Politics & the Nation
  • Worrisome neighbours
    • The developments in Pakistan, Bangladesh and Sri Lanka are not giving any comfort to the strategic analysts in the country.
    • The agreement between the Pakistan government and the TTP in Swat valley, now reportedly extended to another area - Bajaur, is giving an impression that the march of Taliban southwards into the heartland of Pakistan is progressing by each passing day.  The mutiny in Bangladesh by their paramilitary BDR (Bangladesh Rifles) which prompted its army to come out in strength to quell the rebellion is also a cause for concern.  India had to order a strengthening of its borders with the country.  Sri Lanka's annihilation of LTTE is giving rise to lot of protests in Tamil Nadu in spite of the understanding in the political space that the Lankan Tamils -- especially the civilians -- would be supported, is failing to quell the Tamil anger.
  • Chargesheet filed in the Mumbai terror attack case
    • Three months after the terror attacks that claimed over 160 lives, Mumbai Police filed the chargesheet in the case naming a total of 47 accused including the lone surviving terrorist Ajmal Amir Kasab. 
    • Of these, three have been arrested, nine are dead, while the other 35 are still wanted. The Mumbai Police would soon issue red-alert notices against those who are still absconding. Some 200 witness statements are part of the chargesheet. 
    • The chargesheet, which runs into more than 11,000 pages and names 2,202 witnesses, has named Pakistani nationals Zaki-ur Rehman Lakhvi and Zarar Shah as the main conspirators behind the attacks. 
    • Kasab and the other accused have been booked, among others, under the Indian Penal Code, Unlawful Activities Prevention Act, Explosives Act, Explosive Substances Act, Passport Act, Foreigners Act, Customs Act and Arms Act. The sections charge the accused of waging war against the country, conspiring and collecting arms to wage a war against the country, damage to property, murder, attempt to murder, abduction, forgery, possessing explosives and causing explosions. 
Finance & Economics
  • Heard of a 'market disruption clause'?
    • This is a clause that is there in most of the overseas borrowing agreements.  International banks usually keep this clause in the loan agreements as an insurance against their rising borrowing costs.  When they find the going tough and feel that they need to charge more from their customers, they resort to a rise in interest rates on the loans given out by them.
    • Now international banks are reportedly invoking this clause to charge more interest from Indian corporates.  This is the fallout from the tightening liquidity conditions globally.
  • How are hydroelectric power plants more beneficial?
    • The smaller hydroelectric plants would avoid the negative externalities of large dam projects, have far shorter gestation periods and, more important, would call for little or no rehabilitation of the project affected. 
    • The medium hydel projects, however, would aid flood control, boost pisciculture and provide environmentally benign energy at very low marginal cost. 
    • Hydro plants are about 95% efficient at converting the kinetic energy of the moving water into power. 
    • Hydro-power stations have an inherent ability for instantaneous starting, stopping, and load variation, and so help in improving power system reliability. They are the best choice for meeting peak demand. 
    • The generation cost is not just inflation-proof but actually reduces with time. 
  • US banking crisis
    • Total losses on loans made by US financial firms and the fall in the market value of the assets they hold (things like mortgage-backed securities) are estimated to peak at about $3.6 trillion.  Estimates say that US banks and broker dealers are exposed to about half of this figure, or $1.8 trillion; the rest is borne by other financial institutions in the US and abroad. 
    • In the face of such losses, the capital backing the banks’ assets was only $1.4 trillion.
    • So, where does this leave the US banks?  What measures could be taken to recapitalize them?
    • There are four basic approaches to cleaning up a banking system that is facing a systemic crisis: 
    • recapitalization of the banks, together with a purchase of their toxic assets by a government “bad bank”; 
    • recapitalization, together with government guarantees – after a first loss by the banks – of the toxic assets; 
    • private purchase of toxic assets with a government guarantee (the current US government plan); and 
    • outright nationalization (or call it  “government receivership” if you don’t like the dirty N-word) of insolvent banks and their resale to the private sector after being cleaned.
    • Experts in the Mecca of capitalism are now veering round to the view that it is the last approach that is likely to set the US banking sector in order.