoritative rule. The economy is still heavily based on Oil revenues and as oil prices has dropped like stone in the water in last couple of years, the macho attitude of the administration is not achieving anything. And when you are a supreme leader, you are not supposed to side with someone. And that's exactly Khamenie did. I think the protesters will be back in few years and that time it will be nastier than ever.
At the end of the day Persians are responsible of their own destiny. War-mongering, stupid brow-beating and constantly taking some ridiculous stand based on some ludicrous ideology is going to haunt the future of Iran for sure. World is moving on very rapidly and it's up to the folks in Iran to decide whether they want to part of the drama or just some loud bystanders.
The elections in Iran are different that how democratic elections that take place around the world. Persians do have right to vote and they do have candidates to choose from but the mandate can’t be used for quite a few matters related to the state and governance. For example, whether Persians believe that Israel should be wiped off the earth is irrelevant because the Revolutionary Guard - the powerful quasi-military institution in Iran, truly believes in ‘Zionist’ theory and that’s all it matters. The mandate of the people can be used only for intra-state governance. And even then the policies can’t step outside the gamut of Islamic principals.
The elected President then appoints whole bunch of officers through out the country increasing his strong hold over the bureaucracy. He is counseled by Revolutionary Guards as well as another of the religious council that sits between President’s arm of government and Revolutionary guard. And top of all this sits the Grand Ayatollah –the supreme leader, the ultimate arbitrary of all matters related to state. His words can not be doubted or his decisions can not be questioned. He sits above politics and yet he is heavily involved in all sorts of politics. He can dismiss anyone including the President. Like a King, he is not accountable to anything and to anyone. Though, the grand Ayatollah has not exercised his power frequently. At least, not visibly!
Whether Iran wants to hate US and UK is their choice. They don’t have to love western civilization nor do they need to embrace the western culture. If they want to be an Islamic republic and they should be an Islamic republic. Their grievances against UK and US are quite legitimate. Earlier in the days of Colonism and later under the guise of anti-Soviet build-up, these two western nations have messed up Persia quite unnecessarily. They were pawn for British Empire against Russian powerhouse and with the help of CIA, they overthrew democratically elected President in 1950’s. Later on they supported highly unpopular Shah Dynasty till 1979. But then whole of bunch of countries in the world were used and worse persecuted by British and American empires. Because that’s what Empires do. Similar case can be build against Turkish Empire or French colonial policies in Africa. Spanish empire! Anyone? The list is endless. But very few countries actually keep grieving. They rant, yes, but then they move on. They embrace capitalism whatever way is suitable and they try to attain progress. I think that’s where this proud civilization is slipping. And it is quite feasible that this frustration bubbled up through widespread protests.
At the same time we need to be little skeptical about the coverage in western media as well as relying on Facebook or Twitter. The protest seems to be or at least, recorded only in Tehran. The city’s the capital and metropolitan in every sense. And as is the case most of the world, the populace of big metros is usually more liberal. So, eruption of discontent in Tehran doesn’t mean folks in the other cities or in the countryside are sharing the same concern. But then, just to augment the contradiction further, protests in Tehran has been disruptive in the past. So, does recent protest has potential to herald Iran into another era of confusion and chaos? No one, including Persians themselves, knows the answer.
The protest was handled quite humanly if compared with such instances from the past. And in the face of strong warning, the protest fizzled out quietly. There seems to all most negligible use of force and very few people loosing lives. Of course, any loss of life is deplorable. But that’s how protest stuff works. The point is that Iranian rulers need to realize that they can enhance their own status and elevate their own country if they take this protest seriously. It’s absolutely retarded to keep blaming on western nations because even after the way this country is governed, if UK is still in the position to create mischief then all the Ayatollahs & Co. should resign in shame. The protest was genuine and they were peaceful. They simply wanted a recount, a legitimate request in any democratic institution. By calling them "dust" (who writes speeches for Ahmadinejad's?) or worse traitors is nothing but silly. Again they should not worry about what international media has to say. But to dismiss the huge protests on Tehran streets is showing cracks in the authoritative rule. The economy is still heavily based on Oil revenues and as oil prices has dropped like stone in the water in last couple of years, the macho attitude of the administration is not achieving anything. And when you are a supreme leader, you are not supposed to side with someone. And that's exactly Khamenie did. I think the protesters will be back in few years and that time it will be nastier than ever.
At the end of the day Persians are responsible of their own destiny. War-mongering, stupid brow-beating and constantly taking some ridiculous stand based on some ludicrous ideology is going to haunt the future of Iran for sure. World is moving on very rapidly and it's up to the folks in Iran to decide whether they want to part of the drama or just some loud bystanders.
Friday, June 05, 2009
The Tank Man
Since last week New York Times is buzzing 20th anniversary of Tienanmen Square massacre. Various articles, photographs and old reports were getting published trying to shed more light on that tragic event. But any new material is so scarce thanks to absolutely tight control over this incidence by Chinese government that basic questions like how many people were killed and what happened to the ones who were caught are still largely unanswered. If it were the western world, scores of books would have been published by now along with handful of movies. Few universities would have tried to set-up a Chair on this incidence too. It’s a different matter that excessive attention paid in western world even on minute incidence usually ends up muddling the water same as excessive crackdown on any dissent that Chinese government enforces.
Coming back to the topic, I was thinking about the photo that encapsulated the whole event. A lone guy in white shirt with some sort of shopping bag in his hand standing firmly and calmly in front of fleet of tanks. The road, bereft of any life, looks ominous with only tanks moving certain direction, most probably towards the protesters. In one of the recent reports it is mentioned that soldiers were firing indiscriminately from the tanks but it is hard to see any soldiers on the tanks. Amidst this firing and people scurrying around for cover, our hero, the “Tank Man” as popularly known now, is standing serenely ready to welcome the fleet of tanks. It makes me wonder, philosophies, what must be going through his mind at that time. His action doesn’t seem like taken in haste. In one of most recent photograph taken from another angle, published in New York Times, there is a considerable distance between where he took his last stand and the approaching tanks. Basically, he had time to run away. He had time to think to about his future, which obviously was quite bleak at that point. He had time convince himself to run. But he didn’t! What prompted him to be so valiant? Did he believe his act would spare lives of innocents by stopping the menacing march of tanks towards the protesters?
We would probably never know.
The fact that Chinese decided to turn on military grade tanks on their own citizens confirms the magnitude of the protest and uneasiness of the government. Would they really stop for a lone guy with shopping bags in his hands? Or rather, stopped by a lone guy with shopping bags in his hands? They didn’t and rest is history. No one knows the fate of ‘tank man’. Some think he survived and still living in China. I highly doubt that. I mean we have an authoritarian government that hangs even juvenile convicts and it would be totally out of character for them to spare his life, specially, after killing thousands of his protesters comrades with ease. After such a gruesome slaughter killing the tank man would be merely adding to statistics.
The unfathomable courage he showed is so exceptional and surprising that majority would call him a mad-man. These cynics will further point out that his protest didn’t stop the carnage. True, but he showed us the power to take a stand. Whether it changes the reality is for later part. The most important thing is to act. He didn’t care if anyone was following him or not. He didn’t care about the consequences. He didn’t make any speeches or grandiose statements nor did he write any books. There is no way that anyone could stand up against military tanks and bullets. And yet he decided to show his strength by standing in front of them. He didn’t attack those tanks with grenades. He didn’t attack them at all. He just wanted to stop them. Perhaps, he thought that he can reason with the military personnel in the tanks because he did climb on the tank looking for someone to talk to and you can all most feel that he wanted them the tank operator to think about consequence of their act. What ever may be the reason; his act was in sheer desperation he showcased the enduring spirit of humans to fight for others; to look beyond individual interest and stand up for greater cause.
Somehow I believe he didn’t think this profoundly at all. Because one, there was probably no time to do so. But moreover, thinking so much can diminish the resolve. His act was instinctive but resolute. In any case when you are facing your death through barrel of the tank or in the bed, the only thing that remains is the debate with your soul.. You are answerable to your own self. Did you do what you were supposed to do? Are you satisfied with your actions? Were you true to your conscious? He had satisfactory answers for himself and with tank gun pointed at him, he set himself free.
Coming back to the topic, I was thinking about the photo that encapsulated the whole event. A lone guy in white shirt with some sort of shopping bag in his hand standing firmly and calmly in front of fleet of tanks. The road, bereft of any life, looks ominous with only tanks moving certain direction, most probably towards the protesters. In one of the recent reports it is mentioned that soldiers were firing indiscriminately from the tanks but it is hard to see any soldiers on the tanks. Amidst this firing and people scurrying around for cover, our hero, the “Tank Man” as popularly known now, is standing serenely ready to welcome the fleet of tanks. It makes me wonder, philosophies, what must be going through his mind at that time. His action doesn’t seem like taken in haste. In one of most recent photograph taken from another angle, published in New York Times, there is a considerable distance between where he took his last stand and the approaching tanks. Basically, he had time to run away. He had time to think to about his future, which obviously was quite bleak at that point. He had time convince himself to run. But he didn’t! What prompted him to be so valiant? Did he believe his act would spare lives of innocents by stopping the menacing march of tanks towards the protesters?
We would probably never know.
The fact that Chinese decided to turn on military grade tanks on their own citizens confirms the magnitude of the protest and uneasiness of the government. Would they really stop for a lone guy with shopping bags in his hands? Or rather, stopped by a lone guy with shopping bags in his hands? They didn’t and rest is history. No one knows the fate of ‘tank man’. Some think he survived and still living in China. I highly doubt that. I mean we have an authoritarian government that hangs even juvenile convicts and it would be totally out of character for them to spare his life, specially, after killing thousands of his protesters comrades with ease. After such a gruesome slaughter killing the tank man would be merely adding to statistics.
The unfathomable courage he showed is so exceptional and surprising that majority would call him a mad-man. These cynics will further point out that his protest didn’t stop the carnage. True, but he showed us the power to take a stand. Whether it changes the reality is for later part. The most important thing is to act. He didn’t care if anyone was following him or not. He didn’t care about the consequences. He didn’t make any speeches or grandiose statements nor did he write any books. There is no way that anyone could stand up against military tanks and bullets. And yet he decided to show his strength by standing in front of them. He didn’t attack those tanks with grenades. He didn’t attack them at all. He just wanted to stop them. Perhaps, he thought that he can reason with the military personnel in the tanks because he did climb on the tank looking for someone to talk to and you can all most feel that he wanted them the tank operator to think about consequence of their act. What ever may be the reason; his act was in sheer desperation he showcased the enduring spirit of humans to fight for others; to look beyond individual interest and stand up for greater cause.
Somehow I believe he didn’t think this profoundly at all. Because one, there was probably no time to do so. But moreover, thinking so much can diminish the resolve. His act was instinctive but resolute. In any case when you are facing your death through barrel of the tank or in the bed, the only thing that remains is the debate with your soul.. You are answerable to your own self. Did you do what you were supposed to do? Are you satisfied with your actions? Were you true to your conscious? He had satisfactory answers for himself and with tank gun pointed at him, he set himself free.
Thursday, May 28, 2009
Surprise, Surprise!
I haven’t blogged in all most a month. Such a long break is first of its kind. I wasn’t busy per se but I couldn’t write anything. There were quite a few things to write about but it felt like there is no point in writing. What’s going to change? Nothing! I don’t claim to be influential writer that well, influences people. No, it’s not about that. The question that kills me is that if a person of average intellect (which is me!) can see these issues so clearly then how on earth we as a nation fail to act on it? Does that mean majority in our nation have below par intelligence? I don’t think so. Then how on earth Congress can win this election so comfortably? I mean, it was a fair election. They had a plan and people voted for that plan. In short Congress party won an election legitimately. Congratulations to them. But they didn’t win on a successful five year term. I don’t know how they won but if their track record in last five years is of any indication then we are in for tough ride for sure.
Our nation has been constantly attacked by terrorists in last few years. None of the culprits were bought to justice. These terrorists grew so audacious that they bough the one of the biggest cities in the world to stand still and merrily killed 200 innocent people and fired thousands and thousands of bullets without any hindrance. And yet, nothing! Literally, nothing moved. Apart from this mayhem in Mumbai, we had several bomb blasts across the nation, from Guwahati to Bengalluru and from Jaipur to Hyderabad. All though the modus operandi was eerily similar, it seems the problem of catching the culprits has more to do with political will than simple law enforcement.
It’s often said that votes are decided by rather simpler demands like roti, kapada and makaan. I agree to that but even on that front the earlier government failed miserably. The inflation has skyrocketed with no end in sight. All though government figure steadfastly maintains that inflation rise is around 3 to 4%. To see the prices of lentils, rice, eggs and milk makes you wonder if consumer is mad. In the article published in Indian Express the author has conclusively proved that inflation rate has been 7 to 8% in urban and all most touching 10% in rural areas. That’s a staggering rise by any standards. This prices has been challenged both of rapid increase in demand and supply side inability to keep up with the demand. The second of this equation government is supposed to take care of. Instead, disinvestment has come to stand-still. The infrastructure has taken the back seat and red-tape hasn’t budged at all. I can understand that these age-old problems won’t be solved in one term but my concern is that the earlier government refused to take any steps towards modernization at all. This is particularly a sad picture considering our Prime Minister is hailed as a hero for his tenure as a finance minister in 1990’s.
The fiasco of another round of Reservation policy is long forgotten. The putrid character of Arjun Singh is still well placed in the government. After messing up another young generation he seems to be content person now. There was so much hoopla at that time that it wouldn’t surprise anyone if young generations boot out this government. Well, surprising it was that they actually voted in this government. As the saying goes “Khuda bachaaye”
And then there were foreign policy blunders like loosing Nepal to the communists. All though our foreign policy did great work in isolating Pakistan in the international community. But we will come to the foreign policy part in a separate blog.
These are some of the major points I would think of before casting my vote. Obviously it didn’t happen with majority of the people. I don’t know why. I am not saying BJP was the only choice and people should have voted only BJP but my contention is that folks aren’t thinking before voting. This is not a democracy we are striving for. Vote is not just a right but it’s a responsibility. The responsibility is to think and work for the betterment of the society and for the progress of the nation. It’s a heavy burden and should be treated with respect. In democracy we are supposed to ask questions to the politicians. They work for us. We are the rulers and they are serving us. If we are constantly getting attacked by terrorists then power is in our hands to protect and retaliate. If the food prices are sky rocketing then we are responsible for bringing them down. And easiest way to do that is to vote with responsibility.
If this election is heralding the age of two national parties tussling over power then that’s a welcome relief. However corrupt and incompetent Congress Party is, they are much better than likes of Paswan, Mulayam and Laloos. The other silver lining of this election was decline of Communists. Folks like Communist Party should be out rightly banned from India. Not only that they are corrupt, counter-productive parasites but they are anti-national too. Communists Party of India works more for China than for India. At least now they will be confined only to Bengal rather than wracking havoc in Delhi.
We will evaluate BJP’s future in next blog.
Our nation has been constantly attacked by terrorists in last few years. None of the culprits were bought to justice. These terrorists grew so audacious that they bough the one of the biggest cities in the world to stand still and merrily killed 200 innocent people and fired thousands and thousands of bullets without any hindrance. And yet, nothing! Literally, nothing moved. Apart from this mayhem in Mumbai, we had several bomb blasts across the nation, from Guwahati to Bengalluru and from Jaipur to Hyderabad. All though the modus operandi was eerily similar, it seems the problem of catching the culprits has more to do with political will than simple law enforcement.
It’s often said that votes are decided by rather simpler demands like roti, kapada and makaan. I agree to that but even on that front the earlier government failed miserably. The inflation has skyrocketed with no end in sight. All though government figure steadfastly maintains that inflation rise is around 3 to 4%. To see the prices of lentils, rice, eggs and milk makes you wonder if consumer is mad. In the article published in Indian Express the author has conclusively proved that inflation rate has been 7 to 8% in urban and all most touching 10% in rural areas. That’s a staggering rise by any standards. This prices has been challenged both of rapid increase in demand and supply side inability to keep up with the demand. The second of this equation government is supposed to take care of. Instead, disinvestment has come to stand-still. The infrastructure has taken the back seat and red-tape hasn’t budged at all. I can understand that these age-old problems won’t be solved in one term but my concern is that the earlier government refused to take any steps towards modernization at all. This is particularly a sad picture considering our Prime Minister is hailed as a hero for his tenure as a finance minister in 1990’s.
The fiasco of another round of Reservation policy is long forgotten. The putrid character of Arjun Singh is still well placed in the government. After messing up another young generation he seems to be content person now. There was so much hoopla at that time that it wouldn’t surprise anyone if young generations boot out this government. Well, surprising it was that they actually voted in this government. As the saying goes “Khuda bachaaye”
And then there were foreign policy blunders like loosing Nepal to the communists. All though our foreign policy did great work in isolating Pakistan in the international community. But we will come to the foreign policy part in a separate blog.
These are some of the major points I would think of before casting my vote. Obviously it didn’t happen with majority of the people. I don’t know why. I am not saying BJP was the only choice and people should have voted only BJP but my contention is that folks aren’t thinking before voting. This is not a democracy we are striving for. Vote is not just a right but it’s a responsibility. The responsibility is to think and work for the betterment of the society and for the progress of the nation. It’s a heavy burden and should be treated with respect. In democracy we are supposed to ask questions to the politicians. They work for us. We are the rulers and they are serving us. If we are constantly getting attacked by terrorists then power is in our hands to protect and retaliate. If the food prices are sky rocketing then we are responsible for bringing them down. And easiest way to do that is to vote with responsibility.
If this election is heralding the age of two national parties tussling over power then that’s a welcome relief. However corrupt and incompetent Congress Party is, they are much better than likes of Paswan, Mulayam and Laloos. The other silver lining of this election was decline of Communists. Folks like Communist Party should be out rightly banned from India. Not only that they are corrupt, counter-productive parasites but they are anti-national too. Communists Party of India works more for China than for India. At least now they will be confined only to Bengal rather than wracking havoc in Delhi.
We will evaluate BJP’s future in next blog.
Thursday, April 16, 2009
We The Election!
The general elections are round the corner and the consensus seems to be that anyone can come to the power. And that is of course very scary indeed. If third front comes to the power then we will have hodge-podge of parties that are hell bent on making as much money as possible as quick as possible and the results will be disastrous. Remember the period of 1996 to 1998? Nothing got done and we were in real danger of getting Mulayam Singh Yadav or Laloo Prasaad Yadav as our prime minister. Well, those ghastly nightmares are back. We may get them as our prime minister and the chaos will ensue. Muslim appeasement will peak out. Reservations will be doled out like Prasad in the temples. Private investment will dry out and infrastructure development will come to the grinding halt. Foreign policy initiatives will cease to exist and Economic policies will be shunted out and replaced with communist agenda. And we will be staring at the elections within next couple of years. But that’s not it. If any of those dangerous clowns get elected then that will be smack slap on the face of democracy. None of these parties have ability to win outside their base state. The maximum seats they can win don’t go beyond 20’s and yet they are close on becoming Prime-Minister of the country.
Now if Congress party comes to the power then sadly, we will be back to the square one. We will have a Prime Minister who have no say in anything. He doesn’t show backbone of any sort and refuses to be proactive in anything. Our country will get attacked again by the terrorists as well as by Naxals. Our foreign policy will be non-existent again. We will get into peace dialogue with Pakistan and will be attacked again by them in return. We will ask them to hand over the terrorists and they will refuse to do so in return. Months will pass and our moronic society will forget about those attacks and then we will have peace dialogue again. The inflation is through roofs and yet our finance minister who is also our home minister thinks that this is a good sign. He keeps babbling about strong fundamentals of our economy. Somehow he doesn’t see that the grain prices are getting so exorbitant that soon poor people won’t be able to afford daal-chawal.
The third possibility is that BJP wins the election and comes to the power with support from it allies. I would certainly prefer BJP coming to the power. Amongst the political masses BJP politicians at least get things done. Once upon a time, not so long ago to be honest, BJP had powerful second rung leadership. We had Arun Jaitley, Sushama Swaraj, Narendra Modi, Pramod Mahajan, Rajnath Singh. They were competent, non-corrupt for most purposes and nationalist to the core. All of them (except for Pramod Mahajan who died couple of years ago) are still in the BJP but something’s not right. As much as I respect L. K. Advani, let’s be honest here, why BJP is projecting him as a Prime-Minstrel candidate when he will be 81 soon? Why not break the tradition of giving post to the eldest and present rather younger age. It’s true that most of the ‘young’ Turks are above 50 but that means they are ripe with experience, an absolute necessity in Indian politics, and yet young enough to lead our nation for sustained period of time. But internal feuds in the party are well documented denting the image of the party as party of differences instead of a different party.
Historically, the elections in India are decided by very basic issues like employment, price rise and lack of basic amenities. The rise of regional parties should be attributed to the fact that they know how to play with people’s sentiments in this regard. But we are currently dealing with catch-22 situation. Regional parties scarcely think beyond their state boundaries. In fact they actively work against projects or necessary decisions that may affect their state in short term but help nation in longer term. Moreover they lack the vision necessary to develop the whole nation. That in turn complicates an already tough task of providing basic necessities to the common, which in turn (too many turns!!) increases the appeal for regional parties. I am not sure how and when we will come out of it. Perhaps when people finally start identifying themselves with nation they will start voting for the overall development rather than roti-kapada aur makaan Road to that destination is treacherous and onerous.
Now if Congress party comes to the power then sadly, we will be back to the square one. We will have a Prime Minister who have no say in anything. He doesn’t show backbone of any sort and refuses to be proactive in anything. Our country will get attacked again by the terrorists as well as by Naxals. Our foreign policy will be non-existent again. We will get into peace dialogue with Pakistan and will be attacked again by them in return. We will ask them to hand over the terrorists and they will refuse to do so in return. Months will pass and our moronic society will forget about those attacks and then we will have peace dialogue again. The inflation is through roofs and yet our finance minister who is also our home minister thinks that this is a good sign. He keeps babbling about strong fundamentals of our economy. Somehow he doesn’t see that the grain prices are getting so exorbitant that soon poor people won’t be able to afford daal-chawal.
The third possibility is that BJP wins the election and comes to the power with support from it allies. I would certainly prefer BJP coming to the power. Amongst the political masses BJP politicians at least get things done. Once upon a time, not so long ago to be honest, BJP had powerful second rung leadership. We had Arun Jaitley, Sushama Swaraj, Narendra Modi, Pramod Mahajan, Rajnath Singh. They were competent, non-corrupt for most purposes and nationalist to the core. All of them (except for Pramod Mahajan who died couple of years ago) are still in the BJP but something’s not right. As much as I respect L. K. Advani, let’s be honest here, why BJP is projecting him as a Prime-Minstrel candidate when he will be 81 soon? Why not break the tradition of giving post to the eldest and present rather younger age. It’s true that most of the ‘young’ Turks are above 50 but that means they are ripe with experience, an absolute necessity in Indian politics, and yet young enough to lead our nation for sustained period of time. But internal feuds in the party are well documented denting the image of the party as party of differences instead of a different party.
Historically, the elections in India are decided by very basic issues like employment, price rise and lack of basic amenities. The rise of regional parties should be attributed to the fact that they know how to play with people’s sentiments in this regard. But we are currently dealing with catch-22 situation. Regional parties scarcely think beyond their state boundaries. In fact they actively work against projects or necessary decisions that may affect their state in short term but help nation in longer term. Moreover they lack the vision necessary to develop the whole nation. That in turn complicates an already tough task of providing basic necessities to the common, which in turn (too many turns!!) increases the appeal for regional parties. I am not sure how and when we will come out of it. Perhaps when people finally start identifying themselves with nation they will start voting for the overall development rather than roti-kapada aur makaan Road to that destination is treacherous and onerous.
Monday, March 30, 2009
The American Culprit
The AIG controversy gave slimmer of hope to American population to finally lay blame of current credit crises on someone. Alas, the pop fizzled out so quickly that the joy of revenge didn’t last long. Traders based in US returned their money and traders based in Europe didn’t even bother to take notice of this hoopla. After spending or rather printing, literally, two trillion dollars, getting $80 million back into government coffers was like dark comedy. But it shows the lack of understanding regarding current crises amongst the masses. Worse it shows how US government is running out of any better ideas to pull economy out of trouble. The current debacle in the financial market not only shook the very foundation of financial hegemony of US over rest of the world but it dealt severe blow to the American swagger that they are pioneers of finance wizardry.
It’s easy to blame the whole trouble on few people on Wall Street. They were greedy and they did stupid stuff. But technically speaking none of that was illegal. Unlike in Enron- where the top management was deeply embroiled in cooking books- here, the whole credit cycle process as well as Securitization processes was absolutely legal. Now whether that structure was sustainable or not is a different question. (It wasn’t!) That makes average Joe (common man in US lingo!) is confused that if he is loosing his pension plan and on the verge of loosing his job then how come the techniques that brought down the house is legal? The answer is not that simple. The game has been going on for long time and our average Joe inadvertently ended up playing a major role.
The American economy has been reshaped into a consumer based behemoth that gobbles everything and anything produced around the globe. The insatiable demand wasn’t fueled by higher earnings but rather illusion of earnings. People were borrowing heavily for everything. Right from the clothes to house everything was paid by credit. The credit cards were thrown at people like fliers. The houses were made available to everyone. And all though availability of resources and luxuries to everyone is a noble goal, the bitter truth is that the responsibility was bartered for greed. The saving rate was in negative – a fact lawmakers as well as general populace should be worried about. But not in this land of free! The definition of freedom was twisted in such an ugly manner that government in fact supported this binge consumption on borrowed money. And, why not, the government itself was borrowing money from foreign countries by selling debt to them. The chief of Federal Reserve was spreading the euphoria by telling everyone that this kind of debt restructuring (including securitization) is heralding new age of prosperity to American life. The first part was indeed true, the second, not so much! People borrowed more money by putting their houses as collateral. ‘Flipping’ houses became rage. Folks with no knowledge of financial juggernaut behind housing market or for that matter housing market itself bought houses after houses. In the initial years huge profits were made. But the simple rule of supply and demand is like gravity. It always catches up with you and brings you down. Usually with the loud thud!
The juggernaut didn’t just stop there. Financial firms got into the business they didn’t understand either. Creating securitization business, selling CDO’s, CDO’s of CDO’s, tranching, slicing, creating SPE and then buying insurance to find solace went on for really long time. With limited number of players in the market (both in terms of buyers and sellers) they effectively traded with each other creating a manor of cards. The house was meant to come down.
In short it’s all most impossible to pin-point a culprit. If Americans want to know who is the culprit then they need to stand in front of mirror and open their eyes. The reflection ain’t that pretty!
It’s easy to blame the whole trouble on few people on Wall Street. They were greedy and they did stupid stuff. But technically speaking none of that was illegal. Unlike in Enron- where the top management was deeply embroiled in cooking books- here, the whole credit cycle process as well as Securitization processes was absolutely legal. Now whether that structure was sustainable or not is a different question. (It wasn’t!) That makes average Joe (common man in US lingo!) is confused that if he is loosing his pension plan and on the verge of loosing his job then how come the techniques that brought down the house is legal? The answer is not that simple. The game has been going on for long time and our average Joe inadvertently ended up playing a major role.
The American economy has been reshaped into a consumer based behemoth that gobbles everything and anything produced around the globe. The insatiable demand wasn’t fueled by higher earnings but rather illusion of earnings. People were borrowing heavily for everything. Right from the clothes to house everything was paid by credit. The credit cards were thrown at people like fliers. The houses were made available to everyone. And all though availability of resources and luxuries to everyone is a noble goal, the bitter truth is that the responsibility was bartered for greed. The saving rate was in negative – a fact lawmakers as well as general populace should be worried about. But not in this land of free! The definition of freedom was twisted in such an ugly manner that government in fact supported this binge consumption on borrowed money. And, why not, the government itself was borrowing money from foreign countries by selling debt to them. The chief of Federal Reserve was spreading the euphoria by telling everyone that this kind of debt restructuring (including securitization) is heralding new age of prosperity to American life. The first part was indeed true, the second, not so much! People borrowed more money by putting their houses as collateral. ‘Flipping’ houses became rage. Folks with no knowledge of financial juggernaut behind housing market or for that matter housing market itself bought houses after houses. In the initial years huge profits were made. But the simple rule of supply and demand is like gravity. It always catches up with you and brings you down. Usually with the loud thud!
The juggernaut didn’t just stop there. Financial firms got into the business they didn’t understand either. Creating securitization business, selling CDO’s, CDO’s of CDO’s, tranching, slicing, creating SPE and then buying insurance to find solace went on for really long time. With limited number of players in the market (both in terms of buyers and sellers) they effectively traded with each other creating a manor of cards. The house was meant to come down.
In short it’s all most impossible to pin-point a culprit. If Americans want to know who is the culprit then they need to stand in front of mirror and open their eyes. The reflection ain’t that pretty!
Sunday, March 08, 2009
Analysis Of Recent Developments in Pakistan
I am kind of tired of writing about Pakistan but somehow these buggers manage to keep themselves in the news and that too for wrong reasons. I mean spreading terror around the world does take some efforts!
Things are moving so furiously in Pakistan that the repercussions will soon be felt throughout the world. I think another major terrorist attack is due soon. I don’t think the so called democratic government knows what’s going on but what’s worse is that even their military brass is clueless about these happenings. Dealing with devil is always a loose-loose contest. Pakistan should have known better!
Pakistani Government recently signed a peace accord with Talibani fighters in Swat region of Pakistan. In doing that they effectively gave away a part of their country to Taliban. Pakistani laws will be useless in that region and ultimate decider of anything that happens in that region will be Talibani fighters. I am surprised to see it hasn’t raised much of hackles in international media. There are articles about it in all the major publications but if that’s the maximum exposure even to of this proportion is getting then that’s more worrisome that the actual event.
Since getting their ass kicked by US forces Taliban has made North-West Frontier Province of Pakistan as their new home. Not knowing how to deal with these people Pakistan army allowed them to set up the base in their country. All though Taliban was Pakistani Armies creation the purpose was always to take over Afghanistan. The myopic leadership of Pakistan army can’t think beyond the boogie-man of India attacking them. They were worried that Afghanistan being friendly with India will support Indian invasion. So they created Taliban to take over Afghanistan in order to create strategic reserve in case if India attacks. India never attacked but now the chickens are coming home to roost.
The events of 9/11 were entirely unexpected for Pakistan army on many levels. One, it put the spotlight of whole world on them. Practically the whole world realized that the tumor of terrorism flourishes in Pakistan and Afghanistan. Second, they got dissociated from India. That is, news stopped taking Pakistan and India in same breath. For International media Pakistan became a problem child and that has nothing to do with India. And third US army is sitting solidly right next to their door. Pakistani army couldn’t disown Taliban nor could it support them. The pressure from international community was immense and they had limited options to maneuver.US army as well as political leadership is getting impatient. US drones regularly intrudes into Pakistani soil and few months ago US soldiers entered Pakistani soil in pursuit of Taliban. That must have sent Pakistani army brass into seizure. So they turned to their favorite enemy for help! The spurt in bomb blasts in India was their desperate attempt to deflect attention from them. The brazen attack in Mumbai was height of their frustration. But it didn’t do any good for them.
Coming back to our original point we can look at the peace accord between Talibani fighters and Pakistani military in two ways. One, Pakistani army is playing another game with US. They are showing to US that unless US stop pressurizing them they will have to do peace accord with Talibani elements. That way they can check-mate US into submission. Basically Pakistan is telling US that you better listen to us or we will screw you by openly befriending your enemies. Or, the second more scary situation is Pakistani army really don’t know how to fight with Taliban anymore. They are outsmarted by Taliban and getting daily beatings from them. With US on one side and supposedly Pakistan on other, I wonder how on earth Taliban is getting state of the art guns and ammunition! Does that mean there is a fissure in Pakistani army itself with one flank supporting Taliban and other fighting with them?
Reading the conflicting messages emanating from Pakistan leadership aftermath of Mumbai attacks as well as attack on Lankan cricket team tilts me towards the second scenario. That is, Pakistani leadership has no clue what the heck is happening.
Terrorist attacks happening around the world and them knowing everything was scary but them not knowing anything and attack still happening is worse!
Things are moving so furiously in Pakistan that the repercussions will soon be felt throughout the world. I think another major terrorist attack is due soon. I don’t think the so called democratic government knows what’s going on but what’s worse is that even their military brass is clueless about these happenings. Dealing with devil is always a loose-loose contest. Pakistan should have known better!
Pakistani Government recently signed a peace accord with Talibani fighters in Swat region of Pakistan. In doing that they effectively gave away a part of their country to Taliban. Pakistani laws will be useless in that region and ultimate decider of anything that happens in that region will be Talibani fighters. I am surprised to see it hasn’t raised much of hackles in international media. There are articles about it in all the major publications but if that’s the maximum exposure even to of this proportion is getting then that’s more worrisome that the actual event.
Since getting their ass kicked by US forces Taliban has made North-West Frontier Province of Pakistan as their new home. Not knowing how to deal with these people Pakistan army allowed them to set up the base in their country. All though Taliban was Pakistani Armies creation the purpose was always to take over Afghanistan. The myopic leadership of Pakistan army can’t think beyond the boogie-man of India attacking them. They were worried that Afghanistan being friendly with India will support Indian invasion. So they created Taliban to take over Afghanistan in order to create strategic reserve in case if India attacks. India never attacked but now the chickens are coming home to roost.
The events of 9/11 were entirely unexpected for Pakistan army on many levels. One, it put the spotlight of whole world on them. Practically the whole world realized that the tumor of terrorism flourishes in Pakistan and Afghanistan. Second, they got dissociated from India. That is, news stopped taking Pakistan and India in same breath. For International media Pakistan became a problem child and that has nothing to do with India. And third US army is sitting solidly right next to their door. Pakistani army couldn’t disown Taliban nor could it support them. The pressure from international community was immense and they had limited options to maneuver.US army as well as political leadership is getting impatient. US drones regularly intrudes into Pakistani soil and few months ago US soldiers entered Pakistani soil in pursuit of Taliban. That must have sent Pakistani army brass into seizure. So they turned to their favorite enemy for help! The spurt in bomb blasts in India was their desperate attempt to deflect attention from them. The brazen attack in Mumbai was height of their frustration. But it didn’t do any good for them.
Coming back to our original point we can look at the peace accord between Talibani fighters and Pakistani military in two ways. One, Pakistani army is playing another game with US. They are showing to US that unless US stop pressurizing them they will have to do peace accord with Talibani elements. That way they can check-mate US into submission. Basically Pakistan is telling US that you better listen to us or we will screw you by openly befriending your enemies. Or, the second more scary situation is Pakistani army really don’t know how to fight with Taliban anymore. They are outsmarted by Taliban and getting daily beatings from them. With US on one side and supposedly Pakistan on other, I wonder how on earth Taliban is getting state of the art guns and ammunition! Does that mean there is a fissure in Pakistani army itself with one flank supporting Taliban and other fighting with them?
Reading the conflicting messages emanating from Pakistan leadership aftermath of Mumbai attacks as well as attack on Lankan cricket team tilts me towards the second scenario. That is, Pakistani leadership has no clue what the heck is happening.
Terrorist attacks happening around the world and them knowing everything was scary but them not knowing anything and attack still happening is worse!
Monday, January 19, 2009
The Attack of a Black Swan
VaR or Value at Risk is a must model for all financial institution. What VaR model suggests in terms of Dollar figure is that there is a certain confidence that the losses of a firm won’t exceed a certain dollar amount. Calculating VaR number requires complex statistical and mathematical models. And people calculating such numbers are called Quants – a venerable job at least until now! For example if VaR number calculated at 99% confidence interval of an ABC firm is $50 million then that means 99 out of 100 times the maximum losses that can occur will be less or equal to $50 Millions. But the folly lies when we look other way round. It means there is a 1% chance that losses will be at least $ 50 million i.e. from fifty million to infinity. This 1% probability usually brings catastrophe. Nassim Nicholas Taleb christened this seemingly innocuous but probability of catastrophic results as ‘Black Swan’. Unfortunately, the in-built risk management system of human mind doesn’t take this probability into account and hence people tend to get caught unaware. This concept is not just a mathematical probability applied in financial world alone. But we can see imprints of Black Swan in every facet of Human life and across the human history.
For example, no one I mean no one really expected WW II to happen. I know it sounds lunatic. Aftermath of any civilization changing event usually makes us believe that the contemporary generation didn’t do enough to stop the catastrophe. It is true to certain extent but more than that the contemporary generation actually failed to see that something needs to be done. That generation slept like a baby. London Bond Market right up to the Poland invasion was working smoothly. There was no anxiety about getting investment back. And there was no apparent uncertainty in bond pricing about the possibility of a neighborhood country orchestrating war. The war did happen and more than the sheer magnitude, it’s the absolutely surprise that stunned the whole world. And total incompetency in handling the situation cost 60 million lives.
Now let’s try to see India-Pakistan relations through this prism.
It is often mentioned that Security issues is not foremost on Indian voters mind. If that’s the reality then it’s very sad. Considering we are surrounded by countries that don’t necessarily like us we need to be vigilant about our security. We are getting attacked repeatedly by Pakistan and yet we refuse to act against them. We don’t attack them; we don’t put economic sanctions against them. In fact officially they are not even on our Enemy List. (For Pete’s sake we are a peace loving nation!) We play cricket with those bastards and we allow their hopeless singers to make money in India. Any sane mind will think that if Pakistan doesn’t want peace then we will give them war. But sanity is in shortage in India.
The so called intellectual class in India believes that in case of war, losses that Pakistan will be negligible because being a failed state Pakistan don’t have anything anyways. On the other hand the losses India will incur will be huge. That means we need to think hard before going strong. Apart from that, Indians tend to believe that Indian army is too strong for Pakistani army. And Pakistan can never defeat India in conventional warfare In short there is a remote possibility of war and if any then India can kick Pakistani ass anytime. That’s what brings us to the possibility of Black Swan moment. The probability of Black Swan is very low but nevertheless it’s still a possibility. And whenever those events take place, and trust me they do, the results are catastrophic, earth-shattering and history changing. Why do I think the possibility of us getting humbled? Because the conventional warfare is so yesterday! Who wants to talk about conventional war when two of the great empires were humbled by rag-tag armies of Afghan Mujahidin’s and Viet-Congs! The war has changed its face but we haven’t changed our thinking and that can get us into the trouble. Because we believe we don’t need to do anything special and our future generation will curse us for not doing something that was required.
Pakistan is a sworn enemy of India. Irrespective of what Indians or Indian leadership think about Pakistan, in actuality Pakistan’s sole aim is to destroy India. They have tried repeatedly to wage war and when that failed they started creating unrest in India in every way or shape or form. Unfortunately, the usual response from India is nothing short of criminal. It is as if Indians take their freedom too lightly. It is flabbergasting to see Indians forgetting that they were enslaved and ruled by foreign invaders for all most one thousand years. And the freedom we are enjoying and the progress we are achieving is just 60 years old. We are peace-loving nation. Agreed! But peace is a two way street and if other party is hell bent on waging a war or in this case already in war with you then the choices are extremely limited. Either you defend yourself or get obliterated.
It always amuses that the strong Persian and Indian empires crumbled like pack of cards in front of Islamic onslaught. Looking at the history more closely we can see that Hindu kingdoms fought actively and valiantly against Islamic marauders for more than two hundred years. Their mistake was that they fought with invaders as if they are fighting their neighborhood Hindu kingdoms. They failed to see the difference. They didn’t realize that the Islamic invaders are not only hell bent on destroying everything on their way but these invaders, drunk on religious fervor, won’t stop until they destroy the very basic fabric of our society. That’s why Indian kingdom didn’t unite. Worse, they used to let go defeated Islamic invaders with gifts instead of out rightly killing them.
We capture terrorists and then let them go. We capture terrorist and don’t hang them. We don’t think that Pakistan is attacking our way of life and our freedom. We strictly see Pakistan from nation-state angle while they see us strictly through religious perspective.
The uncanny similarities between history and present are too scary to ignore. But we can find solace in the fact that the results will be same! I personally don’t believe there is Black Swan moment waiting to happen. I believe that there is in fact a 900 pound Gorilla sitting in the room ready to pound on us while we sleep like babies.
But then dream land is always more soothing than the reality!
For example, no one I mean no one really expected WW II to happen. I know it sounds lunatic. Aftermath of any civilization changing event usually makes us believe that the contemporary generation didn’t do enough to stop the catastrophe. It is true to certain extent but more than that the contemporary generation actually failed to see that something needs to be done. That generation slept like a baby. London Bond Market right up to the Poland invasion was working smoothly. There was no anxiety about getting investment back. And there was no apparent uncertainty in bond pricing about the possibility of a neighborhood country orchestrating war. The war did happen and more than the sheer magnitude, it’s the absolutely surprise that stunned the whole world. And total incompetency in handling the situation cost 60 million lives.
Now let’s try to see India-Pakistan relations through this prism.
It is often mentioned that Security issues is not foremost on Indian voters mind. If that’s the reality then it’s very sad. Considering we are surrounded by countries that don’t necessarily like us we need to be vigilant about our security. We are getting attacked repeatedly by Pakistan and yet we refuse to act against them. We don’t attack them; we don’t put economic sanctions against them. In fact officially they are not even on our Enemy List. (For Pete’s sake we are a peace loving nation!) We play cricket with those bastards and we allow their hopeless singers to make money in India. Any sane mind will think that if Pakistan doesn’t want peace then we will give them war. But sanity is in shortage in India.
The so called intellectual class in India believes that in case of war, losses that Pakistan will be negligible because being a failed state Pakistan don’t have anything anyways. On the other hand the losses India will incur will be huge. That means we need to think hard before going strong. Apart from that, Indians tend to believe that Indian army is too strong for Pakistani army. And Pakistan can never defeat India in conventional warfare In short there is a remote possibility of war and if any then India can kick Pakistani ass anytime. That’s what brings us to the possibility of Black Swan moment. The probability of Black Swan is very low but nevertheless it’s still a possibility. And whenever those events take place, and trust me they do, the results are catastrophic, earth-shattering and history changing. Why do I think the possibility of us getting humbled? Because the conventional warfare is so yesterday! Who wants to talk about conventional war when two of the great empires were humbled by rag-tag armies of Afghan Mujahidin’s and Viet-Congs! The war has changed its face but we haven’t changed our thinking and that can get us into the trouble. Because we believe we don’t need to do anything special and our future generation will curse us for not doing something that was required.
Pakistan is a sworn enemy of India. Irrespective of what Indians or Indian leadership think about Pakistan, in actuality Pakistan’s sole aim is to destroy India. They have tried repeatedly to wage war and when that failed they started creating unrest in India in every way or shape or form. Unfortunately, the usual response from India is nothing short of criminal. It is as if Indians take their freedom too lightly. It is flabbergasting to see Indians forgetting that they were enslaved and ruled by foreign invaders for all most one thousand years. And the freedom we are enjoying and the progress we are achieving is just 60 years old. We are peace-loving nation. Agreed! But peace is a two way street and if other party is hell bent on waging a war or in this case already in war with you then the choices are extremely limited. Either you defend yourself or get obliterated.
It always amuses that the strong Persian and Indian empires crumbled like pack of cards in front of Islamic onslaught. Looking at the history more closely we can see that Hindu kingdoms fought actively and valiantly against Islamic marauders for more than two hundred years. Their mistake was that they fought with invaders as if they are fighting their neighborhood Hindu kingdoms. They failed to see the difference. They didn’t realize that the Islamic invaders are not only hell bent on destroying everything on their way but these invaders, drunk on religious fervor, won’t stop until they destroy the very basic fabric of our society. That’s why Indian kingdom didn’t unite. Worse, they used to let go defeated Islamic invaders with gifts instead of out rightly killing them.
We capture terrorists and then let them go. We capture terrorist and don’t hang them. We don’t think that Pakistan is attacking our way of life and our freedom. We strictly see Pakistan from nation-state angle while they see us strictly through religious perspective.
The uncanny similarities between history and present are too scary to ignore. But we can find solace in the fact that the results will be same! I personally don’t believe there is Black Swan moment waiting to happen. I believe that there is in fact a 900 pound Gorilla sitting in the room ready to pound on us while we sleep like babies.
But then dream land is always more soothing than the reality!
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