meek-investor

The principle of jurisdiction is a basic tenet in law. Jurisdiction refers to the  law, the court, the authority that is applicable to you . You are then required to follow that law and be subject to  oversight by that authority and that court. In the good old days, jurisdiction was simple - where you were decided who had jurisdiction over you.  I live in India and so the laws of India apply to me. The government of India is the authority that has jurisdiction over me and the courts in India  are the forum I can go to. Simple. As the world started to globalise, the issue of jurisdiction started to become more complicated. If I did a commercial transaction with say an Australian company - who would have jurisdiction ?  Australia ? India ? That is why in contracts involving multiple countries it is always stated which law would apply and which courts would have jurisdiction. But physical presence or assets always enables that country to have jurisdiction . Althoug...

The story that two garbage cleaners in New York were fined and forced to retire after being caught accepting a tip of $ 5 caught my eye.  Not for the reason you might think. This story would provoke hoots of laughter in my country where nothing happens in the public service without a gratuity.  Even in NY, this must be an incredulous story - every man and a dog demands tips shamelessly for just existing in the same space as you. But the real reason this story has prompted this post was buried somewhere in the middle.   The two garbage men apparently netted $100,000 each, including overtime. Granted that they had put in long years of service. Granted that they probably earned lots of overtime. But still a wage of $ 100,000 for a garbage collector shows everything that is wrong about the United States. No wonder they lose jobs by the droves to India and China. No wonder unemployment is a stubborn problem.   But this post is not to highlight the completely unreali...

If you have been following the news in the US, you might have noticed an almighty hullabaloo over the the IRS (their tax man) having targeted Tea Party and Conservative groups. Much hot air and righteous indignation is being spouted and Obama has fired the IRS chief yesterday. Almost everybody on earth loves to bash the taxman (rightfully so !) and this is all good fun. Except that I believe that in this case the bashing is wrong. Or at least much exaggerated. What happened is this. The IRS admits that it subjected groups which bore the name tea party, or patriot to extra scrutiny. The fact that such groups are exclusively Republican and that the President is a Democrat seems to indicate political targeting. That is, of course, against the law. Hence all this noise. But why did the IRS do this - after all, they are not fools. If you try and answer this question, a different picture emerges. The problem all started with, in my view,  the appalling judgement by the US Supreme Court i...

So says Huawei. Really ?? No, not really. They are very interested in the US. Its just that they have realised that the doors to the US are simply shut for them. There has been a spat going on between the US politicians and Huawei for some time. It looks like the politicians have won.  And it begs the bigger question - can any company in the world be exclusively in one country or region (however big that might be) and hope to be a major player in the world. Huawei is a telecoms company. They sell networking equipment significantly cheaper than say Cisco. They used to be crappy ( Cisco would snigger at the mention of their name). Not any longer. Same quality, half the price. In an uncomplicated world, companies  should be falling over themselves to buy from them.  But then, the world is not an uncomplicated place. Huawei is a Chinese company. So what, you might ask ? Huawei's founder and leader was formerly in the Chinese army. Still so what ? Well, the ties with the Chine...

Come on Argentina. How often do you ask everybody to cry for you ?  On Wednesday, a US District Court Judge detonated an atom bomb (metaphorically, thankfully), in the world of financial markets. As usual, Argentina was at the centre of it. Here is the story, with a little bit of history. In 2001, Argentina defaulted on its sovereign debt - one of the rare instances of a major country doing so. A default essentially means that a country has no money on the due date to repay a loan it had taken and tells the creditors to fly a kite. The consequences of such an action are drastic - the country immediately becomes an international pariah in financial markets and nobody would lend to it anymore. That has been Argentina's lot for the last decade, and the situation Greece is desperately trying to avoid today. When Argentina defaulted, most of its creditors got together and negotiated a "restructuring package" which meant that they would get something back at least - spread over...

I am getting tempted to write political posts, despite all my resolutions to stay away from that area. The culprit is my good friend Sriram who continuously tempts me in that direction with incisive writing in his excellent blog. We then debate and counter debate on email !! So made a guest post there - taking the crazy liberty of  writing a letter to the President of the United States !

I recommend that Benjamin Lawski, head of New York state's Department of Financial Services takes my good friend Sriram 's  Geography 101 course . He might want to learn where the borders of the United States lie and where his jurisdiction is. The laws of the United States are enforceable in the United States. They are not enforceable on the world. I am referring to the spat between the DFS and Standard Chartered Bank . The problem is this. US law does not allow US entities to have any business dealings with Iran - neither the country nor its nationals. The US is perfectly entitled to have such a law - its merits or otherwise is for US citizens to decide. The problem is that the US would like everybody in the world to follow that law. That deserves the response - mind your own business. Standard Chartered Bank is a UK headquartered bank that largely deals with Asia and Africa. It has very little business in the US. However it does have a branch in New York where transactions ar...

If ever there was a nonsensical piece of legislation addressing a farcically trivial issue it is the introduction of the "Team USA Made in America Act". If ever there was proof that US senators and congressmen do nothing useful, here it is. A hullabaloo started when it was discovered that the US Olympic Team's uniforms for the London Olympics were actually made in China. Senators clambered over each other in expressing righteous indignation at this outrage. They are now passing a law that seeks to mandate that future olympic team uniforms have to be made in the US of A. This triggered some admittedly nostalgic memories of my first ever post when I took up blogging three plus years ago. My very first post addressed precisely this issue; so much so that I couldn't resist dredging it up.  Has much changed in three years ?

This blogger doesn't mind telling a story against himself. A couple of decades ago, he made his first trip to the US of A. Two experiences stand out in the trip. The first was his  seatmate on the flight. The gentleman was, to put it mildly, a mountain of lard. Having encountered many Rajalakshmis - she of the ample proportions -  this blogger thought he had seen it all. But "he ain't seen nothing yet". The specimen he was now witnessing would put all Rajalakshmis combined into the svelte and petite category . The worthy had boarded the flight first as "a passenger requiring assistance" and occupied the two seater we were to share. When I boarded, I discovered that both the seats had been "taken" (this was before the era which now requires man mountains to buy two tickets). I managed the two hour flight by standing next to the seat ! The second stand out experience was when I ordered a cup of tea at some cafe. Small size please. I got a plastic mon...

Its the world's ninth largest economy. Its six times the size of Greece. Its actually bigger than India. And its hopelessly bust . Yet; we aren't hearing much about it. Only because ,  its not a country. Its a state. The State of California. The world's biggest basket case ! This has been a favourite topic of mine having blogged before here and here . California has a state budget of some $90 bn. And it just projected a deficit of $15 bn. What sort of an economy runs a deficit of 18% of the budget ?? This has been going on for years . And what does that state do - simply borrow . And borrow. And borrow.  And with no hope of ever bridging that gap. If California had its own currency, I would be merrily shorting it. It would be a prime candidate for begging at IMF's door.  For once you can't blame the political leaders for the mess, although they are the ones being vilified and quartered. The blame must squarely rest on the citizens of California. For they are the on...

Immortal words from an immortal movie. If you don't know where this quotation is from, click here (excusable because this was before you were born) I am however writing about more prosaic things. Like the American nomination of Jim Yong Kim for the Presidency of the World Bank. Readers of this blog may recall that I had railed about the practice of nominating an American for the head of the World Bank and an European for the Head of the IMF here . The IMF vacancy came rather suddenly after the antics of Dominique Strauss Kahn. After some pious sermonising about how it wasn't an European stitch up, the post went to Christine Lagarde, another French person ! Now there is a vacancy coming at the top of the World Bank as Robert Zoellick is completing his term. The Americans are now wanting to stitch this up. But its the American they have nominated which is raising eyebrows. Kim who ?? Jim Yong Kim is an eminent American, no doubt. But he is an anthropologist and physician by prof...

Schweddy Balls ice cream is brewing up a storm. It has caught the ire of One Million Moms, who are protesting about it. Wow ! Ben & Jerry's seems to be the flavour of the month on this blog. They are the lot who are churning our a limited edition Schweddy Balls ice cream, which they claim has risen to the top of the charts - presumably charts exist for ice cream flavours too.  Apparently it is "fudge covered rum balls" , whatever that means. Schweddy Balls is a take on a Saturday Night Live skit (a television show in the US). An innuendo laced old skit aired on that programme has the "memorable" tag line - no one can resist my Schweddy Balls. On Million Moms is some obscure conservative organisation based in Mississippi of all places. They are up in arms. They say the language is unsuitable for children. They have forced some supermarket chains not to carry Schweddy Balls and are petitioning the company to stop the production. Little wonder Ben & Jerry...

Even if you didn't suffer from aerophobia, there are some non trivial hazards of flying. Missing baggage for example. Or delayed or cancelled flights leaving you stranded in some god forsaken land. Some even allege deep vein thrombosis. Insomnia due to your neighbour's high affliction of stertor could be another. But even the most wildly imaginative sort could not have thought of adding "going to the loo" in that list. But it is now conclusively established that this is a real hazard. Consider the evidence. Last Sunday Frontier Airlines flight 623 from Denver to Detroit was escorted by F16 fighter jets. Why ?? Apparently two men and a women were seated in a three seater. One guy got up to go to the loo. The other guy stood up.  And the guy spent a "long time" there. That was it. F16s escorted the plane and on landing the three were handcuffed and led off to be questioned. The poor lady did nothing. She was simply sitting and yet was considered suspicious b...

Of all the great mysteries of the universe, none is more confounding than that of consumer behaviour. You would have thought that it shouldn't be an unfathomable mystery - after all you and I are consumers too.  But no. It is inarguably established that you can even hope to nail down the Higgs boson , but cannot begin to understand this mysterious creature called the consumer. Take the example of the Missoni collection and the outage at Target yesterday. Missoni is an outrageously priced design house - designing everything from clothes to patio sets each costing hundreds or thousands of dollars. I cannot imagine why anybody should pay thousands of dollars for something that is essentially similar and available for $49.99, but we shall pass over that lightly. Target is a discount store in the US. At first glance, its not sure what the two have in common - you would have expected that one would wrinkle its nose at the other and the other should be showing its finger at the worthy. ...

If I told you that the most important person in the world now is Deven Sharma, you are most likely to be flabbergasted. Deven who ?? I am absolutely certain that not one reader of this blog has heard of him before. In fact I am sheepishly admitting that I had not heard of him either, one week ago. And yet for the next one week, he may actually be the most important man in the world. Of course, this is hyperbole. But then what is journalism (ha ha) without some excessive exaggeration of reality. You can debate about the "most important man in the world" bit, but the actions of him and his organisation are certain to affect the world very profoundly in the week to come. Deven Sharma is the President of Standard & Poor's one of the world's three premier credit rating agencies - Moody's and Fitch being the two other. In a short while, all the three agencies have to take a call on downgrading of America's Tripe A rating. The drama in America on the debt ceilin...

The Unites States spends some $700 bn on defence. Its spending is more than the combined total of the next 17 countries - a list that includes China and Russia (See The Economist's chart on defence spending here ) . It's none of this blogger's business to question whether it should be having so many bombs - that's for American citizens to decide for themselves, although we can have a mild interest as to whether it is sensible to fire a AGM Hellfire II from a drone above North Waziristan at a cost of some $70,000 to hit a donkey in its ass ! This blog, having some pretensions to economic bias, instead ruminates on the sheer scale of cost effectiveness that is possible on defence spending. Without reducing the number of bombs that is. You see, the traditional ingredients by which businesses attack costs are simply not present n the field of defence. There is very little competition. The best way to reduce costs is competition. But there is little chance of that with US de...

Guess which country is this ? The decision on where a company should locate a new factory is made by the unions and the government. The company, which thought it could decide for itself,  is rapped on the knuckles for presuming this right. Where could this be in this day and age - North Korea ? Zimbabwe ? Libya ? Alas, none of these. It is actually the US of A. The company in question is Boeing. For long it has had factories in the Pacific NorthWest - in the states of Washington and Oregon. It now needs additional manufacturing capacity for making the Dreamliner - the new 787  series that is being launched worldwide.  It set up an additional factory in South Carolina. The unions representing the Washington and Oregon plant workers filed a complaint with the National Labour Relations Board (NLRB). The NLRB upheld the complaint - Boeing was wrong to open a factory in South Carolina !! The case boggles the mind. Boeing did not shut down any factory or lay off any workers. On...

In the aftermath of the tragedy at Tucson, Arizona, there has been a frenzy of chest beating in the United States as to whether the poisoned and inflamed political rhetoric that is now commonplace, was a contributor to the tragedy. It took The Economist to say that was the wrong question. The real issue, as The Economist argues , is the gun control laws in the US. For those unfamiliar with the Tucson tragedy, a deranged man attempted to assassinate a Congresswoman, Gabrielle Giffords. Six people were killed, including a nine year old girl. A further thirteen were injured, including Ms Giffords, who is battling for her life in hospital. Unfortunately, such incidents have become all too common in the United States. Even more unfortunately, many of them happen in school and university campuses. Wikipedia even has a depressing listing of such massacres here . Guns are far too easy to get and own in the US. The right to bear arms is enshrined in the Second Amendment to the US constitution....

I had never heard of ShoreBank until I read this article in The Economist. The Economist titled its article – Small enough to fail. I add an “alas” to my post header. ShoreBank , according to The Economist article, thrived for 35 years on a business model of a small community bank that targeted lending to poor people in poor neighbourhoods. It actually had higher repayment rates and lower delinquency,  as any careful micro lender will tell you.  But then the recession struck like a tsunami. In the neighbourhood in  which it operated, the recession has been brutal and most people lost their jobs. Despite very good payment records in the past, they couldn’t keep it up.  Unfortunately its location in Chicago and therefore the association with Obama made it a political lightning rod. No way it could be bailed out. Alas, it had to go. This article set me thinking on the risk quotient for small businesses. By definition, small businesses cannot be diversified in terms of ...

Yesterday was a theatre that has now become a regular feature of US political life. A self righteous and pompous Committee of the US House or Senate “summons” a CEO of some company and harangues him. Political windbags fall over themselves to misbehave with a foreign national. Yesterday was the turn of BP’s CEO Tony Hayward. It got so bad, that one of the Representatives in the Committee, Joe Barton, actually apologised to Hayward and then the howls from the lynch mob made him recant the apology. The White House and the US Senate and Congress has forced BP to fund a $20 bn escrow account for “damages” with regard to the oil spill and for it to be administered by an “independent” third party and pay out claims. What they have essentially done is to ask BP to write a blank cheque. BP has no choice really; and it duly has written a blank cheque. Make no mistake. BP is at fault. For taking safety too lightly. For not having a backup plan at all – in the companies I have worked in, you get ...