Archive for December, 2014

Goodbye MSD…your calmness off and on the field shall be missed..

December 31, 2014

What a difference time makes and how thongs turn around. There was a time when media and experts could not get enough praising MS Dhoni and called him captain with the Midas touch. And why not. Ever since he took over captaincy, India won T-20 world cup, got no.1 rankings in Tests and then the World Cup in 2011. This was followed by Champions trophy in 2013 and couple of more IPL titles.

And come to 2014 and experts have been criticising MSD for nearly every ill in Indian cricket team. The Aussie experts which have harsh words for most Indian players called him a product which is pass his date and so on. I so wish MSD had hung around and answered them the way Sachin Tendulkar did when similar words were said to him after 2007 WC debacle.

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How macroeconomics has changed since the crisis…(getting more behavioral)

December 31, 2014
Wouter den Haan of London School of Economics sums up the changes in “the discipline”. The best bit is it is an interview which one can actually just hear rather than read the piece:

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Celebrating Tipu Sultan’s birthday..

December 30, 2014

One significant event since the historic May election verdict is how politicians are revisiting and changing our historical thinking. The earlier historical figures are being rejected outright and new or ignored historical figures are being celebrated. The chaos created is not limited to central govt but has intensified at state level too.

The recent one to join the controversy is government of Karnataka which has decided to celebrate Tipu Sultan’s b’day. Here is a detailed historical account by Sandeep Balakrishna which says why Tipu was a false hero.

If anything, one is getting some good readings to read and recall India’s forgotten political history..

How and why prices differ across eight Texas cities?

December 30, 2014

Michele Ca’Zorzi, Alexander Chudik and Chi-Young Choi of Dallas Fed have an interesting research on the topic.

They first show how prices differ across eight Texas cities and then look at reasons for the same:

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Why 94% pickpockets nabbed in Delhi Metro are women?

December 29, 2014

I was not aware of this statistic and kind of surprised to read this.

An overwhelming majority of pickpockets — 94% — caught in the Delhi Metro network this year are women, official data has revealed.

Figures compiled by the Central Industrial Security Force (CISF) for 11 months, from January to November, show that a total of 293 women pickpockets were held as compared to 22 men in metro in the national capital region.

The CISF is the designated nodal force for securing the Delhi Metro network, platforms and rail coaches. “Women pickpockets have been dominating the Delhi Metro premises. It has been found that they camouflage their intentions by deploying a clever modus operandi of accompanying a child or carrying a toddler. In most cases it was found that the women who were apprehended after the act of stealing were the least doubtful,” a senior official said.

The CISF, which is tasked with securing the 134 Metro stations in the NCR, hand over these men and women to the local police for action under law. The rise in numbers of women pickpockets has been a subject of challenge for security agencies in the Metro network including the CISF as the figures for last year also depict a similar trend.

Last year, of the total 466 pickpockets held across stations of the Delhi metro, 421 were women. CISF personnel also recovered over Rs. 29.56 lakh in cash, cheques/drafts of value of over Rs. 9 crore, foreign currency worth Rs. 86,683, gold ornaments and other valuables worth more than Rs. 16 lakh from the transit system this year.

Statistics hide more than they reveal..

Wondering what could be the reason for this? Do men thieves do not like DMetro? Or is it that they are too cunning and are able to trick the authorities? Or is it that they are caught but have ways not to get reported? Or are women thieves too naive and are just caught easily?

Quandary of the urban India – clear air or a good hospital?

December 29, 2014

This is an issue which quite a few urbanites face in India. Some urban people do get frustrated with the daily urban chaos and wish to live in quieter and cleaner rural areas. But it isn’t as easy relocating as rural areas do not have amenities which urban chaps are so used to.

Subir Roy discusses this dilemma from his recent trip to a village in Rajasthan..

 

Economics as a parasite …

December 29, 2014

TCA Srinivasa Raghavan has interesting points on state of economics:

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How our brain determines if the product is worth the price..

December 26, 2014

As neuroeconomics gains ground, we are in for exciting times and research. This piece summarises certain experiment which look at how people react to prices and products.

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The productivity of trust between state and private firms

December 26, 2014

Ricardo Hausmann has a nice article on the topic. There is always this uneasy relationship between big businesses and government.

Both believe that they are distant from each other which is just that – a belief:

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Christmas economics: Challenging some common beliefs

December 26, 2014

Merry Xmas to ME visitors.

Laura Birg and Anna Goeddeke summarise the findings of economic research around X-mas. There are couple of beliefs around the festival:

  • Do you believe that prices peak during Christmas time?
  • Do you believe that the number of suicides peaks before Christmas?
  • Do you think that the monetary value of presents you are giving to your beloved is of importance?
  • Do you believe that at Christmas time the economy peaks?

Most of these beliefs are found wanting when tested empirically. For instance only prices that rise around xmas are stock prices and not really those of goods and services

 

Are home umpires biased in cricket?

December 24, 2014

Ian Gregory-Smith, David Paton, Abhinav Sacheti have this terrific research on the topic.

They say stats does show that home umpires are indeed biased:

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Some extra-terrestial thief please steal our fossil fuels

December 24, 2014

Adair Turner wishes so. It is quite a different wish as most of us would wish that we discover more sources so our binge and lifestyles continue.

He says we do not really need these fuels as alternatives have developed:

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QE for EZ people: send each adult citizen a €500 cheque..

December 24, 2014
John Muellbauer of Oxford University says time for helicopter drop in EZ.
Eurozone deflation is likely to become reality when the annual inflation figure for 2014 is announced in January. This column argues that the ECB should develop a strategy that works in the Eurozone’s unique financial setting, instead of following the Fed’s lead. The author proposes that the ECB should pursue ‘quantitative easing for the people’, such as sending each adult citizen a €500 cheque.
He says ECB should get hold of population registers and start dispatching cheques directly to people:

Clearly, the ECB must develop a strategy that works in the Eurozone’s unique system, instead of attempting to follow the Fed’s lead. Such a strategy should be based on Friedman’s assertion that ‘helicopter drops’ – printing large sums of money and distributing it to the public – can always stimulate the economy and combat deflation. But, in order to maximise the impact of such an operation, the ECB would also have to find a way to ensure fair distribution.

One simple solution would be to distribute the funds to governments, which could then decide how best to spend them in their countries. But the EZ’s rule against using the ECB to finance government spending bars this approach.

A more reasonable option would be to provide all workers and pensioners with social-security numbers (or the local equivalent) with a payment from the ECB, which governments would merely aid in distributing. Another alternative would be to use the electoral register, a public database that the ECB could use independently of governments. Of the roughly 275 million adults in the Eurozone, some 90% are on the electoral register. Nothing in EZ law forbids the ECB from undertaking such an independent action.4

There is an important difference between the ECB implementing a €500 per-adult-citizen hand-out as part of monetary policy and governments doing this as traditional fiscal policy. Economists have long worried about myopic politicians over-spending, for example, just before an election in order to influence the voters and thus creating a ‘political’ business cycle, or simply perpetually spending too much, and as a result running too high government deficits. That is an important reason why the ECB is not allowed to directly finance government spending. But it is quite a different matter for an independent central bank, subject to its governing council and the representation of different countries on that council, to directly hand out cash to households as part of its method of meeting its inflation mandate. That is why I would classify this as monetary policy and not just a devious way of by-passing Eurozone rules.

EZ is looking at options which US was looking around 2010 and Japan looking at for more than 20 years now.

Bangalore’s garbage crisis breeds some Japanese disease

December 23, 2014

Today’s Bangalore edition has this piece on Bangalore’s ever growing garbage crisis.

The several garbage dumps are leading to all kinds of diseases like Dengue and so on. There is a new edition to the list — Japanese encephalitis:

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Argentina is the only country in the world that was ‘developed’ in 1900 and ‘developing’ in 2000…

December 23, 2014

Nauro Campos of Brunei University analyses what transpired in these 100 years of Argentina’s history.

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No deflation risk for Indian economy as yet?

December 22, 2014

I mean it is outright amusing to even have an article like this –deflation risk in Indian economy of all places?

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Socrates in silicon valley…

December 19, 2014

Lucy Marcus has an interesting article.

If Socrates’s gadfly was in Silicon Valley, it would have a lot of lazy horses to sting. The citizens of the techno-polis appear oblivious to how the outside world’s perception of them has changed, and radically so. Once universally revered as a hotbed of innovation, the world’s premier technology hub is increasingly viewed with suspicion and resentment.

Yes, Silicon Valley is still admired as a source of invention and creative destruction; but it is also widely viewed as having lost its ethical compass. With proliferating reports of lax attitudes toward data privacy, wanton disregard for the dignity of the less fortunate, and a growing sense that technology companies are pushing their preferred policy agenda on the rest of the world, discontent and disillusion are rising.

Viewed from outside, the world sees companies that exude a sense of entitlement – for example, by flouting local regulations as they expand into cities around the world, from Berlin to Rio de Janeiro. Supremely confident in the power of their knowledge and skills, they are convinced that they will guide the world onto the Path of Truth. This overweening certitude is not new – the United States, after all, was founded on missionary zeal – but the ethical arrogance is.

Of course, not all technology companies should be tarred with the same brush as the main offenders. But the recent spate of high-profile cases harms the reputation of the sector as a whole. As the world looks to Silicon Valley and sees an echo chamber of self-righteous conceit, mature and law-abiding technology companies are assumed to be inside it, too.

The cases are becoming legion. Uber, the data-abusing car-sharing app that spikes prices during peak demand and threatens journalists who write negatively about it, has been banned in Spain, the Netherlands, Thailand, and two Indian cities so far, including New Delhi (after a driver allegedly raped a passenger). These reports follow the revelation that pictures shared on Snapchat may not be deleted, as promised. In August, Brazilian authorities banned the social-networking app Secret after the company failed to respond to cyberbullying concerns, with Israel considering a similar move. The list goes on.

Well, I guess most moral philosophers of the past will struggle with the world today…

SEBI sends a violator to Jail using its Judiciary function..

December 19, 2014

Just heard SEBI chief a couple of days back. Apart from listing some impressive measures to develop India’s capital markets, he dropped this interesting insight which I think means a lot. He said, we usually say that the three functions of the state viz. judiciary, legislative and executive are to be independent and so on. In SEBI’s case they have powers to do all the three. This is a fundamental insight which seperates SEBI from all institutions in the country with most having executive powers. (see this excellent paper on SEBI too).

In this context, it was interesting to read this news early morning.

 The Securities and Exchange Board of India (Sebi) has sent 58-year old to for defaulting on the payment of a penalty. This is the first time the regulator has sent an individual to jail, after being empowered to do so in August this year. “We might have detained someone in our office once or twice. But this is the first time we are sending a person to jail. He has already been taken to prison,” said a official.

The Sebi order was passed in a case involving and Ltd. The case relates to advertisements about a bonus for shareholders of Kolar Biotech, as well as about a global depository receipt issue of the company, according to a Sebi order passed in 2010. Following the advertisement, a subsequent increase in share prices was used to unload stake by a group of entities linked to Raj Kumar C Basanti, the company’s primary promoter. Adam Comsof, also mentioned in Thursday’s order, was a related entity.

Though Sebi had imposed a penalty in the case, it had been unable to recover the dues for about four years. “The dues of the defaulter are more than Rs 1.64 crore and the fraudulent activities of the defaulter in various capacities in the aforesaid companies have resulted in a number of innocent investors in the securities market suffering. Therefore, I order the civil imprisonment for a maximum of six months,” said the Sebi order, signed by D V Sekhar, the regulator’s deputy general manager and recovery officer.

“Take Vinod Hingaroni to prison and keep him imprisoned for a maximum period of six months or until the amount aforesaid, together with further interest, is paid or until an order of release is received from the undersigned,” the Securities and Exchange Board of India order said. Hingorani had stated he was non-executive chairman of Adam Comsof and Kolar Biotech and that he had no role in the matter.

The order note is here.

SEBI has exercised its judiciary role big time here. A regulator sending people to jail is unheard of.

Sandeep Parekh, founder of Finsec Law Advisors, said Sebi could issue similar orders against more entities that had defaulted on dues. “It’s a very unique order. It’s rare anywhere in the world for a regulator to issue an arrest order without intervention from courts,” he said.

In August, the Securities Laws (Amendment) Act, 2014, gave Sebi additional powers, including to order the arrest of violators and seek call data records of individuals under investigation.

Anyways, the media hardly discusses what SEBI does. Even the pink media whose success is mostly based on what SEBI has done over the years. This is a new chapter in SEBI’s life..

Book review: Merchants of Tamilakam

December 18, 2014

An interesting book which takes you to Tamil business history, dating 2000 years back. It is written by Kanakalatha Mukund who used to teach at Mumbai university.  This book is one of the several books being edited by Gurcharan Das on Indian business history. One of the related books on Marwari history was also reviewed earlier.

This book takes you to early medieval period where Tamil region in the South had something called Sangam poetry. Through the poetry, one gets great explanation and understanding of how things worked during that time. And once again no matter how hard we try and show things are different, much of the things are pretty similar. The businesses existed and thrived even during those times with basic systems of governance and institutions being present facilitating  the overall economic environment.

The interesting aspect of those times in Tamil region was there was no strong ruler as such. You had Pallava and Chola dynasties but none too powerful. But what they did was not to intervene in businesses. They let the business story grow. The business community in turn built its own sets of institutions and mechanisms (like guilds, local business associations etc.) to keep things going.

The book has a fascinating description of how temples played a central role dring those times. In fact temples were like banks which accepted deposits and donations and paid interest on them. Further, these donations etc were circulated around the economy leading to multiplier effects. Temples gave their additonal lands as leases for development of agriculture etc asking the farmers to give certain % of produce to the temple making the temple self-sufficient. This produce fed the priests and also prepared the prasadam and so on.

The merchants traded and coins etc from Roman kingdom have been found. The Roman coins seem to be accepeted as a major currency as well perhaps due to shortages of local currency and other factors. Then there is discussion on taxation and interest rates as well. So pretty much a modern economy, so to say.

Good light read. Just one thing. It could have been organised a little better. It does not have the flow as one would like..

Explaining what it costs to produce a product can potentially increase its sales

December 18, 2014

As a buyer one always wonders the reason behind pricing. Why does a product cost x? What goes behind this x? What are the costs for making the product and so on?

Research by  Bhavya Mohan, Ryan Buell, and Leslie John shows that if a company explains the costs of various things on the price tags, people are more favorable towards buying the same.

When a company sets a price for a product, shoppers typically have no idea what it costs to produce that item. But it turns out that consumers reward efforts to lay out these figures—to deconstruct the price tag.

In fact, new research shows that when a company selling T-shirts, for example, itemizes what it spends on cotton, cutting, sewing, dyeing, finishing, and transporting each shirt, consumers become more attracted to the brand and more likely to purchase.

“By unpacking the costs, you have the opportunity to explain everything you did for the customer in putting that product or service together,” saysBhavya Mohan, a Harvard Business School doctoral student in marketing. “When firms communicate the effort that went into making a good, consumers tend to value the product more.”

Quite intuitive..