Sunday, May 31, 2009

India Elects '2009

The marathon Indian election has finally come to an end. It was done in five phases, and over a month and half. Now the electorate has finally delivered. May 16' 2009 was another one anscious day for every citizen in India, that will decide who is going to rule the country for another 5 year term. The opinion polls and exit polls were banned, which i feel was the right thing to do, and the suspense was there till the end, as no one knew the trend. Even though popular television channels came up with opinion polls after the final phase of polling on may13, the results was always when its out, its not true until its true. Previous polls were way of the mark before and there was no reason why it would be any different this time. The pollsters failed again, i should say. In a huge country as diversified as India, it wouldn’t be honest to ask someone judge the trend and come up with right numbers, when there is no wave across the country. There were some violence in the initial two phases, mostly in central India because of Maoist groups. Overall the election was peaceful with minimum incidence. The election commission of India has proved, one more time. The opinion polls, from New Delhi based television channels, predicted advantage to the Congress party, but didn’t predicts the numbers right. In other words, they predicted the trend and didn’t predict the numbers. It wouldn’t be fair to ask them predict numbers. That is mainly attributed to the fact that India still lives in masses, and talks only in Ballots. The round-the-clock news channels reflect the mood of Urban India rather than rural India. As Jawaharlal Nehru said 60 years before, that India lives in its villages, is still true. In the late 90s, the former chief minister of Madhya Pradesh, Digvijay singh had a five-year term and was running for re-election. The polls suggested a verdict against him. He was asked by a reporter after voting his ballot in the elections on what he thought about the election, now that the opinion polls has suggested that his government may lose. He replied, "Hum ko vote dena valaa, mike mae bath nahin kartha" (people who vote for us, do not talk in mikes). when the results came, he was proved right and won a decisive second term in office. The ordinary Indian electorate has once again kept the results to him till the end, and has emerged victories. The congress party with their allies had cruised towards victory, just falling short of majority. The Congress by itself managed to get 206 seats, which is the highest number of seats by a single party after its own performance in 1991, post Rajiv Gandhi assassination election. The opposition really failed to create space for themselves in the number game, and the results are decisive against the incumbent congress government. There was no anti-incumbency among the mood of the people. Congress emerged victorious in Andhra Pradesh, Uttar Pradesh, Kerala, Rajasthan, Maharashtra, and with its allies in West Bengal, Tamil Nadu. This election will be remembered for ever, because of the surprising victory for Congress in Uttar Pradesh. No one expected that including the Congress party. They allies just left the congress in the cold, before the elections. The major UP allies like Samajwadi party was willing to give only a few seats as part of its pre-poll agreement, and the Congress decided to go it alone. It was Rahul Gandhi's decision to go it alone. It was a bold decision, which turned out to be a good one. Congress vote share in UP, has been steadily coming down for over two decades now. UP sends the highest number of MPs to the parliament, and the Congress or the BJP cannot afford to slide in this crucial state. The regional members here, had split through the main vote bank of the national parties in Congress and BJP. The Congress has won back the hearts and minds of the people in this crucial state. Congress has once again became a leading political force in UP. In future elections, the regional parties like SP, BSP has to now depend on Congress for any central elections. However Congress party's favorability in the state election needs to be seen. Unless the state management is cleaned up with renewed with performing leaders, and avoiding political infighting within the party, it has minimum chances of regaining its supremacy. SP and BSP have really taken a shock from the results. Their unconditional support to the congress government at center, says that they have no where else to go. The anti-incumbency factor in the state of Kerala ensured a sweep for congress in the state. YSR has ensured, Congress is re-elected in the state of Andhra Pradesh, a phenomenal performance both in state and central results. YST deserves lot of credit for his performance. The Chiranjeevi factor ensuring the vote against the congress is split. YSR is the clear winner. Tamil Nadu has been a real interesting state, particularly after the UPA members walking out of alliance and forging ties with opposition AIADMK, and more importantly the Sri Lankan issue. The opposition alliance was huge, and the majority perception was the ruling alliance would be reduced to just a hand full of seats. On one point, even a clean sweep by the opposition was predicted. But when the results came out, the whole theory was proved wrong. The DMK along with the congress and smaller allies has won all but 11 seats including the union territory of puducherry. Just like Chiranjeevi in Andhra Pradesh, it was Vijayakanth's DMDK that split the anti-DMK/congress vote. If the DMDK wasn’t a factor, then the results would have been the other way around. DMDK would be a significant force, when assembly elections are due in 2011, and their stand to be an alternative to DMK/AIADMK would definitely resonate in the minds of voters. Biggest winner: Congress party is undoubtedly the biggest winner in the election. It managed to win the crucial minority vote across the nation. The minority votes moved to the Congress at the expense of regional players like Laloo's RJD, Mulayam's SP. Y.S. Rajasekar reddy is a winner for the congress, as he romped in the highest number of MPs for the congress from Andhra. Navin Patnaik in Orissa surprised the Indian electorate by almost sweeping the state and central for himself. His election as chief minister for the third time is an important indication of how the ordinary electorate is getting more and more mature as democracy evolves. Bihar's Nitish kumar almost sweeped the state Bihar with its allies in BJP. His governance was acceptable by the people of Bihar. Rahul Gandhi's decision to go alone in UP and Bihar has made him project as a wise leader who wants the build the party on its own strength and not dependant on alliance strength. He is expected to continue his good work. His image in the party and in the minds of the people has risen significantly. Sonia Gandhi in her own style still controls the party and is in transition mode for yound Rahul to take over. BUT the clear winner of ALL has been the Prime Minister Manmohan Singh. People of India trust him, and his performance has been acceptable. His hard work and his dedication in work has gone well with the electorate. His honesty still remains impeccable. This is a verdict for him. Biggest Losers: Even though the main opposition BJP is perceived to be the biggest loser; i think there are others who lost more. The third front with the left parties just managed to get 20+ seats. Their tally got reduced from 60. Their formula for third front didn’t work. The alliance partners were found untrustworthy. Failure to promote a universal face for Prime Minister cost them. Every constituent has its own PM candidate. The third front was a misadventure. Laloo's RJD was a complete failure. As Laloo himself admitted, it was mistake not to align with the Congress. RJD reduced to just 4 seats, even the chief losing one of the two he cautiously contested. Nitish Kumar has simple outplayed the opposition by his governance. Laloo's comeback is a real question. He needs to go to his grass roots, and his rail bhavan life has come to an end. LK Advani is a loser. PM Manmohan Singh said during the campaign, the Advani is not a Prime ministerial material. It seemed to be true amongst the Indian electorate. His hindutva charisma and his track record as a divisive force failed to resonate in the minds of the electorate as a PM candidate. His polical life and his dream to be the PM has finally come to an end. Five years from now, he would be more than 86 and BJP projecting him again as PM is unlikely, particularly after this election results. Gujarat chief minister was projected to be PM candidate in the middle of the election and it didnt go well across the country. The 2002 Gujarat riots continue to haunt him, and his popularity will not improve among the moderate India, who form the majority of the electorate. It was a vote for stable government. It was a vote against the smaller parties, who were considered road-blocks to the Nations development. The recent bomb blasts across the country and eventual campaign by BJP accusing the congress of being soft on terror doesn’t seem to have had favor with the voters. The voters has given the Congress, the benefit of doubt, and now expect such acts don't repeat. The victory for congress in all those blast cities, like Delhi, Mumbai,Jaipur, Hyderabad is a classic example that people think congress can handle those issues better than a saffron BJP. Minorities did not want the communally polarizing personality like Advani to become prime minister, and that consolidated the Congress votes across the nation. The left was considered out of touch with reality with their economic policies. Their influence on the UPA government's decisions in the past five years was considered not helpful by majority electorate. Their defeat in their bastion like West Bengal, Kerala is pretty much reflects that. Time is running out for them and they have to come up with something extra ordinary to retain WB in 2011 assembly elections. Overall the people of India have won. The democracy has won. Huge challenges lie ahead for the new UPA government. With the verdict, the expectations from the UPA government have gone high. With a global recession around, things are not going to be easy for Manmohan Singh and his team. How they tackle the economic issues and at the same time provide good governance with development remains to be seen.

Wednesday, February 11, 2009

Banks Of America

Banks Of America
Today was a special day for the heads of major Banks in the US as they had to march to the capital hill to answer the law makers, on questions regarding the
financial crisis they are widely believed to have created. All the major bank heads, including citibank and Bank Of America were grilled by members of the
congress on their past practices and future plans. Future plans would be their plans on how to make more money from the tax payers money they just borrowed
as part of the TARP (Troubled Asset Recovery Program) funds. Couple of days before, this time across the Atlantic in the UK, the Bristish Bank majors were
grilled in the House of Commons. The meeting became famous after all the bosses mentioned the word "sorry". Recently the Pope had to ask for "sorry" too, may
be that is why the Banking bosses too felt asking for "sorry" could probably be divine. They would be alright, as long as the government doesnt ask for the
money they took in previous years in compensation packages, when their institutions were going down in value and making bad acquisitions.
Banks in the western world were always considered to be more customer friendly and are well known for generous loans and business practices. These were signs
of economic progress and nation building. The credit history of individuals were monitored closely, and the credit worthyness of the borrowers were more
often done correctly. The technology was always there to help them do this. They invested huge amount of money in information technology, and revolutionised
the way banking worked. if you had seen any Banks in south asian countries, which are mostly developing countries, the physical structure would be a shaddy,
dim place. its mostly government owned and operated in the lesser scale of attractiveness. On the other hand, the banks in the west were operated as
corporate entities and had huge structures, investments on their offices, massive investment in advertising. Its a altogether a different kind of entity.
Charlotte, North Carolina remains the biggest city for bankers in the US. Both Bank of America and wachovia have their head quarters in charlette and a
casual drive in the city would give a glimse of how big they are, and how much they own. They own not only huge skyscrappers, but also football grounds. They
are really really huge than any corporations in the world.
As the saying goes, when things are good they are really good and when things are bad it may be really be worse. American banks in the last decade gave loans
to potential house buyers. As the interest rate was kept low artificially by then treasury chairman Alan Greenspan, there was an artificial boom in the
housing industry. After the tech bubble burst in the 2000/2001 period, the Government wanted to boost the economy. It was the housing that the government
started encouraging, in the name of increasing the home ownership across the country. The housing boom in the past 4-5 years has been in effect to get over
the hangover caused by the tech bust. As the banks started lending to boost housing, the lending standards came down as the years rolled on. Fannie Mae and
Freddie mac is a government sponsored entities (GSE) that was partly owned by government and the private investor to facilate funding for banks. They are the
intermediaries between the banks that do the lending and the private investors who would like to fund it. The Banks make a profit for the investors on the
mortgage lent. So basically the bank increased lending with the help of these institutions. More and more they lent, there were more and more investors
willing to fund the bank hoping for higher returns. GSE companies sold these mortgages to investors as Mortgage backed securities. These are securities
created by the system to fund the mortgage industry in the US. These securities were sold all over the world in multiple forms. They were in turn sold over
and over again across the world. Investors mostly where soverign wealth funds and banks in other countries which were sitting on top of lot of money
depositted by their customers in their respective countries. The House prices in the US started climbing to historical levels across the country. Mortgage
were available in plenty and ordinary people pounced on the boom, hoping to make some easy money. The bubble started to grow and grow until it burst. During
the boom period Banks relaxed their lending standards so much that they began giving mortgages to risky borrowers. The money lent to risky borrowers are
usually referred to as NINJA (No Income No Job or Assets) loans. This was caused because of increasing competition among lenders to grab the market and the
value of properties which kept on raising. There became a general view that the real estate market would not come down. Much of the buyers were tempted by
AMR (Adjustable Mortgage Rates) by lending companies. Here, you pay a low interest for the initial period and the repayment rate increases after a period of
time, drastically. This would come with a very low or no downpayment and the ordinary customer was ready to take the risk. After all he doesnt loose much, as
he thinks he is going to make a big sale out of it, and would eventually cash it after the value of the property rises in value. There are also allegations
that the people who worked for lending firms, sold AMR lending to buyers, without explaining the risks they might face in future when things dont work well.
This went for quite a while and the housing bubble burst with the subprime borrowers defaulting to pay. what started as a subprime crisis moved slowly to the
wider mortgage industry, and as of now there is a full blown housing crisis. The value of homes are going down. There are more houses in the market than
people willing to buy. The gradual increase in unemployment has checked the house affordability of people and foreclosure has become common. People who
bought houses during the peak of the boom, have come to realize that their houses are no longer worth the money they bought it for. To avoid further loss on
their income, they simple go for foreclosure or just walk away, defaulting on loans. Lots of AMRs are up for reneawal as the years roll on, and the crisis
could get only worse.
In the whole mess, banks were caught naked. The loans started defaulting, and the mortgage backed securities, which once was considered a safe haven was just
running for cover. Except the name there was absolutely nothing "secure" about that. Huge capital in hedge funds and money market securities started
collapsing at the weight of the subprime crisis at the start, followed by the mortgage industry in general. GEC companies started to loose values as their
exposure to bad loans surfaced in the market. Fannie and Freddie fell from their peak of $40 to meare penny stocks. A huge sum of money was just lost by
these GSE. The government has to finally step in to save these firms to avoid further damage as they owned or guaranteed half of total US housing. The demise
of fannie and freddie stocks made inroads to the real economy. With Bear Steans collapsing in the March of 2008, the market assumed it could be a one-off
case. JP morgan bought it for a throw away price. When everything was seemed to have controlled the next big upset came in the form of Lehmann brother
collapsing fully on September 15 2008, after the market came to know of its enormous exposure to mortgage securities and their shares plunged. Merryl Lynch
was acquired by Bank Of America the same day. It was a sad day for those corporate giants who had ruled the corporate world for decades. When they came down,
it was just like the titanic, the legacy wasnt going to save them.
Until September, the Banks were considered relatively doing ok, but the stock holders started to lose confidence in the banks and went in for huge sell offs.
Banking stocks took a huge beating in the last quarter of 2008. Bigger names such as Washington Mutual (well known as WaMu) and Wachovia had to lose market
value so fast, that the government had to step in to save them. WaMu was bought by JP Morgan and Wachovia went to Wells Fargo, after a bitter competition by
rival Citibank. The largest US Bank lost the battle for buying Wachovia to Wells Fargo only to later realize that they wouldnt survive either. Being the
biggest US bank in the world, the government stepped in to save it one more time. Next the Citibank was Bank Of America, which was considered relatively
safe. But there was always skepticism in the Market, since their deal with Countrywide. Any one who would have watched television in the US in the last few
years would know, what country wide is. They were the largest mortgage lenders... remember the guy in the AD saying, 'No one can give you what countrywide
can give, because we are the largest mortgage lending company in the country". The deal was always in a sea-saw, and Bank Of America had threatened to walk
away from the deal many times. Bank Of America bought countrywide after countrywide started failing and was unable to re-pay the bank's loan. Most loans
given through countrywide were bought from Bank Of America. Before they could digest the countrywide deal, they were forced to buy Merry Lynch by the
government in september immediately after Lehmann Brother collapsed. The Government guranteed some of Merryl's loses and bank of America was basically forced
to be patriotic. Struggling with two huge deals, Bank Of America soon realized the Merrly Lynch deal was so toxic, and it had more loses than it was
initially thought. It fired John Thain, who made that deal and has also threatened to walk away from deal. But the Government has backed it to avoid market
So, as of now, most big banks are not doing well and are in emergency units, only to be taken care by government. these Huge Banks and its executives were
supposed to be the masters of universe months before, and the tide has changed now. There are about 10,500 FDIC insured banks in the US. Almost ninety
percent of the deposits are with the top few banks. John Thain has made his money and walked away in spite of spending 1.2 million on his office, when the
company was in dire loses. The loses made by people like him is now in the hands of the government as there are no takers. The whole banking system has
collapsed in the western world as a result of this. The boses of these firms have almost nothing to defend. The people's representative are asking questions,
as why did you give loans to subprime borrowers, and immediately following up with another question, why are you not lending the TARP money to borrowers now.
Its a poor state of affairs.
Historically, banks were not supposed to be for profits. Just think for a minute that there were no banks in the world. People have to carry money in their
pockets or have it in their home. This was risky as it might get stolen or they may be lose it. So banks were created so that, people could keep their
belonging, money - safe and get it as and when its needed. This is how the initial banking system should have started. Over the years innovations came in and
as the human civilisation started maturing it was used for other purposes as well. Now the banks in the west has reached a point where "making more money"
has become the primary responsibility than to "preserve" customers money. Too much innovation in the money market has brought about negative climate to the
financial system. Usually when the government owns a entity and its being privatised, private people rush to buy. it might be a loss making entity, but still
the private ownership wants to buy it with the hope that it can run it for profit as the whole infrastructure already exists and all it had to do is to do
good management. On the contrary, the banks of americas are up for sale and no private buyers are willing to part their money on it... which is left out :
only the government (poor guy) steps in to buy it. its a low end of greed in private sectors, and lack of responsibility on those people who managed it. who
is to blame for this? The government, i would say. it should have regulated at the right time. Bubbles will burst and even the mighty banks are no exception. As Peter Schiff out it, When a
teacher leaves a bag of chocolates in the class for a sometime and is back to see all the chocolates are eaten by the students.. who do you blame... can you
blame the kids for eating them? Of course the teacher who left it there.

Sunday, February 8, 2009

Great Discovery (An Extract from - 100 Greatest Science Discoveries of all time)

Why Is This One of the 100 Greatest?

Copernicus measured and observed the planets and stars. He gathered, compiled, and
compared the observations of dozens of other astronomers. In so doing Copernicus chal -
lenged a 2,000-year-old be lief that the earth sat motion less at the center of the universe and
that planets, sun, and stars rotated around it. His work represents the beginning point for our
understanding of the universe around us and of modern astronomy.
He was also the first to use scientific observation as the basis for the develop ment of a
scientific theory. (Before his time logic and thought had been the basis for theory.) In this
way Copernicus launched both the field of modern astronomy and modern scientific

How Was It Discovered?

In 1499 Copernicus graduated from the University of Bologna, Italy; was ordained a
priest in the Catholic Church; and returned to Poland to work for his uncle, Bishop
Waczenrode, at the Frauenburg Cathedral. Copernicus was given the top rooms in a cathedral tower so he could continue his astronomy measurements.
At that time people still be lieved a model of the universe created by the Greek scientist,
Ptolemy, more than 1,500 years earlier. According to Ptolemy, the earth was the center of
the universe and never moved. The sun and planets revolved around the earth in great circles, while the distant stars perched way out on the great spherical shell of space. But careful
measure ment of the movement of planets didn’t fit with Ptolomy’s model.
So astronomers modified Ptolemy’s universe of circles by adding more circles within
circles, or epi-circles. The model now claimed that each planet traveled along a small circle
(epi-circle) that rolled along that planet’s big or bital circle around the earth. Century after
century, the errors in even this model grew more and more evident. More epi-circles were
added to the model so that planets moved along epi-circles within epi-circles.

Copernicus hoped to use “modern” (six teenth-century) technology to improve on Ptolemy’s measurements and, hope fully, eliminate some of the epi-circles.
For almost 20 years Copernicus pains takingly measured the position of the planets
each night. But his tables of findings still made no sense in Ptolemy’s model.
Over the years, Copernicus began to wonder what the movement of the planets would
look like from an other moving planet. When his calculations based on this idea more accurately predicted the planets’ actual movements, he began to wonder what the motion of the
planets would look like if the earth moved. Immediately, the logic of this notion became
Each planet appeared at different distances from the earth at different times through out
a year. Copernicus real ized that this meant Earth could not lie at the center of the planets’
circular paths.
From 20 years of observations he knew that only the sun did not vary in apparent size
over the course of a year. This meant that the distance from Earth to the sun had to always
remain the same. If the earth was not at the center, then the sun had to be. He quickly calculated that if he placed the sun at the universe’s center and had the earth or bit around it, he
could completely eliminate all epi-circles and have the known planets travel in simple circles around the sun.
But would any one believe Copernicus’s new model of the universe? The whole
world—and especially the all-powerful Catholic Church—be lieved in an Earth-centered
For fear of retribution from the Church, Copernicus dared not release his findings during his life time. They were made public in 1543, and even then they were consistently
scorned and ridiculed by the Church, astronomers, and universities alike. Finally, 60 years
later, first Johannes Kepler and then Galileo Galilei proved that Copernicus was right.

Fun Facts: Approximately one million Earths can fit in side the sun. But
that is slowly changing. Some 4.5 pounds of sun light hit the earth each