Perspectives on the global economic meltdown- (Nov 28 2010)

[abhischekcc]

seems to me like the Western Corporate elite is trying to coax the Indian corporate elite to adopt their ways. to become globalized just like them and to become part of the group than to worry about such pesky things as nationalism, and local/national needs. imvho, we need to find a way to keep our corporate/business elite tethered to India or we risk becoming like Uncle where the concept of billionnaires having fiduciary responsibility towards their fellow citizens is non-existant. these assorted Ambanis, tatas, birlas, etc together have enough wealth that if they become corrupt instruments of the Global elite, India is screwed. this time we'll be colonized by our own people who answer to masters on foreign soil.

Devesh, even during British colonial times, it was the co-opted Indian elite that provided the strength to that empire. The main strength of British colonial policy was its ability to co-opt locals. Even the Japanese and Americans have followed this strategy.

So, there is nothing new in this policy. It won't be "this time" as you say.

Tatas have a long and unspoken history of collaborating with the British. In fact, do you know that Indra Nooyi is being spoken of as a possible successor to Ratan Tata. I think it speaks a lot of what the Tata group is when they point out a Bilderberg member as a potential successor to Ratan.

Tata and Birla both made money in the opium trade during British times.

Mukesh Ambani family has slowly adjusted itself to the global regime because of its energy interests.

---------

Oh, BTW, do you know who advised GOI on the 2G spectrum auction? The Rothschilds group. Why does that not surprise me.

[Arjun]

Devesh, even during British colonial times, it was the co-opted Indian elite that provided the strength to that empire. The main strength of British colonial policy was its ability to co-opt locals. Even the Japanese and Americans have followed this strategy.

It can cut both ways...Money talks & who co-opts whom depends largely on financial muscle power.

Indian billionaires are at the top of the heap today unlike in the past... & there are enough and more high-society Americans who will jump at the chance of being 'co-opted' by the Ambanis.

But what is true is - if there are Western interests that some supposedly secretive high-society clubs seek to advance, this may need to be countered through similar networks that seek to advance Indic interests..Presumably the US elite has a clear understanding of how best to promote Western geostrategic interests - but not sure if Indian wealthy elite have a similar grounding.

[svinayak]

Presumably the US elite has a clear understanding of how best to promote Western geostrategic interests - but not sure if Indian wealthy elite have a similar grounding.

This is the point!. Indian interest and expansion of Indian interest in the near abroad is the most important.

[abhischekcc]

The reason why Indian elite do not have a good grounding in strategic approach is largely a fault of the caste system, which encouraged the development of separate intellectual (Branhmin), strategic (Kshatriya), and financial (Vaishya) interests. Unfortunately, due to lack of intermarriage, there was no possibility of any cross fertilization or coallescement of these interests. This is the reason why we keep falling prey to outside forces.

[Arjun]

The reason why Indian elite do not have a good grounding in strategic approach is largely a fault of the caste system, which encouraged the development of separate intellectual (Branhmin), strategic (Kshatriya), and financial (Vaishya) interests. Unfortunately, due to lack of intermarriage, there was no possibility of any cross fertilization or coallescement of these interests. This is the reason why we keep falling prey to outside forces.

Which leads to the need for a forum for such cross fertilization to happen .The top industrialists, strategic thinkers, nationalist economists, developmental experts..... An Indian Bilderberg, if you will.

[somnath]

there is any group that can claim credit for India's rise over the last 20 years - it is India's corporate elite and entrepreneurs !! And we are all aware that their success is inspite of the (non-functional) GOI, not because of it - unlike the case of China

Well, I am not so sure about that...Indian industrialists have done well, no doubt..But the obscene (yes, I use the word deliberately) number of billionaires in India is very very substantially a function of being able to "manage" the system..

As Raghuram Rajan noted perceptively, the number of Indian billionaires owing their wealth to "govt discretion"-led natural resources compares favourably even with Russia! Take a look at the Forbes list - how many of the chaps there are "natural resources" czars? An overwhelming number....

The idea of the whole reforms process was to release the entrepreneurship and creativity of Indians, and take govt discretion away from economic outcomes...While the former has happened in large measures, the latter has not - govt discretion has taken more sophisticated shapes...All of us need to worry about that...

[Arjun]

Indian industrialists have done well, no doubt..But the obscene (yes, I use the word deliberately) number of billionaires in India is....

If the yardstick is billionaires per capita, at the least about 10 other countries would be more obscene than India.

If you are referring to billionaires per capital GDP - Russia is way more obscene. US, China & India are all approximately at the same level. US GDP is 8 times India and has around 8 times the # of billionaires. Chinese GDP is around 2.5 times and billionaire multiple is just a tad less.

As Raghuram Rajan noted perceptively, the number of Indian billionaires owing their wealth to "govt discretion"-led natural resources compares favourably even with Russia! Take a look at the Forbes list - how many of the chaps there are "natural resources" czars? An overwhelming number....

There are a number of news articles on the billionaire list - and all of them make it a point to emphasize that Indian and Chinese lists are diversified as opposed to the Russian, Indonesian & Brazilian ones that are largely commodities driven. Any case, if you check the 2011 list - there are 13 names whose wealth is primarily driven by commodities, metals, mining or real estate. The relevant ratio is less than 25% - which would compare favorably with most other nations and most definitely Russia, Indonesia or Brazil.

While the former has happened in large measures, the latter has not - govt discretion has taken more sophisticated shapes...All of us need to worry about that...

What do you mean by this? Can you expand?

[somnath]

Arjun-ji, Raghuram Rajan estimated last year that India has the second highest # of dollar billionaires per trillion dollars of GDP, next only to Russia...

http://articles.timesofindia.indiatimes ... llionaires

Besides that, I would also bring in dispersion of dollar billionaire income, ie, the difference (or ratio) in the avg levels of income of dollar billionaires and per capita income...In that, India would be highest by a very wide margin...

Look at this years list of Indian billionaires..

I can count at least 25 names in the list that count on govt concessions - minerals, telco, real estate....Thats half the number..The number of people who are completely "self made", ie, entrepreneurs in the "garage" sense of the term is miniscule - less than 6/7....Now there is no harm if existing business families have done well, what is worrying is so much of the wealth is generated out of govt discretionary activities...

Earlier, govt discretion used to be blunt - licenses, permits etc...Today, the same discretions are available at a more sophisticated level - telecom spectrum for exxample, or land for industrial projects...And the payoffs are humungous, as the whole 2G imbroglio showed...A young chap out of college can today setup a start-up and succeed - that is the success story of reforms...But a Shahid Balwa can become a dollar billionaire, or the largest telecom entrepreneur is the son of Indira Gandhi's closest confidant is a function of the new importance of discretionary (or crony) capitalism...

[ldev]

^^
I agree with that. Another way of looking at it, is the number of billionares in India who have conglomerate operations with companies in widely differing industries as opposed to billionaires in one specific industry, signifying that these conglomerate billionaires rise and sustainment has depended on managing the "system" as opposed to core comptencies in a specific industry. Managing the system besides "managing government relations" would also include managing access to capital including the financial system. After all Bill Gates has core competencies in software, the Fords were in the automotive business. In India the Ambanis can do everthing from oil exploration and refining, to telecom to infrastructure etc. But to the extent that their businesses are exposed to global competition, they have to excel in a specific area. I think the Mukesh Ambani group is coalescing around oil and oil exploration?

[RamaY]

The reason why Indian elite do not have a good grounding in strategic approach is largely a fault of the caste system, which encouraged the development of separate intellectual (Branhmin), strategic (Kshatriya), and financial (Vaishya) interests. Unfortunately, due to lack of intermarriage, there was no possibility of any cross fertilization or coallescement of these interests. This is the reason why we keep falling prey to outside forces.

I disagree.

In a armed force you have the strategists (Brahmins), Attack forces (Kshatriyas), Engineers (Sudras), and Logistics (Vaisyas). If you take a business empire it does contain Strategists (Brahmins), Sales Force (Vaisyas), Workers/Labor (Sudras), and Security (Kshatriya).

Depending on the initiative a specific face/aspect of the society takes the lead. The Varna system is the structure of the society, not the individual.

The purusha in purusha suktam is the universe/society.

[Arjun]

Raghuram Rajan estimated last year that India has the second highest # of dollar billionaires per trillion dollars of GDP, next only to Russia...

Last year was last year....Raghuram did not realize that these things are ephemeral and can change year to year, and therefore there is not really too much 'study' to be made out of one single year.

This year, what do we have- the Indian GDP is up 20% in nominal terms & that makes Indian and American ratios comparable. Secondly, Chinese billionaires doubled (yes doubled) in a single year, bringing them on par with India as well in terms of ratio - though far ahead in terms of absolute numbers.

Besides that, I would also bring in dispersion of dollar billionaire income, ie, the difference (or ratio) in the avg levels of income of dollar billionaires and per capita income...In that, India would be highest by a very wide margin...

Sure but that too is ephemeral - per capital GDP is growing at 15 - 16% for India and at 2% for the US.

Look at this years list of Indian billionaires..

I can count at least 25 names in the list that count on govt concessions - minerals, telco, real estate....Thats half the number..The number of people who are completely "self made", ie, entrepreneurs in the "garage" sense of the term is miniscule - less than 6/7....Now there is no harm if existing business families have done well, what is worrying is so much of the wealth is generated out of govt discretionary activities...

Self-made as in first-generation billionaires are extremely rare in other countries as well - the Indian ratio is probably higher than most other nations.

Billionaires from IT - ratio is higher than other countries, billionaires from healthcare/pharma - again higher than most others. My sense is billionaires from financial services and the consumer segment might be somewhat lower. Infrastructure, materials, telecom - I would seriously doubt there is any difference between the ratios in India and overseas. What are you trying to prove? - most Chinese billionaires have become so due to connections with the CPC as well.

But a Shahid Balwa can become a dollar billionaire, or the largest telecom entrepreneur is the son of Indira Gandhi's closest confidant is a function of the new importance of discretionary (or crony) capitalism...

Certainly several of these aspects need to be changed - completely supportive of that. But other than a few outliers - Indian industrialists and entrepreneurs have what it takes to compete globally and win (& Sunil Mittal is actually a prominent example here). That is what will finally create a new India for everyone - so I wouldn't be too disparaging of their role.

[svinayak]

The reason why Indian elite do not have a good grounding in strategic approach is largely a fault of the caste system, which encouraged the development of separate intellectual (Branhmin), strategic (Kshatriya), and financial (Vaishya) interests. Unfortunately, due to lack of intermarriage, there was no possibility of any cross fertilization or coallescement of these interests. This is the reason why we keep falling prey to outside forces.

It is not. This generation is a product of the modern elite education which created a de racinated generation and their world view is a euro worldview

[ramana]

in the 90s, A famous op-ed chatterati went to ambanis and asked them to setup a think tank for Rs 25 crores. Then Mukesh bhai asked how do we profit from that? The chatterati explained in detail why its in Indian and thus his interests to have think tanks that can study the present and define policy planning outside the govt. The guy said not interested as we define the govt policy!

Later on Mukesh did invest in the ORF think tank.

[abhischekcc]

ramana, would that be BK?

[abhischekcc]

^ Acharya, then how do you explain Prithviraj Chauhan?

[paramu]

The reason why Indian elite do not have a good grounding in strategic approach is largely a fault of the caste system, which encouraged the development of separate intellectual (Branhmin), strategic (Kshatriya), and financial (Vaishya) interests. Unfortunately, due to lack of intermarriage, there was no possibility of any cross fertilization or coallescement of these interests. This is the reason why we keep falling prey to outside forces.

It is the distinct community feeling among different groups of Indians that protected us from losing identity during crisis periods. If Indians turn into a monolith and cosmopolitan, it will be easy for outsiders to penetrate elite families like that happened in Nehru family.

Current problem among Indian elite is due to the way history is taught to them.

[paramu]

New statement by Peter Schiff: "US economy will grow when elephant grows wings!!!". May be he is yet to see Disney's Dumbo.

[svinayak]

^ Acharya, then how do you explain Prithviraj Chauhan?

That era the Indian monarchy did not understand the socio-politico-military doctrine of Islam and muslims.
We see the same thing in the last 100 years in the formation of Pakistan and how islamic sharia took over a state when early foundation did not have it.

[somnath]

Sure but that too is ephemeral - per capital GDP is growing at 15 - 16% for India and at 2% for the US

US PCI is 40k, India's is 1400 - it will take a lot of time for the dispersion to narrow...

But really, the point is different...One would expect the Chinese and Russian business elites to be part of the oligarchy..In India we already had a cozy oligarchy till 1991..The purpose of reforms was not to transform that into a bigger and more sophisiticated oligarchy...One would also expcet the US with a century of developed world prosperity to have a very large number of dollar billionaires..India on the other hand is the only "non-middle income" country in the list of top-10 countries of billionaires...

We can go down that list name-by-name, but an overwhelming majority of the lot owes a lot of their wealth to discretionary govt actions...

Many of these companies are globally competitive as well, as are a lot of the Chinese companies...that doesnt preclude cronyism...

the case of banking/financial services is instructive - banking is the best regulated sector in India (and regulation is substantially taken out of GOI, its with RBI)...And we have a grand total of 1 billionaire from a sector that contributes 16-17% of GDP...Real Estate and natural resources are the worst regulated sectors in the economy - together they have nearly half the number of billionaires...Coincidence? dont think so...

What should be worrying to the polity therefore is how the businessman-politician nexus grows far stronger in some ways while it withers away in certain others...

[somnath]

^^
I agree with that. Another way of looking at it, is the number of billionares in India who have conglomerate operations with companies in widely differing industries as opposed to billionaires in one specific industry, signifying that these conglomerate billionaires rise and sustainment has depended on managing the "system" as opposed to core comptencies in a specific industry. Managing the system besides "managing government relations" would also include managing access to capital including the financial system. After all Bill Gates has core competencies in software, the Fords were in the automotive business. In India the Ambanis can do everthing from oil exploration and refining, to telecom to infrastructure etc. But to the extent that their businesses are exposed to global competition, they have to excel in a specific area. I think the Mukesh Ambani group is coalescing around oil and oil exploration?

Ldev-ji, its an interesting thought, but not necessarily linked to cronyism...Our very own Tarun Khanna and Krishna Palepu articlated a theory of conglomerates about 15-16 years ago, that argued differently to CK Prahlad's "core competence" axioms...the basic premise was that in developing markets, factor markets are not efficient - labour, capital, regulation...Therefore companies tend to become conglomerates as they build all the requred resources in-house rather than depend on an ineffcient factor market...For example, the Tata Group's Tata Administrative Services (TAS) programme spread across multiple companies enabled them train multi-skilled talent in a scenario where such talent was rare domestically...Tarun Khanna has recently expanded further on this axiom - you might want to grab the piece..

Later: found the reference...here..http://www.mendeley.com/research/why-fo ... g-markets/#

A lot of successful western compaines are also conglomerates - GE is the prime example..

You are right in terms of "system management" capabilities of conglomerates..Not all of it is bad, large companies do need to manage the "systems"..What is worrying is if companie, conglomerates or focussed real estate companies, become part of a "deep state"...

[Arjun]

India on the other hand is the only "non-middle income" country in the list of top-10 countries of billionaires..

Somnath, there are 3 issues being discussed out here-

1. Whether India needs to be apologetic about the number of billionaires
2. The 'quality' of these billionaires and whether their initial success was derived from cronyism
3. Eliminating the businessmen-politician nexus - whether you call it cronyism or corruption

My answers to each

1. Not at all. As you know the bulk of the wealth of all these individuals is in the form of paper wealth tied to the stock market value of their firms. The stock market pays for growth - therefore it is only natural that India with the second highest growth rate in the world and consequently several firms that leverage the overall GDP growth - should be rewarded far more by the markets than firms in say the US that are witnessing tepid growth. I would be not be in the least bit sympathetic towards billionaires whose wealth is largely inheritance AND the bulk of the fortune not being tied to their performance in the markets but believe me, as long as one is in a competitive industry - one needs to take decisions on a regular basis that can significantly impact which way the fortune moves. Birla may have had his initial start way back in the 19th century by cosying up to the British - but Kumar Birla today has to take risky bets on a regular basis (eg buying Novelis the Canadian aluminium firm, CCC- the American carbon black manufacturer). Novelis at one point 2 years back was looking like a disastrous decision - he would have maybe dropped out of the billionaires list if that had not been turned around - but then his team took charge and turned it from a huge negative into a huge positive for the group.

Secondly- Indians are inherently global, and a lot of these individuals though Indian (LM Mittal, Lohia, Banga..) have made their fortunes through leveraging global markets and not from Indian consumers.

2. Quality of these entrepreneurs can be judged from the ability like I have stated to stay at the top, as long as they are in competitive and not monopolistic industries. Overall the names that appear are ones that have proven themselves (other than maybe a very small number of outliers). Did they initially benefit from cronyism - possibly a significant percentage of the ones from government-interfacing industries might have, but (a) in the marketplace you can't sit on an initial success and hope to maintain your paper wealth and (b) the examples of initial success being due to cronyism is probably lower than either China or Russia.

3. The businessman-politician nexus needs to be broken - which is a separate issue. But should one castigate businessmen as a class for this ? - that is I believe highly unwarranted. There is certainly need for a strong third leg - of regulators, who decide on the rules of the game and who are objective, and anybody breaking these rules needs to be convicted - whether politician or businessman.

I would also add that one needs to distinguish between 'lobbying' and using underhand means of influencing the polity. Lobbying in the sense of trying to promote certain ideas is a natural activity - but using money or other incentives or threats of punishment to influence law-makers or regulators needs to be dealt with harshly.

Finally, as an aside since you brought up banking - I don't think it is the overall regulation that has precluded banking billionaires - but one single regulation from RBI that prevents any single party from owning more than 10% of a commercial bank. This regulation cannot be used for any other industry other than commercial banking - so I am not sure there is any wider lesson out there.

[somnath]

Arjun-ji,

Dont disagree with much of what you said, the crux of the point was on cronyism..There is disturbingly large amounts of it currently..

But

Finally, as an aside since you brought up banking - I don't think it is the overall regulation that has precluded banking billionaires - but one single regulation from RBI that prevents any single party from owning more than 10% of a commercial bank. This regulation cannot be used for any other industry other than commercial banking - so I am not sure there is any wider lesson out there

??the 10% cap is for foreign banks, not for Indians (or other foreign investors)...Most banks have large single shareholders, including foreigners..

[Arjun]

??the 10% cap is for foreign banks, not for Indians (or other foreign investors)...Most banks have large single shareholders, including foreigners..

Dispersed shareholding is one of the stated objectives of the RBI for commercial banking. Today if any single individual or firm wants to buy more than 10% of a commercial bank - it would not be allowed. There are a few shareholders who hold more than 10% in some private banks due to historical reasons - but in every case the RBI is actively pushing them to reduce their stake to 10%.

[somnath]

^^^there is no such blanket injunction (except for foreign banks)...Most private sector banks, old or new, have very large single shareholder holdings, incl foreign investors..

Randomly, from my bloomberg

ICICI - Deutcshe Bank Trust - 27%
Indusind - Industind intl - 14% + Industind Ltd - 4% + Ashok Leyland - 3.8% - all of it finally going back to the Hindujas
Axis Bank - UTI AMC - 23%
Kotak Bank - Uday Kotak - 40%

Many of these shareholdings are not "legacy" - for example ICICI is a darling of FIIs...

There are 5 new banking licenses that are to be given this year all of whom will be 100% owned by some pvt sector group or the other...

Its not as if billionaires cannot be made out of banking - Uday Kotak is one example...Rana Talwar should have became a billionaire by selling off his stake in Centurion Bank of Punjab..but its tough, much tougher than overnight riches in real estate, telco, minerals - quality of regs makes the difference..

[Arjun]

ICICI - Deutcshe Bank Trust - 27%
Indusind - Industind intl - 14% + Industind Ltd - 4% + Ashok Leyland - 3.8% - all of it finally going back to the Hindujas
Axis Bank - UTI AMC - 23%
Kotak Bank - Uday Kotak - 40%

In the ICICI case, DB Trust is just acting in a trust capacity on behalf of ADR holders, due to ICICI Bank having an ADR listing.

Indusind, Axis and Kotak are the legacy anomalies I refered to, also Yes bank (Rana Kapoor) ...but the new banking bill does intend to do away with some of these restrictions. So we might just see new banking billionaires other than Kotak.

[nandakumar]

ICICI - Deutcshe Bank Trust - 27%
Indusind - Industind intl - 14% + Industind Ltd - 4% + Ashok Leyland - 3.8% - all of it finally going back to the Hindujas
Axis Bank - UTI AMC - 23%
Kotak Bank - Uday Kotak - 40%

In the ICICI case, DB Trust is just acting in a trust capacity on behalf of ADR holders, due to ICICI Bank having an ADR listing.

Indusind, Axis and Kotak are the legacy anomalies I refered to, also Yes bank (Rana Kapoor) ...but the new banking bill does intend to do away with some of these restrictions. So we might just see new banking billionaires other than Kotak.

Banking billionaires built around a huge market capitlisation of the underlying the banking business is inevitable notwithstanding the fact that the RBI has norms on dispersed ownership.
the problem is inheent in the nature of capital accumulation. in any new business the promoter's capital has to be a large chunk of the total as it is difficult to attract risk capital in sufficient volume from others as to make the RBI norms stick from day 1.
so what the RBI does is to allow for ownership concentration in the start up phase but simultaneously enters a caveat while giving out a banking licence that take steps in the fullness of time to dilute it. but there is a catch. if the banking business succeeds- to an extent the kotak bank and indusind have- the original promoter simply refuses to fall in line with the promise made to the RBI to dilute ownership.
they have the political connections to stall any retaliatory regulatory response from the RBI. the RBI too is quite happy not to get into a turf war with the Government as the Government is represented by the political class.
if on the other hand the banking business fails- as happened in the case of GTB and Centurion Bank- the consequent forcible or voluntary merger with another bank results in ownership dilution.

[somnath]

^^Banking sector equity norms are quite openly a very case-to-case affair with RBI...For the longest time RBI wanted the hindujas to dilute their stake, it happened very very slowly..Foreign banks are not allowed more than 10% stake - HSBC got a mighty rap on its knuckles for its attempt on Axis Bank, but RBI allowed ING to fully acquire Vysya Bank....

Sometimes it seems a bit paradoxical and arbitrary, but so high is RBI's credibility as a regulator that no one imputes vested interest in its decisions...

The creation of dollar billionaiers is not the issue...a sense of fairplay, non-discretionary decision-making and absence of cronyism are....

[Arjun]

Speaking of billionaires, I found the geographic origins of the 5 Indian American billionaires (Vinod Khosla, Amar Bose, Kavitark Shriram, Bharat Desai & Romesh Wadhwani) interesting. Four are originally from each corner of India, while the fifth is from a part that India lost in '47 (Sind).... a good advertisement for India's diversity if it were not for the fact that they are now American citizens !

Ok, enough on billionaires... Why are the D&G guys keeping silent??

[abhischekcc]

The reason why Indian elite do not have a good grounding in strategic approach is largely a fault of the caste system, which encouraged the development of separate intellectual (Branhmin), strategic (Kshatriya), and financial (Vaishya) interests. Unfortunately, due to lack of intermarriage, there was no possibility of any cross fertilization or coallescement of these interests. This is the reason why we keep falling prey to outside forces.

It is the distinct community feeling among different groups of Indians that protected us from losing identity during crisis periods. If Indians turn into a monolith and cosmopolitan, it will be easy for outsiders to penetrate elite families like that happened in Nehru family.

Current problem among Indian elite is due to the way history is taught to them.

Agreed. The caste system has had several impacts on Indian strategic course, both good and bad. I was pointing out one negative fact. It is true that the one reason why Hinduism survived contact with Islam while Buddhism did not, is because Hindu priests are determined by birth, while Buddhists choose to become monks. The reaction of the two communities was very different to Islam's genocidal policies targeting the priest class of both.

Hindu Brahmins became Brahmins despite all the threats and murder because they did not feel as if they had a choice in the matter - it was simply past life karma that they are brahmins and have to follow that path regardless of consequences. The disincentive of death was no disincentive.

Buddhists felt that they had a choice in becoming or not becoming a monk. Hence, muslim violence was far more effective deterent. Hence, the cultural backbone of buddhist societies collapsed in front of Islam whereas Hinduism survived.

[ldev]

the basic premise was that in developing markets, factor markets are not efficient - labour, capital, regulation...Therefore companies tend to become conglomerates as they build all the requred resources in-house rather than depend on an ineffcient factor market...For example, the Tata Group's Tata Administrative Services (TAS) programme spread across multiple companies enabled them train multi-skilled talent in a scenario where such talent was rare domestically..

Besides land, labour and capital, the 4th most important factor of production especially unique to India was "government connections". TAS only built the labour factor. The red tape surrounding land usage, ownership, and difficulties encountered in changing its status from agricultural to commercial etc.. is well known and need not be elaborated on, capital availability became almost exclusively government controlled following nationalization. Even today, government connections remain the single preeminent "factor" determining business access and/or success in India and that includes capital even in today's liberlized market. Why has Bank of America opted to have Mukesh Ambani on its board? Not for advice he can proffer on the US market but most certainly for the access he can provide to Government regulators in India.

[shyam]

It is true that the one reason why Hinduism survived contact with Islam while Buddhism did not, is because Hindu priests are determined by birth, while Buddhists choose to become monks. The reaction of the two communities was very different to Islam's genocidal policies targeting the priest class of both.

I doubt this argument is true. If priest class could come only by birth, all Islamists had to do was to go and destroy those families. I read somewhere that this infact happened in Sindh. Original Sindhi Brahmins were annihilated by first Islamic invader (forgot the name) thinking that they were unreliable and risky (they helped him defeat Sindh king)

The reason Hinduism survived is that it asks people to take weapon to fight just wars. No illogical peace bullshit. Secondly, when there are many small sized caste groups, it is easy for them to protect their own groups and practices without looking elsewhere for advice. More discussion about this will be OT.

[Hari Seldon]

Ok, enough on billionaires... Why are the D&G guys keeping silent??

D&G guys, eh? Interesting only.

I can understand the dire need to classify and pigeonhole people. The brain can handle only so much info only. And is susceptible to loss aversion, salience effects and a host of other frailities. Taleb writes well about some of these common biases and their effects on worldview, perspectives and the subjectivity of truth.

I'd rather folks, regardless of labels flung around by the overly opionated, keep an open mind enough to change views based on data (however imperfect) rather than get hung up on a single narrative. I know, easier said than done, and moi has been struggling with it for a while now. QUite educating actually, and entertaining as well. Sometimes.

[Arjun]

I'd rather folks, regardless of labels flung around by the overly opionated, keep an open mind enough to change views based on data (however imperfect) rather than get hung up on a single narrative. I know, easier said than done, and moi has been struggling with it for a while now. QUite educating actually, and entertaining as well. Sometimes.

Relax, I wrote that in jest !

Agree with what you've stated... It is a close call really - and one can never predict which way the balance will tip. Several interconnected themes globally that don't look good, and wrong moves can certainly get the world into a double-dip - and this time the BRICs might not get away lightly.

Given the focus of this thread on an 'economic meltdown' the signs of which have not completely disappeared - I do expect the tone to be on the negative side....And as long as one understands the threats better - one is always better of. As in business - being paranoid is smart.

[Arjun]

Good primer on inflation and deflation ... the consensus at Central Banks seems to be that the latter is a worse evil than the former: Thoughts on Inflation & Hyperinflation

[somnath]

Why has Bank of America opted to have Mukesh Ambani on its board? Not for advice he can proffer on the US market but most certainly for the access he can provide to Government regulators in India.

Nothing particularly wrong in that...Creating access, sharign special experiences - these are precisely the job of non exec directors...Nothing sinister, as long as it does not degenrate into cronyism...BTW, BankAm isnt the first, Standard Chartered used to have Sunil Mittal on its board till a couple of years back....

[Hari Seldon]

Nothing particularly wrong in that...Creating access, sharign special experiences - these are precisely the job of non exec directors...Nothing sinister, as long as it does not degenerate into cronyism...BTW, BankAm isnt the first, Standard Chartered used to have Sunil Mittal on its board till a couple of years back....

Agreed. A-greed again.

Concern though is how soon before retired boorocrats start populating boards of TFTA finbanking subsidiaries in Desh? The revolving door model in the khanate, wherein (some would say ideologically if not logically compromised) folks seamlessly flit between government positions, finbanking boardrooms and 'independent' regulatory charges is known all too well for me to belabor the point here.

The basis of policy, apart from pragmatism, also has to be principle. In this case, 'reciprocity' as a core principle. How many of our desi banks have branches in the TFTA west? Our very own SBI's application for an overseas NY branch to service NRI accounts has been sat upon for 3 decades now close to. Why are TFTA banks being allowed in at all? That is anything should be the start of our negotiating position only. The RBI has done well to restrict the MNC banks in terms of #branches, #ATMs etc allowed and give the PSBs a freer hand to compete with these smooth talkers. Only.

[Arjun]

Why has Bank of America opted to have Mukesh Ambani on its board? Not for advice he can proffer on the US market but most certainly for the access he can provide to Government regulators in India.

The regulator that matters most to BoA is the RBI - I don't think Mukesh has any background with the RBI or anything tangible to offer on that front. In fact, the RBI has tended to look more favorably at banks that don't have any industrialist backing - though that may change down the road. About the only mutual benefit I see is that BoA- Merrill will probably get some more banking business from RIL and Mukesh will gain further in terms of global stature.

The more remote possibility is that there could be a Mukesh Ambani - BoA combine that pitches for one of the rural banking licenses that maybe awarded depending on expected new RBI guidelines. Also since Mukesh is interested in entering financial services - a JV in consumer financial services which also leverages the distribution network of Reliance Retail may be an interesting possibility.

[svinayak]

BOA is a chor bank
But they need the Indian gaints to build relationship with the US system.

[svinayak]

It is true that the one reason why Hinduism survived contact with Islam while Buddhism did not, is because Hindu priests are determined by birth, while Buddhists choose to become monks. The reaction of the two communities was very different to Islam's genocidal policies targeting the priest class of both.

I doubt this argument is true. If priest class could come only by birth, all Islamists had to do was to go and destroy those families. I read somewhere that this infact happened in Sindh. Original Sindhi Brahmins were annihilated by first Islamic invader (forgot the name) thinking that they were unreliable and risky (they helped him defeat Sindh king)

The reason Hinduism survived is that it asks people to take weapon to fight just wars. No illogical peace bullshit. Secondly, when there are many small sized caste groups, it is easy for them to protect their own groups and practices without looking elsewhere for advice. More discussion about this will be OT.

Hindu priest class and social mobility was common in the past. Hindu priest could marry and have families and could take up other professions. It was distributed.
Monks and the system was distinct and was easily targeted

[Hari Seldon]

^^^ The above line of discussion fits perfectly with some other threads in GD and would do very well under brihaspati garu's watchful eye, IMHO.