Pinned Post - Flipkart vs Amazon Series

Flipkart and Focus 4 - Beware the Whispering Death

The fourth part of my series on Flipkart and its apparent loss of Focus and its battle with Amazon appeared in DNA on April 20th, 2015 . ...

Aug 30, 2010

The End of Wall Street

The End of Wall Street 


This is by far the best account of the financial crisis and its origins. Part historical, part journalistic, part thriller. The ending however peters out somewhat. A must-read on the whole.

This book is far the most complete account of the financial crisis of 2008. It begins with a chapter each on the players that were to play their part, dutifully, in bringing down, well almost, the economic foundations of western capitalism - each chapter providing a peek into the players and the maladies that afflicted the financial system: the origins of the housing boom, the NINA mortgages (No Income No Asset), Countrywide, New Century, subprime lenders, S&P, Moodys, Fitch, the ratings corruption that enabled the subprime "Niagara", CDOs, Lehman, AIG FP (AIG Financial Products), and more.
The second part, though there is no clear delineation, is a very tightly scripted account, reading almost like a racy thriller, a minute by minute, hour by hour retelling and reconstruction of the proceedings and discussions and negotiations and the back-and-forth that went on to save Lehman, and not Bear Sterns, how Bank of America wanted to buy Merill Lynch, then not, and then did eventually, are described very, very well. The almost non-stop negotiations, the preparatory work for filing for bankruptcy (it's not as simple as we tend to think it is). Can't stop reading.
The book's eponymous chapter, "The End of Wall Street", unfortunately, is the weakest of the book, relatively speaking. It could have been better written, and could have done a better job of explaining why or how this is the end of Wall Street. By all accounts, it is back to business as usual for Wall Street. With fewer players for sure. Which means more concentration of financial muscle.

To palm off securitized mortgages, you had to first sell enough mortgages. One way you did that was to sell mortgages to people whose credit worthiness should have disqualified them. How you can sell them a mortgage is by approving them to be eligible for one. And you approve them if you overlook falsification of the mortgage applications.
It was widely believed among the staff that stated borrowers brazenly lied (employees referred to these loans as "liar loans"). But underwriters were discouraged from scrutinizing their applications. [page 30]
....
Remarkably, customers who had been rejected after documenting their income were urged to re-apply, this time on a no-doc basis. According to former employees, Countrywide loan officers would "assist" them - in short, coach them to lie - whereupon the loans were approved. One highly productive loan officer from in Massachusetts simply cut and pasted files from the Internet to concoct a fraudulent verification of an applicant's employment. [page 31]
When you read this, the paragraph below, it does make you realize just how manipulative and exploitative the mortgage market is in India; perhaps a reflection of a lack of regulatory foresight, or the emerging nature of the mortgage market and its size still too small to warrant a close enough look, or perhaps the marketing genius of home loan providers in convincing customers that getting fleeced is in fact a good thing.

Like Countrywide, WaMu offerd a smorgasbord of exotic loans - subprime, piggybacks, and option ARMs - and each innovation incrementally weakened credit. As home prices rose, fewer people could afford to buy with conventional loans. Thus, traditional mortgages gave way to adjustable loans. Fluctuating interest rates enabled banks to charge a little less at the outset, making mortgages a tad more affordable. Adjustables were followed by interest-only loans - more affordable still - on which the customer need not repay principal for years. Most permissive of all, option ARMs deferred a portion of the interest as well as the principal and affixed an adjustable rate. [page 33]
Here is where the author seems to take the position that speculators were in fact also contributing to the mess that ensued. Perhaps, but I would disagree. The analogy the author constructs - of a driver being refused insurance because his neighbors are betting on his having an accident - goes only so far and is incomplete. What if the reasons the thus-far-accident-free driver's neighbors have been betting on him having an accident is that he has taken to driving on the highway at speeds of 100 miles per hour. With failing brakes. And driving drunk.
... Wall Street had constructed an alternative way of speculating against troubled corporations, via derivatives. and this wholly unregulated market doubled back on its Wall Street creators with a vengeance. Credit default swaps had been invented by financial engineers at Bankers Trust as a form of insurance on corporate defaults. The initial purpose was supposedly as a hedging vehicle.  ... Unfortunately, such hedges dulled the bank's incentive to perform the one function for which society depended on it: thoughtfully rationing credit to worth borrowers. [page 157]
...
A larger problem was that anyone - not just a lender with a stake in the corporation's well-being - could purchase a swap. In the world of traditional insurance, there are long-standing rules that prohibit dis-interested parties from taking a flier... But speculators, short-sellers, or anyone else could buy credit default swaps. The market evolved into a casino in which market sentiment determined the supposed odds of default. [page 158]

That Goldman Sachs was seen as insulated from the sub-prime crisis, partly because of the fact that so many past Goldman Sachs employees had gone on to positions of influence in the US administration, working for Presidents on both sides of the political spectrum, is further underlined when Paulson, US Treasury Secretary in the Bush Administration, installed Edward Libby as the new chairman of AIG:
The choice was astonishingly obtuse. Liddy was a Goldman Sachs director (a post he immediately quit), and Paulson was already relying on far too many former cronies, violating at least the appearance of impartiality. The Treasury was infiltrated with Goldman bankers who presumably harbored at least a passing loyalty to their former firm. Also, Paulson in this period spoke frequently to Blankfein, the self-effacing former gold trader who had succeeded him at Goldman. Blankfein ... had been groomed by Paulson for his present post. The connection was close, and it was whispered (and later asserted in press accounts) that Paulson had engineered the AIG bailout to spare Goldman from further loss. [page 214]
The author however goes on in the very next paragraph to explain why this charge is not necessarily accurate.


When Paulson announced, one would say quite unilaterally, to the CEOs of the leading banks on Oct 13, that the US government was purchasing a preferred stock in these banks, "it was the greatest intervention in the financial system in seventy years, and perhaps ever, enacted under a conservative president, a Treasury secretary who hailed from Goldman Sachs, and a Fed chief reared on the virtues of financial models and the supposed perfectibility of the market." [pages 271, 272]






© 2010, Abhinav Agarwal. All rights reserved.

Dilbert - Build A Better Life by Stealing Office Supplies


Build a Better Life by Stealing Office Supplies: Dogbert's Big Book of Business (Dogbert n' Dilbert's humour at work)
Amazon.com review
This is an old one - first published in 1991, but remains depressingly relevant and just as funny. The cartoons on career advancement, office politics, clueless managers - are bitingly accurate. How funny they are depends on which side of the office desk you sit on. A person on one side may see them as the frustrated outpourings of a dysfunctional workforce, while the other side may view them as satire hitting the nail on the head.

Since this is an early Dilbert series, Wally is not there. Alice has not yet made her appearance. Nor has Asok. Outsourcing is a decade away. E-mail is not a common workplace affliction. The World Wide Web is waiting for the browser. Dilbert is leading a lone charge, or suffering all alone at the hands of his boss. Dilbert is also less sarcastic than he is now - a reflection of the author's growing confidence that Dilbert may be a lowly cubicle dweller, but his Pointy Haired Boss cannot afford to fire him.

Build a Better Life by Stealing Office Supplies: published by Andrews McMeel Publishing







Build a Better Life by Stealing Office Supplies - Nicholas Brealey Publishing
Build a Better Life by Stealing Office Supplies: Dogbert's Big Book of Business published by Andrews McMeel Publishing

ISBN: 9780836217575
Format: Paperback
On Sale: March 3, 1994





© 2010, Abhinav Agarwal. All rights reserved.

Aug 28, 2010

Golden Temple

Harmandir Sahib ("hari ka mandir") is the holiest shrine of the Sikhs. It is open to all, and I think it remains open at all hours of the day, the night visit being somewhat special, to get to watch the Harmandir Sahib bathed in the light of the night.

Harmandir Sahib - Wikipedia, the free encyclopedia
The Harmandir Sahib[3] (Punjabi: ਹਰਿਮੰਦਰ ਸਾਹਿਬ) or Darbar Sahib[4] (Punjabi: ਦਰਬਾਰ ਸਾਹਿਬ ), informally reffered to as The Golden Temple,[5] is the holiest shrine in Sikhism. It is located in the city of Amritsar, which was established by Guru Ram Das, the fourth guru of the Sikhs and is known as "guru di nagri" meaning city of the Sikh Guru.
I shot some six or seven photos, meaning to use them to stitch together into a widescreen image. This one below, I used three. You can see the Harmandir Sahib in the center, and parts of the Akal Takht at the right.
Panoramic shot of the Golden Temple


View Larger Map

The Harmandir Sahib is considered holy by Sikhs because the eternal Guru of Sikhism, the Sri Guru Granth Sahib, is always present inside in it and its construction was mainly intended to build a place of worship for men and women from all walks of life and all religion to come and worship God equally. [6][7] The Sri Guru Granth Sahib is the holiest literature in the Sikh religion [8], the tenth Guru of Sikhism, Guru Gobind Singh on 7th October 1708 at Nanded made it the eternal Sikh Guru and the leader of Sikhism. [9]

I love this shot below. By using the zoom lens at the zoom end of the lens, and keeping the aperture as wide open as I could, everything in the background is blurred out, only the Sikh,  known as a "sewadar" (सेवादार), and his spear in sharp focus. And the expression on his face - a remarkable mix of gravitas and authority, yet something mature and gentle too in his eyes. Yes, I am glad I shot this photo. The only regret is that I should have spent some time and tried to get the Harmandir Sahib in the background.



During the leadership of the fifth Guru, Guru Arjan Dev (1581-1606), the full-fledged Temple was built. In December 1588 the great Muslim Sufi saint of Lahore, Hazrat Mian Mir, who was a close friend of Guru Arjan Dev Ji, initiated the construction of the temple by laying the first foundation stone (December 1588 AD).[12][13] A mason then straightened the stone but Guru Arjan Dev told him that, as he had undone the work just completed by the holy man, a disaster might come to the Harmandir Sahib. It was later attacked by the Mughals. [Wikipedia page on Golden Temple] [Wikipedia page on Golden Temple]

A posse of tourists getting snapped with the Harmandir Sahib in the background
Anyone who wants to enter the Harmandir Sahib may do so, irrespective of religion, colour, creed or sex. The only restrictions are that the person must not drink alcohol, eat meat or smoke cigarettes or other drugs while in the shrine. Visitors are, as well, expected to dress appropriately and everyone must cover their heads as a sign of respect, remove their shoes and wash their feet in the small pool of water as they enter the Harmandir Sahib premises. Head scarves are provided. [Wikipedia page on Golden Temple]



Marble plaques from people who have donated money to the Golden Temple

Embedded photo, linked to from Wikipedia (http://en.wikipedia.org/wiki/File:HarmindarSahib.jpg)
Photographer: John Edward Saché
Medium:Photographic print, 23.6x28.2 centimetres
Collection from the 'Lee-Warner Collection: 'Bombay Presidency. William Lee Warner C.S.
Date: 1870s


© 2010, Abhinav Agarwal. All rights reserved.

Aug 24, 2010

The End of The Free Market

The End of the Free Market: Who Wins the War Between States and Corporations?
2 stars
The End of the Free Market: Who Wins the War Between States and Corporations?
Free markets deserve a more cogently argued and better researched defense.

Free markets deserve a more balanced, a better researched, and a more cogently argued defense than is offered up in this book. The book reads at times like a rambling rhapsody to free markets, punctuated by paeans to western private enterprise,  underlined with often slipshod, inaccurate research. The middle part of the book feel like filler - perfunctory notes on companies and economies, which while useful at times, does not seem to cohere well into the narrative the author seems to be building - while the beginning only flatters to deceive. This would have been a middling though intriguing article; extended into a book it can be skipped in its entirety.

The beginning of the book grabs your attention. A question posed by China's Vice Foreign Minister, He Yafei:
"Now that the free market has failed," he asked, "what do you think is the proper role for the state in the economy?" [page 1]
demands your attention. This question is provocative, demands serious attention, a reasoned defense, and a balanced set of arguments. Unlike a few years ago, when this question could be dismissed as the usual propagandist bombast of a communist regime, the global financial meltdown of the past few years has meant that a more vigorous, a more reasoned, and a well-thought response is required. This book, sadly, fails to do that.

A fundamental underlying premise of the book is the attempt to delineate the form and role of state capitalism versus free-market enterprise. This is probably a crucial distinction that need to be clarified to the general public. The book however ties itself in all sorts of knots of logic in trying to make that distinction.

Let's look at one example of hastily (poorly maybe?) conducted research. 
National champions are companies that remain in private hands (though governments sometimes hold a large minority stake) but rely on aggressive material support from the state to develop a commanding position in a domestic economy and its export markets. [page 67]
A fairly sweeping definition is penned here. The author seems to realize that the same definition could be applied to some private corporations in the US and in Western Europe. So a hasty distinction is attempted thus:
There are plenty of large U.S.- and Europe-based companies that become global players at least in part with support from their governments. ... But state capitalists create these national champions to build a reliable competitive advantage both at home and abroad, primarily for political reasons. [page 67]

Hmm... pretty tenuous. Almost every country has examples of what the author would define as "national champions". Boeing is one prime example - a company that has aggressive material support from the US government (in the form of domestic military contracts for instance). The Airbus consortium is the parallel example in Europe. No one would deny that each company benefits from political largesse precisely for the reasons that the author articulates in the paragraph above.
Some emerging market-based national champions have expanded their international clout by buying up companies based in developed countries. ... India's Tata Group has become the country's largest corporation, partly through acquisition of iconic Western brands like Britain's Tetely Tea, Jaguar, Land Rover, and Corus (formerly British Steel). Tata now operates across multiple industrial sectors in more than eighty countries. [page 69]
Ok - so this is, just, complete rubbish.
Why? Let's get the obvious error out of the way. The Tata Group is not a corporation - it is at best a holding company for several individual corporations. Tata Motors, Tata Steel, Tata Consultancy Services, Titan, etc... are all Tata Group companies. None is India's largest corporation. That distinction goes to Reliance Industries, per a Fortune Global 1000 ranking (Wikipedia link, Fortune magazine link).

Secondly, for several decades, the Tata group was seen as deprived of political patronage. Patronage that people accused the Birla Group (Wikipedia page) for much of the post-Independence decades, and later the Reliance group in the 1980s of profiting from. The Tatas on the other hand were seen as languishing as an honest but only mildly successful conglomerate because they insisted on doing things the honest way - often finding themselves at the receiving end of the infamous "license raj".

Thirdly, for anyone who claims to be writing with any kind of objectivity to claim, directly or through convoluted insinuations like Bremmer, that the Tata group has served to further Indian politicians' agendas is culpable of abject ignorance at best. It has been ranked as one of the most respected companies in the world by a Financial Times / PriceWaterhouseCoopers study in 2004 ("Financial Times / PricewaterhouseCoopers World's Most Respected Companies Survey 2004").

Plucking names - popular and widely known names at that - out of thin air and besmirching them with innuendo is not going to build credibility.

One other issue with the book is how it labels free speech in communist and socialist countries as propaganda, while the same when practiced elsewhere, in free-market economies, is termed free-speech. A definition based on convenience.

The book talks about "conflicts of interest" being more obvious in places like Russia.
In Russia, conflicts of interest are more obvious. That Viktor Zubkov moved from prime minister to chairman of Gazprom, Russia's gas monopoly, when Dmitry Medvedev left Grazprom to become Russia's president reveals all we need to know about government control of an internationally powerful state-owned company. [page 154]
Very true. Insidious links between the government and companies is all too well-known in communist regimes like Russia and elsewhere. But then, couldn't one make the same argument to the US, where Robert Rubin served as the US Treasury Secretary. Before that he spent 26 years at Goldman Sachs, and after his stint as Treasury Secretary, served as Chairman of Citigroup. Or Dick Cheney, ex Vice-President of the US, who served as Chairman and CEO of Halliburton, "a Fortune 500 company and market leader in the energy sector". The author skips explaining the distinction between these similarities. What should be obvious to all is that there has always been what many would call an unholy alliance between politics and business.

Ultimately, while the book is useful in bits and pieces, it falls far short of what a good defense of free markets should be. In these uncertain times when the infallibility of free markets is in doubt, it is important to come up with a balanced and reasoned treatise. This is not it. Saving Capitalism from the Capitalists: How Open Financial Markets Challenge the Establishment and Spread Prosperity to Rich and Poor Alike is a highly recommended book.

Ian Bremmer (Wikipedia)
The End of the Free Market - Ian Bremmer - Penguin Group (USA)




© 2010, Abhinav Agarwal. All rights reserved.

Aug 23, 2010

The Kindle - Still Sold Out

Amazon.com announced a new version of Kindle, its e-book reading product, in July 2010. Within a few days of its announcement, the cheapest version - the 6" Wi-Fi version - sold out. It has since remained sold out, with the expected date of shipping of new orders staying a couple of weeks beyond.

At $139 this is $10 cheaper than the cheapest ebook reader from Barnes & Noble - nook. The Wi-Fi version of nook costs $149, while the one with 3G connectivity is $199. The corresponding Kindle versions are $10 cheaper. At least some analysts expect the price to drop to $99. Then there are some who expect Amazon to introduce color to the Kindle. Some expect the Kindle to evolve into a more general-purpose tablet-like device, to compete more effectively with the Apple iPad. Some expect the Kindle to retain its niche. And at least some expect the Kindle to not survive. Any which way you look at it, the competition is doing wonders for the customer, and for book readers.

The Amazon.com home page, announcing the new Kindle, with a message from founder Jeff Bezos

Amazon.com Home page with the two versions of the new Kindle

Shipping estimate: Sep 04 (as on August 3rd)


The Wi-Fi version of the Kindle, sold out. Shipping estimate: Sep 08

Shipping Estimate: Sep 10

Shipping estimate: Sep 17th (as of Aug 22)
See my other posts related to the Kindle.

© 2010, Abhinav Agarwal. All rights reserved.

Aug 22, 2010

Barnes and Noble - Sale

Barnes and Noble has a 3-for-$9.99 sale on paperbacks going on till Aug 29. Seems good. Will check it out.


© 2010, Abhinav Agarwal. All rights reserved.

Aug 9, 2010

Page Turners

Page Turners - visited the latest bookstore in Bangalore this Sunday. It was in the news the past week because it was inaugurated by Narayan Murthy, co-founder of the Indian IT Services company, Infosys. The other notable thing is that it is Penguin Books' first collaborative retail store in India.

It's on MG Road, in Kannan Center, adjacent to a GK Vale store.


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Spread across four floors and close to 2,500 sq. ft in M.G. Road’s Kannan Building, PageTurners is a great new collaboration between India’s premier publisher, Penguin Books India, and Surya Infotainment Products (SIP), the successor to the bookshop and magazine businesses of L.B. Publishers and Distributors Pvt Ltd, one of India’s oldest booksellers.

The Hindu : Karnataka / Bangalore News : Penguin's Page Turners for BangaloreansPage Turners | A dedicated book store - Marketing and Media - livemint.com





Penguin Books has published over 50,000 titles, of which 15,000 are still in circulation. Page Turners stocks all the titles that are in circulation, and if you don’t find a book in the store, you can order it.



Now, the one thing you will notice with the bookstore is that it is narrow. Yes - there is a rack on either wall, and there is one more rack in the middle on the floor, between the two walls. And barely enough space between the racks for a couple of people to stand without bumping into each other.


The other thing is there are not too many seats, or chairs, or bean bags. So if you grab a book, you have to sort of keep standing while you leaf through the pages.



They also have a loyalty program, where you get 10% off every book you buy. The cost of the program is Rs 250, and they will throw in a voucher worth Rs 250 you can use on your subsequent purchases. That's nice, but then I am thinking, I can go to online stores and get more than 10% off. Of course, it is not the same as browsing an aisle full of books, that you can simply pick off the shelf, flip the pages, read the blurbs on the jacket, and smell it. Yes - every book has a smell. And believe me, you can get a lot closer to books than you would have ever thought if you only spend a minute to stop and smell the books. That's an additional sensory trigger that gets you to make an association with the books you love.

The press release from Penguin Books: Announcing the opening of the PageTurners bookstore, Bangalore 
Facebook page for the store: Page Turners Facebook Page

© 2010, Abhinav Agarwal. All rights reserved.