30.10.2008

• We return after a long Diwali holiday.
• The initial two day holiday got extended till yesterday. Hope all of you had a memorable Diwali.
• A lot happened during these days; we keep a mental note.
  
• Global action on tackling the financial crisis
• US Fed cut its funds rate -- the rate banks charge on overnight loans -- by 0.5%. It now stands at 1%. This rate was last seen in 2003-04. The cut marked the second half point reduction in the funds rate this month. The earlier rate cut was on October 8.
• Many countries are resorting to rate cuts (a.k.a monetary easing) in the hope that it will perk up demand and ameliorate the deteriorating economic conditions.
• China has reduced rates from 6.93% to 6.66%. Norway reduced the rate to 4.75% (by 0.5%). Britain and European Central Bank are expected to announce similar rate cuts this week or the next.
• Pakistan in the throes of a double whammy
• While it is facing a possible default on servicing its external loans, internally it is being pounded by lawlessness as well as nature.
• With Saudi Arabia, the US and a few other countries refusing to come to its financial aid, it was left nowhere to go but the IMF for helping it tide over its current financial troubles by seeking about $3.4 bn aid.
• Nature played havoc with it by killing almost 170 people in the worst ever quake that it has seen in recent times. The quake occurred in the Pak-Afghan border and has rendered about 15,000 homeless.
• Wavesecure makes waves
• It is an innovative software made on shoe string budget that has Nokia hooked to it.
• The software is made by Varun Chatterji, a Lucknow boy that studied in Singapore. He teamed up along with two of his friends to form a start up called TenSecure.
  
• What his software basically does is registering the mobile number of any SIM card placed in a stolen mobile phone. It would register call logs and SMS logs made or received by that stolen phone. A simple SMS would wipe out all sensitive data present on the stolen phone.
• Microsoft unveils Windows 7 plans
• Humbled (?) by Vista's bad performance -- it's a memory hogger, slowed down computers with features that most of us never use or access -- Microsoft announced plans of releasing Windows 7 by 2010.
• As usual it reeled out all the normal mumbo jumbo: 'fully compatible with all relevant devices and applications', 'without a mouse', 'faster boot up times', 'updated task bar' and 'a new look' etc.
• These are all phrases that we should get used to. Any and every software manufacturer will keep mouthing these things whenever they come up with newer versions of their software; but it is time which will tell whether or not they have lived up to their promise.
  
• But we need not be so despondent about every software including Windows. There will surely be some cool features that we develop a liking for. Let's hope Windows 7 will have more of them this time round.
  
• "Clawback" policies gaining currency
• With many a big corporate eating humble pie in the ongoing global financial turmoil, clawback policies have started gaining currency.
• More firms are banning top brass from ill-gotten pay when there are questions over executive conduct or the accuracy of financial results. These 'clawback' policies allow the firms to recoup portions of executive pay in the event of financial restatements, unethical conduct or other reasons.
• These policies do not generally require CEOs and others to forfeit all their compensation. Instead, they target things like cash bonuses as well as stock options, restricted shares and shares granted for meeting various performance goals.
• Increased credit card spends do not draw cheer from financiers
• The month of September has reportedly seen a jump of about 20% in credit card spends all across the country. Instead of rejoicing, the credit card companies are reportedly a worried lot today. This is because they fear that the defaults will be on the rise. As it is, the industry suffers about 9 to 12% default rate.
• Look at why credit card spends are on the rise:
• Usually the month of September signals commencement of the festive season and hence a rise in spends.
• Rising inflation and interest rates have left lower disposable incomes in the hands of consumers.
  
• The liquidity crisis has led to a rise in credit card spends because people would like to hoard cash; even if temporarily.
• Are the subprime loans to be blamed for the present global financial crisis?
• If you have been following this blog during the last six months or so, I am sure you would answer it in the negative.
• But many of you who didn't and those that are just starting to get an idea of the crisis, may think otherwise.
• What is to be blamed is the securitization of the subprime loans and the attendant regulatory failure.
  
• Take a look at this subtle distinction being very finely explained by TT Ram Mohan in his article today.