Finance & Economy

  • Today is a big day. The G-20 is meeting.
    • To discuss the way forward out of the present global financial crisis (or should I say 'mess').
    • In this context, what should India articulate in the meet?
      • India's concerns at the Group of 20 (G-20) developed and emerging nations would be three-fold. One, the global financial system must become more inclusive; two, growth of the developing economies must be protected and, three, the leading economies of the world must guard against protectionist tendencies.
    • This summit is preceded by a meet of the G-20 finance ministers whose job was to lay the ground for the summit of government heads. It has identified the following themes for the summit:
      • One, there has to be a new global oversight order that covers every existing institution of global finance, whether it is the International Monetary Fund (IMF) or the Bank for International Settlements (BIS).
      • Two, the world must, in its own collective interest, ensure that resources continue to flow to countries such as China and India that today drive global growth even as much of the world goes into a slump.
      • And three, no hindrance must be introduced to the free flow of goods, services and capital.
  • Know anything about stakeholder theory?
    • I am sure many of you are aware of the World Economic Forum that has an annual meet in Davos, Switzerland. It is founded by Klaus Schwab in 1971. He is the propounder of the stakeholder theory. Look at it in his own words:
    • The stakeholder theory says that the management of an enterprise has to serve all stakeholders connected to the company. This goes beyond serving only the shareholders; it means that the management has to lead the enterprise as the trustee of all stakeholders and not just the appointee of the shareholders, in order to secure the long-term prosperity of the company. This comprehensive, professional role of management has been undermined in recent years by bonuses and other systems that link the management to the short-term interest of the shareholders. Maximum profit-seeking has increasingly taken precedence over long-term strengthening of competitiveness and sustainability.
    • In other words, the economy is not an independent or self-contained realm; instead, it has to serve society.
  • What's a covenant-lite loan?
    • The "covenant-lite" loan – or "cov-lite" – looks like a traditional syndicated loan (see below) but does not carry the legal clauses that allow investors to track the performance of a risky borrower or declare a default if financial measures are breached. This can even go to the extent of reducing interest burden by the borrower sometime after the loan is contracted for.
    • Such type of loan can be stated to have originated in October 2005, with the buyout of Neiman Marcus by Texas Pacific Group and Warburg Pincus -- a deal that was structured with almost no covenants tied to the deal.
    • In 2005, TDC, a Danish telecoms group, was able to cut the interest rate it had agreed to pay lenders only a year earlier.
    • Syndicated loan is a loan in which a group of banks provide funds for a borrower. There is usually a lead bank or group of banks (the "Arranger/s" or "Agent/s") that takes a percentage of the loan and syndicates or sells the rest to other banks. In contrast, a bilateral loan, involves only one borrower and one lender.
  • We somehow missed a very good piece written by Joseph Stiglitz recently. We catch up with it Discover It today.
International relations
  • India still to operationalize the Indo US nuclear deal
    • Even though India and US have signed the civilian nuclear deal, the deal will become operational only when India signs the safeguards agreement with the International Atomic Energy Agency and ratifies the Convention on Supplementary Compensation for Nuclear Damage.
    • India is yet to sign the safeguards agreement with the IAEA though the text has been negotiated and frozen. Similarly, India is also expected to sign the Convention on Supplementary Compensation for Nuclear Damage, without which US firms cannot do business in India.
    • Though the UPA government has assured the US that it will ratify the treaty, it has come under domestic criticism for trying to reduce liability of nuclear companies in case of an accident at a nuclear plant.
  • Are you ready to work for the Obama administration?
    • Even though you are an Indian and not a citizen of the US, the Obama administration appears to have its doors open for you to work for them. Look at change.gov, Obama's web site.
    • It appears this idea is already making great waves among Germans and Indians. Germans are the second largest slice of applicants through this site followed by Indians. Largest ofcourse, are the Americans.
    • A real change; isn't it?
  • Commentary on a self deprecatory remark from Obama in today's ET is worth a read. Do so here.
Language lessons
  • But some language lessons that the above commentary prompts us to:
    • mutt: is an inferior dog or one of mixed breed
    • hubris: overbearing pride or presumption
    • l'etat c'est moi: means "I am the State". This is attributed to Louis XIV of France.
    • dander: Small scales from animal skins or hair or bird feathers that can cause allergic reactions in some people.
Defence: In international waters
  • Heard of INS Tabar?
    • That is the Indian Navy Ship that thwarted the attempted attacks by pirates on two Indian merchant ships, in the Gulf of Aden off the cost of Somalia.
    • According to figures from the International Maritime Bureau, there were 37 incidents of piracy off Somalia between mid-March 2005 and mid-February 2006, compared to just two in 2004.
Science & Technology
  • Chandrayaan I's MIP lands successfully on the lunar surface
    • Joining the US, the erstwhile Soviet Union and the European Union, the 35-kg Moon Impact Probe(MIP) hit the moon exactly at 8.31 PM yesterday, about 25 minutes after the probe instrument descended from the satellite.
    • The primary objective of MIP is to demonstrate the technologies required for landing a probe at the desired location on the moon.
    • The MIP consists of a C-band Radar Altimeter for continuous measurement of altitude of the probe, a video imaging system for acquiring images of the surface of moon from the descending probe and a mass spectrometer for measuring the constituents of extremely thin lunar atmosphere during its 20-minute descent to the lunar surface.
    • Miniature Indian flags painted on four sides of the MIP signalled the country's symbolic entry into moon.
    • The probe will help qualify some of the technologies related to future soft landing missions. This apart, scientific exploration of the moon at close distance is also intended using MIP. During its 20-minute descent to the moon's surface, MIP took pictures and transmitted them back to the ground.
  • Solar energy update
    • The installed solar photovoltaic (SPV) capacity across the globe has gone up by about 11 times in the last 10 years, has shown an annual growth of about 45% during each of the last five years and is expected to be at least 20 times today's installed capacity by 2020.
    • Solar power will constitute only about 3% of the global installed generation capacity and far lesser in terms of generation by 2020. In the Indian context, the installed SPV capacity of about 10 MW (grid plus distributed) as of March 2008 constitutes an almost negligible percentage of the overall installed renewable capacity of over 12,632 MW.
    • The main raw material for making SPV cells is polysilicon. It costs about $200 per tonne at present. It is estimated that the global commitments to new polysilicon capacity addition are likely to outstrip demand by 2010-12 and result in spot prices of silicon falling to about $50 per tonne, a significant factor considering that polysilicon alone constitutes abut 80% of the solar cell cost.
    • Solar incentive package scheme (SIPS) of the central government has so far drawn interest from about 14 players proposing a staggering investment commitment of about Rs 140,000 crore. The SIPS among other direct and indirect incentives proposes a 20-25% central financial assistance to 3-4 fabrication units and 10 eco-system units.

1 Comment:

Yusuf said...

Thanks for the Joseph Stiglitz link. I think he's an awesome writer.