Tuesday, December 29, 2009

Let's become children: Where ignorance is bliss

On the eve of New Year I toyed with several topics to blog on. The decade that passed has been eventful, especially for America. The decade opened with a tragic attack on 9/11 and is passing out with a gut wrenching economic crises, two wars and a failed terror attempt. I will leave those topics for magazines to ruminate endlessly and in turn let me leave this year with a fond, probably naive too, hope.

We were visiting my brother-in-law in North Carolina for X-mas. My 4 year old and his 3.5 year old both hit it off great. It was warming to see kids play with each other. Just like kids they would hug each other tightly and be chummy for the most part and then suddenly fight over a toy. After a short tiff all would be forgiven they would then go back to chasing each other with peals of laughter. Their love has an abiding quality and meaning. The fights had meaning only in that short lived moment, not beyond. What a lovely childlike, rather Godly, impulse that gets lost in adults. Having lost such a childlike quality we seek refuge in fancy theories and books and psychologists to make sense of conflicts that tear apart relationships and souls. Probably a deeper theology underlies in celebrating Gods as children, Krishna and child Jesus being the most prominent.

Often the phrase "ignorance is bliss" is used in a negative connotation. Not many realise that T.Gray actually meant it as a compliment and said it in a wistful mode that let children have their blissful ignorance after all once they grow up this world filled with cares will rob us of our joys. (Thomas Gray's complete 'Ode on a distant prospect to Eton' http://rpo.library.utoronto.ca/poem/884.html)

Alas, regardless of their doom,
The little victims play!
No sense have they of ills to come,
Nor care beyond to-day:
Yet see how all around 'em wait
The ministers of human fate,.......
Since sorrow never comes too late,
And happiness too swiftly flies.
Thought would destroy their paradise.
No more; where ignorance is bliss,
'Tis folly to be wise.

Wednesday, December 16, 2009

X-mas : A season for giving and forgiving

Two events in the backdrop of X-mas season tickled my thoughts to write this. I work for a major European investment bank in NY that recently organized an event called "toys for tots". 'Toys for tots' is a program run by US Army marine Corps. Companies partner with the Corps, they collect toys from staff and through the corps distribute it to needy children who cannot afford X-mas gifts. The Marine Corps is running this program since 1947 (http://www.toysfortots.org/about_toys_for_tots/toys_for_tots_program/origin_and_evolution.asp). This is just one aspect of charity giving that hits an all year high during X-mas. Companies partner with major non-profit organisations and announce corporate matching grants where the company puts a dollar for each dollar donated by employees. Companies consider it a prestige to exceed targets. Corporatised philanthropy has its benefits, its targeted, its reach is much wider, money is accounted for, programs are monitored and reported on. A popular charity drive is to get used winter coats for the needy, another network collects women's suits to donate to aspiring low-income professional women.

Giving is just one part X-mas, a consciously cultivated sense of forgiving is the true spirit of X-mas. MLK Jr captures this wonderfully in a sermon. Peter asks Christ "how many times shall I forgive if my brother sins against me, seven times?", the Lord answers "seventy times seven". MLK explains that when somebody can forgive a wrong doer 70 times 7 (490) then forgiveness becomes a habit. "PEACE" is the recurrent theme in New Testament. Matthew admonishes a worshipper who gives offerings while he runs a feud with his brother "leave your gift there in front of the altar. First go and be reconciled to your brother; then come and offer your gift." Life is not a game to rebuke anybody as "too little too late in the game". When asked to be taught how to pray Christ offers the Lord's prayer which emphasises forgiveness "And forgive us our trespasses, as we forgive them that trespass against us".

This X-mas season and in seasons to come let us give as much as we can and learn the art of forgiveness enough to make it a habit.

Given the recent bad press on corporations and CEO's I could not resist adding the following:

Bill Gates Foundation is the richest and best run charity organization. Gates is redefining how charity is done. Impressed by the impeccable nature of Bill & Melinda Gates' work Warren Buffet, the second richest man, bequethed his entire wealth to the Gates foundation. Barack Obama's charity contributions rarely rose above a paltry 1% of his gross income (In 2001 he donated $1470 out of $272,000) until he decided to run for President. Al Gore set the record for political doublespeak, he donated $353 in 1997 when he earned $197K.

Barack Obama Charity details: http://taxprof.typepad.com/taxprof_blog/2008/03/obama-releases.html

Friday, December 4, 2009

A few thoughts on the Economic meltdown of 2008

Reading an article on Neel Kashkari in Washington Post today I felt compelled to write on this subject. Kashkari, of Indian origin, shot to prominence when he was tasked with overseeing $700 billion in TARP (Troubled Asset Recovery Program).

By now a linear storyline has emerged in the minds of the populace that a bunch of CEO's in wall street ran the vaunted American economy tanker aground thanks to unbridled 'greed'. The line from Oliver Stone's film "Wall Street" spoken by the character Gordon Gekko, "greed is good, greed works" became oft cited. Nobody cared that the actual line was "Greed, for lack of better word, works". Big difference. St Paul did not say "money is evil", he said "love for money is evil".

Is it even remotely possible for a clique of guys in pinstripe suits to bring a $14 trillion economy, the economy of the only super power, to its knees? When Congress dithered on passing a staggering $700 billion stimulus/bailout plan Ben Bernanke, Fed Charirman, Hank Paulson, Secy of Treasury, lobbied senators behind closed doors. Hearing what they said Sen. Chuck Schumer (D-NY) said "my jaw just dropped". The bottom line message delivered was "no time to play partisan politics, if the bailout does not pass Congress come Monday morning there will be NO American economy". Apocalypse would have looked like a picnic in comparison. When the economists at the Fed looked at the data staring out of their PC screens what they saw was akin to a patient whose blood stopped flowing. The credit markets were simply frozen. Nobody, absolutely nobody, was lending to another person or bank. Credit, the blood and oxygen of an economy, that too of the worlds largest and most powerful economy was simply in a stage of a coma. Banks did not know if the collaterals offered, complex structured securities, where worth anything to be lent against. Nobody believed the credit ratings anymore, credit rating agencies themselves were in a tail spin.

To attribute all of this to simple greed is too simplistic and self serving, especially when mouthed by politicians in the heat of a campaign.

Lets take a small slice of contrarian view. There is furore amongst the Afro-American community that foreclosures have hit them the hardest. Very true. What is conveniently glossed over, if not hidden, is that banks did not dupe them, or at least most of the time. Banks have been compelled by legislation to invest in under served communities, CRA (Communities Re-investment act). Most who applied lacked documentation for income, many would not qualify for loans under normal circumstances. When banks asked for proof's of income and proof of ability to pay etc they ran into rough weather, lawsuits alleging 'discrimination' sprouted, including one by a certain community organizer named "Barack Obama". I am not for a moment suggesting that this was the only reason for the crisis. I just want to shine a light on lesser known but vital components that helped create the mess.

From consumer to politician today everyone rails against banks for 'enticing' gullible consumers with fancy projections of how properties would appreciate and how such appreciation can be tapped into in the form of more loans to finance dreams of cars or just plain re-finance the home. Give me a break. American economy, the capitalist component is based on the premise of 'personal responsibility'. When a guy, family of 5 with 2 daughters in college and gross household income $90,000 buys a home with swimming pool at $500,000 what can one say. Irrespective of any fancy enticement or math wizardry of the house appreciating in double digits the guy is facing the immutable logic of what he can afford. That too when he took a interest only loan betting that when the house appreciates he will re-finance and THEN start paying measly principal, I call it plain "nuts". Yes, the American style of consumerism encourages risk taking. But risk and recklessness are not synonyms. When a well educated young working couple buy a home stretching a bit by 20K or 30K they have a decent chance of coming clean, that's calculated risk but what the guy did was sheer recklessness. CNN once featured a forlorn single mom in Florida lamenting about how she has to foreclose. The camera goes around the home and I saw a pretty swanky well kept home, the kitchen had a Wusthof knife set (retails at $750 at discount). This woman was a realtor too. She had bought a home way beyond her earnings and bought it on a 'interest only" pay option loan.

Amongst the carnage blame can go around sufficiently to how Congressmen and senators sought to use the quasi-federal agencies of Fannie and Freddie to further their own political mileage with constituents. The easy money policies of Fed, under Alan Greenspan fuelled the housing crisis that finally brought America to its knees.

The derivatives market, short sellers, math wizards behind bundling of securities etc all had a role. To blame each and everyone with just greed and malicious intent bordering on calling them as just thieves is sheer stupidity. I've worked for one of the ratings agencies and I've my highest regard for that company as a corporate entity. Companies exist to maximise profits, to deny that is to deny them a reason to exist. Companies innovate to differentiate themselves. The innovations in capital markets were not done to swindle a gullible consumer. That they went awry and need to be reworked is part of being a resilient capital market. America will find its feet again.

CEO's have no joy in seeing their firms get obliterated in a tsunami of crisis. One could comment wryly that the hundreds of millions lost by Lehman CEO Richard Fuld really does not change his life style unlike the thousands who lost their jobs when Lehman went down. Agreed. But to characterise Fuld as some swindler is gross injustice. Thousands of Lehman employees have made a fortune working for Lehman. Also beyond a point its not only about money, imagine the humiliation that Fuld had to endure with jeering crowds carrying placards when he appeared for Congressional hearings. One can only imagine how his ego might have hurt. In the final moments of his company going under he pleaded with all and sundry to save his employees by buying Lehman.

Then there are the conspiracy theorists of how Goldman Sachs alumni control US government. Hank Paulson, ex-CEO of Goldman, had to forgo hundreds of millions in selling his Goldman stocks prior to joining Bush administration. Show me a politician who does that. John Thain who took over Merrill after Stan O'Neil was ousted was excoriated for spending $100,000 decorating his office while company was going down the tube. Note that the crisis which finally engulfed Merrill had nothing to do with John Thain. In fact Thain helped avert a catastrophic event by orchestrating the merger with Bank of America. Contrast that with how Barack Obama behaved. He too inherited a crisis, he too inherited deficits yet he had no problem in taking Air Force one and the presidential entourage to make good on his promise to Michelle for a date night in NYC if they won. Wow....Nero anybody.

Thursday, December 3, 2009

Obama and Afghanistan imbroglio

I'd like to state one thing at the outset, Obama is my president too, as an American citizen I'd like to see my President succeed for then America succeeds. A registered republican appearing on CNN said the same and David Broder, Washington Post's columnist, captured that correctly when he wrote "the average American wants his President to succeed".

I winced when, of all the press, the European press lectured Obama to decide soon enough on his strategy. The "Telegraph" from UK and "Der Spiegel" both ran less than flattering editorials. At home many in his own camp were uncomfortably wringing their hands as Obama took 90 days to decide. Republican commentators had a field day on his "dithering". Michael Moore who famously caricatured Bush for sitting quiet for 5 minutes after learning of the 9/11 attacks went incognito.

There were leaks and surmises. When General McChrystal went public with his request for troops there was animated discussion on whether Obama should fire him for violating the chain of command a la Truman firing MacArthur. His own cabinet was divided between non-escalation (Joe Biden et al) Vs escalation of troop levels (Secy of Defense Robert Gates and Hillary). Obama was unperturbed by the outside chatter, he coolly asked his team to evaluate, re-evaluate, go back to the drawing the board for more options etc.

Finally he gave a speech at West Point, America's most hallowed military academy. His left wing devotees winced at the very Bush like venue. The speech was a good one and as usual a tad longer. Obama addressed most concerns head on.

Obama gave McChrystal less than what he wanted, 30,000 troops versus 40000+ requested. This is public gamble. If the gambit pays off then Obama would have proved the wisdom behind civilian control over army. Else he would pay dearly for second guessing his own general. This is a risky gambit that every American President has had to contend with Truman upwards.

The sickening question of deadlines was addressed too but with some political wiggle room. An open ended commitment, like Bush, would have warmed the hearts of republicans but sent his left wing flock scurrying home to look for another messiah. I disagree with commentators parsing his commitment for withdrawal in summer 2011 provided ground conditions meet certain benchmarks. Many say this is contradiction. Some commentators point out that once we announce a date all that the Taliban have to do is just lie in wait for that date and then wreck havoc. Then they proceed to ridicule the wiggle room of "ground conditions permitting" after committing to a date. This is nothing to ridicule about. Obama is attempting a very tough sell here to an American public that, thanks to the increased security today, has become a little too complacent about threats and more importantly is concerned about job loss than another attack. The health care reform impact on an economy reeling from record deficits, not entirely of Obama's making, the unemployment and the costs of this escalation are valid concerns. Obama paraphrased Thomas Friedman when he said that America's economic prosperity is the cornerstone of its power status. Shoring up the dollar is as important as shoring up Iraq and Afghanistan.

The best part of the speech was when Obama put a stop to the Vietnam comparison. Very sharply worded he differentiated the Vietnam imbroglio with Afghanistan. Afghanistan is not seeing any populist surge. Afghans would still like to see Taliban wiped out, more schools built, women able to walk freely in the streets etc. There are challenges in the form of war lords etc but that is NOT populist insurrection.

Let us note that when Obama took office Afghanistan had less than 30,000 troops compared to 150,000 in Iraq. Afghanistan has the reputation of being the graveyard of empires, the Soviets left Afghanistan when their empire crumbled. Karl Rove is peeved that Obama did not credit Bush in his speech for the Iraq surge strategy which is being copied now in Afghanistan. Mr Rove should be happy that Obama did not justifiably excoriate Bush and his team for the Afghan mess.

All that apart here are some inconvenient truths. Most of the world took umbrage at the Iraq war as US imperialism, many wanted to impeach Bush for War crimes, many opined confidently that Iraq war was illegal, Michael Moore had a field day ridiculing Bush's claim of many allies in Iraq war front. Now lets look at Afghanistan, a war that was unanimously agreed to as 'justifiable and legal response', NATO had signed on, UN security council endorsed it. CNN's John King put up a map of troop deployments and made a telling point. NATO, non-US, troops were in regions which had almost zero conflicts while US troops were the ones mostly taking heat in Taliban infested regions. A fellow commentator ominously chimed in "this is America's war". A sad truth. Also Bush was often cited as a factor for other countries not stepping up their role in Afghanistan. Yet with Obama at the helm its no different. Its unfortunate that the world at large think of Afghanistan and Iraq as America's problems, especially Afghanistan.

Thomas Friedman's latest column beautifully stated one thing "Many big bad things happen in the world without America, but not a lot of big good things. If we become weak and enfeebled by economic decline and debt, as we slowly are, America may not be able to play its historic stabilizing role in the world. If you did'nt like a world of too-strong-America, you will really not like a world of too-weak-America — where China, Russia and Iran set more of the rules."

Friedman opposes Obama's strategy and chimes "Iraq was about “the war on terrorism.” The Afghanistan invasion, for me, was about the “war on terrorists.” To me, it was about getting bin Laden and depriving Al Qaeda of a sanctuary — period. I never thought we could make Afghanistan into Norway — and even if we did, it would not resonate beyond its borders the way". This from Friedman who consistently admonished Bush for Iraq and pouring so much resource into it.

For the sake of America and the world lets hope Obama succeeds in both Iraq and Afghanistan. To the American soldier who heads out to the front we say "Godspeed and God bless you all"