Anger

The terrorists have at last been defeated. Now comes the time for questions and answers.

The sense of anger amongst the citizenry is palpable. And it is as much directed against the government as the terrorists. The government has completely failed to discharge its duty of protecting citizens. This was not an attack from the blue. For the past many years, terrorist attacks have rocked multiple Indian cities on multiple situations. Bombay was last attacked in July '06. This year, Delhi, Ahmedabad and Bangalore had already been targeted. Bombay was clearly high on the priority-list of the terrorists. RDX had been smuggled into the country via its coast in 1993. Why is Bombay's - Bombay, the home of the Indian Navy's western fleet - coastline still so porous? Why were there no NSG commandos in Bombay? Why was the union home minister on TV announcing the despatch of the black cats for the terrorists to see and plan?

There must be accountability. The union home minister Shivraj Patil has to resign. So does Maharashtra's home minister RR Patil. Perhaps even the Vilasrao Deshmukh, the chief minister of Maharashtra.

Unless there is concrete action by the union and state governments in the next few months to improve internal security, the Congress party faces a big rout in the elections in May '09. For many reasons, including its complete inaction on economic reforms and infrastructre creation, and its gross fiscal mismanagement in a time of economic prosperity, I was quite disinclined to recast my vote for the Congress in the upcoming Lok Sabha elections. That disinclination has almost become a certainty now, and it will take sometime big to change.

Nov 27 (2nd Post)

Was able to go to office after all (the suburban branch, not the one in Nariman Point of course)...I am very pleased about that :)

Nov 27

I returned home a little earlier than normal last night and decided to go on a short drive in my car (since it hadn't been moved for over 10 days). The Metro line that will connect Andheri to Ghatkopar is being built quite close to my home. I was very pleased to see that construction is underway in full swing, and after the somewhat depressing trip to Delhi, became optimistic about Bombay's future again. On my way, the car radio mentioned something about incidents in South Bombay, though it was not very clear what had happened. By the time I reached home at around 11, it was clearer that terrorists had struck the city again.

By morning, the gravity of the situation was quite clear. But I wished still that the daily routines of millions of citizens wouldn't be disrupted. I don't think I have ever been as keen to go to office as I was today - just to send a message that ordinary citizens will not allow themselves to be paralyzed by the violent acts of a few criminals. I learnt that my office building, which is bang opposite the Oberoi Hotel, had been cordoned off. I then decided to go to another office of my firm in a different part of the city. On my way there, I learnt that the authorities had decided to shut the capital matkets for the day. So I returned home. It may have been a necessary and sensible decision, and yet I still wish that we had been able the keep the markets open...terrorists should not be allowed savour these little victories they score by disrupting our lives.

Time running out?

I visited Delhi this weekend to attend the wedding of a friend. It was my 4th visit to the city in the last 2 1/2 years, though the 2nd and 3rd visits were both flying ones, bereft of any real opportunity to see the city. While I couldn't see much of Delhi this time either (was confined to the southern parts of the city), whatever little I saw this weekend confirmed my expectations - Delhi is way ahead of Bombay in terms of physical infrastructure.

Cities go through their ups and downs of course. Delhi has had a good run in the last 10 years, largely due to the presence of a chief minister committed to development and interventions by the courts. Bombay on the other hand, has suffered at the hands of politicians who are more interested in changing the name of the city than its nature, in banning dance bars than preventing hooliganism, in restricting the arrival of citizens from other parts of the country than enforcing laws against the encroachment of public property. But be that as it may, at some point, the human capital advantage of Bombay will be outweighed by the infrastructural advantage of Delhi. Commercial capitals tend to stick - witness the centuries-long domination of London and New York of the UK and US respectively (and even Bombay's own domination of the Indian financial scene since atleast the 1850s). But if commerce ever flies away, it will be impossible to bring it back. And that would be a tragedy for the city and its citizens.

A few days ago, I read an extremely interesting article in the Indian Express arguing that it is the politicians, bureaucrats and other government officials who head the city who are outsiders rather than the migrants they denounce. How I wish Bombay were made a union territory (a wish expressed before in this blog, I think)! Perhaps then we would have rule by natives, and some accountability which could lead to rapid progress.

Film Notice: Red

I saw "Red" today. Red is the third part of the "Three Colours" trilogy (Blue, White and Red) by Polish filmmaker Krzysztof Kieślowski. I liked the movie somewhat, but found it a bit slow. The actress Irene Jacob looks very pretty in the movie. I should write a better review, but will stick with the notice this time :)

PS: Had seen "Blue" last month, but missed "White".

Investment Banking: The Future

Disclaimers first: I work in a publicly listed investment bank. Hence any criticism directed towards employees of investment banks in this series of articles I hope to write over the next 6-18 months is also applicable to me.

The financial upheavals that have occurred since mid-2007, particularly the events of this year, have forced me to rethink my beliefs about the functioning of financial services firms and the desirability of changing their structure / state of regulation. I am of course fiercely libertarian, and do not easily come around to accepting the interference of the state in economic affairs or personal freedoms. But this crisis has confronted me with plenty of evidence that the something has gone profoundly wrong with the working of the financial services industry (especially investment banks). I have given much thought over the last 3 months as to what exactly is broken and how it ought to be fixed. So far, I have few answers, but I continue to think and read what others have to say.

Two very interesting articles have come to my attention this week. One is "The End of Wall Street's Boom" by Michael Lewis, of "Liar's Poker" fame, in a long article in Portfolio.com. The other is an Op-Ed piece in the NY Times ("Our Risk, Wall Street's Reward") by another Street insider, William Cohan. Among other things, both argue that the crucial problem that has arisen in the functioning of investment banks is that they have transformed from being private partnerships to publicly listed corporations (Merrill in 1971, Bear Stearns in 1985, Morgan Stanley and Salomon Brothers in 1986, Lehman in 1994, Goldman in 1999, to name the most prominent). This has created a serious principal-agent problem where shareholders (owners) cannot control their agents (executive managers who run the firms) as the latter go on taking gargantuan risks or fleecing clients regardless of the longer-term impact on the firms' reputation and capital. I have lately come to believe that publicly listed investment banks are conduits for transferring money from shareholders and national treasuries (in the form of the inevitable bailouts) to employees with probably incommensurate benefits for the economy. Whether the nature of the conduit that I postulate and whether the probably are true is something that I need to investigate further to uncover. Even if these are true, the solution of the problem will need more thought...hopefully I will write more on this topic this year and the next.

President-elect Obama

So Obama has won an expected victory. His acceptance speech in Chicago was very eloquent, almost inspirational. I preferred McCain till a few months ago, but his uneven campaigning and a horrendous selection of vice president, made me agree that Obama was a better candidate. Obama's inexperience is more than compensated by the qualities he displayed during a stupendously executed campaign - articulateness, a calm demanour and the determination to stick to a well thought out strategy even in the midst of the financial meltdown and other crises. He is an idealist but displays a clear political street smartness too. I think Obama's will be a successful presidency. Still, I do spare more than a thought for McCain - his concession speech was graceful.

The world is delighted by the Obama victory, it is evident. I wonder how long that will last. Some months later, when Obama will act in what he thinks are the best interests of his country, I'm sure most people will revert back to their habitual disillusionment with the US. Perhaps the US will not be disliked as much as it has been during the Bush years, but so long as it remains a pre-eminent world power (that's another 20 years atleast), global opprobium will be its reward, I'm afraid.