18.03.2008

• Mayhem in markets!!!
• With a 951 point pounding, the sensex crashed below the 15000 mark!!
• Know some of the reasons for this beating? Both global and local reasons. ET’s leader gives them and it is an interesting read.
• Wall Street’s fifth-biggest securities house, Bear Stearns, was sold to JP Morgan for just $240 mn (less than Rs. 1000 crores). This is the kind of money that is being exchanged for some land deals in Mumbai.
• Singapore bank DBS reportedly told traders not to deal with Lehman Brothers, fanning speculation that it is the next casualty.
• The world’s second biggest economy, Japan, is not able to decide who will head its central bank at a time when its spiralling currency is unsettling global markets. If Japan slows down, it would be big bad news.
• Our trade deficit is hovering around $10 bn a month, causing an outflow that’s making the rupee less attractive.
• Can you imagine the level of leakages in our public distribution system?
• It is 36% as stated by our own Finance Minister.
• That means, this much of what is put in the system never reaches the intended people.
• Taslima quits India?
• In a move that is certain to dent India’s image as a ‘secular’ society, and, at the same time, marks a big victory for Muslim fundamentalist outfits which had launched a campaign for her ouster, controversial Bangladeshi writer Taslima Nasreen has told Indian officials that she was planning to leave India for good.
• Indian wards pay $13 bn to study abroad
• While a typical IIT student in India pays $120 as fee per month on an average, our students who go to the foreign shores end up paying anywhere between $1500 to 5000.
• While we have about 27,000 foreign students studying in our country, a country like Australia has about 4 lakh foreign students.
• Isn’t there a case for liberalising the opening up of foreign universities in India? If they can be made to charge far less than the amounts that are paid for by our students, will it not make sense?
• A bit about ground handling operations in air ports
• Do you know that the reason for the delay in the commencement of operations at the recently opened Hyderabad International airport at Shamshabad, is about charges / agreements for ground handling operations? But what exactly are these operations?
• They involve every process from the time a plane lands. ‘Turning the plane around’ in aviation parlance refers to handling it from landing to take off. This includes attaching the aerobridges to the doors, or if the plane is parked in a remote bay, providing steps and buses for disembarking passengers, cleaning the plane, refuelling and boarding passengers, providing power when the aircraft is on the ground and so on.
• How did Indian companies burn their fingers in currency derivatives?
• As many currencies, including the rupee, were rising against the dollar, Indian companies took a contrarian call and bought cross-currency products which bet on a marginal dollar recovery. As the dollar recovery has not happened, (against most of the world currencies) the exposure of these companies to these transactions crossed the $3 bn mark. These contracts are in the process of expiring and by March 31, these companies have to provide for losses arising out of these exotic derivatives.
• Do you see any systemic failure in the above scenario?
• Some people argue that lack of a proper currency exchange is one that gives rise to such a feeling.
• Some others argue that banks have sold complex derivative products to companies which did not understand them fully. There is a conflict of interest in this as banks were acting both as advisors and sellers of these cross-currency options. In developed markets both functions are clearly defined and remain separate.
• Still another argument is that the products were sold in violation of an RBI circular which prohibits sale of derivatives without a real underlying transaction. But would the companies involved have complained about this, had they made a profit on these transactions?
• So the RBI seems to have written to the Finance Ministry for thinking about the establishment of an independent currency derivatives exchange.
• Is transactions tax on commodity futures justified?
• Though we covered something about this in our blog previously, soon after the budget, the issue deserves a further detailed look. Look at the excellent comments in today’s debate. It is a must read. Do so here.
• Israel-Palestine conflict: some details which need our noting
• Shin Bet is the Israeli counterintelligence and internal security agency.
• Do you know Mossad? We can say it is the counterintelligence and external security agency for Israel.
• Gush Emunim movement
• This movement arose in 1973 in response to Yom Kippur war, which resulted in the handover of the Sinai Peninsula to Egypt.
• The movement’s ideology is that the arrival of a messiah for the liberation of the Jews could be hastened by establishing settlements on the land over which Jews have had a divine right, as revealed in the Hebrew Bible.