Friday, October 23, 2009

Chief Execration Officers Vs Politicians - a silly new class warfare!

We are a very trendy society. Jack Welch and Robert Kiyosaki were trendy when I came to the US in the late 90s. 10 years later, any one who talks about money is a pariah in the newly emerging class system. Post Lehman collapse, any top executives of any company, whether bailed out by US govt or not, taking huge compensations (I guess they just take them - unlike ordinary employees who receive them) will be scorned first by Robert Gibbs and eventually by the president. Actually, time of scorn has passed long time ago, its time for action. Top 25 executives of the companies that received substantial help will see their salary cut by 50% until they pay back all of tax payer money. Federal Reserve is proposing to review pay practices of 28 unnamed giant banks. They are no longer Chief Executive Officers - they are Chief Execration Officers!

Politicians have their fare share of excessive risk taking and wasteful spending. US treasury is deep in debt. Chinese kept bailing out US in the last decade by pumping around 800 billion of recycled dollar. Japan did that a decade earlier and holds around 700 billion of US treasury.

They were also greedy; for the shining legacy of protectors of freedom and proliferates of democracy. 
US spent around 700 billion to over-throw Saddam from Iraq and to transform Iraq into a beacon of democracy in the middle east.

Bankers leveraged big time to play the sub-prime game (a noble side-effect of expanding home ownership to every American family) and US borrowed big time to pay for two wars at the same time. Bankers took excessive risk and got rewarded handsomely. Politicians (both Republicans and Democrats who voted to authorize the war) took excessive risk to get reelected and to be placed on the right side of history - if history turned out to be the way they thought it would.

When the Bankers fail their company and bring the world to the brink of economic collapse; they loose billions of their own money (James Cayne, Ex-CEO of Bear Sterns lost a billion), get sued (Richard Fuld, Ex-CEO of Lehman is sued by State of New Jersey) or get fired (John Thain, Ex-CEO of Merrill got fired after losses at Merrill far exceeded what was projected during the merger with BofA). All of them get humiliated.

Politicians act irresponsibly and fail to provide leadership to combat world's severe problems. Melting ice, rising sea levels, hunger, HIV, religious tensions; the list is long. When Politicians fail their people and ignore inconvenient truths, how are they punished? President got reelected in the middle of two seemingly unending wars. Senator who voted for war in Iraq became the Secretary of State for a president who came to power primarily for his opposition to Iraq war from the get-go. Henry Kissinger won  Nobel peace price despite his role in starting many wars and being accused by some for war crimes!  Former Secretary of the Treasury who praised Gramm-Leach-Biley act of 1999 as 'historic legislation that will better enable American companies to compete in the new economy' is the economic brain power to a President who thinks de-regulation was a mistake and it caused the subprime crisis of 2007-2008. If we think Gramm-Leach-Biley caused the subprime collapse, how about every politician who voted and supported this bill take a 50% pay cut until foreclosure rate returns to normal levels?

So here is an advise to 'angry' politicians. Get some perspective. If Chinese were to declare a forced pay cut on all US politicians until we pay back all of 800 billion dollars, will that be an easy pill to swallow? What goes around comes around. The public is with populist politicians these days; that's because they have short memory. They forgot how bad the politicians were and how much they disliked government in their lives - until the CEOs did worse and made politicians look like angels!

Sunday, August 16, 2009

Health Care by Numbers - Right and Responsibility of Individual Health

According to the proponents of health care reform, the biggest problem with current US health system is that there are so many uninsured people in this country who drives up cost of health care for every one when their ER visits could have been avoided with access to primary care . Another problem is that Americans are at the mercy of insurance companies and they need relief from insurance companies who put profit ahead of people. But are these really true? Let us look at some numbers.

Highlights from LA Times Aug 16, 2009 report

Total Insured in the US: 253 million (84% of people)
Total Uninsured: 47 million (16% of people)

Assuming that insured people pick up the cost of the uninsured, our health care cost should only be 16% higher than what would be considered as a normal cost. US's per capita health care spending is almost twice that of industrialized nations! So the first argument is inaccurate and there is some thing else driving up the cost.

What about the second argument? According to a TIME poll Aug 10, 2009, 86 % of people are satisfied with their current health care plan. So 72% of all population has coverage and satisfied with their current health care plan. So Does that sound like a demographic in trouble seeking help from uncle Sam? Not to me. 14% of insured people who are not satisfied will need legislative help keeping their insurance for perpetuity at the existing rate even when they are out of job, have a pre-existing conditions or diagnosed with chronic illness.

Now, why 16% of population does not have insurance? Do you think they are too poor to afford insurance coverage? From the LA Times report:

Uninsured below federal poverty line: 15 million
Uninsured who make at least 4 times federal poverty limit: 4.5 million

Note: Federal poverty line: $10,830 for individual and $22,050 for a family of four

32% of the uninsured does not have any means to buy health insurance and will need help. 10% of the uninsured is making 4 times federal poverty line and would not need any help.
While we embrace the noble goal of health care for all, why not we start with 1/3 of the uninsured who are at or below federal poverty line?

Did any one tell you that illegal immigrants camping at ER is causing your cost to spiral out of control? Only 7 million illegal immigrants who are uninsured. They are adding just a few cents to the 6-dollar Tylenol at the hospital!!

So what is really driving up the cost? The problem is more fundamental than everything that is being discussed these days. Its individual responsibility for their own health. Our politicians keep talking about 'right' to health care but unfortunately we don't have a leader who can tell us about our 'responsibility' to take care of our health.

"Unfortunately many of our health-care problems are self-inflicted: two-thirds of Americans are now overweight and one-third are obese. Most of the diseases that kill us and account for about 70% of all health-care spending—heart disease, cancer, stroke, diabetes and obesity—are mostly preventable through proper diet, exercise, not smoking, minimal alcohol consumption and other healthy lifestyle choices" - John Mackey co-founder and CEO of whole foods.

We are fascinated why Canadians and French spend less on health care and live longer but we don't bother to ask how many of us are living our lives irresponsibly and sheepishly expecting some one else to pay for it. There will always be health care surprises even if we all made healthy and affordable lifestyle choices, not including shopping at whole foods for organic bananas. But as a society, it is easier for us to take care of a few unfortunate than to carry the burden of irresponsibility.

The Whole Foods Alternative to ObamaCare

Saturday, May 9, 2009

Sockeye Sam - Eulogy of a soon-to-be-extinct Hummer

It was almost midnight and I was at the rental car counter at the Anchorage airport. I forgot to ask at the counter which rental car I was getting into. As I walked towards my marked lot, I was a bit disappointed to see an "upgrade" to a minivan. I was too tired to go back inside and request a car. (I dint want to drive around in a 7 passenger Minivan in Alaska for all places all by myself).

Next day, I went to exchange the minivan for a car. But they didn't have any cars and I could only get an SUV instead. They gave me two choices. Ford Expedition and Hummer H3.

I was not very happy to get a super sized SUV considering that I am an Environmentalist attending a conference on Climate change. Besides, I promised to give ride to a top EPA scientist,who helped author some of the toughest air quality standards, to do some sight seeing in the evening. Looking from any perspective, Hummer and Global warming didn't go along well. But then my only other option was to get an Expedition which also doesn't get high marks for environmental friendliness. Also the fact that GM will no longer make Hummer, made me want to ride a soon to be extinct species. I never rode a Hummer and this is my last chance, I said to myself.

The lady at the counter was getting a bit impatient. She asked in a higher than normal voice, "Expedition or H3". I said H3!!

It looked intimidating at first. It felt tedious to operate. The window sill was too high. I couldn't even reach to the ticket machine to pull out the parking tickets. Gear knob was too bulky that it didn't fit in my rather large fist. I couldn't find the headlight switch. After fiddling around for a while, I found it on the dash! I looked for gas tank cap release button inside. There isn't any because it is a manual twist and turn cap. The doors are too heavy that you feel it is better to use both hands to avoid back injury. The wheels are too tall and bulky. Over all, it was like a muscle man walking in the gym with tiny shorts and namesake brief to show off. All muscles and a little cloth.

The last day afternoon of the conference, we set out to a small harbor town Seward (120 miles south of Anchorage) in the hope of getting a glimpse of the Glacier. It started raining as soon as we left anchorage. We said to ourselves, "well it is better to be in an all wheel drive when it rains". The rain intensified and we started seeing snow in abundance along the freeway. We said to ourselves, "well a heavy SUV is more stable on ice than a minivan but a car definitely handles well on curves".

After a few curves and potholes later, we said to ourselves, "this damn thing handles well and glides over potholes like it never existed". It had a pickup of a rocket (ok, you get the point) and had a turning radius of a Sledge Dog!!

The more we drove, the more inviting it became. It taunted and teased us to be bold. I tried to finish a U turn on a narrow street hoping that the wheels will run over the curb. But it finished the turn without touching the curb! I drove through a puddle of water and it just cut it through. I braked sudden in a turn out and it stopped in a heart beat with a giant jerking of the ABS.

We took some great pictures of him standing majestic with snow clad mountains backdrop. We were not sure if we wanted to leave a proof of our affair with the prodigious creature that is hated for its carbon foot print. But decided, "what the heck, this is our last opportunity to be seen next to a dinosaur". So took some photos of ourselves standing close to a Hummer.

After 260 miles of fun along the highway, it was time for payback. Pulled over to a gas station and filled him up. 20 gallons for 260 miles of highway!! That is 13 mpg. All the fun we had for the last 6 hours seemed like a forbidden pleasure. Not very proud of what we did but felt very good.

We parked him at the curb to end the day with a good Alaskan salmon dinner. We felt that we need to christen our friend. The hummer is red and we are in Alaska. What name could be more appropriate than "Sockeye Sam" ( as in red sockeye salmon), we thought. Sockeye Sam it is....We miss you Sam. Not just today but years to come. But we will wait for a day you are reborn as an H2O emitting darling on the road (and off road too). Till then, peace to your soul :(

Saturday, April 11, 2009

Why Dr Shashi Tharoor Matters

Outside is inside when you look from outside! People call him an 'outsider'. It is a matter of perception. For a Keralite, some one born in London, educated in Mumbai, Kolkata and Delhi and US, worked at UN in the New York office until 2007 and wrote English books is a total outsider. But for me, who is born in a village in Kerala, educated in Kannur and Delhi, working in the US as an NRI, Shashi is an insider. That is because although he was born and lived outside, he went to his roots and embraced the place and people he consider his own after passing opportunities to become a citizen of the western world. My four year old son is born in the USA. Will he ever identify himself as an Indian and run for a public office in India to better the live's of Les Miserables? The depth of Tharoor's committment to India and Indian people lies in the answer.

Win or lose, Tharoor already made a difference. First, he put money where his mouth is by offering himself as a candidate for election. Second, his candidature has instantly raised the standard of conversation about the purpose of election in a chaotic democracy like ours. Third, he set an example for highly qualified and successful people who are sitting on the side lines hesitating to test the dirty waters of Indian Politics.

American people are better served because successful people from other walks of life enter politics and take public offices. A B Film actor, fighter pilot, a professor at University of Arkansas, part owner of a baseball franchise and a community organizer; all became presidents of USA. People who ran big corporations, those who went to Harvard and Yale, those who are Rhodes Scholar, bankers and accountants, surgeons and physicians, lawyers and engineers; all come to politics. Sure, there are people who enter politics because of pedigree but people with sheer merit walk straight into American politics and achieve great heights. Obama and Bobby Jindal are no accidents in American Politics. They are the products of American's willingness to invest in smarter people even when they disagree with them.

Unfortunately in India, it is easier if you come from the rough and tumble of local politics. It is easier if you speak local dialect but with fewer thoughts about how to solve local problems. It is easier if you dress up like a local but does not represent the struggle and aspiration of the locals. It is not easy for Dr Shashi Taroor. Having a PhD in law and diplomacy from Tufts University does not make it easier. Being a number 2 man at UN does not make it certain. Having written many books of international repute does not guarantee an election victory in the capital of India’s most literate state. He is accused of as ivory tower intellectual by men of fewer merit and accomplishments. Youth wing of his party of choosing has publicly protested against the ‘imported candidate’ only to be told to back off by Ms Sonia Gandhi.

I am afraid that this very writing will be ridiculed as an NRI love shown by a fellow NRI in the US to a man who spent most of his adult life in New York. It is not. I don’t know Shahi Tharoor personally. I didn’t even know that he had Kerala connections until he announced his candidature from Thiruvananthapuram. I didn’t even know he could speak fluent Malayalam. But I know this. Shashi is a once in a lifetime rarity that manifests in Indian political landscape. I am sure temptations of good life in New York and Dubai might have gave him countless sleepless nights before making a decision to enter into Indian Politics. I am sure he offered deaf ears to lucrative consulting jobs that were his taking. Instead he chose to sweat it out among the locals in the scorching April Sun in Kerala. He could have waited for an opportune moment to get nominated to Rajya Sabha and found his way to Union Cabinet. Instead he chose the path that is chosen by many great men in world’s largest democracy. And like those men, win or lose, he will be keep coming back to his people and constituents to make life better for everyone.

I have only one thing to say to voters of Thiruvanathapuram. If you worry that he does not understand common man’s problems and not vote for him, you are not doing justice to the historic opportunity that is presented to you. To elect a candidate who represents a new attitude in Indian politics. You have given chances to many men who did not change the landscape of your capital city in any big way. Give a chance to this honorable and able man!

Friday, March 20, 2009

United States of Anger - How to redeem the true United States of America?

President of United States of America said he is angry. An angry Congress passed a constitutionally questionable retroactive and punitive tax bill as a response to massive public anger over AIG bonuses paid out to same executives who brought AIG to ground. John Stewart is angry at CNBC and Jim Cramer, understandably so. Rush Limbaugh is angry at Obama and want him to fail.

Alan Greenspan's fall from grace has been painful to watch. Bill Clinton's push on Fannie and Freddie to underwrite subprime mortgages looks thoughtless at best. Phil Gramm's 1999 Gramm-Leach-Bliley bank deregulation bill is identified as ground zero of the financial implosion by Obama. Quantitative Analysts (once fondly called Quants) are blamed for fusing quantum mechanics and human behavioral dynamics to mystic levels while predicting the risk of subprime derivatives. People those who lost their jobs are angry. Those who lost their retiremnent savings are angry. I lost more than 50% of my 401K. I lost 150K of my home value. I am young and I have time to recover most of what I lost. Fortunately I still have a job. But I am also angry. Very angry.

Not at the wizards and Quants at AIG and Lehman any more. Not at Alan Greenspan. Not at Gramm-Clinton-Summers. Not at Jim Cramer and CNBC. I am angry at any one who is instigating anger and fear in American People. That includes media screaming 'worst since.......' fear mongering. I am angry at Congress for getting angry at their own omission and commission and for not being unable to contain and channel their anger into anything productive and constructive. I am angry at the president who keeps warning American people 'it will get a lot worse before getting better'. I am angry at American people for getting angry. Because every passing minute of anger is costing a job, retirement and a home some where in this great land.

Dont get me wrong. I am not writing this to defend legal but questionable operations pulled off by a select few in Wall Street that is now holding the entire world hostage. They deserve blame to the highest order but not anger. In America, people don't like anger. Or that is what was told as a reason why Obama professionally managed his anger during his campaign.

Coming from a country where credit was hard to come by, I saw with starry eyes how US created credit out of thin air. The prosperity of US, compared to any other developed world, is largely due to the so called 'greed' of bankers and investors and, to some extent, 'stupidity' of American people chasing American dream. You might be thinking how irresponsible is to say such a thing at a time bankers and investors are the most hated people in the world.

I dont have a PhD in economics but I will give it a try :)

US has seen many booms and busts. Each boom brings a level of prosperity that was not seen before. Each bust erodes some portion of the wealth that was created during the boom. But after every bust, we have more jobs, more homes, better cars, better infrastructure, longer life, better technology than what we had before the boom. We lost about 6 trillion in home values since its peak in 2006. But we added twice that much in the years leading upto 2006. So we still have a long way to go before we hit pre-bubble prices. Median net worth of American households is still higher than that in 2004 even after falling 13% in 2008.

What we as a society fail to see is the "macro economic tectonics" that happens during the 'irrational exuberance' years leading up to a crash. For economic activity to thrive, we need credit. And we need credit available to all classes of people including the so called "sub-prime" borrowers. This does not happen in many parts of the world. First, it is extremely difficult to get credit. Second, credits are the privilege of the few. But in the US, credit is freely available. It is available to all classes of people albeit with higher interests and fees to "sub-prime" borrowers. Sure some people will default and foreclose. Some will file for bankruptcy. But increased credit provides a mechanism of shifting massive amount of money from those who can invest to those who need money. In the process both the investor and invested prosper and living standard of the society improves dramatically. If you tell the rich to donate money for a housing project in inner city, they will do a little. But if you tell them to buy a sub prime mortgage security insured by AIG, they will invest a lot. It takes mass hysteria and hype to create capital flow. And almost always, the market over shoots. It comes up with mind bending complex derivatives in a frenzy to push more mortgages and securities only to realize that it made gigantic blunders.

Almost always it is impossible to see a bubble when we are in one except if you are Greenspan. Even he decided to let the market bubble over by itself than trying to pop it. Once the credit has flown so much so that it over shoots the capacity of people to borrow money, everything comes to a grinding halt and then follows a high speed retracting. The investors loose money in toxic securities. People loose their home values, retirements. Then market corrects. The correction also over shoots. It corrects more than necessary since we are in a reverse bubble. After a while a sense of normalcy prevails and market and asset values corrects to a normal valuation. Not so strangely, the valuation of assets are higher than what was before the hysteria started. After all, all the new homes built, new streets paved, new water and sewage lines laid, new cable and phone lines connected, new parks and play grounds built will continue to serve American people for decades with only periodic maintenance. These are hard assets and no one can take those away from America. Not even the foreign treasuries whom we owe trillions.

We built 73 million homes between 1950 and 1979 and only 45 million since then. We thought we had the biggest housing boom in the history between 2000-2005! Brace for the next housing boom in 10-15 years and a quadrillion dollars bust a few years after that!! So much for the recently acquired national resolution to end "boom and bust cycle".

Apologies if I sounded overly insensitive to people lost their jobs, homes and retirements. But US would not have had that many jobs, homes, retirement savings and net worth if we did not have the greed of the investors and stupidity of American people. Also having a money printing press at Federal Reserve helps too :)

This may give socially minded readers a reason to calm. Roughly 3 trillion dollar of sub prime mortgages were funded since 2000 to low income people. At least 8 in 10 of the sub prime borrowers are still living in their homes. Only 2 in 10 are foreclosed. Without the now hated subprime loans, 8 out of the 10 may never have owned homes. Rick Santelli can scream on live TV that those are losers but that is precisely what anger can do to a great country's psyche. They are American heroes working hard and paying off their mortgages and raising their family in a place they call home. Anger blinds the mind and it is the easiest route to destruction. And I think it is time for Americans to redeem their country devoid of anger but full of excitement and optimism that always defined and redefined America. So no more anger please.

ABC News: The Middle Class Is Doing Just Fine, Thank You

Wednesday, February 11, 2009

Slumdog – a plausible explanation of success!

Bollywood movies request a very high degree of suspended disbelief from its viewers. Details are not very important. People are allowed to fill the holes in the story using their own imagination and preferences. And that’s the point of Bollywood production. It leaves room for perfection. While great Hollywood movies leave you disarmed of criticism, Bollywood movies invite it. Hollywood makes sequel to tell a new story but Bollywood makes them to say the same story with new cast and new crew.

I thought Bollywood movies are not appreciated in the west because it defies logic and realism. It’s too cheesy. It is musical. It has lip-sync. It always has happily ever after ending. It has predictable story line with few twists and turns. No complex plots and subplots. It’s usually a story of young couple falling in love, not of ogre falling in love with a princess. A singer singing for the hero and heroine is common place, not a hero or heroine speaking for one eyed monsters and mammoths.

Slumdog has holes in it. A lot of them. The kind of gaps you usually expect from Bollywood flick, not from a western production. In Bollywood movies, long lost orphan twins grow up and recognize each other after decades by looking at birth marks. In Slumdog, small kids grow up into big boys in a train ride. Jamal and Latika recognize each other, both in their adulthood by then, just by staring at each other for a while. Jamal recognizes his brother Salim’s voice over the phone when they talk for the first time after they became adults! In true Bollywood tradition.

Slumdog require a high degree of suspended disbelief. Indian police can be brutal. But they will dare not touch a slumdog who just came out of a show in which he answered all but the last question on his way to win final price in front of millions watching on TV. It is cheesy. I have seen Amitabh and Sharukh hosting Indian version of ‘who wants to be a millionaire’. They usually take extra care to be friendly with contestants when millions are watching them on TV. Any perceived ill treatment or arrogance will damage their popularity and brand value and knock off millions from their endorsements. A non-Indian audience will conclude that calling someone on live TV ‘chai wala’ is an Indian way. It is not. We may call ‘chai wala’ when the camera is off and mikes are pulled off, but not before. India is a land of caste and class but cant be accused of a land of stupid people. Oh, I didn’t tell you this one. Amitabh gave autograph to a kid without even noticing that this kid is covered in feces. In fact, no one among the crowd seems to smell! But again, that’s Bollywood tradition.

So how is Slumdog different from a Bollywood production? Not much. Bollywood movies do not pretend that what they show on screen is nothing more than a fiction . It’s a means of illusory fulfillment for ordinary people to see miracle happening on screen while their day to day life is spent pulling rickshaws and serving tea in call centers. In this movie, like many bollywood classics, its characters fight poverty and refuse to play victims. This is what Bollywood has been teaching Indians for almost a century now. They show how to fight grinding poverty and grueling injustices albeit in their own filmy ways. They show the wealth and flamboyance of the rich to help poor folks dream of good life.

Sometimes the fights are won when a retired police inspector, whose hands were chopped off by a dacoit, takes revenge by crushing him to death with his feet (Sholay). Some other times the fights are won using cricket bat and ball (Lagaan). Wealth is made by the hero breaking rocks in a hot Indian summer day. Wealth is also made by the taxi wala when a rich business man forgets his suitcase full of cash. Every movie shows a way to happiness. Depressing ones usually don’t make much money. They can’t afford to depress already stressed Indian people. After a day of sweat, spit, and trash all around them, they want to go back to their 10’ x 8’ jannath (heaven) and turn on their TV and watch song scenes from a Bollywood movie and constantly remind them of life’s plausible surprises.

And that’s the Bollywood experience Slumdog offers to western audience. Indians who are seasoned by Bollywood movies may not find much new in this movie. But its a new experience for the west. The magic of believing in unbelievable things, the liberty to imagine what is missing, the idea of enthrallment to all senses and the healing power of watching young and beautiful falling in love!

At a time people saw collapsing home prices, plunging 401Ks, massive job losses, widespread breach of trust in business and government, story of underdog becoming a topdog offers poetic justice. After watching Mumbai under siege on CNN for 3 days, it is easy for the west to break into AR Rehman's music and Bollywood's dance and song number. Jai Ho....

Indeed, we live in times of HOPE. Oscar will want to recognize that.