24.11.2010

Politics & the Nation

• Was the PM bound to give a decision on Subramanian Swamy's petition for prosecuting Raja?
• This is a very good news report about the proceedings before the Supreme Court in the case.  Look at how effectively legal luminaries argue their cases.  We are impressed with GE Vahanvati's contention that the PM is not bound to consider the issue, as there was no complaint filed by Swamy at all before lower courts.  Let's wait and see what the SC says on the matter.

Finance & Economy

• Korean developments spook markets
• A global stock market rout was triggered after rogue state North Korea shelled a South Korean island, triggering panic that it could escalate into a large-scale conflict. Investors fled risky assets to the Swiss franc and US dollar, and commodities tumbled fearing that Chinese banks approaching annual loan quotas may affect demand.
• BSE’s 30-share Sensex fell 1.33%, or 265.75 points, to 19,691.84. NSE’s 50-share Nifty dropped 1.25%, or 75.25 points, to 5,934.75.
• Although stocks recovered from their intraday lows, it has shaken the complacency off traders, who had taken for granted a rally in the emerging markets because of printing of more money by the US Federal Reserve.
• Foreign funds have invested 2,800 crore in the last two weeks, when the benchmark indices fell 7%. They have poured in close to 17,900 crore so far in November, and 1.30 lakh crore since January, driving up the gauges by 15%. NSE’s VIX, a measure of options traders’ perception about near-term risks in the market, rose 17% to 23.26 after the selloff. An increase in the index reading means investors are cautious in their outlook.
• Look at the two Koreas’ military strengths in here.

• MFIs are nothing but moneylenders in another garb: YV Reddy
• A man of the stature of YV Reddy, who was credited with successfully steering the country's monetary system in the 2008 global financial meltdown, put it very bluntly.  
• So, is the recent bill from the AP Government regulating the MFIs a good measure?  Will it deliver the results?  What are dynamics that operate in the market for microlending business?  What results in market failure for microlending?  What are the measures that can possibly correct or prevent these market failures?
• Today's op-ed from Arvind Panagariya is an excellent piece that offers answers to all such questions.  A must read.
• How has the insurance industry performed in the last 10 years since it was opened up for private participation?
• This is an excellent article that attempts to assess the performance.  A very informative reading.
• Bosses will have to account for live-in partners next year onwards
• Corporate disclosures from the next financial year will include details of transactions between top managers and their domestic partners, with the country’s apex body on accounting standards clearing a move that, for the first time, recognises live-in relationships.
• Existing accounting norms on ‘related party disclosures’ define a relative as the spouse, son, daughter, brother, sister, father and mother who may influence an individual’s dealings with a company. The international financial reporting standards (IFRS), coming into force from April 2011, has domestic partners also among the list of relatives.
• The Institute of Chartered Accountants of India (ICAI), in its exposure draft on accounting standard AS-18 issued this year, mentioned the term ‘domestic partner’ as a close family member who may be expected to influence a person in his dealings with an entity.
• In some jurisdictions like Australia, New Zealand and some states of the US such as Oregon, Washington, Nevada, and California, domestic partnerships are treated at par with marriages.
• Related party transactions are defined as transfer of resources or obligations between related parties, regardless of whether or not a price is charged. As per the existing Indian accounting standard, a related party include holding companies and subsidiaries, associates and joint ventures and individuals such as key management personnel and their relatives.
• The current accounting norm in this regard, AS-18, came into effect from April 2001. From 2004, compliance with the standard was made mandatory for all listed companies, banks, financial institutions and insurance companies.
• As per the roadmap laid out by the ministry of corporate affairs, companies with a net worth of over Rs 1,000 crore, will have to prepare their accounts as per the IFRS from April 2011. Banks and insurance companies have been exempted from complying with these norms for the first year.
• Minimum wages for MNREGA to burn a hole in government finances
• Fiscal experts are worried the government could be staring at a financial black hole if it agrees to the demands to provide minimum wages under the employment guarantee law, as states could revise the minimum wages sharply knowing that the centre will be legally bound to pay.
• Take a look at this graphic which details the minimum wages in various states for agricultural labourers.
• First Principle on carry trade
• Serves as a good recap on carry trade.

International

• Why is the Korean peninsula on the boil all the time?
• The tension between the North and South in the Korean peninsula can be beautifully summed up in one sentence: “A war in search of peace.”
• Pyongyang says it needs a nuclear shield against the threat of US aggression.  Ithas long called for talks with Washington on signing a peace pact. The United States says this can be discussed but only after the North returns to stalled nuclear disarmament talks. Analysts say the North’s regime has lived for decades in genuine fear of a US attack. It sees a peace treaty as some sort of a safeguard.
• Complicating the equation is the North’s succession, with leader Kim Jong-Il preparing his youngest son to succeed him.

Language Lessons

• founder: Verb
• Fail utterly; collapse; Break down, literally or metaphorically
• eg: Attempts to force Kim’s regime back to disarmament talks have foundered after North Korea quit the six-party forum last year.