Pegasus

Yesterday I saw the movie "Enron : The Smartest Guy in the Room" and now when I think of it, I find how much we can learn about the nature of free markets and their effects from Enron.When we talk about free markets in India it is perversely treated as some sort of magic which if allowed to come out of the box , will change our life and make it better than we can imagine but when I look at the leader of Free Market, USA and what the unleashing of Free Market by Regan has done to her I an forced to think again if it is a really a system where sellers and buyers interact and market forces work out the best prices or a system which feeds to the basic cravings of men for risks, power and wealth and makes wealthy a few at the cost of others.

Enron is about how a group of Ivy League Graduates gambled away share holder's wealth and themselves made million in stocks and options.Enron is about pride, arrogance and greed.And Enron is about mankind and his vices. Enron Corporation is about how everyone, be it bankers, or lawyers, or auditors lose their moral compass when it comes to money and by act of commission or omission participate in mugging common people. Enron was one of the world's leading electricity, natural gas, communications and pulp and paper companies.While power generation and distribution is the general work of a similar company,Enron major power engine was trading these commodities on exchanges as derivatives.Enron devised new innovative accounting system where they could book profit they were expecting in the future ,that way they could make book look real good while no actual money flows in.So they started to show profits they never made and used those profits to krocket Enron's shares through the roof (why would not they,everyone in management had millions of stocks and options).When debt started to pile up because the profits never came in, Enron Corporation's CFO Andy Fastow started to fudge the account books so that debts wont look like debt and that way dupe investors and share holders.For this he created number of companies and in this process he skimmed off a lot of wealth for himself.When other sources of income stopped Enron created artificial shortage of electricity in California and traded on it and made billions of dollars at the cost of the citizens of California.

The Enron failure demonstrated a failure of corporate governance, in which internal control mechanisms were short-circuited by conflicts of interest that enriched certain managers at the expense of the shareholders.Managers who were given millions in options and stocks gambled at the exchanges as the system rewarded those who helped the Enron reach is financial goals even if it that entailed excessive risks which is essentially gambling and yanked those who put red flags and cautioned against the approaches.Managers who had stocks and options were interested in only one thing to keep stock prices up so that their own wealth don't depreciate.At the end,when ship was sinking those rogue managers sold their stocks making millions and left the company broke.

Now if you look at it and think that this will not happen again and at least not in India,then I must disagree .This will happen again because all the mechanism put in place to prevent these happening are controlled by people.So these institutes essentially have the same weakness as mankind.Pride and Greed,two most common vices of men, are equally effective in incapacitating these organization.So powerful these vices have proved themselves that they have overcome individual as well as group's wisdom. Before the bankruptcy, Enron had dealings with all the major banks in America,some them helped it proactively to cover the debts.These banks could have stopped Enron but immediate greed blindfolded them.Of the 17 analysts who rated Enron ,16 gave them good ratings.Lawyers and Councils,who were ethically bound to stop from stealing people,chose to look away because they were being paid millions per week.Story of its auditors Anderson is legendary which need not be told.And above all management of Enron which did everything it could in its power to steal away from investors .And finally the regulators and the government .The coziness of Bush and Kenneth Lay is well known.He donated millions in presidential campaign.Interesting Kenneth Lay was actually being considered for the post of Treasury Secretary. Regulators are appointed by the Washington and do their bidding only, so no wonders they looked away when there was power crisis in California or when Enron books were being cooked.

Talking about government and power,I could not help myself but to think about the frequent visits of Ambani Brothers to New Delhi.In such a mesh of greediness, wealth and power even if anyone tries to stand up-to his principles, the weight of the unscrupulous system is so enormous that it breaks his spine or squeezes him out. Enron executives pro actively ensured the credit ratings of its stocks remained good,so one of the analysts did not work with the wishes of Enron bosses he was shown the door.

Free Markets and less government intervention are wonderful place where productivity increases and creativity unleashes and entities which are baneful to the development are thrown out.These would have been true had they been operated by just men who were free of vices of common man and could think beyond money but it is not the case, so whenever we talk about free markets and economics, a little behavioral science would really help.

Regulators who are supposed to control the market will never be able put a leash the market because they are controlled by politicians and politicians are controlled by their love for power which has direct bearing on their morality as for power there is need of money for which we need those organizations whom regulators are supposed to control.A complete free market is a like a great illusion where everyone thinks that he has the liberty and power to make choices,but the real decisions are made in the boardroom.Parliaments become the facade to legitimize the greed of Capitalists and Democracy becomes autocracy re-invented.(Remember the Matrix)
Evolution suggest that fittest survives and weak gets eliminated,I hope here if capitalist are the fittest,weakest are not the common people.

P.S - Skilling was asked in Harvard MBA interview if he was smart to which he supposedly replied he was fucking smart !

Labels: Economics, Enrons, Free Market

The world is a dangerous place to live, not because of the people who are evil, but because of the people who don't do - Albert Einstein.

On a stone wall at the memorial of the Dachau concentration,a promise is written in five languages: "Never Again".6 million Jews were being systematically slaughtered in the name of ethnic cleansing while world leaders,citizens looked away!! I often wonder, how possibly could this be allowed to happen.But recently it has dawned on me that the answer is simple.Just as we are allowing.

Conflict and humanitarian crisis in the Democratic Republic of Congo have taken the lives of 5.4 million people since 1998 and continue to leave as many as 45,000 dead every month .The genocide in Darfur has claimed 400,000 lives and displaced over 2,500,000 people. More than one hundred people continue to die each day; five thousand die every month.In 1994, Rwanda experienced genocide unparalleled in modern history. In less than 100 days, approximately 800,000 men, women and children were brutally murdered. Within four months, an estimated 1.75 million people, or a quarter of the country's pre-war population, had fled.Since 1991, 350,000-1,000,000 Somalis have died because of the conflict.Had Had these killings occurred in Europe,we would be seeing third world war but,the world chooses to focus on wars and countries where America and European countries have interest like Afghanistan,Iraq,Iran,Saudi Arabia.

Violence is not the only ugly face of life poor Africans have to endure ,abject poverty,malnutrition,communicable diseases,AIDS,religious intolerance,illiteracy,unavailability of drinking water etc has also been a part of their life.According to the world bank report every year six million children die from malnutrition before their fifth birthday.More than 800 million people in Africa people go to bed hungry everyday,of which 300 million are children.There are an estimated 8000 girl-slaves in West Africa alone.Rape has become a signature of the militias; women are preyed on every day: as they collect water, or go out to see the morning- literally any time at any place. These young women who are raped are often ostracized by their families and communities for something they had no say in, and many are forced to bear the children of the monsters that did that to them.

Unless we take some concrete steps to help these people these atrocities are not going to stop on their own.As we wonder today about holocaust, future generations will try to fathom the urgency of work which engaged us so immensely that we choose to let our brothers die and sisters raped !!

Labels: Africa, genocide, poverty

In the stone age , persons with disabilities were banished from the group as realities of time demanded that everyone in the group contributed to the group. Then even as we became more civilized the practice continued in civilizations like Greece, Italy etc.These despicable acts could be remotely justified on the arguments of survival,so those who are not able to contribute could not possibly be part of tribe. Even in recent history as late as 18th ,19th century disabled people continued to face discriminations. Some believe discriminations had its roots in the belief that disability is god'curse,or disability is communicable ( in India probably even after the discovery of theory of germs), or various such reasons. Their fear could also be justified as they were scientifically ignorant. But when it comes to us here at a time when man is most rich,intelligent than it had ever been in the pas,t I find it hard to think of a single reason that we are not able to provide these disabled brothers of ours with their rights.Education is still eluding them,those who have proper qualifications find it hard to find a job which rightly awards his talent and degree, in villages social stigmas are prevalent , girls find it harder as in addition to economic abuse ,they are prone to sexual abuse as well. Arguments about prioritizing education,jobs etc of not disabled person may not be out in the open,but this is what is happening. How many schools,buildings etc we find in our locality which have proper,leave proper even basic facilities for disabled like ramps,special teachers in schools ? Now arguments of economic constraints would be propounded by some these facts would be helpful.

Hey,
I know that I was to post on economic crisis ,but recently I met a man after which I feel compelled to write about him, so bear with me while I tell you about him .
As a kid or while growing up everyone has a childhood hero or some inspiration, so that whenever you think of him, you pray earnestly to God that as an adult you also have some qualities or success of him, but I dont remember having any such child hero, But recently I came in acquaintance with a man , and now I certainly have an inspiration and I also pray earnestly to GOD that when I die I have some qualities of him.
The man I am talking about is Randy Pausch.Now those of you who know about him must be puzzled that how could I meet him when he is not in this world anymore. I actually did not meet him in person but saw his video, and I feel so strongly connected to him, few persons have left such indelible print on my mind as him , so I feel meet would be a better word.
And for those you who dont know about Randy Pausch ; Randy Pausch was a professor of Computer Science at CMU , and he died of pancreatic cancer on July 2008. He gave a lecture at CMU to 400 students which is the best lecture I have ever heard. That lecture was a part of lecture series which used to be called "The Last Lecture"."If you had one last lecture before you died , what would it be ?" In that lecture he showed how to stare right into the eyes of The Grim Reaper and make fun of him. He taught no matter where, what and who you are , you can bring changes to somebody's life, how to live life .And the best part was that he did not tell these thing in age old boring manner but as he termed it he head faked it !!
I can write on and on about him but to fully appreciate it you must first watch the video .

Bye!!

Hi,

So let me start with guessing as to why u r reading this blog , may be because you know me and u r checking what this buffoon is upto now, or more likely you are just a idle sailor in the ocean of information (!! internet) like me and have come across it .So whatever may be the reason let me very clear on one thing that whatever is following on this blog is utter non sense and I being the owner of blog reserves all the right to be subjective , biased , blinkered etc etc on any topic ,be it political ,financial, social or what ever else.
Ya Ya Ya ! you are getting it right this is also going to be one of the numerous blogs floating around ranting about everything which is wrong in India and World and rarely lauding it :) !!

Bye !!