Errors of the Commission

Pankaj Vohra, Hindustan Times

Email Author

September 28, 2008

First Published: 23:19 IST(28/9/2008)

Last Updated: 23:24 IST(28/9/2008)

The findings of the GT Nanavati Commission Report into the Godhra incident on February 27, 2002 are essentially a weak attempt to absolve Gujarat Chief Minister Narendra Modi and the Sangh Parivar from the responsibility of engineering riots in the aftermath of the fire in Sabramati Express. The timing of the report’s submission, which seeks to show that the fire was a result of a pre-planned conspiracy to target kar sevaks returning from Ayodhya, leaves several doubts in the mind. The timing coincides with a conscious effort being made by a section of the BJP to project Modi, accused of mass murders by his opponents, on the national stage.

Propounding the conspiracy theory six-and-a-half years and several extensions after the incident took place is in total variance with the findings of another Supreme Court Judge, UC Banerjee who had concluded that the fire was accidental. What is most alarming is that the rumours that were spread in the wake of the Godhra train tragedy led to the worst riots in the state conducted by lumpen elements of the Parivar and supported by the state police.

Several questions are bound to be asked after the release of the report as it has failed to answer many questions. Further, it is being argued that no commission can submit its report in parts and, therefore, the presentation of the report in the Gujarat Assembly itself lacks legal sanction. Second, there are allegations that Justice Nanawati’s son, Maulik, was appointed as the standing counsel of the Gujarat government by Modi. This itself raises several questions about legal ethics and whether the judge should have been on the panel if the charge is correct.

There are several other factors that show that the ‘clean chit’ and the ‘conspiracy’ theory are bunkum. The then Prime Minister Atal Bihari Vajpayee, on his visit to the state in early April 2002, had advised Modi to observe the tenets of governance (“Raj dharma”). He was sure that something wrong had happened and even wanted the CM to be removed. But at the BJP meeting in Goa in mid-April, the younger leaders, along with Advani, helped bail out the CM and Vajpayee did his infamous ‘flip-flop’.

What nails the lie in the report are the sworn testimonies of three IPS officers before the Banerjee Commission: Raju Bhargava, SSP, Panchmahal, RV Sreekumar, then Additional DGP, state IB, and Rahul Sharma, DCP, Control Room, Ahmedabad. Bhargava and Sreekumar had said the state CID had no information about the return of the kar sevaks by the Sabarmati Express on February 27. The departure of the sevaks had been recorded, but no information on their return was available with the state police. When the CID did not have information, how could common people accused of burning the train know that kar sevaks were on board?

Second, the local units of the VHP had provided certain phone numbers in Pakistan from where calls are believed to have been made or where the calls were made on cell phones by some of those arrested. Rahul Sharma, while examining the records, did not find any such communication activity between Godhra and Pakistan.

The fire had broken out in coach S-6 where 59 of the 200 passengers died. On the basis of meticulously kept railway records, it was established that the fire broke out at 7.55 am — not at 8.20 am as stated by the local police. Those familiar with train travel will concede that no coach can be locked from outside except by a key that is with the guard. Also, the hurry with which coach S-7 was disposed of prevented forensics from examining the vestibule connecting it with S-6 to ascertain the truth in the ‘petrol-pouring’ theory.

There are several other loopholes and the Americans are no fools to have repeatedly refused to give a US visa to Modi. Justice Nanavati has let down not only the judiciary but also the people of India in concealing the truth. Between us.

Adam Smith isn’t dead

Pramit Pal Chaudhuri, Hindustan Times

Email Author

September 28, 2008

First Published: 20:54 IST(28/9/2008)

Last Updated: 20:57 IST(28/9/2008)

Capitalism does two things well. Creating wealth and making a bad name for itself. The sub-prime crisis and its fallout have meant a lot of the second, not much of the first. However, Adam Smith isn’t dead. Capitalism is just making a poor job of adjusting to a new financial order. And a large part of why it’s tripping is bad governance. Here’s a market-friendly guide:

Sub-prime is a consequence of greedy politics: Sub-prime’s origins lie with the US government. Sub-prime loans were mortgages doled out to people who couldn’t afford them. One variety was ‘stated loans’ where a person just had to declare his income, without proof, and get a cheque.

The largest players in this were the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation and the State-owned federal home loan banks. The first two alone underwrote 44 per cent of the US sub-prime market in 2004. Better known as Fannie Mae and Freddie Mac, they were private in theory but crony capitalist in fact.

Under the aegis of providing ‘affordable housing’ — giving home loans to people normal banks wouldn’t touch — the US Congress exempted Fannie Mae and Co. from the regulatory and accounting norms of private banks. In return, these institutions showered political constituencies with dud loans and donated money to campaign coffers.

Because it was correctly believed these hybrid financial institutions could count on an implicit government bailout, they were dubbed ‘government-sponsored enterprises’. Three-quarters of the $1.3 billion sub-prime loans were handed out by these enterprises. The US government spent $400 billion bailing them out, as opposed to $113 billion for private sector firms who joined in the feeding frenzy. Sub-prime’s rise was socialism masquerading as capitalism and capitalism falling for the disguise.

Wall Street’s financial bust shows markets work: When Lehman Brothers bought up securities backed by dud loans with borrowed money, it decided to load up on risk. Months before the present meltdown, I was told by a senior Federal Reserve Bank official that the market would be better off if stand-alone investment banks like Lehman died — they were gambling on credit cards.

If Lehman had survived and prospered - that would have been market failure. Instead, capitalism put it to the sword. Economists like Joseph Schumpeter adopted nihilism’s description of capitalism as ‘creative destruction’ but argued this was the system’s strength. When firms get greedy and stupid the market wipes them out, making way for more sensible firms. American International Group, as a boring insurance firm, was doubly stupid to have submerged itself in sub-prime and deserved to die. Politics and panic are why the only price it is paying is 11 per cent interest on its $85 billion US government handout.

Yes, it took a long time for supposedly efficient markets to bring down these faulty towers. There was regulatory failure by the US central bank under the once-sainted Alan Greenspan. Gree-nspan, a laissez faire advocate who headed a government regulator, also believed central banks shouldn’t pre-empt asset bubbles, that they should just clean up after they popped.

He should have been warier. Over the past decade or so, the world has become submerged in an enormous tidal wave of dollars, with credit growing nearly a fifth more each year than the real world economy. Capital was abundant, so it became cheap and eventually abused.

Forget sub-prime, this cheap capital has led to speculative bubbles in everything from petrol to platinum. Two years ago,
at an Aspen world economy conference, I heard analysts fret that $400 billion worth of the homes being bought in the US were being bought as investments. When, they asked, would someone stop this? The market did. It just took a while because the money flood obscured the reality.

Government regulation is no answer to modern finance: The experience of quasi-government enterprises like Fannie Mae and the US central bank over the past decade shows bureaucrats are as clueless about the financial world as their private sector counterparts.

A simple example are the new-fangled mathematical models being used by both regulators and bankers to calculate the risk in buying and selling things like sub-prime mortgages. The nerds who did quantitative analysis, ‘quants’ in New York parlance, underestimated the sub-prime risk. What they accomplished was to take bad debts, run them through a computer, and then stamp them with ‘AA’ credit ratings. Everyone fell for it, regulators and investors alike, because the stochastic calculus-based financial superstructure was indecipherable. Lehman and the others do not seem to have strayed from the rules, the world of finance had moved beyond the rules.

Not everyone in Wall Street believed in these models. Goldman Sachs didn’t, which is why it survived the panic. Last year, while being quizzed by a Manhattan fund manager on India’s financial sector, I was asked, “Have the MIT quant guys got to India yet?” No He smiled, “Thank god.” I presume he bought Indian bank stock after that.

The other reason the world will have to find ways to let markets be regulated by economics is that bailouts are getting too big for governments. Washington has deep pockets. But Deutsche Bank has liabilities equal to 80 per cent of Germany’s GDP. In case of a meltdown, what would Berlin do?

History won’t declare this the day capitalism died, Perhaps the Day that Lehman Died. Capitalism will go on, not because it is perfect but because no alternative comes close in terms of creating wealth. My guess is historians will look back on what has happened — and the crisis has a few more phases to go — and call it the Day 21st Century Capitalism was Born. Much of what has happened is a consequence of the intersection of two or three developments in the international economic system.

One, already mentioned, was the sheer expansion of capital in the economy. In 1945, only the US generated surplus funds for the world economy. Today, everyone from China to India, Brazil to Bahrain, adds to the global pool. When its capital that’s on tap, no one has the necessary plumbing. This capital flow then joined with an information technology revolution whose intangible impact on finance, one, reduced regulation to guesswork for people like Greenspan and, two, paved the way for quant-based risk assessment. Most quants used a measure known as Value at Risk that drew on historical data. But what if you live in ahistorical times?

Finally, because even regulators are groping with the new financial order, the man on the street is less willing to trust governments to do the right thing. This is crucial because much State intervention in the market is not based on financial logic; it’s just a gut judgement of what is needed to restore public confidence. If Joe Investor believes central bankers don’t know what they’re doing, he will join a vicious cycle of financial panic. If he does so, he will join a virtuous cycle of financial recovery.

Welcome to 21st century capitalism. The ride has just begun.

Majority of Australians still hold racist feelings

29 Sep 2008, 0827 hrs IST,PTI

MELBOURNE: Despite international migration growing in Australia, around majority of Australians still hold racist feelings with one in 10 Australians having those views, according to a new study.

New South Wales tops the list with racist views, with lead researcher on the project Kevin Dunn pin pointing Sydney being the focus of international migration to Australia.

The study, led by human geography and urban studies Professor Dunn and his team from Western Sydney University, has revealed racism in Australia has waned over the years but the figures remain high, according to an AAP report.

The Anti-Racism Research Project had randomly surveyed over 12,500 people in different studies during the past eight years.

Prof Dunn attributes the results to people's overarching views.

"It's an indicator of a narrow view of what constitutes Australianism," he was quoted by the report.

When people were asked which cultural/ethnic groups do not fit into Australian society, NSW topped the list with 46 per cent of respondents saying some ethnic groups should not be in the country.

Dunn said "The most often-mentioned groups were Muslims or people from the Middle East." The overall figures surge to 65 per cent for people over 65 but drop to 31 per cent for those aged 18 to 34.

"It's too high, isn't it," Dunn said adding "We've got to bring that down." On average, about one in 10 people said it was not good for people of different cultures to marry and about the same number said not all races are equal. "It's only about one in 10 people now in Australia across the different states that would have that sort of view the racial supremacists for instance," Dunn said.  

Washington Mutual is largest US bank failure

26 Sep, 2008, 1116 hrs IST, REUTERS

NEW YORK/WASHINGTON: Washington Mutual Inc was closed by the U.S. government in by far the largest failure of a US bank, and its banking assets were sold to JPMorgan Chase & Co for $1.9 billion.

The rescue marks a historic step to clean up a U.S. financial system littered with toxic mortgage debt.

Washington Mutual, the largest U.S. savings and loan, was closed by the federal Office of Thrift Supervision, and the Federal Deposit Insurance Corp was named receiver. Customers should expect business as usual on Friday, the FDIC said.

The bailout came after the thrift suffered deposit outflows of $16.7 billion since September 15, the OTS said.

"With insufficient liquidity to meet its obligations, WaMu was in an unsafe and unsound condition to transact business," the OTS said.

Seattle-based Washington Mutual has about $307 billion of assets and $188 billion of deposits, regulators said. The nation's largest previous banking failure was Continental Illinois National Bank & Trust, which had $40 billion of assets when it collapsed in 1984. 

The transaction gives JPMorgan roughly 5,400 branches, and fulfills JPMorgan Chief Executive Jamie Dimon's long-held goal of becoming a retail bank force in the western United States.

It comes four months after JPMorgan acquired the failing investment bank Bear Stearns Cos at a fire-sale price.
Shares of Washington Mutual plunged 80 cents to 89 cents in after-hours trading after falling 57 cents to $1.69 in regular trading on the New York Stock Exchange.

NEGOTIATIONS

A transaction would follow more than a week of negotiations over the fate of Seattle-based Washington Mutual, which attracted interest from several large North American and European banks, as well as private equity firms, despite soaring mortgage losses and evaporating investor confidence.

It also appears to be a costly defeat for David Bonderman and his private equity firm TPG Inc, which in April invested $2 billion in Washington Mutual as part of a $7 billion capital-raising by the thrift. TPG was not available for comment.

Washington Mutual's $227 billion book of real estate loans, more than half of which comes from home equity loans, and adjustable-rate and subprime mortgages now considered risky, ensconced the thrift on the critical list of financial institutions needing help, analysts said.

Its fate appeared to grow more precarious after problems with mortgage-related debt led to last week's bankruptcy filing by Lehman Brothers Holdings Inc and the near demise of insurance company American International Group Inc.

The addition of Washington Mutual would make JPMorgan close in size to Citigroup Inc, now the largest U.S. bank by assets. It would trail Bank of America Corp assuming that bank, which now ranks second in assets, completes its planned purchase of Merrill Lynch & Co.

Once something of a golden child at Citigroup Inc before Sanford "Sandy" Weill engineered his ouster in 1998, Dimon has been carving for himself something of a role as a Wall Street savior.

Some historians see parallels with the legendary financier John Pierpont Morgan, who ran J.P. Morgan & Co and was credited with intervening to end a banking panic in 1907.

Bank of America Chief Executive Kenneth Lewis has also been credited with helping steady Wall Street, or at least reduce damage, with his acquisitions this year of Merrill Lynch and Countrywide Financial Corp, the troubled mortgage lender that was once the nation's largest.

HARD-HIT

It was not immediately clear how much of Washington Mutual's loans might have been eligible for the bailout. The thrift has a significant presence in California and Florida, two of the states hardest hit by the nation's housing crisis. It also has a significant presence in the New York City area.

The thrift had long been expected to sell itself after amassing $6.3 billion of losses in the previous three quarters. It had also projected $19 billion of mortgage losses through 2011, but many analysts said that was too low.

Washington Mutual earlier this month ousted Chief Executive Kerry Killinger, who spearheaded the thrift's growth as well as its expansion in subprime and other risky mortgages, and replaced him with Alan Fishman, the former chief executive of Brooklyn, New York's Independence Community Bank Corp.

Iraq signs billion-dollar power deals with GE, Siemens

28 Sep, 2008, 0132 hrs IST, REUTERS

DUBAI: Iraq has signed preliminary deals worth billions of dollars with General Electric Co and Siemens for equipment to almost double electricity generation capacity, an energy official said on Saturday.

The deals with GE, Siemens and a third company would be worth a total of $7 billion to $8 billion, Iraq's Electricity Minister Karim Waheed told Reuters. Years of war, sanctions and neglect have battered Iraq's power grid and the country suffers chronic power shortages.

The capital Baghdad receives only a few hours of electricity a day. The deals would mark a big step in the country's reconstruction, Waheed said. "These deals will help us to end the electricity supply problem by 2012," Waheed said on a private visit to the United Arab Emirates.

Iraq signed a memorandum of understanding (MOU) earlier this month for U.S. giant General Electric to supply turbines to generate 6,800 megawatts of power, Waheed said. He declined to say how much Iraq would pay GE for the equipment, but said each megawatt would cost between $700,000 and $800,000.

That would give a value of between $4.8 billion and $5.4 billion. The country has signed a second MOU with Germany's Siemens to supply equipment to generate another 2,000 MW, he added. That deal would be worth between $1.4 billion and $1.6 billion. Baghdad was negotiating with a third company for another 1,000 MW, he said, declining to give further details. The three deals would enable Iraq to add around 10,000 MW to installed capacity by around 11,000 MW.

Damage to the power stations, lack of maintenance and drought mean Iraq's actual power production is well under capacity at around 5,500 MW. Demand stands at around 11,000 MW, Waheed said. Iraq plans to approach engineering, procurement and construction (EPC) firms to build the plants once the deals are signed, he added.

While big international companies were still reluctant to send people to work in Iraq, improvements in security had improved Baghdad's chances of attracting companies to undertake the work, he said. Iraqi oil officials will meet Russia's Technoprom Export on Oct. 12 to review a $124 million deal to repair 400 MW of power generation capacity in the southern city of Basra.

The World Bank will fund the deal, he added. The deal was one of several frozen after the U.S.-led invasion of Iraq in March 2003. Iraq is also negotiating with Russia's Power Machines to revive another old deal to build two plants with 160 MW of capacity each in Iraq's north, he added. Iraq signed a deal with GE for three power plants worth $480 million in June.  

T-Mobile Lifts 1G-byte Limit on Android Phone

Thursday, September 25, 2008 11:20 AM PDT

T-Mobile is backpedaling on the limit it placed on the so-called unlimited data plan that will accompany its Android phone, but the operator isn't saying exactly what the new terms will be.

When T-Mobile introduced the G1, the first phone based on Google's Androidmobile platform, on Tuesday, it said that subscribers would be able to sign up for a US$35-per-month unlimited data plan. But the fine print on the Web site for the phone said that users would actually be limited to 1G byte of data usage per month, after which their connection would slow to a 50K bps or less rate.

The operator quickly came under fire for the limit, which is relatively low for people who hope to use the phone regularly to view maps, check e-mail, watch YouTube videos and browse the Internet.

On Thursday, T-Mobile said it removed the 1G-byte limit from its policy statement. But it didn't say that users would have true unlimited download capability. "The specific terms for our new data plans are still being reviewed and once they are final we will be certain to share this broadly with all customers," the company said in a statement.

The Web site now has a more generic statement about possible repercussions for people who use what T-Mobile calls a "disproportionate" amount of bandwidth. "To provide the best network experience for all of our customers we may temporarily reduce data throughput for a small fraction of customers who use a disproportionate amount of bandwidth," the fine printreads.

Mobile operators routinely cap the amount of data that users can download, even in their so-called unlimited plans. They say that the cap ensures that a few heavy users don't hog the limited available bandwidth to the detriment of other users.

T-Mobile, however, might be at a particular disadvantage compared to its competitors. The operator is only just now launching its third-generation data network, currently available in 16 markets, with a total of 27 expected to be live by the middle of November. Some operators face challenges when first launching new networks, as they try to predict the demand for services and plan their capacity accordingly.

Q&A: Infosys European chief BG Srinivas

Written by Rosalie Marshall 

Computing, 24 Sep 2008

What is your role in Infosys? 
I have headed up the European operations for the past four years, concentrating on ways the business in Europe can grow. We reached close to $1bn in revenue last year.

We started restructuring the business at the end of last year to bring more vertical expertise to our customers. We now have six industry verticals - banking, manufacturing, life sciences, energy, telecoms, and communication and media. I head up the manufacturing division, focusing on aspects such as product design and development.

How does the proposed £400m acquisition of Axon fit into Infosys' strategy?
We want to expand the number of business transformation deals we form. At the moment our consulting services for SAP and Oracle applications is growing. Around 24 per cent of our global business footprint is in ERP consulting.

Are there likely to be more acquisitions of this kind in the near future?
Not really. Axon is a sizable acquisition and we need to concentrate on making it an effective purchase, so it is unlikely we will make more acquisitions in this area for the time being.

But if there is one company out there that has a strong intellectual property offering or service line footprint, we might consider making them an offer.

At Infosys, we concentrate on making a select few acquisitions and then making them work. For example, we acquired Expert Information Systems in Australia and within 18 months it had been integrated extremely well with the rest of the company.

How are you keeping up with new IT trends and the desire by businesses to adopt certain technologies such as service-oriented architecture, open source and green IT?
We encourage our clients to look at new ways of delivering services to increase their flexibility and reduce fixed costs.

We have recently launched a software-as-a-service procurement platform, including on-demand procure-to-pay and order-to-cash solutions. We are also about to launch an on-demand human resources platform.

As well as advising organisations on how they can become more environmentally friendly, are you getting any requests from clients to record and report on your environmental footprint for their contracts?
A few companies are beginning to ask for such reports but it is really just the beginning.

Do you believe you are keeping up to speed with your main competitors, such as TCS and Wipro, in your ability to offer customers new types of technology?
We have only just started to compete with other Indian providers this last year as the service industry inside India has started to grow. Our main competitors are the big European firms.

But yes, I believe we are delivering customers what they want. This is shown by 97 per cent of our business coming from repeat customers.

Will Infosys continue to build its new software development centre in West Bengal, and how will it deal with the dispute there arising from the opposition to the Tata Group's plans to build the world's cheapest car? I heard Infosys might be forced to rethink its plans?
We have just been watching the situation evolve. I don't believe we have been impacted yet.

There have been a large number of reports, following the Lehman Brothers collapse and the sale of Merrill Lynch, that a number of Indian providers have launched recruitment freezes. How has the current turmoil in the finance sector affected Infosys?
A lot of those reports are purely speculation. The Infosys planning cycle is three years, broken down into chunks of periods. This allows us to be flexible and adapt to big changes in the marketplace.

On the subject of the economy, there are mixed reports on whether Indian providers are likely to benefit from the economic slowdown in the western markets. What is your view?
We are expecting an impact and a possible slowdown as clients rethink their budget strategy. However, we expect clients that are challenged with their IT spend to play into our business model. There could be a temporary lull. Anyway, it is not the case that all sectors are going through much pain, in relative terms.

But have you noticed any change in contract size or length?
I can tell you that in the past six months we have noticed no significant changes in contracts.

And how about trends towards multi-sourcing? On average, how many providers do your customers hold outsourcing contracts with?
We offer consulting expertise on multi-sourcing strategies and we tell the customer to adopt a few best-of-breed partners. Most enterprises hold three outsourcing partners.

In what circumstances would Infosys be considered a best-of-breed partner?
In consulting, package implementation, application management and business process outsourcing.

Top Dishonours: India slips on corruption index

Shreya Dhoundial / CNN-IBN

New Delhi: The sensex is crashing, inflation is on the rise, but there's one place where it's business as usual. It's the most corrupt nation's list.

According to this year's Transperency International Report, out of 180 countries, India is the 85th most corrupt nation in the world. It's the same down-hill journey. This time India has tumbled from rank 72 last year to rank 85 this year - mostly thanks to inspired moments like the cash-for-vote scam.

Country President Transperency International India, Admiral R H Tahiliani says, "When the world sees that at the highest level people can be bought what are they going to think of us."

Small mercy is that we are at least better off than Pakistan at 134. China's integrity index is marginally better than ours as it comes 72nd on the list and Somalia is the worst at 180. Denmark, New Zealand and Sweden are the least corrupt countries.

The dubious distinction of the most corrupt sectors according to Indians goes to the police department closely followed by the political establishment and the lower judicary.

Executive Director Transperency International India, Anupama Jha says, "That's the trend the world over. Corruption in politics is a given, but over the years the perception of the judicary has changed too."

The state-by-state survey by Transparency International India and the Centre for Media Studies, New Delhi places four Indian states in its "Alarmingly Corrupt" category.

The four states are - Jammu and Kashmir, Bihar, Madhya Pradesh, Uttar Pradesh and Assam.

The next rung of "Very Highly Corrupt" states include Karnataka - which was ranked 17th in a 2005 Transparency International India survey - Rajasthan as well as Tamil Nadu.

Not as notorious but still "Highly Corrupt" are the five states of Chhatisgarh, Delhi, Gujarat, Jharkhand, Kerala and Orissa.

Meanwhile, Andhra Pradesh, Haryana, Himachal Pradesh, Maharashtra, Punjab, Uttarakhand and West Bengal are the "Moderately Corrupt" states of India.

The survey is a part of efforts by Transparency International India to reduce corruption by promoting and supporting transparent and ethical practices in the Government sector.

And so even as Prime Minister Manmohan Singh is signing nuclear deals and the country is on its way to becoming a global powerhouse, India still loves being corrupt.

LOW INTEGRITY

Corruption in India has increased marginally in the last two years, taking its position from 72 to 85 in the list of world's corrupt countries, according to global watchdog Transparency International.

The Corruption Perception Index, prepared on the basis of surveys conducted in 180 countries by 13 international agencies associated with Transparency International, puts India's integrity score at 3.4 as against 3.5 last year.

India and China were at par last year in the corruption index. But this year, China's position is 72. Pakistan with 2.5 integrity score has been ranked at 134 in the list.

The integrity score is prepared by a mathematical calculation by a Switzerland-based professor on the basis of the findings of the surveys on governance. Electoral and political systems in India were the major sources of corruption.

HC slams MNS, likens Raj Thackeray to terrorist

Nimisha Srivastava / CNN-IBN

Mumbai: Beating up taxi drivers, threatening shop owners and making inflammatory statements - the Maharashtra Navnirman Sena (MNS) led by Raj Thackeray has done it all.

It finally took the Bombay High Court to say enough is enough. During the hearing of a case filed by the Retailers Welfare Association, Justice J N Patel slammed the state government for not acting on the law and order problems caused by the MNS.

He said: "Some people try to enforce the law as if there is no government and they challenge you to touch them and the mighty state is helpless. If you don't have the political will to do something about it, it just gives the message to the public that you cannot solve law and order problems."

Comparing the MNS actions with terrorism Justice J N Patel further said: "Last time you caught him (Raj Thackeray), he came out like a hero. We used to worship Bhagat Singh and all but now the concepts seem to have changed. We seem to be worshipping terrorists."

Retailers Welfare Association Secretary, Viren Shah said, "The judge has raised the important point about the security of the common man."

The state government has not reacted to these observations by Justice Patel, but the MNS has gone on the defensive.

MNS Spokesperson, Shishir Shinde said, "Over 1,200 of our party workers have been arrested. We only requested the shopowners to have signboards in Marathi. The government was doing nothing about it."

But the MNS was not there to present this view in court on Thursday.

The petitioners' lawyer, Majid Memon said, "They go around making such a noise, so why weren't they present in court on Thursday?"

The High Court has given the state government time till October 16 to take some strict action against the MNS and Raj Thackeray. It remains to be seen whether the state government will bow down to the compulsions of realpolitik or the rule of law.

Inflation strikes: Price of a matchbox touches Re 1 mark

23 Sep 2008, 1030 hrs IST, T S SREENIVASA RAGHAVAN,TNN

  KOCHI: More than 20 years ago, they cost a mere 25 paise, then a decade later they were 50 paise. Those prices disappeared and so did the denominations.

Now, for the first time, the ubiquitous matchbox, which could be bought with loose change left over from buying cigarettes, has touched the Re 1 mark.

The All India Chamber of Match Industry president Sreeram Ashok said dealers across India have already been notified about the price revision effective September 15.

Ashok who is also managing director of Sivakasi-based Sundaravel Match Industries Pvt Ltd said, "As of now, the price revision has come into effect in 60% markets in the country. The entire market would be converted to Re 1 per matchbox by end 2008.''

A P Selvaraj of Sree Kaleeswari Colour Match Works, which promotes Cock Brand matches, said manufacturers were left with no option but to revise prices since raw material costs had risen 250% in the last decade. "Still we were managing to hold onto 50 paise norm since we succeeded in bringing down the labour cost by mechanization,'' he said.

According to Ashok, labour was 33% of the cost of a matchbox but, with mechanization, it came down to 20%. "Since the hike in raw material prices have eaten into the benefits of mechanization, we're now forced to revise the price,'' he said.

Yet, many smaller match units still remain labour intensive. Of 90 million bundles of matches (each containing 600 boxes) produced, 18 million are handmade. Each bundle sells for Rs 350 and retailers have a margin of 25 paise per box.

Tamil Nadu leads in manufacture of matches with 75% of the country's production. Manufacturing centres are located in Sivakasi, Virudhunagar, Gudiyatham and Tirunelveli. In Sivakasi alone, there are more than 500 licensed units.

STRIKE RATES
Period Price per box
1950 : 5 paise
1960 : 10 paise
1970 : 15 paise
1980 : 25 paise
1994 : 50 paise
2008 : Re 1 

Man collapses on Metro, commuters look on

Tanya Ashreena, Hindustan Times

Email Author

New Delhi, September 24, 2008

First Published: 00:31 IST(24/9/2008)

Last Updated: 00:37 IST(24/9/2008)

On September 6, Dinesh K. Mehta, a 56-year-old insurance advisor with Max New York Life Insurance, boarded a train at the Subhash Nagar metro station. Little did he know the journey would be one of the most traumatic experiences of his life.

Mehta was standing next to an elderly lady in the train, when he spotted several young men sitting. He requested a man to offer his seat to the lady.

“When the man rudely refused, I got really angry. I got into a bitter argument with him, and raised my voice. Suddenly I had severe chest pains and collapsed,” he recalled.

A bottle of water helped him get back on his feet. But he claims when he fell, no one helped him up.

“The other passengers were apathetic.  No one showed any concern. On the contrary, at the Tagore Garden station, a person tried to kick my bags out of the train to get me to leave,” said Mehta.

Since he felt better after drinking water, he decided to continue his journey amidst bouts of chest pains, which became unbearable.

“I got down at Barakhamba station, and pleaded with the CISF personnel to help me to a hospital, but they refused. When I called up 100, a person asked me what they could do. Are we supposed to tell the police what to do, or should they know better?” questioned Mehta.

Finally, Mehta got himself admitted at Lok Nayak hospital, where doctors informed him he had suffered a heart attack.

“What happened to me could also happen to someone else. Although my attack was not so serious, what if it was?” he asked, “Judging by the callous attitude of the commuters, I would have just been left to die.”

Delhi Metro Rail Corporation (DMRC) spokesman Anuj Dayal said, “The person concerned should have informed DMRC authorities. Our staff is trained in first-aid, and we have a tie-up with a cab service that will transport the sick person to a hospital.”

“There must have been some misunderstanding. Normally, CISF personnel are supposed to help,” CISF spokesman, Rohit Katiyar said.

'Lynch politicos if they don't perform'

September 24, 2008 19:10 IST

Furious with Union Labour Minister Oscar Fernandes for empathising with workers who killed their boss, the business community said on Wednesday by that measure politicians who do not perform should be lynched.

"If we go by his argument then he should be lynched in his constituency if he does not perform," Indo-Italian Chamber of Commerce (Northern Region) chairman Diljeet Titus told PTI.

Fernandes said on Tuesday that 'simmering discontent among the workers' led to the lynching of L K Chaudhary, CEO of an Italy-based auto-component manufacturer Cerlikon-Graziano in Greater Noida.

"This should serve as a warning for the managements. It is my appeal to the managements that the workers should be dealt with compassion. 

"The workers should not be pushed so hard that they resort to whatever that had happened in Noida," the minister had told reporters at a press conference on Tuesday.

To this, an enraged Titus retorted, "Disputes are integral part of any business, but there is a way to resolve them".

"We have legal processes to settle any dispute. If any person is fired without keeping rules in mind, he can approach the court and opt for other mechanisms, but in any case killing an innocent person is not the option," he added.

There are about 150 Italian joint venture companies in the northern region. 

"The episode will certainly have an adverse impact on these companies whereas others will also think about their future," Titus who also heads Titus and Company, a law firm, said.

Arguing that the disgruntled unions have always expressed anger in their own way, Titus said: "In the last five years, I cannot remember any such case where the CEO of a company has been murdered by the mob."

He lamented that multinational corporations become soft targets because they work honestly and do not pay heed to unlawful demands of local netas and gundas.

"Indian businessmen manoeuvre their way by offering bakshish and can get away in such situations with the help of anti-social elements but most multinational corporations don't follow such tricks and are victimised," he said.

"There is a sense of deep shock among Italian businessmen, but we cannot comment what will be the long-term impact. We are still assessing the situation," commercial counsellor at Italian Embassy Nicolo Tassoni said.

Nath seeks to soothe tempers: The Centre said on Wednesday that legal course would be followed to bring culprits to book.

"This incident is very unfortunate and we strongly condemn it. The legal course will be followed and all the culprits will be punished. This stray tragic occurrence would not be allowed to mar India's position as investment destination. . .," Commerce and Industry Minister Kamal Nath said on Wednesday.

Nath is leaving for Paris this weekend where he is scheduled to interact with European investors.

Nath said that the violence at the Greater Noida plant was at variance with the Indian culture and tradition of peace.

Fernandes, however, apologised for his remarks on Wednesday.

Scenes from India

More here - http://www.boston.com/bigpicture/2008/09/scenes_from_india.html

CEO lynching a warning for management: Govt

Press Trust of India

Tuesday, September 23, 2008, (New Delhi)

The government on Tuesday termed "simmering discontent among the workers" as the main reason behind the death of Graziano's CEO L K Chaudhury in Greater Noida.

"This should serve as a warning for the managements. It is my appeal to the managements that the workers should be dealt with compassion," Union Labour Minister Oscar Fernendes told reporters at a press conference in New Delhi. (Watch)

He said, "There are disparities in the wages of permanent employees and contract workers. The workers should not be pushed so hard that they resort to whatever that had happened in Noida.

"It is a fact that the number of organised workers has been decreasing. It came down from seven per cent to six per cent. We are going to discuss the matter of hire and fire policy in the next Labour Congress. First we deal with PSU and later with private sector on the issue."

The workforce is "unable to express its simmering discontent over the management policies", leading to strained ties between them and the management, he said while expressing his condolences to members of the bereaved family.

The minister is expected to visit the incident site on Wednesday.

About two months back, workers of the company were dismissed. The CEO of the company was reportedly beaten to death by a group of dismissed employees inside the premises after a compromise meeting called failed. 

Madurai Bishop faces flak for 'usurping' college

Sam Daniel

Tuesday, September 23, 2008, (Madurai)

It is being seen as a coup of sorts by a bishop. The administration of the 128-year-old American College in Madurai has allegedly been taken over illegally by the bishop.

The college was founded by American missionaries but was being run by an independent governing council with the bishop as a nominal head. But recently the bishop suspended the principal, reportedly in an illegally convened governing council, stormed the college and made his chosen man the principal incharge.

Principal Dr T Chinnaraj Joseph Jaikumar defends that actions, saying: "It's a Christian college and as early as 1934 the founding fathers wanted the college to be independent of the church. And the faculty, students and all would like me cherish it and protect."

The state government has not accepted the bishop's action. The Madras High Court has restrained the principal from carrying out his work. Now there is fear and unrest on the campus. The bishop says the college is an integral part of the church.

"It's dichotomised as internal administration by the principal and the controlling authority by the bishop. But this part is normally concealed," says Christopher Asir, Bishop in Madurai, CSI.

Caught in the tussle for power are students. 

Politicians buy a fifth of votes, shows study

 by Liz Mathew

New Delhi: Even as a Lok Sabha committee probes the cash for votes allegations in the 22 July trust vote that gave a new lease of life to the ruling Congress-led Union government, a new study shows that, in the last decade, at least one-fifth of the country’s electorate was paid cash for their votes.

The numbers rise among the rural poor, who are relatively more vulnerable to such cash inducements.

According to the study, conducted by the Centre for Media Studies (CMS), a not-for-profit research firm, almost one in two voters in Karnataka, where assembly elections were held in May, had taken money for voting or not voting.

However, the share of voters is higher among the voters in the so-called below the poverty line, or BPL, category: 73% in Karnataka while the national average is 37%.

“It is the mother of all corruptions. This is the beginning of the vicious circle of corruption in our society today. The voter who took money to elect his representative does not realize how much more bribe he has to pay annually to avail what is entitled for him,” says N. Bhaskar Rao, chairman of CMS.

“The bribe money varies from state to state. It may be Rs100-150 (a voter) in some states and it can go up to Rs1,000 in some constituencies,” said Rao, adding that the CMS study refers to only cash bribes, not the value of liquor or other material inducements being doled out during election campaigns.

The national survey sampled 18,000 voters in 18 states and 23,000 voters spread over all the Indian states.

Also See Money for Votes (Graphic)

Explaining the methodology for the study, Rao said CMS used a perception, experience and estimation method to arrive at its conclusions. “Not many will admit they have been bribed to cast their vote,” he said. “But, in confidence, they would let you know if they knew someone who has taken money.”

CMS spotted this trend, which Rao says is worsening every year, while analysing recent voting patterns in various states.

The Centre is finalizing its larger study on the “patterns of bribing” in elections.

While money has always played a role in Indian elections of all sizes and shapes, the increasingly brazen use of wealth to garner votes is a major concern to the Election Commission, the autonomous body that conducts Indian elections and a body that has generally failed to curb the use of non-overt use of monetary inducements in elections.

Also Read Mint’s corruption series

In an article in The Hindu on 31 May, chief election commissioner N. Gopalaswami disclosed that the total value of cash, liquor and other non-cash objects used for bribes that were seized across Karnataka during the run-up to the May polls was around Rs45.5 crore.

He maintained that he had never come across such a precedent in the four years he spent on the poll panel.

Election Commission officials couldn’t immediately be reached for comments on the CMS findings about how much cash was being paid for votes.

Admitting that money played a major role in Karnataka election, B.K. Hariprasad, a Rajya Sabha MP and a Congress party general secretary, said: “It is sad for the democracy. Democracy will lose its essence of genuine choice.” The Congress party lost to the Bharatiya Janata Party (BJP) in the elections.

According to some political party leaders, one candidate in any Lok Sabha constituency of an Indian metro city often spends up to Rs2 crore in an election, while it is about Rs1 crore in a semi-urban constituency and Rs60-80 lakh in rural constituencies.

The numbers, however, sharply vary from constituency to constituency and various election periods.

“It is less in rural constituencies of Bihar, Uttar Pradesh and Madhya Pradesh,” says a BJP member of Parliament who didn’t want to be named.

Several politicians claimed they have no choice but to induce voters.

“Many voters are also looking up to candidates who spend money for them. They consider a rich candidate before a poor party worker, even if the latter is a genuine candidate. Poverty could be one reason for it,” said a senior Congress leader, who did not want to be identified.

Prakash Javadekar, spokesperson for the BJP, says he would like to believe that voters mostly go by their “heart” in big elections.

“It is true that money is being paid in various forms and it is worrisome,” he said. “In civic body elections, where a small number of voters matter, the candidate tends to buy the voters.”

Javadekar claims this, however, “is not feasible in Lok Sabha elections. Our own experience is that when there is a battle between dil or dollar (heart and money), heart always wins.”

According to the CMS study, Tamil Nadu and Madhya Pradesh, which is due to go to elections later this year, follow Karnataka in the list of the states where the voters have been bribed with cash to cast their votes. While 34% of voters were paid cash in Tamil Nadu, it was 33% in Madhya Pradesh and 31% in Andhra Pradesh and Bihar. In a somewhat surprising estimate, only 29% of BPL voters seem to be bribed with cash payments in Madhya Pradesh, as opposed to 94% in Andhra Pradesh and 23% in Bihar.

About 18% of BPL voters were bribed in West Bengal, while it was 8% in Kerala.

Indian IT companies bringing 11,000 migrants to UK every year

Sun, Sep 21 08:52 AM

London, Sep 21 (IANS) Over 11, 000 foreign workers are being brought into Britain by Indian IT companies every year, prompting a trade union to question if the work permit system is being 'abused' in the process.

The Sunday Telegraph releases Home Office figures, which it says it obtained after a two-year battle under the Freedom of Information Act, showing that just six specialist Indian IT companies had recruited 11,644 immigrants to work for them in the UK in 2006, the most recent figure available.

The companies are Tata Consultancy Services, Wipro, Mahindra-BT, Mastek, Infosys Technologies and Satyam Computer Services.

Over a seven-year period these companies were granted work permits to bring 47,000 foreign nationals into the UK. Their annual total has climbed steadily every year since 2000 and has doubled since 2003.

The majority are thought to have been Indian nationals. The Home Office could not say how many have settled in the UK and how many have returned to their homeland.

Tata Consusltancy Services is the largest single sponsor of foreign workers. It secured permits for around 4,000 foreign workers in 2006 compared with less than 1,600 in 2000.

Much of the work of the six companies involves outsourcing, where British companies or public-sector organisations bring in a separate company to operate their computer system.

In some cases, companies have brought staff from India to Britain to learn about operations such as call-centres, before shutting down the British businesses and moving the staff back to India to replicate the operation there.

A British trade union, Unite, is questioning these figures. It says while it is possible that only foreign workers have the skills required for the specific jobs in question, the granting of work permits 'should not be at the cost of resident workers'.

Unite is worried that the Indian companies may be 'undercutting' British pay rates in the UK by securing work permits to foreign workers and paying them much less than what their British counterparts would earn in the same rank.

According to The Sunday Telegraph, British IT workers earned an average of pound35,000 a year in 2006 while two-thirds of foreign-born employees in the same sector were paid under pound30,000 a year. The figures include both employees on short-term and long-term work permits.

Peter Skyte, national officer of Unite, wrote in a report titled 'The impact of the work permit scheme on IT professionals in the UK': 'The question needs to be asked whether the skills represented in these figures are not available in the UK, which would be a justifiable use of the work permit system, or whether these companies are bringing in non-resident work permit holders at below going pay rates in the UK, which would not.'

U.S. Congress gets $700 bln financial bailout plan

Sat, Sep 20 11:32 PM

By Kevin Drawbaugh and Richard Cowan

WASHINGTON (Reuters) - The Bush administration on Saturday sent a $700 billion financial markets rescue plan to Congress where Democrats immediately questioned its impact not only on Wall Street, but on homeowners and taxpayers as well.

The plan to move toxic mortgage-related debt off the balance sheets of U.S. banks and other institutions, and into a massive government portfolio, represents an all-out attack on the worst financial crisis since the Great Depression.

Under authority sought by the U.S. Treasury Department, the government could purchase as much as $700 billion in mortgage-related assets from U.S.-headquartered institutions.

Decisions by the treasury secretary related to the buyback program could not be reviewed by any court, according to a copy of the department's draft legislation obtained by Reuters.

In a related move, the U.S. government's debt limit would be raised to $11.315 trillion from $10.615 trillion.

Congressional leaders have promised swift action on the bailout package but many details are still to be worked out.

New York Democratic Sen. Charles Schumer, chairman of Congress' Joint Economic Committee, said the plan is a good start. "But it includes no visible protection for taxpayers or homeowners. We look forward to talking to Treasury to see what, if anything, they have in mind in these two areas," he said.

As lawmakers' aides huddled on Capitol Hill, President George W. Bush acknowledged the plan would put large amounts of taxpayer money on the line to buttress shaky markets.

"But I'm convinced that this bold approach will cost American families far less than the alternative," he said in his weekly radio address.

"Further stress on our financial markets would cause massive job losses, devastate retirement accounts, further erode housing values, and dry up new loans for homes, cars and college tuitions."

After government takeovers of individual firms in recent months failed to stop spreading credit turmoil, U.S. authorities are turning their focus to part of the underlying problem -- the rising tide of bad mortgage debt choking the financial system.

The draft legislation said Treasury could hire asset managers to handle debt purchases, which could include residential or commercial mortgages and related instruments that were originated or issued on or before Sept. 17, 2008.

The authority to purchase ends two years from date of enactment, but the authority to hold the assets would continue.

Banking industry sources said "reverse auctions" would be held to purchase $50 billion tranches of debt, which could include residential and commercial mortgages and mortgage-backed securities. But that level of detail was not spelled out in the draft legislation.

A Treasury official said Friday that hedge funds would not be eligible to offload troubled assets under the plan, but that was not explicit in the draft legislation.

MAIN STREET

Congressional committees were to be briefed on Saturday on the legislation, which could be considered by the U.S. House of Representatives and Senate as early as next week.

Democrats have said they might try to use the financial bailout legislation to reduce home foreclosures and put some limits on the pay of corporate chief executives.

"We must not forget Main Street as we work to address the crisis on Wall Street," Senate Majority Leader Harry Reid, a Nevada Democrat, said on Friday.

The financial crisis has dominated the U.S. presidential campaign this week with Republican Sen. John McCain Barack Obama skirmishing over the proper government role.

And some members of Bush's Republican Party are upset with the government's increasing involvement in the private sector.

"The free market for all intents and purposes is dead in America," said Kentucky Sen. Jim Bunning. The Treasury proposal would "take away the free market and institute socialism in America," he said in a statement on Friday.

But financial markets have shown their approval and may be disappointed if Congress does not swiftly back the measures.

U.S. stocks had their best day in six years on Thursday on talk of an aggressive plan. On Friday the Dow Jones industrial average rose 368 points, or about 3.4 percent.

The Treasury and Federal Reserve have already put nearly $1 trillion of taxpayer money on the line to help credit flows.

And banks worldwide have suffered more than $500 billion of write-downs and loan losses since the global credit crisis began more than a year ago.

CRISIS GREW

The crisis grew more acute this month with government takeovers of mortgage companies Fannie Mae and Freddie Mac; the bankruptcy of Lehman Brothers Holdings Inc; Bank of America Corp's shotgun agreement to buy Merrill Lynch & Co; and a bailout of insurer AIG. This came just six months after a government-backed rescue of investment bank Bear Stearns.

The plan to buy back mortgage-related debt was just one of a series of measures unveiled in the last two days as the Treasury and Fed decided the frozen credit markets signaled a growing storm that would engulf the economy.

The Treasury said on Friday it would siphon up to $50 billion from a fund established in the 1930s to conduct foreign exchange market intervention to backstop the rattled U.S. money market mutual fund industry.

This long-safe corner of financial markets, home to some $3.5 trillion of deposits, has increasingly appeared at risk of falling victim to the year-old credit crunch. Money market fund assets dropped by a record $169.03 billion in the week ended Sept. 17 as jittery investors pulled money out.

The U.S. Securities and Exchange Commission got involved too, imposing on Friday a 10 trading-day ban on short sales of 799 financial stocks.

And the administration will step up a program announced this month to directly buy mortgage-backed securities in the market, and said Fannie Mae and Freddie Mac would also increase their buying to try to get credit flowing.

Bush said he initially thought the government could deal with the trouble on Wall Street "one issue at time."

But the financial "house of cards was much bigger, and it started to stretch beyond just Wall Street in the sense of the effects of failure," he said at a White House event with Colombia's President Alvaro Uribe on Saturday.

Surviving the financial meltdown

Ganesh Natarajan / New Delhi September 19, 2008, 3:16 IST

The domain competencies of Indian IT firms could see the employment of many professionals in a redesign of the financial systems in 2009.

Lehman Brothers files for bankruptcy and Wall Street shudders with news of AIG. Washington Mutual and quite a few financial stalwarts are feeling the tremors. A few thousand direct and indirect employees of Lehman in India face an uncertain future. Almost immediately, there are rumours that no BPO job is safe, particularly when it has anything to do with the financial sector. On the heels of all this bad news, HP announces the loss of over 24,000 jobs globally and a few Indian firms announce performance-led separations and delayed campus hiring! Is there reason to panic for the IT and BPO industry in India?

Not really — we have seen such worrisome collapses before, the biggest of them probably being the dotcom bust that saw billions of dollars in market capitalisation on Wall Street evaporate and the loss of a sizeable number of jobs. The industry survived and continued to grow; the only vestiges of that blip are jokes about back-to-Bangalore (B2B) and back-to-Chennai (B2C) that still linger on the campuses of IT companies. In the current situation too, there could well be a medium-term opportunity to get into the heart of a major IT-led restructuring of the entire global financial services sector. Indian IT firms are already well-embedded in the development and support processes of most major investment banks and brokerages and the incredible domain competencies they have acquired could well see the employment of thousands of professionals in a redesign of the global financial systems in 2009.

Having said that, there will certainly be trouble in the short term. The global-demand environment has been sluggish since the beginning of the current financial year, which has resulted in a lowering of revenue-growth guidance for the year to the low twenties. The Indian IT-BPO sector is a part of the global ecosystem that has been facing uncertainties and cannot insulate itself from the travails of its key customers, particularly in the banking and mortgage sectors. The mitigating factor is that ever since the sub-prime crisis began last year, many companies that were being directly impacted had prepared for this. The industry has already tightened its belts, improved utilisation and reduced bench strength, and this turn for the worse will not substantially change the guidance or the outlook of the significant players in the sector.

Does this in any way impact the achievement of the $60-billion export goals that the industry has targeted for the turn of this decade? The preliminary analysis of the current situation indicates that the impact will be short term and company-specific and though all strategy planners will continue to keep a watch on any further downstream impacts, there is no likelihood of any catastrophic happenings or announcements from the industry in the coming months.

India’s value proposition continues to be strong. As an industry, we have worked as partners with our customers and will continue to do so, even as the financial services sector realigns itself. During the last few years, Indian IT and BPO firms have moved from being peripheral services of contextual services to becoming the epicentre or at least an integral part of the core value chain in customer business processes, which is what gives us the confidence that no process transformation will be contemplated or undertaken without the active involvement of India’s large professional manpower. If there is some panic in the ranks today, with many television channels already pronouncing a fading interest of business schools in financial services and investment banking career opportunities, young aspirants can be assured that the future opportunities are real and promise to be more exciting than the current quantum and quality of work done by the services industry.

Every slowdown also presents its own slew of new opportunities. Companies like iFlex have already established the capability of Indian firms to provide the best in-class products for the banking sector. The innovation movement initiated by NASSCOM a few years ago and the launch of the NASSCOM-Boston Consulting Group report on ‘Innovation in the IT and IT Enabled Services industry’ in Bangalore at the end of July demonstrated the industry’s determination to create a new sigmoid of growth for the industry. After successfully using the “value for money” wage arbitrage advantage to get a toe in the door of global multinationals and then making the transition from on-site to offshore delivery through the perfection of high-quality processes and the ability to migrate technology development and business process management to Indian centres, the third wave of success in this industry may well come from innovation, adding a potential $50-billion of new revenues in the next five years through new products, services and business models which will lead to one more phase of industry transformation.

The true imperatives for the coming months can broadly be grouped into three areas: At the firm level, diagnostic exercises on the present state of innovation activity and the path to reaching a desired state of extensive innovation need to be undertaken so that serious projects are planned and executed. New product creation in intellectual property-oriented firms and process innovation to look at new delivery methods and collaboration with customers and partners should be attempted in all services firms. And finally, all the participants in the eco-system — the government, research and academic institutions, financing agencies in addition to firms and associations — need to work to build an enabling environment for innovation.

Major initiatives have already been announced where liberal arts and science degree programs in colleges are being augmented with vocational skills provided through a combination of technology and facilitation to transform the employability of thousands of young industry aspirants. Staying on the path of ongoing success is not difficult for an industry which has grown from under $5 billion 10 years ago to $50-billion-plus in services this year. There will surely be a tryst with a global destiny!

The author is Chairman of NASSCOM & CEO of Zensar Technologies

The body count’s rising

18 Sep, 2008, 0000 hrs IST,Sudeshna Sen, ET Bureau

And so, it’s been a crazy kind of week, or rather weekend. One that leaves even the most snarky columnist out of funny takes.

We’ve been clutching our mobile phones, checking text messages from friends, acquaintances, and everyone - as soon as we finished the first lot of ‘is everything okay’ series after yet another set of bombs ripped through Delhi, we had to recycle almost identical messages to friends in the banking sector in London and New York. If you live in London, everyone knows at least a few people in the banking sector.

Lives at one end of the world, livelihoods in the other. Body counts, both. At last reckoning, the financial bombs that went off on Wall Street are likely to run up a casualty list of 50,000 worldwide.

The bad news just keeps piling up, and from this part of the world, there’s not even a silver lining.

What happens now? Nobody knows, frankly, though everyone is randomly rewriting financial management books. It’s like a computer virus; it’s infected almost everything, and the world is now in the process of rebooting its entire financial system.

Uncharted territory, is the response I get from most senior economists and bankers here. The only other response they all seem to be agreed on is that it’s going to get a lot worse before it gets any better, at least for developed countries. So far, India is largely still insulated from the mess. Europe, the new thinking is, may have to suffer longer than the US, because the US is still more flexible and has larger resources.

People are making up the rules as they go along, because the old theories don’t seem to work any longer.
Here’s the latest version of theories doing the rounds here, I’m fairly sure they’ll hit the Indian markets soon, they always do.

One, derivatives are a bad thing, not the super financial equivalent of James Bond’s gizmos everyone thought they were. Oh well. Despite various attempts by teachers and harried bosses over the years, I never got the hang of derivatives anyway. Which, generally, seems to be the idea - that if nobody can figure it out, you can keep up the magic trick up for years. Until the juggler stumbles, like now.

As thousands of innocent employees wearily dust off their resumes, the question being asked, as always after any major disaster, is how and why? How, is that a whole lot of hot potatoes got passed around bank to bank in a major juggling act - given the complicated trails nobody knows where those hot potatoes are at the moment, burning holes in which books. Lehman Brothers just happened to be the one which was left holding the parcel when the music died last weekend.
The why is easy to answer; obviously everyone was making loads of money, so who cared? But there really is no free lunch.

Next, the jury is still out on the role of central banks and governments, and exactly how big is Too Big To Fail.

First, the world took its cues from the Fed bailing out one distressed player after another - besides the big names, a lot of smaller mortgage companies and banks in the US have quietly and regularly been going bust over the last year, though these don’t make it to India headlines. Everyone jumped on Mervyn King, governor of the Bank of England, last year when he balked, on principle, at underwriting crazy risk-taking by private banks. Financial institutions, said everyone, are so interlinked and connected that they were TBTF without dragging the rest of the world down with them.

Now, when the US government finally refused to prop up Lehman, that world view is changing again. It’s their greed that did ‘em in, so why should taxpayers pick up the tab for those fabled Wall Street lifestyles, is the question? Not all investment bankers are rich, and one estimate says one Wall Street job supports 4 more in New York. All those will suffer as well.

Who is to blame, though? There’s no point blaming just the investment banks, or central bankers - equally to be blamed are the hordes of consumers who greedily lapped up cheap housing and other loans, without a thought of how and when to repay. And everyone else, including in India who happily jumped on the gravy train when the going was good.

Another theory that’s coming up for severe examination is the whole compensation structure of the financial sector. The high risk, high reward, bonus-based compensation system, say experts, is the one that made all those investment bankers trigger happy. The system itself needs overhauling, into something that will reward risk-taking, but balanced with fiscal prudence, they say now.

And of course, we’re daily seeing predictions about the end of stand alone investment banking. With three big names gone up in smoke, how long can the others last? The fact that the cast of characters in the world of high finance was due to change has been known for a while - the question has just been who, and when.

And finally, it seems as if the harried central bankers and finance ministers are veering around to the view that the developed world needs to get used to being a bit poorer, at least for a while, until the mythical prosperity created by all those derivatives can vanish into the smoke and mirrors they came from. 

The Crash of Western Capitalist Civilization?

Politics / Economic Depression Sep 14, 2008 - 11:54 AM

By: Richard_C_Cook

“Train-wreck” doesn't even begin to describe what is starting to happen to the U.S. today with the financial crisis, an onrushing depression, and the failure of George W. Bush's war policy as he is faced down by Iran and the Russian bear.

But in an even broader sense, the West, as a civilization, after a century of world war and the utter failure of global finance capitalism, may have reached its limits.

Those with a vested interest in the status quo dismiss any suggestion that something is wrong. This includes Donald Luskin, author of an article in the Washington Post on Sunday, September 14, titled: “A Nation of Exaggerators: Quit Doling Out That Bad Economy Line.”

Luskin writes, “The relentless drumbeat of pessimism in the media and on the campaign trail” is “a virus.”

He continues: “Sure, there are trouble spots in the economy, as the government takeover of mortgage giants Fannie Mae and Freddie Mac, and jitters about Wall Street firm Lehman Brothers, amply demonstrate. And unemployment figures are up a bit, too. None of this, however, is cause for depression -- or exaggerated Depression comparisons.”

Continue reading, and you find out who Luskin is: a campaign adviser to John McCain.

We know that “where you stand depends on where you sit”—and who pays you for advice. So is a catastrophic meltdown coming?

If so, probably a majority of the people in the world are thinking: “Serves them right.” For the last 500 years, the West has been striding across the globe, armed to the teeth with firearms, warships, bombers, and—more recently—depleted uranium, enforcing the “white man's burden” by enslaving nations and peoples and confiscating everything of value—ranging from art objects to gold to oil—that can be carried away.

The financiers behind it all have also used the diabolically clever practice of creating money “out of thin air” to put the natives everywhere into debt, and, when that has proven insufficient, of doing the same to their own populations.

All this is rationalized by various brands of racism, cultural superiority, social Darwinism, historical determinism, “dominion of the Elect,” “God's chosen people,” etc. Or, simply, “might makes right.”

Some call it “The New World Order.”

So today, we Americans, denizens of the “land of the free and the home of the brave,” victors in two world wars, bearers of “democracy” to Afghanistan and Iraq, allies of the brave Israelis who hold high the banner of Judeo-Christian values among the ungrateful Palestinians—well, we Americans owe our own bankers almost $70 trillion at most recent count. With the government takeover of Fannie Mae and Freddie Mac, we owe holders of bad housing loans, including the governments of China, Korea, and Japan, another few trillion.

The bluster of Kissinger, Brzezinski, the Kristols, the Christian fundamentalists, and their paid-off politicians and media millionaires notwithstanding, America—indeed, the entire West—has been found out, perhaps even checkmated on the world stage.

The Bush/Cheney wars in Afghanistan and Iraq have blackened America's name forever. Iran has called our bluff. In Israel the gap between rich and poor is increasing as much as in the U.S. According to an article by Ian S. Lustick, the Palestinians have stood up to the Israelis to the point where more Jews are emigrating from that country than are moving in, and where those who remain are increasingly huddling around Tel Aviv as a safe haven. (Ian S. Lustick, “Abandoning the Iron Wall: ‘Israel and the Middle Eastern Muck',” Middle East Policy , Vo. XV, No. 3, Fall 2008.)

In the 1990s, the European bankers used U.S. and NATO forces to dismember Yugoslavia so George Soros and the Rothschilds could gobble up Balkan resources. But that strategy is failing in the Caucasus, where the Russians fought back against the genocidal attack by Dick Cheney's poodle, Mikheil Saakashvili, the New York-trained attorney the CIA got elected as the president of Georgia.

And now the people of Ukraine, the “Little Russians,” realizing what the West has in store for them, are rushing back into the Slavic fold and may be only a year or so away from reuniting with their “Great Russian” cousins across the border.

What is telling is to watch the Western financier press, chiefly the Washington Post and the New York Times , fume about Russian prime minister Vladimir Putin and his “authoritarian” manner. An example is the article by Times correspondent Ellen Barry on Putin's September 11 press conference in Moscow. She wrote, “In three-and-a-half hours, in tones that were alternatively pugilistic and needy, Vladimir V. Putin tried to explain himself.”

I'm sorry, Ms. Barry. You and your editors may think your writing is cute, but Vladimir Putin is the foremost figure on the world stage today. He will remain so after George W. Bush leaves the White House disgraced.

Putin is heir to an epochal movement of patriots who began in the 1970s to take back Russia from within. It started with a base of operations within the KGB and the Orthodox Church, led to Gorbachev's glasnost in the 1980s, and culminated in the Second Russian Revolution of 1991. At that point, the Western financiers gleefully rushed in to support an assault from the Russian “oligarchs” who were looting Russia of everything it owned.

The oligarchs were the shock troops of a financier assault that had already begun to overlap in the West with the Russian Mafia. Cheered on by the Washington Post and aided by academic advisors from places like Harvard, this international syndicate nearly destroyed Russia during the 1990s. But when Putin was appointed interim president by Boris Yelstin in 1999, and after winning the presidential election of 2000 in his own right, he began to fight back.

From the mid-1970s to today, thousands of Russian gangsters, along with many hard-line Bolsheviks/Stalinists, were allowed to emigrate. Many settled in the U.S. and are here today, and many more settled in Israel. In fact, one reason the price of condos in New York, Miami, Tel Aviv, and elsewhere has inflated so much reportedly is the flood of cash from racketeering.

The crooks have allied themselves with the Colombian drug cartels and have heavily infiltrated the world's financial systems, even setting up their own banks for laundering money and speculating in the commodities markets.

Today, Putin is cleaning out the remaining gangster class. His efforts reached a milestone in January with the arrest in Moscow of Semion Mogilevich, called “the world's most dangerous man.”

Putin has declared that the world will not be governed in a “unipolar” manner; i.e. by the U.S. military as the police force for the global financiers. This does not mean Russia has to be our enemy. In fact the world would be much better off, and much safer, if we joined with Russia as allies in keeping the peace.

But to do that our system would have to change, because finance capitalism is far too unstable to coexist with other nations as equals. It must either grow or die, because it always needs new victims to pay the interest on its usury practices and to finance its speculative balloons. As a last resort, it needs the kind of financial institution bailouts being engineered by Secretary of the Treasury Henry Paulson, where the only remaining stopgap is borrowing from public funds and adding to the national debt.

Once economic growth stops, as has now happened, and all the bubbles to restart it have blown up, as has also happened, the end really is nigh. Especially if the host—the U.S.—is bankrupt.

What is coming at us today isn't just another downturn. If people like McCain adviser Donald Luskin doubt it, maybe, instead of writing campaign propaganda, they should ask the fired CEOs of Fannie Mae and Freddie Mac, the stockholders of Lehman Brothers, whose shares have dropped ninety percent in less than a year, and the millions who are losing their homes.

Presidential candidates Barack Obama and John McCain are calling for “change.” Well, if I were standing on a beach with a 100-foot tsunami roaring in my direction, I would call for change too. Except I would not be standing around arguing about the meaning of the words “lipstick on a pig.”

By Richard C. Cook
http:// www.richardccook.com

Copyright 2008 by Richard C. Cook

Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department. His articles on economics, politics, and space policy have appeared on numerous websites. His book on monetary reform entitled We Hold These Truths: The Hope of Monetary Reform will be published soon by Tendril Press. He is also the author of Challenger Revealed: An Insider's Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age , called by one reviewer, “the most important spaceflight book of the last twenty years . ” His Challenger website is at www.richardccook.com . A new economics website at www.RealSustainableLiving.com is upcoming with partner/author Susan Boskey. To get on his mailing list, for questions and comments, or to pre-purchase copies of his new book, please write EconomicSanity@gmail.com .