Buffeted by age?

Warren Buffet has kicked up a storm by commenting that the super rich in the US need to be taxed more and as a means of example he said that he paid 17% of his income as taxes whereas the people he employed paid in excess of 30%.

One needs to understand that taxes are a means of incentivising business. Thats why Capital Gains taxes are lower than other forms of taxes. Also incentives for exports are given in countries with net forex outflows (like India).

The issues that need to be discussed is the abuse of these lower taxes (or nil taxes) and how corporations have set up tax free contracts. Just plugging these loopholes and reigning in Government expenditure would be more than enough.

Of course taxing the rich at higher slabs will not hurt BUT do you want to be branded a socialist in capitalist america?

Too smart by half!!

Karunanidhi thought he had a winner when he gave away free TV's as it created a monopoly for SUN TV's cable and Directv business. What he forgot was that power consumption doubled as people started watching more TV (add the lights and fan in some cases AC too!!) and by the time the next election came there was huge power shortfalls across the state!!

Added to this the free food and money being given away resulted in people becoming too lazy to vote for him when the time came around!!

So it would do good for the future politicians to note that freebies dont work.

Crime of War

There has been a lot of thought given to war crimes BUT none to the war itself.

There have been innumerable killing fields since time immemorial -

Inter tribe wars

Inter faith wars

New world wars - colonisation

World war II

Local ethnic conflicts - etc etc..

In all this the stakeholders are not seen taking to the roads risking death in the crossfire to stop the "crime of war". Nor does the International community impose sanctions and allow safe passage for those persecuted in a war zone. (unless of course oil is at risk!!)

The latest "war crime" making headlines is that of the Srilankan Army wrt the tamil population. The fact that a soft war was going on for over 3 decades and had caused huge civilian casualities, the fact that the tamil uprising had been termed as a terror outfit and the fact that the local population had never once spoke against the war with the leaders that be, shows that they had accepted to be silent partners in the "crime of war". To cry wolf when the soft gloves were taken off and the hard hammer of a government was unleashed which brought a swift end to 3 decades of war is at best opportunistic.

In all war there are victors and there are those who lose all. Just by showing the atrocities of war and asking for a "war crime" retribution makes no sense when you were silent partners in the "crime of war".

The Tamil people can be best served by getting international help in getting a proper dialogue in place with the Sinhalese for certain political gains using the force of these "war crime" evidence. This will more than compensate the loss of the war in the long run if peace can be finally obtained. I am sure the people of Srilanka will vote out the incumbent to send a strong message of peace. The ideal situation of course would be for the President to resign as his work is over and hand over the reigns to one more acceptable to the ways of peace than war.

As for the excesses committed in any war - it is these very excesses that cause a swift end to the conflict. This paradox is what makes war a crime.

The current situation with respect to the Maoists in India is not much different than the Tamil conflict. As long as the government has a soft stance in the war with these people this war will keep growing and that point will be reached when the hard hammer will be used and only then will that conflict end.

The Question that all have to answer in the end is "what would be more beneficial - a political process of reconciliation between the tamils and the sinhalese or some mindless vendetta?"

Suprisingly the answer by the Srilankan Tamils will be the former than the latter.

IFRS and (un)fair value (contd..)

Lie of those who are pushing for IFRS nailed.

Comment on AS7 by Delloite partner -

"Percentage of completion method is a leap of faith," says N Venkatram, partner, Deloitte Haskins & Sells , an audit and advisory firm. "A lot of it is based on what other professionals certify."

(entire article at http://economictimes.indiatimes.com/markets/real-estate/realty-trends/real-estate-experts-doubt-percentage-completion-method-of-revenue-calculation-by-builders/articleshow/8957198.cms )

IF this AS is flawed because one cannot rely on what a professional certifies then the entire IFRS is flawed as the entire accounting is at the mercy of "professionals" and how they "value" balance sheet items!!

Basically I dont know what scam or financial tragedy the regulators are waiting to happen before they decide to junk the IFRS.

As i keep saying retain historical cost accounting and use IFRS as an analytical tool for all listed entities to facilitate one common platform for comparision.

Anti corruption - the demands - an analysis

1. To bring back in the nation Rs. 400 trillion (US$ 9 trillion) of black money which is a national wealth. - this cannot be more than the debt generated by the govt and the sum of money supply - assuming that only politicians and businessmen (and that too only some among them) are corrupt/ create black money - the actual amount may be in the region of $300-400Billion

1.1. Create a law to declare money stashed in foreign accounts as national assets. - one more law. all the best.

1.2. Create a law for foreign account policy where each citizen having a foreign account has to disclose complete information. - already there in FEMA. enforce it.

1.3 Sign US Convention against Corruption, thus paving way for getting black money back. - that convention works for the US as they have the military strength to chase down those who dont repond to enquiries under this convention. is our military capable?

1.4 Recall high denomination currency i.e., 500 and 1000 Rupee notes and make 100 Rupee note as sparse as possible. - no issues with this - but not practicable. i fear this dilutes the value of the other demands.

2. To stamp out corruption fully by enacting stringent laws for a capable Lok Pal Bill which should have three important points? - there are already enough laws - they arent enforced for a multitude of reasons - this lok pal will meet the same fate - just another law. try to set accountability targets and more transparent reporting procedures for existing laws - that would be more meaningful.

2.1 It should be able to punish any official irrespective of designation if found guilty. - already exists. only constitutional authorities, PM and president are not covered except by impeachment law. i personally feel that the crimes that these people can be tried for has to be preset in parameters of value, hardship etc etc. the jobs they do is not easy and there are times when the rules are ignored to get a result. this latitude at this level is required otherwise we wont have people running the show - rather a gaggle of people and that is to be avoided at all costs as no "decisions" will ever be made. the answer for this is that the procedure for election/ appointment of these people has to be made more inclusive/ transparent. the current persident has a lot of unanswered questions on integrity - but was still wlected simply because the congress has the numbers - same with the CVC who had to resign rather uncerimoniously etc etc. these were done just because the party in power could get away with it.

2.2. Any person should be able to file FIR against corruption and if proofs are provided then Lok Pal should be able to take action against the guilty. - anybody already can file an FIR - make it automatic by sms/ online etc.

2.3. Once fast track court declares a person guilty of corruption then he or she should be given harsh punishment like death sentence or life imprisonment if corruption involves crores or lakhs of Rupees. It should have provision of declaring all assets of such person as national assets. - death penalty? what if the person is innocent. its enough if the assets are attached - the family has to prove through ITR's what they have earned on their own - rest will be presumed to be tainted money and confiscated.

3. To end foreign laws, customs and culture prevailing in the independent Bharat so that every Indian can get economic and social justice. We should follow Mahatma Gandhi’s book named Hind Swaraj mentioning that after independence we need to remove British system and adopt Bhartiya system. - what??? you must be joking. whatever the differences are - i am sure these can be debated and if found functional/ practicable they can be recommended and passed as law by parliament.

3.1. We need to abolish Land Acquisition Act 1984 because by using this Act the government is exploiting farmers. A farmer who is the producer of food is not respected and is getting killed daily by wrong government policies. We need to impose complete ban on genetically modified food which is dangerous for the health of citizens of this nation. - GMO's , vacines have to go. as for land acquisition - see how the devil in that can be removed - without a due process for land acquisition even what they are getting today they will not get tommorow.

3.2. On the language issue the whole nation is suffering because 99% of people do not know English. When countries like Japan, China, France, Germany, Denmark, Russia, etc. educate their citizens in their own language and produce doctors, scientists, engineers, etc. then why we cannot do so in our own national and native languages. Each of our languages has more words than any foreign language. Why we are neglecting and giving such a low importance to our own languages. Technological innovations and inventions do not depend upon a language, it is a function of human intellect and mind and the world is a witness that Bhartiya’s thinking and mind is one of the best in the world. Language of law, justice, science, engineering, medicine, etc. should be in our national or regional languages then only smart kids of poor people will be able to become scientists, doctors and engineers. - local panchayats etc can vote the language they want their kids to learn in. no issues here. resent it when this is forced as national federal policy.

3.3. Why are we given Macaulay’s education system which was created to make Indians as Englishmen and why 34735 laws are created by British still imposed on this nation? Why people of this country are still tortured and humiliated by using those laws in the same way as British used to do. - no issues - lets sit down and review each and every law and expunge those not functional and retain those that are needed for maintaining order and harmony in society.

3.4. When Bharat has given the world physics, chemistry, biology, mathematics, all social sciences, law and justice system, astrology, astronomy, astro-physics, social structure, time –days, years, etc., names of planets, economics, a cultured society and highly advanced philosophy, and spirituality to the whole world then why are we always taught that everything is developed by western world. We ought to give highest preference to our own culture. - very general - kindly be more specific - jingoism only dilutes the value of the other demands - one has to be clear, focused and rational in demands.

3.5. Although democratic system is best in the world but it has its demerits too. Had we not have this faulty law and order system in our country then such a big conspiracy would not have been created, and so much corruption and such a bad condition of our people would not have happened. So those people who are doing this conspiracy in the name of democracy and are looting this nation by corruption, it is imperative to change them and such a system. Funding of election, mandatory voting and electing the Prime minister directly by the citizens of this nation should be there. Thus only honest people will come to power and then only strong democracy and high value parliament will be formed. We want to make it clear that we do not want to change the Constitution of India created by Dr. Bhimrao Ambedkar but want to change the system created by British and still followed. Example Land acquisition act was not created by Late Shri Bhimrao Ambedkar but by the British and so was Macaulay’s education system. - so who decides who is honest - you? dont think so - democracy is still the best. maybe we can have a system that the PM is elected from a pool of independents and that the political parties can only send ministers based on their representations. worth looking at.

War cry..

After 10 years and bankrupting a nation (more than 6 trillion dollars on homeland security and wars in afghanistan, pakistan, iraq, etc etc) the objective has been finally achieved. The most wanted man (by the americans at least) is dead.

Immediately AFTER the event we have people like the Archbishop of Canterbury Rowan Williams and other "human rights" watchers who are expressing their "discomfort" over the killing of an unarmed man.

HELLO - wake up and smell the coffee - this is WAR and all is fair. Where was their collective humanity hiding DURING the past decade when scores of innocents were killed trying to get to Osama? Also the inescapable fact that the American government now will inflict great hardships on its people as it collects higher taxes to repay the debt that has financed this war? (increasingly more and more of them are living in INHUMAN conditions)

The fact that people forget is that the hydra monsters of terrorism are all local faction groups set up by the CIA at various times in the past. They think that by killing the figureheads (saddam, osama etc) these groups will be destroyed BUT as they woke up and smelled the coffee they realised that the local resistance groups they had helped set up had become systems of terror that have tentacles far and wide and there is no ONE true head.

So the debate on whether the war is moral or not may continue, who started it etc etc BUT personally there is no humanity in a terrorist that one has to shed tears of human rights when one is killed - armed or not. Remember none of their victims were armed OR were at war. They were normal cilvilians buying grocery, out for a movie, at a restaurant etc etc.

Just as Bheeshma and Drona were killed in the battle of Right over Wrong by adopting means not exactly rooted in Dharma - so too the war on terror (adharma), in future, will be fought with increasingly questionable means.

Fakes and Flying

The latest scandal to hit is that of fake pilots.

Well the issue of fake pilots has to be understood from the point of :

1. Can he pilot a plane or not - nothing more nothing less.

Rest all degrees are nonsense anyways!! Most people who are termed as fake are those who have given fake marksheets - but they have undergone the training and passed and most are amongst the best pilots in the business anyways.

NOW the larger issue is - HOW did they pass ?

Nobody wants to ask this uncomfortable question as most are in a job because of some "fake" certificate anyways. If one were to take a proper audit of all lawyers, engineers, doctors - I am sure a far greater percentage of fakes would be found here.

The bigger question is and SHALL ALWAYS BE is - Are these so called fakes doing their job or not AND Oh! - This question applies to those who arent fakes but are incompetent too!!

This brings us back to the central simple Question all over again - How did they pass the exam to become a fake or incompetent whatever!!

Cairn, Vedanta, ONGC and the crude politics of OIL

The latest skeleton making its way into the governments cupboards is the mess they have been making with the ONGC-CAIRN-VEDANTA royalty issue. It has become painfully clear that Vedanta hadnt done a proper due diligence as the issue of royalty recovery was not spotted by them and Cairn was betting on the same not being spotted so that they could get a higher price for their shares!!

What interests me is that even after it has become painfully aware that the royalty is to be recovered from all the stakeholders Why is the government now suddenly saying that let us give the green signal for the takeover of Cairn AND that the issue of royalty can be settled later?

The cost of arbitration for such an issue can manage the mid day meal scheme of a whole district for a year!! Quite obviously this issue has to be resolved BEFORE any merger or takeover is sanctioned and more importantly the same cannot be done without the express consent of ONGC.

Of course one should also not lose sight of the fact that the price that Vedanta pays for Cairn will be different depending on the royalty issue. So why is the government in a tearing hurry to bless this deal when Vedanta can get a significantly lower price once the royalty issue is settled in ONGC's favour? (as expected)

SEBI is as usual snoring away in one corner while the shareholders of Sesa Goa, Sterlite and Vedanta fend for themselves.

HONDA - not the HERO of its shareholders

Going by the convoluted way in which the shareholding is being transferred by Honda to the Hero group with total disregard or total detriment of the other shareholders speaks volumes of the chicanery that exists in the system.

The most transparent way would have been for HONDA to have given these shares as a rights to all existing shareholders (would have been 1 share for every 3 shares held) at the price of 740/-.

The other issues that are interesting to watch out for here are the action that the IT department will take for the implied gift being given by HONDA to HERO - almost 1100 per share when the agreement was initially drafted to a more sedate 800 per share now. that works out to 240/- per share as a gift tax that the hero group will have to pay to the govt for the gift received by it!!

also the immediate sale of these shares to PE players at a price above 1540 would also call into play short term capital gains tax. keep watchig this space to see what the IT department does in this deal.

SEBI has snored through the entire episode - lets see what what the tax collector does ...

Defending the indefensible

On the one hand as the 2G saga continues and the new Telecom minister, who has been sent with a one point agenda to shut down the investigation and openly encouraged by the entire industry (as they are all the beneficiaries without a single exception i guess - and even if there is an exception he must have been promised proper compensation once the dust settles) - took it upon himself to discredit and rubbish the CAG report. By the time he could take his foot out his ulcerous mouth the Supreme Court went on and admitted the CAG report as evidence. Now the entire industry is on tenterhooks as they along with a corrupt minister will also have to "go to jail" NOT pass go or collect their 200!!

On the other hand the tamasha of the appointment of a tainted IAS officer as the Chief Vigilance Commissioner (CVC) got curioser by the day and the virus of "Footus mouthus" continued here too as a cornered government said that it was not made aware of the fact that the incumbant was a party named in the FIR for the palmolien scam dating back a couple of decades back!!

What really surprises me is that once the government is NOW AWARE, what is stopping them from removing such a misfit? Sadly there was none to answer us when we called. Even the answering machines had long given up recording messages as there was none left to hear them For they were all either defending the indefensible or had been struck the "Footus mouthus" virus.

A few of my friends said that it was time that India did an Egypt. Sadly we still have a lot more water to go by under the bridge of the "haves and the have nots" before people set aside their differences of caste, colour, religion etc etc and take on the politicians who are the one true enemy of the "Aam Admi" (common man)

2G and the Raja

"A general equitable principle that no person should be allowed to profit at another's expense without making restitution for the reasonable value of any property, services, or other benefits that have been unfairly received and retained."

The Tamasha of the 2G probe continues and nowhere in all this has there been a call to remedy the loss!! There are enough precedents in law to support a re-auction of the spectrum and forcing the telcos to pay the difference under the "unjust enrichment" doctrine.

The Right hand man (Kapil Sibal) of the "first family"(gandhi's) has now been sent to the telecom ministry with a single directive - "obfuscate, confuse, redirect" so that in the end nothing comes out of all the allegations.

refer my earlier blog at http://forsec.blogspot.com/2010/03/king-of-elections.html

With Raja having served his purpose the first family has no more use for him. But of course other than removing him from the post of "union minister" dont expect the powers that be to arrest or even jail the erring minister - because we all know who were the ultimate beneficiaries of the lucre.

It would indeed be interesting to watch Kapil Sibal destroy what little credibility he has left as he tries to defend the indefensible. Looking forward to some major "footus mouthus". Keep watching this space.

He has already taken some baby steps in that direction by taking on the CAG report and saying they dont know how to do their job!! Well Done indeed Mr Minister.

The Citi never sleeps

To add to the latest in the scams front is the one by shivraj puri, a manager in Citibank, gurgaon branch.

The media has been going to town with an initial swindle of 400Cr which now stands at 300Cr. This is sensationalism at its best.

The issues are:

1. what was the purpose for which the investors gave their money to Citibank ?

2. was there anything in the documents wherein the investors gave rights to Puri to use the funds on their behalf ?

3. finally when he was doing all these trades why wasnt the brokerage houses questioning him on the sources of his funds as required by SEBI?

No media / press person has been writing about the above which i find very disturbing as there seems a total lack of "informed" writers OR even bigger a total lack of "informed readers" !!

The bigger worry is the way investigative agencies are dealing with the case. Common sense suggests that Puri be allowed to close out his positions. The minute public knowledge of his positions are made known to others they can take opposite positions (as his accounts are frozen) and thus bleed him to death. This ultimately hits the investors whose money is invested in the first place!! My fear seems justified as the fall in the markets in the past week seem too orchestrated and maybe, just maybe it is because the frozen positions of Puri is "private" knowledge to "few" in the "know" and they have already taken these opposite positions.

The transparent way would have been to just transfer these positions to a SEBI appointed trader/ broker etc and tell him to close these positions at the earliest (1-2 days) and then to freeze the funds in a bank account till the investigation is over and it is determined how much money goes to each investor.

Guess everybody is sleeping at work and that is why the Citi never sleeps as it is too worried for its future..