Where are the dollars ?

The RBI has been furiously buying dollars to stem the rise of the rupee. It has bought over 84 Billion since Jan 2007. Where are these dollars going ?
From the historical data from US treasury India had about 15 Billion US dollars invested in US treasuries. The latest data shows that India is not even on the list. So it has less that 11 billion dollars of US treasuries.
So where are the dollars going ? Is RBI buying other countries treasuries and thus insulating itself from any weakening of the dollar ? If RBI is doing that, hats off to it. It is passing on the role of managing the dollar depreciation to other central banks, while keeping the rupee from appreciating.

Michael Lewis on "Why I'm Ready to Be New Citigroup CEO"

Micheal Lewis column: "Why I'm Ready to Be New Citigroup CEO".
Fun stuff! Here is an excerpt.

The Wall Street CEO must possess an extraordinary ability to be paid huge sums of money each year without losing composure.

This isn't as easy as it sounds, especially when the firm is losing billions. Imagine if some board handed you $40 million or so a year (before benefits) and tossed in a nine-figure severance package. If you're like most people, you'd dance around the kitchen naked with the drapes wide open -- until you realized what people who raised you would say when they read about it in the paper.

AP tops the chart

Andhra Pradesh has the distinction of topping the chart on the number of NGOs blacklisted by CAPART. Of course the data can be interpreted in many ways. May be the blacklisting criteria was tougher for AP, the AP based NGOs were stupid enough to get caught etc. The lesson to be learnt from this exercise is, if you plan to donate to NGOs, do your homework before giving away the money.

Here is the state wise list that I have compiled.

Andhra Pradesh	176
Bihar	123
Tamilnadu	75
Karnataka	71
Uttar Pradesh	69
Kerala	33
Rajasthan	33
Delhi	21
West Bengal	21
Haryana	20
Maharashtra	19
Orissa	19
Madhya Pradesh	14
Manipur	11
Nagaland	10
Gujarat	8
Jharkhand	8
Himachal Pradesh	6
J&K	4
Mizoram	4
Assam	2
Pondicherry	2
Chattisgarh	1
Meghalaya	1
Uttaranchal	1

Erosion of core constituency ?

How much the CPI(M)/CPI's core constituency has been eroded can possibly be gauged from the JNU elections . Its student wing ( SFI-AISF) supported candidates finished 3rd in three of the four central panel posts and just about managed to cling on to second position in the other post. JNU has always considered a bastion for SFI, with both Prakash Karat & Sitaram Yechury being past presidents of the JNU students union. Does this election provide a pointer to the direction in which the wind is blowing ?

Mr Prime Minister, Did you sleep well last night ?

Mr Prime Minster,
Did you sleep well last night ? If you did , was it because you stopped watching television? Was it because the Indian media chose not to highlight the plight of families of over 4000 workers detained in Dubai ? Was it because these 4000 odd people were not accused of terrorism and therefore did not deserve to have their share of your sleepless nights ? Was it because these poor workers had no articulate English speaking wives, to explain their viewpoint to media?


ps : Is it surprising to see that the BBC does not seem to report that any one was detained. It has a bland news item. What a contrast to its coverage of the Gurgaon Honda Strike

Callous leaders ?

How callous can our leaders get ?

Here is an illustration. From Deccan Chronicle - epaper : Page 4


This comes a couple days after the bomb blast in Hyderabad. It was in a all party meeting to discuss the blast. Wonder if the Chief Minister & his colleagues would be laughing so loud if their friends/family had been victims?

Markets headed further down ?

From Forbes : BNP Paribas Freezes Funds

One of Europe's largest banks, France's BNP Paribas, said on Thursday it had frozen three of its investment funds, citing volatility in the U.S. asset-backed securities market. The funds' exposure to risky subprime loans means the bank can no longer calculate their net value.

BNP Paribas blamed "the complete evaporation of liquidity" in certain areas of the U.S. securities market for its inability to calculate the fair value of the three funds in question

Hmm.. So any fund that has invested in these three funds will now no longer be able to accurately calculate their net value. So should they also be frozen ? That would trigger a cascading effect, which likely will result in no mutual fund any where in world being able to calculate their net value.

Here is the normal way in which this would have been handled. These funds would probably treat their entire sub prime mortgage investments as wiped out and calculate their net asset value accordingly. Investors would be allowed to redeem at this calculated net value. New investment in the funds would be stopped to allow existing investors to gain if there is any value left in the sub prime mortgage investment.

The fact that this wasn't done leaves room for speculation that losses from the sub prime part of the funds could have been unbounded i.e the entire net value of the funds could have been wiped off. A scary thought for markets already under some strain.

Disclosure : I have no short position in any markets.

Disclosure vs License permit raj

Business Standard today has a wonderful editorial on higher education. This is the first time that I have heard of any one advocating a disclosure based approach to institutions of higher education.

The basic idea is straight forward. Instead of the mandarins of the HRD & its affiliates deciding who should offer, what courses, to whom and for what consideration, it is left to consumers of education to decide. To enable the consumer to make a rational choice, the editorial calls for disclosures from institutions that offer education. The idea has been borrowed from the Indian capital markets, which has moved from a restrictive Controller of Capital issues to a SEBI mandated disclosure rules for companies raising money in the capital markets. And the results are there to see.

Direct transfer is the way to go

From the Indian Express

To a question by Lord Meghnad Desai — why can’t we transfer money, say a dollar a day, directly to the poor? — Chidambaram said, “Cash transfer Publish Postdirectly in the hands of poor is the single most popular program to poverty alleviation until we provide them jobs. But we need to have the money for it. We will need to dismantle the existing schemes and the system. I will do my sums tonight to see if we have the money.”

Mr. Chidambaram need not do the math. He can have all the information here
My calculations shows that each BPL (below poverty line) family can get Rs 2500 per month by cutting the subsidies which have been instituted to alleviate poverty. An biometric based Unique Identification Number is the way to go to prevent fictitious claimants for these transfers. Tying this to PAN & making PAN mandatory for all financial saving transactions can weed out the pretenders.