Vitality and viability

A nice blog entry in the NY Times about the resilience of New York city and its ability to regenerate itself with changing times ("New York, New York: America's Resilient City"). I of course see parallels to Bombay, a city which, in face of all adversities, has constantly renewed itself during the past 300 years.

The article claims that the primary reason for NY's success is its human capital. "Historically, human capital — the education and skills of a work force — predicts which cities are able to reinvent themselves and which ones are not." I quite agree (and think that even unskilled labour can add much to a city's economic muscle). And that is why Bombay needs to retain its historic welcoming attitude to migrants - both the poor, who dream of becoming rich; and the rich, who dream of becoming richer. From across India and across the world, the greater the number of the enterprising that the city is able to attract, the brighter its future will be. Those who wish to close our city's gates inadvertantly wish to sign its death warrant, I believe.

One for the road

And so ends the 8-year reign of Bush II.

The announcement of $18 bn for GM and Chrysler is the crowning glory of this administration. The economy is in a mess. Unemployment is high, and the Big Three of Detroit employ 3,00,000 people and indirectly support 3 mn, according to some analysts. Something had to be done. But that something was not government intervention, I think. I of course favour bankruptcy over nationalisation. Bondholders would have taken a hit. The generous pay of union-affiliated labour would have been reduced to more realistic levels. Restructuring and recovery would have been faster. The next best option was nationalisation. But throwing money at the companies without nationalising them is surely the abdication of all pretense to assigning responsibility for the firms' failure. Surely the shareholders should have been wiped out. Management has been left in place. It seems clear that these companies are soon going to be back, cap in hand, for more aid. These companies, that have messed up so badly, are not being allowed to die a natural death, but die they will, after sucking up more money from the taxpayer.

[BTW while the bailout for Citigroup was necessary, I think that it too should have been fully nationalised, with the aim of breaking it up and reprivatising the parts as soon as possible]

But then, what else could we except from an administration that ran down the fiscal surpluses accumulated in the Clinton years and turned them into some of the biggest deficits in US history, waged two costly wars that have cost over a trillion dollars, reinstated the practice of torturing captives, watched as a city drowned in the wake of a storm and of course presided over the biggest financial meltdown since the Great Depression.

It is always a mistake to write off America, but the 21st century has begun disastrously for the country.

Something to cheer about

The NSE today released a circular declaring that, in accordance with SEBI directions, the conditions for the securities lending and borrowing scheme (SLBS) will be relaxed from Dec 22 onwards in order to attract more participants to that market. The SLBS is basically a mechanism which allows participants to short sell shares in the Indian equity markets. I suspect that India is the only country in the world which has made short selling easier this year (the practice was introduced in India just a few months ago). I of course am all in favour of allowing short selling. Atleast some regulators have the sense to avoid shooting the messenger.