On the morning of November 27, I woke up with a sense of dull apathy. I lazily switched on the TV where reports were coming in of firing that happened at Mumbai's CST terminus on the night of November 26.
As the series of news events began gathering momentum, it dawned on me that Mumbai was under the grip of a terrorist attack. "Not again" - my mind screamed.
As fervent newscasters went about their business trying to find out who were behind the attacks, I knew at the back of my mind the inevitable name that would come forth - "Islamic Terrorist". As I braced myself to be plunged in grief to hear this, it suddenly flashed across the screen that they were from Pakistan. Call it morbid, but somehow I was relieved that it was some other country and not someone from India who had perpetrated the attack.
This is exactly the way every Muslim of this great country feels on hearing of a bomb blast or a terrorist attack. There is an unannounced air of relief whenever perpetrators of violent attacks turn out to be from non-Islamic backgrounds like the Virginia Tech university massacre in April 2007 in which a South Korean killed 32 students.
I rack my brain trying to find a reason as to why these people do the brazen things they do. The mind numbing emotions that all Muslims share are hard to pen down. A deep sense of shame and gloom prevails amongst us.
Why, why do they have to attack in the name of religion? Do they feel people will be terrified and will accept Islam? Is this the way to let people know about Islam at the point of massacring innocent humans? Who will understand the high ideals this religion propounds, the solution for all of human problems that it offers, if the followers resort to such inhuman methods?
Do these people know that we hang our heads in shame with regularity when we are with non-Muslims? Do they even have an idea of the way we try to hide and skirt these topics when it is being discussed?
By Farooq Ali Rizwan in an E-Mail to NDTV
Tuesday, December 23, 2008
Friday, December 19, 2008
Coke/Pepsi
For those of u who LOVE Coke/Pepsi. Just when you thought you knew everything.
1) To clean a toilet:-
· Pour a can of Coca-Cola into the toilet bowl.
· Let the "real thing" sit for one hour, then flush clean.
· The citric acid in Coke removes stains from vitreous china.
· No scrubbing, no sweat - guaranteed.
2) To remove rust spots from chrome car bumpers:
· Rub the bumper with a crumpled-up piece of aluminum foils dipped in Coca-Cola.
· Much economical than the stuff from Smart Shop.
3) To clean corrosion from car battery terminals;
· Pour a can of Coca-Cola over the terminals to bubble away the corrosion.
4) To loosen a rusted bolt;
· Applying a cloth soaked in Coca-Cola to the rusted bolt for several minutes.
5) To remove grease from clothes;
· Empty a can of Coke into a load of greasy clothes, add detergent, and run through a regular cycle.
6) The Coca-Cola will help loosen grease stains. It will also clean road haze from your windshield.
Wednesday, December 17, 2008
Fight Climate Change
- Replacing one regular incandescent light bulb with a CFL will save 70 kgs of CO2 a year.
- Walk, cycle, car-pool or take public transport more often. You'll save one kg of CO2 for every 3.5 km you don’t drive!
- You can save 1080 kgs of CO2 every year by recycling just half of your household waste.
- Keeping your tyres inflated properly can improve mileage by more than 3%. Every litre of petrol saved keeps 3 kgs of CO2 out of the atmosphere!
- You can save 540 kgs of CO2 if you cut down your garbage by 10%.
- Simply turning off your TV, DVD player, stereo and computer when you’re not using them will save you thousands of kgs of CO2 a year.
Climate change is real
Climate change is a reality. Today, our world is hotter than it has been in two thousand years. By the end of the century, if current trends continue, the global temperature will likely climb higher than at any time in the past two million years. While the end of the 20th century may not necessarily be the warmest time in Earth's history, what is unique is that the warmth is global and cannot be explained by the natural mechanisms that explain previous warm periods. There is a broad scientific consensus that humanity is in large part responsible for this change, and that choices we make today will decide the climate of the future.
How we are changing the climate
For more than a century, people have relied on fossil fuels such as oil, coal and gas for their energy needs. Burning these fossil fuels releases the global warming gas carbon dioxide into the atmosphere. Other, even more potent, greenhouse gasses are also playing a role, as is massive deforestation.
What we know
While there are still uncertainties, particularly related to the timing, extent and regional variations of climate change, there is mainstream scientific agreement on the key facts:
How we are changing the climate
For more than a century, people have relied on fossil fuels such as oil, coal and gas for their energy needs. Burning these fossil fuels releases the global warming gas carbon dioxide into the atmosphere. Other, even more potent, greenhouse gasses are also playing a role, as is massive deforestation.
What we know
While there are still uncertainties, particularly related to the timing, extent and regional variations of climate change, there is mainstream scientific agreement on the key facts:
- Certain gasses, such as carbon dioxide, in the atmosphere create a "greenhouse effect", trapping heat and keeping the Earth warm enough to sustain life as we know it.
- Burning fossil fuels (coal, oil, etc.) releases more carbon dioxide into the atmosphere. Although not the most potent greenhouse gas, carbon dioxide is the most significant in terms of human effects because of the large quantities emitted.
- Carbon dioxide concentrations in the atmosphere are now the highest in 150,000 years.
- The 1990's was most likely the warmest decade in history, and 1998 the warmest year.
- A certain amount of additional warming - about 1.3º Celsius (2.3º Fahrenheit) compared to pre-industrial levels - is probably inevitable because of emissions so far. Limiting warming to under 2° Celsius (3.6°F) is considered vital to preventing the worst effects of climate change.
- If our greenhouse gas emissions are not brought under control, the speed of climate change over the next hundred years will be faster than anything known since before the dawn of civilization.
- There is a very real possibility that climate feedback mechanisms will result in a sudden and irreversible climate shift. No one knows how much global warming it would take to trigger such a "doomsday scenario".
Tuesday, December 16, 2008
The world's environment in danger
Species are dying out at a speed 1,000 to 10,000 times greater than in the major geological periods of extinction.
We now know that failing widespread measures, the impact of human activity on the global environment threatens the survival of the biosphere and future generations:
Global climatic warming largely results, according to the vast majority of scientists,from “greenhouse gas” emissions caused by human activity and modern modes of consumption, primarily those which are bound up with urbanization (thermal power plants, industrial pollution, motor traffic, etc.). The thawing of the Earth’s glaciers would lead to a veritable ecological disaster. Global warming also seems to be accompanied by greater variability and considerable regional or local disturbances. These could be the cause of radical climatic changes in some regions of the world and of a growing number of increasingly serious “natural” disasters whose precursory signs are already to be observed. It is nevertheless clear that, where control of greenhouse gas emissions is concerned, the progress made since the Rio Conference in 1992 has had a limited impact, as shown by the problems of getting the Kyoto Protocol ratified.
Water is not evenly distributed: it is abundant, it is “running”, but not everywhere and for everyone. Almost a quarter of humanity – 1.4 billion people – does not have access to clean and drinking water and over half the world’s population lacks proper sanitation. To meet the challenges will require above all policies on the judicious use of water resources so as to put an end to the excessive consumption of water in agriculture, which at present uses up worldwide close to two thirds of all the water taken from rivers, lakes, streams and underground. But behaviour patterns must also change.
The depletion of the ozone layer, protector of life on Earth, has never been so great. But there are encouraging signs: if the provisions of international protocols are complied with, the ozone layer could be completely reconstituted by 2050.
Desertification is spreading and today directly affects 250 million people and is threateningclose to one billion human beings living on arid lands in approximately 110 countries. This figure could double by 2050 if desert areas continue to expand at the present rate.
All natural environments are directly affected. While forests still cover aquarter of the planet’s land, the net loss of forest cover in the world is estimated at some 11.3 million hectares per year, even if an ever-increasing number of countries are endeavouring to manage forests more effectively and take greater account of environmental factors in this domain. The oceans are also affected: continental fishery resources, one of the main sources of food and protein for millions of people, are threatened by environmental damage and need immediate protective measures. In addition, changes in ocean currents worldwide, accelerated by human activities, are directly endangering the present dynamics of the Earth’s climate and ecosystems.
Chemical pollution and invisible pollution are on the increase. Over the past 50 years, new modes of consumption and production, primarily in agriculture-based industry, have developed and thousands of new chemical products have appeared. These chemicals are present in countless consumer and maintenance products throughout the world, in cardboard and plastic packaging, in the waters of all the oceans and in the air, and in houses, schools and work-places. They pass through the food chain and cross the barriers of the species. Some pesticides and dangerous chemicals that have been prohibited or strictly controlled in some countries can be exported to poor countries, where they give rise to frequent cases of poisoning.
Biodiversity is also likely to diminish considerably in the coming decades. Many of the species described to date are now being depleted or even dying out at a speed 1,000 to 10,000 times greater than in the major geological periods of extinction.
Courtesy: UNESCO
We now know that failing widespread measures, the impact of human activity on the global environment threatens the survival of the biosphere and future generations:
Global climatic warming largely results, according to the vast majority of scientists,from “greenhouse gas” emissions caused by human activity and modern modes of consumption, primarily those which are bound up with urbanization (thermal power plants, industrial pollution, motor traffic, etc.). The thawing of the Earth’s glaciers would lead to a veritable ecological disaster. Global warming also seems to be accompanied by greater variability and considerable regional or local disturbances. These could be the cause of radical climatic changes in some regions of the world and of a growing number of increasingly serious “natural” disasters whose precursory signs are already to be observed. It is nevertheless clear that, where control of greenhouse gas emissions is concerned, the progress made since the Rio Conference in 1992 has had a limited impact, as shown by the problems of getting the Kyoto Protocol ratified.
Water is not evenly distributed: it is abundant, it is “running”, but not everywhere and for everyone. Almost a quarter of humanity – 1.4 billion people – does not have access to clean and drinking water and over half the world’s population lacks proper sanitation. To meet the challenges will require above all policies on the judicious use of water resources so as to put an end to the excessive consumption of water in agriculture, which at present uses up worldwide close to two thirds of all the water taken from rivers, lakes, streams and underground. But behaviour patterns must also change.
The depletion of the ozone layer, protector of life on Earth, has never been so great. But there are encouraging signs: if the provisions of international protocols are complied with, the ozone layer could be completely reconstituted by 2050.
Desertification is spreading and today directly affects 250 million people and is threateningclose to one billion human beings living on arid lands in approximately 110 countries. This figure could double by 2050 if desert areas continue to expand at the present rate.
All natural environments are directly affected. While forests still cover aquarter of the planet’s land, the net loss of forest cover in the world is estimated at some 11.3 million hectares per year, even if an ever-increasing number of countries are endeavouring to manage forests more effectively and take greater account of environmental factors in this domain. The oceans are also affected: continental fishery resources, one of the main sources of food and protein for millions of people, are threatened by environmental damage and need immediate protective measures. In addition, changes in ocean currents worldwide, accelerated by human activities, are directly endangering the present dynamics of the Earth’s climate and ecosystems.
Chemical pollution and invisible pollution are on the increase. Over the past 50 years, new modes of consumption and production, primarily in agriculture-based industry, have developed and thousands of new chemical products have appeared. These chemicals are present in countless consumer and maintenance products throughout the world, in cardboard and plastic packaging, in the waters of all the oceans and in the air, and in houses, schools and work-places. They pass through the food chain and cross the barriers of the species. Some pesticides and dangerous chemicals that have been prohibited or strictly controlled in some countries can be exported to poor countries, where they give rise to frequent cases of poisoning.
Biodiversity is also likely to diminish considerably in the coming decades. Many of the species described to date are now being depleted or even dying out at a speed 1,000 to 10,000 times greater than in the major geological periods of extinction.
Courtesy: UNESCO
Saturday, December 13, 2008
Global Warming
What is Global Warming?
The Earth as an ecosystem is changing, attributable in great part to the effects of globalization and man. More carbon dioxide is now in the atmosphere than has been in the past 650,000 years. This carbon stays in the atmosphere, acts like a warm blanket, and holds in the heat — hence the name ‘global warming.’
The reason we exist on this planet is because the earth naturally traps just enough heat in the atmosphere to keep the temperature within a very narrow range - this creates the conditions that give us breathable air, clean water, and the weather we depend on to survive. Human beings have begun to tip that balance. We've overloaded the atmosphere with heat-trapping gasses from our cars and factories and power plants. If we don't start fixing the problem now, we’re in for devastating changes to our environment. We will experience extreme temperatures, rises in sea levels, and storms of unimaginable destructive fury. Recently, alarming events that are consistent with scientific predictions about the effects of climate change have become more and more commonplace.
Environmental Destruction
The massive ice sheets in the Arctic are melting at alarming rates. This is causing the oceans to rise. That’s how big these ice sheets are! Most of the world’s population lives on or near the coasts. Rising ocean levels, an estimated six feet over the next 100 years or sooner, will cause massive devastation and economic catastrophe to population centers worldwide.
The United States, with only four percent of the world’s population, is responsible for 22% of the world’s greenhouse gas emissions. A rapid transition to energy efficiency and renewable energy sources will combat global warming, protect human health, create new jobs, protect habitat and wildlife, and ensure a secure, affordable energy future.
Health Risks
Malaria. Dengue Fever. Encephalitis. These names are not usually heard in emergency rooms and doctors’ offices in the United States. But if we don’t act to curb global warming, they will be. As temperatures rise, disease-carrying mosquitoes and rodents spread, infecting people in their wake. Doctors at the Harvard Medical School have linked recent U.S. outbreaks of dengue fever, malaria, hantavirus and other diseases directly to climate change.
Catastrophic Weather
Super powerful hurricanes, fueled by warmer ocean temperatures are the “smoking gun” of global warming. Since 1970, the number of category 4 and 5 events has jumped sharply. Human activities are adding an alarming amount of pollution to the earth’s atmosphere causing catastrophic shifts in weather patterns. These shifts are causing severe heat, floods and worse.
http://www.stopglobalwarming.org/
Saturday, December 6, 2008
What happened in Mumbai?
Applying operational art in Fourth Generation war is so difficult it is hard to point to many successful examples of it. The recent assaults in Bombay are among the few and also among the best, bordering on brilliant. We may regret brilliance on the part of our opponents, but that should not prevent us from acknowledging it.
The operational logic is evident:
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The United States wants Pakistan to focus on fighting al Qaeda and the Taliban.
- To be able to do so, Pakistan must shift its focus away from the Indian threat, which requires a détente with India. A piece by Jane Perlez of the New York Times which ran in the November 28 Cleveland Plain Dealer reported that
- Friends of al Qaeda and the Taliban need to block this shift in focus by Pakistan. To do so, they must ramp up the hostility between India and Pakistan. How could they do that?
- With a special operation in India’s most important city. Remember, a special operation must have operational significance to qualify as "special ops." If its meaning is only tactical, it’s just a bunch of yahoos running around making noise.
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The special operation was tactically well planned and carried out. To work operationally, India must blame it on Pakistan. Early indications suggest that may happen.
-
If India does blame Pakistan and Pakistan feels the Indian threat is increasing, the American strategy of convincing Pakistan to focus on the Taliban and al Qaeda will have been defeated. That is operational art at its best.
Reconciliation between India and Pakistan has emerged as a basic tenet in the approaches to foreign policy of President-elect Barack Obama, and the new leader of Central Command, Gen. David H. Petraeus. The point is to persuade Pakistan to focus less of its military effort on India, and more on the militants in its lawless tribal regions….
Wednesday, November 5, 2008
Why Barack Obama won
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Two years ago, Barack Obama was barely a blip on America's political radar. But, with a brilliant, disciplined campaign, a vast amount of money and a favourable political climate, the junior senator from Illinois has risen to the most powerful job in the world. His campaign will be a template for those seeking to replace him. It was, even Republican strategists admit, a technically perfect ground campaign. The money was key. Mr Obama realised during the primary contest that he had developed an extremely broad donor base, which he could keep going back to for money. So, he rejected federal funding for his campaign and the financial limits that came with it. Army of helpers With the help of Facebook founder Chris Hughes - who devised an innovative internet fundraising system - the campaign eventually attracted more than three million donors. They donated about $650m (£403m) - more than both presidential contenders in 2004 combined.
Mr Obama had the money for four times as many campaign offices as Mr McCain and a vast army of campaign staff and volunteers. They developed and exploited a vast database of information about potential donors and voters in every key state. Everyone who visited the Obama website was asked to sign up to get more information. Everyone who did so was asked to contribute, or volunteer. If they did, they received several follow-up calls and messages asking for more money, or more assistance. That fundraising ground campaign left him well equipped for the air war. TV advertising is the life-blood of a campaign which has to span some 3.5m square miles (9m sq km) and 300 million people, and Mr Obama had no problem buying airtime. Masterful operation In some swing states in the final weeks of the campaign, he was outspending Mr McCain by a ratio of four to one. His team again tapped into the internet, targeting ads at those online.
They even bought ad-space embedded in video games. Mr Obama could afford to campaign in Republican strongholds and force Mr McCain to spread his limited resources ever thinner, sucking his resources away from swing states. At the same time the campaign was masterful at getting out the vote. It ran a huge registration drive for likely Democrats - adding more than 300,000 people to the voter rolls in Florida alone. Realising that so many new voters could overwhelm polling places on voting day, the campaign made early voting a priority in states where it is allowed. More people cast their votes before election day this year than ever before - more than 29 million in 30 states, according to preliminary data. All of this worked of course because of Barack Obama's appeal as a candidate. He is a superb orator who can work a crowd in the Bill Clinton tradition. His image was wholesome; a self-made family man with one house, one car - and one family. It was a contrast to John McCain who divorced the wife who waited for him through the Vietnam war, married an heiress and couldn't remember how many houses he had. Anti-Bush candidate Mr Obama was able to connect more deeply with more diverse voting blocks. He struck a chord with younger voters, won over Hispanic and Jewish voters who had been Republicans in the past, and of course got out the black vote like no president before him. Mr Obama's single, consistent message of change was appealing when almost nine out of 10 American's believed their country was "on the wrong track". He could easily position himself as the anti-Bush candidate in a way Mr McCain struggled to do. President Bush had lower approval ratings than the disgraced Richard Nixon, and Mr Obama's relentless campaign message was that John McCain had voted with him 90% of the time. The polls suggested more people trusted Mr Obama to fix the economy and when the financial crisis struck he was best placed to take political advantage of it. His persistent focus on how to help those most impoverished by eight years of George Bush's leadership seemed a better fit for the times; a sharp contrast to the kind of tax cuts which were now a central plank of the McCain campaign and would disproportionately benefit the wealthy. Difference a strength Ultimately, even Mr McCain's great political strength as a war hero with decades of foreign experience was eclipsed.
Mr Obama's selection of the veteran foreign policy expert, Senator Joe Biden, as his running mate helped close the experience gap. He insisted too that judgement was more important than experience and over the course of the campaign the political consensus seemed to shift to his ideas. Mr Obama called for a withdrawal timeline in Iraq, defending Afghanistan's borders by launching raids inside Pakistan when required and talking to America's enemies. Slowly and quietly even the Bush Administration came to accept those ideas, while John McCain seemed ever more isolated as he continued to reject them. Barack Obama said he didn't "look like other Presidents on the dollar bill". Although that was a reference to his colour, he was different in so many ways to the established political aristocracy, that in a year when Americans were craving something new, his differences turned out to be his part of his strength. | |||||
Monday, November 3, 2008
Vedam la ghoshinche Godavari
“Vedam la ghoshinche godavari
Amaradhamam la sobhille rajamahendri
Satabdala charita gala sundara nagaram
Gataveibhava deeptulato kammani kaavyam
Raja raja narendrudu kakatiyulu
Tejamunna meti doralu reddi rajulu
Gajapatulu narapatulu elina ooru
Akadhalanni ninadinche Gauthami Horu
Adi kavita Nannaya rasenicchata
Srinadha kavi nivasam pedda mucchata
Kavisarvabhoumalakidi alavalamu
Nava kavitalu vikasinche nandanavanamu
Dittamaina silpala devalalu
Kattukadhala chitrangi kanakamedalu
Kottukoni poye konni kotilingalu
Viresalingamokadu migilenu chalu”
Amaradhamam la sobhille rajamahendri
Satabdala charita gala sundara nagaram
Gataveibhava deeptulato kammani kaavyam
Raja raja narendrudu kakatiyulu
Tejamunna meti doralu reddi rajulu
Gajapatulu narapatulu elina ooru
Akadhalanni ninadinche Gauthami Horu
Adi kavita Nannaya rasenicchata
Srinadha kavi nivasam pedda mucchata
Kavisarvabhoumalakidi alavalamu
Nava kavitalu vikasinche nandanavanamu
Dittamaina silpala devalalu
Kattukadhala chitrangi kanakamedalu
Kottukoni poye konni kotilingalu
Viresalingamokadu migilenu chalu”
Flowers for Dr. Reddy
Investing in India: The Honest Truth by Ajit Dayal
Fw: This Week's Honest Truth - Flowers for Dr. Reddy
It is time to send a bouquet of roses to Dr. Y. V. Reddy.
A really large one.
As a gesture of "Thank You" from all of us for keeping India afloat at a time when the world is reeling under the weight of a scary global financial crises.
Dr. Reddy retired as the Governor of the Reserve Bank of India on September 5th, 2008 but his acts - and actions - while at the helm of the RBI has, in my opinion, saved India from a total meltdown. The meltdown that we are witnessing in the US and Europe and in countries like Iceland which got carried away with access to low-cost easy money.
Dr. Reddy's caution was typified by the old-fashioned suits that central bankers wear. His old-cut and boring grey and dark suits were reminiscent of a visit to the house of a disapproving uncle. An uncle who always wanted to know why the child's hands were dirty and the clothes stained with mud.
The never-ready Dr. Reddy was constantly criticised for not allowing India to dance with the winds of change that had overtaken the global financial markets. The policies of the RBI were often at loggerheads with what the new-age economists wanted. Free markets - they urged - free up banking - free up everything.
But Dr. Reddy worked with one goal in mind: how to keep India and the Indian financial system as immune as possible from the lack of risk control that had enveloped the world. His more well-known peers had succumbed to pressures from the "real" world: The world of unreal financial engineering. The world ruled by the financial geniuses who influenced global economic policy for their personal gain. And pursued it under the guise of "free-markets" .
The International Herald Tribune reported that Gordon Brown, now the Prime Minister of UK and the cheerleader of the rescue pack for the European financial markets, was vehemently opposed to tighter regulation while Mr. Brown was UK's financial representative. Mr Brown's agenda - the article suggests - was to see that London remained the capital for financial transactions and any regulation would threaten that objective. So, lax regulation it was - and the UK public is paying the price for financial innovation.
Alan Greenspan, the Chairman of the Fed, had long ago given up his conservative view of the world. He wore the ragged suits and the old fashioned glasses of the central bankers but his actions of bailing out anyone in trouble and printing money wore little resemblance to the characteristics associated with a central banker. His successor, Helicopter Ben, seems to have surpassed the Master in a short period of time.
But Dr. Reddy did not budge.
And today India can sleep well because - despite what you hear on the idiot box or read in print - Dr. Reddy's job of being a central banker has kept India from being part of the crisis that has kept central bankers - globally - awake throughout the night as they try to figure out what to do.
A crisis that has forced leaders of governments to work on weekends as they huddle together to find band-aid solutions to this crisis of confidence.
India's problems are really of little significance relative to the global crises. Our economy is not crumbling. Our banks are not leveraged. Our consumers are not in debt the way they are in other parts of the world. The problems we have - and we do have them - are of the "Made in India" kind because Dr. Reddy did not allow us to import - duty free - the "Made in Everywhere Else" problem. As a country we still get confused between making policy for the sake of making policy' or making policy with an end objective in mind. Our political leadership, with an election around the corner, looks hesitant and seems to have lost confidence in all the PR stuff they churned out about India Shining, Resurgent India, or !ncredible India.
A few weeks ago, Bloomberg news reported that Chinese Premier Wen Jiabao told a gathering of bankers and corporate executives at a World Economic Forum gathering in Tianjin, "When economic and financial crisis occur, economists and entrepreneurs, people and politicians, should be confident," Wen said. "At the moment, confidence is more precious than gold."
Ahead of the curve
Dr. Reddy had loads of confidence. And acted with determination.
Central bankers have a tough job. They have to protect the value of their country's currency; they need to ensure that inflation does not get out of control; they need to support economic policies that help create jobs.
Politicians get elected by promising the impossible. "Don't worry", the politicians tell the voters, "We will make sure you get jobs at great salaries - and that the prices of essential good will not increase. We will make India a great economic power."
While on the election campaign trail the politicians also promise things like free loans, free rice, or some guaranteed employment schemes. To make life more interesting the politicians may burn a few places of religious worship along the election trail. Occasionally, they will hassle people from some other state who seek a job in their "mother" state. Having left their voters a bagful of candies, the politicians tend to disappear for five years till the next elections.
And once the politicians are gone for five years, the central bankers are left to do the dirty work.
The central bankers are left to worry about the effects of a generation of diabetic patients overstuffed with sugar-coated sweets and chocolates - sometimes laced with adulterated ingredients.
The jobs the politicians promised need to be paid with currency notes.
The handouts the politicians declared and the promises they made - to build roads, bridges, factories - need to be paid for in currency notes.
In most instances, what the government collects by way of taxes is not good enough to meet the costs of all the promises. The RBI has to print the notes to plug the gap, the deficit. The RBI has to print paper currency to pay the bills.
And printing too many notes can lead to a situation where inflation gets out of control.
And if inflation gets out of control, the value of the currency falls. If currencies lose value, it can lead to inflation.
Sometimes, with a view to generating quick growth - another wonderful point to discuss when an election is on the horizon - the policy makers in the government want "growth at any cost". Usually that means asking the central bank to lower interest rates in the country. This allows people to buy what they really cannot afford to buy - but now can afford to buy because the cost of borrowing (the famous EMI) is lowered.
We witnessed the debate played out in the media over the past two years. The Ministry of Finance wanted interest rates to be reduced and the RBI said "no".
Lowering interest rates, felt the RBI, would lead to a lack of pricing discipline and risk assessment by the banks. The RBI was under tremendous pressure to reduce interest rates. They did not. Since 2006 they raised interest rates. The RBI raised the amount of capital that banks had to keep aside against loans given for homes, loans given against real estate projects, and receivables against credit cards. They controlled the borrowings of Indian banks from international sources. The RBI was not keen to see India hostage to an unfriendly world. They, like a true central bank, were concerned about what could go wrong when and if the world turned. Not about the rewards of being a friendly central banker.
(And by the way the RBI has been saying "no" to P-Notes since December 2003. Remind me to send Dr. Reddy a bouquet for that, too.)
Saving India from financial catastrophe.
Source - Bloomberg
This chart shows the India 10 year Bond Yield (dotted orange line) and the Repo Rate (the rate at which banks borrow from the RBI). The period between the two red vertical lines was when Dr. Reddy was the RBI governor. Dr. Reddy was making money expensive to control a super-fast economy.
From default to choice
India has been witness to many crises in the past. And some pretty big ones after we began on our own economic reforms in 1991.
There was the Tequila crisis when Mexico went bust in 1994.
There was the Asian Crisis when the magical Asian Tigers went bust in 1997.
There was the LTCM collapse which led to South Korea and Russia going bust in 1998.
In each of these crises, the central bankers of these countries had set themselves up for the fall. They had allowed the companies and banks under their jurisdiction to borrow excessively and rely on foreign capital. While the world was greedy and no one priced risk correctly, all these countries enjoyed boom years. When risk got re-priced - as is being done now - and capital was in short supply, all the Salsa dancers and Tigers sunk into disaster.
But, during those crises, India was still a relatively closed economy. Our total trade with the free world was less than 10% of GDP for a long time. Today it is over 25% of GDP. India is now a more open economy.
The RBI has allowed Indian individuals to invest overseas; they have allowed us to use Indian credit cards anywhere in the world; they have allowed Indian companies to buy companies overseas.
The uncle has had no problem letting the child play in the mud - but he has first used a stick to ensure that the mud is not quicksand.
But that did not make our finance companies happy. Like the finance companies monitored by Mr. Gordon Brown during his tenure, our "Made in India" finance companies wanted India to have access to any and all capital. The colour of money is green, they said, why should the RBI care where it came from.
Thank god, the RBI did care.
Thank god, Dr. Reddy did care.
Unlike the central bankers in Iceland, who must have been so enthralled by that classic line from "Gone with the Wind": "Frankly, my dear, I don't give a damn"
The top 3 banks in Iceland borrowed US$ 60 billion from the global financial markets. The value of their liabilities is 12x the size of Iceland's GDP. Their foreign currency reserves are only US$ 3.7 billion.
Now the top 3 banks in Iceland are bust.
And so is Iceland.
It is seeking US$ 8 billion from the IMF, Russia, and some Nordic countries. CLICK HERE to read what my colleague had to say about Iceland in 2006).
If Dr. Reddy had not done what central bankers are supposed to do - the Indian banks would have all been in an Icelandic mess.
Remember: financial geniuses - in India and overseas - have generally been rewarded for some mythical annual profit and have left the mountains of debt to be cleaned up by tax payers' money from bailout programmes. Their rewards stay with them. And they live in prime health. Sub-prime is the problem of the public.
A new era, a new response
But despite all the great work that Dr. Reddy has done, India still got hit a bit. Some cracks have appeared in the system.
The stock market continues to show its true colours as a casino rather than a place where savers (like you and me) provide capital to companies to build long term businesses. The P-Notes are the mysterious Phantoms who have left the Opera - and us wailing as we see a meltdown in the Indian stock markets.
Yes, some companies were over extended and some banks did not have great pricing models for the risks they took. Many banks focused on market share, rather than profits. They will stay solvent and they will not fail - but these banks are not likely to see the profit growth the investors in their shares had expected. A minor crisis. But an expensive one if you own shares in these "market-share" banks.
This is a new era and it requires a new response.
The new Governor of the Reserve Bank of India, Mr. Subbarao, has responded firmly. He has thrown money back into the system and started the process of lowering interest rates.
Dr. Bimal Jalan, who was the RBI Governor till 2003, lowered interest rates in India as a response to the technology bubble, UTI going bust, 9/11, and SARS. The situation needed some money pumping. The plumber was there to turn on the faucet.
Dr. Reddy, who took over as the Governor of the RBI in September 2003, inherited a weak economy but began to see significant capital inflows and solid economic growth since 2004. Once the plumber sees the tap flowing fully, he reduces the pressure of the water flow. Sometimes he shuts down the tap. Dr. Reddy set forth the appropriate response and began the long journey of increasing interest rates and slowing the pace of financial innovation (see Chart 1).
Dr. Reddy had stalled the introduction of the Credit Default Swap markets, one of the root causes of the global financial crisis. If CDS was allowed in India, we would have been an Iceland by now! Why am I so sure? Look around you and see what the "market-share" banks have done - would they not have enjoyed an opportunity to make another quick quarterly profit - and leave the garbage for someone else to clean up? That is the DNA of the current financial reward-me-now generation of market-share bankers.
On October 20th Prime Minister Manmohan Singh read out a statement in Parliament to confirm that India is quite safe from the turmoil. "Our banks", said the Prime Minister, "both in the public sector and in the private sector, are financially sound, well capitalised, and well regulated."
We believe that - and we know we have the RBI and Dr. Reddy to thank for that.
Thank you, Dr. Reddy, and I hope you get more flowers from the bankers whose very banks you have saved.
Note: The Honest Truth is authored by Ajit Dayal. Ajit is a Director at Quantum Advisors Pvt Ltd and Quantum Asset Management Company Pvt Ltd.. Views expressed in this article are entirely those of the author and may not be regarded as views of the Quantum Mutual Fund or Quantum Asset Management Company Private Limited.
Fw: This Week's Honest Truth - Flowers for Dr. Reddy
It is time to send a bouquet of roses to Dr. Y. V. Reddy.
A really large one.
As a gesture of "Thank You" from all of us for keeping India afloat at a time when the world is reeling under the weight of a scary global financial crises.
Dr. Reddy retired as the Governor of the Reserve Bank of India on September 5th, 2008 but his acts - and actions - while at the helm of the RBI has, in my opinion, saved India from a total meltdown. The meltdown that we are witnessing in the US and Europe and in countries like Iceland which got carried away with access to low-cost easy money.
Dr. Reddy's caution was typified by the old-fashioned suits that central bankers wear. His old-cut and boring grey and dark suits were reminiscent of a visit to the house of a disapproving uncle. An uncle who always wanted to know why the child's hands were dirty and the clothes stained with mud.
The never-ready Dr. Reddy was constantly criticised for not allowing India to dance with the winds of change that had overtaken the global financial markets. The policies of the RBI were often at loggerheads with what the new-age economists wanted. Free markets - they urged - free up banking - free up everything.
But Dr. Reddy worked with one goal in mind: how to keep India and the Indian financial system as immune as possible from the lack of risk control that had enveloped the world. His more well-known peers had succumbed to pressures from the "real" world: The world of unreal financial engineering. The world ruled by the financial geniuses who influenced global economic policy for their personal gain. And pursued it under the guise of "free-markets" .
The International Herald Tribune reported that Gordon Brown, now the Prime Minister of UK and the cheerleader of the rescue pack for the European financial markets, was vehemently opposed to tighter regulation while Mr. Brown was UK's financial representative. Mr Brown's agenda - the article suggests - was to see that London remained the capital for financial transactions and any regulation would threaten that objective. So, lax regulation it was - and the UK public is paying the price for financial innovation.
Alan Greenspan, the Chairman of the Fed, had long ago given up his conservative view of the world. He wore the ragged suits and the old fashioned glasses of the central bankers but his actions of bailing out anyone in trouble and printing money wore little resemblance to the characteristics associated with a central banker. His successor, Helicopter Ben, seems to have surpassed the Master in a short period of time.
But Dr. Reddy did not budge.
And today India can sleep well because - despite what you hear on the idiot box or read in print - Dr. Reddy's job of being a central banker has kept India from being part of the crisis that has kept central bankers - globally - awake throughout the night as they try to figure out what to do.
A crisis that has forced leaders of governments to work on weekends as they huddle together to find band-aid solutions to this crisis of confidence.
India's problems are really of little significance relative to the global crises. Our economy is not crumbling. Our banks are not leveraged. Our consumers are not in debt the way they are in other parts of the world. The problems we have - and we do have them - are of the "Made in India" kind because Dr. Reddy did not allow us to import - duty free - the "Made in Everywhere Else" problem. As a country we still get confused between making policy for the sake of making policy' or making policy with an end objective in mind. Our political leadership, with an election around the corner, looks hesitant and seems to have lost confidence in all the PR stuff they churned out about India Shining, Resurgent India, or !ncredible India.
A few weeks ago, Bloomberg news reported that Chinese Premier Wen Jiabao told a gathering of bankers and corporate executives at a World Economic Forum gathering in Tianjin, "When economic and financial crisis occur, economists and entrepreneurs, people and politicians, should be confident," Wen said. "At the moment, confidence is more precious than gold."
Ahead of the curve
Dr. Reddy had loads of confidence. And acted with determination.
Central bankers have a tough job. They have to protect the value of their country's currency; they need to ensure that inflation does not get out of control; they need to support economic policies that help create jobs.
Politicians get elected by promising the impossible. "Don't worry", the politicians tell the voters, "We will make sure you get jobs at great salaries - and that the prices of essential good will not increase. We will make India a great economic power."
While on the election campaign trail the politicians also promise things like free loans, free rice, or some guaranteed employment schemes. To make life more interesting the politicians may burn a few places of religious worship along the election trail. Occasionally, they will hassle people from some other state who seek a job in their "mother" state. Having left their voters a bagful of candies, the politicians tend to disappear for five years till the next elections.
And once the politicians are gone for five years, the central bankers are left to do the dirty work.
The central bankers are left to worry about the effects of a generation of diabetic patients overstuffed with sugar-coated sweets and chocolates - sometimes laced with adulterated ingredients.
The jobs the politicians promised need to be paid with currency notes.
The handouts the politicians declared and the promises they made - to build roads, bridges, factories - need to be paid for in currency notes.
In most instances, what the government collects by way of taxes is not good enough to meet the costs of all the promises. The RBI has to print the notes to plug the gap, the deficit. The RBI has to print paper currency to pay the bills.
And printing too many notes can lead to a situation where inflation gets out of control.
And if inflation gets out of control, the value of the currency falls. If currencies lose value, it can lead to inflation.
Sometimes, with a view to generating quick growth - another wonderful point to discuss when an election is on the horizon - the policy makers in the government want "growth at any cost". Usually that means asking the central bank to lower interest rates in the country. This allows people to buy what they really cannot afford to buy - but now can afford to buy because the cost of borrowing (the famous EMI) is lowered.
We witnessed the debate played out in the media over the past two years. The Ministry of Finance wanted interest rates to be reduced and the RBI said "no".
Lowering interest rates, felt the RBI, would lead to a lack of pricing discipline and risk assessment by the banks. The RBI was under tremendous pressure to reduce interest rates. They did not. Since 2006 they raised interest rates. The RBI raised the amount of capital that banks had to keep aside against loans given for homes, loans given against real estate projects, and receivables against credit cards. They controlled the borrowings of Indian banks from international sources. The RBI was not keen to see India hostage to an unfriendly world. They, like a true central bank, were concerned about what could go wrong when and if the world turned. Not about the rewards of being a friendly central banker.
(And by the way the RBI has been saying "no" to P-Notes since December 2003. Remind me to send Dr. Reddy a bouquet for that, too.)
Saving India from financial catastrophe.
Source - Bloomberg
This chart shows the India 10 year Bond Yield (dotted orange line) and the Repo Rate (the rate at which banks borrow from the RBI). The period between the two red vertical lines was when Dr. Reddy was the RBI governor. Dr. Reddy was making money expensive to control a super-fast economy.
From default to choice
India has been witness to many crises in the past. And some pretty big ones after we began on our own economic reforms in 1991.
There was the Tequila crisis when Mexico went bust in 1994.
There was the Asian Crisis when the magical Asian Tigers went bust in 1997.
There was the LTCM collapse which led to South Korea and Russia going bust in 1998.
In each of these crises, the central bankers of these countries had set themselves up for the fall. They had allowed the companies and banks under their jurisdiction to borrow excessively and rely on foreign capital. While the world was greedy and no one priced risk correctly, all these countries enjoyed boom years. When risk got re-priced - as is being done now - and capital was in short supply, all the Salsa dancers and Tigers sunk into disaster.
But, during those crises, India was still a relatively closed economy. Our total trade with the free world was less than 10% of GDP for a long time. Today it is over 25% of GDP. India is now a more open economy.
The RBI has allowed Indian individuals to invest overseas; they have allowed us to use Indian credit cards anywhere in the world; they have allowed Indian companies to buy companies overseas.
The uncle has had no problem letting the child play in the mud - but he has first used a stick to ensure that the mud is not quicksand.
But that did not make our finance companies happy. Like the finance companies monitored by Mr. Gordon Brown during his tenure, our "Made in India" finance companies wanted India to have access to any and all capital. The colour of money is green, they said, why should the RBI care where it came from.
Thank god, the RBI did care.
Thank god, Dr. Reddy did care.
Unlike the central bankers in Iceland, who must have been so enthralled by that classic line from "Gone with the Wind": "Frankly, my dear, I don't give a damn"
The top 3 banks in Iceland borrowed US$ 60 billion from the global financial markets. The value of their liabilities is 12x the size of Iceland's GDP. Their foreign currency reserves are only US$ 3.7 billion.
Now the top 3 banks in Iceland are bust.
And so is Iceland.
It is seeking US$ 8 billion from the IMF, Russia, and some Nordic countries. CLICK HERE to read what my colleague had to say about Iceland in 2006).
If Dr. Reddy had not done what central bankers are supposed to do - the Indian banks would have all been in an Icelandic mess.
Remember: financial geniuses - in India and overseas - have generally been rewarded for some mythical annual profit and have left the mountains of debt to be cleaned up by tax payers' money from bailout programmes. Their rewards stay with them. And they live in prime health. Sub-prime is the problem of the public.
A new era, a new response
But despite all the great work that Dr. Reddy has done, India still got hit a bit. Some cracks have appeared in the system.
The stock market continues to show its true colours as a casino rather than a place where savers (like you and me) provide capital to companies to build long term businesses. The P-Notes are the mysterious Phantoms who have left the Opera - and us wailing as we see a meltdown in the Indian stock markets.
Yes, some companies were over extended and some banks did not have great pricing models for the risks they took. Many banks focused on market share, rather than profits. They will stay solvent and they will not fail - but these banks are not likely to see the profit growth the investors in their shares had expected. A minor crisis. But an expensive one if you own shares in these "market-share" banks.
This is a new era and it requires a new response.
The new Governor of the Reserve Bank of India, Mr. Subbarao, has responded firmly. He has thrown money back into the system and started the process of lowering interest rates.
Dr. Bimal Jalan, who was the RBI Governor till 2003, lowered interest rates in India as a response to the technology bubble, UTI going bust, 9/11, and SARS. The situation needed some money pumping. The plumber was there to turn on the faucet.
Dr. Reddy, who took over as the Governor of the RBI in September 2003, inherited a weak economy but began to see significant capital inflows and solid economic growth since 2004. Once the plumber sees the tap flowing fully, he reduces the pressure of the water flow. Sometimes he shuts down the tap. Dr. Reddy set forth the appropriate response and began the long journey of increasing interest rates and slowing the pace of financial innovation (see Chart 1).
Dr. Reddy had stalled the introduction of the Credit Default Swap markets, one of the root causes of the global financial crisis. If CDS was allowed in India, we would have been an Iceland by now! Why am I so sure? Look around you and see what the "market-share" banks have done - would they not have enjoyed an opportunity to make another quick quarterly profit - and leave the garbage for someone else to clean up? That is the DNA of the current financial reward-me-now generation of market-share bankers.
On October 20th Prime Minister Manmohan Singh read out a statement in Parliament to confirm that India is quite safe from the turmoil. "Our banks", said the Prime Minister, "both in the public sector and in the private sector, are financially sound, well capitalised, and well regulated."
We believe that - and we know we have the RBI and Dr. Reddy to thank for that.
Thank you, Dr. Reddy, and I hope you get more flowers from the bankers whose very banks you have saved.
Note: The Honest Truth is authored by Ajit Dayal. Ajit is a Director at Quantum Advisors Pvt Ltd and Quantum Asset Management Company Pvt Ltd.. Views expressed in this article are entirely those of the author and may not be regarded as views of the Quantum Mutual Fund or Quantum Asset Management Company Private Limited.
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