The Taj I remember

I shifted to Bombay some two years back from Delhi. Like any other dilliwala, Taj Mahal Hotel was something you just instinctively associated with anything Bombayite, be it the Gateway, the varied background shots of the Taj from innumerable Hindi films and the fact that everyday from my office perch in Fort I could clearly see its dome and the upper floors only served to reinforce the sense that Taj was as much part of the mesmeric landscape here as was the Gateway of India or indeed the Arabian sea itself. So early this year when I actually got a chance to stay in the heritage wing for a week as part of an international conference, it was as luxurious an adventure as possible. Of course, I was not in any of the super opulent suites but roaming around the silent wooden corridors, the magnificent spiral staircase, gazing away somewhat embarrassingly at the dome above it, and having breakfast in the verandah connecting the Palace wing to the Shamiana restaurant was opulent enough for me.

Witnessing the cold blooded murder of those dear memories over the past 60 hours has been tortuous to say the least, it is indescribable. Every benumbing second I spent in front of the television, it was impossible to get away from it; in my mind I kept revisiting the Taj. One day during the conference having gotten up early I decided to venture out through door flanked by the quaint wooden horses and the sky was overcast. But the façade was just as majestic even in the soft light of the dawn. And then, it started to turn a reddish golden as if a million multicolored floodlights had been switched on. I clambered up the spiral staircase and went and sat in the Sea Lounge, the restaurant on the first floor overlooking the sea. The clouds had vanished and the sun appeared to be acknowledging the mute greetings of the scores of boats of all shapes and sizes bobbing up and down in the waters around the Gateway of India. Today from what the media tells us, the spiral staircase leading almost up to the dome is gone and as one can see, the façade has suffered serious damage.

The main lobby that connects the Old Taj to the Tower side is probably the liveliest part of the whole complex, day or night. The thirty meter passage is flanked by bars and restaurants and of course exclusive outlets of luxurious brands. It also show cases old black and white pictures of the legions of Indian and foreign celebrities who have stayed in the Taj in the past. During my stay I saw hordes of giggling foreigners, some dressed up in ethnic Indian costumes, posing for pictures like excited kids in Disney’s Magic Kingdom. The point is that the whole ambience is such that it transports you to another era. I realised this is why these people booked a room here in the first place, to experience the India of the regal past, of the opulent maharajahs and the khidmatgari that made you feel like a royal even if you probably were on a business visit to close a deal for a outsourcing medical transcription services! I shudder to think what has become of that passage and those b&w photographs.

There are scores of other delicate memories that keep floating in and out of my vision. And how can one forget the excellent service provided by the Taj staff. During my week there I made numerous completely unreasonable requests, ranging from asking for a high end Mercedes at 3 am in the morning, or a meal at an equally unearthly hour. But there is one memory I will cherish the most. One time we got a request late in the night from a very distinguished person who was going to address our conference the following morning at 7 am for a lapel microphone when we in fact had made arrangements for a podium. So I call up my event manager at midnight asking him if he can arrange it. I can, he says after some serious cajoling, only if the Taj people let me get in at 6 am. Next, with some trepidation, I call up my contact person at the Taj, a lady who probably thought I was insane. “It would be taken care of, Sir”, she signs off with just a touch of coldness in her voice. Next morning I rushed to the meeting room expecting to see serious electrical work in progress with cables trailing all over the place. But lo! the room was spic and span with the sound mechanics doing a final discreet check and it was just 6 am!
Dear Taj and staff members, I pray that you all recover from this tragedy and I am sure you will.

All Fall Down By THOMAS L. FRIEDMAN (New York Times)

November 26, 2008

Op-Ed Columnist

All Fall Down

By THOMAS L. FRIEDMAN

I spent Sunday afternoon brooding over a great piece of Times reporting by Eric Dash and Julie Creswell about Citigroup. Maybe brooding isn’t the right word. The front-page article, entitled “Citigroup Pays for a Rush to Risk,” actually left me totally disgusted.

Why? Because in searing detail it exposed — using Citigroup as Exhibit A — how some of our country’s best-paid bankers were overrated dopes who had no idea what they were selling, or greedy cynics who did know and turned a blind eye. But it wasn’t only the bankers. This financial meltdown involved a broad national breakdown in personal responsibility, government regulation and financial ethics.

So many people were in on it: People who had no business buying a home, with nothing down and nothing to pay for two years; people who had no business pushing such mortgages, but made fortunes doing so; people who had no business bundling those loans into securities and selling them to third parties, as if they were AAA bonds, but made fortunes doing so; people who had no business rating those loans as AAA, but made a fortunes doing so; and people who had no business buying those bonds and putting them on their balance sheets so they could earn a little better yield, but made fortunes doing so.

Citigroup was involved in, and made money from, almost every link in that chain. And the bank’s executives, including, sad to see, the former Treasury Secretary Robert Rubin, were clueless about the reckless financial instruments they were creating, or were so ensnared by the cronyism between the bank’s risk managers and risk takers (and so bought off by their bonuses) that they had no interest in stopping it.

These are the people whom taxpayers bailed out on Monday to the tune of what could be more than $300 billion. We probably had no choice. Just letting Citigroup melt down could have been catastrophic. But when the government throws together a bailout that could end up being hundreds of billions of dollars in 48 hours, you can bet there will be unintended consequences — many, many, many.

Also check out Michael Lewis’s superb essay, “The End of Wall Street’s Boom,” on Portfolio.com. Lewis, who first chronicled Wall Street’s excesses in “Liar’s Poker,” profiles some of the decent people on Wall Street who tried to expose the credit binge — including Meredith Whitney, a little known banking analyst who declared, over a year ago, that “Citigroup had so mismanaged its affairs that it would need to slash its dividend or go bust,” wrote Lewis.

“This woman wasn’t saying that Wall Street bankers were corrupt,” he added. “She was saying they were stupid. Her message was clear. If you want to know what these Wall Street firms are really worth, take a hard look at the crappy assets they bought with huge sums of borrowed money, and imagine what they’d fetch in a fire sale... For better than a year now, Whitney has responded to the claims by bankers and brokers that they had put their problems behind them with this write-down or that capital raise with a claim of her own: You’re wrong. You’re still not facing up to how badly you have mismanaged your business.”

Lewis also tracked down Steve Eisman, the hedge fund investor who early on saw through the subprime mortgages and shorted the companies engaged in them, like Long Beach Financial, owned by Washington Mutual.

“Long Beach Financial,” wrote Lewis, “was moving money out the door as fast as it could, few questions asked, in loans built to self-destruct. It specialized in asking homeowners with bad credit and no proof of income to put no money down and defer interest payments for as long as possible. In Bakersfield, Calif., a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.”

Lewis continued: Eisman knew that subprime lenders could be disreputable. “What he underestimated was the total unabashed complicity of the upper class of American capitalism... ‘We always asked the same question,’ says Eisman. ‘Where are the rating agencies in all of this? And I’d always get the same reaction. It was a smirk.’ He called Standard & Poor’s and asked what would happen to default rates if real estate prices fell. The man at S.& P. couldn’t say; its model for home prices had no ability to accept a negative number. ‘They were just assuming home prices would keep going up,’ Eisman says.”

That’s how we got here — a near total breakdown of responsibility at every link in our financial chain, and now we either bail out the people who brought us here or risk a total systemic crash. These are the wages of our sins. I used to say our kids will pay dearly for this. But actually, it’s our problem. For the next few years we’re all going to be working harder for less money and fewer government services — if we’re lucky.

2 A.M., November 27, '08-BOMBAY's BLACKEST DAY

All,

Some 4 hours ago commenced what we would come to term India's most deadly terrorist attack. It is 2 am now and we have been watching live a complete unraveling of India's security claims. More than 80 including foreigners are confirmed dead and as one reporter pointed out this is going to be the longest night in Mumbai. 3 very senior police officers have been killed in the encounters...and the dead count continues.

No words to describe the extreme sense of dull pain and a feeling of total helplessness!

When would Indians ever learn?

The Financial Markets MAD

(From WSJ of Oct. 10, 2008: Would this weekend , the G7 meeting, give some hope to the mindless bloodletting going on the world financial markets? I am using this post to serve as a reference point for the future-Sid)

OCTOBER 10, 2008, 2:38 P.M. ET

Dow Continues Historic Slide

By PETER A. MCKAY

Stocks' relentless slide continued Friday, leaving the Dow Jones Industrial Average poised to register the bloodiest weekly drop in its 112-year history.

The Dow Jones Industrial Average fell more than 600 points shortly after the opening bell, sliding below the 8000 mark intraday for the first time since April 1, 2003. Blue chips quickly moved off those levels, and at one point managed to climb into positive territory. But in recent trade, the Dow was off about 480 points at around 8100.

The S&P 500 Index was down about 58 points at around 851, with energy and consumer-discretionary stocks seeing sharp losses. Industrials stocks were also hammered. The Nasdaq Composite Index lost about 87 points to trade around 1557.

An early rebound in financial stocks played a part in moving the market off its opening lows. But banks saw their shares sink back into negative ground after the initial results for an auction of credit-default swaps tied to Lehman Brothers bonds. The auction set the recovery rate on the firm's senior debt at 8.625 cents on the dollar, suggesting hefty losses for holders of the swaps.

The recent freeze-up in the CDS market has hurt many hedge funds, said David Kotok, president of Cumberland Advisors in Vineland, N.J. He said that much of the recent stock selloff has come as hedge funds unwound a popular trading strategy in which they would buy a company's stock and then buy credit-default protection on the same company, since that protection would tend to go up in value as the stock or index went down.

But as CDS paper has become ever more difficult to value -- or fallen in value in cases where a price can be set amid doubts that the sellers of the insurance-like contracts can make good on their commitments -- many funds have been forced to raise cash to meet margin calls. To do that, they sell stock, which is easy to unload on a public exchange compared to opaque, privately negotiated CDS trades.

"As all this is going on, you have average Joe investors who are getting more nervous as they watch on the sidelines, they don't quite understand the trade, and so they just pile on and sell their stock as well," intensifying the market's slide, said Mr. Kotok. "It's just feeding on itself."

The Dow is threatening to extend a seven-day losing streak during which it has shed nearly 21%. Heading into Friday, the average was down 17% this week. The stock market has so far avoided a one-day plunge of 10%, the traditional definition of a crash. But even in the two instances when such a single-day drop did happen, in 1929 and 1987, the full-week bloodletting was not as bad.

"In some ways, this is worse than '87," said James D. Baer, a managing member at Uhlmann Price Securities, a Chicago brokerage. Alluding to the previous session's 678-point drop, he added: "Going down 600 points a day adds up, but you're not getting a one-day purge," to shake sellers out of the market and pave the way for a renewed rally.

Mr. Baer, who was a Treasury-futures trader on the floor of the Chicago Board of Trade in 1987, said, "I've never seen a credit market like this one. The fear has gotten way ahead of the fundamentals," including an unprecedented round of coordinated central-bank rate cuts this week that would normally prompt banks to increase their lending to one another.

Tony Saliba, chief executive of the Chicago options brokerage LiquidPoint, said the market's recent slide "has been anticipated to some extent, since you had the market at records without much behind it fundamentally."

"Coming into this move, you've had a lot of people buying options for protection" against unexpected declines in their stock portfolios, said Mr. Saliba. "You have a lot more buying now, but anyone who's doing that is coming late to the game."

The Chicago Board Options Exchange Volatility Index surged 16% on Friday, climbing above 74 for the first time.

Many Wall Street veterans believe the roots of the selloff lie in the interbank lending market, where tensions aren't easing. Three-month Libor, a key lending benchmark for loans of U.S. dollars, climbed to 4.81875% Friday, the highest in nearly 10 months, up from 4.75% a day earlier. The jump overshadowed a sharp drop in the overnight rate.

The losses for U.S. stocks followed a plunge Friday in international markets, which itself came after a late-day rout Thursday in the U.S. In Asia, Tokyo's Nikkei Index dropped 881.06 points, or 9.6%, to 8276.43, its lowest level since May 2003. Since the start of this week, the benchmark index has lost 24% of its value.

In Hong Kong, the Hang Seng Index plunged 7.2% after falling by more than 9.5% intraday. Australia's S&P/ASX 200 ended down 8.3%, in its biggest one-day percentage loss ever. The U.K.'s FTSE 100 Index fell 8.4%.

This week has seen an unprecedented coordinated rate cut by six central banks, a comprehensive bailout plan for U.K. banks and a move by the U.S. Federal Reserve to lend directly to borrowers in the commercial paper market. And yet markets have continued to plunge.

"Despite the innovative and, in our view, comprehensive actions taken by the UK government and central banks, the sell-off in equity markets continues apace as relief in pricings of various credit and money markets have failed to materialise," says Robert Quinn, equity strategist at Standard & Poor's in London.

After a late-Thursday warning from Moody's on the credit ratings of Morgan Stanley and Goldman Sachs, shares of the banks fell. Morgan Stanley recently slid 41% while Goldman dropped 19%.

Crude-oil futures continued a months-long slump, falling below $78 a barrel, and commodities generally suffered a broad-based selloff Friday.

"The oil market is in the same carnage and liquidation that we have seen in other markets," said Peter Donovan, vice president with Vantage Trading, who was speaking from the trading floor at the New York Mercantile Exchange. "Everyday, we see the Dow Jones industrial get crushed, we are getting crushed," he said. Oil traders have ignored the news of OPEC's call for an emergency meeting on November 18.

"There's such a herd mentality in every market, once the selling tide and wave starts, it's really hard to stop it," he said. While many believe the selloff in commodities is overdone, traders are still waiting on the sideline and reluctant to get back into the market as the general trend is pointing downward.

—Carolyn Cui and Jeannie Clarke contributed to this article

(Mine) Who will inherit the Earth?

(NYT, Oct. 4, 2008)
By Judith Warner

October 2, 2008, 10:02 pm

Waiting for Schadenfreude

A couple of years ago, at the height of the boom, a friend in New York publishing described to me the indignities of being a five-figure employee commuting daily from suburban New Jersey on trains packed with traders, stock brokers and hedge-fund types.

“These were the guys who, in college, I used to step over on Sunday mornings when they were lying in a pool of their own vomit,” he said. “And now they’re earning millions and millions – in bonuses alone.”

The image, as you might imagine, stuck in my mind. For it summed up so well a certain kind of resentment and sense of injustice that a particular class of non-monied professionals in the New York area came to feel sometime in the late 1990s.

The feeling of injustice wasn’t just about money, though it was partly about being more than solidly middle class and still struggling to pay the bills, as New York writer Vince Passaro captured so well in his “Reflections on the Art of Going Broke” (“Who’ll Stop the Drain?”) in Harper’s in 1998.

It was, rather, about a sense that the wrong people had inherited the earth.

They had taken over everything. Their salaries (and bonuses in particular) had pushed real estate costs and living expenses sky-high. Their values had permeated every aspect of life. And their choices seemed to have become the only acceptable — even viable — ones possible.

In the 1970s, even in New York, it had been financially possible for a middle class family to survive if parents — even one parent — built a professional life around something other than purely making money. In the 1980s — even in the “greed is good” (which was of course meant to be a damning phrase) 1980s — it seemed respectable, honorable and, dare I say, valuable to do things other than make a lot of money. But by the late 1990s, in New York, if you weren’t in the financial industry, it was hard to survive.

And so it went, in a more general way, throughout the country, in the whole winner-take-all-era ushered in by the boom years of the late 1990s. The model for success narrowed. The goal posts marking success grew more out of reach. For all the people who did something with their lives other than doggedly, single-mindedly — and successfully — pursuing wealth (“You mean, some people’s jobs are just about making money?” Julia once asked me in the course of one of our “What the World is About” conversations), life got harder and scarier and more confusing.

Many of us who’d proudly decided, in our twenties, to pursue edifying or creative, or “helping” professions, woke up to realize, once we had families, that we’d perhaps been irresponsible. We couldn’t save for college. We could barely save for retirement. If we set up a “family-friendly” lifestyle, we threw our financial futures down the drain.

So, like just about everyone, we worked hard and treaded water, but felt we were entitled to do better than that. And if we lived in the New York area, or another similarly wealthy area where the spoils of the new Gilded Age were constantly thrust in our faces, we felt, like my friend on the train, a little something more: we knew that we were losers.

(“The Big L,” a friend, an art school grad turned design consultant, declared last week, calling me in tears after her stockbroker told her how little she cared about her modest portfolio. “Why not just brand it right on my forehead and be done with it?”)

This financial crisis is supposed to be a big moment of reckoning. “666-Mark of the Beast” and “Root of all Evil” the End-of-World Web sites are shouting, quoting prominent economists on the demise of the American banking system. “Wall Street, R.I.P.”, a headline in The Times proclaimed last weekend. “The Master of the Universe Era is over,” New York magazine chimed in.

For those of us who have hated this period — the wealth worship, the wealth gap, the elevation of everything suspiciously shiny and irrationally bubbly and stupidly ebullient, there should be some feeling of vindication. But it just isn’t coming. A great emptiness — and a gnawing kind of fear — has taken its place.

After 9/11, psychologists said that the tragedy and trauma would magnify whatever emotional state people were already experiencing. Depressed people would become much more depressed. Anxious people would become much more anxious.

The current financial crisis has, I think, proven to be a similar sort of emotional Rorschach test. People who felt impotent feel even more powerless. Those who felt lied to see new levels of conspiracy. Demagogues are engaging in even more demagoguery.

And those of us who felt, well, like losers, are feeling like even bigger losers, as we shove our unopened 401K or (if we’re double-loser freelancers) SEP-IRA statements into bottom desk drawers and wait for a cathartic burst of schadenfreude that simply refuses to come.

Schadenfreude is impossible because the fat cats — the ones who bent the rules, the ones who pushed the envelopes, the ones who paid lower taxes because capital gains were most of their income, the ones who opposed regulations on the banking and mortgage industries — are taking us down with them.

The very wealthiest are, as always, likely to do just fine. Real, hard-core Wall Street, as Tom Wolfe reminded us last weekend, long ago decamped for the hedge funds of Greenwich. The political leaders who allowed this mess to develop have turned into the great defenders of “Main Street.” (If I have to hear the juxtaposition of “Main Street” and “Wall Street” one more time, I will be the one drowning in a pool of vomit.). It’s a whole host of other people — vulnerable middle class homeowners and small business owners and, now, universities unable to make payroll — who are hurting.

I called my friend in publishing yesterday to ask him how things were going on the train.

“There’s a lot of rueful chuckling. There’s a lot of talk about riding this out, about maintaining,” is all he had to say.

It was 23 years ago that Tom Wolfe introduced us to the Masters of the Universe. They were curiosities then — remote, very rich, and decidedly not like you and me. But now, the world of Wall Street has become our world; there is no outside to it, there is no other option than to pay and play. Our fortunes rise and fall together to a degree like never before, and our values are enmeshed like never before. The language of Wall Street — of cost-cutting and efficiency, self-interest, using each situation to maximize profit, is the language of everyday life and social interaction.

We’re all losers now. There’s no pleasure to it.

US in Recession: A new definition

This post on WSJ blogs caught my attention.

August 18, 2008, 5:13 pm
UCLA Professor Says U.S. Is Still Far From Recession

Though U.S. economic activity remains subpar, it is still well above recession thresholds thanks to resilient industrial production that has offset a recession-like rise in unemployment, according to a UCLA forecaster in a National Bureau of Economic Research paper.

In his paper, Edward Leamer created an algorithm of three economic indicators — payroll employment, the unemployment rate and industrial production — that he said “nearly perfectly reproduces the NBER official peak and trough dates.”

“Bottom line: things have to get much worse to pass the recession threshold,” Leamer wrote.
The NBER, an academic association, is considered the official arbiter of whether the U.S. is in recession, a determination it usually makes many months after the fact. There have been nine NBER recessions since 1950 — the last one being from March 2001 to November 2001.

Leamer isn’t a member of the NBER business cycle committee.

NBER bases its determination on monthly indicators including personal income less transfer payments, employment, industrial production and manufacturing sales volume. According to NBER’s Web site, “there is no fixed rule about which other measures contribute information to the process.”

Leamer said the purpose of his model “is to take the guesswork out of the recession definition.” The thresholds include falling industrial production for six months at a rate of at least 6% per year; declining payroll employment for six months at a minimum 1% rate per year; and a six-month rise in the unemployment rate of at least 0.8 percentage point.

“Every recession since World War II has included months that satisfied all three of these limits. And there has never been a time in the expansions during which all three of these limits were satisfied,” Leamer wrote.
The one instance when Leamer’s algorithm didn’t line up with NBER was in the early 1970s. NBER had a recession starting November 1973. Leamer’s model had it beginning later in 1974.

As for 2008, the unemployment rate satisfies the recession threshold, but the decline in payrolls hasn’t hit the recession cutoff yet, while “the problems in industrial production are nowhere close to the limit,” Leamer wrote.
His paper examined data through June. In an email, Leamer said those trends hold even including July data released since his paper was written. –Brian Blackstone

What I am reading now!

Two books, but actually just one- "The New Paradigm of Financial Markets" by George Soros. Why Soros? Well, first of all this is my first introduction to the famous investor beyond his sound bites on business television. Second, He doesn't write bad at all and last (after I read in the book itself) that he too in a way is a WWII Jewish victim and I am quite interested in the period's history and that of the holocaust. But lest I suggest anything, Soros is certainly not a holocaust victim. Coming back to the book, its a short piece about how the current international financial order begets creating a new paradigm to understand it better and to prevent any future financial apocalypses!

Soros talks about his "life's work"-his "Theory of Reflexivity" that is the impact of human behavior on social situations, like the financial markets for instance. His chief hypothesis being that humans tend to imbibe knowledge from their environment (Cognitive function) and attempt to use it to their advantage (Manipulative function) but in the process end up injecting their biases and beliefs in to their intended actions. The final result is that the expected outcome deviates from the actual outcome and this results in a feedback loop which as usually is the case in human affairs turns out to be vicious. I will come back to this after I finish the book.

And the second book! Leo Tolstoy's collections of short stories. Why? Simply because I have to narrate a new story (repetitions are rarely permitted) to Priya every night and LT's stories have just the right amount of emotion and drama to satisfy her and induce sleep.

Amitava Ghosh-Sea of Poppies

First of all, the new blog picture belongs to Amitava Ghosh, one of India's foremost contemporary writers and certainly destined to be included in the list of all time greats who write in English. His latest work, "Sea of Poppies" a novel set in the 1830s-1840s is something I would recommend to all.

Blog Picture

I had initially posted my mugshot but the limited feedback was less than gratifying and then I thought why not use the picture space to remember some of the favourite authors, their works or their characters. At the moment it is Cervantes's Don Quixote and his faithful servant Sancho, both of whom, whenever I remember them, make me feel lighter!!

Posting pictures is easy as everything is online these days. Just hope I am not violating any copyrights...cheers

A Son is born!!

God blessed us with a son at quarter past noon on May 6, 2008. Baby (birth weight 3 kg) was actually due a fortnight later but both he and Dipti are doing fine as of now. The arrival of the second child means a much more busy daily routine but since my mother in law is currently with us, she is bearing the brunt of the strain. We are still thinking of a name for the baby (Saumitra, Somanshu, Shivam, Satyam, Prajval are some of the names on the shortlist).

My elder child (just writing 'elder' gives me the heebee jeebees!) Priya is showing some signs of sulking but overall she is quite pleased to have a brother even though just a night before the birth she was quite clear that she wanted a sister as otherwise we would have no use for all her barbie and other girl things and would throw them away. All said and done, betoo (that's how we call her most of the time) is very special to us as she has been the focus of our lives over the last 5 years, during all the traveling and living overseas and in a way she is my lucky charm. But now that the second one has come, he too would receive the same love from us.

Pictures follow soon!

New job role

I am now a part of the crazy world of forex trading. Sounds cool? It is! But there are more things to learn than just candlesticks and Fibonacci's retracements.....the atmosphere in the dealing room is quite vertiginous to say the least!!

I am only 3 months old in the business so shall keep you posted.