08.04.2009

Politics & the Nation

• Journalist throws shoe at Chidambaram
• Looks like this shoe throwing business has caught the fancy of journalists as a form of protest.  Why is it that they get agitated?  They are supposed to be dispassionate about what they are reporting on; isn't it?
• Whatever may be the reasons for their grievance, whether real or imaginary, this cannot be chosen as a route to express one's protest.
• Of course, you should, as usual, expect lot of politicking about this incident.
• BTW who are the other dignitaries that had to be at the receiving end in such shoe-throwing incidents?
• George Bush, Wen Jiabao & Pinarayi Vijayan.  Don't ask me who are these; will you?  You should be able to easily identify them all.
• Update on Satyam probe -- CBI files charge sheet in the case.
• Here is an update on the Satyam probe.  Good enough to stay updated.
• New fuel norms
• The government has set up a committee to ensure supply of Euro-IV petrol and diesel in 13 major cities and Euro-III fuels in the rest of the country from April 1, 2010. 
  
• The higher grade of fuels will reduce emission of sulphur and benzene from vehicles that pollute environment. 
  
• Euro-IV, or Bharat Stage-IV, diesel and petrol will be sold in 13 cities.
  
• Know the various ways in which you can fly?
• One, is the plain old simple model of buying a ticket and flying.
• Second, is owning a plane and flying.
• Third, is chartering a plane.  In this you hire a plane for your trip.  It's taking the plane just for the trip.
• Fourth, is the fractional ownership.  You own a share in the aircraft.  Somebody gets to maintain it and whenever you need it, you get to use the aircraft.  In this model, usually the charges for the trips are charged.  If at the end of the day, there is any profit left out of the proceeds so received, as part owner, you also get a share in the profits.
• Fifth, is the timeshare model.  In this you pay for a timeshare of the aircraft.  You are entitled to use that much time of the aircraft.  If you don't use it, you can sell it to others who are interested in buying it.
• Now one more model that has recently kicked off is the pre-paid model.  It is a tweaking of the timeshare model.  Jetliners such as BJETS, VistaJet and Club One Air now offer pre-paid ‘timeshares’ in which you can buy a fixed 25-hour “all-expenses-included” flying package for Rs 2.7 lakh or Rs 3.5 lakh per hour, with a validity of one year, and fly to any part of the world.
  
• That's a lot of variety; isn't it?
• How should food surpluses be handled?

• This year, due to better procurement prices, the government godowns are over filled with stocks. The procurement of wheat alone for 2008-09 is of the magnitude of 226.8 lakh tonnes, which is almost double that of the last year. Rice and wheat stocks in the central pool as on December 2008 had been 357.8 lakh tonnes as against the buffer stock norm of 200 lakh tonnes. The storage capacity, both owned and hired, is not sufficient for the tune of procurement and stocks with the government this year.  In such a scenario, how should these surpluses be handled?  Take a look at the expert-speak, as excerpted from today's face-off:
• Now, given that surpluses do arise, the solution is in developing a framework to optimise the handling of these stocks. 
• Firstly, we need to strengthen the warehousing facilities; and the private sector can be involved here. 
• Secondly, the surpluses should be stored in deficit states to avoid the pitfalls of transportation in times of shortage. 
• Thirdly, surpluses should be a part of the government’s foreign trade policy where the surplus grains are exported. 
• Fourthly, surpluses should be aggressively distributed through the food for work programmes. 
• Fifthly, futures trading should be encouraged where the storing authority manages to hedge the price risk. The ban on futures trading needs to be reviewed. 
• Sixthly, stocks beyond the maximum tolerable limits should be given as aid to the poorer nations. 
• Lastly, the private sector can complement the FCI’s efforts in handling procurement and buffer stocks which can reduce the burden on the exchequer. 
  

Finance & Economy

• Bulk deposit rates — interest on deposits over Rs 1 crore — have come crashing down, following surplus liquidity in the banking system. Banks are offering rates as low as 1% for oneweek deposits and 5% on one-year deposits.
  
• How can you say that there is liquidity overhang in the system?  What are the developments that will point you out to this?
  
• One, there were no auctions held in the first six days of the current financial year by the RBI, in spite of redemption of Rs. 40,000 crore of paper by it.
  
• Two, liquidity tends to rise in an election year.  Because of huge government spending.
  
• Lastly, banks park more money with RBI under the reverse-repo window.
  
• When we hear somebody say/write about 'huge macro-economic imbalances globally' what is it that should come to our mind?  Or how should we understand this phrase?  Look at this excerpt; you will understand:
  
• For decades the US ran huge trade deficits, with China (and later Opec) running huge surpluses. US household saving fell from 9% of disposable income in the 1960s to zero after 2000. This was matched by unprecedented savings surpluses in Asia. 
  
• This is the 'imbalance' that the sayer/writer is referring to.  It can be any other such similar phenomenon.  This particular one was about savings.  It could be about any other such thing like trade, production, employment etc.
  
• A snippet about bank advances
• Indian bank lending is barely 60% of GDP, whereas total US debt is about 350% of its GDP.
  
• You know this is what makes it possible for banks there to lend $100 even if the borrowers can put in just a third of it on the table as their share.  Such a thing cannot happen in India.  Either we should cough up more or we should show the bank that the asset that is being purchased is far more than the $100 that is being lent by it.  And mind you, these estimates are very conservative, to say the least.
• Exports take a knock
• The country seems all set to miss the pared down export target for 2008-09 with exports recording a fall in March 2009, for the sixth time in a row. Quick estimates made by the commerce department reveal that exports fell by 18% in March 2009 to $12 billion. The aggregate export figure for the entire fiscal is, therefore, at $168.59 billion, which is more than a billion dollar short of the lower range of the revised target of $170-175 billion set by the government. The unofficial quick estimates, however, are sometimes quite different from the revised estimates officially issued at the end of the month. 
• Have the stomach for understanding why exchange traded derivatives are better at handling risk?
• Heard of phrases of like 'entropy aspect of risk'?  Wonder what has thermodynamics got to do with the financial world?
• Much more than a background in equities or derivatives, what you should have is a stomach for understanding the complexity involved in derivatives trading to enjoy this article.  Take a look at it, if you have some.

Acronyms

• DGAD: Directorate General of Anti-dumping and allied Duties
  

Language lessons

• hobble: verb
• Hamper the action or progress of
  
• eg: In such a situation, it hardly makes sense for domestic policy to hobble NBFCs accessing debt from abroad to finance much needed infrastructure projects.
• stultify: verb
  
• Prove to be of unsound mind or demonstrate someone's incompetence
  
• Cause to appear foolish
  
• Deprive of strength or efficiency; make useless or worthless
  
• autarky: Noun
  
• Economic independence as a national policy
  
• revile: verb
• Spread negative information about