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Monday, June 11, 2018

Interesting Readings 11 June 2018 = Is Debt Jubilee lurking?

I came across an article titled Some ways to introduce a modern debt Jubilee at Vox. The article is in line with the recent discussion about debt. John Mauldin has highlighted this problem generally and more specifically in the last Thoughts from Frontlines. A few months back Christopher DeMaria had written about debt jubilee on Seeking Alpha article titled The American (Debt) Jubilee, And The Current Correction.

Debt Jubilee may be lurking in our future. It is not as bad as it sounds. For some kinds of debt, when prevalent in excess, needs to be written down. I have highlighted the difference between good debt and bad debt earlier - i.e. productive debt and unproductive debt.
Productive debt creates an asset of higher value than the debt itself.
A large part debt currently outstanding is unproductive debt. All consumer credit is unproductive, except educational loans or student loans. It does not create a means to pay the debt back. Thus, debt jubilee may be a proper solution to problem of unproductive debt. Productive debt in trouble can be repaid by extending more productive debt.

The alternative could be to extend and inflate it away. But will there by appetite for that?

Friday, June 01, 2018

Monday, May 14, 2018

Interesting Readings May 14 2018 - Development Finance Institutions.

Deepak Nayyer talks about capabilities created in Development Financial institutions (DFIs) for longterm lending. 

These DFIs are very important in creating a capability for lending to special investments. India, till 2000, had developed the capabilities to lend to infrastructure, sector-wise capacity creation etc. We need the concentration of skills in one place. This way, special knowledge reduced the risk for lending.

The commercial banks decided to reduce the lending risks by consortium lending. That is a statistical approach to risk mitigation.

Now Deepak Nayyar wants to create a National Development Bank. That I think is a bad idea. Though there may be some merit in creating a network of professionals who can lend to industry and towards infrastructure. These professionals can be monitored using DIN-like number (Director identification number) and their investments performance tracked. These people may be employed with commercial banks but without sign-off from these persons, such loans will not be approved.

What we are creating is attribution chain. I have discussed the importance of attribution in both of my books - Subverting Capitalism and Democracy and Understanding Firms. Please use the links below to check out the books. 

Wednesday, May 02, 2018

My two favourite HR people!

I was listening to Masters in Business and discovered Patty McCord. Patty is former HR head of Netflix. She doesn't speak HR she speaks innovation. Listen to the MiB episode with Patty Mccord here. It is worth it. THIS is what HR should be.

My suggestion:
  1. Ask your HR manager if he/she knows what is your job like day-to-day. ( analyse financial statement, work on new toothpaste launch, etc.) it has to be specific.
  2. Does he/she know who are your clients? 
  3. How do you make money for the firm? How much?

And the next one is of course EvilHRLady.

Friday, April 20, 2018

Interesting Readings 20 April 2018

India needs to fundamentally alter its export strategy
Ajit Ranade spells out the answer briefly. The article however highlights important gaps in Indian exports.

What 1985 tells us about a US China trade war
Mint searches for lesson in Regan's Japan strategy for Trump's China strategy. Interesting.

Worth reading.

Sort of explains my feeling. Long ago we shorted a group of Australian media stocks. We took positions when they were trading in $38-42 range (yeah all of them) and then they went up over next 3 months. I being a junior was a bit scared though we had doubled down of these bets. Ultimately Lehman struck and these stocks went down right to $4 approx. Yet, I still remember feeling a bit jittery during those times.

One of the most important podcast you will listen. Annie is a poker player and her views on decisions in uncertainty will definitely be helpful. I want to read her book "Thinking in bets". Poker is much like financial markets - decision making under uncertainty. You can also read For Richer, For Poorer: Confessions of a Player by Victoria Coren Mitchell for general view of Poker.

Many people seem to throw blockchain and Distributed Ledger technologies as useful in many domains. For example, in the above one, shipping is considering. While blockchain can solve their problem, that is not the most apt solution. What they need seems to be a centralised processing system with view access to all channel partners.

This is an old one but it gives sort of the evolution of Chinese leaders. 

World War Watch

F-35 the myths. This four part series answers some of the questions related to F-35. Part 1; Part 2; Part 3; Part 4. I am beginning to believe it will be better for India to rely on 5 aircraft configuration for Indian Airforce. Gripen, F-35, Tejas, Su-30, Rafale. If US can offer a manufacturing line for F-35 we should take it. But a manufacturing line for F-16 block 70 does not seem to make sense. Particularly I find F-16 short on avionics and a fuel guzzler of sorts. The main part will be to ensure all aircrafts talk to each other. That will be the biggest problem. Further, the deployment should be multi-aircraft types rather than single types. It means more collaborative training between all pilots.