Gill Eapen's Blog, page 90

Catching up

A friend of mine recently alerted me to the fact that flexibility is getting incorporated into organized crime. Organized crime, the street, corporate and religious varieties, thus far, had a great disadvantage - lack of flexibility.  The street crooks, corporate kingpins and religious monarchies managed with an easy to understand command and control structure. In such a system, decisions are taken unilaterally at the top and propagated downward. Implementation is largely driven by...

It is cricket : let's play

Tomorrow Afghanistan will take on India in the T20 World cup. As most of the world sleeps. a country that has gone through so much will play for its pride. It has been a dream ride - something that demonstrated that sport has an important role to play in solving problems. The creation of the Afghanistan cricket team took only a few dollars and not billions wasted in wars and killing. It focused the younger generation on the emerging country and on what they can accomplish if they put their...

Smoke stacks of banking

As the economy and country move back to a sustainable growth rate, it is important for the law makers to take this opportunity to assure that our systems - both real and financial - are on stronger foundations. For the real economy, this foundation is one built on innovation and for the financial intermediation, one built on clear ethics and the law of the land. Financial intermediation does not add significant value to today's economy, replete with electronic means to connect capital...

Greater organization

Many companies, organizations, countries and religious organizations and their leaders have claimed greatness and superiority. Often, one evidence of greatness sighted is brand recognition or age. Brand recognition, however, can come from many avenues - good and bad. The other is size as if the sheer size automatically bestows greatness on the institution. What makes an organization great? This is a philosophical and societal question and one that does not command much attention from the...

Derivative fear

It is happening again. The typical response of policy makers to identified problems has been a blanket regulation that stops everything. In the wake of the alleged fraud and incompetence at the godly institutions, the policy makers are down the well traveled path again. One victim of this is derivatives. Derivatives are risk management vehicles, the simplest of which is an option - the right but not an obligation of doing something in the future. Derivatives help managers hedge risks they do ...

Ready, set....

Driven by many factors, the world economy may be poised for a significant leap forward. There are three primary factors that are positively influencing growth. First, significant improvements in materials science and other technologies that aid the production, transmission and storage of energy is on tap. Energy, the only thing humans need to solve the most fundamental problems - food, clothing, shelter, education, disease control and meteor impact - can become abundant in less than a...

Increased regulation, incorrect policy response

The typical response of policy makers to individual and company specific issues is a blanket increase in regulations. This is easy to do and this may help in elections. But such a response has deleterious effects on the economy and most people who played by the rules. The current problems are specific to few individuals and fewer firms and letting them off easy on the promise of higher regulation for everybody will be the wrong thing to do. It is typically not lack of regulation that causes u...

The ego destroyer

Stock market is the ultimate ego destroyer. From the beginning of time, when grown men and women started playing games for their own enjoyment, there has not been a single mechanism that came even close to the enormous power of the stock market to deplete ego. Huge industries and "too big to fail" firms have been built on this cunning roulette, some claiming superiority in knowledge and others experience, but in the end the system has always won. It is a perpetual teaser - providing just...

Does He hedge?

Recent allegations by the SEC, speculated by many market participants for several years, is a huge confidence booster for the markets and the economy in general. It shows that we are breaking away from the country club culture, where a few people with preferential access to money, information and trading mechanisms, can take the entire economy hostage, claim ransom and run away with it. Markets (and the economy) function well when there are no monopolies, fraud is detected and punished...

Deflated

A collective groan was heard from the mountain tops, where the market forecasters have been vacationing, after shorting the market, US$ and everything else in America, anticipating a spiraling deflation and the end for those in the valleys, as the Dow climbed over 11,000.  As they ordered Champaign - some so confident in their ability to see the future and the possible end of the world - they nestled into their comfortable arm chairs, waiting for the Dow to crash to 1000 or even less.  Gold w...