Memoirs Part 2

As soon as X entered the room, the cold hit him, literally too. Prof. Y was on the phone talking with someone and curtly pointed to the chair in front of his huge table. X obediently took the chair. Not wanting to worsen the situation, he lowered his head humiliatingly and kept staring at his own fingers. Time seemed frozen. The banter on the phone extended to eternity.

And then as abruptly as things had happened all day, Dr. Y hung up and asked X, ‘Mr. X, How do you find the courses here? Are they up to your standard?’ X thought of the damage control mode he had decided to adopt. So he just looked at Y pleadingly. Y stressed, ‘What are your thoughts on my course and International Marketing? Write them down on this sheet.’

X took the sheet obligingly and stared at it. His thoughts were racing. Should he write anything at all, the least now he wanted was to make Y more furious? So he timidly started writing the course names. Y was waiting with his hands folded. Seeing that, X timidly started writing.

Good structure and content. Case studies extensively discussed. Live strategy games could be held to make the class more interesting.

X now wondered what made him write that last point. Why is he habitually pointing out things? Will he ever change? Maybe the dressing down today will achieve that. He meekly extended the sheet forward. And then something hit him on the face. He was surprised although he expected anything to happen. Then he realized it was another sheet of paper. He slowly picked it up. It was THE FORM.

Y spoke calmly, ‘I had to study all the handwriting in the answer papers to zero down on the one who wrote this. Now what made you write this?’

X was wondering if that was really a question or just figurative. So as always he kept quiet.

‘I have had some mistakes pointed out in feedback forms. In fact there were 5 negative forms from your class, but nothing this outrageous’, said Y, still very calm and restrained.

X was still pondering if at all he should say anything. X went through his form again to get a grasp of things he was hearing. Then he noticed the word, ‘FAMILY’. What made him write it? Who in their right senses would have mentioned that in the feedback form of an academic course?

X had his reason as always. X had had his share of trouble with Prof Y prior to this. Once he had rejoined college 2 days late as his dad was due to fly back home then. His father told him that he will call up the administrator. X had insisted, ‘This is no primary school dad, I can handle it’, thinking of how much an arse he will be made to be by Y in class, after his dad’s call. But X, to his rude shock was awarded 4 DGPs (Derogatory Award Points) for joining two days late. And as the trimester progressed he found that people were joining weeks late. But the only thing they did right was they were in Y’s good books. And meanwhile Prof. Y was rescheduling all his classes to take a break and go home.

DGPs are awarded in extreme breaches of code of conduct. If one gets 8 of them, they are duly asked to forfeit the course. Y had sarcastically remarked when awarding the DGP’s, ‘What if you had started out of home and then wandered away and then joined late. This will teach you a lesson.’ X was slipping away in his thoughts. But this was no time to think of all of that. He needed to imagine something good about Prof. Y so as to have a real pitiful expression. He knew he could not fake his feelings now.

Dr.Y ’s voice brought him back to reality, ‘What is your CGPA Mister? What makes you think that you are eligible to advise me, when the toppers have all given me a good review? Tell me, what is you CGPA?’

X was cornered now. He did not recall his CGPA. 20 years of education and thousands of scores. How can anyone remember them all? He tossed between 3.1 and 3.3. Trying to be modest, ‘Sir, it is 3.1’.

Dr. Y was getting hysterical. X could clearly see the signs. X was wondering where was all the usual nervousness he had had during interviews in the past. Strangely, he was feeling quite calm unlike the other side of the table.

Dr. Y screamed, ‘What makes you think, you can do this and get away with it? Do you know my history? If this thing happened anywhere else, you no longer will be alive. I studied in Loyola in Chennai. You should know about its notoriety. How long have you lived in a metro? You have no idea about the kind of contacts I have.’

X was stupefied. How can anyone kill someone for writing a feedback form? Under the influence of his new found temperance, he was even laughing at the irony of the statement. If it really gets down to it, he was wondering who would be in a better position. A college guy or a man 10 years into teaching?

‘You had no right to say anything about my family, forget the teaching part which is also false by the way’, shouted Dr.Y. X now made up his mind to answer. ‘Sir, I never thought any faculty member goes through these feedback forms. I just wanted to sound funny to my friends. Nothing in it, I ever meant’, said X politely, knowing that it dint even convince him. And as expected it fell on deaf ears.

‘Even those DGPs have not helped. Now I would not punish you. I will let you go and I never want to see you again. Don’t attend my lectures. I will give you an A in Business Management. Don’t even come anywhere near my classes’, barked Y.

‘Sir, I am sorry, I never meant any of it’, pleaded X.

‘Do you know what I can do to your career? Just one minute, and you would be a loser even before you start’, said Y, snapping his fingers demonstrating the fickleness of X’s career. X was wondering if he should have used the college fee and started a kirana store rather than joining here.

‘Now get lost out of here. You will get an A. Don’t come to my class. I will make sure you repent for this, till you leave this place’, said Y tapping THE FORM.

X rose out of the chair, turned his back and walked out of the room with a sheepish grin across his face. What more could he have asked for? An A, full attendance, a one on one with the boss and special treatment for the rest of his college years. He took out his mobile and dialed. He sure had a grand tale to tell her.

Memoirs part 1

Disclaimer: Personal views. This post has high perishability.

This is where our Mr. X (for choice of a better name) can speak out. Now can he? That is what he thought when he filled out that wretched feedback form. The course was some basic one on management. The lecturer was the Numero Uno Mr.Y, of the new campus. He was terror unleashed on the students. His booming voice, hostile remarks and short temper unnerved everybody. Now in this perfect setting, our bloke sat about filling the form at the end of his first trimester exam. The form had just 3 simple questions. And enough space to communicate his feelings. Or so X thought. So here goes THE FORM.

Comment on the following

1. 1.Course structure

Loosely structured with total disregard to students.

2. 2.Course content

Out of date case studies. Repetitive slides

3. 3.Course scheduling

According to the whims and fancies of the professor and his family.

The forms were collected back by the assistant. As usual the chatter was about the exam. People were asking each other how many additional sheets they used. Our X felt so much left out of all this. He was wondering if anyone will even go through the answer scripts and he was pretty sure about the feedback forms being thrown away. Or else someone would have infused some sanity into the professor way back. But in his batch he was sure no one else would have written anything other than the typical three ‘GOOD’s. He smirked with an evil sense of power at having had the opportunity to lead the crusade. He turned to his mates to begin the ‘chai’ routine before classes resumed. But they were still immersed in discussing the paper. In his mind, he reinforced his thoughts of not belonging to the college in any way.

The rest of the day was uneventful, some boring lectures with few nodding in the first row and religiously making notes of what ever were on the slides, not withstanding the fact that the lecturer mailed all of it the next day. The chai routine was only something that our X was looking forward to everyday. Sipping his cuppa, he reached in his trousers for his ringing mobile. X was wondering as to who it could be. A local landline number in a new city was unusual. As he answered, he heard the familiar voice of the dutiful assistant from the administrative desk. Again unusual! What does X have to do with the administrative desk? In fact he wanted to be as far away as possible from it.

The assistant said ‘Where are you Mr. X? Prof. Y wants to meet you. Immediately!’ Then it dawned upon our dumbo. Oh Holy f***!! They have zeroed in on the feedback form. But how could they? It was supposed to be anonymous. The assistant was awaiting his reply. ‘Oh! Mam. I just returned to the hostel. Can’t it wait till tomorrow?’

‘NO ! SIR SAYS HE WANTS TO SEE YOU TODAY!!’

‘OK mam. I am starting from the hostel to college mam. I will meet him right away’, X hung up.

Now was the first time, X missed all his close friends back home. Anyway he had a new group. So form the Chai Dukhan opposite his campus, he called them (SMS: Save My Soul). B & C turned up. X curtly narrated the situation. C said, ‘Bosidike! Kya ho gaya tuje!!’ And B pitched in saying, ‘Dude you are a goner’.

So the three gulped their chais, trying to think clearly. The gravity of the issue was still sinking in them. B broke the silence saying, ‘Dude the maximum he can do is, throw you out of campus. Can you handle that? Will your parents stand by you then?’.

X was simply blinking, imagining how his father will react if he came to know of it. No, that is too much to think about now. One problem at a time. ‘Guys! Just tell me what I can tell him now, to reduce the impact of the damage already done.’ B called out, ‘Gulfam!! 3 more cups.’ Gulfam gleamed and was right there with his chai.

C out of the corner of his eye watched the assistant returning home. X now tried hiding behind the tree. Too conspicuous. Gulfam’s cash counter seemed better. So he pushed Gulfam out and hid himself there.

‘OK you are safe now. Come out. How much time do you have left?’ enquired B, glancing at his watch.

‘Not much. I told her, I am starting from the hostel. That gives me like 20 minutes. So ten more I guess’, said X wiping out beads of perspiration from his forehead. X was now visibly shaken. Adrenaline was coursing through all his veins. Such level of heightened thrill, he had never felt before.

‘Mate! You cannot go in and argue that it is not your form. So get in, agree that it is yours and ask sorry. Also I think he cannot throw you out, as an anonymous form cannot be used as evidence’, B encouragingly told X. Now X felt a little better. Yeah! You cannot use a lousy form as evidence against you. C chipped in saying, ‘Dude, be brave. We are with you.’ X knew that it was only figurative. But when you are under pressure, you like to hear reassurances like that, though they mean nothing.

‘Chalo logon, time to face the music. Anyone coming with me’, asked X mockingly. B being in the goodbooks of Prof Y asked earnestly, ‘I can mate. If you want me to.’ ‘Thanks yaar! Let us save that one for the bigger troubles’, grinned X.

X got into the lift, acknowledging the ‘All the best’ signs shown by B & C sarcastically. He found the lift climb slowly. He smirked to himself thinking even the lift is having its share of fun. Finally it jerked to a stop on his floor. He walked out of it and asked the guard if Dr.Y was in his room hoping against hope that Y would have left. The guard nodded his yes very cheerfully. The lift and now the guard, X felt as if everybody is conspiring against him.

To be continued….

Subprime crisis

It is time to get technical. Cuff up. This ain’t gonna be easy. So what is all the hullah about subprime mortgage crisis? Over debated, less understood as is any financial term. Join me in this attempt to demystify it. Before getting lost or dozing off, let us first make sure of a few basics before progressing.

In very few words, the crisis is just a lot of loans that went bad. So this may lead you to believe that the banks that lend the money would have gone bust. But by the end of this discourse (if you manage to!!!!) you will discover that it was the borrowers and other people totally alien to the mortgaged houses who ended up losing.

Some terms to understand which will put the crisis in its right perspective include,

1. Mortgage
2. Sub prime market
3. Securitization
4. Refinance
5. Fed rate

Mortgage

The simplest of the terms, this refers to the loan secured in order to purchase a real estate property, mostly a house. The parties involved include the debtors or borrowers i.e. the one buying the house and the creditors or lenders, either a bank or other financial institution.

Sub-prime market

Based on credit history (borrowing history), people are divided into tranches (groups). The prime borrowers are those whose history of repayment has been good and risk of default is less assuming that they will continue to be as good as they have been. So this leads us to sub-prime borrowers, who naturally have had a bad credit history. This includes default of loans, delayed EMI payments and also declaration of bankruptcy.

So what is the point of lending money to someone who is likely to default? Here comes the crux of any financial market. ‘RISK INVOLVED JUSTIFIES THE RETURNS’. These borrowers are lent money at an interest rate that is much higher than the prime borrowers. This is under the assumption that the defaults can be compensated by the higher returns obtainable from the borrowers who repay.

Securitization

Technically it can be defined as treating any receivables, cash flows or assets as securities and bundling them and passing it onto investors.

Okay if that just buzzed by, in our context, it can be understood as follows.

A bank issues loans to borrowers. So it has a stream of future cash flows receivable. Now what the bank does is, it bundles up all the loans and sells this as a security (a financial instrument) to interested investors. For example, ICICI lends money for auto-loans. Say it has a pool of 1000 borrowers. Now it prepares a security and issues it to 1000 investors. These investors are assured of receiving the EMI payments of the borrowers.

Why has the traditional lending-borrowing model undergone a change like this? It is because as in our example, it gives ICICI bank more funds to lend again (as the securitized loans are sold) and allows it to specialize in evaluating credit risk and giving away loans. The investor himself cannot go and find 1000 people buying automobiles to lend a small amount to each one of them. Since the pool is large, it inherently has risk diversification. Thus it seems like a win-win situation for all.

Refinance

Refinance generally refers to replacing one loan with another. The motive behind refinancing a loan in the mortgage market is to get a lower interest rate and hence a lower EMI payment. Banks have a tendency to charge a rate of interest in line with the proportion of investment. That is for the same house, if the borrower pools in 20% and borrows for 80%, the loan will be cheaper (lower interest rate) than going for 100% borrowing.

For example let us consider, someone buys a house for $ 1 million in California borrowing 100% of the capital from say Citibank. Now in a booming real estate market, one year down the line, the property appreciates to $ 2 million. So now a new bank say Countrywide is willing to lend the owner $ 1 million at a rate lesser than Citibank as Countrywide is only paying 50% of the house value. Thus the owner is willing to refinance his loan as he is required to pay a lesser EMI.

Fed rate

The fed rate is the interest rate at which the banks can borrow from the Federal Reserve in US. This rate almost decides all the other interest rates applicable in the economy. So an increasing fed rate implies, floating rate loans are expensive and vice versa. The fed rate reached abysmal levels of about 1.75% in 2002. Since then the Feds have been increasing the rate 11 times in a row by 25 basis points( 0.25%) each time.

La crisis

So now that we (though few :D) are clear with the terms, let us delve a little deeper and try to figure out what caused the bubble to grow and then finally burst.

The low fed rate around 2002 made home loans cheaper. To fuel the housing boom, banks started to lend to sub-prime borrowers. The banks became so involved in disbursing new loans, that they relaxed their credit risk (repayment capacity) evaluation procedures. At heights of such lending, jokingly even NINJAs (No Income No Jobs Also) were given home loans. And moreover the banks also quickly securitized this sub-prime lending and sold it as securities to investors. These investors included pension funds, Mutual funds, financial institutions, other banks and big investors spread over US, Europe and other regions.

The demand in housing as a result of such reckless lending resulted in prices of houses skyrocketing. So people who had already borrowed started to refinance their loan on account of their appreciated houses. This reduced their EMIs. This created some strain on the banks and credit enhancement (We will delve into this part sometime later. Not today!!) agencies involved in securitization of the loans.

Now the fed believed the rates have been artificially low for long and started to raise it in 2004. Since then there has been an increase of 25 basis points (0.25%) 11 times in a row. Thus the EMIs increased which started to trigger defaults all around. This snowballed and the banks took over the houses of the defaulted people and put them on sale. But there were no takers. Hence the prices of these properties plummeted. Thus the bubble burst.

The people who were affected in all this were the investors in sub-prime mortgage securities. They had invested in it attracted by the higher rate of returns they offered. But the investors had no clue about the credit worthiness of the borrowers. They believed by what the lenders had to say. Also the defaulters are going to be affected in the future by way of poor credit evaluation. So now they will be tranched even lower than subprime borrowers. So the loans they take hereafter will be more expensive.

So how can all this be undone now? As an immediate relief the Fed is lowering its rate, thus making more funds available for the institutions on the verge of bankruptcy. But will that solve the problem is yet to be seen. To make sure this does not happen again, securitization should be done with prudence and the investors should demand access to the borrowers risk profiles. Also the real estate market needs better regulation and price discovery mechanism like the financial markets.

And if you are reading this line, WOWW!!!! We are at the same wavelength.

And if all this got a little heavy. Lighten up. Click below

http://youtube.com/watch?v=ewiXA_he6VQ

Touted to be the initiator of a global recession, how much ever we may deny, all our immediate future is inextricably linked with this phenomenon. But the most we can do is to watch how the drama unfolds.

The Kodai Sojourn
Strange things bring together people. Out of college, old school mates seem to have headed in different directions brought together by a small holiday made possible by the weirdest of reasons. A bandh against Ram Setu outcry and Gandhi Jayanti holiday along with the weekend gave the perfect opportunity for a short outing.
After much disagreement, everyone agreed to go to Kodai. And as usual we went there in the most unconventional way. 9 of us packed in a Scorpio. With Durai and Sajan that is an achievement in itself. The trip was quite memorable. Some events that bring a smile to my face recalling now include:
1. Durai puking at every 100 KM
2. Rajesh on his omlette gobbling spree
3. Arun and his GPS smsing
4. Me and my new love (Fuji Finepix S6500fd)
5. Pradeep's 'sunior... jeenior' tongue twister
6. Vijay's leg shaking while driving back
7. Sajan and his marine photo shoot
8. Sujith's ridiculous HR game

Here are some of the eye candies of the trip :

IMPORTANCE OF STOCK AND OTHER FINANCIAL MARKETS
Stocks tumbling all around the globe on the wake of the sub-prime issues in the US, gives non believers in stocks enough mileage to further their self fulling prophecy of wisely staying out of it. But can anyone really be totally unaffected by stock markets. In capitalist and mixed economies atleast, it is not possible.
Even if you are not invested in the markets, you, your spouse or your parents are working in a company that is listed in the market and hence their compensation is invariably tied with the performance of that company's stock, which in turn is tied with the general health of the country's stock market and the global market trends. Indirectly all the products and services you make use of, is provided by corporate entities. So a stock market bubble burst may close down these companies or drive their product/service prices northwards. My roomie Suresh, still was not convinced with this line of argument. He questioned how come a beggar on the road is affected by the markets. But is it not obvious? Ultimately it is a person employed with a listed company or a stock trader who drops coins to the beggar.
So who can be the real ones who are totally unaffected by stock markets. There are two possibilities. One is a perfect socialist state. Also this socialist state should remain a closed economy, meaning not trade with other countries of the world. Such a closed socialist country where the state owns all means of production and is the only employer can remain unaffected by the stock markets. But such idealism cannot be applied to our world.
The other are the tribal groups that are totally secluded and have no means of communication with the rest of the world. There are only few groups that are present like that in today's world. The kalahari bushmen from Africa and few trial groups in the Andaman like the Sentinelese, Negrito and the great andamanese.

Way to future
Of late I have been yearning to become a techie, trying out and reviewing new gadgets, staying at the forefront of technology. This is more because of my inner conviction of being able to identify which new developments will click and which are just namesake additions. This attraction towards technology is in spite of spending four years in engineering (precisely electronics) and feeling lost. But that feeling has lot to blame on the course structuring. The faculty did an unbelievable and unparalleled job in making it drab and incomprehensible.

Let me take you through a sneak preview of your home fifty years down the line. All electronic gadgetry will be integrated and master controlled. For convenience let us call your master system as fido. Fido be accessible at a couple of places in the house. Accessibility will be through a projected screen which will be touch sensitive. (Imagine a transparent screen with icons)

Mobile phone will become obsolete atleast inside the house and will stay confined to your car and exterior locations. From anywhere inside your house, you can use it by just calling it out. Also the microphones will be hidden in the walls and the listener on the other end will hear your voice as good as if he is in your room. There will be voice recognition, thus allowing only calls from you and not anyone in your house, unless you give them a code to access it.

Movies and music can also be played by calling out the appropriate codes. Vast collections of movies can be saved in a small drive without any fuss which will reflect both the efficient compressing algorithms and huge memory capacities that will prevail then.

In your wardrobe, the clothes you throw on the bottom will automatically be channeled to the washing machine which will be invisible to the dwellers. The washed clothes will be dried, ironed and even your deodorant (permanent smell) will be added to it and placed neatly back in your wardrobe.

From the projected screen you will be able to access the inventory in your refrigerator. If you feel you have run out of something, you can just call out an order to Fido. It will place order with the grocer and the grocer will deliver it instantly. There will be a small box outside your house. Fido will pick this up from there and place it in the refrigerator. You will be billed in the end of the month for this.

The airconditioning system will work based on your presence. Thermal detectors will sense your position and the vent near that vicinity will work. The same principle will also be applicable to the lights. There will be face recognition at the door and depending on who turns up at the door, Fido will tell you of that person's arrival in the room in which you are present. If it is someone new, it will try describing you the person.

You will be able to change the color of your walls and also your car through simple commands. Your car will drive automatically. The traffic will be syncronized by a big server (Fido senior) run by the state. When you get into your car and announce your destination, it will send a request to the fido senior. It will obtain the route from fido senior. There will be no traffic signals anywhere and regulation will be done by modifying speed suitably so as to keep moving continuously and not wait anywhere.

I guess this preview is enough. Too much of it and it spoils the surprise for you. In a nutshell, people will become so dumb and lazy and if anything goes wrong with fido, you will go mad. Also it will take a whole group of technicians to get it right.

Sifting fact from fiction
For a few of you, this line of argument may be completely new and ridiculous. But for those who try to seek explanation for everything, you may find this acceptable. How true are the things we consider as facts about our history? Historians are under the mercy of the incumbent rulers. Victors have unlimited power in twisting facts and rewriting them to show them in good light.

In the Indian perspective, most of our history is vague and intertwined with religion. Accepting the occurrence of Mahabarath and Ramayan, still doubts persist on the degree of truth in them. Were the Kauravas really the malicious lot? How will historians have treated the pandavas, for polyandry, if they had lost the war? In any story that is passed down generations, people are bound to exaggerate facts and the final product that is present is a really distorted version on truth.

Extending this line of thought to recent events, we can even question the validity of the Pearl Harbor attacks. Did Japan really wrecked havoc or did US use a stray navy plane as a reason to enter the already full blown world war. Also if Pearl Harbour can be made into a dramatic movie, how will the Americans react to a movie that is made on the Hiroshima & Nagasaki bombs. Also US's recent aggression towards these countries is lot because of a whole generation being fed on war gloryfying movies and that explains Bush's continued presence in the office. And also the influence US wields on the world now can be seen from the way the current wars in West Asia are being portrayed to others.

This line of argument finds support in the movie '300' in which the Persian King Xerxes threatens Greek Leonidus that he will erase them from history after the war if they fail to come under his ascendancy.

The current scenario with respect to history writing is more optimistic than in the past. We have various options by which we can pass all that happened with us to our descendants. But they face an Herculean task. They have to sift through all the evidence and reach a judgment about us. Most of them might be tired to do that and just follow the popular opinion of their day.

Hiatus Ends
After seeing some spirited minds blogging and the craze to associate with anything google, activity in my blog is resumed. But this time I have decided to flood this space with my posts. To begin, let me explain you why my posts have been sparse for a while now. It has nothing to do with the rigors of my b-school as they hardly take place when there is natural light. It is because of the thought process that i go through before scribbling here.
1. I don't want to blog on mundane things that happen with me, thereby making you go through the travails of knowing my ordinary life. Also letting people know what is happening with you through blogs is so impersonal.
2. I never believed in diary writing as it is like accepting your fate that you are not destined for greatness and looking for satisfaction in ordinary things.
3. I do not want to write on any contentious issue as it is already discussed threadbare, thereby making my blog redundant.
4. I have become tired of writing about my friends because that is becoming so predictable and also keeps only a small group interested.

So inspite of all this, why am I blogging now?
My friend just received his adsense cheque from google. So lets cut the crap and please start clicking on the ads by the side of this rambling.

THIRD TRIMESTER
Whoaaaaaaaaaaaaaaa...
This has been a whirlwind of a trimester here.
Saying that in a nutshell aint possible n de usual lengthy dissertations have already received enough flak.
So for now let me just detail about my learnings in the third trimester in my college IIFT, Kolkata.

Consumer Behavior :At the end of the day, the consumer is a big black box and very unpredicatable.

Operations Management :Learning Quality (L) and using Quality (U) are two individual events with the conditional probability P(U/L) = zero

Soft Skills for Entrepreneurs :Every test including MBTI says I am mad but will be able to convince others too to follow my mad idea. Typical traits of an entrepreneur. Yipeeee

Business strategy :Corporate and business strategy are based on the premise that people will work.

Working capital management :Extend credit from suppliers forever and never give credit to buyers. (ha ha airtel)

International Finance :Forex markets offer the best returns but they are not open to individuals. Why teach us and tease us??

Information technology management :Secrets to success include cut the crap, never use acronyms to show off, share a secretary and work form home.

International Trade operations :There is so much disparity in prices around the world not withstanding 25 trillion $ global trade.

Advanced research methods :"I will give an instant A to anyone who solves this" means the faculty is kidding or the question doesn't have a solution.

Macro economics :Sounds very far fetched to write on India's fiscal deficit and inflation when you cannot afoord stationery and snacks.