De-Lurking on the Net

November 9, 2016

Sledge Hammer strike by India’s PM Modi on black economy and terrorism funding

Today, Mr Modi went bold. Perhaps not of his own volition but on behest of what all the economic advisors he could muster in last few months, advised him. He struck the  big denomination Indian currency notes void(Rs 500, Rs 1000). Some say these large notes amount to 86% of economy. Indians have guessed that economy is as much in black as it has been in legal/legitimate or white economy. So, given that both 86% is a guess and dividing line between black and white as at 50% of guess, then Mr Modi is writing off 43% of GDP in one hit. No matter what % is hit, the impact will be to usher the huge deflation in its black economy. It comes on the heel of his visit to Japan, a country staying in deflation since its hay days of 1993, before which it had seen any boom. Perhaps, it is just a coincidence.


His intentions can not be construed as wrong as he wanted to hit the most, two sets of people – 1) terrorists 2) Black economy peddlers who have refused to come out in open in spite of the amnesty to convert their black money into white(The scheme was not failed but could hardly be called a successful scheme).

So, what happens now – he introduces two type of notes – Rs 500 and Rs 2000 . These are not Plastic polymer notes as recently got introduced in number of countries (Australia, Canada, UK, New Zealand, Vietnam, Maldives etc) but it has new security features. Some say , Rs 2000 note has NGC technology . Details of the NGC has not emerged from Govt sources but social media rumors are fueling this. The NGC introduced in Philippines did not have any nano GPS chip as people are talking of Rs 2000 will have one. Without introducing a fool proof arrangement of  temper prevention or making it tough for some people or countries to stay in printing duplicate currency  and sending it to India, this whole exercise achieves nothing but brings pain to India. You merely burn your own notes.

There are terrorists using Hawala market, an arrangement where someone who wishes to send money into India does not go to banks or use legitimate companies. They use individuals who disburse Indian rupees from their black money in India to the recipient and get paid in return in foreign currency in a foreign country abroad. Such transactions were major source for black marketers to convert their money into white, money launderers to launder money, terrorists to get funded for new terrorist acts, drug pushers, smugglers etc . The cinema(Bollywood) largely depended on black money for funding. The Real estate particularly in north India had a big share of black money in it. All the political parties virtually live on black money. There is a domestic currency based trade between Iran and India. India’s currency is also used and particularly popular in Gulf  countries and in a country like Zimbabwe who are in the process of re-introducing their own currency again after a hiatus of several years. So, will all these people or even diaspora spread around the world will have all their money in bank or would be in position to change these notes in time?

So, immediate impact would be less housing activity, less Bollywood Cinema films, less terrorism (at least for now), less smuggling(all the smugglers money is never fully invested in metals like gold or other commodities but also remains in hard currency), less drug trafficking. There will be less activity in air travel and luxury living. There will be suffering for both poor and rich people. Poor people hardly have bank accounts, so will be impacted  a great deal. There are remote , rural areas where there can never, ever be a bank.  Even if such people have notes with honest earning or sent by their relations or kids, they will never know how to go inside a bank and convert it. There will be people not been able to pay to private hospitals. Govt hospitals rarely exist  for most in the country. There will be people who hide the money and unable to return in time to the places where they hid it to convert it or have anyone to access their money to convert it. Virtually all sectors in India have humongous corruption from ISRO scientists to judges, from North to South, West to East India. So, what happens when people suddenly have less financial muscle. Well it means, that their economic activity goes down including expenses on exorbitant weddings. So, hoteliers, caterers, etc all will have impact. It is like dropping a bomb on your own economy or helping your enemies who may all want your GDP to come down to a very low level or to see  your purchasing capacity substantially reduced.

The notes  can be converted in next 50 days . But beyond a threshold  of converting Rs 4000 in cash of new notes, conversion is allowed only by the bank accounts. If someone does not have their own bank account, then they have to use some one else’s bank account by giving them consent to receive his/her money into their accounts. Later on,  such people can withdraw their money in new notes from the account for which they consented. So, this particular activity will make the menace of already accumulated black money  in the economy to reduce substantially and it will become trackable until it stays in bank. It may stay long term in bank accounts but chances of its  staying in bank accounts long term are remote as people are used to cash transactions.  This declaration by Mr Modi, therefore, will not make the economy to become overnight controlled by banks. The networks of black economy generation, terrorists funding or drug peddling mules, duplicate currency circulators, smugglers, betting, bribe givers, bribe takers  are not going to disappear overnight. They are part of the system just like political parties or corrupt judges.  So, a new black economy will start growing as soon as one ends. Yes, there will be  people who will suffer massively and a few may even commit suicides or may even die of heart attacks when they find themselves  ruined totally. Incremental changes like Jan Aadhar Yojana etc would have achieved Mr Modi’s dream of having a economy fully running via banks etc. in few years.

Misery awaits India in short term and this will have impact on  the growth of the world economy too. Perhaps, it will teach a lesson to the other leaders to be patient.

June 11, 2016

Fixing capitalism – Will taking away, knighthood from Mr Green prevent another BHS?


From India, recently, Britain gave refuge to a liquor tycoon, Mr Vijay Mallya. He had multiple companies including an airline. The company was extended loans from Indian Banks (State owned and Private) when the petrol prices were double than what is today. The company kept getting loans because without it massive unemployment would be created. Moreover, the man, Mr Mallya had political connections and he himself was a member of Indian parliament’s upper house. These loans were given to his airline company without any collateral support or risk assessment. So, this man sold his other main company to British company Diageo. He flew out of India, without paying anything to banks . Now banks are holding merely the brand name of bankrupt company Kingfisher as a collateral. But, no one is interested to buy this name. Banks now can not recover anything of this 1.4 billion dollars debt. Mr Mallya, from his safe abode in UK wants to settle these debts at his own terms (say around 55 %  haircut)  as per this article in FT GOI has cancelled his passport and he has been given refuge in UK. It was clear from CBI investigation that this man was diverting loans from banks for buying assets abroad. He was also running a formula 1 team, an IPL franchise, two football teams etc.

Kingfisher Airlines Chairman Vijay Mallya speaks to the media during a news conference in Mumbai November 15, 2011. REUTERS/Vivek Prakash/File photo

Kingfisher Airlines Chairman Vijay Mallya speaks to the media during a news conference in Mumbai November 15, 2011. REUTERS/Vivek Prakash/File photo

Giving refuge to runaways like him is not a one off event. In 2010, there was another chap on these British Isles given refuge from India – Mr Lalit Modi. He was the czar of Indian Cricket Premier League for first 3 years. He diverted money in  various accounts overseas, bought assets abroad etc. There are many charges in this wiki page on LalitModi. So, Britain is good for fugitives as these people are given special protection by the British crown and are beyond repatriation.

One can understand, if British only overlooks the deeds of those who come from outside but how about the ones, who were very much part of this land from first day, they were born. The debacle of Royal Bank of Scotland was far more profound than the current crisis of BHS (British Home Stores). BHS owes 1.1 billion pound at the point, it  entered administration. RBS needed bailout of £45billion  in year 2008 when the British chancellor was told that the bank can only last 2 to 3 hours max. Both Mr Fred Goodwin and Philip Green were given knighthood.  The telegraph is publishing one article after another revealing gory details of current financial crisis in BHS as how Mr Philip Green did the asset stripping and lined up his pockets before selling the shell to a novice in retail business for one pound. While Mr Goodwin is now stripped of knighthood, but the debate is on if Sir Philip Green should follow. But should the debate be reduced to the knighthood. It will do nothing to correct the mistakes of the system which allows this.


Sir Philip Green

Before, these two episodes, there have been plenty others, but I will mention two related to famous football clubs – Liverpool and Manchester United. Both did not have any debt some 10 years back. Manchester United ‘s current debt is £322 million, its turnover is £133 million. The peak  debt as per this BBC report was £778 million in 2010 summer. So, this debt is going down at least. The Liverpool has quite a similar tale. From no debt to £313 million debt as per this guardian article in 2009. Liverpool has current debt is £47 million as per this article of daily mail after it has converted £69 million debt into equity last year. So, both these clubs are moving in right direction with having reduced debt every year. But the question is should a personal debt (to buy the debt free club) of an owner be allowed to be moved to the company. Where should the line be drawn. There are plenty of stories where the debt has sunk a club. Leeds Football Club is a good example of that.

 But does it not make one wonder how in the land where industrial revolution took shape and capitalism was born, the rules even today allow anyone to pocket any money from any company, only if they know how to play the game. The state has no control to prevent the plight in time. In case of RBS, the whole country (UK) suffered as the govt or tax payers had to rescue the bank. UK suddenly found so much in debt after all these mega bank rescues after recession started since 2008. In the present case of BHS, the plight certainly hinges on to the massive job losses and depleted pension funds of employees. Asset stripping to fill your pockets has still not disappeared . Movies have been made on this. So, how to prevent unscrupulous creatures exploiting the system while everyone else languishes? Perhaps, company law needs amendment. Could these be the solutions to prevent the owners from taking advantage –

  • The working capital should not be allowed to be touched.
  • Only a certain percent of retained profits be allowed to be withdrawn
  • It must be a rule that auditor and board be involved in a withdrawal bigger than a particular ceiling
  • A ceiling must also be placed to withdraw more than the capital injection done by any owner/investor
  • The shifting of individual loan onto company books must not be allowed

October 25, 2015

Make-In-india Initiative, is it viable?

India’s GDP stood at 2.066 trillion dollars in 2014. Amidst the plethora of initiatives, funding and new policy moves in India, there is one news that said India launches one stop Reserach funding for Research. It seems a good initiative on the surface as India was spending abysmal amount on research in comparison to other top countries. The latest data available from world bank was from 2012. But since it was not available for some countries,  2011 was chosen here to compare –

Global Research Spending by Major Countries

Country Year 2011
Korea 4.04
Israel 3.97
Japan 3.39
Swedan 3.39
Germany 2.89
Austria 2.77
USA 2.76
Iceland 2.6
Slovenia 2.47
France 2.25
Singapore 2.23
Belgium 2.21
Netherlands 2.03
China 1.84
Canada 1.79
UK 1.78
Russia 1.09
India 0.81

So, India spent 0.81 % of its GDP in 2011 or 15 billion US dollars. The west in general spends more than double to 5 times of India in percent terms. After adding this new spending,  does it change anything.  Well, with  this miniscule addition of 0.09%, it amounts to nothing when India’s biggest IT company TCS spends 900 Crore Rupees (14 million dollars)  itself which is close to this figure of 1000 Crore Rupees (15 million dollars) announced by govt of India. Also, if  this change will bring research from scientific labs of the govt or universities, institutes etc to the commercial entities is not clear. One can not think any new bridges have been built there between labs and industry.

Lately, India has made lots of interaction on international stage either by visiting their countries or inviting them over. India has been focussing to get some Foreign Direct Investment (FDI) from all these countries. But given that except few countries all are in deep hole. The few who have deep pockets are in Gulf, China or Norway(having largest pool of Oil related sovereign fund).  The UAE, China, Japan, US, Germany etc pledged to invest in India but how much does it really fructify remains to be seen. To attract this FDI, India of course had to give away something – which is market access. In some industries as defence and insurance, it has given access to 49% equity holding but in many areas the foreign companies or individuals can get access to  even 100% equity.

Only the other day, India’s one mobile infrastructure company Viom was sold to American Tower Corporation (ATC). After the deal in which it buys 51% holding of Indian which has 11.5% share of the market, the combined entity will have close to 15% market share or to the number three position  in the fragmented market. It is expected that this type of M&A activity will gather pace. Though a private law firm, “Linklaters” operating from Hong Kong says this – “The largest interest in Indian M&A has come from investors in the US.” The overall volume is down by 10% to second half of 2014 but in value terms the new FDI amount brought in  is now 15 billion dollars.

There is another Gold Monetisation Scheme announced for the festive Nov Season by govt of India. it is estimated  to mobilise a part of 20,000 tonnes (about 750 billion dollars) of idle gold lying with households and temples. What will it do to the International  bullion market also remains to be seen as that depends heavily on the Indian gold demand. Will it effect the gold jewellery makers as the people will deposit their gold in the banks to to earn interest on their gold. The logic says the state will melt this gold and use this to sell overseas to use the fund for development project like infrastructure building. So, two things should happen – first the state will give full interest only if it is allowed to melt the jewellery into gold, that means  who will spend money to  make jewellery . It means it should certainly affect the jewellery sector work. It also should affect the gold prices. it seems that the only way is down for them from here onward. Will it affect the international gold mining – of course it should. With most of the mining sector already sick, this certainly should drag gold sector in doldrums too. Being the largest gold producer of 300 tonnes, South Africa should be affected most of them all. But given nothing much came out of many pre-election promises (return of black money from abroad) , one should not assume that this scheme will definitely take shape or  be successful.


What about reforms on land, labour and GST(to transform india into one integrated market) etc. While GST is definitely on the schedule, it will be implemented on 1st April 2016 as per the govt website GST India. The growth estimated to be boosted by GST is estimated around 1.5 to 2% . This will give definitely boost to manufacturing. But any boost to manufacturing also needs many more ingredients e.g. increase in capacity of transportation networks, power generation  besides  the ability to hire labour at short term basis. There was a short one day strike in Sep, 2015  by labour unions. As per Economist’s article where union leaders claimed  150 millions downed their tool. The article said “The government wants to streamline India’s 44 labour laws into five codes covering wages, conditions, social security, industrial relations and training. It also proposes to raise the employment threshold at which employers must ask for permission from government to lay off workers—from 100 employees to 300—a reform that has already been adopted in the state of Rajasthan. In return it has offered unions a national minimum wage and a broader social-security net. Since only a small proportion of India workers are protected by any such legislation, there ought to be a new labour deal that would work for all. Sadly, many union bosses think otherwise.” So, chances of labour reforms succeeding do not look good. But even without it, labour laws are not completely archaic.There are many sectors where hiring and firing is easy and in Govt also  the voluntary retirement schemes are running.

The land reforms are already rolled back for now as the current incumbent govt do not control both houses and the opposition was in no mood to oblige the govt. But while land may be an issue in short term, it is not an issue in long term. The govt has time on its side to wait for this.

What about power sector reforms – well an article in June 2015 of Livemint, a financial paper asked its readers at the end of article “Will the government enact pricing reforms in the power sector?“. That says it all which means the reforms need one of the biggest courage from the govt. The chances of that happening looks slim at best as there are no talks seem on the horizon for its reforms.

There is one good initiative of integrating rural hinterland into banking sector by opening some 10 new banks  each with initial paid up equity of 200 crores rupees.  In her talks with Bloomberg, ICICI bank chief Mrs Kochar(youTube video) said  recently that  this initiative  will bring 180 million new bank customers, but the sword of Damocles keeps hanging in the form of non-performing assets (NPAs) of banks as the problem stays untackled. The patent regime to protect its own industry let alone companies of outside countries also needs strengthening and so does the capacity enhancement to judicial system. It is creaking at the moment. So, where does this all leave India.  Well, it amounts to nothing much for now.  But India is gathering steam bit by bit. One has to hold the breath. Perhaps, it will definitely achieve its potential or  bring success to the “Make in India” initiative if  it tackles many crucial ingredients mentioned here and it is definitely looking good at the moment.

January 8, 2013

Thanks Karl Marx, the world is still changing the right way.

When Karl Marx published Das Kapital in 1867, the world had seen just capitalism and exploitation of masses. It was the time, the capitalism was looked down for its labour exploitation . The exploitation gave way to the thought of equality. The feudalism, capitalism and class culture started melting down across Europe and gradually elsewhere. In some societies, the class distinction was not very visible like in Americas (North and South). In place of feudalism, there the capitalism took roots as  neo rich people wanted to achieve the same social status which was denied to them in their European home countries from where they had emigrated.  The new class system based on wealth now took root in all countries. The wealthy people wanted to see capitalism to flourish and therefore abhorred those who wanted to finish this off.  Marx’s economic theories were changing the thought process . His books had affected the minds of Russians first as Russia was emerging out of profound  serfdom.  The book had got translated in Russian first before in English. Whether  Marx got the inspiration from the French Revolution(1789), melting away of slavery around the world (1833 in UK, 1865 in US)  and serfdom abolition in Russia (1861) to expound that theory  on the use of  capital, one can not be sure.

Somehow, that theory from Marx led  the Russia and the world to try communism . While the neo rich and capitalists in US and other countries carried on fighting to establish whether  capitalism and wealth should be  worshipped or the equality (socialism).The Marx has infected the minds of millions . A new social order has become desirable where those people who work are not looked down upon by wealthy and indolent people and they have more freedom.

When colonialism was giving way to democracies in late 20th centuries, all  the leading lights of the day were embracing socialism like Nehru, Tito, Bhutto, Nasser etc.  But, after the 1989 breakdown  of  communist bloc , the communism  is now considered a failed ideology whose time is gone. The socialism as being associated with communism is therefore a word people want to retreat from even though every body still wants to bring equality to masses.

In recent past, the socialism was just used by many to come into power and then forget about it. The socialist halo was also present in Sukarno, , Indira Gandhi and in military men Gaddafi, Suharto, Nasser & Anwar Sadat. The socialism  led many leaders to nationalise the  production assets, the banks etc. However, the nationalisation was on the retreat after the Margret Thatcher‘s show in UK to claim back the world from that ideology of socialism where the  labour unions had virtually paralyzed the country. So, for operational aspects the world began to see the folly of putting everything under the state control. But this retreat of socialism has also affected the effort in elimination of exploitation by few of the masses.

Arab Spring of 2011 began to claim back the rights of have-nots in Muslim world  and  let people have freedom. The democracy which was thought is not suitable model by some Muslims was now wanted by them. It also inspired other countries too by stressing that however entrenched any govt or system may be, it can be thrown away. The trigger was a single incident of Mohamed Bouazizi self immolation in Tunisia for the start of Arab Spring.

The advent of internet and means of mass communication like mobile phone has allowed people to see that the things can be changed . So, the aspirations of people are changing too. Why would they be willing to put up with the same exploitation and denials of their rights which they had in the past. But there are always those who have the capital, the power . They would not be willing to change and give it away so easily without struggle. So, Syria has simmered on and on.  While some struggles have started in some countries and some will have it some day  but the danger lurks that it may come suddenly to that country causing widespread misery and chaos.

Recently, this struggle manifested in a movement to claim back proper gender equality in India after the death of a woman following a rape but the govt  muzzled the protest. The govt may have had success in controlling the protest by closing lots of metro stations, water cannoning the protesters etc. but any such success of govt and the failure of masses to register protest stores the mass fury for the next time.


In Pakistan, there was a march scheduled to the capital Islamabad calling for the end of feudalism.  The march  organisers have been under tremendous pressure to scrap the march in case it derails the democracy and allow the military to usurp power again. So, whether anti-feudal  struggle remains in abeyance will become clear on Jan 14, the March date to see if it has any effect. China is still waiting for something to happen as it is yet  keeping the individual freedom at bay. If its new leadership of 2012-13 does not take small steps now to let people allow  some protests, there is a danger that it will boil over in big way one day which will then also affect the whole world.

So, some govts will be changing a little and some will remain the same until the mass fury visits that country one day. But it is thanks to Karl Marx and his ushering a thought of socialism, the world after about 150 years of his book looks lot better place to live and breathe in as it is little more equal and allows lot more freedom.

July 19, 2012

Indian Migration Around The World – Unmitigated Joys And Sorrows In Equal Measure

Usually, there should be no surprise as there are two major countries China and India with the biggest population and no matter how much progress these two countries have made, their citizens are always craving to leave their motherland. Both countries not only compete in terms of growth but also in terms of migration to the western world. Indians have the advantage because of English and having good understanding of democratic norms of governance that allows dissent. It helps them settle, integrate and grow better in a foreign land. So, it is not a surprise that they are most prosperous ethnic group in US. But they are usually the cream or the most talented bunch of India. Indians provide the third biggest migration to US after Mexico and China. This was the data in 2010



Mexico 139,120
China 70,863
India 69,162

Interestingly, the Australia has just published their data too saying that Australia took more permanent migrants from India than any other country for the first time in the year to June, 2012. India was the largest source of permanent migrants in 2011/12 with 29,018 places, or almost 16 per cent of the total. China was the second most fertile source with 25,509. “Skilled migration is essential to support our economy and help overcome the challenges of an ageing population,” said Australian Minister for Immigration and Citizenship, Chris Bowen.

Some migration will always take place as there can never be an equitable world. There will always be poorer areas and rich areas. Some areas will have more opportunities and therefore, more potential to individual growth than others. Not all migration ends on happier note. There was a news – An Indian’s suicide in a Bahrain park highlights workers’ nightmare“. The agencies who recruit usually are the first to exploit the emigrant. After landing the employer does the same, so the only escape route is that of the suicide as one can’t escape a continuous exploitation or modern day slavery and return home. By now, everyone realises that Indian govt. wants to ship the human capital as much as that can be absorbed by another country. India clearly can not absorb the number of engineers and other graduates itself  that it produces annually by providing them meaningful employment without frustration. It is not creating such jobs in equal number. So, whether it is right or wrong, why should govt. policy bother to stop that migraion. After all, there are plenty of benefits of migration. It generates FDI inflow to India, reduces the need to generate employment for these people back home. Moreover, the other country becomes more Indianised. Also, the migration to the west in particular of highly educated, skilled persons brings another benefit. It creates the absence of those people who may prove restless and critical of govt. functioning by not bringing changes fast enough. It is like quietening the voices without an active action on the part of the govt. but akin to the outcome Pol Pot of Kampuchea sought by actively eliminating intelligentsia. Besides this, migration results in yet another outcome. The Indian immigrants as they all are getting absorbed by west, so they are inculcating the western values affecting the govt. policies in both west and India itself. There is a big Indian voice now in US. So, the inter-government harmony is taking root. So, no matter how many socialist or left leaning parties, politicians and media outlets may be present in India, the Indian govt. policy will start leaning more and more towards the capitalism and the west.

Migration brings both joy and cringe in equal measure. If a migrant wins a coveted award like ‘Noble Prize’ or recognition, people feel puffed up at home and feel helpless when someone gets caught doing something un-mentionable like terrorism, fraud, crime etc. Migration causes some headaches too for both countries when one country wants to act according to its own laws but the other country wants to intervene. This was the case when Germany sought pardon in 1992 for two twins brothers ‘Walter’ and ‘Karl’ ‘LaGrand’ for murdering a couple in 1984. Germany remained unsuccessful in spite of Vienna convention ruling and Arizona went ahead with death penalty. In some situation, the migration become even bigger headache as was the case in second world war when the Japanese Americans living in US were taken away after ‘Pearl Harbour’ and kept in relocation camps away from their homes from January 42 until Dec 1944. They were suddenly considered aliens.

Migration was slated as brain-drain in ’70s India and was looked down upon by the then govt . of India. It will be silly to stop the migration to the west by any Indian govt. regulatory moves as it is a free democratic country. The west already puts the visa restrictions. But, should India be actively seeking to overcome those restrictions? If someone looks at the longing for the home and uneasiness that lingers on during the whole life time of an uprooted person, settled in a foreign soil, one may a have different view. India may recall that even after centuries of adaption abroad e.g. the Indians in west-indies, Surinam, Fiji , that feeling of belonging to Indian roots never went away. India has certainly not been able to help all those settled abroad or going to settle.  It will need ever growing funds to help people in trouble. So should there not be a neutral policy on migration – neither encouraging nor discouraging?

Sir Venkatraman Ramakrishnan, 2009 Nobel Prize winner in Chemistry

It is quite clear that world is becoming more homogenised due to migration but there is personal as well as national pain with every joy or benefit that each migration brings. My own migration to the west has brought me both – pain and the joy. I clearly decried every struggle back home when I was growing up and even working. The only solution and dream was to escape from that struggle to a foreign land. I never wanted to go back home because I was clearly enjoying the life abroad. But, the realisation of my folly of short-term gain dawned on me recently after the death of my mother and younger brother in less than a month when it was too late to be able to help them in more meaningful way. Gazing through their funeral pyres reminded me that my sin was not to consider that my original home was still the home, I should had been looking after. There, I was needed not only by my family but also by that country itself, I had left behind and that I had yearned to escape from. The yearnings for both, family and country linger very deep even today after roughly quarter of a century of creating a home abroad.

January 21, 2012

Reforming Capitalism and protest by Groups

Should  occupy Wallstreet and London Stock Exchange by Groups continue? Can some good come out from these type of movements ?  I wonder how long they can hold on protesting from one site to the next. This protest started with  good tempo and appeared well meant but then it could not connect with the general public or even with the socialist sympathisers within the general public. This fringe movement has already petered out but could it have become more relevant which it once appeared at the start. Usually, a leaderless movement is bound to fade pretty soon when the goals are obscure and the connection with the public is not firmly set. So, here it can not be compared with leaderless movements of Arab Spring. These protesters should have just focussed on core objective to smoothen the capitalism’s  rough edges  rather than inviting supporters from all anti-govt movements from climate control, homelessness to globalisation.  A reform in capital structure could have been one of the objective of the protest group. Majority shareholders (institutions as pension, investment and unit trust funds) in most companies do not participate actively and scrutinize the pay structure and rewards like bonus  of the board . Thus the board and CEO like Fred Goodwin (ex RBS) get away with their risk taking behaviour without  sharing any information even with its own shareholders.   The other week, the John Lewis department stores was lauded by Nick Clegg, Deputy PM in UK for the model shareholding where all employees are shareholders and called partners. But the model also caused concern for the investment flow into that type of companies where rewards do not come into play straight away and it takes a long time for invested capital to work. It means some companies will still continue to need private investment funds or venture capital . It leads to conclude that there are two issues – one having passive investors unwilling to intervene and participate and one where capitalism by its share structure only builds a few rich capitalists in public.  Imagine, if  all the employees were shareholders in most companies. There will be less inequality in public as all those who work will be owners of something somewhere which may mean less room for socialism to grow. The risk taking by institutions as banks will continue due to passive shareholding and little regulation – local or global. The protestor groups do not want globalisation because they think it harms the underdeveloped economies. However, global regulation of world organisations as banks is needed when multinational companies such as banks and big corporate companies  operate in so many counties.  So the counter need of setting up global watchdogs is there and not any  less need as the protests against global meets such as G20, IMF and World Bank often breaks out to eliminate globalisation. London can not bring new regulation to control perks and bonuses as it fears  the trade from London will move elsewhere to New York, Frankfurt, Tokyo, Singapore etc. Gordon Brown had once proposed global regulation around late 2008 when Lehmann Bros disappeared from stock market. IMF and World Bank’s mandate does not cover this need of regulation. So, how to make capitalism more acceptable and answerable. Timothy Geithner  from US also called for global regulation in 2009  at G20 Meeting in London. Should such a thing not take place  which can force less risk taking on the part of banks and other financial institutions. This along with shareholding reforms are needed.  A  new classes of shares – active and passive shares could be created to help keep a check on the behaviour of the boards. Pension Funds etc who invest in major companies could choose to become passive shareholders with the same shareholding rewards and losses as for any shareholder but having no right to vote in AGMs if they elected to become passive shareholder when they invested into the company. This way only few will be active shareholders and those will definitely have their voices not drowned by the passive but absent shareholders like funds. Also, a reform is needed to issue more percentage of share capital to employees so that the type of behaviour by the employees as of John Lewis can also be emulated in most companies. So, the Wallstreet movement would have connected more with public if they had focussed merely on smoothening out the rough edges of capitalism like shareholding reform and global regulation as the capitalism is not going to disappear anytime soon.

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