Finance & Economy

  • Our stock markets may fall yet again today
    • On the back of a record low registered by the Dow in five years (it has slipped below 8000 yesterday) and the weak openings seen in Japan, Korea, Australia & Shanghai today, we may also witness more bloodbath in the stock markets today.
  • Interest rate futures to make a come back in January?
    • These instruments were first introduced in 2003. The central bank had then introduced interest rate futures based on two underlyings, a notional 10-year zero coupon bond and a notional 90-day treasury bill, and were traded over the counter. However, due to wide price disparity between the spot and the futures market, it did not take off.
    • Interest rate futures are contracts that have interest-bearing instruments like treasury bills as underlying assets. According to Bank for International Settlements (BIS) — an international organisation of central banks — the size of interest rate contracts globally is pegged at more than $45 trillion.
    • Market participants feel that the interest rate futures market would actually help the spot market as the introduction of such contracts leads to better discovery of interest rates, not only for market players but also for other corporates that have interest-rate risks.
  • Sovereign Wealth Funds set to lose their sheen?
    • In the wake of their investments' valuations hurtling down the hill in recent months, SWFs appear to have become cautious.
    • Currently sovereign wealth funds are estimated to be managing about $3 trillion funds which are expected to grow over the next several years.
    • Estimates from Morgan Stanley put that global SWF assets will grow to $10 trillion by 2015, down from their previous projection of $12 trillion.
    • Merrill Lynch, taking into account slower rates of transfer of funds from central banks to SWFs, expects total assets to hit $5 trillion by 2012, instead of by 2011 previously forecast.
  • Take a look at two of the legal entitlements that employees have in India and why companies try to avoid giving them:
    • Many small scale units deliberately keep the number of employees below 20 to bypass the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
    • Also, many units maintain the workforce below 100 to prevent the applicability of Chapter VB of the Industrial Disputes Act, 1947 (ID Act).
      • The Industrial Disputes Act, 1947 came into existence in April 1947. It was enacted to make provisions for investigation and settlement of industrial disputes and for providing certain safeguards to the workers.
      • This piece of legislation is considered archaic by the industry and once an industry is established in India, it reportedly takes about 10 years to close it down. Captains of industry have been demanding that this act has to be amended to make it more investment/entrepreneur friendly.
  • What is Ricardian equivalence?
    • Ricardian equivalence, is an economic theory which suggests that it does not matter whether a government finances its spending with debt or a tax increase, the total level of demand in an economy will be the same. It was proposed, and then rejected, by the 19th century economist David Ricardo.
    • Why should we know about it now? To get a feel of how theory can relate to practice. Take a look at this:
      • Germany is perhaps the only country that is well-placed to raise taxes to fight the current recession. Spending packages enacted by it to fight slumps in the 1970s produced little but new debt. Since then the prevailing wisdom has been that they do not work. Governments that boost spending in bad times rarely pare it back later. When people see that debts, and thus taxes, are heading up they tend to save more rather than spend. So, the demand stays the same; thus bringing in Ricardian equivalence.
  • What explains the logevity of Japanese companies? Excerpts from an excellent piece that appeared in today's ET:
    • Prof Haruo Funabashi's research on 'secrets of long-lived companies of Japan' reveals some startling facts:
    • 20,000 companies in Japan are more than a hundred years old — 1,200 of them more than 200 years, 600 over 300 years, 30 companies 500 and more, five more than a thousand years and one is fourteen hundred years!
    • Why do so many longlived companies exist in Japan? "The answers seem simple, but quite complicated in practice", says Funabashi. "In Japan we say business not only has to make money but it should ultimately go beyond and serve the greater purpose and well-being of society."
      • If you recall, Neville Isdell the CEO of Coca Cola said something similar recently. We noted in our notes on 17.03.2008. This instance fortifies my belief that our approach to life is far more congenial than the West's blind pursuit of material happniness.
    • It is about religion in practice — every moment, everyday — a deep concern for employees, respect for customers; it is about ethical pricing, understanding suppliers' difficulty and so on. Innovation and change are on high priority — more as self-expressions of creativity and, if need arises, as tools for survival. Most important is the emphasis on empowering people, creating a culture of trust, quality and excellence, all the time.
  • Country to develop mechanism for assessing welfare programmes
    • India, in collaboration with Britain, will develop the mechanism to assess the impact of programmes like National Rural Employment Guarantee (NREG) so as to know whether the policies are being delivered on ground and being implemented in the interest of poor.
  • Rwanda's top presidential aide arrested in Germany and deported to France for questioning
    • Back in 1994, Rwanda witnessed a political assasination. The shooting down of Juvenal Habyarimana's plane, which triggered the country's genocide. The shooting down was done by RPF, Rwanda Patriotic Front which is the ruling party now. Rose Kabuye was an active participant in RPF and is a top aide for the current President Paul Kagame.
    • When she was on an official visit to Germany, she was arrested at the behest of France and deported for facing the enquiry. Even the President could have been arrested, but Germany did not do so because the head of the state enjoys diplomatic immunity.
  • Basque separatism
    • Just as we have separatist agitations in J&K and in the North East, Spain also faces Basque sepratists.
    • ETA is the organization that fights for Basque independence. It is blamed for more than 800 deaths in its long fight for Basque independence. It has traditionally used France as its rear-guard base for logistics to carry out attacks, mainly across the border in Spain. French and Spanish police have cooperated on a number of arrests of top ETA operatives in France.
    • ETA declaration in March 2006 of a "permanent" unilateral cease-fire, which raised hopes for an end to nearly 40 years of ETA violence. Although Spain's Socialist government immediately ended the fledgling peace process, ETA did not officially end its cease-fire until June 2007.
    • The recent arrest by the French authorities of a top Basque separatist leader is expected to have hit the movement hard. There are about 600 ETA convicts or suspects in Spanish jails and 150 others in French jails already.
  • India thrashes Somalian pirates: sinks a 'mother ship' of the pirates
    • Piracy off the coast of Somalia has of late assumed enormous proportions.
    • Their biggest catch to date perhaps is the "Sirius Star" which is an oil tanker carrying a cargo of two million barrels of Saudi oil - worth more than $100m (£67m). Saudi Arabia is reportedly in negotiations with them for release of the crew and the tanker.
    • Earlier they have hijacked a couple of Indian merchant vessels. This has forced the Indian government deploy its INS Talabar. We noted on 15.11.2008 that INS Tabar has thwarted hijack attempts on two Indian vessels by Somalian pirates.
    • INS Tabar had to fire in self defence against a pirate ship when it refused to stop for inspection and instead fired on INS Tabar. In the retaliatory fire the pirate mother ship was destroyed totally and sunk.
    • IMB, the International Maritime Board which keeps a watch on piracy incidents worldwide, reported that 95 pirate attacks have taken place so far this year in the Gulf of Aden. Of those, 39 resulted in successful captures; 17 of those vessels and their crews -- a total of about 300 sailors -- remain in the hands of the pirates.
    • What are the effects of piracy?
      • Shipping companies face higher insurance premiums, customers could see longer delivery times, less traffic may pass through the Suez Canal.
      • The success of the pirates may also strengthen the hand of radical Islamists in Somalia
  • Nation remembers Indira Gandhi on her 91st birth anniversary
    • President Pratibha Patil, Vice President Hamid Ansari and Prime Minister Manmohan Singh on Wednesday led the nation in paying homage to former Prime Minister Indira Gandhi on her 91st birth anniversary.
  • Indira Gandhi Peace Prize conferred on Md. ElBaradei
    • Mohammad ElBaradei, Director General of International Atomic Energy Agency (IAEA), has been chosen for the 2008 Indira Gandhi Prize for Peace, Disarmament and Development.
    • He was conferred this prize for "his impassioned opposition to the use of nuclear energy for military purposes and his steadfast espousal of the peaceful uses of nuclear energy, sustained over many years."
    • ElBaradei has held his present position at the IAEA since 1997, having been re-appointed for a third term in September 2005.
  • First ever transplant of laboratory engineered wind-pipe in humans
    • Surgeons in Spain have carried out the world's first tissue-engineered whole organ transplant - using a windpipe made with the patient's own stem cells.
    • The steps involved in the procedure:
      • Trachea is removed from dead donor patient
      • It is flushed with chemicals to remove all existing cells
      • Donor trachea "scaffold" coated with stem cells from the patient's hip bone marrow. Cells from the airway lining added
      • Once cells have grown (after about four days) donor trachea is inserted into patient's bronchus
    • The importance of this event can be gauzed from the fact that it is for the first time that tissue transplant was carried out without the need for anti-rejection drugs.

1 Comment:

Anonymous said...

The 1400 year old Japanese company Kongo Gumi folded in 2006 after an impressive 1428 year run.