Finance & Economy
  • Here are some definitions given by Bradford DeLong that are worth our attention:
    • ...there are many ways to relieve excess demand for financial assets. When the excess demand is for liquid assets used as means of payment — for ‘money’ — the natural response is to have the central bank buy government bonds for cash, thus increasing the money stock and bringing supply back into balance with demand. We call this ‘monetary policy’.
    • When the excess demand is for longer-term assets — bonds to serve as vehicles for savings that move purchasing power from the present into the future — the natural response is twofold: induce businesses to borrow more and build more capacity, and encourage the government to borrow and spend, thus bringing the supply of bonds back into balance with demand. We call the first of these ‘restoring confidence’, and the second ‘fiscal policy’.
    • When excess demand is for highquality assets — places where you can park your wealth and be assured that it will still be there when you come back — the natural response is to have creditworthy governments guarantee some private assets and buy up others, swapping them out for their own liabilities and thus diminishing the supply of risky assets and increasing the supply of safe assets. We call this ‘banking policy’.
  • FMC to retain its independent identity
    • The convergence debate involving the merger of Forward Markets Commission (FMC) with Sebi has been closed, with the government taking a decision that FMC will continue to regulate the commodity futures market and report to the consumer affairs ministry, which lays down policy for the market.
    • Consequentially, FMC chairman BC Khatua along with consumer affairs secretary Rajiv Agarwal will be made part of the high-level cooordination committee (HLCC) on financial markets, currently comprising four regulators and the finance secretary.
    • HLCC is an inter-regulatory coordination committee which comprises the finance secretary and heads belonging to RBI, Sebi, Irda and PFRDA.
  • Now Infy considers searching for a successor to NRN
    • Infosys Technologies will begin the task of finding a replacement for its chairman and chief mentor, NR Narayana Murthy, from January next year, as India’s secondbiggest software exporter seeks to pass on the baton to a new crop of leaders. Mr Murthy will retire next year August after he turns 65.
    • Mr Murthy, who founded Infosys along with six others in 1981, quit as executive chairman when he turned 60 in 2006. The company has been preparing for its biggest leadership transition since then.
    • Infosys has seven subsidiaries, each with a separate board and at least one emerging leader as one of the directors. Apart from geographic business units such as Infosys China and Sweden, these subsidiaries include bigger bets for the company, including the recently-established Infosys Public Service and Infosys BPO.
  • The search panel word is final
    • The decision of the five-member panel set up to find the successor to Ratan Tata will be binding on the group’s holding company, Tata Sons.
    • This is what the Tata Sons' MoA says.
    • Tata Sons, established as a trading enterprise by the group’s founder Jamsetji Tata in 1868, amended the MoA by putting in place a formal mechanism to select the chairman and members of the board of directors sometime after Ratan took over as chairman in 1991.
    • Ratan Tata has led the group’s international expansion and created a $71-billion conglomerate, helping large shareholders like the Dorabji and Ratan Tata trusts—which have two nominees on the board—and the Pallonji family to increase their value of their shares.
    • The group has 65% of its revenues from international operations after acquisitions such as those of Corus, a steel maker, and Jaguar-Land-Rover, a manufacturer of luxury cars and SUVs. It runs India’s top vehicle maker, the biggest software services firm and the leading private sector power producer.
  • What is a meta university?
    • A meta university is first proposed by Charles M Vest. It focuses on collaborative learning and collaborative knowledge production, operating on a web-based platform. This suggestion, of course, builds on ideas currently in practice such as Open Courseware, digital academic repositories and networks for higher learning.
    • Globally, as universities ponder their future, many of them are considering this model—but India is eminently suited to take the first steps towards a global meta-university. Precisely because India’s eminent knowledge institutions are part of a public system, and are now being brought together as a network.
  • On graphic novels
    • This is new genre of books. These are books in comic form, and they aren’t meant for kids.
    • A graphic novel looks exactly like a comic strip, but then what is the difference? They are intended at a 15-24, and above, age group unlike traditional comics that are either obliged to be funny or scary. But actually this differentiation was more of an accident.
    • Will Eisner, who wrote the first graphic novel in 1978, thought of the term just as he was talking to a publisher over the telephone for the fear that the man on the other end might not even take him seriously if he called it a “comic book.”
    • Goa-based writer-designer Orijit Sen of the The River of Stories fame had dabbled in the medium in the 1990s. This was followed by filmmaker Sarnath Banerjee, who wrote Corridor in 2004 and The Barn Owl’s Wondrous Capers in 2007. Two years ago, Kari was released. It was a slim 116-page graphic novel that tells the story of Kari, a quiet Indian woman employed in an advertising agency, her inseparable friend Ruth and their life in Mumbai.
  • HP chief resigns over sexual harassment investigation
    • Mark Hurd, Chief Executive of computer giant Hewlett Packard, has resigned following an investigation into charges of sexual harassment, the company announced on Friday.
    • The investigation revolved around sexual harassment allegations made by an outside contractor with HP.
    • Without going into details, Hurd admitted the charges.
    • The company's Chief financial officer Cathie Lesjak, 51, will take over as interim chief executive while the company searches for a permanent replacement.
  • India is worried about the problem of plenty
    • The problem of plenty refers to the inward financial flows.
    • Therefore it is reportedly going to propose global financial safety nets at the Seoul summit of the G-20 in November to protect fastgrowing emerging economies from destabilising foreign capital flows.
    • Large inflows pose a challenge to developing and emerging economies and there should be a mechanism to deal with it at the global and regional levels, feels India.
    • Loose monetary policy practised by the US and the EU has brought down the cost of funds to near-zero levels. Fund managers seeking high returns invest such funds in emerging market economies like India,exposing them to risky fund flows.
    • A sudden large capital inflows can fuel asset price bubbles and put upward pressure on local currencies, rendering exports uncompetitive and making monetary management difficult. India has already attracted $11 billion of portfolio inflows in the current calendar year.
    • When the economy faces high inflation, as is the case now, large inflows will have to be sterilised, which impose costs on the exchequer.
    • The financial safety net proposal involves currency swap arrangements to rescue countries faced with large-scale capital outflows.
    • The new concept is seen as an alternative to International Monetary Fund’s financial rescue mechanism that came under intense criticism during the Asian financial crisis of 90s so much so that countries’ are still shy of seeking help from the agency for such support.
  • How should countries having forex surplus manage their surplus?
    • The conventional wisdom and behaviour has been that the surpluses are invested in safe havens like the US dollar. But UR Bhatt argues that they should hold a portfolio of assets across the risk spectrum to safeguard against a future financial crisis.
    • Take a look. An interesting read. Some excerpts worth our noting:
    • The large foreign exchange reserves held by the trade-surplus countries have, in turn, created a massive demand for safe assets for investment of these surpluses, and this is seen as one of the root causes of the global financial meltdown in 2008.
    • Despite the current global slowdown, over the last 12 months itself, Asian countries have generated a current account surplus of around three quarters of $1 trillion. Their holding of foreign exchange reserves is in excess of $6 trillion, around two-thirds of the global foreign exchange reserves.
  • British Queen furious about CWG scandal
    • The never-ending reports of corruption in the Commonwealth Games are now threatening to sully the country’s image outside its shores as well. A British media report has said that the British Queen is in “cold fury” over allegations of financial irregularities involving a British firm and the Commonwealth Games baton relay.
    • The CWG organising committee is alleged to have paid AM Films, an Indian-owned firm in London, over 450,000 pounds for services during the Queen’s Baton Relay inaugural without proper tendering and paper work.
Language Lessons
  • feckless: Adjective
    • Not fit to assume responsibility; Generally incompetent and ineffectual
    • eg: Unfortunately, Michelle’s pricey preferences are leading to her being likened to a certain feckless (and eventually headless) French queen…