Indian Economy: News and Discussion (June 8 2008)

[Singha]

its was a branding exercise to project themselves as a strong player in the
market of being the outlet for 'peoples greviences'. the target, time, slogans shouted onsite are not material, they will vary on a tactical basis depending on what buttons need to get pushed to attract media attention - vandalism of malls, multiplexes, beating up valentines day couples always gets the attention of the elites and nationwide tv. waylaying some punjabi truck drivers off near badami and making them turn 180' out of KT not so newsworthy.

it is a old strategy - AGP under mananiya prafulla mahanta wrote a new chapter in it 20 years ago.....see a bunch of students in age group 25-30 took on the entire indian govt (including 'chankian' IAS types with decades of experience), fought a running battle with a hard nut like IG, signed a deal with RG (though the kangress showed its chankianness there with the IMDT act non-repeal) and enjoyed the loaves and fishes of office for 2 terms, enriched themselves for 100 generations, screwed the state and now live in sobha villas in pune and blr

branding and strategic marketing at its best. I doubt even wall street ceo's
can better this performance.

[abhischekcc]

its was a branding exercise to project themselves as a strong player in the
market of being the outlet for 'peoples greviences'. the target, time, slogans shouted onsite are not material, they will vary on a tactical basis depending on what buttons need to get pushed to attract media attention - vandalism of malls, multiplexes, beating up valentines day couples always gets the attention of the elites and nationwide tv. waylaying some punjabi truck drivers off near badami and making them turn 180' out of KT not so newsworthy.

it is a old strategy - AGP under mananiya prafulla mahanta wrote a new chapter in it 20 years ago.....see a bunch of students in age group 25-30 took on the entire indian govt (including 'chankian' IAS types with decades of experience), fought a running battle with a hard nut like IG, signed a deal with RG (though the kangress showed its chankianness there with the IMDT act non-repeal) and enjoyed the loaves and fishes of office for 2 terms, enriched themselves for 100 generations, screwed the state and now live in sobha villas in pune and blr

branding and strategic marketing at its best. I doubt even wall street ceo's
can better this performance.

Well, see item no four in the list I made

4 . Identity (vote banks, H&D)

Heh heh, my list covers grievances for all seasons.

[Singha]

the director (IIM-a onree) will chew you out for hedging and not being firm on any one point.

you see, he/she has to report to the bigger dog CxO (wharton) up the chain and be authoritative based on your inputs

--
engineer: sire the product is ready for a 10 min demo but has many loose
ends.
manager: sire the product is ready for a 10 min demo
senior manager: saar the product is ready for a demo
director: we have a carrier-class product ready for beta trials
sr director: we have a ready-to-ship, best of breed, flexible, fast, carrier
class product, bulletproof quality and tested rigorously for months
VP: its the worlds best product in that space and a game changer
SVP: call the press, tell them IBM and MSFT are toast
CEO: a revenue stream of billions of five years, Alice can you block my
calendar for the CNBC interview *adjusts blue coat and departs to the
executive washroom to freshen up before the afternoon round of golf*

[Suraj]

Folks, please don't nukkadify this thread with the continued pro- and anti-MBA discussion. Thanks.

[Suraj]

Net direct tax receipts dip 13.4% in Dec

Initial estimates reveal net direct tax receipts dipped 13.4 per cent to Rs 52,749 crore in December 2008, compared with Rs 60,976 crore in December 2007. In November, the collections fell 36 per cent.

Net direct tax collections refer to tax collections after refunds, but before transfer of states’ share in the central revenue. Thus, the direct tax collections for the nine months ended December 2008 have slowed down to 11 per cent as against 40 per cent growth during the corresponding period in 2007-08.

Direct tax collections have to grow at a rate of 16 per cent to achieve the Budget target of Rs 3,65,000 crore in the current fiscal. The shortfall is likely to put pressure on fiscal deficit as the government has increased its spending as part of the stimulus package and has also foregone revenue by cutting taxes.

Direct tax collections stood at around Rs 2,30,000 crore in the first nine months of 2008-09 as against Rs 2,06,029 crore in the corresponding period in the last fiscal, sources said.

Textile sector yet to receive stimulus package funds

The textile industry is yet to receive the Rs 1,400 crore promised in last month’s stimulus package to clear the backlog of reimbursements under the Technology Upgradation Fund Scheme (TUFS).

The industry, which has complained of widespread job losses along with a sharp decline of about 30 per cent in its expected export target for the current fiscal, wants a quick action from the government. Industry sources say that even if the government releases the funds, the banks would take another month to disburse them.

According to a senior textile ministry official, the money would be released within a few days. “Within a week’s time, the ministry will issue cheques to banks,” said the official, adding that there were last-minute procedural formalities to be done before releasing the money.

TUFS, which was launched in 1999 and modified in 2007, provides 5 per cent interest reimbursement plus 10 per cent capital subsidy for machinery required in manufacturing technical textiles as well as garments. Similar benefits are provided for the specified processing machinery. There is no cap on funding under the scheme. In November, the ministry released Rs 300 crore to clear the backlog till December 2007.

[SwamyG]

Vina: So what is the strategy?

[Rishirishi]

Can anyone who knows directly about the situation in germany and japan tell me if the Mba cult
is worshipped there same way as the US-UK-India combine? I read long ago that these countries
have a lot of senior management who were actually engineers for a longish phase in their careers.
maybe it has something to do with the fact these countries are the globe's largest exporters of
engineering goods and services (as opposed to londonistan and its financial 'wizardry' )

my personal opinion is one should do non-management for atleast 10 years (i.e. in the trenches
doing whatever needs to get done) before going into people manager or marketing/sales roles
and it is at this point, should one decide to change role that a Mba can be helpful.

instead we have people with 2-4 yrs of 'experience' (30% of time spent in non-work tulla activities) armed with an Mba, wearing blue suits and analyzing business plans and 'presenting'
to CxO decision maker types. we have them taking huge risks with other people's hard fought
money in mutual funds and hedge funds as tyro 'managers' . and they are supposed to be
above the blame if things blow up due to their own mistakes and greed.

in no other form of human activity except the military are young people given so much
responsibility and power. and the military is a different beast with its tight checks and balances.

for indians this problem is culturally even worse. compared to amirkhan kids our kids tend to
far less menial work as teenagers and children and many have a real dislike for getting their
hands dirty in "shopfloor jobs" like mechanical or metallurgy as opposed to turnbull and asser
shirts and team lunches with petite brunettes in 5* restaurants.

it dovetails very well in indians' cultural desire to let the "lower elements" do the grunt work
while he/she is a "manager" just guiding/strategizing/managing things from a distance without
getting the hands dirty.

amirkhan is safe because there are still _many of the super bright_ who get into hardcore
engg, medicine, law and _remain there_. and amirkhan continuously absorbs the worlds
brightest in these fields via "black holes" like MiT and stanford which act like giant roving
vacuum cleaners.

amirkhan is safe.

what about us?

till date we lag behind periolously compared to even emerging 1st world types like taiwan
and south korea in so many fields its not even remotely funny. suffice to say if a 100storey
tower were needed in India, the builder would squeal and dial up some consultant in
vienna or turin. let us not even talk of blisks and tri-mode seekers

In Japan and Germany technical people are promoted to become managers. In US-UK-India MBA's and business school graduates are promoted to become managers. In my experiance the technical oriented managers (dirty hands approach) understand the product, the market and the dynamics of growth. The MBA's produce great PPT slides and are good at putting up a nice show.

You are very right about Indian kids lacking the experiance of "dirty hands". Last time I was in India, I was speaking to a person trying to "mange" cleaning and maintnance. He had never washed a floor or even touched a mop. yet he was shouting at terrified employees, a typical "MBA" arrogant type of approach.

I rolled up my armes and demonstrated to the workers, how to clean, set up inspection routines, specified cleaning standards (how often, how clean etc) (learned this in the military) and treated them as humans. It was all done in one hour and the palce was clean the entire week I was there.

[vina]

Folks, please don't nukkadify this thread with the continued pro- and anti-MBA discussion. Thanks.

Awwright. Awwright. Enough of the MBA circus. Let us get back to Econo Mix.

Remember, many many many moons ago, a lot of folks, (including you if I recollect correctly) were going Rah Rah, along with the Sensex at 25K boosters, to set up a "Sovereign Wealth Fund" and you had argued for it , quoting Temasek as an example.

I had vehemently argued against that and said, that Temasek's record itself is pretty spotty and I had predicted /echoed my Prof on what he said when asked about the new fangled "Sovereign Wealth Funds" .. namely "THEY WILL LOSE THEIR SHIRTS" . Yup. Exactly what has happened. Those who bailed out Citi, ML and all the banks, have lost the shirts. The chinese with Private Equity like Black Stone, the Arabs with all the banks.

Now consider this story about Temasek. Temasek's ML loss could exceed $2b ..

My alarms were going off with in a massive woot woot when we had the boosters arguing for a desi sovereign fund run by babus or worse by "fund managers". Many strong supporters for that on BR as well..

[Suraj]

Vina: I didn't argue in favour of a SWF - I asked what are the pros and cons of one, and got multiple responses either way, yielding an informative debate

[vina]

MBA ejukashun , IIM-A , bigger dog CxO (wharton) , Harvard

Pappu ke paas hai MBA ... Karta hai France mein Holiday!
But Pappu Can't Dance Saala!
Pappu Naach Nahin Saktha!
Dhirikitaana, Dhirikitaana , LETS DANCE
Dhirikitaana naana nana na , Dhirikitaana naana nana na
But Pappu Can't Dance Saala!

Sorry guys. Coudn't resist it , and had to join the MBA bashing brigade..

[rsingh]

You wrote this......?

[derkonig]

^
^
Ignorant kuffars....
Anywayz CAT results are out.

[vsudhir]

Desi IT sector, already export dependent, was under stress.

Now Satyam implodes.

Wondering what that does to the desi economy that likely was banking on continued growth in the IT sector to yield those 7% growth rates sustainably over the yrs.....

And now, with war clouds on the horizon of the eve of Rahul baba's inaguration (after SG sacrifices the ineffectual MMS), who knows where the economy maybe headed?

Meanwhile, straits are dire in cheen. Aam aadmi is unhappy with sarkar, so the PBS newscast claimed yesterday. Mass layoffs without pay as factory owners (capitalists) decamp out of the mainland shutting down the factories was the background music. War is a real possibility to deflect attn and stir the pot.

[AshokS]

Vina - Its been a tough year for PE, but as always the dispersion of returns in PE (therefore SWF) is very volatile compared to other asset classes. The best PE funds completely outperform other equity indexs (S&P, etc), so it depends on the fund manager. There were some problems, but the volatility in the market is a HUGE opportunity for PE funds today, those with dry powder are taking advantage of the market. Capital commitments are hard to come by as pension mgrs and other institutional investors are trying hard to hold on to their jobs, but PE is usually no more than 10% of the portfolio allocation in any case.

Been following the MBA "discussion"... funny stuff, as you say sour grapes.

PS, its been extremely crazy here as you can imagine, sorry could not get back to you on the project. I have a candidate that can help us... will touch base in a few weeks.

[amol.p]

Can anyone who knows directly about the situation in germany and japan tell me if the Mba cult
is worshipped there same way as the US-UK-India combine? I read long ago that these countries
have a lot of senior management who were actually engineers for a longish phase in their careers.
maybe it has something to do with the fact these countries are the globe's largest exporters of
engineering goods and services (as opposed to londonistan and its financial 'wizardry' )

my personal opinion is one should do non-management for atleast 10 years (i.e. in the trenches
doing whatever needs to get done) before going into people manager or marketing/sales roles
and it is at this point, should one decide to change role that a Mba can be helpful.

instead we have people with 2-4 yrs of 'experience' (30% of time spent in non-work tulla activities) armed with an Mba, wearing blue suits and analyzing business plans and 'presenting'
to CxO decision maker types. we have them taking huge risks with other people's hard fought
money in mutual funds and hedge funds as tyro 'managers' . and they are supposed to be
above the blame if things blow up due to their own mistakes and greed.

in no other form of human activity except the military are young people given so much
responsibility and power. and the military is a different beast with its tight checks and balances.

for indians this problem is culturally even worse. compared to amirkhan kids our kids tend to
far less menial work as teenagers and children and many have a real dislike for getting their
hands dirty in "shopfloor jobs" like mechanical or metallurgy as opposed to turnbull and asser
shirts and team lunches with petite brunettes in 5* restaurants.

it dovetails very well in indians' cultural desire to let the "lower elements" do the grunt work
while he/she is a "manager" just guiding/strategizing/managing things from a distance without
getting the hands dirty.

amirkhan is safe because there are still _many of the super bright_ who get into hardcore
engg, medicine, law and _remain there_. and amirkhan continuously absorbs the worlds
brightest in these fields via "black holes" like MiT and stanford which act like giant roving
vacuum cleaners.

amirkhan is safe.

what about us?

till date we lag behind periolously compared to even emerging 1st world types like taiwan
and south korea in so many fields its not even remotely funny. suffice to say if a 100storey
tower were needed in India, the builder would squeal and dial up some consultant in
vienna or turin. let us not even talk of blisks and tri-mode seekers

In Japan and Germany technical people are promoted to become managers. In US-UK-India MBA's and business school graduates are promoted to become managers. In my experiance the technical oriented managers (dirty hands approach) understand the product, the market and the dynamics of growth. The MBA's produce great PPT slides and are good at putting up a nice show.

You are very right about Indian kids lacking the experiance of "dirty hands". Last time I was in India, I was speaking to a person trying to "mange" cleaning and maintnance. He had never washed a floor or even touched a mop. yet he was shouting at terrified employees, a typical "MBA" arrogant type of approach.

I rolled up my armes and demonstrated to the workers, how to clean, set up inspection routines, specified cleaning standards (how often, how clean etc) (learned this in the military) and treated them as humans. It was all done in one hour and the palce was clean the entire week I was there.

Truly said...in my company also all these MBA guys in marketing & HR are told to leave every six months and new guy is recruited. They all get hefty salaries but output is zero. All these do their Bcom/BBA and directly get into good MBA colleges.
No knowledge of products they are selling/its maintainance/shelflife........they just make good PPT's during regional meetings and nothing else......In one incident when a MBA girl was given target of six lakhs for year end in retail she started crying and told I have never sold anything in my life..... ....thts the situation

[vina]

In one incident when a MBA girl was given target of six lakhs for year end in retail she started crying and told I have never sold anything in my life..... ....thts the situation

All right..

Pappi ke paas hai MBA!. Karti hai Shimle me Holiday!.
But, Pappi can't dance Saali!
Pappi Naach Nahi Sakti
Dhirikitaana, Dhirikitaana, Let's Dance!.
Dhirikitaana Naana na , Dhirikitaana Naana na

But seriously, if Pappi or Pappu were a engineer of any sort (lets say civil) and int he first day of the job, he/she is is given the task of building a sky scraper, would it be any different ?

[Singha]

no different sir, but he would not be trying to act smart and throw his weight around from day1. and he wouldnt be demanding a room, a admin assistant (chosen by him from the crop), daily facetime with the big bosses and the luxe perks that go with having "arrived"

pups are pups and deserve to slapped into place with one large paw by bigger wolves if they step outa line

[hnair]

Personally, I find the amount of Indians doing MBAs in unkil's big universities as highly encouraging. Post-lib generation needs to move away from applied tech fields like engineering into either pure sciences or administrative/leadership areas. And MBA does help. Whenever I hear Indian engineers groan about how "Tsingua Univ won engineering contest, whereas we are nowhere in sight" all I can think of are the number of Indians who chisel money out of Sand Hill VCs and hire these Tsinghua grads And not all of them even have MBAs!! We learnt from the best on "managing" the world and making the world "understand" our POV.

BTW, I am not talking about the Indian number crunchers of wall street, of which there is a substantial non-MBA/techie chunk who comes up with all the math models. They are there for milking the looters' system. I am talking about serious Indian entrepreneurs, who are at this point handling some of the cutting edge oiropean/japanese/american firms. Tsinghua has a long way to go and their alumnus is aware of that too. Not bad to blab a bit, I say

[Singha]

is there any significant number of mainland chinese (not taiwanese or american borns) in the bideshi hi-rung business schools? they have setup
some posh looking collaborative campuses in the mainland in partnership with foreign bschools though.
as always I keep a sharp eye on the chipanda

many pix here:
http://www.businessweek.com/bschools/china/

[abhischekcc]

Is something burning on this thread?

[abhischekcc]

Wall street was felled by quants - who are NOT MBAs.

They are PhDs and Masters in Maths, Physix, Stats, and other disciplines which an engineer would be comfortable with (who would have thought).

Giving control of finances to non-MBAs, and engineers at that, is what has landed the world in this mess.

-------------
>>Vina - Its been a tough year for PE

No, not really. Total global AUM have grown 15% in 2008, whereas the CAGR in the preceding years since 2001 was 10%.

Money bags have quite well regardless of appearances. And given the fact that valuations are EXTREMELY attractive now, 2009 will see large scale acquisitions.

Just remember you heard it here first

-------------------

>>In one incident when a MBA girl was given target of six lakhs for year end in retail she started crying and told I have never sold anything in my life..... ....thts the situation


Girls do MBA thinking big fat salary, and then husband with bigger fatter salary. Female engineers is (even today) a contradiction of terms.

BTW, how many women are there is a mechanical engineering course? You guys are just jealous that MBA males get to study with delectable females - you should go and rant in the Whine thread about it.

[derkonig]

You guys are just jealous that MBA males get to study with delectable females - you should go and rant in the Whine thread about it.

errm...the laws that apply to the Yindian Engineering College hierarchy also seem to apply to the B-school hierarchy as well...

[vina]

errm...the laws that apply to the Yindian Engineering College hierarchy also seem to apply to the B-school hierarchy as well...

What is that law saar? . Myself poor Yindian Engineering College grad onree. If it was anything to do with wimmin, I used to envy the kids studying in all those posh "arts" and "humanities" colleges in places like Bengalooru and Naiyi Dilli, esp places like St Stepehens and DU scene. Oh, the avg Yengineering College in India had a far higher percentage of wimmin. My poor college had wimmin in single digits onree in entire under grad population(ie in all 4 years put together!).

How I used to envy folks like Bade Saar. Master's programs and Pee Yech Dee, one gets the feeling that it was a scene of Krishna surrounded by Gopis!. No wonder Bade Saar types is all calm , collected, satisfied and content, instead of the wild , basically frust undergrads. I always used to wonder how wimmin could go straight to Masters and Pee Yech Dee without doing undergrad altogther..

[Harshad]

You guys are just jealous that MBA males get to study with delectable females - you should go and rant in the Whine thread about it.

study makes me
There would be a cause for jealousy if study is replaced with sleep

Also these "delectable females" are enamoured by the street scholar Marlboro smoking Rayban wearing bikers with Harley Jacket. (with zero productivity skills aka Mavaali). Why?
Analyze this with your "Systems Theory"

On a serious note: Most of these college educated Joes armed with Degrees are expected to perform what is considered beyond the capabilities of the Jacks w/o a degree. So the question is of the same form as who came first the chicken or the egg? Is it the recruiter who is enamoured by the charms of the candidate or has the candidate cast his spell on the recruiter?

Secondly the ability to take risks is non existant amongst these Joes. Again is the alma mater that produces " corporate babus" or is it a choice of the student? Thats the reason Pappi cries. Pappi's failure is not her ability to make a sale but her inability of not attempting to make a sale. In the world of risks and risk takers, these Joes inevitably become risks while the Jacks roll the dice. Victory only to those who fight.

Third is the ability to absorb failure or shocks. The Jacks can absorb shocks better than Joes. Again the Pappi cried. This is due to conservative upbringing in a controlled environment. Just like the product that performs best in the lab, satisfactorily in the shop and disastrously on site.

My personal experience with these high flyers is that most of them suffer from Analysis Paralysis. Moreover I have come to the conclusion that success in work has nothing to do with education or experience. Technicians offer more logical, practical and innovative solutions than a PHD/MS/BE types.

[Harshad]

But seriously, if Pappi or Pappu were a engineer of any sort (lets say civil) and int he first day of the job, he/she is is given the task of building a sky scraper, would it be any different ?

The scenarios are not exactly identical. And not a fair comparison either.
The cost of failure for an incorrectly constructed Skyscrapper is far more than the entire loss of the sales target set for the retail sales person even if that sales person is the only sales person in the company.

[AshokS]

Wall street was felled by quants - who are NOT MBAs.

They are PhDs and Masters in Maths, Physix, Stats, and other disciplines which an engineer would be comfortable with (who would have thought).

Giving control of finances to non-MBAs, and engineers at that, is what has landed the world in this mess.

Which schools do you think the "quants" went to? Usually its the top US B-schools... CAPM, Black-Scholes, portfolio and options theories, capital markets, private equity/hedge funds, and advance corp finance are all taught in depth at the MBA and PhD level classes in the top tier US business schools (and I would assume at credible Indian B-Schools like IIB and IIM-A).

I realize its not the fun and games and color between the lines type education, you learn at Symbiosis or whatever passes off for the flavor of the day for the second / third rate Indian "business schools"...

Need to say this again. If you didn't go to a top B-school, such as the Ivy League schools and about dozen others, you have a permanent handicap (you will have to work harder and smarter)...If your B-School isn't in the top 15 globally - don't bother going. The accretive value on your career in the US is minimal otherwise.

I realize in India, getting an MBA is a trend amongst the "just barely passed" crowd - so a lot of these fly by night MBA "schools" appear.....and reduce the credibility of the degree. Frankly in my opinion in India all of the MBA institutions there with the exception of IIB, IIM-A (and perhaps the other IIMs), and ISI are not worth the paper the diplomas are written on. There is no international credibility for that degree if you did not go to one of the aforementioned institutions. Its ok if you want to play house in India, but no so much if you want to roll with the big boys...

Strike Two (you still need to answer Vina's question)

>>Vina - Its been a tough year for PE

No, not really. Total global AUM have grown 15% in 2008, whereas the CAGR in the preceding years since 2001 was 10%.

Money bags have quite well regardless of appearances. And given the fact that valuations are EXTREMELY attractive now, 2009 will see large scale acquisitions.

Just remember you heard it here first

So you are saying vintage 03,4,5 funds are doing well now? Ha!! What about capital calls? How do fund managers raise funds in 09? Whats happening on the secondaries today? What will happen on the fee structures going forward?

Since when did they measure PE in CAGR terms? Assets under management skyrocketed across the board...so what? Sure valuations are cheap in almost all asset classes, so what? Anyone watching CNBC can tell you that.

What are secular trends that will affect PE across all asset classes? What are funds buying today? What are the LPs thinking?

You need to dig deeper, its not about the "systems approach" or whatever gibberish you picked up at the Symbotron house of learning....

Strike Three ... your out

So you wanted to play ball with the big boys...how does it feel?

[Singha]

I would like to ask in a neutral tone out from the sidelines that with the implosion in employment at "top financial hubs" around the world, where are
all these surplus "masters of the world - ibanker/PE/hedge" types going to find a gainful living?

dubai, shanghai or good old mumbai *sniff sniff*

where are the "big boys" going to find a playground now that the "robber capitalist" days have come to an end and all the hi-funda theories discredited plus all their "quant/modeling" skills shown to be useless due to a mix of greed + lack of village common sense

a lot of these people need to be hung out to dry. and never allowed back in
charge of a nursery school again.

I was looking at the MFs in india, all the superstar managers who used to
hog the media are nowhere to be found these days. sandip sabharwal for
instance has managed huge loss in his JM funds .... I can hardly find a fund that has not declined 50% in 2008. with even the sensex declining by similar margins, all their "techniques" of "top down / bottom up" research to beat the market indexes ring pretty hollow.

a monkey throwing darts on a wall (to quote a book) could have booked similar losses.

[Raju]

they should have gone into farming or start-ups some time ago.

[Vipul]

Come on anyone who is a major player in the Indian stock exchange(these guys are making decision to invest hundreds of crores) are guys who make big money through insider tips.They dont need to look for a job afterwards.

[shaardula]

i would think managing and conducting any thing successfully requires a lot of taste, temperament and judgment. While schooling can teach you the lay of the land be it physics or maths or business, i doubt any schooling can teach you how to actually do and be responsible for anything in any field. I mean be truly responsible – you are it type of thing. Being knowledgeable about a field is not the same as being a player in it. Knowledge is not the same as action and doing.
Churning out numbers is one thing. Putting a context to it and taking decisions based on them is yet another. Suppose a doctor tells you that there is a statistics backed 80% success rate wrt to a procedure, how do you take a decision on based on that number when somebody's life is at stake?
I have seen a few MBA types strut p-values, confidence intervals and factor analysis etc. While they expertly know how crank these tools, anybody with any exposure about how these tools came to be and what they operate on, will shudder at the abuse of these tools. As elegant as PCA is, it is a linear discriminator, based on a linear measure of correlation. Things like business and medicine and sociology are complex entities where each component comes with a prior of huge cloud of uncertainty and the components interact in complex ways to produce an even more complex uncertainty cloud. To act as if everything is measurable and reduceable and actually act based on it is crazyness.
And what is this non-sense about top 15? What can they guarantee about their graduates? Nothing. Beyond passing knowledge in a sub field of specialization, they cant guarantee anything and there is lot more to the sum total of business activity than just being knowledgeable about the statistical measures in a sub field. As I said uncertainty compounds and in complex usually unmeasurable ways and a little bit of humility about this fact is perhaps long past due. At least now. By those who work in high impact, high risk fields. its one thing for an engineer to abuse a linear guassian estimator and completely another for a MBA type to be fooling around with it.

[Nayak]

For all the fancy education and slick talk them high flying MBA coyotes could not predict the credit crises. Am I glad to see these high flying no gooders back on terra firma with the begging bowls in their hands. Allah will be kind some day and cull the flock from these degenerates.

[Nayak]

Hey is anybody even buying the investment strategies books ????

Investing in Playboy magazines would give better returns. Atleast the used magazines can be sold to h0rny high schoolers and engineering college kids..... bwahahahahaha

[AshokS]

where all these surplus "masters of the world - ibanker/PE/hedge" types going to find a gainful living?

dubai, shanghai or good old mumbai *sniff sniff*

There are still opportunities in NY, though a lot less. Will be like this for most of 09, and then boom back. That is how it has always happened. I see friends moving to London and Dubai nowadays. There was a recent career fair in Dubai for bankers and MBA type jobs, they are being agressive in hiring top talent, though once has to wonder if the house of cards in Dubai is set to fall soon. India will be a source of growth for these funds in 2009, along with US distressed debt and other assets. Mumbai is also being talked about as a viable place to go, esp for people with Indian ties.

where are the "big boys" going to find a playground now that the "robber capitalist" days have come to an end and all the hi-funda theories discredited plus all their "quant/modeling" skills shown to be useless due to a mix of greed + lack of village common sense

Despite what you may hear in the news, money is being made today if you are capitalized and can take advantage of market inefficiencies. The problem is with liquidity and and with large investors with dry powder waiting for the right time to get back in. Most people think it will be 3Q09.

The issue was greed, but more importantly a moral hazard problem. Securitization allowed for banks to take on more risk via CDS and CDOs and speculators (such as home owners / flippers) could simply walk away if they defaulted. This became an issue of corporate governance issues, as risks increased the appetite for those assets increased, largely due to securitization and competition from banks to provide easy liquidity. Net result is simple, its a modern example of Gresham's Law, where bad money drives out good. The bad was leveraged capital. You will see now that the extreme 30:1 leverage levels have fallen, that the "good" money, corproates with large balance sheets and existing funds with capital commitments will take advantage of this. There is lots more to it, could write a couple of pages, but that is it in a nutshell.

I can hardly find a fund that has not declined 50% in 2008. with even the sensex declining by similar margins, all their "techniques" of "top down / bottom up" research to beat the market indexes ring pretty hollow.

not sure about the top down/bottom up thing you are talking about, but all funds took a hit this year. 2008 is one of the worst years we have had....will take years if not longer to recover to 2006/7 levels.

I have to ask with all the talk of MBAs, etc, there are a bunch of smart jingos like yourself in India that have good US experience. Why aren't there more entrepreneurs from the "Bangalore" working class to start your own innovation and ventures? Why work for the big MNCs? What satisfaction do you derive from that. Take this dislocation in the market as an opportunity. There is so much talent in the country, but largely wasted due to the Indian risk aversion tendencies.

[hnair]

I have to ask with all the talk of MBAs, etc, there are a bunch of smart jingos like yourself in India that have good US experience. Why aren't there more entrepreneurs from the "Bangalore" working class to start your own innovation and ventures? Why work for the big MNCs? What satisfaction do you derive from that. Take this dislocation in the market as an opportunity. There is so much talent in the country, but largely wasted due to the Indian risk aversion tendencies.

Part Deux, The Empire Strikes Back

And this scratched up old R2D2 scamper off to the nearest adobe hut.....

[AshokS]

I have seen a few MBA types strut p-values, confidence intervals and factor analysis etc. While they expertly know how crank these tools, anybody with any exposure about how these tools came to be and what they operate on, will shudder at the abuse of these tools. As elegant as PCA is, it is a linear discriminator, based on a linear measure of correlation. Things like business and medicine and sociology

The Economics and Management stat and decision models classes I took went through the underlying derivations of what we learned.... though in the end all I remembered was to use crystal ball to figure things out, or look at the r-squared, or the term homoscedasticity (just to impress friends)

If real stats need to be done, a house statistician / quant can do it. As far as concerns about "abuse" in use of these tools in business vs medicine... these are two completely different issues. Most valuations in business are guesses, lots of factors. Use of stats is more important for the smart quant guys with options strategies I guess. Medicine is life or death, so there is a need to be more prescriptive and precise.

And what is this non-sense about top 15? What can they guarantee about their graduates? Nothing. Beyond passing knowledge in a sub field of specialization, they cant guarantee anything

No gurantees in life, but going to a top 15 b-school will ensure doors open up a lot easier for multiple reasons. Top companies directly recruit from the top 10 (usually 8 ) schools directly at the B-School level, your affiliation network is a lot more valuable, and the people you want to influence might have gone to the same school. That drops off substantially after the top 10, less so after the top 15, and good luck on anything after that.

[Suraj]

Surjit Bhalla covers several issues related to Indian economy in the current global economic scenario:
Financial crisis - Getting facts right - II

Reality Check 1: Trade not to stay at Oct-Dec lows: How realistic is the possibility that world trade would remain in a deep funk? Small. Even without the additional stimulus, it would be a fair bet that world trade would bounce back from panic lows. So the prospects for Indian trade in the next fiscal year will be considerably better than the second half of 2008/9.

Reality Check 2: Fiscal space in India: There has been a lot of comment on the fact that India does not have any room for fiscal expansion. Double-digit, and historically the highest fiscal deficits are staring us in the face — so warn the fiscal watchers. Given that nine months of this fiscal year are over, it is a simple matter to calculate what the fiscal impact of oil and fertilizer subsidies is likely to be. This is shown in the table. The result — there is zero net impact, or at best a half percent of GDP. One way to appreciate this result is that the average oil price in fiscal year 2008/9 will most likely average the same as the last fiscal year — $72/barrel (Indian basket) or $80/barrel (WTI crude). The rupee is 10 percent cheaper in 2008/9 so the net fiscal cost cannot be more than 10 percent of last year. And last year the petroleum sector was approximately in balance, in terms of the net fiscal impact (subsidies and taxes included).

Reality Check 3: No scope for interest rate reduction: This mantra is repeated so often by the RBI and the fiscal hawks that it has attained the status of an out-of-reality broken record. At 5.5 percent repo rate, interest rates are still about 2 percentage points too high — especially in comparison to all the nations in the world. The real problem that policymakers are facing around the world is the danger of deflation overstaying its welcome. Yet in India the ‘money supply causes inflation’ hawks still reign supreme.

They have several lines of defence, though each is collapsing first. Recall that the first objection was that money supply growth was too high. This was shown to be both false logic and false economics. The next line of defence is that interest rates cannot be cut because the fiscal deficit is too high, and too expansionary. The table nails this defence. The next line of defence argument is that interest rates cannot be cut because the rupee could be in trouble.

Reality Check 4: Exchange rates respond to growth, not interest rates. A not-so-appreciated empirical reality is that exchange rates respond much more to growth prospects and very little to interest rate differentials. Most government and RBI officials were (pleasantly) surprised to see the rupee appreciate every time the repo rate was cut. Last year the rupee appreciated not because of interest rate increases but because Indian growth was strong.

Reality check 5: India to revert to pre-2003 growth: Many are making the point that India will revert, on a sustained basis, to pre-2003 levels of 5 to 6 percent GDP growth. For this to be true, investment rates will have to fall to pre-2003 levels. This would imply a decline of 14 percentage points of GDP, from 38 at present to 24 percent before. No non-oil economy, and certainly no high growth economy, has ever witnessed this fall. A fall of about 5-7 percentage points is reasonable. Assuming this permanent fall, the decline in potential growth rate is about 1 percent, ie, an 8 percent long-term growth rate.

Growth forecasts: For the second half of fiscal 2008/9, an average growth of 6 percent can be expected, which yields growth for the fiscal year to be close to 7 percent. For 2009/10, there is some argument — given the worldwide stimulus, given the trade freeze in Oct-Dec 2008 that analysts are using as a (false) benchmark for forecasts, and assuming that there are no more major shocks, man or God-made — that the growth will exceed that of 2008/9. So my forecast for 2009/10: higher than 2008/9 and in the range 7.5-8 percent.

[ramana]

So some sanity check to stall the sky is falling chickens.

Can we bank on his analysis and do periodic/qtrly updates to see if his prognosis is correct?

[vina]

i doubt any schooling can teach you how to actually do and be responsible for anything in any field. I mean be truly responsible – you are it type of thing. Being knowledgeable about a field is not the same as being a player in it. Knowledge is not the same as action and doing.

Very true. But like it or not, it is mostly the MBA types who have the guts, cojones, drive and I would definitely think "irrationality"/ "blindness" whatever you call to just do it. The more "cerebral" types end up thinking too much and doing too little.

At least now. By those who work in high impact, high risk fields. its one thing for an engineer to abuse a linear guassian estimator and completely another for a MBA type to be fooling around with it.

Believe me. The "Finance" abuse of any statistics is chicken feed compared to what goes on in Economics and other social "sciences". Why this country was run even shakier statistical and math models for 40 Years, something our "Poojya Pradhan Mantri" can vouch for in his stints in planning commission. And no, there were no tyros in that field, but acknowledged experts, who would be absolute stars in any economics dept anywhere in the world. Names like Amartya Sen, Jagdish Bhagwati, et al are among the better known .PC Mahalanobis was one of the world's leading statisticians. there is even a stat called "Mahalanobis Distance" named after him. It was basically the hubris of learning. It takes a more "philosophical" and "self aware" kind of person to know that what you dont know (the unk-unk as Donald Rumsfeld put it on TV) is very important as well. Modeling deals with stuff you know. What happens in engineering is that you keep the "system" (for eg a car or a fighter like LCA) firmly within the limits of your model and dont let it depart (FCS fails in LCA, the pilot punches out. wheels start spinning and sliding, traction control and ABS start kicking in in cars) . Unfortunately in social "sciences", modeling subsets is not enough, because the Unk-Unk has massive effects and when you try to control the real world like you do in engineering, you end up being wrong and massively wrong and giving up tremendous value (like what happened with the 40 years of disastrous low growth in India and the persisting endemic poverty) or serious losses like what happened in Wall St. That is the modeling part.

The larger issue is the ethics and governance part. Those were fundamentally misaligned in Wall St. It wasnt broke, but no one fixed them (now they will, after the debacle). Much of it was hubris and bad business decisions, the other was total lack of integrity, ethics and outright fraud (Esp on the origination , underwriting and ratings side)

So what was the key thing that happened in Sathyam ?. It was purely an ethics and integrity issue. Now, diss Infosys and Wipro and TCS all you want. One thing is clear in those companies, ETHICS AND INTEGRITY ARE NON NEGOTIABLE. When folks talk about the integrity and ethics of the IT industry in India, whose names come to mind ?. It is always Infy, Wipro and TCS. Has anyone EVER talked about Satyam (before this blow up happened) on those terms. has any one talked about HCL that way ever before? . Yes, Mindtree has strong integrity (come on,those guys built Wipro in any case and took the value system with them there), but what about the thousands of other second tier and 3rd tier guys . does anyone talk that way about them?

It is cynical to put your fresh out of school kids coming in for "Integrity Training" and all that ,while you cynically indulge in massive fraud. How much more cynical can you get ,esp when you name the company "Satyam" aka "Truth" d basically are anything but that ?. Infy, Wipro and TCS are anything but that. Those guys live and breathe their value system, starting from the top.

Infy or Wipro may or may not become $50 b companies, may or may not become this and that. But one thing you can rest assured, their value systems wont change. You will not see them rush to buy Private Jets (they can afford it right now if they want,it is chump change for them) or strip assets and cash.

In fact yesterday (dont ask me how I know, but I do, and I dont work for Infy), Narayan Murthy in Mysore (the infy management is all in Mysore right now) addressed the employees and said this.

"One thing I can assure everyone here. You will NEVER ,EVER have to back to your family, friends and public and have to hang your heads in shame , because of what your company did" . No one is infalliable. Infy may make bad business decisions, but it will be a honest mistake and not malice. Same with the other two.

TVS group of companies. Another group that is a chip off the old block. You can trust them with your life's savings. How many folks will you do that with ?

[vsudhir]

Bravo, vina saar.

Agree with every word said 400%.

The stellar stewardship and transparent management of the world's savings in the US financial system seen in the last few yrs has become the stuff of legend and is bound to inspire, transpire, perspire and expire and funeral-pyre asspiring future generations of bangers (oops, bankers) the whirld over all the way to the year 3009, seems like.

/Hic.

Rant over.

Peace!

[AshokS]

No one said anything about ethics or lack thereof being the exlcusive domain of any group .... just one group will probably be able to leverage their network better (at least at the beginning)...

Speaking of questionable ethics ...
http://www.youtube.com/watch?v=jM1DWd-Q ... re=related

At least they predicted the mortgage back stuff back in 2007, who said the MBAs were clueless
http://www.youtube.com/watch?v=weKN9-9T ... re=related

Some of these "evil" MBAs having a little fun during the finacial meltdown...from the same school:
http://www.youtube.com/watch?v=heBxMzSA ... re=related

Finally....captures the true essence of b-school
http://www.youtube.com/watch?v=c3FTaljU ... re=related

All the above from various annual "follies" event at school...