1. Andy Mukherjee on the over-burdened NCLT,
Across the country, 27 tribunals are being run by 29 judges; at least 25 short of what’s required. Many have no experience in financial matters. One judge, M.B. Gosavi, sits on four benches. Cases from Noida, a suburb of Delhi where big builders have defaulted to homebuyers, land before a single tribunal member 300 miles away. The insolvency courts also adjudicate unrelated matters under the Companies Act, overwhelming an already strained system.
2. The Insolvency and Bankruptcy Code may be a good example of iterative adaptation,
The IBC is a road under construction. The Insolvency Law Committee continuously reviews its workings to identify issues impacting efficiency and effectiveness, and makes recommendations to address them. In less than five years, the Code has witnessed six major legislative interventions.
3. Forward guidance by Bank of England about how it plans to exit the monetary accommodation,
The BoE’s main interest rate that is currently 0.1 per cent — known as Bank Rate — will rise first. But when it reaches 0.5 per cent, the BoE will switch its focus and start to reduce its balance sheet by not reinvesting the funds it receives as its holdings of government and corporate bonds mature. If that proceeds smoothly, the central bank might start raising rates above 0.5 per cent. When this main rate reaches 1 per cent it will consider actively selling some of its bonds, leading to a quicker reduction in the balance sheet.
There is an important difference in the BoE's strategy,
Note that this exit strategy prioritises reducing the BoE’s balance sheet, a very different plan to the one the central bank put in place after the financial crisis. Back then, it did not emphasise balance sheet reduction, instead wanting its Bank Rate to reach 1.5 per cent before it considered unwinding its asset purchases. Reading between the carefully crafted lines of the policy statement, the BoE seems less concerned about reducing the balance sheet, so long as it is conducted in periods of market calm.
The Fed, with a $8 trillion balance sheet, continues to purchase $80 bn of Treasuries and $40 bn of mortgage backed securities a month, same rate as at the height of the pandemic.
4. FT article about the success of the technology cluster around Cambridge University in UK,
The Cambridge cluster is now home to more than 5,000 knowledge-intensive companies with £18bn in turnover. Their nearly 70,000 employees account for three in 10 jobs in the area, according to Cambridge Ahead, which brings together academics and business.
Among the reasons,
A 1970 decision to set up the first UK science park helped spark a wave of entrepreneurship dubbed “the Cambridge phenomenon” but the broad growth took much longer... The attitude of Cambridge Enterprise, which began to commercialise the university’s intellectual property in 2006, was also key. While many universities promote spinouts, entrepreneurs and investors say that Cambridge is especially easy to deal with, even the most “founder-friendly” in Europe... In short, Cambridge is “a safe place to do risky things”, in a phrase coined by serial entrepreneur Andy Richards. As in much larger Silicon Valley, entrepreneurs feel comfortable striking out on their own because they know they can get a job somewhere larger if the effort fails. The bigger companies also provide a natural customer base for the start-ups. And investors take heart from the fact that many new groups have co-founders, advisers and board members who have succeeded before.
5. It's reported that KPMG has bid Rs 1 to win a seven-cornered bid competition to be the transaction advisor for the strategic disinvestment of IDBI Bank.
Firms have been placing near-zero bids to manage privatisation of large public sector undertakings as a means to improve their portfolios and establish credentials in respective sectors. Deloitte had recently bid Re 1 to manage the privatisation of Bharat Petroleum Corporation (BPCL), and was appointed as the transaction adviser.
These bids are a matter of concern and should be discouraged. It's hard to believe that it would not impact the process. Even assuming the strategic advantage to the consultant in winning the bid in an emerging area (disinvestment and asset monetisation), it's difficult to imagine the consultant putting their best resources in managing this contract. I am inclined to believe that, for the consultant, winning the bid and being part of the early disinvestment has much greater signalling value than being seen as having contributed to a successful disinvestment. In our mainstream discourse, the failure of any disinvestment is attributed almost entirely on the bureaucrats and politicians, leaving consultants and others unscathed. This creates perverse incentives which encourage such ridiculous bids.
In this context, there is also the danger that the big consultants collude to parcel out the bids and monopolise the emerging market area.
Interestingly, while the government holds 45.48% share in IDBI Bank, LIC owns 49.24%. The latter too will apparently offload its stake to the new buyer. In theory LIC, therefore, should have a greater stake in the success of this.
6. Stunning statistics about the challenge faced by the present generation of youth,
In the UK, people aged under 30 are now four times as likely to rent than they were two generations ago. In the US, a 2015 survey found home ownership among those aged 25 to 34 was 37 per cent, compared with an average of 45 per cent for the same cohort in previous generations. Analysis of US Federal Reserve data by the economist Gray Kimbrough shows the proportion of household wealth held by each generation has fallen over the years: at 35, baby boomers held 21 per cent of US wealth, compared with 8 per cent among Generation X, who were 35 in 2008. Millennials, who reach an average age of 35 in 2023, own 5 per cent of national wealth despite representing 22 per cent of the population.
And it reflects in their political views - satisfaction with democracy has declined and political preferences are changing.
According to a 2020 study by Cambridge university, faith in the democratic system had already experienced its steepest decline ever among 18 to 34-year-olds on the eve of the pandemic. They were the first generation to have a global majority dissatisfied with democracy in their twenties and thirties... According to a recent study by the Harvard Kennedy School, the proportion of 18 to 29-year-olds in the US who think the government must do more to stop climate change increased by 26 percentage points to 55 per cent between 2009 and 2021; the proportion who supported universal health insurance rose 17 points to 64 per cent; and those who believe immigration is a force for good rose 14 points to 37 per cent.
Chinese property developers... have a tradition of building high quality private schools near residential projects to make the latter more appealing to home buyers... parents have long been drawn to the city by the quality of its private schools, most of which have been funded by property developers and have garnered reputations for academic excellence.
8. FT long read on the rise of private equity investments in affordable housing sector in the US to take advantage of affordable houses built with housing tax credits.
9. Madan Sabanvis shines light on the state of the Indian economy.
10. After its tech companies and private tutoring firms, the NYT points to a Chinese crackdown on idol worship and celebrity culture.
The Chinese government has taken a series of steps in recent days to rein in celebrity worship and fan clubs, amid growing concerns among officials that the relentless quest for online attention is poisoning the minds of the country’s youth. On Friday, the Cyberspace Administration of China banned the ranking of celebrities by popularity. The authority called for greater regulation of what it called the “chaos” of fan clubs and the power they wield over music, movies and television programs. The government also took a swipe at celebrities themselves... The move to clean up unruly fan clubs and discipline celebrities is the latest example of the increasingly assertive role that China’s governing Communist Party under Xi Jinping, an authoritarian leader, wants to take in regulating culture... the authorities have been alarmed by more extreme behavior on fan forums, like mudslinging between rival fan clubs and doxxing, which involves digging up personal details of individuals and publishing them online.
11. Times has an article on the plans to open a new coal mine in the northwest England town of Whitehaven which has been received with enthusiasm by the locals as an economic stimulus but is facing opposition on climate grounds.
The proposal by West Cumbria Mining calls for investing 160 million pounds, or $218 million, in a mine that would create more than 500 well-paying jobs, ranging up to £60,000 a year. The coal would be used not in power plants, but instead in the making of steel, an industry still heavily reliant on coal. The mine would ease the reliance of British steel makers on imported coal to run their mills.
Sample the two sides of the debate. The environmental critics,
The mine’s opponents are gearing up for a fight. The organization Friends of the Earth recently held a meeting in Cockermouth, about a half-hour drive from Whitehaven, with a small group of volunteers to talk about how to discuss the issue with decision makers and prepare a door-to-door campaign. “From the Cumbrian point of view, having a coal mine doesn’t make much sense,” said Ruth Balogh, a local representative of Friends of the Earth.
The locals who see it as a stimulus,
“To me, it’s an opportunity to start creating an industry locally,” said Danny Doran, who works at a nuclear research institution. “Kids come up, and there is nothing available,” he added, speaking outside his home not far from the site of a former chemical plant where the mine’s processing plants would be built. Mr. Doran and others said they were resentful at what they considered outsiders trying to take away a golden opportunity. “I think there are too many do-gooders putting their nose in that don’t live in Whitehaven,” said Barry Patrickson, a trash hauler. He said that there used to be many places to work in Whitehaven, but that most had shut down. “It is a ghost town now.” Some so-called outsiders live in nearby communities on the edges of the scenic Lake District National Park, a magnet for tourists and people moving out of Britain’s cities.
This debate mirrors that taking place between developing and developed countries about mining and thermal plants in the latter.
12. Fascinating long read about the businessman and human being that is Roger Federer,
... earn $1 billion during his playing career, a milestone he reportedly surpassed this year, joining Tiger Woods, Floyd Mayweather, LeBron James, Cristiano Ronaldo and Lionel Messi. Federer’s two decades of on-court achievements only begin to account for that stunning total: About $130 million of Federer’s earnings has come from official prize money, a figure that puts him second on the all-time list in tennis to Djokovic’s $152 million. The rest has come through sponsorships, endorsements, appearance fees at tournaments and lucrative exhibition events around the world... Some might still claim that he is the greatest player of all time... What is undeniable, though, is that no tennis superstar has ever built a financial empire comparable to Federer’s — and that this, more than his greatness as a player, might well be his most enduring legacy. If the bedrock of that billion-dollar brand has been his phenomenal on-court talent and graceful game, what he has built off the court has also been based on some extremely rare qualities: impeccable strategic instincts, along with the sort of personality that might be more suited to a boardroom or a political campaign than to a pro-sports arena, all combining to make Roger Federer the greatest player-mogul the tennis world may ever see.
This about his personality,
The French have a fine expression that applies to Federer: “joindre l’utile à l’agréable,” which translates loosely as “combining business with pleasure” but is actually broader in scope, encompassing the tasks of daily life. If you wonder how Federer managed to remain in the top 10 until age 40, part of the answer lies in his ability to embrace what some other prominent athletes might consider drudgery. That applies to long-haul travel, news conferences in three languages and mundane one-on-one interactions with various corporate partners. It is in that last category of task — his knack for delivering personalized service with sponsors — that Federer’s performance has been especially remarkable. Even in his early years, he would endeavor to visit all 20 of the sponsor suites at the Swiss Indoors to meet and greet. He has stuck with that philosophy. “He’s just so good if you’ve seen him with sponsors, with C.E.O.s,” Eisenbud said. “He just has the ability to make you feel like he really cares what you are saying and he has time for you. He’s never rushing you. If you’re a fan at a hundred-person event that one of his sponsors puts on and you are talking to him, he makes you feel he has all the time in the world to talk to you and hear what you have to say. I think it’s genuine, and I’ve never seen another athlete like that, and I think it has a lot to do with how he was brought up.”
Mike Nakajima, who was a director of tennis at Nike, remembered Federer coming one year to the company’s headquarters in Beaverton, Ore., for shoe testing at Nike’s research lab. They walked out of the building and were headed for their next meeting when Federer stopped in his tracks and said, “I’ve got to go back.” Nakajima asked him if he had forgotten something, and Federer said he had forgotten to thank the people who helped him with the shoes. “So we ran back into the building, downstairs, through security so he could say thanks,” Nakajima said. “Now what athlete does that?”
13. Srinath Reddy makes the case for abandoning the eliminate Covid 19 strategy and instead adopting one of co-existing with the virus through a combination of measures like masking and distancing, and vaccination.
14. Matt Stoller (HT: Ananth) points to the role of management concepts and services contracting in the failure of the US strategy in Afghanistan. This from an Afghan General,
Contractors maintained our bombers and our attack and transport aircraft throughout the war. By July, most of the 17,000 support contractors had left. A technical issue now meant that aircraft — a Black Hawk helicopter, a C-130 transport, a surveillance drone — would be grounded. The contractors also took proprietary software and weapons systems with them. They physically removed our helicopter missile-defense system. Access to the software that we relied on to track our vehicles, weapons and personnel also disappeared. Real-time intelligence on targets went out the window, too.
The US military like the corporate world appears to be another example of the pursuit of efficiency taken to its extremes - management consultants and their ideas being applied indiscriminately and outsourcing to keep costs down and harvest efficiency gains.
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