Archive for December, 2008

It’s the creative break that matters

December 31, 2008

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Workaholism — joining the frenetic rat race in which we chase our own tails in the mistaken concept that we are making progress — is the curse of the thinking classes. This is the open secret known to all great artists, scientists and spiritualists. Meditation — the fount of spiritualism — is the purest form of creative leisure.

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In his essay ‘In Praise of Idleness’, Bertrand Russell tells the story of a rich man who offered a gold coin to the laziest of 12 lounging beggars. Eleven of them jumped up to claim the prize — which went to the 12th who’d been too lazy to get up. Russell’s point? Idleness pays. Russell’s critique of the work ethic propagated by industrial civilization is that it is exploitative of labour and increases, rather than reduces, economic disparities.

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By constantly working harder (i.e. producing more) we have created a vicious spiral of ever-increasing and inequitable consumption, which is rapidly depleting our planet of non-renewable resources, resulting in degradation of the environment and of life itself. Apart from its adverse physical consequences, busy-ness for the sake of busy-ness (running hard to stay in the same place, or even go backwards) has larger, philosophical implications. All the great inventions and breakthroughs in thought have been a result of leisure. With your nose stuck to the grindstone of mindless everyday drudgery, you can’t see the horizon, leave alone aspire to go beyond it.
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The story of civilization — be its narrative set in ancient India or Attic Greece — has been the story of creative leisure. Leisurely contemplation unfettered from routine preoccupations has always been the fulcrum that moved the world. Archimedes figured out his theory of water displacement while soaking in a bathtub. James Watt conceptualized steam locomotion while daydreaming and watching a kettle boil. Kekule was asleep when he literally dreamt up the composition of the carbon molecule.

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I get amused when I get to puncture idioms and conventional wisdom. So here I go. Not every idle mind need be a devil’s workshop. It’s alright if it’s a creative break; because you could be getting up close with your Eureka moment. Would the Buddha have attained enlightenment, sitting in perfect repose under the Bodhi tree, had there been clocks to punch in Nirvana?

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The earth could’ve stopped spinning

December 26, 2008

Oh, for the year that was… Battered global economy, foreclosed homes, Oil prices that soared and crashed, currency values that swung high and low – ah, the Madoff Scam that ended the year with a flourish.  If I had the magic powers, I would have put the spinning earth on pause mode and have time stand still so that 2008 comes after a long enough pause to forewarn the world of the economic crisis that awaited it.  And till we all had time to get out of our portfolio stocks 🙂

So what does that leave us with? Some bitter lessons. Will we miss the automatic deference accorded to titans of investment banking? The senior executives of banks used to command great respect; it is now clear that many of them did not deserve it.

The Anglo-Saxon capitalist model has been sorely tested in the past 12 months. Governments have been forced to prop up the banks and tempted to erect scaffolding around industrial titans. We may come to miss some of the dynamism and inventiveness of unfettered capitalism, but we will not miss glib free-market fundamentalism.

The ground is now clear for a safe touch down of Keynesian prophecies.  The first lesson – Never analyze the economy like you do a business. For a company, it makes sense to cut costs. If the world tries to do so, it will merely shrink demand. An individual may not spend all his income. But the world must do so.

Next lesson – Never treat the economy as a morality tale. It’s a technical challenge. In the 1930s, two opposing ideological visions were on offer: the Austrian; and the socialist. The Austrians – Ludwig von Mises and Friedrich von Hayek – argued that a purging of the excesses of the 1920s was required. Socialists argued that socialism needed to replace failed capitalism outright. These views were grounded in alternative secular religions: the former in the view that individual self-seeking behavior guaranteed a stable economic order; the latter in the idea that the identical motivation could lead only to exploitation, instability and crisis.  We can’t predict which is right.  But we can certainly believe neither is.

We bid a hearty farewell to the lack of discrimination that characterizes the height of a boom. When even conscientious investors are happy to hand their money over to a man with inexplicable returns, a peculiar business model and whose name is pronounced “Made-off”, something is awry.

Finally, we are pleased that it looks like the end of a casually unsympathetic attitude towards society’s walking wounded. When even the highest in the financial land have been forced to seek assistance from the great mass of ordinary taxpayers, a humbler approach from all of us must be in order.  So usher in 2009; only if you remember the lessons…

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Dr.Y.V.Reddy, the man who insulated Indian financial system

December 20, 2008

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It was George Bernard Shaw who said “We are made wise not by the recollection of our past, but by the responsibility for our future”.

 

A child can ask a question that many wise men cannot answer. Similarly few could explain why great leaders err on the side of caution even as there seemed little to worry.  They are even blamed for missing out on great opportunities. These worries epitomised the rudimentary yet sagely wisdom (that most realized only in hindsight, after he was gone) that underscored the era of Dr.Y.V.Reddy as the Governor of Reserve Bank of India (RBI), India’s central bank.  Dr.Reddy during his tenure as the Guv was criticized for being too stringent with his policies that sucked out liquidity from the system even as the economy was growing at a scorching 9 percent plus.  Yet when credit crisis struck global finance, India remained relatively secure thanks to his early braking mechanism.

 

NYT correspondent Joe Nocera captures many a banker’s opinion in his column “Talking BusinessHow India Avoided a Crisis”. 

Dr.Reddy post his term is now being lauded by one and all for India’s relative resilience in the face of global liquidity crisis.  The man deserves kudos for not letting Indian banks sin excessively.  By seeing the real estate bubble early, he made regulations more stringent by increasing the CRR and risk weightage for realty loans.  He banned bank loans for buying land and allowed them to lend only for financing construction costs.  He never allowed securitizations and credit derivatives to gain prominence and setting up off-balance sheet vehicles that hide debt.  Thus the Indian banks never could slice and dice debt and palm them off to unsuspecting buyers that fueled the mortgage crisis in the US.  The banks were forced to hold on to the loans they made to customers until maturity.  It meant banks made sure the loans got paid back since that was their only way to ensure liquidity.

When he saw huge foreign fund inflows into India, Reddy feared inflation and he duly pushed interest rates up to more than 20 percent, which of course dampened the housing frenzy. He increased risk weightings on commercial buildings and shopping mall construction, doubling the amount of capital banks were required to hold in reserve in case things went awry. He made banks put aside extra capital for every loan they made. In effect, Mr. Reddy was creating liquidity even before there was a global liquidity crisis.

India’s bankers were naturally furious, just as American bankers would have been if Mr. Greenspan had been more active. Their regulator was holding them back, constraining their growth! They felt Reddy was being too harsh, excessively paranoid and cutting things to the bone. For a while they felt if Indian bankers were missing out on something, but now they know they missed out only on the toxicity.

As Luis Miranda, who runs a private equity firm devoted to developing India’s infrastructure, put it: “We kept wondering if they had figured out something that we were too dense to figure out. It looked like they were smart and we were stupid.”   Joe Nocera rounds it off  as he says “Instead, India was the smart one, and we were the stupid ones.”

Dr.Reddy has indeed acted responsibly for our future.  No words to thank him.  Perhaps he realized wisdom is never on the menu.  But he ended up owning the restaurant !!!

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Now I am relieved

December 2, 2008

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I was pleasantly surprised when my teeny daughter came and told me “pa, the moon looks beautiful tonight”.  First, I thought she has hit one of her starry moods. Occasionally she busies herself watching the sky, humming a song while leisurely sitting on the swing in our balcony.  At other times, she tries out new songs in her keyboard.  But she has never shed her shyness to come and tell us what got her riveted so much. I ran to the window to watch it but didn’t get a clear view.

 

She described how the two shining specks have dotted around the moon like a fine celestial designer jewelry.  She speculated it must be Jupiter and Venus in a rare alignment but wasn’t sure.  Here’s the detail.  It was a rare spectacle called “planetary conjunction” in which two planets —the brightest in the night sky — will appear extremely close, separated by only the width of a finger held at arm’s length. They won’t be this close together and well-placed for evening viewing again until May 2013.

 

I am glad that she got to watch it. Gladder that she shared it with me. But I am delighted to know she takes an interest in celestial spectacles, gets amused by nature because each time I drag her to watch programs about universe featuring in Discovery or National Geographic, she fobs me off and returns to her other youthful priorities.  Now I am relieved, she has it in her and someday likely she will get her priorities right.  Ain’t gonna miss her lot in life 🙂

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Boarding choice

December 2, 2008

The recent siege of Hotels (Taj and Oberoi) by Terrorists in Mumbai have sparked off several quirky foibles.

Jeff Goldberg writes in the Atlantic blog – How to stay alive in a terrorized hotel.

 

Goldberg suggests some practical tips to stave off hostile situations.  Check it out. Avoid staying in big hotels,  stay in 4th, 5th or 6th floor rooms so that a fireman can easily reach through his ladder, stick to room service and avoid being seen at the lobby 😦 , map your escape route soon after you check in, fill your bathtub with water to put off fires, stay in already bombed hotels etc.

 

My reaction after reading that was mixed. Is it not some kind of an extreme to try and plan everything to the T?  What is the probability of one being in the wrong hotel?  Aren’t you ruining your vacation by imagining dreadful things and preparing for it?  I have a better idea – never leave home 🙂

 

I am loath to pedantic existence ; might as well believe in destiny.  By pulling the randomness out of life, the thrill and cheer of surprises in life is sought to be deprived.  It turns pretty mundane and hardly there could be anything worse. Whatever is bound to happen will happen. A person often meets his destiny on the road he took to avoid it. To be too conscious is an illness. Life is a process of becoming, a combination of states we have to go through.  Where people fail is that they wish to elect a state and remain in it.  Isn’t it kind of death? 

 

Truth hurts – not the searching after; the running from!  Also there is no point in leading a crippled life after jumping from the 4th, 5th or 6th floor in case if there were more people to be rescued than ladders around…