Politics & the Nation
  • PE firms exit realty deals on ‘condition precedents’
    • PRIVATE equity (PE) firms are learnt to be pulling out of real estate deals, citing condition precedents (CPs), which are part of a deal document. What are these CPs?
    • CPs are conditions that are required to be satisfied post signing of a deal, without which the deal cannot close. Conditions include getting permission in a specified time period, timeline guarantees etc.
  • The drug price control regime in India
    • India controls prices of 74 bulk drugs — raw materials or intermediaries — which the government considers as essential in nature. Companies not complying with the ceiling shall be liable to deposit the overcharged amount along with interest.
    • But usually companies get around this by adding a new ingredient and obtain a licence under Food and Supplement Act to increase the price of the drugs.
  • What is social entrepreneurship?  Can you define it?
    • It is about creating business models revolving around low-cost products and services to resolve social inequities.  The idea that goes with it is the realisation that social progress and profit aren't mutually exclusive.
    • Sounds like gobbledegook?  Read this: When Muhammad Yunus, 2006 Nobel Peace Prize awardee and founder of Grameen Bank, was contacted by the Nobel Foundation for the customary winner interview, he remarked, “...poverty is an artificial creation. It doesn’t belong to human civilisation, and we can change that, we can make people come out of poverty (sic). The only thing we have to do is to redesign our institutions and policies.” 
    • Hope it has clarified the idea to you.
Finance & Economics
  • A silent revolution happening in our rural hinterland?  Proof that India is transiting from a 'developing' to 'developed' country status?
    • The traditional view that India’s rural economy is largely agrarian is about to take a beating with a dramatic fall in the share of agriculture in rural GDP, the value of goods and services produced in rural areas. 
    • According to an analysis done for ET, the combined share of industry and services in rural GDP has risen to 58.4% in the current fiscal from 48.6% in 1999-2000 on the back of strong growth in these sectors in the past five years while the share of agriculture slipped to 41.6%. The contribution of industry, the most robust of all rural sectors, to the rural economy is 30.2% in the current fiscal year while services account for 28.2%. 
    • Economists read this shift away from agriculture as part of the broader country-level GDP trend - sign of a development of an economy — when contribution from industry and services grows relative to agriculture.
    • BTW do you know what is defined as an urban area?  The current definition of an urban area, according to the 2001 census, includes all places with a municipality, corporation, cantonment board or a notified town area committee as well as all other places with a minimum population of 5,000, at least 75% of male working population engaged in non-agricultural activities and density of population of at least 400 persons per square kilometre. 
  • Inflation at record lows
    • INFLATION eased to a 13-month low of 3.92% for the week ended February 7 on the back of a sharp fall in the prices of edible oils and manufactured products. 
  • Why are banks (globally) reluctant to lend?
    • One possibility is that they worry about borrowers’ credit risk, though this would have to be extremely high to justify the complete cessation of long-term lending. 
    • A second possibility is that banks worry about having enough resources to meet their own creditors’ demands if they lock up funds in long-term loans. But the many central bank lending facilities that have been opened around the world should assuage these concerns, especially for large and well-capitalised banks. 
    • Thirdly, it could be the fear of being short of funds if investment opportunities get even better. Citicorp CEO Vikram Pandit said as much when he indicated that it was cheaper to buy loans on the market than to make them. And buying may get cheaper still! 
  • What can be done to revive lending?
    • Political exhortations to lend can have some, albeit limited, impact. Any voluntary resumption of lending will necessitate reducing both fears and potential opportunities.
    • First, the authorities can offer to buy illiquid assets through auctions and house them in a government entity, much as was envisaged in America’s original Troubled Asset Relief Program. This can reverse a freeze in the market caused by distressed entities that are unwilling to sell at prevailing market prices. 
    • A second approach is to have the government ensure the stability of significant parts of the financial system that hold illiquid assets by recapitalising regulated entities that have a realistic possibility of survival, and merging or closing those that do not. 
    • Are the recommendations going over your head?  Read this.  Especially the last four paragraphs.  It will give you a  better understanding.  
  • UBS runs foul of the US tax authorities and agrees to pay up a record $780 mn to settle the issue
    • UBS, the largest Swiss bank, arrived at a landmark settlement with US tax authorities, admitting it “participated in a scheme to defraud the US”. UBS will pay $780 million to settle the investigation, but more critically, the beleaguered bank has also agreed to turn over the details of an estimated 300 to 400 US clients, and closed down its offshore business for Americans. 
    • UBS has been under investigation, with many of its executives indicted over the past, from American prosecutors for a scheme that alleges it helped American citizens set up and conceal offshore accounts by falsifying, destroying and concealing required documents. The settlement came as the bank faced indictment for non-cooperation for resisting disclosures of client details. Of the $780 million that UBS will pay, $380 million is for profits from its cross-border business, and the rest unpaid taxes and penalties. 
    • BTW one thing that is notable about Swiss banking laws is that it discriminates between tax fraud and tax evasion or avoidance — UBS was caught in a case of fraud; evasion or avoidance is not a criminal offense under Swiss law, and protected by secrecy. 
  • You have heard of Bernard Madoff.  But Allen Stanford?
    • This Texan billionaire is best known for sponsoring the $1 million West Indies Twenty20 last year.  He has now gone into hiding, even as US authorities are investigating him for defrauding investors and running a Bernard Madoff style ponzi scheme.
    • The fallout of the spectacular collapse of the high-profile financier spread to the Caribbean and Latin America, as banks linked to his empire faced a run. And estimated $50 billion of assets is being looked for. 
Science & Technology
  • The hardest natural substance
    • We all know that diamonds are the hardest natural material.  But a rare natural substance, called lonsdaleite, which is made from carbon atoms just like diamond, has emerged as 58 per cent harder than the gemstone, reports say.
    • Lonsdaleite is sometimes formed when meteorites containing graphite hit earth.
Language lessons
  • gobbledegook: noun
    • Incomprehensible or pompous jargon of specialists
  • sentient: adjective
    • Endowed with feeling and unstructured consciousness; Consciously perceiving
    • eg: the living knew themselves just sentient puppets on God's stage
    • "sentient of the intolerable load"; "a boy so sentient of his surroundings"