Suddhospeak

SOPA, PIPA, Kapil Sibal and Ad Hominem

2012-01-26T17:42:00.000-08:00

In recent times, we have seen a huge furore against policing on the internet, both in India and globally. In the US, SOPA and PIPA have been positioned as instruments of state control (even Wikipedia went on a 24-hour black out against this); while in India everyone and their dog has cried foul against Mr Sibal.

Now, neither Mr. Sibal not the US Congress are saints. But we need to see what they are saying instead of attacking a framework just because it has been presented by them.

The US wants to expand the current copyright framework and clamp down on online piracy aggressively. I cannot see how this is against freedom of expression.

The whole issue boils down to the issue of "user-generated content". Over the past 18 months, we have seen many forums that host content contributed by the user - Blogs with comments, facebook, youtube, etc. This has been a magnificent addition because this has democratized creativity, so to say. One does not need to have a grand distribution system to launch a video/album. You put something together, get it up on youtube and it will take off if it is good. On good websites, the comments section has increased the value of the article to the reader immensely. They have taken this urge in people to express and converted this into a wonderful positive externality. So, user-generated content has generally been a huge positive.

However, the provision of this platform has lent itself to two forms of abuse - copyright violation and hate commentary. Anyone who feels compelled to do so can upload highlights of a football match or streaming video of a concert. Thanks to technology the costs of doing this is very low. And most people do this in order to increase traffic to their blog/channel. This is not user-generated content - this is called IP theft.

Facebook, youtube and co have found a wonderful way to help ordinary people find a platform for expression. What they have also found is an equally wonderful way to monetize this. Even if they were not monetizing this, they should be held responsible for content that gets aired. I cannot imagine a legal framework where some movies cannot be aired but can be showcased on youtube,

The cloak of anonymity gives many cowards the "courage" to air their thoughts. This is why the internet is more hateful, shameless and edgier than real life. Facebook, youtube should provide all details to help nail the offenders. They cannot simply shrug their shoulders and hide behind freedom of expression.

Freedom of expression has established limits in almost every country. In India, one cannot incite religious hatred in the name of FOE. Even in the far more liberal Euro-land, holocaust denial is a crime. In almost all countries, freedom of expression does not include the right to air content created by someone else. That is Intellectual Property Right violation. The internet need not adhere to stricter standards than the real world. But, it most definitely should adhere to the basic tenets agreed upon in each country.

If it is considered illegal to say random stuff about religion in India, it must be considered illegal to post it on facebook on Indian accounts. And if facebook cannot take responsibility for this, I do not know who else can. Facebook, youtube, etc should be asked to monitor content aggressively. And a government agency should be given the powers and liberty to impose hefty fines if some violation sits on the website for more than, say, 6 hours. I would go to the extent of saying FB and youtube should be able to share their overall dope for the government agency to continuously screen the content with some sophisticated software. If any user can come up with a screenshot of offensive content, they should be able to send it to some government agency. If FB/youtube do not agree to this, said websites should be asked to take a hike.

Just because the odds of Kapil Sibal saying something sensible are very low, we should not take it that everything he spouts is incorrect. In fact, his reasons for wanting to monitor the web could be spurious, but the point still remains. Hiding under the garb of "user-generated content" is a lot of copyright violation and hate-speech. The sooner we face up to this reality and handle this the better.

India's inverted risk pyramid and FDI in retail

2012-01-22T21:50:00.000-08:00

90% + graduates from India's IIMs take up jobs with the corporate world. 95% of entrepreneurs (most working in the so-called unorganized sector) are guys who would definitely not be among the top 10% of India's wealth (who will collectively hold 90% + of India's wealth)

Vijay Mallya runs a so-called risky business where his personal fortune is perfectly hedged. Apparently for every Re 1 that Kingfisher loses, assorted creditors and banks lose Rs. 14. Your vegetable vendor borrows Rs. 1000 at the beginning of the week, buys vegetables & fruits, makes Rs. 1600 -ish through the week, repays Rs. 1100 and then keeps Rs. 500 for himself (If everything works out).

In a rational world, we would see well-off people taking more risk and the less well-off settling for steady-income jobs. In India, the setting is the exact opposite. The well-off fall in two categories - 1) ones that are happy with a steady role and see enormous wealth-accumulation opportunity in that and 2) ones those find themselves in a position to take healthy risk with other people's money.

The poorer ones, on the other hand, are forced to take risk on an everyday basis. They take every kind of risk - business risk, financial risk, life risk (have you seen how our buses/trains overflow), health risk, etc. etc. The organized sector shuns these because they lack polish and good communication skills, they do not have inherited wealth and make a choice to run their own vegetable shop rather than being someone's office boy. Many take the route to Dubai or East Asia. (very risky options).

Now, what has this got to do with FDI in retail? Everything. Forget the big shops, forget the consumer benefits, forget how the big western guys can scr*w the happiness of dear Reliance retail. Expansion of organized retail can de-risk India's working class. And it is worth pursuing for that reason alone. A week's effort from a vegetable vendor can be erased if one small scooter runs into his tricycle by mistake. If you have seen the utter look of horror on the face of a vendor when they see looming clouds on the horizon, you can get a sense of what I am getting at here. What is 2 hours of pain for most of the salaried-class is a debt-crisis for the vegetable vendor. Especially, when you keep in mind how tough it is to maintain vegetables and fruits fresh during rains.

A lot of chatter has been seen on how Mom and pop stores can get squeezed out by giant discount stores. This is irrelevant. Lets face it, our mom and pop stores are not great entrepreneur stories anyway. Lot of these stores are being run because the people who are running them could not get "other" jobs. If these people could get employed at a big store, stay in AC store rooms for 10 hours, get paid a salary, get 15 days off a year and get trained on consumer-handling, it is going to be great for them. They no longer need to worry about their mini-store getting flooded when rain crosses 12 cms level in Chennai. For the love of god, someone should be selling the idea of this de-risking. Instead of saying this is Satan by another name.

Quite inevitably, India being India, either the Ambanis or Ruias or Mallyas will get into some JV with some global player and make tons of money for just existing. But for all this, if retail chains come through and convert India's hapless unorganized sector into salaried class, it is worth pursuing.

India's poor are exposed to way too many risks than they care about. If trickle down can make their life more steady, even if not richer, that alone is worth pursuing. India's poverty cannot be eradicated in 10 years. If we can create a setting where the next generation has hope, that is something to shoot for. Reduce risk, give people good salaries and bend over backwards to convince them that this is the better option for them. Instead of doing all this, we are protesting against organized retail.

Chennai's Education system - Why has it gone down the drain?

2011-12-20T01:56:00.000-08:00

Had ranted about how the education system in Chennai had become very poor over the past decade and a half. Had made a promise to myself to outline why this has indeed become the case. So, here goes.

The usual suspects are all there - Lesser pressure from parents, more distractions, mobile phone, gadget-fetish, etc etc. But two things stand out.

First is the fact that the City's engineering colleges have completely mastered the art of ensuring 90% of their students get placed in the IT Companies. And the lines have blurred between "good" job and "bad" job. Most jobs pay in the same range. If we can treat the odd offer from Amazon or Google as an outlier, everyone is pretty much in the same boat. Great breakthrough for engineering colleges, good for the real estate market; but extremely bad for the incentive system for parents and students. There appears to be no credible answer to the question - Why should I b*st my ass preparing for JEE?

The best response I can think for this is a wonderful quote from Mr Warren Buffett - You only find out who is swimming naked when the tide goes out.

Cometh the tough times, we will realize that most of our engineering graduates know pish tosh about anything. Now would be a good time to give a silent thanks to the Infies and Wipros of the world for bailing the city out at just the right time.

The second and more distressing factor driving this is the Tamilnadu stateboard education system. Most of our college students know very little because we have taught them only that much. Simply put, the stateboard education system teaches close to nothing to students.

Tamilnadu students are classic examples of the frog in the well syndrome. There are apparently 600 guys in the state who get 200 each in Maths, Physics and Chemistry in their standard XII exam. The amount of cocaine needed to believe that this is a good statistic runs in kilograms. But somehow, this is touted as a good showing every year. I really want some of what the government officials are having.

Importantly, this idea has been sold to the people so magnificently that there is a sense of pride in choosing our own path, a feeling that justice has been done, etc. "Entrance exams rig the game in favour of city people and rich people, this marks-only scheme is a more level playing field" - this is what most people in the city are made to believe.

Tamilnadu has been drunk on watered-down material, inflated grades, and great jobs for close to 15 years now. When the state will pay the price, I do not know. That there is a price to be paid, I am sure of.

Some early signs are there. Large number of small companies based out of Chennai go to Bangalore to recruit (some go to Madurai, Truchy as well. In order to get good attitude. Chennai cannot offer that either).

Last year, IIM Kozhikode, in a fantastic gesture told Tamilnadu students that they could take their stateboard marksheets and shove it somewhere. In an overall scoring system where class X and XII marks play a role in securing admissions. Marks obtained in Tamilnadu stateboard exams have been given 50% weightage. In other words, if you scored 90% in CBSE board exams, you would 18 out of 20 for that section. If you scored 100% in Tamilnadu stateboard exams you would get 10 out of 20 in that section. Awesome. This is the clearest indicator of what the rest of the country thinks of our beloved board. I dont think any state government officials would even know about this. If they did, we would have heard of court case against it. It has a late 80s soviet Union spiel about it. (We live in our cocoon, we are the best. Repeat after me)

The qualification one holds is a signal. In a recruitment market with asymmetric information, the degree you hold tells the potential recruiter whether you are good, bad or rotten. The reputation of the college and the difficulty level of the course you have done determine what you are signaling to your recruiter.

The signals sent could be very simple

1. A person with a high score is likely to be good (whatever way good is defined us. let us keep this simple).
2. A person with a low score is unlikely to be good

The signal Tamilnadu education board has created is awesome. After years of effort they have developed this one-way signal, probably unique in the world

If a student scores high marks in Tamilnadu board, this means nothing.
If a student scores low marks in Tamilnadu board, this means he must be phenomenally dumb or should be so lazy that he just does not care. Or both.

So, with the TN board signal, you can either conclude that you know nothing about the candidate or that he is an idiot.

Now, we are heading towards Samcheer kalvi. God save the state.

The class and caste system in the IITs

2011-12-08T05:04:00.000-08:00

The IITs have their own class and caste system. The class system is one of grades, the point that has been well-illustrated by the book "Five-point someone". Everyone in campus is a something-pointer, and this classification gets established right at the end of semester II and chases one all the way to semester VIII (and beyond, sadly).

There are juntas who slide down from a 9-pointer to an 8-something, there are those who that crash and burn all the way to the dreaded 6-somethings. Less frequently, we would hear about the upwardly mobile as well; the rare "fighters" who travel in the opposite direction. This group undergoes the same acceptance problems as any aspiring class but gains recognition once 2 semesters go by.

In every branch there are 9-pointers to 6-pointers and beyond. In many ways, local social standing and preconceptions are built pretty much around this number. One of the main planks of Alpha-male-dom in campus is the number attached after (or before) your name. The Chetan Bagat novel actually captures this very well.

The caste system in IITs is one based on branch or department. Depending on the craze and frenzy of the times, the departments are placed in some order. Computer Science is usually on top, followed by electrical, mech, chem and then the rest(see how patronizing that was. Caste usually operates like that).

People earn(!) branch changes at the end of semester II if they are in the top x% of the overall batch or some such norm; but barring this naturalization, there is no way of changing your caste (branch). People can choose to move to "lower" branches without any CGPA cut-off at the end of semester II, although political correctness usually demands that this not be called a "branch slide".

Even the most broad-minded and politically correct juntas usually accept the caste/class norms and this is what keeps these norms from disappearing. For any class/caste system to really gain acceptance, the so-called "lower" class/caste should subconsciously accept the hierarchy. The group dynamics in IITs ensure that this happens smoothly.

So, how does one compare an elec 7-pointer with a 9-pointer from a "lower" branch? Thats a tricky one. Both will argue that they are superior to the other. But in many cases, if you are sufficiently lower in caste, the class ceases to count. To give an example, a mech 9-pointer can have a better standing than an elec 7-pointer, but there is a good chance that the meta 9-pointer cannot compete.

I had this memorable conversation with my classmate who was (is) an electrical engineer. And who (like yours truly) was designated low class by semester III (we were both 7 pointers). There was this 4th year student from our hostel who was in the top few in his branch and felt he had done enough academically to impart gyaan to students two years his junior. The only problem was that he was a topper in metallurgical engineering. And meta is a low-caste branch, if you know what I mean.

My friend patiently listened to said pompous git for about 3 minutes, waited for the guy to leave and then said "Meta-****** have started speaking to me about academics. ****** . ***^&%^*.. I would effing be an elec 5-pointer than be the branch record holder in that ***'s branch. Somebody should tell that ***** that he can shove his advice up his ********. If he can clear the electronics paper in my effing branch without getting his *** whipped, I will listen to the **** for more than effing 3 minutes. *****.

Caste overrides class here.

We have parallels of the caste/class demarcation in many different fields. Academic background/Job is one such. Essentially, one aspect that cannot be easily changed along with one that can be improved upon together combining to count for social standing is a caste/class system

Grade/branch in IITs
Academic background/ Job performance
Beauty quotient of wife/ wealth
Inherited wealth/ income generated

This is probably the reason why the caste system is more odious than the class one. Because you can still alter your class - through smarts, luck or perseverance. But if you are a meta dude, there is no way in hell you can give gyaan to Computer Science graduates and hope to be listened to. And that somehow grates more.

P.S: On a side note, that meta dude was a muppet. Pompous non-achiever if ever there was one. :)

Why I am not a fan of Chartered Accountants

2011-10-17T06:22:00.001-07:00

Apparently, the answer to the above question is not obvious. Makes me feel that we live in a world filled with chartered accountants. Top 6 reasons below

1. Rule of 44A: This is the rule that allows CA's to arbitrarily club 2 numbers and an alphabet and hide behind that - no questions asked.

2. Propensity to act like the military: CA's either tell you that something cannot be done, or that they will take care of the issue (they often flipflop between the two, which can be mildly irritating). Never, will they tell you how something is taken care of or why something needs taking care of. The left hand shall never know what the right hand does.

3. Popular belief that CA's are good at maths: CAs know how to add/manipulate numbers that can be put on a spreadsheet. They generally know diddly-squat about maths. Most CAs wont know that the probability of them understanding anything has to be lesser than or equal to one, no matter how great they are. It is an unfortunate reality of our country that someone who can add/subtract using excel sheets is considered "strong in numbers".

4. Legal system that gives them a monopoly: Put simply, the signature of a CA carries value. So, throw a simple demand-supply equation in and you know what I am getting at.

5. An education system that de-selects intelligence: I find it very hard to believe that someone with a high level of intelligence will tolerate the slow decay of brain cells that is CA preparation. So, CAs strike that exact beautiful balance. One needs to show resilience, diligence and some degree of smarts to get there. But you are essentially dealing with a peer group that is not frightfully smart because of the dumbing-down required to get there. An awesome cocktail to facilitate the indoctrination that follows. A very narrow IQ band of 90-95 or thereabouts would fit the bill, I think.

6. An extremely inflated sense of self-worth: Now, this is what gets me the most. So, there goes the rant-alert. The game is rigged to select irritants with average IQ and give them monopoly powers. At best, this is a positive result for society because it prevents these characters from interrupting other productive activities. If all of us see it this way, we could all treat CA-dom as a necessary evil and get on with life. However, this is where indoctrination plays spoil-sport. CAs are bred to believe that they are phenomenal because a) it is so difficult to become one and b) they are the number-keepers of all of society.

I once attended this party where there were 4 couples. All 4 couples had young kids and the first two couples I interacted with the mothers had taken a break from work to handle the kid(s). When I ran into couple no 3, I asked the wife if she was working, very innocently (with not even a tinge of chauvinism, I must add). She was more than mildly irritated and replied "I am a CA" (with a nasal twang that so called high-brow South Indians are wont to use). Somehow this was meant to convey to me that she not working would be such a loss to society that it could not even be contemplated. This made me recall this timeless scene from one of my favourite movies - with the immortal line, "Athulla enna peruma, get out"

Next time some CA has that "I am a CA, please give me the respect it deserves" look, think about the line - "Athulla enna peruma, get out" (For good measure imagine Thengai Srinivasan and Rajnikant as well). I have noticed that even though it does little to change CA's perception of oneself even a smidgeon, it makes your conversation with said CA slightly less miserable. And if you are unfortunate enough to be caught in a conversation with a CA, this is the best you can hope for.

A sense of humour that can compete with that of a hockey stick, an ability to spout global inanities at the first request for detail and vice versa, propensity to underestimate other professions, etc can be added to the list of CA characteristics that can be less endearing. But no point flogging a dead horse and all that :)

I need to add a disclaimer here, because the CAs have a chip on the shoulder and are liable to list down a series of successful CAs in a bid to reclaim the holy-land that is CA-dom. Not all CAs are dumb. There is bound to be a sizeable minority of CAs who are reasonably intelligent and tolerable. This is called law of averages. The likelihood of finding a CA who is smart and tolerable is about as high as finding someone else with any other qualification, be it B.Com or BE or BA. The other graduates accept this as reality, CAs will perceive this as an insult. And that is the most painful factor about them.

Greece crisis in Laymanomics

2011-09-15T21:21:00.000-07:00

Had a discussion for long-ish stretch of time at home last evening on Greece and why this crisis is upon Europe (and by, extension the rest of the world). Just thought I would put it on the blog as well.

It all began with the start of the Euro project. When the single currency was launched, all countries could borrow in Euro terms, though the rate each country borrows at depends on that country's financial state. However, when the Euro was launched, the rates of almost all countries were within a small band. This really helped Greece, Portugal etc as they could now borrow at very low rates. This benefit was added on as one of the Euro project's success stories.

For a parallel, think of a group such as Tata. TCS can borrow whatever money it needs at less than 6% interest rate (TCS has cash reserves running into 100's of millions), whereas if Tatas started a new venture called Tata oil financing, they would be able to borrow only at rates of 10% or so. If the banks got a 'Tata' guarantee, then the loans to TCS and Tata Oil financing would be at closer levels. The Euro project gave all countries a Euro guarantee (Only it did not, we will see that)

Now, we all know what debt at low interest rates can do to people, imagine what it can do to countries. For second house and big car, read increased pensions and pet going-nowhere projects. Government spending increased and fiscal health deteriorated. Come 2008-crisis and everything froze for a little while. Anything freezes, the riskier assets are the first to clog up.

For our India parallel, imagine a bank run on ICICI. ICICI will do whatever to calm the markets, but one of the first things it will do internally is to say that stop lending to companies like Tata Oil.

Now, no country can run without debt-financing and even temporary freeze-ups can hurt perfectly well-run businesses and countries. So, the system did whatever it could to unclog stuff. Big blanket guarantees were promised. Huge recapitalization was done

In India RBI comes out and says depositors are protected, no matter what.

But suspicion that some countries are not that well-managed never went away and everyone started looking closer and closer at risk premia. Spreads started expanding. No longer would German debt and Greece debt be at the same cost. It was a stupid idea anyway and now with things looking sticky, markets had to revisit this.

ICICI and co told Tata group that group guarantees are well and fine, but will TCS shareholders cough up $500m if Tata Oil collapsed? Because they wont, we want to get paid 10% interest rates anyway. For good measure, we want to add a penalty clause that will increase the interest rates to 12% in case of missed/delayed payments.

When interest rates go up and EMI creeps up, families struggle to pay mortgages. Countries are no different. As it is the recession had hurt revenues, now with interest costs increasing finances started looking ugly.

Tata Oil had one rig failure and with interest rate reaching 12% things became tricky to handle. Interest payments went high and margins got squeezed

Greece got a soft loan from rest of Europe/ECB (read Germany). This was at a low interest rate, made plainly to help tide things along. This was for a short-term only, with the idea that once things recovered, Greece would be able to hold its own. In return, the Euro countries forced down a plan to improve Greece's fiscal state. Severe austerity measures were imposed. An already contracting economy's troubles were exacerbated.

ICICI realized that deliberately squeezing Tata Oil was going to help nobody, struck a deal with Tata Group, relaxed interest rate to 7% for 2 years, with an added guarantee from Tata Group (TCS shareholders were not spoken to even now). ICICI clamped down on top management pay, had an ICICI guy installed on the board of Tata Oil and slashed marketing budget. A company struggling for revenues had its marketing budget slashed - one can imagine what happens

Greece's recovery plan was based on three assumptions - 1) the austerity measures would be sufficient (some doubted this) 2) the austerity measures would be implemented well and accepted well (many doubted this) and 3) global economy would recover well (nobody really believed this)

ICICI got a promise from Tata group and assumed that Tata Oil would retain its best employees. Good employees have a knack of running away from a sinking ship and sharp clients are good enough to sense fleeing employees.

We are where we are. None of the three assumptions have held good. The world now wants blanket guarantees from Germany, a huge bazooka to bail out Greece and Greece to become good citizens and reform. Good luck with that. If this does not turn out well, the markets will go after Portugal and Ireland, we are told. If Germany wont bail out Greece, why should they bother with Portugal or Ireland.

Taking our parallel further, if TCS wont bailout Tata Oil, why should the bankers lend to Tata Real estate on group guarantee? Why indeed?

The most critical parallel here is the fact that as much as TCS is part of the Tata group, TCS is also listed. And the TCS shareholders have to have a say in any further guarantee-ing. Being part of the group was all well and good when this started. But 90% of TCS revenues come from outside, and everyone can sense that the group tag is a liability. Importantly, TCS shareholders can ask Tata group to take a hike.

Replace Tata group with Euro, TCS with German citizens and Tata Oil with Greece and our parallel becomes complete.

I am firmly with TCS shareholders on this. The German citizens should ask Greece to take a hike. This bail-out-or-we-will-all-be-in-bigger-trouble trick worked for the banks in 2008, Germany should not fall for it again.

Ich bin ein Berliner

2011-09-11T23:02:00.000-07:00

John F Kennedy made this phrase famous nearly 50 years ago in his dramatic speech in West Germany. I have a sneaky suspicion that those of us not holding the belief that the profligate are entitled to help from the afflient will be echoing similar sentiments in the weeks to come.

If, over the next few weeks, the Germans indeed refuse to be blackmailed into bailing out the Greeks, I think at least few people around the world should show their support for the Germans. For sure, the self-righteous, good Samaritans will pile on the Germans and insist that it is the Germans' duty to help out a neighbour; while economists will point out that Germany will be shooting itself in the foot if the Euro project collapses.

The economists have hinted that Germany has gained the most from the single currency and must therefore save the Euro. Even German ministers have said this .

Germany has been accused of dithering (many times over) and have been accused of increasing debt burden of other countries. In a round-about fashion, the Economist has even accused the Germans of being part of the problem-creators -

"None of this is to say that Germany is the main cause of the euro’s crisis. As much or more blame lies with those that spent irresponsibly, failed to reform in good times and were blind to property bubbles."

Huh. How does that work?

But all this chatter overlooks some basic facts. Germany has contributed the most Euros for the Euro project. It is the biggest donor country, it is the country that has chipped in the most for bail-outs. The Germans work harder, work longer hours, retire later than some of the Euro citizens they have been bailing out. And it is considered deplorable if Merkel considers what ordinary Germans think about the bailout. Pish tosh. If I were German I would be participating in all protest marches against giving money away. German efficiency, German pragmatism and German faith in the all-for-one Euro project have been exploited enough. Fiscal union is just another way of saying Germany will pay for pet projects of governments across the Euro.

Thanks to messrs Sergey Brin and Larry Page, I can write that I will offer "Internet-support" for any move from the Germans to not support everyone else. I know it is not worth much, but I just thought I will say this any way.

Ich bin ein Berliner

Chennai's education system

2011-09-01T03:33:00.000-07:00

Never the most vibrant of cities, Chennai still had a lot going for it - Marina beach, Carnatic season, Kollywood. But beyond all these, Chennai also had a sense of identity, a sense of being distinct. One of the underpinnings of this was the city's rich academic culture, and this played a huge role in maintaining that confidence and pride. Chennai has always placed a huge importance on academia and in excellence of any kind, and it is no surprise that benchmark for many 12-15 year olds were the 20-somethings who had a standing because they had done a BE or an MBBS in a good college.

And this is why it is important for the city that the educational institutions stay healthy and competitive. And this is why the City is going down the drain. I am not going to sit on the fence on this one, nor am I going to mince words or be politically correct. Political correctness be damned. If I can shout from a suitable rooftop, I would - The city's educational system is slowly going kaput. It just isn't working. And the funny thing is that most people in the city don't know this.

Good teachers are disappearing, students are clueless, and the general levels of application are abysmally low. Have no illusions, Chennai has fallen so far below the other big cities that we will soon lose sight of them.

The statistical evidence is strong. Chennai has come near the bottom in assessment tests conducted by agencies. In JEE, Chennai did not have a single student in the top 100 apparently, there was a similar poor performance in AIEEE. In AIEEE, a state rank of 3000-odd would have translated to an All India rank of more than 1.5 lakh. CAT, IAS, NLS, we have become poor across the board.

As a former analyst who made his living as a number-cruncher, I retain a healthy scepticism of presented data and am more comfortable with anecdotal evidence that I can trust. As someone currently employed in the education sector, I regularly interact with a lot of teachers. The anecdotal evidence is, if anything, even more depressing.

Teachers across the city are lamenting how student-quality has fallen. A teacher from PSBB told me - You guys worried about clearing JEE. With these kids, I am more worried about them getting decent marks in board exams. Teacher from SBOA: 1997 was the last decent batch that I saw (this in 2010). Even accounting for nostalgia playing a role in rose-tinting the past, it is very clear that standards have fallen dramatically over the past decade or so.

I handle different batches of students. I see three key distressing signs.

1. No clue about fundamentals: I am a bore when it comes to learning from first principles and I can be very pedantic when it comes to very basic things. Even accounting for this, I was shocked when the kids showed zero awareness (plus zero curiosity, which is somehow even more painful to take) of basic concepts. For instance, I have asked several batches of students why d/dx (sin x) was cos x. And not one of them could relate it to anything fundamental. 95% of students in Chennai are taught that d/dx (sin x) is cos x as if d/dx where a black box. They have no idea why this d/dx thing works or what it is supposed to mean logically. To them, it is just something that gives out results that they need to remember. Teaching calculus like this must be the most pointless exercise ever. It is far better to not know anything about calculus

2. Learning fatigue: The ability of students to take in concepts from very basics is p*ss poor. Most good students tire in 20 or so minutes.The average ones have attention spans comparable to 2-year olds. The students can take in formulae (plenty of that), the 'memory' component of their brain is fully functional. Someone has just tampered with the component called "application". Tell students the formula for finding the number of factors for 2^3 * 3^5 * 5^4, they will solve questions all day. After 30 minutes of practice, ask them for number of even factors of the 2^3 * 3^5 * 5^4 and they will stare at you as if you asked them to recite from the Gita. In their defence, if you gave them a formula for counting even factors, they would be happy to practice that as well. But the "application" component of the brain as gone AWOL. This leads to a fetish for shortcuts and more formulae - both distress signals.

3. Lack of ambition: When I was in school (1997) , we guys would want to participate in any contest at an all-India level just to see where we stood vis-a-vis students from Mumbai, Bangalore etc. The number of times I hear "JEE is an All-India exam and so too tough", "We should not look at AIEEE all India rank", "The competition in CAT is mad. We should not have to put up with this" is absurd.

The students positively quake in their boots at the very mention of competition at an All-India level. If this timidity brought with it some humility that would be half a victory. But for some reason, the city has been infested with this slugfest celebrating mediocrity. When the whole world is trying to imitate the competitive setting from India and China, there is our own Chennai that is running away from competition at a rapid clip. The heart bleeds.

Parents have lost the ability to say - "Roll with it. You were born in this country. This intensity will build character. Apply yourself and the fundamentals for a bright future can be built". We are becoming a city of wimps. Parents are mollycoddling their kids endlessly. We guys used to bicycle 7+ kms one way six days a week to attend coaching classes for JEE. Our parents felt bad about this, but not once did they make it sound like a big deal. I think overwhelming majority of parents these days are not willing to tell their kids to push themselves harder. Where are the tiger moms of Chennai?

Somebody had to say we are not that good these days. I am happy to be that guy. I realize that I have used to pretty provocative language. Please don't take offence to that and miss the point. The city is a horror show as far as education is concerned. The earlier we realize this, the better.

Will outline my hypotheses for the reasons for this in the next post. And suggestions for improving things in the subsequent post.

Cricket and India

2011-08-30T21:10:00.000-07:00

There seem to be a lot of parallels between Indian cricket, and erm, India.

Till late 80's, both the Indian team and India were largely unheralded/unknown quantities till the late 80's. Then Sam Pitroda-Rajiv Gandhi took some steps in the right direction, broadly the same time at which the Reliance world cup and later SRT happened. Both were the first signs of promise.

Then early 90's, Indian reforms took shape, the ground-work was laid for some breakthrough industries/enterprises that were to come along later. For the team, Kumble came along, Ganguly made an appearance, and Dravid-Laxman started doing their thing in the local circuits. In many ways, the real fruits of the reforms took effect only in the second half of the 90's

Second half of 90's is when we really started hearing about Infosys Wipro, started believing that India could finally compete globally and create high quality institutions. About the time, Ganguly-Dravid appeared. TCS, the old warhorse also joined the mix, ditto SRT (finally now it looked like he might not be the only good guy around). Cognizant/Laxman were the slightly late entrants. 2000-01, India felt the dotcom bust, cricket went through the match-fixing scandal. The Azhar-Satyam parallel is the only one where the timeline does not match :)

Around this time, Pokhran happened and Eden Gardens happened. These expanded the horizons of what-could-be beyond imagination.

Early 2000's, good results all around. Adelaide, Pakistan tour, 2003 WC, etc. Good growth, good infra build up, general feel good factor. Telecom sector came and took the limelight, enter Harbhajan with a bang in his debut series. It looked like we were setting ourselves up for a higher trajectory. India needed newer biggies, the team needed newer names - Sehwag, Yuvraj, Zaheer came up. Auto sector, telecom sector broke through, realty sector also shined.

Just when things were fine, we were woken up rudely. 2007 WC debacle, 2008-meltdown. But the rebound was way better than expected. It also helped that we were seen now as relatively better. Australia declined, Pakistan, Windies disappeared, NZ finally ran out of steam, England were in transition, and it was up to India to not fluff its lines. On the global economy, US went into a big recession, Europe was struggling and there were few safe havens. India, part of the emerging market brigade acquitted itself wonderfully, or so it seemed.

The new-age, confident group made a mark in the biggest stage with a WC win and on the other hand Indian market rallied to nearly touch a new high.

But, the reality is that both triumphs were built on weak (longer-term/longer-format) fundamentals (even the metaphors start matching :) ). Just like how decoupling was always a myth, the new all-round fitter+better team was also just a myth. Both have been running low on newer inputs. The old-warhorses are still pulling the engine along. The rising tide had just lifted all boats, in both settings. Both need renewal now. Especially, with a giant recession looming, and huge retirements around the corner.

Most importantly, I think for all the improvements seen, we are now left with a feeling that some of the basics aren't much improved - governance, administration, education, fitness (corruption, bowling stocks). Funnily enough, those of us who have been following both for a while have this vague inexplicable feeling that the promising-but-not-there-yet version of the late 90's had more going for it than the premature we-have-arrived-bring-it-on version of the early 2010's. But hey, things go in cycles. And this is still better than the 80's. :)

Test Cricket - The end is nigh

2011-08-27T21:33:00.000-07:00

Michael Holding has recently said in an interview that he fears for the future of test cricket. Many have made this pronouncement in the past, and many have made strong defence against this hypothesis. Few are better than Gideon Haigh at discussing this . On this issue, conventional wisdom has alwaye been that the future of test cricket depended on whether test cricket die-hards would cede space to the newer breed of T-20 fans. The question people had in their minds was always - "Will there be enough die-hards left for tests post the T-20 bonanza?"

I held the belief that if the die-hards turned up, test cricket would be safe. And I always believed that the die-hards would turn up. I have too many friends who wake up at 5:30 in the morning to follow the Ashes in Australia, too many who know Brian Lara's test average, and far too many who will happily be able to recall at least 30 of Sachin's test centuries at 5 minutes notice. India alone would be able to keep test cricket alive - I used to believe. Now, I am beginning to have doubts.

It is not the T-20 that made me waver, it is not even the IPL. These always attracted "newer" audiences. There were too many who had seen the 376 partnership in Kolkatta and therefore could not take Warne's claim that Yusuf Pathan had played the greatest innings ever too seriously. These events increased the share of T-20 audience in cricket. What it did not do was to reduce the audience for test cricket. And there-in lies the rub, I used to think.

Now, post the 4-0 drubbing in England, I am getting worried. I am beginning to hear people saying that "It is alright, one off defeat is fine. We are still the ODI champions". I can happily live with that.

I am also hearing an undertone of "Dhoni is still the best in the world. He took India to the WC. He took India to the No1 ranking in the world. He took CSK to 2 crowns and a Champions League triumph". Now, this I feel is dangerous. The moment Dhoni's legacy gets measured in terms of all of these things, the famed primacy to test cricket argument becomes a sham. And without even the pretext of the primacy to text cricket argument, test cricket could be on its last legs.

Fans' emotional involvement alone can keep a game going for a long time. There are a great many (yours truly included) in India who will watch India test series in even New Zealand and West Indies if it will help keep the game going. We guys are crazy enough to accommodate bad timings, poorly scheduled tours, etc etc. But what we cannot bear to think that is that the guys whom we support so madly, so passionately, do not accord the same importance to the form of cricket that we so adore. Indian cricket took its fans' trust for granted once in the match-fixing scandal and got away with it. Test cricket in India cannot have another trust-beating like that. If Dravid or Tendulkar come out and say what Gayle did, test cricket would not survive long in India. And my fear is that, once these legends bow out, then sooner or later, one of these guys is going to say something similar. The "primacy to test cricket" adage has probably done its time.

The two countries that seem to really place importance on test cricket are England and Australia. And I would say my heartfelt thanks to them. I am not a big fan of either team, and have hated (and still hate) the English cricket team with a passion. I dont carry a chip on my shoulder like Gavaskar, but have been accused in the past of irrationally hating the England team. No matter how much I loathe the team, I can assure them come 2024 if the Ashes are still on, I will be watching them. I will not have the same passion for the game if India starts playing less than 5 tests per year, but I will still watch the Ashes. If the Ashes turn out to be the last reminder for what test cricket used to be, I will do my bit to keep that going. Because, in all likelihood it looks like that will be the only test series in the 2020's where both teams care deeply about the result.

I am hoping like crazy that I am wrong. Much as I would wish Dravid, Sachin and Laxman to be remembered as the greatest middle order ever, there is no joy in them getting this accolade if they were also the last relevant middle order around.

The Open magazine and the genius called Akshay Sawai

2011-06-05T11:22:00.000-07:00

Akshay Sawai is the writer on the rolls of The Open Magazine who pretends to write on sports. His first few articles were not that painful - just unfunny and mildly irritating. Just sample this -

From an article titled "How to impress your father-in-law"

Inside the circle, things are more intense. Hammocks are prohibited. There is a slip or two, mid-on, mid-wicket, mid-off, cover, point. There is the wicketkeeper, of course, and behind him a helmet that looks like the head of a man buried neck-deep.

Now, seriously - helmet looks like the head of a man buried neck deep. What next, shoes look like the top view of what Bharata (of Ramayana fame) would have carried to Rama when he went to the forest

This one titled " Perks of the job" is even worse. He tries to ridicule Sreesanth very unsuccessfully here

Asking the players even the odd question at the nets is PR suicide. When I ask Sreesanth for a comment after he accidentally bowls a beamer at Yuvraj Singh, he raises eyebrows. “I’m still playing the World Cup. You know the rules. Now please don’t write anything,” he says haughtily. I only asked for an answer, not the Louis Vuitton loafers he wears off the field.

Not the Louis Vuitton loafers?, 'answered haughtily'?. Sreesanth is prohibited from talking to journos. As a muppet with a two-digit IQ, AS should know this. He chooses to ignore this, pokes his nose and is politely told off. But still cannot resist a cheap gag at an easy target. In the same piece, he has a poke at Yuvraj Singh as well.

One misses Julian Assange when the Sreesanth-Yuvraj episode happens. How entertaining it would be to employ the investigative chicanery of Assange and find out what exactly Yuvraj said to Sreesanth after being struck by the beamer. But even without Assange around, it is obvious that a full sargam of Punjabi invective has escaped Yuvraj’s mouth. How is this for a new Yuvraj slogan: six sixes in Durban, six gaalis (abusive words) in Bangalore?

One misses Assange? 'Investigative chicanery'?, new absurd slogan - how low can Indian journalism go. Anyone who has played any sport at any level beyond bedroom games with 3-year olds knows that people swear. I played at a level that can be described as "potentially a qualifying level for attempting to be pre-amateur", and I used to swear. A lot. Akshay Sawai goes for another easy target here - Punjabi loudmouth - and comes off wrong. Now, my issue is not that AS goes for these guys. It is that the essays are unfunny. One cannot laugh at these jokes even if one were paid to do so. He probably thinks investigative chicanery is a turn of phrase of which Wodehouse would have been proud of.

Now, even these are mild. What really got me going was this piece on Djokovic. Djokovic was in the middle of a great run when this was published. A writer could have written about Djoker's forehand, Djoker's run which Mcenroe acknowledged was better than his own, Djoker's initial years as a pro, Djoker's imitations of various players, or Djokers life in war-torn Eastern Europe. But our dude starts with this.

Rafael Nadal picks at a certain body part, Jayalalithaa does not. But there is a similarity between the two: beating them on their home turf is hard. If Tamil Nadu is Jayalalithaa’s turf, Nadal’s is clay.

No, seriously. Nadal's posterior and an inaccurate description of Jayalalitha's electoral record are the topics one needs to touch on before getting on with a ( gut-wrenchingly dull) piece on Djoker. The start is absurd, factually inaccurate, absurd and frightfully unfunny. That this has gone past the subs at The Open leads me to think that the writer either knows the editor personally or is sleeping with someone in the subs team. This was the last straw. I thought that post this, someone, somewhere would have written to the Open to tell them about the writer.

Apparently, not. Because this was published this week. Among other things, the article says that Kapil was disappointed that the Indian team won the WC in 2011 as this would take some of the gloss off the 1983 version. The writer is peeved that Kapil Dev gets Rs. 20 lakhs for appearances in TV shows, asked Rs. 3 lakhs per article for writing for the Open.

Darling, you can take your opinion about how much Kapil Dev should demand for a TV show and stick an oar into it. Kapil Dev demands Rs. 20 lakhs because some muppet is willing to pay for it. And because millions are willing to watch it. I think you are not worth Re 1 and The Open should be paying something in the range of 40-42 paise per year. But that does not count. The Open went to Kapil Dev asking him to "contribute" a column, he named a price, you walked away. Now, discussing that deal is cheap. Any muppet in this country can write on cricket. Only one can sign it as Kapil Dev. He named a price for that signature, not the article. You walked away from that deal, good for you. Now, shut up.

Kapil got a lion's share of commercial contracts and deals post 1983, because he was by far the best player that this country had seen till 1992 (when one Mr. SRT started showing some of his stuff). KD was miles ahead of any other player we had ever produced. To date, he is the best all-rounder we have produced and will probably count in the top 10 all-rounders of all time. He won us our first WC and no one is going to take that away from him.

Full of snide comments, unnamed sources (former-great, 1983 winner, industry insider are all descriptions used. These could be my aunt, my great-grandfather and my 2-year old son), and patently unfunny. The article has zero credibility and is written merely to provoke. I am ashamed to say that I could not resist that temptation. I am going to do the bare minimum within my power. Stop the damn subscription.

As I have mentioned here, Open is beginning to resemble a troll. All provocation and no substance. Anyone can write an article that is contrarian and going against the grain. It is important for a magazine to provoke. But provocation cannot be sole aim, and neither can it be done at the cost of honesty and integrity.

I am not sentimental about Kapil Dev. KD be damned, for all I care. But for the love of god, either do it on sound ground, or do it with a lot of wit. This half-cock attempt is just a shame. Jokers.

The Open - Fast turning into a farce

2011-06-05T10:34:00.000-07:00

The Open started out as a decent magazine, and with Sandipan Deb and later Manu Joseph as editors, it got positioned as the one 'neutral' magazine on the street. It informed and provoked in equal measure, and was soon way better than the rag that is called 'India today' and the magazine-that-was Outlook.

Then Barkha-gate brought it to the limelight, and in many ways the magazine reveled in this. Even then, the magazine did not come undone. Then Hartosh Singh Bal happened. Smart guy, but usually too smart by half for himself. Magazine increased its 'unconventional' quotient. But in many ways, fell into the trap of being different for the sake of sounding cool. Now, it has become the magazine that writes stuff merely to provoke. There just is not enough substance. If the entire magazine were to be given a virtual nickname, it would have to be 'troll'.

While Manu Joseph wrote provocative (but freakishly well thought-out) pieces on Indian pride and religion (Islam in particular), Hartosh Singh Bal got into a war of words with William Darlymple - Bal and WD's reply. It would have been alright if Bal had stopped it at this. The Open then went on to print a rebuttal of a rebuttal which was completely unnecessary. Pseudo-intellectualism at its worst. As a reader, you were left with the feeling that these morons' sense of self-worth was so screwed that they believe this would interest me. I mean, investment bankers have smaller egos than this. Like Calvin would have said - I deeply resented the editors' assumption that this would amuse me (Calvin is a genius, btw).

This streak in the Open Magazine team to be contrarian is beginning to grate. When the whole country was talking anti-corruption, they ran with a cover story going how the middle-class is hypocritical and how Anna Hazare is a muppet. For the record, Anna Hazare is a figure-head, and most of India knows this. The earlier the Indian media gets this, the better. The magazine also became more pseudo-intellectual. For instance, I cannot even figure out what is being said by Hartosh Singh Bal here .

But all these are pardonable sins. Hartosh Singh Bal is probably like this school bully who has to have the last word and establish his ability to think a lot and think differently. The readers' complete lack of interest in this showcase of Bal's intellectual prowess be damned. There is half a chance that Bal might even be provoked enough to construct a reply to this in his mind rubbishing the credentials of yours truly (that is, in case one of the 4 people who reads this is not more than 3 levels of separation from Mr Bal). But, as I said, these are pardonable sins.

The main reason I am stopping my subscription is the space occupied on the Open Magazine by one Mr. Akshay Sawai. I refuse to fund any institution (in however indirect a way) that facilitates the upkeep of Mr Sawai. Now, I dont know Mr Sawai personally, but what I have read, I can only state that the Guardian's description of one of the football commentators would suit him perfectly. The phrase was - Efforts should be taken to cure Mr. X of his delusions of adequacy (or something to that effect). More on that here.

Wikileaks, Barkha Dutt and our ability to feign outrage

2010-12-02T04:56:00.000-08:00

Recently, we have seen two revelations that have outraged people enormously, and I use that term lightly. The US cables leak and the leak that Barkha Dutt and Vir Sanghvi stretched the ethical boundaries of journalism.

What I have been most surprised by is how, we the public are outraged by this. US cables suggest that Pakistan ISI might have been helping terrorists. They also discuss the possibility of Iran going nuke. No shit Sherlock. What did you expect them to be doing? Discuss diapers and pregnancies?

The second issue is even more of a joke. PR person massages her journo contact to get something published. TV presenter crosses line in a bid to be on the news-creating side instead of merely on the news-disseminating side. Again, what did you expect these people to do?

Nobody needs to tell journos about regular boring news. So, PR people essentially give them some scoops in exchange for favourable press. This practice has been alive and kicking for years. If PR people had job descriptions, it would read something like "Keep scratching back, one day hope for return back-scratch". The media-PR-bureaucrat nonsense is nothing new. Just because it happened to people who are famous does not mean we should all act surprised and outraged.

Barkha Dutt has time and again shown that she has a weakness for being at the center of it all. Even her 26/11 coverage was filled with equal amounts of Oh-my-god-this-is-bad-for-India with Still-I-am-glad-I-am-the-one-talking-about-this. She has even tried to milk the accusations against her for TRP ratings. The lack of irony is stunning.

I am not condoning either the actions of the US foreign ministry guys or Barkha Dutt and co, am just amazed at the ability of the public to express outrage at this. The Open had a decent post on this issue as well sometime ago.

What are we going to be surprised by next - Military men kill, Santa Claus does not exist, Traders will punt on any rumour, Hedge funds spread rumours to make money. Should we not have become immune by now?

For those feigning outrage, don't bother. Your outrage will have an impact for about 6 seconds and then the parties will find better ways to do what they were doing all along. Barkha will probably do all her dealings in person rather than on the phone.

For those, who are really outraged, get over it. Get a reality check.

Enthiran - Genius

2010-11-21T20:46:00.001-08:00

Enthiran - Now, this movie is pure genius. It is very clear that Shankar was never told about the law of diminishing marginal utility. The movie is based on "You think one Rajnikanth is good, two are better, what about this?". Shankar essentially looked at Kamalhasan's Dasavatharam and said "I see your 10 and raise you 1300". I am hoping Kamal did not blink.

Now, people would have told you how the plot is inane, that the chemistry between Aishwarya Rai and Rajnikanth more than matches India's contribution to the world of numbers - zero. But, remember, a Rajnikanth movie is not about all that, the last Rajnikanth movie with a plot was Thalapathi, and that was stolen from the dude Vyasa. And heroines are usually mere props for defining that thala is the thala of all the thalas in the whole world. Anyone who is not ok with this can go take a walk, and that is that.

Now, if only these overreacting, elitist, hyper-analyzing, jealous north-Indian film critics were not there, we would picked up an Oscar or two by now. The film critics just dont get it. They think a review is about appearing pseudo-intellectual. A film review about a Rajnikanth-starrer is straightforward - say it is the best ever and get on with it.

Now, there is just this one crib I have about the movie and the reviews. Before I get into that, let me give some background. I am bona-fide South Indian - dark, Rajni-loving, hindi-bashing, supertam with a hint of paunch to get closer to 100% certification. As is mandatory for all Tamilians, I did my tamiltriotic duty and watched the movie at the first opportunity. I also promptly did the 'totally worth a watch' and "Thala is awesome". I would have even gone on to the now obligatory 'the Hindi guys can never create quality cinema like this' in 1-2 weeks. But, this time it was different. I was brushed aside by this amazing love in in Tamil. It was like the state had been taken over by the TV channels (this is partly true) and they were organizing a wedding show co-directed by Karan Johar and Sooraj Bharjatya. There was just so much love.

And this has got me very pained. Why did I not get an invite for the love in? Who assumed that I would not have been able to trump K.Balachander's paen to Shankar? Am I any less Tam than these others? Don't I believe that Sadagopan Ramesh did not go on to play 100 tests purely because he is Tam?

I was just not in the loop. Whoever is giving out the messages, please drop me an email next time around. I would not want to miss the opportunity to participate in any attempt at creating a self-fulfilling prophecy (I wake up every morning and chant - "I am really good" 108 times). The whole country is anyway in on this one now - replace the I am good with "India is great" and you could be on the media by end of the week. I would hate to be a non-conformist. I do not want to miss out. Because as I said, I am awesome.

The Open Magazine: Good magazine whose standards are beginning to fall

2010-10-26T02:50:00.000-07:00

Over the past year, I have come to really like the Open Magazine and have recommended it to many of my friends. The magazine is surprisingly free of cliche and aims to entertain and inform. It sits right in the middle of the spectrum of Indian magazines - far from the textbook-like Frontline and equally far from the Tabloid-ish India Today.

Some of their articles are provocative, some are funny, and some are very informative. Generaly, the quality of writing is of a reasonably high standard.

However, after the bright start, the magazine has started writing articles for which I can only assume they are being paid by the protagonists. The last two issues had an article each on Shashank Manohar and John Abraham. I can only hope that the Open got paid well by these two.

Sample this on Shashank - Positively cringe-worthy

When asked what he observed in the way Manohar handled the Modi/IPL issue, Ratnakar Shetty, the Board’s chief administrative officer, says, “He was firm. He is one person who cannot be pressured.”. Hahaha - What is he? An sllrounder who has to score 12 off the last over?

On that hectic 26 April afternoon, Manohar showed that he had the smarts, the conviction and the larynx to be a worthy president of the country’s most powerful sports federation. The smarts, the conviction and the larynx?! Really?!

Even if some of his answers seemed unsatisfactory, he demonstrated a grip on facts and an ability to argue a case. (How does one do that).

He was unreadable, a walking-breathing BS Chandrasekhar delivery. This is awesome.

He is atypical because he does not seem to hanker after the trappings of power and wealth. He already has them. Manohar owns a couple of Mercedes E Class cars. He has two Merc E class, then he must not want more money

True, Shashank Manohar is not the first BCCI president who is rich. But somehow he does not show it. And he is not driven by naked ambition. So, when everyone around him is overdressed or busy looking busy and important, Manohar strolls in wearing a half-sleeved shirt. What about the Merc E class then, that too two of them?

What is Manohar’s special talent? “Administering the game in a clean, professional manner is what is important to him,” says Rajan Nair, This is a classic. Spoken like a Miss World contestant. Guys, he is an administrator. Not a rocket scientist. Reminds me of an immortal piece from Catch-22

"Flying combat missions for General Dreedle is not exactly what I had in mind," he explained indulgently with a smooth laugh. "I was thinking more in terms of replacing General Dreedle, or perhaps of something above General Dreedle where I could exercise supervision over a great many other generals too. You see, my most precious abilities are mainly administrative ones. I have a happy facility for getting different people to agree."

"He has a happy facility for getting different people to agree what a prick he is," Colonel Cargill confided invidiously to ex-PFC Wintergreen in the hope that ex-PFC Wintergreen would spread the unfavourable report along through 27th Air Force Headquarters. "If anyone deserves that combat post, I do. It was even my idea that we ask for the medal."

"You really want to go into combat?" ex-PFC Wintergreen inquired. "Combat?" Colonel Cargill was aghast. "Oh, no - you misunderstand me. Of course, I wouldn't actually mind going into combat, but my best abilities are mainly administrative ones. I too have a happy facility for getting different people to agree."

The old VCA Stadium, however, has a tragic history. In 1995, during a Test between India and New Zealand, a wall collapsed, killing nine spectators and injuring over 70. Manohar, who was very much a force in the VCA then, was criticised for the condition and handling of the ground.

Manohar also faced public condemnation after his son, Adwait, was chosen to play for Vidarbha in the 2000-01 Ranji Trophy. Vidarbha experts say that Adwait was drafted in the team even though he had not been playing much or with any consistency. Manohar has characteristically kept quiet about the issue. Characteristically kept quiet about this issue? What could he have said? I tried it, but you guys caught on.

Shashank Manohar is a filthy rich lawyer from Nagpur who presided over one of the worst tragedies in Indian cricket, who tried to get his son into the domestic circuit by underhand means. He has accomplished nothing of note as cricketer or administrator but presides over the most powerful cricket body in the world. The way Open magazine has spun this story to paint him as being second only to Moses is brilliant. I thought the Open Magazine was above this kind of random trash. Looks like they are falling away.

The John Abraham article is even more cringe-worthy. I am seriously considering stopping my subscription.

All of us know Indian media is bit of a joke. I just thought there was a purple patch somewhere. Looks like another false dawn.

It is on occasions like these that I like to revisit this Ram Jethmalani tirade. I have become a big fan of this guy purely because of this. Anyone who can bury a journalist like that deserves a fan club.

Arvind Adiga's White Tiger - A very good book

2010-10-17T23:30:00.000-07:00

I read "White Tiger" over the weekend. Excellent book. I found the book to be different from the stereotypical hi-funda Indian author book. In my mind, there are two categories of books by Indian authors. They are either written in such fantastic English that they become heavy reads. Or, they are stabs at "wit"/different topic that become boring/repetitive by about page 40.

This one is different - the fiction is well-woven into the narrative on India. The setting is not based on confident, resurgent India but on the other India. The author could have gone to town narrating horrifying stories about poor Indians. That would have become repetitive and boring, and in the end left the mind numb to the suffering. Adiga's style of conveying the starkness is refreshing. He has chosen a setting that strikes home because it is very realistic. It strikes at the very root of Indian oppression - the indifference of the urban middle class. And this without sounding sanctimonious and preachy. The pace is good, the book is laced with dark humour. Excellent read overall.

The one comparison that sprang to my mind when I finished reading the book was of this Balachander-kamalhasan movie called Varumayin Niram Sivappu. Awesome movie depicting the struggles of aspiring, educated, unemployed youth in India of the 80's. Stark setting, but one in which the protagonists poverty is depicted without resorting to cheap tricks. One of the best scenes in the movie is one in which the hero and his two friends pretend to be having a big meal while the heroine waits outside in the living room. Awesome scene. A lesson in using humour in critical scenes.

Beautiful movie. No other movie captured the angst of the 80's youngster better, in my view.

Global Warming - When will science stand up and speak for itself?

2010-10-12T04:47:00.001-07:00

Global warming is a bandwagon like few others. Almost everyone is green these days, and whoever is not is planning to turn green . Corporates are doing it, associations are doing it, even individuals are doing it. Tom, dick and harry (and of course Al) is going around giving advice on how one should be careful. Couple of guys have picked up nobel prizes for it as well. It is such a fantastic thing that almost everyone in the world is happy that something like this has come along. I am bl00dy sick of it. I have had enough of this global warming love-in.

I resent the idea that even investment bankers can take it upon themselves to provide the moral compass when in comes to global warming.

I hate it when people who have little to no knowledge about the scientific back-drop start thinking that they 'get' global warming because they have read two scare mongering articles. Dont even get me started on the scare-mongering articles.

I ran away a little bit from religion because of the fundamental role guilt plays in it. On the issue of guilt-tripping, religion cannot hold a candle to climate change.

The scientific basis to global warming is a mountain of conjecture. Thats about it. There is nothing incontrovertible there. In fact, there have been theories that state that cutting down rain forests could help fight global warming. And this from an article from The Economist. The environmentalists try desperately to make everyone feel guilty by repeating conjecture after conjecture. Remember, only 40 years ago, we were paranoid about Ice Age. And in climate pattern change studies, 40 years is nothing.

This latest mail from from Professor Harold Lewis is fantastic. Talks about how money is influencing research.

Excerpts -

It is the greatest and most successful pseudoscientific fraud I have seen in my long life as a physicist. Anyone who has the faintest doubt that this is so should force himself to read the ClimateGate documents, which lay it bare. (Montford’s book organizes the facts very well.) I don’t believe that any real physicist, nay scientist, can read that stuff without revulsion. I would almost make that revulsion a definition of the word scientist.

Awesome stuff. Climategate was another episode that laid bare the fact that vested interests of a huge scale were operating all over the research world. Someone, somewhere realized that religion was somehow not doing enough with people's ability to feel guilty came up with climate change. So far so good.

The most disappointing thing about all this is that the mainstream debate (in as much as handwringing guilt-mongering and chest-thumping can be called debate) has been dominated by politicians, environmentalists (what do they do for a living. who pays their wages?), and page 3 jokers. Reputed scientists have been conspicuous by their absence. Is it because their agenda has been hijacked, or is it because having a scientific outlook has prevented them from talking about anything without proof. The few voices that have come out, have cautioned us against this bandwagon-jumping. But, when mob frenzy takes over, reason goes out. Everyone is turning green with a vengeance these days. If you cannot beat them, join them.

Catch-22 - A magnificent book

2010-09-18T03:20:00.000-07:00

Catch-22 by Joseph Heller is one of all-time favourite books. It is an extraordinary satire on war. Although the book focuses on the futility of war, some of the statements made by the key character, Yossarian, are applicable in many other contexts. (For instance, this)

I have been thinking more and more about one classic conversation that appears towards the end of the book. This is a conversation between Yossarian at his aggrieved-and-cynical best and his colleague Danby (a dope, in Yossarian-speak).

"You must try not to think of them," Major Danby advised affirmatively. "And you must never let them change your values. Ideals are good, but people are sometimes not so good. You must try to look up at the big picture."
Yossarian rejected the advice with a skeptical shake of his head. "When I look up, I see people cashing in. I don't see heaven or saints or angels. I see people cashing in on every decent impulse and every human tragedy."
"But you must try not to think of that," Major Danby insisted. "And you must try not to let it upset you."
"Oh, it doesn't really upset me. What does upset me, though, is that they think I'm a sucker. They think that they're smart, and that the rest of us are dumb."

The last two sentences are the best. It captures that fleeting moment of utter self-revulsion that the set of we-are-nice-guys-its -alirght-if-we-finish-last face when we see someone else unreasonably cashing in. It is not the finishing last that bothers us, it is not even the sight of some undeserving character getting ahead of us. It is the fact that the we can picture the undeserving moron who broke the queue laughing all the way back thinking to himself how these other guys are big losers. It is when every decent impulse is perceived as another sign that we would be willing to lie down and take more that gets to me.

It is the one reason why I quit my first job. I had thoroughly enjoyed my first job although I was posted in a godforsaken location. My boss asked me if I enjoyed the job and the HR team took my "Yes" to mean that I would be willing to work in godforsaken places for the rest of the decade. The HR team in this company evaluated every employee's location preference in conjunction with how much he/she is likely to quit if given a cr*ppy location. And I, naive, fresh out of college eager employee had told them that I loved the company and was promptly posted to godforsaken location 2, post the mandatory "You are a great asset to the firm, we are posting you here only because we need you to sort out his mess". I hated myself for being naive and honest for 24 hours and quit within the next 48 hours and the exit interview was something that brought me great joy.

Anyway, enough ranting about my sad personal stories. Great book. Utter delight to read (and reread any number of times). I must confess that when I first read the book I just did not 'get' it and did not understand what he big deal was. It was only on the second read that I could appreciate the satire. Joseph Heller is a genius. Cynicism laced with humour is the style all no-hopers aspire to. But only few get it right. Joseph Heller, in my mind is the best at that.

The morality question

2010-03-08T05:24:00.000-08:00

Read a decent article on the Open magazine that got me thinking about morality. The article is by this pretty good writer called Manu Joseph. Scores of people jump on to the morality bandwagon every time a celebrity has a bout of infidelity. Though it is a lot of fun to watch people get all gagged up when they are expressing their utter disbelief over the latest transgressions of some so-and-so, I think people miss one critical detail in this whole fidelity-morality extravaganza. Opportunity.

Let me explain. Fidelity is a function of two factors - opportunity and morality. This is why it is easy to say "I would never sleep with Sophia Lauren as I am married and with two kids. And therefore it is morally wrong". If you are a witless fat slob whose idea of a good joke is to quote something from this blog, the likelihood of sleeping with Sophia Lauren is, well, pretty low (And I am being very kind here). So, the limiting constraint here is the lack of opportunity, and not the presence of morality.

Celebrities cross the line more than you or I do because they can, and less because they are less morally anchored than you or I. Or, to put it differently, average Joe would not even have an idea of how difficult it would be to be morally right when the opportunity presents itself.

One of my friends put this beautifully. One fine morning, whilst in college, with this deep thoughtful look on his face, he pronounced - "Samaj saktha hoon be". This elicited the inevitable - "Kya?" from the gang. "Soch ke dekh na, tu hero hai, Sonali Bendre ke saath baarish me naach raha hai, uske baad woh tere saath aa ke pyaar se baat karti hai. One thing leads to the other, etc".

Tum bhi soch ke dekho, samajh jaaoge. :)

Tiger Woods had the opportunity, he crossed the line. The only peeve I have with him is with regard to his bad taste.

What price price discovery?

2009-08-05T02:00:00.000-07:00

In the financial world, there are some dogmas which participants are keen to reinforce every now and then. The stated justifications for these are mostly on the basis of principle, while the real reasons have generally got to do with more parochial interests (Regulatory arbitrage is one that comes to mind). There are many such dogmas around – the concept of a high-water mark, the notion of insuring bonds to get a higher rating, the idea of low-tax offshore havens, etc. In my mind, the one that has caused the most damage is the notion that liquidity is the holy grail of the capital markets (in fact all markets). We have all been led to believe that liquid capital markets are good for participants, regulators, small investors, governments, everyone else. Why, indeed? Because it aids price discovery. It helps the market know exactly what the market clearing price is for any stock at any point of time.

Creating liquidity in every imaginable market has become a guiding principle for participants that we have often created tradable entities where none should have existed. We want to trade carbon, carbon footprint, grades, virginity?, and many other historical non-tradables. I do not want to enter into the debate of moral questions on trading all kinds of stuff. I am not easily outraged, and more importantly, I would prefer debating on this issue without entering the morality domain. The belief that if anything is tradable, the price would be accurate is ubiquitous. I think this is just plain wrong. Some instruments are meant to be illiquid. In our fetish to create liquidity, we create shallow markets and prostrate before the holy god of price discovery. Merely trading over and over again does not aid price discovery. We merely get to a market-clearing price, and not to a relevant discovered-price.

I think there is an interesting analogy in the science of measurement that might help explain what I am getting at here. There are two interesting terms in measurement – accuracy and precision, both of which give an idea about the efficiency of a measurement but with subtle differences. Accuracy is the measure of how close the measurement is to an actual value, while precision is a measure of how close the measurements are to each other. Accuracy depicts how close we are to the actual quantity. So, in layman terms, accuracy is what is important. Very often, we mistake a precise measurement for an accurate one. According to me, market determined share prices are very precise. Quiet often share prices are “discovered” based on orders accumulated around a point. The more orders that are there, more precise the measurement. But markets do not uncover value accurately. If that were the case, then an index would not move from 8K to 21K in 1.5 years and go all the way back in another 8 months.

Market aficionados will retort saying that there is no “actual” value as far as markets are concerned. Perception is reality, “discovered price” is indeed the actual price. This is a credible argument. One that acknowledges the inherent variability in values of assets based on future assumptions about different factors in the world. But, if this is indeed the case, why do we want precisely discovered prices. Why place the burden of precision on an entity that has no notion of accuracy? The idea of having high levels of precision for an measurement that is inherently inaccurate is absurd. This is like a weather report guy telling you that the temperature for the day should be 23.678 degrees Celsius, but with the caveat that the measurement could be off by 15 degrees on either side. If your range if this broad, your precision counts for pish tosh, a concept with financial markets have never come around to understanding.

If valuing assets is a mugs game, if variance is going to be high, if market dynamics are going to influence prices way more than actual changes, if a change in unemployment rate in the US can take the share price of a local pharma company down sharply, then why should we insist on creating liquidity and aiding price discovery. This piece from Paul Wilmott from New York Times discusses the notion of liquidity and price discovery well.

Leaving aside the question of whether or not liquidity is necessarily a great idea (perhaps not being able to get out of a trade might make people think twice before entering it), or whether there is such a thing as a price that must be discovered (just watch the price of unpopular goods fall in your local supermarket — that’s plenty fast enough for me).

I remember a time when real estate prices of places close to the LSE were higher than ones 200 meters further away – merely for the fact that orders entered into systems in these offices could hit the LSE sooner. We are talking nanoseconds here. If this does not make people look at the financial markets and go – Oh my god, what have we created here? I don’t know what will.

Apparently, this madness is finally being debated. Our fetish for liquidity has led to a scenario where High Frequency Traders account for 50% of NYSE volumes. As ever, this article uses myriad high-falutin words like Flash trading, frequency rebate etc. Finance need not and should not be this complex. If it gets to this level, we should be stopping and restarting.

Nicolas Nassim Taleb wrote a book on randomness in markets called “Fooled by randomness”. The fundamental premise in the entire book is that people do not realise the role randomness plays in life, and in financial markets. That randomness is there is undeniable, and perhaps can be managed. What is more difficult to handle is the fact that inevitably (and periodically) people create structures and thought processes that do not acknowledge the inherent randomness in life (and financial markets).

Why should stock prices trade every day? Why should stock prices be given to the final decimal? We could just have a system that says stock A trades between Rs. 50 and Rs. 55. They announce results on the third Thursday after each quarter ends. The stock can be traded for a week after their results are announced – from the Monday after the results are announced to the Friday. Beyond this, there will be a week in the middle of the quarter when stock A will be open to trade. Prices will still be “discovered”, liquidity will still be there, randomness will be acknowledged, there will be little mark-to-market madness, and insider trading will be non-existent. Mutual funds will not be able to publish NAVs. If there NAVs change from when they publish it to when you read it, the NAV publishing is useless anyway. This is a small price to pay, I would argue. There would be fewer people participating in the price discovery game. This may not be a bad thing.

Weather forecasts often go wrong. The financial market is often like weather forecast. Except that instead of having a weatherman give his thoughts, we have about 25 who contribute their data-points for the daily temperature, and we take the average as a benchmark for the day. Can any of these forecasts change the temperature for the day? Can more estimates improve our accuracy of our prediction? If both these answers are no, then we are probably better off with one guy trying to tie all the dots. All people in the country will have to live with the fact that the temperature could be between 28 and 32 degree Celsius. It is far better than them assuming that it is 30 degree Celsius, when in fact it could be anywhere between 14 and 46.

Imagine the number of weather forecasters freed up to do less damage to the world than they were originally doing. Now, multiply that number by a million. That would probably be the number of resources that can be taken away from harm-creating financial jobs, if the world could shed its fetish for price discovery.

Greenhouse gas emissions, India and China

2009-07-27T04:12:00.000-07:00

The good professor has this article on his blog http://blogs.ft.com/maverecon/2009/07/does-poverty-give-a-country-the-right-to-pollute-the-atmosphere/#more-4091 .(The professor is one of the best Economics bloggers around and one of my favourites.)

Usually, I try to resist the chip-on-the-shoulder response to articles on the western media, but this time I thought the article was painting a wholly inaccurate picture and chose to comment. My comment was as follows

Dear Sir,
An interesting article. But unlike your usual articles, there are some specious bits of reasoning which are thrown in into the mix here. 1. You say that the NBP's are wrong to say "your ancestors broke it, you fix it". Mainly because their ancestors dramatically increased population.

Your exact rant reads thus - The logic in the argument of the NBPs comes unstuck especially badly here. If the overdeveloped world is held accountable for the choices of past and present generations that produced large past emissions of CO2E and resulted in today’s high atmospheric concentration of CO2E, then surely today’s inhabitants of China and India should be held accountable for the individual and collective choices of past and present generations of Indians and Chinese that have resulted in the oversized populations of these countries? The selective application of the ‘your ancestors broke it, you own it’ logic by those who advocate special lenient treatment for today’s poor countries in global efforts to reduce greenhouse gas emissions is deeply intellectually dishonest.

Sir, I cannot imagine you actually drew out this comparison. The previous generation of OECD's pillaged the world. The previous generation of NBP's had kids (because they were poor and did not know about contraceptives, by the way). I agree with your original contention that inter-temporal punishment is morally unjustifiable. But your counter-argument is built on spurious ground.The argument from the NBP's need not be stated as "It is our turn to pollute". It can be interpreted as "You have taken the lead in polluting, now take the lead in cleaning up". A stance that I find very justifiable, morally.

2. You set out to try to establish that per-capita comparisons are incorrect. Your passage says - First, the externality associated with greenhouse gas emissions relates to the total amount added to the atmosphere, not to the amount emitted per capita. A given quantum of CO2E emissions does an equal amount of global harm, regardless of whether it is produced by 2 over-fed Americans or Europeans or by 100 under-fed Indians. Those who bang on about per capita emissions appear not to understand the ‘technology’ of the global environmental externality created by CO2E emissions.From here on you draw the conclusion that per-capita emissions are an inaccurate measure.

It is undeniable that overall emissions matter to the world's well-being and per-capita is but a diversion. But when on the issue of determining how we can morally justify how much EACH country can pollute, per-capita measure is perhaps as good as any other. Would the world stop writing articles on global warming if India were broken down into 30 smaller countries, each not being big enough to be part of your global 20?

3. When you start your argument, you get in your disclaimers early; and further hedge your positions well by citing the precautionary principle. I guess George Bush's justification for the Iraq war could have been constructed on similar grounds. 1) Weapons of Mass destruction are a bad thing 2) Human-made WMD are capable of destroying the world (and very quickly) 3) That WMD can be created by some dictator-run state is a reality. Invoking the precautionary principle, one should attack everyone in sight. The green-mongers have succeeded in depicting anyone debating climate-models as someone who is out to destroy this world.

The debate on how much we need to do is very crucial to the debate on who has to do what? In the current setting, the way you have put things, it appears as if the OECD countries have woken up to the threat posed by global warming, have taken a lead in cleaning the act for the world and given the time constraint everyone (read NBPs) has to chip in. An alternate interpretation could be, the OECDs have had their fun, now that they are losing out, they are throwing the toys out of the pram. The NBPs perhaps have this view.

OECD carrying the moral high-ground on the global warming debate. Now, that is hilarious.

In case it was not obvious, I am from one of the NBPs that you have mentioned. And although I am sceptical of the climate models (from a scientific point of view), I agree to the premise that the entire world must pull together to reduce emissions. I also agree that India and China should do more to reduce emissions. What I disagree with (and vehemently) is that the OECD countries should be pontificating on moral high ground.

My stand on this global warming debate is straightforward. India should fight tooth and nail against any restrictions, be it on geopolitical or moral grounds. I belong to the Henry Kissinger school of thought - His guiding philosophy was that foreign policy should serve the national interest.

On the more global issue of global warming, I think the debate should cover the grounds on which scientists are claiming that the world is heating rapidly. Invoking the precautionary principle in defence of going green is unacceptable in a world full of vested interests. As a student of science, I am inclined to give credence to scientists' claim that the globe might be warming. On the same basis, I think there should be room for healthy scepticism for the scientists and their models.
The world is already reeling under the impact of one group of self-appointed geniuses believing the infallibility of their models; we can ill-afford another screw up like this. Let us by all means reduce CO2 emissions; but let the freedom to question these models not disappear either.

After all, it was only 35 years ago when the world was damn scared of the Ice age; and even these scientists will tell you that climate changes will take a century to take shape.

Financial Sector participants – II

2009-07-27T02:58:00.000-07:00

Bunch II – Guys who work with the markets

This category comprises of two sub-sections, buy-side and sell-side. The buy-side is the one that buys/sells securities. These groups manage funds, invest in equities, debt etc and try to generate returns. Sell-side firms are the ones that work for a commission. Whenever buy-side firms trade anything, they do through a broking firm, paying anywhere between 10-45 bps for this transaction. This commission is the key revenue line for sell-side firms. In other words, buy-side firms generate on fund-based income, sell-side firms generate fee-based income.

Sell-side firms have 3 kinds of participants – analysts, sales guys and traders. Analysts are the ones that sweat over balance sheet, P&Ls and the like, come up with recommendations for stocks and supposedly uncover value in equities. Sales guys propagate these ideas. They call up assorted buy-side firms and ask them to buy stocks which they (analysts and sales) think are undervalued and sell those which they think are overvalued. Traders are the guys who actually put orders through. They understand the mechanisms of the market and can get a sense of which direction the market is headed merely by watching the order book.

Analysts agonise over small details and generally pontificate about specific industries. They are the most pseudo-intellectual of the lot. They generally do not have the courage to put in any trades on their own but take great pride in sharing anecdotes about how they helped a client make lots of money. Particularly bitter analysts have a habit of recalling stories where a client lost money after having not listened to the sage advice from the analyst himself.

Sales guys have the individuality of a log of wood, a particularly uninteresting one at that. They peddle analysts’ views with any market flavour they can pick up. Sales guys spend hours on the phone recalling funny anecdotes from stories they heard while they were spending hours on the phone talking to other clients. Sales guys swear by the flavour of the season and pride themselves on knowing the pulse of the market.

Traders live for/in the moment. If they see a big buy order they conclude markets are indefinitely going up. If they see no activity in a day, they are generally depressed. These guys rarely care about anything beyond the immediate future.

On the buy-side, there are analysts and fund managers. Analysts are generally flunkeys who interact with fellow analysts in sell-side firms, provide internal research to fund managers, and generally do anything that helps them in their eternal quest to impress fund managers. Fund managers are the guys who manage portfolios, the ones who take the decision to buy/sell/not buy any stock. They are paid on the basis of their funds’ performance.

Now, where is the catch? If this is such a well-structured industry, where is the problem?. The problem stems from the fact that everything in the industry is relative or hidden. And every participant is allowed to hide behind some smokescreen. Cover-thy-ass is the underlying theme amongst all participants. Any research report will be littered with the following phrases – “in our view”, “we believe”, “increasing likelihood” etc. Now, equity pricing is an inexact science, so there is nothing wrong in getting things wrong. Except that, the pay packets of the participants hardly acknowledge the fact that this is an inexact science. Markets are random, investors bear the brunt of this, but employees are hardly affected. And, in my view that is wrong.

Imagine going into a hospital and the doctor says – “Look, in my view, you should take these tablets. There is a likelihood that these might help you” and follows up with – “ I must disclose to you that I might or might not have a stake in the pharma company that sells these tablets”. And for good measure, you find out that the doctor himself would never take these tablets. Not because he does not trust them. No siree. But because he wants to diversify his professional and personal risk. As in, if the tablet turns out to be bad, even if his professional reputation is ruined his personal health at least would remain. Remember, doctors generally earn about one-fifth of financial consultants globally.

Both diagnosis and stock-picking are inexact sciences. It is just lamentable that we set two standards for these two. The more crucial between doctors and analysts is set the more onerous set of restrictions, judged harder and has to get by with far lesser pay.

Now, coming to the part where the industry participants hedge their bets. Sell-side guys are in the business of generating commissions, not returns. So, they do enough to create chatter. According to the sell-side, the actual job of picking the right-stocks is with the buy-side. The motto is simple – Ours is not to buy or sell, ours is but to peddle (paraphrasing Alfred Tennyson). Even within this, the structure helps these guys out. The research analysts are slightly reticent; while the sales guy is at liberty to say whatever he wants, because in the end he is just providing market view (albeit with a bias). On the buy-side, the analysts do not take any calls, so it is impossible to blame them. The fund managers, who are the only ones who can be pinned down to something (because they have a clear P&L) have numerous ways of getting away with it. Fund managers are generally measured only relative to the market. So, their play is simple – allocate 85% of portfolio to the standard stocks (market), have 4 companies where you have inside information, park 10% of your portfolio here, and place 5% of funds base on your analysts’ recommendations and blame them if things go wrong. Everyone is happy this way.

Financial sector participants - I

2009-06-22T04:02:00.000-07:00

Financial services is one of more opaque industries around. The structure of the industry and the reporting lines are fairly muddled. It took me quite a while to understand how the industry is structured and so I thought it would be a good idea to give a broad map of the industry. All in an effort to lower my own guilt at earning a living out of a fundamentally unscrupulous industry (perhaps all industries are like this, but I have only ever been exposed to this one).

Broadly, the industry can be divided into three parts – one bunch of people working with companies, one bunch of people working with markets and a third bunch who we will charitably describe as other jokers (mostly because I do not understand what they do). By industry, I do not include the guys who actually do banking in the true sense of the word. The guys who actually lend you money to buy house, car, or an education. These guys are probably only slightly less clueless, but what makes them far more tolerable is the fact that they generally don’t have huge egos. Also, there are more women in this part of banking. J

Bunch 1 – Guys who work with companies.

The guys who work with companies are the ones that advise companies to issue corporate paper (to “borrow” in English), to “optimise” their balance sheet (there is no English-word equivalent for this) and to buy other companies. This industry is structured in three layers, one big shot guy who has a “board-level” relationship with 4-5 companies in an industry. He has 2-3 guys reporting to him (rising stars) who do the market analysis and are generally sold the dream of being tomorrow’s big shot. This structure is propped up by flunkeys who make the presentations. Now, you might wonder why these guys would be best-suited to give gyaan to CEOs on what companies to buy. How in the wide world would a 28-year-old who has spent all his career (all of 4-5 years) in the financial sector be capable of “advising” on a transaction where one telecom company buys another, you might wonder. But this is how the industry works. Most big deals are done for the sake of one underlying theme, and generally that is not financial. Top management either develops a fetish for a competitor’s product, or develops an ego that demands a bigger company to run, or in most cases is under pressure to “better-utilise” the cash on its balance sheet.

The “board-level” guy plants the idea in the minds of top management, gets his flunkeys to flip a bunch of the presentations, has one of his stars run through this and makes a pitch to the management with a shortlist of 3 targets. Some financials are thrown in for good measure. The flunkeys literally do a match-the-following of “buyers” and “sellers” in the industry and create a laundry-list of possibilities. When some companies fall under the category of potential “buyers” and “sellers”, flunkeys self-actualise. I have heard questions from flunkeys like – Can Atos Origin buy Satyam in order to acquire offshore capacity?. I would reply that Atos has cartloads of debt, and Satyam’s market cap is actually higher than Atos’s. Oh, then can Infosys buy Atos Origin then?, would be the next question. Imagine you going to a vegetable vendor and asking for potatoes and him replying, I don’t have potatoes today, but can I buy your pen instead?

The stars know a lot more about the industries. They would know that Atos hadn’t a chance in hell of acquiring anything and Infosys would rather de-list before they bought Atos. They would shorten the list created by flunkeys, add their “expertise” and bond with the board-guy to discuss possibilities for the sector. They would patiently “crack” new boardrooms, build a potential-deal “pipeline” and wait for one ego to get big enough to cloud judgement. That is pretty much the description of your average M&A house. Till I completed by MBA, I did not even know that companies bought other companies so frequently. I just could not see the reason for this type of transaction. They probably wouldn’t do this if not for this industry.

The other divisions which raise debt, help with rights issues etc, work similarly. There is one bunch that does financial engineering to help companies manage their balance sheet. In India, generally this work is done by assorted auditing firms. Mostly, what these guys do pushes the ethical boundaries; in some cases it is downright fraud. The auditing firm will help you “optimise” your balance sheet. In essence, the company will help you massage your ratios if you want to borrow on favourable terms. Your inventory will be placed with your biggest customer to count it as receivable, your key shareholders will be paid cash dividends, your big lenders will be told they will receive interest, only it will be called dividend from now on. This is called financial engineering. It sullies the good name of engineering.

Will give a few bits on bunch II and III later on.

Markets and the small investor

2009-06-04T20:20:00.000-07:00

A lot many Indian families have been sold the idea of taking part in the great Indian bull-market game. Quite a few have tried this and met with some success as well, and now think that this is a no-brainer. I work in the financial services sector and I can state with reasonable conviction that it is not easy to generate solid returns year after year. There have been a lot of myths sold to retail investors in order to make them cough up. As a kind of guilt-reduction exercise, I want to explode a few of them.

1. Equities may be a riskier asset, but if you are investing for a long time, they will definitely generate better returns: This is pish tosh. Most long-term calculations are biased by the starting date, and therefore most statistics presented are wrong. Let me explain this with an example. If as a small investor, one had entered the market in 2006, the long-term argument will hold good, but anyone who entered when the sensex was anywhere between 18-21K might not see this argument bearing good even if we stretch the definition of long-term to 50 years. If over any stretch of long-term, equities generated better returns, then this is not a riskier asset class, it is the juicier asset class.

2. Small investors are not at a disadvantage: Think about this. The industry has 3 kinds of participants, domestic institutions, foreign institutions and small investors. The first two move the market, and the third is a price-taker, and this is a zero sum game. This is how market mechanism works – Company of reasonable size keeps peddling its own investment story, Fund managers hear the story and build positions; one of the sell-side research firms picks up on this and writes research, some more fund managers like story and buy stock; some retail brokers follow suit and write about the investment idea, the small investors also get in and the stock price keeps going up. Who do you think is selling? In the first 2 phases it is some promoter, in the third phase it is the fund manager. The key to an investment idea is not whether or not you understand the story, it is whether you are amongst the ones who are early to the story. A fortnight after the elections, the buzz word among retail investors was how infra would be a major theme for this government. At least 4 fund houses held conference calls with psephologists before election results were out. Infra stocks were up 50% in the first 2 weeks after election results. By the time the retail investors get into the theme, it is already done and dusted.

3. The guys on TV are really smart, and therefore get things right: I worked for a large sell-side firm. Journalists from Bloomberg or Dow Jones would call our offices once a month to have a chat about this and that. I would give him/her the most sanitised dope possible, sans name/organisation. (The stated internal rationale for this was that our clients pay for our research, they would be angry if we gave it away for free; the real reason is that in most cases, we are really not sure what is going to happen and wouldn’t want to get sued). These journalists would spin a story out of this which would then get picked on by the TV guys. As a sell-side analyst, I was generally late to the game as the buy side guys had more at stake, more resources and were generally better than me. The best buy-side guys got may be 60% of their calls right. TV analysis is at the fag end of the investment analysis-chain. They still sound smart because they are good at packaging and are perhaps at the beginning of the retail investment analysis chain. In a reasonable market, a major insight uncovered by good analysis lasts perhaps a week. This is roughly about the time the insight takes to find itself on TV screens. So, if you invest based on TV analysis, be prepared for some rude shocks.

4. A lot of small investors make very good money: Remember this is a zero sum game. Most small investors get s*ckered into this because someone they know has struck it rich by just randomly punting it on the market. All investors like to talk about their investments that worked beautifully. This is true of mutual fund managers, hedge-fund guys and small investors. When things go well because the market is going up, people give themselves credit for picking the right stocks. When things go wrong, they go quiet. So, anyone hearing these jokers will assume that they are rockstars of the investment world. They are not. (Nobody is, the market is a great leveller. More on that in another post). Rising tide takes all boats up, the oarsmen take credit for this; and when the tide recedes, they go quiet. You will hear the odd story that someone has gone bust because of stock investing, but this is not all. Most guys enjoy trading in bull markets, lose a lot of money in bear markets and keep their trap shut about this. Chatter is directly proportional to return levels.

5. Blue-chip names are generally safe bets: Again, think about this. Blue-chip names are among the most researched in the market (There are perhaps 40 sell-side analysts covering Infosys, there will be another 50 buy-side analysts covering the same name). There are guys who have spent 10 years in just studying the 25 names that are so-called blue-chips. So, even if they are stable and solid, you will get beaten to the best returns by the guy who goes to the same club as the CFO. So, you are likely to generate better returns by placing money on the index. There is a huge difference between a good company and a good stock.
6. The financial markets are very ethical and take care of the small investor: Hahahaha. This is a whole new can of worms. One can write an entire book on ethical standards in the financial sector. Let me at least set this aside for another post.

So, what does a retail investor do? Generally, market return is classified into two types – alpha and beta. Beta is just what the market returns, while alpha is what the “skill” level of the money-manager returns. By definition, the cumulative alpha of all market participants has to be zero. According to me, the best strategy for retail investors is to go for beta, and build portfolios where they won’t get smacked by huge negative alpha. In essence, time your overall market entry, don’t get s*ckered into the absolute lemons, and for the love of god do not fall for the temptation of trading more when the going is good. The simpler version of this is to just punt on the overall market and not get into specific names. If you want to trade on khabar, do not use your brains to verify whether khabar is likely to be right, rack your brains to figure out if you are the first to the khabar. Baseless khabar can generate returns if you are the first to hear it; and vice versa. And develop a temperament to handle volatility in returns without letting it affect your health. If you cannot do any of these, place your money in FD’s and pray that this bull-market madness comes to pass.

Sachin - Part II

2009-05-31T23:53:00.000-07:00

Having deliberated on the reasons for Sachin Tendulkar's Numero-Uno standing in Indian cricket in the previous post, let me attempt to answer the question that divides opinion on Sachin in the most damning fashion, the one question that can get fans and critics wound up almost immediately and possibly the one question that gets added importance when the great batsman is in the final lap of his long cricketing career, the eternal - "Is he an All-time great test player or a merely great player of his era". Based on reader feedback, have decided to suspend the writing style that sacrificed brevity. Also suspended would be the (enormous) self-restraint that I placed on myself in order to be objective. Having written a long piece on how the Sachin polarizes opinion among average Indian fans, it would be presumptuous of me to be non-opinionated. God Forbid, No.

In the era where there is a thin line separating freedom of speech from conflict-inciting rhetoric, I will begin my piece with a request to all of the 3 people or so reading this piece to view this piece in the right light and promptly fight off all thoughts of inflicting grievous physical injury on the writer.

To begin with, let us set the context right. What we are trying to ascertain is not a statistical evaluation of the cricketing achievements of Sachin, neither are we trying to see whether he is the most important cricketing icon of the country, nor is this an attempt to compare Sachin with other members of the Indian team and measure his performance. We are not trying to ascertain how fans would evaluate Sachin; we are trying to evaluate how history would. And in order to have a more active discussion on "All-Time" greats, we have limited our context to Test cricket and excluded ODI's. Otherwise, we would be like Americans playing "World Series" Baseball if we discussed the "All time greats" in a version of sport that has had a relevant history of 25 years, in 16 of which the protagonist has played in. The distinction between a contemporary good performer and an All-time great would be thinner than the icy ground I would be standing on once I have slowly veered the reader towards my own prejudices.

In order to evaluate this question seriously while still keeping it simple, I have listed but three criteria to distinguish between the great and the merely good. The first and most simple criteria would be the time-span spent at the top of the pile among contemporary players. Every player hits a purple patch, but consistent performances over a period of time and against varied opposition would only merit a place among all time greats. The obvious extension of this criterion would be that the aspiring-to-be-great player must not have an Achilles Heel. In other words, there must not be a facet of the sportsman that can be considered as an obvious weakness, or stated in more severe terms removing the benefit of doubt away from the player; there must be demonstrated capability for playing on all surfaces, against all opposition in all conditions. Players like Matthew Hayden, Justin Langer and Carl Hooper would fall at the first hurdle while Ian Botham with his none-too-impressive record against the West Indies and Ricky Ponting with his so-far-not-proven record in India would fall at the second.

The second criteria that I wish to establish is that the player should have the ability to hold center stage in a match and force the direction of play. He should have the ability to dominate the opposition, an ability to have a devastating period of play and therefore impact the entire course of the series. The player should have this intangible presence at the crease that allows fans to dream of possibilities even in dire situations and evokes fear and respect in opposition players who have a constant awareness of the threat posed by that one player; a presence because of which opposition players say "the match isn’t really over until we dismiss him, or, see off his spell". This presence can be brought on by the sheer genius of the player making an impact with his huge talent, a la Vivian Richards, or Keith Miller, or by a presence acquired by the not-so-gifted by sheer weight of performances under trying circumstances, as in the case of the indomitable Stephen Waugh (a quality, that for all his talent, his brother Mark Waugh sadly never did acquire). Notable good players that would fail to make the cut because of not having this "quality" would be Jacques Kallis and Shaun Pollock. I know that criteria no. 2 seems like a contrived factor through I which I can eliminate players whom I don’t have a particular liking to in the forthcoming (likely) scenario of these three criteria becoming the accepted international benchmarks for assessing greatness, but then I did warn you that I would make my prejudices count.

The third criteria which would distinguish a great career would have to be a series of defining performances, a series of testaments attesting the proof of the pudding, signature knocks, legendary bowling spells, outstanding series, match-winning performances, marks on sporting history that become part of cricketing folklore, a timeless testimony of talent that has found fulfillment. History has a bias towards events that sometimes undeservedly relegates eras to second position; sporting history is no different. Stories of Curtly Ambrose turning in a fiery spell after being irked by Steve Waugh will be retold by generations, while Ambrose's overall statistics will rarely get discussed. Exceptional performances have this happy habit of being retained for posterity, while patient accumulation does not. The obvious caveat for judging greatness based on signature performances would be that they should not be one-off. Graham Gooch's outstanding 154 against West Indies or Mike Atherton's excellent 182 against SA would be noted in cricketing history as a one-off brilliant performance by a steady performer, but not as a signature performance by a great player.

Now, having set the context in which to discuss Sachin Tendulkar's career, we can go to the onerous task of actually ascertaining his position in history. The sheer weight of the runs he has scored and his awe-inspiring presence at the crease make the evaluation along the first 2 criteria a no-brainer. It is in the third criterion that Sachin Tendulkar might fail to make the cut.

My contention is that Sachin has rarely ever played innings that have determined the course of an entire series. In fact, barring a wonderfully belligerent 155* in the Chennai test of the India-Australia series in 1999 where he showed Shane Warne who was boss, there haven’t been any innings that have been series-determining. It is unfortunate that some of his best overseas innings like Perth 1992, Edgbaston 1996(?), Johannesburg 1999(?) and in Wellington 2001(?) have been in lost causes. Though these have been masterclasses in batsmanship, their impact on the course of the series has been minimal. Unfortunate circumstances, a laughable bowling attack and a mediocre support cast have all been contributed in ample measure for this state, but the bottom line remains that there is a clear blot on Sachin's CV which provides ample ammunition for his critics to point at when Cricketing Hall of fame comes beckoning. When history judges Sachin's performances, he could get slotted into that fateful "Special mention" category, instead of marching on as one of the winners. A slot not different from the one occupied by the Dutch Football team in the World cup context or by Ivan Lendl in Wimbledon.

According to me, Sachin Tendulkar seamlessly transformed from a player with extraordinary promise who was set to rule the world to a player who, albeit being past his prime was a great player nevertheless. There was a phase in his career, when every pundit said "If he is this good now, how will he be a few years from now"; a few years later these same pundits were saying "Even at this age, after these many years in international cricket, he is still one of the best in the world". What I find disconcerting is that this promised "peak" of Sachin never came. As a once-die-hard fan of Sachin Tendulkar, I am still awaiting for that one fantastic series, one run of extraordinary innings, one stamp of class that puts distance between him and Number 2. The only difference being that, at the beginning there was an eager expectation before each series of witnessing a defining performance from Sachin; this slowly gave way to desperate hope that he would finally deliver that great innings to silence his critics. Now what remains is just a prayer for that final swansong, a la Marlon Brando in Godfather. That promised "peak" never came. (The heart still says the promised peak "hasn’t come yet", but years of disappointment have made the brain a touch cynical)

Perhaps this is because of the weight of the promise that was made to us Sachin fans at the beginning of his career, or perhaps it was our own fault in building our expectations to such spectacular levels that even Sachin could not achieve, but the truth is that there remains a lack of complete fulfillment when looking back at Sachins career. Too many "could-have-beens" casting their lengthy shadows. Too few instances when the prodigious talent has found expression in a sufficiently forceful manner to impact important series.

Now, for all my smugness at having arrived at the foolproof method of assessing "greatness" in cricketers, I realize that this entire process is merely an exercise to express one side of a long-running debate and attempt (rather feebly) to pass it off as a verdict. Any half-wit can easily evolve a set of criteria for assessing greatness that could contrive to create anomalies. And it would be just as easy to pick holes in any set of criteria presented and discredit the assessment. (The obvious 'hole' in this set of criteria would be the fact that there has been a deliberate super-positioning of team's performance in an individual's assessment. My defense is that context super-cedes statistics in historic assessment, and series outcome is as good a proxy for context as anything else. But this contention is imminently debatable)

This is today's post. Feel free to revile.

Sachin Tendulkar – Numero Uno

2009-05-31T23:45:00.001-07:00

I have often wondered why Sachin Tendulkar attracted so much pontification. Why do the most reticent of men get drawn into animated discussions about issues concerning the little master? I myself have been part of numerous road side debates, dinner table discussions, rigorous statistical analysis, and never-ending argument sessions over the Internet dissecting his performances and trying to answer questions of paramount importance like, "Should he be opening the batting because he is best suited to play there, or chaperone a fledgling middle-order by playing lower down the order?” "Has captaincy affected his performance or is he just suffering because he is a great player in a mediocre team" or the eternal "Is he an all-time great, or is he merely a good player of his era?"

Even in a country besotted by cricket, it is perplexing that one single individual should be given so much attention. Even in the current Indian team that had quiet a few personalities, he was still the one batsman millions of fans identify with. Sehwag drew the crowds in and got the adrenalin flowing, Laxman brought a wristy elegance and a subtle grace to batsmanship, Dravid was the perfect blend of classicism of the past and professionalism of the modern, Ganguly chimed in with the passion and controversy, but if there is one person who embodied the heart and soul of Indian cricket, it was Sachin Tendulkar. A fan running out of a train after a 6-hour train journey to check the score of the latest ODI (we Indians tend to do that) would no doubt ask for the score, the context of the match, the batsmen playing right now, the required rate, the odds-of-winning etc. But more often than not, he will follow up with the one question that has been most asked by desperate Indian cricket fans - "How much did Sachin score".

For Indian fans, the match context is never really over until the postscript about Sachin's performance is added. Though the match context is the information we desperately seek, it is this sub-plot about Sachin that quenches our thirst for drama. He is the man that amplifies the vicissitudes of Indian performance. Every Indian victory is sweeter if Sachin had a hand to play, likewise every defeat harder to take when Sachin's efforts go in vain. Even in 2006, when there was a slow realisation that the master is perhaps past his prime and that Indian cricket is going to eventually move on from the "Sachin" era, the focus on his individual performance was enormous. He is Indian cricket's answer to Maradona.

What was it that made Sachin special? Perhaps it was the time of his entry into international cricket, arriving at a moment when the cricketing and media establishment of the nation realised that this near-religious zeal of Indian cricket fans can be monetized -- a realisation stemming from the enormous commercial success of the 1987 Reliance World Cup, and helped in no small measure by the entry of cable TV. Perhaps it was the bewitching combination of a precocious talent swathed in an endearingly humble personality. Or perhaps it was just the sheer drama of a 16-year old man-boy playing the fastest bowlers of the world and taking them on, something the Indian fans had not been accustomed to barring short glimpses during the chequered career of that old warrior, Mohinder Amarnath. Whatever the exact trigger was, Sachin Tendulkar captured the imagination of the entire nation very early in his career and suffice to say that he did not relinquish till his retirement.

His brutal assault of Abdul Qadir in his very first series, a back-to-the-walls innings in his first series against Wasim and Waqar, his first test century in England, his masterpiece at Perth all soon became stories told and retold. He was soon earmarked for greatness; whatever he did on the field seemed to exude confidence. Off the field, he was a huge commercial success. Across the nation, he appeared on Television ads, billboards, hoardings, chat shows, documentaries and what not. But, oddly enough, never suffered from the affliction called "over exposure" that affects the biggies of that "other" entertainment industry in India, Bollywood. People just lapped it up. He was everywhere, but not enough for people to say, "Oh, there he is again". He had become a consummate pro at advertising, but never ceased to have that innocent boyish look on screen. In short, India's first sporting Icon had been born and the nation loved him.

The on field presence of Sachin was due to the fact that he could enthrall laymen and critics alike. If the purists loved the bat arc of his straight drive, and the high elbow in his cover drive, his uninhibited stroke play and an innate desire to dominate bowling attacks made him a darling of the masses. He brought in skill and precision to his batsmanship without sacrificing his instinctive flair. He was calm and composed at the crease, yet there was an air of unpredictability about his batting. Whenever he had a role to play in the match there was an air of anticipation all around. The generous applause afforded by Indian crowds for the fall of the second Indian wicket was not mere appreciation; it was an act of reverence, an involuntary warming up of the crowd in expectation of what was to come. For a number of Indian spectators, the match really started only when India lost two wickets, and the master could come in and display his wares. The openers were merely there to set the stage - like the title song before the action begins.

There was a presence that the man exuded that made grown men suspend rationality temporarily. I have witnessed a few men wishing out aloud that the Indian openers would get out soon so that Sachin could come in. The rationale offered was "This is Sunday afternoon. We cannot watch the match if the openers play out the day" - only that when these people say, "match", they mean Sachin's batting.

It was this presence that to some of his die-hard fans symbolizes the very basis for watching sport- an active distraction from the drudgery of regular life, a few moments of magic and adrenalin that drowns out the monotony of routine. A presence that often transcends the match scenario or context, a presence that consigns the match status to being incidental, a mere prop to the stage on which the master performs. A presence that in some perverse way, would help the fan get solace - even rejoice, on occasions, from a Sachin half-century, even if India ended up losing the match. In as much that the result of the match did not matter so much to the Indian fan as Sachin's performance in the match, this could be called as cricketing Karma.

In many ways, this pre-eminence accorded to Sachin by dint of his precociousness is the principal bone of contention for his critics. To the critics, the subordination of the result of the match to the performance of one individual was a travesty. The critics could not take the fact that Sachin's performance superceded the match result, and more importantly that Sachin was absolved of all blame whenever the team sank to defeat. This elevation of Sachin to demi-god status seemingly shielded him from criticism, which further irked the critics who began laying in wait for every slip of the man where they could bring out the old knives.

The average fan's internal response India's defeats and average performances was to go into a state of denial and distract himself by way of celebrating Sachin's performance. Fans would talk about how Sachin batted admirably and did not receive any support, about how some shots were pure magic. Newspaper columnists would mention India's defeat in passing and dwell on Sachin's performance for pages. The critics, on the other hand, would insist on pointing out that the effort, though admirable, was in vain. To one, the batting was a celebration; to the other it was a pointless exercise, as it did not lead to victory. Reality, as in many such cases of debate, is, perhaps somewhere in the middle.

On occasions when there was a happy correlation between Sachin's and the team's performance - an event that has dotted his entire career if you listen to his fans, an event made remarkable only by its rarity if you listen to his critics - the entire nation was a happier place. The critics would convert for a day and write reams about the brilliance of the individual. The fans would thoroughly savour the moment and relish in pointing out that Sachin's performance was, in fact, crucial to the team's performance; the more pedantic among them would treasure the details to fight another statistical battle. Another day, another match, a Sachin failure and Indian defeat, and we were back to square one, with battle lines redrawn.

And herein lay the reason why the country discussed him so much, everyone aboard celebrated the victory, yet polarisation of opinion was never far away. When things went well, celebration centered around him, when things went badly debate surrounded him. Much like alcohol.

The power of inertia

2009-05-31T23:38:00.000-07:00

I have started blogging for the second time in life (Right now, I am mostly recycling old trash). I should manage to hold on to this tradition for 2 more weeks before going the way of most blogs. An ambitious foray into writing, a brilliant outlet for pent up energy, blah blah blah before slowly falling prey to that oldest enemy of them all, Inertia. For the physically uninitiated, (this is not a snide reference to the population that has not 'sinned' thus far), inertia is the tendency of any body at rest or in uniform motion, to continue to stay so. In other words, the tendency of human beings to become addicted to routine.

Inertia is one of the most-important and least-understood facets of existence. It is the reason why you have not gone on a holiday to a great-new place in the past 3 years, why you have spent the major part of the last 4 weekends doing the same things you did in the 4 weekends before that (watching TV), why you shut the alarm clock on Saturday morning and postpone that ambitious jogging plan. It is the gap between the thought process behind a great business idea and the actual execution behind it. Hell, it is one of the main reasons most people continue in their jobs in spite of the lousy boss and the ugly secretary.

At this point, I would like to digress a bit and clearly define inertia. Specifically, differentiate it from the often-confused-with laziness. You are lazy when your body refuses to listen to instructions from your brain; inertia has set in when the brain doesn’t bother to instruct your body. Let me state it clearly with an example. When you skip your first two gym sessions after having paid for the forthcoming 15 sessions, you are being lazy. When you subconsciously train your brain to forget that you paid for the gym-subscription and skip the next 10 sessions, you have got inertia.

People live in a state of denial about inertia. They underestimate this power of inertia and tend to gloss over it and pretend that it is not there. Life would be much better if we acknowledged inertia, and realigned our life. There are two major ways to do this.

The first method is to fight it aggressively. This has to be done very methodically and can be done only when you completely acknowledge that it is there. I will give you an example to illustrate this.

One of my friends had this problem with his alarm clock - in that it would ring and he would switch it off. Not an uncommon problem, but only that he had done this so many times that he had become conditioned to it. The alarm clock never woke him up. Every time it rang, his hand would just trace an arc, lovingly caress the top of the clock and re-occupy its original position - all without his "awareness". And every time he kept the alarm clock in a different position, his hand would just trace a different arc. He came up with this ingenuous solution to tackle the problem. Whenever there was a desperate need to get up - as opposed to generally waking up to attend classes or such - he would place the alarm clock in this tiny slot above his fan and place his chair outside his room. Every time it rang, he would have to get the chair from outside, switch off the fan, wait for it to stop (a good 2 minutes for those old-fashioned hostel fans), climb on the chair, remove the alarm clock and shut the damn thing down. By the end of it he would have the mental state of a serial killer, but would be wide-awake. Job done.

Some other gems for fighting inertia (followed by a few friends of mine): If you have to apply for new jobs and cant get the time to build your CV, call up the HR person and promise her that you will send the CV in 4 hours. If you have an 8-hour window to complete a 4-hour job, play for 4.5 hours and then start the job.

The second method and the method often preferred by me is the very simple - "Accept you have inertia and get on with life". This is extraordinarily effective and simplifies life enormously. Weekend gets planned around TV, there is a small shelf in the loo having a bunch of books, there is a deodorant bottle near your shoe-rack, you forward articles that are titled "10 mins of ogling at women can be as useful as 30 minutes at the gym" (This article was actually published in the TOI - Oh, the powers of journalists who have inertia) to all your friends and think the law of conservation of energy has a more literal meaning. No planning, no pressure, no guilt. Ah, a simpler world. The believers would say God meant it to be this way.

Unfortunately for us, we can not permanently take either of these courses, internal response favors option two, while society (read parents, stupid peers) forces you towards route one. This struggle between these two states has given birth to some beautiful business models. I will discuss a couple of these.

Gyms: Gyms are the best examples of institutions that have cracked the concept of inertia. They run essentially on the assumption that people enroll for Gyms and don’t complete their courses. I will run the economics behind a gym to explain the concept to you clearly. Lets take an example of a gym in a reasonably big city like Chennai. The gym has to be in a very good location, has to have at least 5 treadmills and corresponding gym equipment and a separate room for aerobics and such. Add a few trainers, a mini-refreshment center, the imputed rent for 4000 sq ft of area in a posh location, maintenance of a showering area, a parking lot, a watchman and some basic marketing, and you have got your self a monthly cost base of Rs 200,000 (bare minimum).

At a reasonable rate of Rs 1500 per person per month, that is a required customer base of more than 130 people for just break-even, leave alone return on capital, depreciation on machines, etc etc. Generously allowing for a window of opportunity of 5 hours each day for gymming (2 hours in the morning and 3 hours in the evening), and assuming peak efficiency in management, this implies that at any point of time there wd be more than 25 people inside the gymming area. If you have been one of the unfortunate people who has got membership for a gym and actually seen one, you will realize that there is no way there can be more than 20 people at a time inside the gym (A good gym wd have 5 treadmills, 3 each of those cycling and SFX things, 4 weird machines, and some area to do weights-training. Of these machines, at least 2 wd be dysfunctional at any point of time. There won’t even be space for 25 people to be in there).

But gyms still make money, and are popular. This can mean only one thing. A lot of people take Gym membership and don’t turn up regularly. If you were an economic geek, you wd call it capture of inertial surplus

Another example that I am big fan of and I must say, fell for comprehensively, is this concept of mobile phone rental in the UK. They have this beautiful concept of half-line rental for post-paid connections. You get a one-year contract for say £40 a month. They give this to you at half rate for the first 9 months of a one-year contract, give you the handset free at the end of the month and give you a return-flight ticket to New York if you complete your contract. This is like money in the pocket. The only catch being that while you get the rental for half the price for the first few months, you actually have to pay the full amount, get the receipt and mail to an address six-months after you have paid your bill, and get half the rental refunded. Pure genius.

The customer thinks he has got a deal for £20 a month for 9 months, the company knows that they retain the remaining half-line rental for 80%+ of the customers (market statistics prove that). And as far as the return ticket to New York is concerned, the customer sales rep will probably explain to the 3 or so people who have sent all 9 of their bills and got the refund and completed the contract that the offer was a co-promotion with the insurance company and wd not be available for the customer because he had cancelled the £15 per month insurance contract in the second month itself. Again, pure genius. These marketing guys make George Costanza seem like a saint.

Less subtle versions of these forms of revenue capture are adding "fault-prevention-charges" on your credit card bill. The brilliantly irritating we-will-cancel-it-if-you-call-up-and-abuse-our-callcenter-guys-but-are-still-giving-it-a-go-because-40%-of-cutomers-dont-bother strategy preferred by Citibank.

One of my friends actually worked in a division called "revenue-enhancement" in a large firm. Is his job description were stripped of fancy management terms it would look like "think up devious methods to extract revenue from customers". Out of respect for the group, I am withholding the name of the company, but if any of you get this weird looking "charges on messages received" entry on your mobile phone which charges up every time you receive a message when on roaming, you can safely assume my friend has earned his salary for that month.

That’s it for the day. Acknowledge Inertia. Eliminate guilt. Enjoy your weekend on the couch.

Elections and Physics

2009-05-31T23:24:00.000-07:00

There is a principle called the Heisenberg’s uncertainty principle. It goes like this “The product of the uncertainties involved in predicting the exact location and velocity of any particle is greater than a constant”. In the arena of Physics, this law has relevance only for sub atomic particles, but the law lends itself to several interpretations and variations.

Stated in English, the law can be taken to mean “Any measuring device that is used to measure any parameter sufficiently distorts that parameter during the process of measurement so as to not make the measurement completely accurate”.

Let me explain the above interpretation with an example (stolen from the stable of my physics professor). Assume that in a particular school, there is a particular noisy corridor occupied by boisterous students. The principal of the school decides to pay a surprise visit to this corridor to find out who the miscreants are and to what extent these students were making noise. Unfortunately for the principal, one particular student notices him walking down the corridor and promptly sounds the warning as a result of which the entire corridor becomes quiet. This is an ideal illustration of an extreme case of the presence of a measuring device altering the measuring parameter sufficiently so as to defeat the entire purpose of the experiment.

Taking the above illustration as a proxy for the Heisenberg principle let me build this theory further and incorporate certain corollaries. To make this process scientific, let us define certain terms; the teacher becomes the “measurer”, the teacher’s walk becomes “measuring process”, the teacher’s cane is the “feedback”, the guy who watches the teacher is the “signal”, the noisy classroom is the “object of observation”, and the entire exercise is the “experiment”.

Corollaries
1. When the experiment is conducted in a finite interval of time, i.e. it is not a continuous function of time (the teacher does not continuously walk up and down the corridor), the single observation made by the measurer often becomes the proxy for the performance of object of observation over a period of time.
2. If the principal walks the corridor once every ‘T’ units of time, it eliminates the necessity for the signal and the object of observation has that much more freedom to misbehave and not get noticed.
3. This implication is perhaps the most important implication in the context of the forthcoming example. Over a period of time “Effectiveness” of the object of observation gets determined solely by its performance in the experiment so much so that the only thing the object of observation does during the entire period is to create scenarios for better performance during the next experiment.

Replace “measurer” with “people”, “measuring process” with “Elections”, “object under observation” with “government” and the “experiment” with “the great democratic way of functioning” and you have uncovered what can be termed as the “Electoral Fallacy”.

The world of Tam-brahm students

2009-05-31T23:08:00.000-07:00

Have you met someone who is reasonably tall, fair, with a reasonable build (sometimes frail, but never well-built), a tikka on the forehead, and a self-righteous expression on their faces in your college premises? If you still haven’t placed this species called Tambrahmo Sapien, I will describe further characteristics of this species.

The members of this species perform well academically, are generally religious, are sought after for their views, have an opinion on most things under the sun while simultaneously being non-judgmental, and frequently wear an "I have not been given my due by this world" expression on their faces. They are also consciously self-effacing (aka painfully modest) about their achievements (generally academic)

The members of this species have a strong desire to be with fellow species' members though they are socially 'accepted' in other groups as well. When 2 Tam Brahms meet, they discuss a third, when 3 meet they discuss other species' members, when more than 3 meet, they discuss topics like 'Changes in socio-cultural patterns of urban India fuelling prosperity in rural India' or 'the inherent fallacies in the parliamentary democracy system' with their collective decibel levels of discussion varying in direct proportion to the proximity of non-tam-Brahms, especially those possessing XY chromosome. A lone tambrahm has this brooding intellectual look about him giving an impression that he is trying to mentally divide 233 by 17 while he is actually benchmarking himself vis-à-vis other tambrahms and later on with other homo sapiens as well. This is a favorite pastime of the Tam Brahms.

They are fiercely competitive but are repulsed by the notion of relative benchmarking and frequently proclaim (with a sigh of relief) that they are glad that they didn’t get sucked into this rat race. That the tam-brahm knows the re-evaluated score in the second cycle test of the little known character with whom he has spoken to exactly twice before in his life is pure coincidence.

When tambrahms are locked in conversation, they laugh at jokes like 'Even if you win the rat race you are still a rat' and 'statistics are like Bikini, they show a lot but not what you want to see' but only so much a smile politely at sardar jokes or gujju accent jokes. Not that they mean ill to surds or gujjus, it is just that they have a far more refined taste than that.

They also revel in the knowledge of their own refined taste in art or literary forms and consciously move towards 'better' books rather than wasting time in mundane 'pulp' fiction. They are wont to make statements like 'yeah, I used to read Sidney Sheldon when I was in class IX and X. I don’t know why but I used to like them a lot. Sheldon is pure pulp. You read 3 and you can write the 4th. Now, I am glad that I have graduated to Ayn Rand, PG Wodehouse and The Economist'. All this to a poor soul who has just told him that he liked a Sheldon novel that he had read the previous night. After a pause, the tambrahm follows his speech up with "yeah, I read that book and liked it too. Typical, but ok. If you are a Sheldon fan, it’s a great book". The well-kept secret of Tam Brahms is the fact the Tam brahm himself struggled his way through 985 pages of 'Atlas Shrugged' precisely for deriving the satisfaction of making the above statements.

Now, where is the catch? What is it that this species lacks? They are academically good (some are 'gifted'), socially accepted everywhere, well-sought after for their views on everything, adored by even the girls, are considered smart and sincere, are on the right side of ethics and teacher's favorites.

Wait a second; God isn’t all that kind to anybody. These guys have their share of problems too. In most cases, they are too good for themselves. When it comes to academics, their parochial attitude keeps them on the edge; in sports, upbringing and dietary constraints kill them; in social life, their pseudo-intellectualism does them in, but their biggest problem lies with their performance with girls. They generally get slotted into 'Oh, he is a deeeeeaaaar friend' or 'I can always count on him for a chat after I have had a tough day with my boyfriend(s)', or in really rare and sad cases 'If only I had met him earlier'.

There is also a bunch of lads who slot into the between n and n+1 category, but more on that later.

Catch-22

2009-05-29T01:42:00.000-07:00

This is an imaginary conversation between WICB president, ECB chairman and Gayle. This took place after Gayle told them he did not want to play the WI tour of England in May 2009 (the tour which WI went on to lose by a fair margin and gave the impression of not really caring). Post this chat, he decided to take part but not really turn up. For good measure, his team emulated him.

"These are very critical times," the West Indies cricket board president (Hunte?) asserted petulantly from a far corner of the office...
"Hasn't he got any patriotism?"
"Won't you play hard for your country?" Giles Clark (ECB chairman) demanded, emulating Hunte's harsh, self-righteous tone.
"Won't you give up your life/joy for Hunte and me?"
Gayle tensed with alert astonishment when he heard Giles Clark’s concluding words. "What's that?" he exclaimed. "What have you and Hunte got to do with my country? You're not the same."
"How can you separate us?" Giles Clark inquired with ironical tranquillity.
"That's right," Hunte cried emphatically. "You're either for us or against us. There's no two ways about it.
"I'm afraid he's got you," added Giles Clark. You're either for us or against your country. It's as simple as that."
"Oh, no Hunte. I don't buy that."
Giles Clark was unruffled. "Neither do I, frankly, but everyone else will. So there you are."
“Go play this tournament because we have promised a summer series every year to Sky and Natwest. Now, run along”

The original is given below. This is from a timeless book called Catch-22.

"These are very critical times," Colonel Cathcart asserted petulantly from a far corner of the office...
"Hasn't he got any patriotism?"
"Won't you fight for your country?" Colonel Korn demanded, emulating Colonel Cathcart's harsh, self-righteous tone.
"Won't you give up your life for Colonel Cathcart and me?"
Yossarian tensed with alert astonishment when he heard Colonel Korn's concluding words. "What's that?" he exclaimed. "What have you and Colonel Cathcart got to do with my country? You're not the same."
"How can you separate us?" Colonel Korn inquired with ironical tranquillity.
"That's right," Colonel Cathcart cried emphatically. "You're either for us or against us. There's no two ways about it."
I'm afraid he's got you," added Colonel Korn. You're either for us or against your country. It's as simple as that."
"Oh, no Colonel. I don't buy that."
Colonel Korn was unruffled. "Neither do I, frankly, but everyone else will. So there you are."

The context is given in these two articles - Vanesa baksh says it is a sign of the times here - http://www.cricinfo.com/magazine/content/story/404911.html

Gideon Haigh article on Gayle's candour captures the mood before the series well. http://www.cricinfo.com/magazine/content/story/404810.html