Term limit - Honduras, India

Honduras is going through rough times. The president tried to extend the term limit of his presidency indefinitely through a referendum and a got into trouble with the constitutional entities such as Congress and the Supreme court. Military stepped in, on directions from the Supreme court, and removed the elected President and handed over power to Congress. The validity of the action is questioned by many States including the US. The events are still unfolding at this time.

It raises an interesting question for India. There are no term limits for the Prime Minister or the Chief Minister. We have a 80+ year old man on the wheel chair running a state for the 5th time. Although our Presidents have two term limit, we don't have term limits for our PMs and CMs.

In US, the first president George Washington set a precedence by stepping down after two terms. That was followed for a long time until FDR stayed in power for 4 times during WWII. The US constitution was amended in 1951 that set the term limit to two times for a President.

Is it time to set such limit for elected officials in India? I understand we need the wisdom of the experienced to govern. But should they be at the helm of the demanding executive branch or serve as consultants to the young and able as needed?

Here is an interesting discussion thread on the topic.

Using Other People's Money (OPM)

This is the continuation of the "borrowing money" blog. You may want to review it first to get the flow.

When you want to maximize your return on investments, the math shows that one way to do is to maximize your leverage. i.e. In the previous example, if you invest 25% of your dough ($25) and borrow 75% to invest($75), you return on investment ($12.5) is at least 50%. Very attractive, indeed.

In theory, if you borrow 100% and make a wise investment, your return on investment is infinite! You are just taking advantage of the difference in low fixed interest rate on your loan and potentially high return gained from your investment choice.

It can't be that easy, right? Well it isn't. It is a slippery slope math that can trip anyone. When you over leverage(borrow), your commitment to your lender is higher and fixed, irrespective of the payback from your investment. So anytime you don't get your expected $20 back from the $100 investment, you are in trouble. When the lenders don't get their fixed payments, the result is the insolvency or the bankruptcy of the borrower. That is, the lender has the right to replace the owner and take over the investment and perhaps resell or liquidate it. A terrible result for investors because all their investment is totally lost in that situation.

So not borrowing at all neither gives you good returns on your savings (and investments) nor does it increase economic activity of the country. On the other hand, borrowing too much can be disastrous. The trick is to maximize your savings and yet reduce your risk by not over leveraging.

The benefits of failure

J.K. Rowling Speaks at Harvard Commencement from Harvard Magazine on Vimeo.

Please go full screen to see the video continuously.

The fate of "Market Fundamentalism" abroad

Every crisis comes to an end—and, bleak as things seem now, the current economic crisis too shall pass.
When the current crisis is over, the reputation of American-style capitalism will have taken a beating...

...The American economy will eventually recover, and so, too, up to a point, will our standing abroad. America was for a long time the most admired country in the world, and we are still the richest. Like it or not, our actions are subject to minute examination. Our successes are emulated. But our failures are looked upon with scorn...

Fantastic article by Nobel laureate Joseph E. Stiglitz

Globalization Vs. Socialism - Part1

"Globalization" may be a recently coined term. But visionaries saw its arrival 50-60 years ago. Eisenhower, in a book written righ t after the end of WWII, wrote, " The democracies must learn that the world is now too small for the rigid concepts of national sovereignity that developed in a time when the nations were self-sufficient and self-dependent for their own well being and safety. None of them today can stand alone". About the same time, Jawaharlal Nehru, in his "Tryst with Destiny speech, said, "....Those dreams are for India, but they are also for the world, for all the nations and peoples are too closely knit together today for any one of them to imagine that it can live apart. Peace has been said to be indivisible; so is freedom, so is prosperity now, and so also is disaster in this One World that can no longer be split into isolated fragments". True, we may be far from that One World governed by one govt. But in the path of human evolution, trade came before nation states. So it is safe to assume that Golablization of markets is but one step towards Golbalization of peoples. In other words, "Globalization", even it a broader sense is inevitable. This means that eventually markets will be global, so will be the companies and so will be the people working in them. Hence, by induction, people (read Americans) who do not train today to compete with other people (read Indians, Chinese) will end up receiving unemployment benefits. There are several countries trying to avoid this pitiable situation to their population by using trade restrictions - for instance, by giving tax benefits to companies employing people from Buffalo while giving tax punishements to those employing people from Bangalore (assume disclaimers) - all in the name of Socialism. Is this good or bad? Am I saying Socialism is an outdated concept? Nope - for the simple fact that we still don't have a One govt. So what the hell are you saying? - Hang on mate, why else do I have a "Part 1" in the title.

Atlantic horseshoe crab

A few days back we saw a crab like creature with a long sharp tail on the New Jersey shore. It was lying on its back on the sand struggling to turn back. Our friend, Dinesh helped it with a stick to topple it back on its feet and it went away into the ocean. We didn't know what it was at that time and wondered if it was a stingray fish. Today at the local library there was a sea animals show and the horseshoe crab was the guest of honour.

Do you know that, horseshoe crab species is pre-dinasour age? 250 million years back it existed on this earth and survived whatever happened here that destroyed the dinasours! It has blue blood, no teeth, no claws and its tail is only useful to help it turn itself back on feet. It is completely harmless to humans!

Is borrowing money good for you?

If you have $100 to invest in one of three different ways that gives back three different returns, say 12%, 15% and 20%, all on identical terms, which one would you choose? Obviously the investment that gives back 20%, right? Of course! Individually we want the most out of our money.

The counter intuitive concept in an investment is the fact that leverage helps to maximize the returns. In India, we are always told not to take loans ever. Even Kambar says, "Kadan-pattar nenjambol kalankinaan Ilankai vendan" when he refers to Raavanan. However, the fact is that borrowing funds to invest yields higher returns and is actually encouraged by Governments around the world including in India. Let's look at some math.

You invest $100 on a business that generates, say $120. i.e. 20% return on your investment. Clean and Simple.

Now suppose you borrow $50 from your bank at 10% interest and invest $50 of your money on the same business. You owe bank $5 in interest. So your returns is $15 on $50. i.e. 30% But wait it gets better.

All governments give incentives to people to borrow money because that increases economic activity of the country. That is, you get tax incentive on your interest payment. Suppose the tax incentive is 20% on the interest payment. You end up getting back $1 from Govt. for paying $5 interest to your bank.

That makes your returns to be $16 on an investment of $50. i.e. 32% return on your investment.

All you did was borrowed half the money from bank and played by the rules. You are subjected to the same risk in both cases of the business failing to generate the target revenue. But simply by leveraging your investments, you have increased your returns!

Before you rush to bank to borrow and invest, make sure your investment is guaranteed to generate the revenue. Don't borrow and invest in stocks!

Next, let's see how this math can lead to disaster if not handled carefully.

Jeans banned in Indian colleges!

This is a controversial topic that has raised lot of discussion in the news thread. Thought one particular comment on the thread was interesting.

"When I entered high school, it was the first year when girls were allowed to wear pants. Since then of course, clothing standards have dropped to the point where girls are wearing next to nothing on top of low cut, tight jeans or short-shorts. I would have screamed my head off in high school that it was unfair to tell us what to wear. Now that we've had 30 years of 1/2 dressed high fashion and I've become older and wiser, I understand why modesty makes sense. Our schools, especially here in CA area a complete disaster. There are many reasons for it but requiring that the girsl dress modestly and that boys dress respectfully is a good start. considering that harmones are bubbling like volcanoes, particularly in teenage boys, simple steps like this would make a difference. I remember the days when people dressed up nice just to go to the movies! I'm not advocating this but I would even be for school kids wearing uniforms. It puts them in a different frame of mind. Trying to get kids to sit still, pay attention and get an education is not only difficult but as we see from our dismal failure in the last 20 to 30 years, imperative for the future of this country. Looking back, it does amaze me how much my opinion has changed. It is said that the devil is in the details and I must concur. The small things that I thought didn't matter at all turn out to be very important not only in themselves, but are the blocks on which other decisions / behavior are built. It's really hard to see this when your're 15 or even 25 but as I have accumulated experience in life, it has become very clear."

Of course, ton of other views are expressed in the thread. Worth checking it out.

Incredible performance and excellent analysis

Elu swarangalukkul ethanai paadal
by Roopa Revathi

Analysis and Comments
Don't miss the expert analysis!

Manathaalum Ninaivaalum...

Kannadaasan wrote those lyrics for a popular song in Tamil movie "Paalum Pazhamum". A friend of mine recently asked what is the differece between Manathaalum and Ninaivaalum? Why did Kannadaasan mention the two separately? Aren't they the same? I wanted to tell him "azhagana song ellam anubavikkanum, aaraya koodathu"! :-) But see some merit to his question. So here goes my understanding.

I think Kannadaasan refers to the heart and mind respectively in those words. I guess we can imagine those two as separate logical partitions of the single physical structure, the brain. It should not be confused with the left and right hemispheres of the brain which are physical partitions. Somehow, we have come to associate the "logical heart" (manam), with the physical heart when we refer to it.

We associate 'feeling' to the heart and 'thinking' to the mind although both originate from brain. The feelings such as love, empathy, emotions such as joy, jealousy, etc are deemed "heart felt". On the other hand caring for others, thoughts, imagination, plans, etc are conceived to originate from our minds. Going back to the Reason and Passion post, passion emerges from the heart while the mind reasons out.

"Manathaalum ninaivaalum thaayaga vendum" is a fantastic phrase that expresses the wish of a wife who wants to "love" and "care" for her husband like a mother. Lucky guy I say :-) Perhaps there is a better explanation to those beautiful lines. I have to go listen to that song now. Love to hear your thoughts.

Just who are these "elders"?

They say that one gets knowledge from one's father. By "knowledge", I think, they meant morals and values of life (My father taught me chemistry which I didn't understand a bit). Accordingly, my father, my senior 'values' advisor,  always told me to "pay respect to elders", "Listen to what elders say" and a lot of other phrases that involve this elusive species called "elders". Elusive because this category could be applied to anyone all the way from my grand father to my elder brother, who is actually a half wit (and I am brilliant :)) - which begs the question - "Just who is this bloody "elder"?  Def1. Most people seem to be equating this philosophical "elder" with the literal meaning of that word - that older people are "elders". But then wouldn't we call them, say, "Olders"? After all it seems ' not dying' for some more years than you is their greatest achievement! /So Rejected/. Def2. Some say that you become an "elder" when you get married. Apparently that is why in western civilizations, a bride is asked, "Do you consent to take this 'man' as your husband" (or something to that effect), because a boy becomes a 'man' when he marries. But in India saints and sadhus are revered as "elders" - and they are all bachelors..(at least used to be). /So Rejected/. Def3. A scientific definition would be to equate people who have attained sexual maturity to elders and those who haven't to "youngers", if I may. But all these qualities - age, marital status, sexual maturity - aren't exactly qualities that makes one "respected", "listened to" etc. After giving it much thought I have a come up with a definition of "Elders"- Def 4. - "Elders" are those who actually take responsibilities, solve younger people's problems, shield them from evil and who work hard to create a better society for the younger generations. Think about it - Elders of a family take care of the kids - from helping them put on their shoes, making their bed, taking them to school to protecting them from harm's way - all because the kids themselves cannot. Thus, in a society, "elders" should be those who take care of people who are not capable of helping themselves. Educated people should educate the illiterate. Wealthy should fend for the poor. And strong people should protect the weak. When an "elder" sees a hapless child not fortunate enough to get an education, that "elder" must put that child in a school. When an "elder" sees someone in dire poverty, that "elder" should feed him, teach him skills, so he or she can get out of poverty. When politicians use the caste card or the religion card to get votes from poor  unsuspecting mass, the "elders" should enlighten the mass and encounter the politicians. Otherwise they cannot be called "elders".

I am becoming 26 this month and given the fact that India's median age is 25 - I belong to the upper half of the age group! But I realize that so far I haven't really taken any responsibility towards my society - towards those younger half of the population. There is so much evil in my society. Am I going to turn a blind eye towards the negative consequences they have on the younger people? Or am I going to start changing my society, my country, so my younger brothers and sisters can have a better India? I should get cracking because I don't think gen Y and gen Z will "pay respect to", "listen to", "get advise from" someone just because that someone is old - Hell, even I don't.