Having worked in the investment banking industry before this wonderful MBA program, I would like to share my views on this issue with you.
The reasoning behind the idea makes some sense: Investment banks would have all gone bust without the help of governments. This is true even for houses like Deutsche Bank that didn't get money directly - had the US not bailed out AIG, Deutsche Bank would have lost billions. And, being a taxpayer, I don't like the idea that banks just take my money and pass it on to some Aston Martin drivers.
On the other hand: The British government actually owns large parts of the financial industry. If they are concerned about the capital of their banks, why don't they just keep RBS and Lloyds from paying bonuses? If they are concerned about the capital of the whole industry, why don't they increase capital requirements? If they want high-income people to share the burden, why don't they just increase the income tax?
And how long will it take banks to find ways to get around this tax, anyway?
Here's my interpretation: "We don't want to pay bonuses at our banks, but we don't want our best people to leave. And we want to demonstrate that we hate these City guys just as much as everybody else does. And if the tories don't like our one-off tax, we can really push them into the "only for the rich" corner. If they support it, they'll lose voters to the liberal party. Looks like we can only win! Let's do it! Yeah!"
Tom.
Thursday, December 10, 2009
Wednesday, December 9, 2009
Prof Haliassos on the 'Greek Tragedy'
Time Magazine has stuck its neck out just published its obituary on the Fitch downgrade the Greek Economy,calling it the Next Dubai.Needless to ask I did go and ask our Macro Prof on his views on this,His answer was straight to the Point, 'We see that whenever something like this happens the EU has to 'talk it up' since it has greater consequence to the whole concept of an Integrated Monetary Union'.
He went on to express his confidence with the Present Finance minister Giorgos Papakonstantinou who happens to be his good friend and Junior at School,"He has to bring down the deficit",Prof added.
My doubts based on my current half baked knowledge of Economics & Google Search! is
1) A 3% decrease in Fiscal Deficit under the current environment is the ambitious task for the Greek Finance minister is it Feasible ?
2) The problem is going to be tough not now ,but next year when the current government debt comes for 'roll over',obviously due to the downgrades of the Credit Rating Agencies the cost is going to baloon!
Venkat
PS : Here is a question for the readers of this post how would AS AD look ? the one who posts the correct curve shift on this(will verify with experts!) will get a Gluh Wein!
PPS: My current ambition at the MBA is to complete atleast one paper completely on time! I just hope that this AS AD question turns up in the Exam!
He went on to express his confidence with the Present Finance minister Giorgos Papakonstantinou who happens to be his good friend and Junior at School,"He has to bring down the deficit",Prof added.
My doubts based on my current half baked knowledge of Economics & Google Search! is
1) A 3% decrease in Fiscal Deficit under the current environment is the ambitious task for the Greek Finance minister is it Feasible ?
2) The problem is going to be tough not now ,but next year when the current government debt comes for 'roll over',obviously due to the downgrades of the Credit Rating Agencies the cost is going to baloon!
Venkat
PS : Here is a question for the readers of this post how would AS AD look ? the one who posts the correct curve shift on this(will verify with experts!) will get a Gluh Wein!
PPS: My current ambition at the MBA is to complete atleast one paper completely on time! I just hope that this AS AD question turns up in the Exam!
Wednesday, December 2, 2009
A Fable for Growthmen
If you think the Blanchard chapter on growth is a little bit dry, have a look at this one here:
Once upon a time the Kingdom of Solovia was gripped by a great debate. "This is a growing economy but it can grow faster," many argued. "Sustainable growth is best," came the reply, "and that can come only from natural forces."
A few called the debate growthmanship. But most thought it would be healthy if it led to a better understanding of Solovian growth. So the King appointed a task force to learn the facts of Solovian economic life. ...
Much more fun to read - google "The Golden Rule of Accumulation: A Fable for Growthmen" and you'll find it.
Tom.
Once upon a time the Kingdom of Solovia was gripped by a great debate. "This is a growing economy but it can grow faster," many argued. "Sustainable growth is best," came the reply, "and that can come only from natural forces."
A few called the debate growthmanship. But most thought it would be healthy if it led to a better understanding of Solovian growth. So the King appointed a task force to learn the facts of Solovian economic life. ...
Much more fun to read - google "The Golden Rule of Accumulation: A Fable for Growthmen" and you'll find it.
Tom.
Sunday, November 29, 2009
Re: Zero Tolerance on Corruption
Zero tolerance on corruption was exactly my attitude before our Ethics class yesterday.
I changed my mind. It seems to me now that there is in many cases no clear distinction between tipping and bribing. Nor between a widely accepted "give and take" approach and corruption.
Doing an MBA means questioning one's attitudes, indeed.
Tom.
I changed my mind. It seems to me now that there is in many cases no clear distinction between tipping and bribing. Nor between a widely accepted "give and take" approach and corruption.
Doing an MBA means questioning one's attitudes, indeed.
Tom.
How did "The Economist" get it so wrong?
Dear "Economist",
claiming that "New Moon, a tale of vampires, werewolves and the women who love them, earned more in a single day at the American box office than any film in history"
supports the hypothesis that you did not attend Hans-Theo Normann's MAEC course at GBS. Otherwise you would probably be aware of the fact that it is still a long way to go for the vampires and werewolves to catch up with "Gone with the wind" and "Snow White and the seven dwarfs" in real terms.
Your faithful reader Tom.
claiming that "New Moon, a tale of vampires, werewolves and the women who love them, earned more in a single day at the American box office than any film in history"
supports the hypothesis that you did not attend Hans-Theo Normann's MAEC course at GBS. Otherwise you would probably be aware of the fact that it is still a long way to go for the vampires and werewolves to catch up with "Gone with the wind" and "Snow White and the seven dwarfs" in real terms.
Your faithful reader Tom.
Zero tolerance on corruption and the Harvard Biz School MBA Oath
Continuing the discussion of Patrick Sullivans Ethics Class(which btw I noticed we all as a class thoroughly enjoyed albeit being a saturday) ;-
There are few issues which makes my Blood Boil -
1) missing my BP Tablets in the morning
2) Losing a cricket test match to Australia
3) Any one who rationalizes any form of corruption as a cost of doing business. (Esp in India! or other Developing countries)
Although in terms of adrenaline effect I would name (3) as the top most!
Corruption was written off as a cost of doing business in developing countries. But it is a fact that has emerged thanks to the recent crisis(a crisis can have positive impacts too) today corruption is rightly deplored as a political, economic and moral cancer that robs entire nations of a more prosperous future.It really should be so basic that one need not state it: Public corruption is not justifiable, under any circumstances (and in the case of India this is the 'only' reason for economic backwardness, actors who want 'status quo' to prevail on corruption)
Indian MNC's as Change Agents
A few Indian companies such as the Tata group or Wipro, have taken the
high road, but most firms find it impossible to get anything done without greasing palms. Wipro,headed by Azim Premji, is India's third-biggest global tech services provider (behind Tata Consultancy Services and Infosys). In Bangalore Tiger: How Indian Tech Upstart Wipro Is Rewriting the Rules of Global Competition, business journalist Steve Hamm writes that "Wipro is not just a company, it's a quest." That quest, according to some observers, is as much about moral rectitude as it is about business success. For example, according to Hamm, the company pays no bribes and has a zero tolerance policy for corruption.
Add to the above economic effect the real serious problem,is the the prevalence of corruption in the economy ends up distorting 'cultural' norms within the society.The extent that change in cultural norms will be needed to root out corruption, it will take a persistent, long, drawn-out effort. While economic change or even Stable growth is easier to achieve, cultural change is much slower and more difficult. This is compounded by the rearguard actions of those who are beneficiaries of the status quo and would prefer a laisez faire approach.
In India we had a case where a fresh MBA student,Manjunath who was working for Indias largest Oil company, was Gunned down, there was this case of an MBA Professional who was killed for the principles&values that he stood for. , as long as there a section of 'civil' society which continues to think that corruption is indeed a 'cost of doing business' the externalities of such consequences would always make Manjunaths sacrifice go in vain.
I think this is where we as MBA students can really play a very important role, and I cant be without mentioning what the students of the 2009 MBA batch at the Harvard Business School initiated.The MBA 2009 HBS created the mbaoath.org.
The MBA oath is a voluntary pledge for graduating MBAs and current MBAs to “create value responsibly and ethically”.At last count There were about close to 1700 MBA graduates who have signed up for this.(They also maintain a page on Facebook for this).Rightfully so this was named in the Top Good 100 most important exciting and innovative people ideas that would contribute to a better world. News week featured this as are Business Schools to be blamed for the current financial crisis ?
Tschus
Venkat
There are few issues which makes my Blood Boil -
1) missing my BP Tablets in the morning
2) Losing a cricket test match to Australia
3) Any one who rationalizes any form of corruption as a cost of doing business. (Esp in India! or other Developing countries)
Although in terms of adrenaline effect I would name (3) as the top most!
Corruption was written off as a cost of doing business in developing countries. But it is a fact that has emerged thanks to the recent crisis(a crisis can have positive impacts too) today corruption is rightly deplored as a political, economic and moral cancer that robs entire nations of a more prosperous future.It really should be so basic that one need not state it: Public corruption is not justifiable, under any circumstances (and in the case of India this is the 'only' reason for economic backwardness, actors who want 'status quo' to prevail on corruption)
Indian MNC's as Change Agents
A few Indian companies such as the Tata group or Wipro, have taken the
high road, but most firms find it impossible to get anything done without greasing palms. Wipro,headed by Azim Premji, is India's third-biggest global tech services provider (behind Tata Consultancy Services and Infosys). In Bangalore Tiger: How Indian Tech Upstart Wipro Is Rewriting the Rules of Global Competition, business journalist Steve Hamm writes that "Wipro is not just a company, it's a quest." That quest, according to some observers, is as much about moral rectitude as it is about business success. For example, according to Hamm, the company pays no bribes and has a zero tolerance policy for corruption.
Add to the above economic effect the real serious problem,is the the prevalence of corruption in the economy ends up distorting 'cultural' norms within the society.The extent that change in cultural norms will be needed to root out corruption, it will take a persistent, long, drawn-out effort. While economic change or even Stable growth is easier to achieve, cultural change is much slower and more difficult. This is compounded by the rearguard actions of those who are beneficiaries of the status quo and would prefer a laisez faire approach.
In India we had a case where a fresh MBA student,Manjunath who was working for Indias largest Oil company, was Gunned down, there was this case of an MBA Professional who was killed for the principles&values that he stood for. , as long as there a section of 'civil' society which continues to think that corruption is indeed a 'cost of doing business' the externalities of such consequences would always make Manjunaths sacrifice go in vain.
I think this is where we as MBA students can really play a very important role, and I cant be without mentioning what the students of the 2009 MBA batch at the Harvard Business School initiated.The MBA 2009 HBS created the mbaoath.org.
The MBA oath is a voluntary pledge for graduating MBAs and current MBAs to “create value responsibly and ethically”.At last count There were about close to 1700 MBA graduates who have signed up for this.(They also maintain a page on Facebook for this).Rightfully so this was named in the Top Good 100 most important exciting and innovative people ideas that would contribute to a better world. News week featured this as are Business Schools to be blamed for the current financial crisis ?
Tschus
Venkat
Monday, November 23, 2009
An Apple a day is worth two in the bush!
Coincidentally it was today that I was discussing at the Mensa with Gaurav(The Rt. Hon. Editor:)) that we must use the blog to take our class room discussions 'offline' and Lo we had "Apple" to discuss as a part of our Innovation management Case Study.
First I again reiterate ,I Love my iPhone!I switched my half decade+ loyalty from Research in Motion to Apple(Frankfurt converted me! Frankfurt they say always gets to you!),but at the same time as some one who is just passionate to keep track of technology and technology trends I must say with utmost humility, things do look very bleak for Apple,if they dont mend their ways!(pardon my Arrogance but I intend to make my case here)
First let me start with the irrational exuberant' :)! who quote Apple stock prices over the last one year to say that things are very bright at Apple;
1.There has always been a run up in stock price towards the Macworld announcement linked to the Holiday Shopper(Thanksgiving&Christmas Sale) (also with amazon & pleasebuymymommymadesnacksforyourpet.com)
2.iPhone had a bit of accounting 'surprise' for 2009(good ole Zaks : actually bad creative accounting! their stock prices could have rallied much much earlier,they had the best free cash to price ratio in the Industry!) they 'moved' their accounting standards(Refer accountancy binder), so much of what happened this year on their stock prices was infact not a reflection of what is in store for the future but more to the fact of adjusting with 'REALITY'(read PAST)!
Apple is exhibiting the kind of overweening arrogance that is almost always cataclysmic in the long run to the entire technology sector. It is a well know fact that 'VICTORY' tends to breed abject arrogance.A backlash against Apple is not only inevitable but also some where in the near horizon, albeit will take time before it translates into its stock price.
1)Every developer who is worth his/her salt(read some one who can do atleast 36 Ctrl C Ctrl V per minute) is cribbing about Apple’s 'closed systems.Think about it 'Apple insists on locking non-iTunes music out of the iPod'.
2)There’s been crib about the reliability of the iPod line(add to the overwhelming fact of iPhone Canabalizing right into its own 'profitable' iPod market).
3) There has even been a corporate scandal swept under the carpet over stock option backdating, that the company has failed to explain candidly and which could result in serious legal problems sooner rather than later.
Yet somehow Apple continues to be viewed as an underdog and gets a nod on polemical issues that would subject other companies to flak and litany. Dell, for example, has received an enormous amount of flak for shoddy customer service(The best joke- Apple offers essentially no customer service without the expensive AppleCare service plan try to take your machine to an authorized dealer if it is under warranty its ok,but when try it with say a local dealer,he would not take the machine and bet you he would say that he has to ship it back to Apple, which would take him a week or two, and you might get your computer back in about 30-45 days.
Apple customer service will tell you that both you and Harry Potter don't exist especially if you hadn’t bought AppleCare; this for a brand-new computer that cost more than $2,000 and had what the industry refers to as a cut-and-dried factory goof up.
Similarly, the way Apple uses digital rights management software to keep iPod/ITunes as a closed system would be considered a blasphemy if tried by Microsoft. Apple is basically the only meaningful player in the online music business, but not to many people criticise because it faces plenty of competition from 'businessmen' at Chandni Chowk & Wangfujin Street.
Apple' strategic marketing and online sales of music in the European Union-in the EU as a single market, customers should be free to purchase goods and services from any member state. iTunes Stores restricted users to only allow the purchase of content from the country to which their payment details originate, which also forced users in some countries to pay higher prices(Brussels can you hear me!).In 2004 the British Office of Fair Trading referred the iTunes Music Store to the European Commission for violation of EU free-trade legislation. Apple commented that they did not believe they violated EU law, but were restricted by legal limits to the rights granted to them by the music labels and publishers. PC World commented that it appeared "the Commission's main target is not Apple but the music companies and music rights agencies, which work on a singular national basis and give Apple very little choice but to offer national stores"
It is a well known fact that Bill Gates’ arrogance had everything to do with the company’s legal problems(Btw I personally love Bill gates for two reasons one his Melinda Gates foundation and two he plays fantastic bridge online on BBO(bridgebaseonline.com) some times with his partner Warren Buffet who has never put a pie in any tech company but has put a lot of money to the Gates Foundation!). Every one hated Bill for his extremely aggressive business practices, and that attitude helped turn a lot of people against them. While the anti-trust case ultimately resulted in only limited sanctions(look its Simple! Bill didnt want to create a monopoly he just wanted to control the world!), it had all kinds of negative effects that a company with a bit of humility might have avoided.
Apple since time immemorial was a been there in the tech business, a volatile firm that couldn’t figure out how to leverage its technological strengths.
According to the 'valley' pundits,Steve Jobs, for his part trying to prove that his early success wasn’t a fluke, was relentlessly ingratiating in his efforts to make a go of Next Computer.Apple loyalists similar to dead heads(Grateful Dead) cult followers, could still be counted on to show up and cheer at MacWorld, and to spew venom on any one who differed in their views.
Apple was the anti-Microsoft, and that was enough to instill pride into the average techie!! Do check out the popular Anti Microsoft Ad of Apple (just google!):)!
in a nut shell what am I trying to say on AAPL,
1) Apple is staring at an empty R&D Cupboard which was infact the 'driving factor' all along(gegenuber)their time line
2) Their Distribution strategy sux! they dont stand a chance in India & China, thats the market for mass customization! the future!
3) They have serious Leadership sucession issues(any one who saw how aapl fared the day Jobs announced in public that it was not a small ailment but infact Cancer treatment) stands testimony!
4) Lack of Barriers to entry.
Lets now see whether I am going to open my mouth to change my feet(not that I have not done that in the past)!
V
P.S: Btw smokers who own an iPhone or for that any Apple product Beware your warranty might no longer be valid
P.P.S: the views expressed on this post is mine and my copy paste alone! so if any of you guys at Apple want to sue me! remember I am just a poor student who travels on S-Bahn using the free pass issued to him by his college!(btw 6 of my classmates are brilliant lawyers doing their MBA' so THINK!)
Subscribe to:
Posts (Atom)