Greenspan's mumbo jumbo

How much is Alan Greenspan's mumbo jumbo worth?

Penguin has agreed to pay $8.5 million for his memoirs.He says," I do not intend to dwell on personality aberrations, except as they affect policy decision-making - which, of course, always involves personalities" .This is probably the least confusing statement ever by Greenspan.Alas!One has to wait till next year before the book is published.

Majesty of the Courts

Following observation of the Supreme Court comes not a day too soon:

"Courts are not tape recording machines. They have to play a participatory role. People have started feeling that criminal trials are like cobwebs where small flies are getting caught and big people are dashing through. Courts have an over-riding duty to maintain public confidence and uphold the majesty of courts. The interest of society is not to be treated with disdain. The duty of the court is to uphold the majesty of law".

Stability of any society depends on the reliability of its judicial system.

Insensitivity and intolerance

one of our ministers hasoffered Rs.51 crore to anyone who would do away withthe cartoonist.A religious court in U.P.,exercisingits global jurisdiction,has issued a fatwa against thecartoonist.. It may be simple logic that an insane response to aninsane act is an aggravation and not a solution.But,weneeded a Mahatma to remind us that 'an eye for an eye'makes us all losers. Among animals and birds,a deviant is immediatelyisolated and its influence ring-fenced.It is only inthe biologically most-rational species that a rogue iseither deified or demonised to such an extent that hisbehaviour becomes self-sustaining and acquires a largefollowing. Once animals and birds start emulating humanbehaviour,there will be total anarchy.Let us pray thatanimals will remain as animals.

Pedestrian and the car

If the pedestrian moves before the horn is sounded,something is wrong with the car;if he does not move even after the horn,something is wrong with the pedestrian.

Treasury Skills

InFeb,2005, I took charge of treasury function though Ihad no prior hands-on experience.When I entered thedealing room for the first time,I could notdistinguish it from a gamblers'den.Swaps,options,swaptions,derivatives--it was allmumbo jumbo.I had no option but to pretend that Iunderstood all this.Every trader said that he/she wasmaking money ("was in the money")every day.Was freelunch possible in treasury? Soon I realised that when marked to market,ourposition would turn negative.Around the same time,RBImade MTM disclosure compulsory for derivatives also.Istarted sharing such info with others in theorganisation.I was shifted fromtreasury.Transparency,I learnt,is the eighth deadlysin in treasury. In the brief period I was in treasury,I understoodthat multitasking is de rigueur for a trader.Nothaving a conversation on a mobile ,while on twolandlines already,is considered infradig.A trader isnot worth his pay if his attention is not constantlydistracted by his BlackBerry and the Bloombergmonitor. In India,hedge derivatives have a betteracceptance.Speculation is a no-no.The mantra is:"Hedge if you can;fudge if you cannot;but,never admitspeculation."Every trader reflexively claims,"Ihedge;my predecessor was speculating."Once, I heard atrader say,"My predecessor was speculating;mysuccessor will do the same.I do only hedging."How didhe know what his successor would do?"Foresight",boasted the dealer.My takeaway was,"Atrader ,in addition to multitasking,must be capable ofmultisights also." Performance-related bonus is a strong incentive fordressing up figures.Figures don't lie,except intreasury.Given the intense competitive pressures,thetipping point for a normally ethical person to adoptdishonest means is reached faster.The irony is thatprofits/losses are determined more by market movementsthan by trader's skills.It is unfortunate that plaindame luck masquerades as performance.

Digital divide and digital dividend

Mr.Deve Gowda's recent outburst against InfosysTechnologies and its Chairman and ChiefMentor,Mr.N.R.Narayanamurthy indicates that there is aneed for introspection by IT companies regarding theircontribution to society.Deve Gowda has faulted Infosysfor its penchant for owning land and buildings;he isalso not satisfied about employment potential createdby the company.He wonders what can be the worthwhilecontribution from a peripatetic mentor to companies ofwhich he is a director.A dispassionate discussion on(a)how to bridge the digital divide,(b)ways to promotefair distribution of digital dividends among allstakeholders and (c)prevention of degeneration of'overboarding' into 'sinecures' is called for. Digital divide:There is doubtless a politicalagenda behind Gowda's carping criticism.But it is alsoto be recognised that growth of IT industry has notmade any difference to the lives of countless peoplewho feel alienated from the development process.Apartfrom the traditional 3R-s,computer literacy has becomea sine qua non for gainful employment.The haves andthe have-nots have been redefined as thecomputer-literate and the computer-illiterate.Onaccount of higher levels of remuneration in ITindustry,the incidence of relative poverty (thedifferential between the incomes of employed andunemployed)has increased leading to greater socialtension.Apart from the age-old urban-ruraldivide,there is now an intra-urban divide between theIT-savvy and others.With business and communicationturning more and more online every day,thecyber-challenged are becoming increasinglymarginalised.This polarisation is an invitation topoliticians to fish in troubled waters.Therefore,ITcompanies in their own interest and in the greaterinterest of society would do well to provide ITeducation to as many people as possible,be they inurban slums or in the remotest rural areas.Hardwarecompanies can also play a significant role innarrowing the digital divide by introduction ofinexpensive computers and peripherals. Digital divide is defined as the the socialinequity in the access and the opportunities forgaining competencies with information andcommunication technologies.Government and IT companiesought to work together towards amelioration of thisinequity instead of criticising each other. Digital Dividend:Society gains in a variety of wayswhen IT sector grows.Software is a major strength toour economy by virtue of its exportpotential.Employment opportunities are augmentedthanks to outsourcing of IT jobs to India.But equityand even enlightened self-interest of the industrydemand that benefits (dividends)accrue to all sectionsof society.Fair distribution of these dividends is asure way of bridging the digital divide.Instead ofcontinually harping on poor infrastructure,the ITcompanies may make a beginning by helping to construct nearby roads.Corporate socialresponsibility(CSR) is not a fetish.It should beviewed as an essential part of strategy to sustainbusiness growth.N.R.Narayanamurthy rightly points out,"The primary purpose of corporate leadership is tocreate wealth legally and ethically.This translates tobringing a high level of satisfaction to fiveconstituencies--customers,employees,investors,vendorsand the society-at-large.The raison d'etre of everycorporate body is to ensurepredictability,sustainability and profitability ofrevenues year after year."This underscores the factthat society-at-large also is a significantstakeholder in growth of any industry.Sustainedprofitability of IT industry in the long run ispossible only if digital dividend is fairlydistributed.Many IT companies are now admittedlydarlings of the stock market.They need to becomedarlings of society. Though CSR practised by IT industry cannot bebelittled (for example,Infosys contributed Rs.5 croretowards tsunami relief),society expects a lot more.The most prestigious award for excellence in CSR isthe TERI (The Energy and Resource Institute)annualaward established in 2001-02.In the first threeyears,14 Indian companies have qualified for this CSRaward.It is revealing that none of these companies isfrom IT industry.(All Indian registered companies areeligible to apply for this award.) Overboarding:IT industry has produced many capableleaders/managers.Naturally,their service as directorsis desired by many companies.Narayanamurthy'scontribution as chairman of Bangalore InternationalAirport Limited(BIAL) has been questioned by DeveGowda.Gowda's implicit assumption is that such a busyperson cannot devote required time and energy forBoard meetings.While it is likely that a person who isa Board member in several companies may not be able todo justice to all companies,Narayanamurthy's record interms of attendance is good.Albert Brunner,CEO of BIALhas confirmed,"Despite his hecticschedule,Narayanamurthy chaired all the board meetingsof BIAL barring one."Gowda's criticism regarding BIALseems to be misplaced.However,overboarding(thephenomenon of a person serving too many boards hascome to be called as 'overboarding')should be avoidedif the person concerned is not able to perform forwant of time. To sum up,though Deve Gowda's fulmination is undulyharsh,it is a warning signal to IT industry that it isrequired to improve its image as a sociallyresponsible sector.

Deve Gowda on Infosys

It is obvious that there is a political agenda behind Gowda's attack on Infosys.But,his reference to the company's penchant for owning land and buildings is worth analysing.

In 2004-05,the company spent more on capex than on R&D.

It is food for thought that no IT company so far has bagged the TERI corporate social responsibility award.