The capitalist fat cat has long held a treasured place in popular demonology. Russians used to deride casino capitalism before showing us how to do it really well - by playing with the house's money. British trade union leaders castigated the City of London even as it created jobs at many times the pace at which their own mulish Luddism destroyed them.
Even for Americans - perhaps especially for Americans - Wall Street has been the target of popular revulsion and caricature almost since the first banks opened in Lower Manhattan. From William Jennings Bryan's philippics against the “idle holders of idle capital” in 1896 to Michael Douglas' portrayal of Gordon “Greed is Good” Gekko almost a century later, the susceptibility of the American public consciousness to the perceived cupidity and selfishness of Wall Street is every bit as acute as that of any European.
When crises unfold and the idlers and greed merchants get their comeuppance, the instant reaction is a mix of anger and Schadenfreude. The public experiences a sort of Kübler-Ross style progression through the various stages of socialist grievance.
The inner Marxist rather enjoys the spectacle of rich bankers becoming victims of their own unsustainable excess, proof of the inevitable internal contradictions of the market process. Picture editors never tire of those photographs of some trader holding his head in his hands as the numbers on the screen behind him bleed red.
Then the inner Stalinist takes over and rages at the injustice of it all. How dare these Masters of the Universe with their Porsches and their incomprehensible gobbledygook bring us to our knees? Annihilate the options traders!
Finally, we get to the inner Leninist, surveying the economic wreckage and calmly insisting that Something Must be Done.
That is roughly where we are now in the Great Panic of 2008.
There is a compelling narrative that spans the transatlantic political space - all the way from Barack Obama through John McCain to the Labour Left and, for all I know, the British Conservatives too.
We got into this mess, it says, because we unleashed the forces of free-market capitalism. This is what you get when you let the animal spirits loose. We bought too willingly into all that 1980s ideology of deregulation and the primacy of markets. Government bowed out of the business of supervising and constraining the financial system. We need to realise the destructive folly of free markets and put the Government back in control. It's a convenient and compelling narrative but is deeply flawed both in its historical account and its prescription.
First, the mess we're in cannot simply be ascribed to an insufficiency of government intervention. It's true that some better regulation would have helped but in important respects there has been way too much government intervention.
Take the US mortgage market at the heart of the present crisis. One of the largest sources of the problem is the role of Fannie Mae and Freddie Mac, the giant US mortgage companies, government-sponsored enterprises that hold or guarantee almost half of America's $11 trillion mortgage market. They facilitated much of the explosion of the mortgage-backed securities market in the US and they did so because investors always believed that these oddly public-private hybrids carried an implicit government guarantee. (They were right.)
Critics gave warning repeatedly that if they were not scaled back they would threaten the stability of the whole financial system. (They were right again.)
The idea that these two collapsing behemoths somehow represent a failure of the market is about as plausible as saying that the collapsing boxer falling to his knees somehow represents a failure of the canvas.
Nor is it the case, as capitalism's critics maintain, that the regulatory structure has been dismantled. On the contrary, the US system of financial regulation has been built up over the years into a staggering skyscraper of rules and institutions that induce a sort of governing paralysis.
The regulatory framework is not too small. It is a mess, multiplicated in many areas among different state and federal agencies, and completely lacking in others. It is developed on a base that was created in the 1930s to deal with a wholly different financial environment. Most of those still extant rules that deal, for example with commercial banks, are redundant, while others that should be in place to deal, for example, with investment banks, are not there.
Or take the UK model - please, take the UK model. Tripartite regulation between the Treasury, the Bank of England and the Financial Services Authority was a work of genius - until someone rediscovered the old truth that when you have three people in charge of something no one is really in charge. Again this is not lack of regulation. It is the wrong sort of regulation, misdirected, incoherent and in some respects, excessive.
Or consider another example in which tight regulation is actually hampering economic recovery. Under international financial rules, banks are required to maintain a core capital base as a proportion of their total balance sheet. But in a financial catastrophe, as capital dwindles and assets become riskier, those rules require banks to cut their lending and investments, driving deeper into the vicious circle
The need is not for more regulation but for more relevant regulation, a more intelligent and targeted role for government that acknowledges the essential wisdom of markets but acts to protect the weakest from their excesses.
That might certainly mean a more active role for supervisors in examining bank balance sheets. But it is more likely to require not aggressive government intervention, but simply the insistence on better provision of information to avoid the chaos created in the past year because investors didn't have a clue about the quality of many of the assets that they held. And in some respects it might even require less public involvement in, or restraint of, the economy: for example, the dismantling of the US mortgage giants and perhaps less onerous restrictions on bank lending when the economy is contracting.
We certainly don't need a system based on the wholly implausible proposition that, in the end, government knows better than people. We should resist at all costs the historically challenged claim that politicians, or the officials they appoint, can possibly know better than free, liquid, well-informed markets in which, every day, hundreds of millions of people put their own money on the line to choose their own future.
Friday, December 19, 2008
Thursday, October 23, 2008
Does London Have the Best Indian Food ?
Better quality meat, fish and vegetables could very well put London ahead of any Indian city when it comes to high end Indian food. World renowned London-based Michelin star Indian chef, Atul Kochhar and the owner of the Benares Restaurant, a high-end Indian restaurant in the exclusive Mayfair area of central London said India needed to reform and reorganise its farming industry, so consumers and caterers had reliable access to fresh produce.
Watch out - be warned! Chefs in India could lose their cutting edge in preparing top quality Indian food to chefs in London.
Atul Kochhar is one of the few Michelin star Indian chefs. He warns that if India's farming industry is not reorganised - London will become the center of Indian cuisine in terms of quality.
It's not because of lack of good skill, or lack of good spices. It's purely because of lack of excellent ingredients. India doesn't have excellent ingredients in terms of fish, meat or vegetables, he says. Back in 2001 Kochhar became the first Indian chef to be awarded the highly coveted Michelin star. Kochhar is looking to return to India and open up restaurants. His biggest worry however is getting a regular supply fresh food.
The lamb farming has to be niche. The vegetable farming has to be amazingly good. All those things are there, but there is no organized effort in India he says
It wont be surprising that more Indian chefs will be awarded Michelin stars in the near future as the reputation of the Indian chefs in the city are growing.
There are more people conducting business with Indians. They are trying to understand the culture and cuisine better now and hence the recognition.
Kochhar says the corner curry house which churns unique English scorchers such as 'chicken tikka masala', or 'balti chicken' - are on the decline. It in fact, was never an authentic cuisine. I call that British Indian food - because that's how brutish people liked it. That's why they were cooking it and thats why it went on for so long. The curry house will always be part of the British landscape
Incredibly there are 1000 plus new restaurants that open every year in Britain, more than any other kind of business, unfortunately around 850 to 900 close within a year. It’s a dream that every couple has entertained. Why? Because secretly they all think that it’s so simple and that they could do it.
They think that as they know the mindset and what people like to eat, what they only wanted is the money and the opportunity.
Friday, October 3, 2008
'Shank town' brings in the cleaners to drive crime off the streets
A neighbourhood nicknamed "shank town" after a spate of stabbings is to adopt New York's approach to fighting crime.
Enfield council is using the "broken windows" theory in Edmonton in the hope it will halt killings, robberies and anti-social behaviour.
Scores of street cleaners, jet washers and environmental crime officers are carrying out a deep clean and fining litterers this week as part of the drive to make the area safer.
The thinking behind their strategy is that a problem ignored, even one as apparently minor as a broken window, sends out a signal that disorder is tolerated - encouraging more serious crime and vandalism.
Enfield council is using the "broken windows" theory in Edmonton in the hope it will halt killings, robberies and anti-social behaviour.
Scores of street cleaners, jet washers and environmental crime officers are carrying out a deep clean and fining litterers this week as part of the drive to make the area safer.
The thinking behind their strategy is that a problem ignored, even one as apparently minor as a broken window, sends out a signal that disorder is tolerated - encouraging more serious crime and vandalism.
Saturday, September 20, 2008
And they say the US Exported More !
WASHINGTON - The U.S. trade deficit rose to the highest level in three months, with record oil prices and a flood of toys and other imports from China swamping a solid gain in American exports.
The Commerce Department reported Wednesday that the deficit for October increased to $57.8 billion, the highest level since July and 1.2 percent above the September imbalance.
The widening deficit was slightly worse than expected and occurred even though U.S. exports of goods and services rose for an eighth consecutive month, climbing 0.9 percent to an all-time high of $141.7 billion. This gain was offset by a 1 percent rise in imports to $199.5 billion, also a record, as a surge in global oil prices sent America’s oil bill soaring.
The deficit with China jumped 9.1 percent to $25.9 billion, a record for a single month.
The rise reflected record imports from China, led by large gains in shipments of toys and games and televisions as retailers stocked their shelves for Christmas. The demand for Chinese imports is still surging despite a string of high-profile recalls of Chinese products from toys with lead paint to defective tires and tainted toothpaste.
So far this year, the trade imbalance with China is running at an annual rate of $256 billion, putting it on track to surpass last year’s $233 billion deficit, which had been the highest deficit ever recorded with a single country.
Those record deficits have triggered a backlash in Congress, with dozens of bills introduced seeking to penalize China for what critics see as unfair trade practices contributing to the loss of 3 million U.S. manufacturing jobs since 2000.
Treasury Secretary Henry Paulson and other members of President Bush’s Cabinet were meeting with their counterparts in China this week for the third round of talks aimed at defusing trade tensions. While minor agreements were expected, there was likely to be no breakthrough on the biggest point of contention, China’s undervalued currency. The currency disparity makes Chinese products cheaper in America and U.S. goods more expensive in China.
Some of the legislation in Congress seeks to impose penalty tariffs on Chinese products unless China allows its currency to rise in value against the dollar at a faster rate. But Vice Premier Wu Yi, the leader of the Chinese delegation, delivered a blunt threat of Chinese retaliation should the United States impose economic penalties on China.
“I need to be quite candid about this: If these bills are adopted, they will severely undermine U.S. business ties with China,” Wu said at the opening of the talks with Paulson on Wednesday.
The gain in exports was led by increased shipments of civilian aircraft, industrial equipment and telecommunications products. U.S. manufacturers have been benefiting from a fall in the value of the dollar against many other currencies including the European euro. The weaker dollar makes U.S. goods cheaper on overseas markets while making foreign products more expensive for U.S. consumers.
So far this year, the U.S. trade deficit is running at an annual rate of $704 billion, down by 7.1 percent from last year’s $758.5 billion, putting the country on track to see the first narrowing of the deficit after five consecutive years of record imbalances.
The import gain was led by an 8.3 percent jump in the foreign oil bill with petroleum imports setting an all-time high of $29.6 billion in October. The average price of a barrel of imported crude also set a record at $72.49 per barrel. The oil bill is expected to rise even more in coming months, reflecting the fact that prices jumped to near $100 per barrel at their peak this fall.
The Commerce Department reported Wednesday that the deficit for October increased to $57.8 billion, the highest level since July and 1.2 percent above the September imbalance.
The widening deficit was slightly worse than expected and occurred even though U.S. exports of goods and services rose for an eighth consecutive month, climbing 0.9 percent to an all-time high of $141.7 billion. This gain was offset by a 1 percent rise in imports to $199.5 billion, also a record, as a surge in global oil prices sent America’s oil bill soaring.
The deficit with China jumped 9.1 percent to $25.9 billion, a record for a single month.
The rise reflected record imports from China, led by large gains in shipments of toys and games and televisions as retailers stocked their shelves for Christmas. The demand for Chinese imports is still surging despite a string of high-profile recalls of Chinese products from toys with lead paint to defective tires and tainted toothpaste.
So far this year, the trade imbalance with China is running at an annual rate of $256 billion, putting it on track to surpass last year’s $233 billion deficit, which had been the highest deficit ever recorded with a single country.
Those record deficits have triggered a backlash in Congress, with dozens of bills introduced seeking to penalize China for what critics see as unfair trade practices contributing to the loss of 3 million U.S. manufacturing jobs since 2000.
Treasury Secretary Henry Paulson and other members of President Bush’s Cabinet were meeting with their counterparts in China this week for the third round of talks aimed at defusing trade tensions. While minor agreements were expected, there was likely to be no breakthrough on the biggest point of contention, China’s undervalued currency. The currency disparity makes Chinese products cheaper in America and U.S. goods more expensive in China.
Some of the legislation in Congress seeks to impose penalty tariffs on Chinese products unless China allows its currency to rise in value against the dollar at a faster rate. But Vice Premier Wu Yi, the leader of the Chinese delegation, delivered a blunt threat of Chinese retaliation should the United States impose economic penalties on China.
“I need to be quite candid about this: If these bills are adopted, they will severely undermine U.S. business ties with China,” Wu said at the opening of the talks with Paulson on Wednesday.
The gain in exports was led by increased shipments of civilian aircraft, industrial equipment and telecommunications products. U.S. manufacturers have been benefiting from a fall in the value of the dollar against many other currencies including the European euro. The weaker dollar makes U.S. goods cheaper on overseas markets while making foreign products more expensive for U.S. consumers.
So far this year, the U.S. trade deficit is running at an annual rate of $704 billion, down by 7.1 percent from last year’s $758.5 billion, putting the country on track to see the first narrowing of the deficit after five consecutive years of record imbalances.
The import gain was led by an 8.3 percent jump in the foreign oil bill with petroleum imports setting an all-time high of $29.6 billion in October. The average price of a barrel of imported crude also set a record at $72.49 per barrel. The oil bill is expected to rise even more in coming months, reflecting the fact that prices jumped to near $100 per barrel at their peak this fall.
Thursday, August 7, 2008
The Rise Of The Indian Thought Leaders
The late Sumantra Ghoshal had observed sometime back that a very different management philosophy is arising and will become dominant – the purpose, process, people philosophy.
We are moving beyond strategy to purpose; beyond structure to process; and beyond systems to people.
This will shift the basic doctrine of shareholder capitalism, and moderate it so that if people are adding the most value then people will increasingly have to be seen as investors not as employees. Shareholders invest money and expect a return on their money and expect capital growth. People will be seen in the same way. So they will invest their human capital in the company, will expect a return on it, and expect growth of that capital.
Ghoshals’ legacy lives on.
He mentored and then extensively co-authored with Harvard’s Nitin Nohria, and inspired his students toward a more holistic view of management and leadership and how it is linked to broader society.
Nitin and I have been co-authoring papers and cases on management as a profession, says Rakesh Khurana, an Associate Professor of Management Harvard Business School
A profession, not simply in a technical sense, but in a normative sense which considers thinks like responsibility, mutual respect for the various constituents in a business enterprise, such as employees and customers, and accountability.
Ideas which were catalyzed through discussions with Sumantra. Indeed, my current research and forthcoming book project is on management as a profession as developed through a sociological analysis of elite, U.S. business schools.
In the increasingly global world of business thinking, an American Spring could be followed by an Indian Summer.
A passage to India
Some US companies appear to have recognized the shifting intellectual tide. A number now regularly second people to India, reversing the traditional flow of corporate knowledge. Infosys, for example, runs an intern program in which Americans go to work in India. U.S. companies are also becoming more attuned to Indian culture.
Intel is not alone. Other high-tech firms including Adaptec, AMD, Intuit, and Rockwell Automation also offer Indian cultural lessons to their employees. Unlike some diversity training, which is aimed at avoiding law suits, Indian cultural programs are specifically aimed at boosting performance. Some companies, like chipmaker AMD, have gone further. For its Indian Global Immersion Program, the firm flew teams of Indian workers – at $17,000 per person – to Sunnyvale, California, and Austin, Texas, for a month of cultural training with US managers.
Some US companies appear to have recognized the shifting intellectual tide. A number now regularly second people to India, reversing the traditional flow of corporate knowledge. Infosys, for example, runs an intern program in which Americans go to work in India. U.S. companies are also becoming more attuned to Indian culture.
Courtesy : The book by Stuart Crainer And Des Dearlove
Stuart Crainer and Des Dearlove are the founders of Suntop Media. Their " Thinkers 50 " list of most influential global business thought-leaders is a definitive bi-annual guide with endorsement from European Foundation of Management Development (EFMD).
We are moving beyond strategy to purpose; beyond structure to process; and beyond systems to people.
This will shift the basic doctrine of shareholder capitalism, and moderate it so that if people are adding the most value then people will increasingly have to be seen as investors not as employees. Shareholders invest money and expect a return on their money and expect capital growth. People will be seen in the same way. So they will invest their human capital in the company, will expect a return on it, and expect growth of that capital.
Ghoshals’ legacy lives on.
He mentored and then extensively co-authored with Harvard’s Nitin Nohria, and inspired his students toward a more holistic view of management and leadership and how it is linked to broader society.
Nitin and I have been co-authoring papers and cases on management as a profession, says Rakesh Khurana, an Associate Professor of Management Harvard Business School
A profession, not simply in a technical sense, but in a normative sense which considers thinks like responsibility, mutual respect for the various constituents in a business enterprise, such as employees and customers, and accountability.
Ideas which were catalyzed through discussions with Sumantra. Indeed, my current research and forthcoming book project is on management as a profession as developed through a sociological analysis of elite, U.S. business schools.
In the increasingly global world of business thinking, an American Spring could be followed by an Indian Summer.
A passage to India
Some US companies appear to have recognized the shifting intellectual tide. A number now regularly second people to India, reversing the traditional flow of corporate knowledge. Infosys, for example, runs an intern program in which Americans go to work in India. U.S. companies are also becoming more attuned to Indian culture.
Intel is not alone. Other high-tech firms including Adaptec, AMD, Intuit, and Rockwell Automation also offer Indian cultural lessons to their employees. Unlike some diversity training, which is aimed at avoiding law suits, Indian cultural programs are specifically aimed at boosting performance. Some companies, like chipmaker AMD, have gone further. For its Indian Global Immersion Program, the firm flew teams of Indian workers – at $17,000 per person – to Sunnyvale, California, and Austin, Texas, for a month of cultural training with US managers.
Some US companies appear to have recognized the shifting intellectual tide. A number now regularly second people to India, reversing the traditional flow of corporate knowledge. Infosys, for example, runs an intern program in which Americans go to work in India. U.S. companies are also becoming more attuned to Indian culture.
Courtesy : The book by Stuart Crainer And Des Dearlove
Stuart Crainer and Des Dearlove are the founders of Suntop Media. Their " Thinkers 50 " list of most influential global business thought-leaders is a definitive bi-annual guide with endorsement from European Foundation of Management Development (EFMD).
Tuesday, June 17, 2008
Corporate Lesson
A pastor, while driving home happened to pass a nun, to whom he offered a lift. The nun got in and sat down and crossed her legs to expose a pretty leg.
The priest having lost his concentration couldn’t take it no more and placed his hand on the leg. The holy woman didn’t say a word but asked the pastor to remember psalm 129.
Embarassed, the pastor apologized and dropped the nun at her convent and went inside the church to look up psalm 129, which indicated "Go forth and seek; further up, you will find glory"
The moral :
Always be well informed in your job; or, you might miss great opportunities!
The priest having lost his concentration couldn’t take it no more and placed his hand on the leg. The holy woman didn’t say a word but asked the pastor to remember psalm 129.
Embarassed, the pastor apologized and dropped the nun at her convent and went inside the church to look up psalm 129, which indicated "Go forth and seek; further up, you will find glory"
The moral :
Always be well informed in your job; or, you might miss great opportunities!
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