STCMA – 15th March 2019

Study Links Eggs to Higher Cholesterol and Risk of Heart Disease [Link]

Across the globe, a question of air safety becomes a question of American leadership [Link]. I agree. America dithered a bit and damaged itself a lot in the process. Some pilot friends explained the nasty ‘penny pinching’ that Boeing did. Sad and condemnable. Chalk one more entry in the journal of ‘how capitalism is destroying itself’

Elbridge Colby urges America to take India’s side [Link]

Disturbing story of the treatment of Kazakh Muslims by China [Link]

This is from February 14. A fascinating long read on China’s mistreatment or harassment of young Marxists [Link]

Aarati Krishnan provides some good statistics on aggregate wage growth and breaks it down well. She explains why the economy is lacking the spark it needs. Well written. [Link]

On Thursday, 108 economists and statisticians put out a note urging that agencies associated with the collection and dissemination of economic statistics should not be subject to any political interference. [Link].

Some question the timing but the appeal has gained in legitimacy in recent months. The government’s many moves on different statistical data have raised more queries than answered them.

Honestly, this requires much more than a cursory mention. The article on how we need to save our ignorance from artificial intelligence is rich with philosophical implications and questions too. [Link]

Undoing IBC

Only the other day, I did a post on the recovery of non-performing assets in India. I wondered or hoped if IBC would help drive a bigger recovery than we have seen in recent years. But, came this op.-ed., in BusinessLine that threw some cold water on my optimism. The reactions to this from friends (they shall remain anonymous) were interesting.

One wrote: This confirms the Gunnar Myrdal thesis: India is a soft state.

Another wrote:

I think it failed purpose in its conditional clauses. It tries to avenge and recover – both cannot sustain. Its dharma  should have been to extract the best price for the assets — from whosoever. This was not to be because the political objective of optics of punishment found place in the rules. The process of criminality or malfeasance cannot be pre-judged by barring original promotersits a mess from day one.

I asked him:

I see your point. Jayanth Varma has made the same point in one of his blog posts too that “dharma  should have been to extract the best price for the assets — from whosoever.”
However, I have this question:
if the borrower was able to bring  70 to 80 paise on the Rupee he owed, clearly, there was a very high probability that the default and the refusal to keep the loan current were mala fide?
How should that be dealt with? Should the asset be sold first back to him and then pursue him separately for fraud? That won’t work and might not be legally tenable.

His response:

I agree it’s complex. But case has to be proved not presumed. So question source of funding, create escrow and process investigation on the side.

Appears reasonable.

Another friend wrote:

But this is typical of the judiciary. India’s courts always act as they please. The law as written does not apply to them; they consider the written text as a suggestion to be considered as far as  possible. Because of the contempt law, the intelligentsia is reluctant to lay blame at their door. Much easier to blame the executive, the politicians etc.

The fourth friend sort of echoed the above:

This is the problem when you allow the judiciary and retired judges to decide such cases. They play to old instincts where worker interest ia paramount. Also NCLAT tends to take long judicial vacations

While two have blamed the judiciary and the retired judges who man the NCLAT for these interpretations, the truth might be more nuanced. The morality aspect may be given more weightage than is due or necessary while the recovery aspect should have been accorded primacy.

The Cadbury Makers

I had made a mental note long ago to check what Mondelez is since I see it every day during my walk in Sri City but never got around to doing some internet hunting. Today, I decided I must check them out. I did not know that they make chocolates for the Cadbury brand.

So, during my internet search, I found this ET article on their workforce. Felt happy to read about their workforce comprising a large portion of rural women from Andhra Pradesh. Good stuf.

Mondelez International has an interesting website, although I am not sure its ‘purpose and strategy’ would pass the Lucy Kellaway test.

Their ‘Compliance & Integrity’ page is rather comprehensive and, at first glance, looks impressive.

NPA recovery in India

On December 28, 2018, RBI released the ‘Statistical Tables Relating to Banks in Inda, 2017-18′. I just quickly browsed the table-headers online and looked at NPA recoveries in India :’ NPAs of Scheduled Commercial Banks Recovered through Various Channels’. The trend has not been good. In that sense, the implementation of the Insolvency and Bankruptcy Code (IBC) has been very timely. It may have initial troubles, changes and resistance, etc.

Which momentous change would go unchallenged or has gone unchallenged by entrenched interests? The table below shows the percentage recovery (col. (2)); percentage recovered through SARFAESI Act (Col. (3)) and the fourth column is the amount referred to the various sources for recovery – Debt Recovery Tribunals, Lok Adalats and SARFAESI Act. The recovery % are proportions of these amounts (Col. (4)).

Source: RBI

Let us see how these numbers evolve in 2017-18 and later, after IBC becomes accepted and established. Clearly, the table shows that IBC had not come a day too soon!

The ‘Enlightened’ West

Now, of course, all the 12 disciples, like Jesus himself, were Jews – yet, as this new exhibition shows, it was Judas who western art chose to depict as the Jew, often with the red hair that marked him out as a betrayer, alongside his mysteriously fair-haired, fair-skinned fellow apostles. The power of the Judas story lives on: Judas a byword for traitor, the word Jew and Judas almost indistinguishable in several languages, including German. [Link]

I am glad that this article appeared in ‘The Guardian’ (ht: Rohit Rajendran). The important thing to note for readers is how optics is used to influence us and manipulate us, without us being conscious of it – Judas with red hair and other jews are ‘fair-haired’ and ‘fair-skinned’!

So much for Western openness, tolerance, reason, racial harmony vs. Eastern (Indian) prejudice, intolerance, bigotry and untouchability, casteism, etc.

HFT is FTT levy!

On the 3rd of March, I had written a blog post ‘Towers of Meaninglessness’. See here. I was happy to find my old ‘colleague’ (we were not exactly colleagues but we were in different businesses of Credit Suisse) Douglas Cliggott making an insighful observation that High-Frequency/Algorithmic Trading is a form of transaction tax levied by those with faster machines and servers on those who have slower equipment. Thus, he makes the case for claiming and levying this ‘tax’, rather than it being appropriated by private market participants. A very fair case.

Douglas Cliggott is currently a lecturer at the University of Massachusetts in Amherst – my alma mater!