min-myinnersoul

Tragedies are usually associated with Greece - a tribute to the richness of its theatre in the 5th Century BC. Over the weekend, you could be forgiven if you changed your tastes to a Cypriot tragedy. For that's exactly what has happened - albeit in the more prosaic world of economics.   These are the facts. Cyprus is another Eurozone country in deep trouble. It needed a bailout. So far, nothing unusual. A bailout was duly announced over the weekend. It was the terms of the bailout that sent a jolt reverberating through the world of economics. The EU is bailing them by about €13 bn (chickenfeed by the standards of bailout). But the conditions of the bailout are that all bank depositors would be levied a tax of between 6.75% and 9.9%. That means on Tuesday when banks opened, all depositors would lose that amount instantaneously.   The genesis of the problem is, alas, not new. Cyprus is a very small country. In boom times, it went berserk pushing its financial industry, positioni...

This blogger is rather vain about his English. And yet he was completely flummoxed when he spotted the headline " JP Morgan loses $2bn in egregious error " . He has to sheepishly admit that he did not know the meaning of the word "egregious" and had to look it up in a dictionary :( Trust a banker to come up with an unintelligible world - at least unintelligible to one "master" of English :). It sums up the problem neatly. The financial world has gone so bonkers in dreaming up structures of incredible and ununderstandable complexity that we cannot sit by and watch this go on anymore. JP Morgan is a well respected bank. Its governance is top class. It should be one of the models of all that is good about the financial sector. In  Jamie Dimon, it has one of the finest Chief Executives in the world. It has superb risk management systems, strengthened even more in the wake of the financial crisis of 3 years ago. And what happens - it manages to lose $2bn in  on...

Arise Sir Fred, the Queen of England said in 2004 after tapping the kneeling Fred Goodwin lightly on the shoulder with her sword. This archaic ceremony is the conferring of knighthood by the Queen of England. If you are a citizen of the UK or one of its dominions then you can call yourself  "Sir". Fred Goodwin was the CEO of the Royal Bank of Scotland in its boom years. An unknown, middling bank in Scotland (where's that for Gods sake), he took it to become one of the largest banks in the world. First the acquisition of Natwest, a big British bank much bigger than RBS. And then the mega takeover of ABN Amro, just as the financial crisis was unfolding. The bank was growing wildly through mega acquisitions and was cheered on by all and sundry - the shareholders, the market and even the government, including Gordon Brown, the then Prime Minister of the UK. Hence the knighthood. Sir Fred could do no wrong. Of course the party couldn't last. It came crashing down with the ...

Mr Vikram Pandit Chief Executive officer Citigroup Inc. New York United States of America Dear Mr Pandit You are probably used to receiving hate mail, but here’s a letter that you might be very pleased to read. I read in the Wall Street Journal that the United States Government is planning to sell its 27% holding in Citigroup over the next few months. It is heartening to note that US tax payers are expected to make a profit of $ 7bn from their original “bailout” money that they gave to Citigroup. You have not only paid back the entire amount, but also let the taxpayer make a profit of $ 7 bn. Yours was the last bank from which the government is completely recovering the money it lent under the Troubled Asset Relief Program, more popularly called as the bank bailout. The US government invested a total of $165bn in all the banks and in the end it has made a 14% return ; not bad considering that if the tax payer had invested in the S&P index at the same period he would have lost 3% ...

A few days ago I posted on the Cash for Clunkers scheme that is just closing in the US (Click here ). In the post, I jokingly asked the question – “Why not cash for clunkers for TVs, washing machines, dishwashers, or for that matter, kidney machines”. It turns out that this wasn’t a joke. Or else somebody in the US administration is reading my blog (Ha Ha). There is such a scheme coming – Cash for refrigerators . Usual rubbish being given on improving energy saving. Cost ? Some $300 m. It IS becoming a joke. What next ? For some prosaic speculation, click here . Where will this all end ? The wallet is empty. You are borrowing from your children. And then recklessly spending like this . When the history of our generation is written, it shall be said of us – that was the most irresponsible, reckless generation in all of human history; a generation that committed the unpardonable sin of bankrupting its children before they were born. The United States Constitution is the one of the most d...

Germany started this and other countries picked it. The US had its “cash for clunkers” programme this month and is closing it on Aug 24 after “a wild success ”. Cash for clunkers, is a dole the US government gives Americans for trading in their old car and buying a new one. The subsidy that Uncle Sam is willing to give could be as much as $4500 per car. The US government has just spent $1.9 bn on it. In Germany, it was “successful” in that auto sales went up by some 20% or so. It is estimated that it cost Germany some $ 3.5 bn and it is claimed that it saved “thousands of auto jobs”. The moral justification under which politicians have sold this idea is that carbon spewing clunkers will be replaced by fuel efficient cars and that this is helping the environment. Balderdash. They are doing this because its wildly popular as everybody loves a subsidy, if its given to them. And in car crazy countries like Germany and the US, that's pretty much everybody. I can’t fathom the economic r...

Air India is lobbying furiously for a massive bailout. Most airlines around the world are sick; so its no surprise that Air India, which is a particularly badly run airline, is in deep trouble. The mood these days is in favour of bailouts of whoever shouts loudest or scares the most. But look at what Air India is reported to be asking - They want Rs 15,000 crores ($ 3bn plus) - They want foreign airlines’ “sixth freedom rights” – the right to operate to multiple destinations in India to be reviewed (read stopped) - They want capacities of foreign airlines to be frozen to give Air India “breathing space” - They want to stop private Indian airlines from operating to areas like the Gulf so that Air India can “gain”. All in the name of “public interest”. Hello ! The cheek to even make such a demand. Air India – do you think the tax payer and the poor flying customer are idiots ? You guys just don’t get it – you are in business to serve a customer, not to screw him. Just look at yourself i...