Putin - Savior or Tyrant?

I and an uncle of mine, who has varied interests and great knowledge on middle east, had a discussion on Russia's action in the middle east, especially Syria, where the Russians under Putin had taken the fight to ISIS and the Syrian rebels in support of President Bashar al-Assad. While I agree with his assessment that what Russia does is noble and good, I didn't necessarily subscribe to his view that Russia would emerge the next super power from the ashes of World War 3.

It is rather ironic (not that much, this Wired article claims it is common at this time of the year and gives tips on how to win) that the discussion happened on Christmas when the whole world celebrated the birth of Jesus Christ, prince of peace (Oops, not the whole world, many Russian Orthodox churches celebrate it in January). So is Putin a Savior who would restore Russia to former glory or a tyrant who would run Russia to the ground. I have my own reasons, which I discuss below, as to why the latter is more likely to happen though I would love the possibility of the former happening. Who doesn't like a triumphant, underdog story?

Economy

Russia is no longer the heavy weight it used to be among the BRICS nations. In fact most nations including Brazil and China are fighting high inflation and severe slowdown in their economies. The sanctions imposed by the European Union and the USA after the Crimean annexation and subsequent play in Ukraine is also having a negative effect on the Russian economy.

The fall in oil prices, whether it is being orchestrated by Washington, Riyadh or Moscow itself, the fact remains that Russia is suffering along with the other oil economies. Saudi Arabia is likely to raise debt which would help them fill in the void left behind by the plunging oil in their treasuries. Alaska is also proposing to bring in higher income tax rates after nearly three decades to plug dwindling oil revenues. Saudi Arabia (AA-) is better placed than Russia (BB+) in ratings by S&P and hence would have a clear advantage here.

The allies also play an important role here. On Russia's side we have got Syria, Iran and Iraq for now. Syria is still battling ISIS and have conceded large swathes of land to the self proclaimed Caliphate. Iran recently won a diplomatic victory in getting the West remove crippling sanctions against it by agreeing to go slow on its nuclear weapons program and is unlikely to antagonize them again. Iraq is still rebuilding itself from the invasion by the United States and subsequent IS menace. There are other countries such as China on the fence, which is battling its own financial crisis at home and also concerned about USA's involvement with its regional rivals. The other countries are too small or economically weak to bring anything substantial to the table.

Against Russia we have Saudi Arabia and Turkey, two of the most powerful countries in the middle east. Israel can also be counted in as also Pakistan. The United Arab Emirates can bankroll the fight for long. Though these countries are economically sound if push comes to the shove they can be backed by the Americans and the Europeans with their large purses miffed by age old Soviet adversity and recent Russian action in Ukraine and Syria.

Advantage: Anti-Russia coalition

Military

The Soviet Union was a formidable military power but the same cannot be said about the Russians. When the Russians battled Georgia over South Ossetia and Abkhazia their performance was assessed and found to be lacking by both International and Domestic experts. Though their performance had significantly improved during the Ukraine and Syrian conflicts, it is still not the kind that would upset the Anti-Russian coalition. Russia's allies are also not in a very strong position. Iran has dated weaponry and is dependent on Russia for its' supplies. So is Syria and most of their weapons fell into rebel hands when Syrian soldiers defected to join the rebel ranks.

China, who is sitting on the fence on Syria, if it decides to join would be a game changer. China has weapons that are either imported or copies of some of the world's most renowned. However, the question is whether they will enter the war. Chinese economy is already in a slowdown and being a trade economy heavily dependent on exports of finished goods, war is bad news. A slowing economy doesn't augur well for domestic politics either. But if they were to enter despite these they might be aggressively engaged more locally in the South China Sea, Tibet and India. Also entering the middle east in support of the Russians and the Shias against the Sunnis may lead to loss of relationship with the Pakistanis. Moreover, the Uighur problem in Xinjiang may peak considering the fact that Uighurs adhere to Sunni practices.

Contrast this with the Anti-Russia coalition. In the middle east we have Turkey, Saudi and Israel ready to defend against Russian action. The United States and its allies would be ready with arms and ammunition to back them up. Considering that Turkey is a NATO member, any attack on them would invite NATO ire which might affect Russia closer to home than in Syria. Probably the reason why Turkey downing a Russian fighter has more or less received muted response.

While Russian performance have significantly improved since 2008 it still doesn't match its opponent and allies.

Advantage: Anti-Russia coalition

Domestic Politics

A country need stability internally to project power externally. This is important, especially in this age, when the enemy actively uses internal disturbances as a policy to attack. Russia in this front has many active instability factors - separatists, drugs, demographics, corruption, mafia and oligarchs. The fact that Russia lacks any credible opposition to highlight excesses by the Government and most of the fourth estate being owned by the Government or state run companies doesn't help either. Divergent views aren't tolerated, be it from a Journalist, physicist or from that of a Chess Grand master, they are silenced either by assassination or intimidation. In a full scale war these can be put to maximum use to divert  Kremlin's attention from the battle field.

Iran too faced protests soon after elections in 2009 like Russia did after Putin came to power in 2012. The supreme leader, Ayatollah Khamenei, is still a central figure and a force to be reckoned with, known for his fierce anti-west tirade. Though the current Iranian president, Hassan Rouhani, is a moderate, who was able to strike the deal with the west on Nuclear energy, he still is very much influenced by the Ayatollah is an open secret. There is a civil war going on in Syria and Iraq isn't exactly peaceful either.

China has a more complicated problem at hand. The bond that holds the Chinese people together is that the economy has been growing, providing opportunities, keeping them busy. So busy that they have never felt the need to fight for government services, labor incentives and freedom. The unraveling economy can have a cascading effect on the cheap labor which might make the local population to raise against the state in protest. Apart from this there is the restive province of Xinjiang with the muslim Uighurs who are fighting against the Han Chinese for autonomy. Tibetans too are protesting the presence of Chinese in their land. All this flash points could be activated if China decides to side with Russia in the war.

On the other side we have dictatorships too - UAE, Saudi Arabia, et cetera. However, these don't have an imminent threat of losing power. Turkey has a vibrant democracy so does Israel and Pakistan, at least on paper. The other American and European powers have a strong mature democracy and institutions to take care of internal issues freeing their leaders to concentrate on the war, should the need arise.

Advantage: Anti-Russia coalition

It is simple to dismiss all the above as western propaganda. But a propaganda targeting whom would be a valid question. If it is to shape public discourse to prepare them for a war then it is not happening. People today are more connected and war averse than before. And in this age of Wikileaks, Snowden, Anonymous and a free press, a propaganda of this scale, if it was one, would have been easily called out as one. Contrarily it is countries like Russia and Iran which have a press high on propaganda.

So is a great war in the offing then? I would say, NO!

Russia, Europe and America are too smart for it. The great powers have more or less understood that war creates more problems than it solves. We have seen Europe, once the world's hot spot for conflicts, kick out all misunderstandings and merging together for good. Russia went ahead and created a trade union combining Belarus, Kazakhstan and Russia into an Eurasian Customs Union. USA is consolidating its friendship with Mexico and Canada and is extending a hand of friendship to even former enemies such as Cuba.

So Putin - a savior or tyrant? A savior to his people thanks to the propaganda that is going on in Russia and among the Russian people. A tyrant to the west and all who view Russia as a threat including Ukraine, Georgia, et cetera. What Putin actually is a smart negotiator, a shrewd businessman and a sly fox. His negotiation skills came to the fore when Syria was to be punished by the policeman of the world. He means business when he says he would protect Russian interests (which include ethnic Russian population in other countries) under threat using force. When the heat is on him he turns around, withdraws to negotiate and concludes his business - the French saw it during Georgia, Germany and Europe in Ukraine and the United States probably would see it in Syria.

Disclosures:

• I am a big fan of Russia, the country that demonstrated how Communism (me a fanboi) can work (albeit for a short time with all the inefficiencies).
• I also like spies (have read most works of Tom Clancy, Robert Ludlum and watched most Bond movies) and hence Putin, the KGB agent, naturally commands my admiration.
• I understand that no one can be without bias but I am working on containing mine.

Is 'Uber'ization the answer?

Very few companies can boast of having become so famous that they ended up as verbs, mostly as a jargon in the business circles and a rare few officially. There is a term which defines this - Neologism.

Wikipedia had this to say on Neologism

A neologism (/niːˈɒlədʒɪzəm/; from Greek νέο- néo-, "new" and λόγος lógos, "speech, utterance") is the name for a relatively new or isolated term, word, or phrase that may be in the process of entering common use, but that has not yet been accepted into mainstream language.

Google was one among them with more people replacing the term 'searching' with 'googling'. It was added to the dictionary about a decade back. And Xerox was one of the earliest. Off late, a new word is in vogue -'Uberization'. As you probably know, it comes from Uber, the transportation company that infamously employs more developers of software than drivers of automobiles. Uberization means different things to different people. To some it is just disruption with new technology/processes and to others it is a service part of the nascent yet promising 'on-demand, sharing economy' driven by technological innovation. It is the latter definition I referred to while penning the below content.

Uber was successful in disrupting the market of good old taxis and works as an intermediary in connecting service providers (Cab drivers) and demand (Cab riders). Uber grew fairly quick, thanks to generous funds from the venture capitalists eager to identify the next Google. Incidentally, Google itself is a big investor in Uber through Google Ventures. Uber has been efficient as a service and cost effective too since the majority of the job is done by algorithm with little to no human intervention. They have also been quite aggressive in expanding as expansion to newer territories and scaling up operations took no or negligible effort. The ubiquitous technology infrastructure in the form of smartphones in the hands of the masses and the ability of computer hardware to more or less keep up with Moore's law has made sure the business model remains competitive.

The social reasons were compelling too. When Toyota brought in Just-in-time (JIT) manufacturing it was touted as a game changer and it did prove that it was an efficiency multiplier and waste eliminator. However, the credit for taking JIT from factory floors into personal lives goes to us, the Millennials. We called it On-Demand Services. This was partly because of the lack of patience. It is indeed ironic that we complain of a mundane, robot-like life when we are ready to adopt assembly line techniques in real life.

The logic behind on-demand services, however, is solid. Uber, for example, tries to address the transportation problem for the masses, especially in the USA, where the public transportation system is lackadaisical. Their argument primarily is this - Why own a car when you can demand one at any point of time. It makes massive economic sense for the consumer. A car would spend most of its time parked at home or in office and little time transporting. Moreover, there are also overhead expenses such as service costs, insurance, et cetera associated with ownership not to mention the physical and mental stress while driving. It also adds value in that a single car in the Uber world ends up transporting more people, many times than a single car in its whole life time when they were owned. And there are the usual arguments on pollution, traffic and the likes.

The efficiencies no wonder are making people call for the Uberization of the whole economy. However, that may be a bad idea.

Uber and most other on-demand services treat the service providing professional as a contractor and not an employee (except in California). This helps the company in running lean and also frees them from other conventional employee benefit related expenses. However, it restricts the company’s reach in controlling the contractor behavior. Experience shows such lack of a leash has been exploited to unleash terrible crimes on unsuspecting consumers.

It is likely that the quality of the service would suffer because of the above reason. A contractor is largely not bound by strict employee guidelines and is likely to deviate from moral and social responsibilities in which the company believes in. The market is expected to instill such guidelines through a network of feedback, leader boards which affect the reputation of the contractor but the ease of obtaining a pseudonymous identity would render it worthless. Just plain human tendencies of forgiveness screw the feedback mechanism too.

The contractor has the freedom to be online or go offline at their chosen hour. There are no fixed minimum hours of work expected out of them. While this gives the contractors the freedom it would break the whole system spreading the available resources too thin and insufficient. It would also result in what is known as surge pricing which is discussed below. This was experienced in the recent tragic Chennai floods when most taxi aggregators including Uber were not able to service all customers (though they need to be applauded for their relief efforts).

Demand and supply for a commodity or service affects all businesses. On-demand services try to make the most out of discrepancies in demand and supply. This is because when the demand is high and supply low, the emoluments are attractive and new suppliers get into the system and when the reverse happens, supply is high and demand low, the consumers get a better deal. Free market economics at work. However, Surge Pricing, as it is known, is not embraced by consumers who feel they are being exploited. Moreover, if not done properly any cost optimization achieved earlier may be lost due to surge pricing methodologies.

Surge pricing would also drive up inequality (related), which according to many, is the single greatest threat facing humanity. A free market is an economist's dream come true but very rarely are markets free and ideal. When the fares hit the roof only those with the ability to pay would be able to avail the service and the less fortunate would be left behind to fend for themselves. If the whole economy is Uberized and all services are to be delivered, on-demand with surge pricing then on a rainy day a low income household would probably lose all the saving they accumulated when the sun shone.

Thus I end my argument on why Uberization is not the answer. Comments welcome below.

Avengers

Apologies if you came here looking for something about the movie! This entry is not about the movie. I just borrowed the name since it looked quite apt. How? Well I will try to explain that towards the end, hopefully!

The planet and the landmass in it, with their many, man-made, disputed, virtual, borders, which we popularly refer to as countries, is going the right way. What is wrong in going the right way? Well it is not the ‘Right’ as in Right/Wrong, but, it is the ‘Right’ as in Right/Left. Still how is it wrong? I am not saying it is wrong, I am just worried that the Right way might be the wrong way.

Full Disclosure: So am I just another paranoid leftist (communist) advocating Karl Marx while enjoying the fruits of Adam Smith? Nope, I see myself more of a Centrist! A mixture of Amartya Sen and Jagdish Bhagwati, if you may.

The world, right from the Land of the Free, The United States of America to the other countries to its east ending with Land of the Rising Sun, Japan are already in or witnessing the steady rise of the Right. Agreed there are a few places where the Left are still left, most recent example being the Syriza in Greece and the Liberals in Canada. But the Right’s rise is what captivates and concerns me. Possibly because the most important countries are helmed by the conservatives or those with a conservative mindset.

Anyone who is following the US presidential election campaign would be familiar with the faces from the Conservative, Grand Old Party (GOP), The Republicans. This is the party that counts a lot of conservative leaders in its fold including Governor Bobby Jindal, the Indian-American who renounced his Indianness in as many words and Jeb Bush from the no-introduction-required Bush family.

And in comes Donald Trump who shook the conservative leaders and followers of the GOP through his Ultra-Conservatism. Trump, I learnt, was considered too conservative by some conservatives of the conservative party. Perhaps similar to how Islamic State was considered as too radical by the radicals at Al-qaeda. And guess what, the American public seems to like him. Considering the anti-incumbency of the Democrats in the White House, it is likely that the Republicans would be given the spectre and there is a chance, however slim, for Trump to be crowned Commander-in-Chief.

Not far across the Atlantic, the Americans’ old colonial masters who too in 2015 decided that they would like to be ruled by Conservatives rather than Labour much to the chagrin of the liberals. In a tightly fought election where pundits predicted a hung parliament rode the Conservative *White* knight with a majority of his own . Just like how in 2014 their former colony, the crown jewel of the British Empire, India, quite similarly elected the *Saffron* savior in the Hindu Nationalist party, the BJP, with a majority of its own contrary to what the pundits had predicted.

The Syrian refugee crisis brought the contention among European conservatives out in the open. Led by Hungary which conveniently sidetracked the whole humanitarian angle by claiming that the Government didn’t have the mandate to change the demographics which would be the outcome of letting in the Muslims, a charge often echoed in India by the far right though not backed by much empirical evidence. German conservative behavior was also blamed for the near collapse of the Greece bailout.

On the other side of Europe we have Russia led by Vladimir Putin, Tzar of the Union of the Soviet Socialist Republics (USSR) who wanted to retain Russia’s buffer zone of the old soviet states. Russian adventurism in Ukraine and more recently in Syria brings back the cold war era to mind. Who knew when Obama and Putin spoke of the ‘Reset’ button they wanted cold war v2.0?

Shinzo Abe, author of the Abenomics and Prime Minister of Japan, is from the Liberal Democratic Party (LDP) and don’t let the liberal in the name fool you. The LDP is a major conservative political party in Japan. Abe has not only been credited with the small successes Japan has had in getting out of the decade old deflation, but, also been called ‘far more right than most of his predecessors’ and his interpretation of history has been controversial. No wonder the current ruling dispensation in India who also are quite vociferous of imperfections in history found a great friend in Abe and have moved ahead in forging a formidable alliance, economically and militarily.

This is not just evident in democracies across the world where people who have the power to elect their rulers have given overwhelming support to those who have promised to restore their past glory but also authoritarian regimes. China recently commemorated the 70th anniversary of defeat of Japanese forces in WW2 with a massive show of force. Its flexing of muscles with neighbors especially in South China Sea and India haven’t gone unnoticed.

So what are the common things that unite most of the conservatives. Well most resort to restoring the lost glory through re-writing history and AVENGE their imaginary enemies. The last time it happened it led to something called Holocaust. And that's what worries me!

NOTA, FTW !

A friend of mine recently drew my attention to a Frontline magazine article, albeit a dated one, in which Subash Kashyap, the former General Secretary of the Lok Sabha, talks about a few noted Supreme Court directives of that time. NOTA or None of the above option was one among them in which Mr. Kashyap dwells and expresses his views extensively.

NOTA, for the uninitiated, allows the disapproval of all the candidates in a voting list by the voter.

Though Mr. Kashyap has many valid points, he is not entirely convincing, at least to me. I am trying to list down the why.

NOTA helps to reduce Confirmation Bias

Confirmation Bias is the tendency to search or interpret information in a way that confirms one's preconceptions. So when I vote for a particular party in an election, I would probably not critically analyze their policies for the term they are in power. Thus I fail my duty as a citizen in my democratic right to elect without bias and arrive at a rational decision in the consecutive elections.

I had written previously too on confirmation bias and how we need to get rid of the concept of party membership. Probably shows my bias in continually supporting the existence of confirmation bias.

NOTA helps in a more informed, non-acrimonious electorate

This is linked to the first point on confirmation bias. A lot of people without confirmation bias means a lot of well informed people who tend to share their knowledge through debates and editorials making the overall electorate aware of their political masters and their shortcomings. Journalists, for example, can use NOTA while voting so that they are not swayed by party loyalty while covering news.

We see a lot of personality driven leadership in parties today. And when the leadership fails in its duty it falls on its followers to defend the indefensible. NOTA would help in easing such constraints and help enjoy and involve oneself in debates based on what one believes in rather than party or personality loyalty.

NOTA helps in bypassing compulsory voting

Mr. Kashyap made an important point in the interview that NOTA was already allowed even before its introduction. The voter can reject the candidates by simply not voting. However, with recent talks of introduction of compulsory voting by governments, NOTA would probably be the only option through which the voter can reject all candidates.

Moreover, in this age when pseudo-nationalists run amok in every street corner, an unstained indelible ink fingered individual post election date is sacrilegious. NOTA could very well save the voter from the self proclaimed nationalists.

NOTA thus is uniquely placed to provide certain benefits and hence I see it go FTW!

Did Britain already pay reparations to India as Cs?

The speech by Dr. Shashi Tharoor, Member of Parliament, on whether Britain should pay reparations to India at the Oxford Union debate was well received. Both by his supporters and detractors, which, is a rarity in Indian politics. Indian political leaders typically play to the gallery that cheers them and ignore the others but Tharoor is distinctive in that he is a Liberal who proved he can become a darling of the conservatives overnight.

While I agree with all the points he made and do feel that Britain does need to pay reparations, I am willing to play a little Devil's advocate here for my own benefit to get a better understanding on why I agree with Dr. Tharoor. I would like to counter Tharoor's arguments through my own theory - Britain paid back the reparations in full, with Interest, not in Pounds but in Cs.

This video of Dr. Tharoor's eloquent speech on reparations can give a little context to those who haven't watched this before.

C for Cricket

I am not a big follower of the game, however, I do get all charged up when India plays against any country and especially if it was Pakistan. Very few events have matched Cricket's ability to bring together the country of a Billion people of various religion, language, caste and creed. This amazing sport was not native to India and even India's national sport is Hockey (until 2012?!). However, it is likely that any random Indian would recognize an Indian Cricketer better than a Hockey player of the Indian team. There are probably more coaches, stadiums, events, recognition, even sporting accessory brands for Cricket than Hockey. However, these are points for a different blog post.

The point here is this amazing game which brings together a billion Indian together was brought here by the British. In the speech Tharoor makes a point on Railway and Road Infrastructure. He very rightly says that Colonialism cannot take credit for bringing these to the country as there are countries which were not colonized able to develop these on their own. However that argument might fall flat in case of Cricket. Because we don't see Cricket famous outside the commonwealth. The most followed sport in the world currently is Football and not Cricket.

So now that we have made a point let us try to quantify like Dr. Tharoor did. Well we have the richest cricketing board in the world. We have millions who would pay an arm and a leg to watch and take selfies with the Cricketers. That with one of the fastest growing middle class in world sounds rather profitable. We even hold the International Cricket Council Chairmanship currently.

For me, however, the fact that the game can rally together a billion people alone is priceless.

C for Comprehension and Conversation.

India is a land of many tongues. A great many languages were spoken and we didn't need one more to add to the confusion. However, we all took to learning English since the Britishers spoke English. And probably because they sounded horrible speaking our languages or they were dim witted or plain lazy to learn ours. This ability to comprehend and converse in the lingua franca of the World opened our economies in ways we never comprehended.

Not many people would remember the protest against Hindi as a national language that broke out in many states, especially Tamil Nadu in late 1960s. Language can trigger dirty civil wars is a known fact which is a topic for another Blog post. People were open to the idea of seceding from India to protect their language against the invasion of Hindi. And it was finally left to English to save the day. Till today English remains an official language along with Hindi.

The Information Technology and associated services revolution wouldn't have occurred if not for this ability. Russia and Ukraine had better programmers, China had cheaper programmers while only India and a few other countries of the commonwealth had better, cheaper and English speaking programmers. Today the GDP contribution of these services industries is out there to make quantifying easy.

For me, however, the fact that this language of the Britishers played a role in keeping India together, united, is priceless.

C for Crown

Before Cricket and before English the one thing that held the people together, galvanized an entire sub continent on a massive civil disobedience movement was the Crown. Or to make it more clear - a hate for the crown and its excesses. Before the crown, India was largely non existent. It was a bunch of princely states fighting each other for power and influence. Thanks to the crown and its excesses we were united to fight them off and decided to stay united.

That again is priceless.

So my arguments have largely stated that Britain had already paid reparations. Right?

No! Like Dr. Tharoor says, reparations are not about the money, it is about principles. The British must take the opportunity to atone for their past misdeeds.

SBI merged with subsidiary banks - A SWOT analysis!

A couple of days back the Ex Chairman of State Bank of India (SBI), Mr. O P Bhatt, irked a few shareholders by suggesting that the subsidiaries of SBI may be cut-off from the parent or worse, merged with other public sector banks as fit. As a shareholder of SBI and an ex-employee of one of the subsidiaries, I found the idea ridiculous. As I was contemplating on why I found it ridiculous, I found another intriguing news - TASMAC, the Tamil Nadu government's liquor cash cow is employing SWOT analysis to understand what is leading to fall in sales at its outlets.

Thus I came with this idea of a SWOT analysis of a hypothetical scenario - SBI merged with its subsidiary banks. Who said alcohol isn't a stimulant? : )

However, given that am both a shareholder and an ex employee, my words are to be taken with a pinch of salt. Let me start with a disclaimer - I may be biased in my views (you, the reader, are welcome to point them out in the comments)!

Strengths

• SBI and the subsidiaries as a single bank will be a banking behemoth with no parallels among Indian banks and few parallels in the International stage. Such a high standing might reduce borrowing costs in the overseas market.
• With the additional capital, a merged SBI can better compete with the JPMorgans and Goldman Sachs of the world.
• Achieve 'economies of scale' given its huge size. They will be big enough to dictate prices to vendors.
• Achieve unprecedented levels of financial inclusion given its reach and additional resources.
• The other subsidiaries (SBI Life, SBI General, SBI Mutual Fund, SBI Capital, et al.) can dip their beak into this huge pool of customer base and cross-sell their products.
• Given the customer base, a merged SBI's base rate would influence competing bank's loan and deposit interest rates next only to RBI's repo and reverse repo rates.

Weaknesses

• 'Too big to fail' tag might make them take riskier bets which might throw up nasty surprises.
• Human Resource challenges following a merger were quoted as the biggest risk by the current chairwoman, Ms. Arundhati Bhattacharya. When associate banks, which are more traditional in their approach to business are exposed to more modern ways of business sparks are bound to fly. Considering that certain staff unions are not keen on merger this is bound to get worse.
• The size of the bank might act as an obstacle to changes in the industry. A smaller, agile bank might quickly adapt to changes rather than a behemoth with its swelling customer base and overwhelming employee strength.
• An already stretched workforce may be thinned out further resulting in bad customer service. The same can also be said about physical and IT infrastructure.

Opportunities

• Implement global best practices in its merged entities and copy jugaad innovation from merged entities and taking them global.
• Leverage branch presence to deliver more targeted service. For example, a SBI branch and SBM (State Bank of Mysore) branch in MG road, Bengaluru can serve as one SBI branch for SMEs and one SBI branch for all other banking needs.
• Exposure to more modern banking facilities in place of traditional banking products.

Threats

• Losing traditional customer base to more traditional regional banks. SBT (State Bank of Travancore) merged with SBI might lose traditional customers to Federal Bank and South Indian Bank which are seen as Kerala based bankers.

Apart from the fact that the weakness and threats are minimal, they can be easily addressed. The public sector mentality will keep them off from the kind of risky bets entered by the MNC banks in 2008. Though HR will be a big pain, it would be limited considering that most of the manual work would be automated going forward and the Officers' union is supportive of a merger. Technological innovation and alternate delivery mechanisms would reduce the burden on staff. It is also highly unlikely that customers would make a switch to other banks considering the fact that many would hardly realize anything has changed. Everything from the symbol to most processes and systems are similar across the parent and subsidiary.

Considering all this it makes more sense to merge or remain as subsidiaries rather than break or merge with other Banks. Have a different opinion? Let me know in the comments below.

Cash on Nash to Lash at Communism but it's not making a Dash despite the Bash!

I haven't watched or read 'A Beautiful Mind' and hence when someone told me that John Nash and his wife met with a fatal car accident I just joined in a collective gasp. Only later did I learn that Nash was the genius behind the famed 'Nash Equilibrium'. My tryst with Nash's work was during management studies and my respect grew when I found the man's work helped various fields from economy to psychology. May their souls rest in peace and equilibrium.

John Nash won the Nobel memorial prize in economic sciences in 1994 despite his contributions primarily had to do more with mathematics than economics. He had very less interest in economics too. Then why economics? Well could be because Nobel prize didn't recognise mathematicians (Alfred Nobel supposedly lost his lady love to a mathematician) and hence economics, as a centrist would tell you. Or because Nash's work helped in economics the most than other fields as a conservative would tell you. Or because it was all a big fat conspiracy by the western world as a communist would tell you.

Why is it a conspiracy some might wonder? Well the reason is though the work itself was devoid of any particular politico-economic ideology it was used to further the 'capitalism is best' idea. 

The crux of the Nash Equilibrium in layman's terms can be defined as - when two or more person strategise rationally for his/her own benefit taking into account the others' decisions they are said to be in an equilibrium and would tend to achieve the most optimal result. Extending this to economics one might conclude that if each player is selfish and is after his/her own betterment then each would achieve optimal performance (wealth). Thus it was arrived that capitalism and free markets were good. Businesses compete in a free market for their own selfish goals and eventually making the market a better place to live in for all.

Uh huh but, Houston, we have a problem! Not all humans can be expected to be rational in this age. In today's cut throat competition, businesses employ hook or crook methods to make money. Bribes are freely given and taken, competing businessmen not companies are eliminated, cartels are formed, resources, environment and the unassuming, innocent, Homo sapiens are exploited. The term for all this in vogue is crony capitalism. But by definition it's a free market, no one is stopping the others from doing all the above and they are well within their right of being selfish!

And not just that! Inequality, a serious problem engulfing the world, is feature of this capitalism says a new age economist who has done some serious research. He has compiled his work into a book 'Capital in the Twenty-First Century ' which incidentally is a best seller (I keep falling asleep while reading it, promised myself to get back after finishing Gone Girl). He is a Frenchman with a very French sounding name, Thomas 'no not Friedman' Piketty. 

This video though dated gives a clear understanding of Inequality in the USA which sells the American dream

And it makes sense. Can someone start with millions or even billions of the green back from the best of Wall Street and aim to compete successfully against the likes of Costco or Walmart in their own game? They may disrupt them with an alternate delivery channel like what Amazon or eBay does but in their own game of brick and mortar behemoths? Not unless they have really shitty management. Even in the alternate channel the success of the disrupter lies in the failure of the disrupted. If Google waked up to the potential of a social network earlier, I doubt Facebook would even exist today.

Thus in a capitalist economy, the haves have a clear advantage over the have nots and some government intervention is needed to bring about a level playing field.

And Mr. Piketty isn't quite finished yet. He comes with his analysis on previous revolutions like the French and Bolshevik goes on to make a scary formula

Where, r is rate of returns from capital, g is the growth rate and boom is a boom - a revolution that could overthrow capitalism and in turn democracy as we know it.

It is high time we get something to replace Capitalism. Communism may not be the answer, but a hybrid socialism could very well be the optimal solution.

Are we entering a period of USA 'neutral' Superpowerdom?

When the 'Nobel' committee decided to award US President Barack Obama the Nobel Peace Prize in 2009, I was one among the many people who criticized their collective wisdom. Here was a man who was commander-in-chief of the most powerful army in the world, involved in two of the most deadliest conflicts in the 21st century and who has proved nothing with less than one year into his presidency. What I didn't know then was the almost psychic power of the committee to look into the then distant future.

In his two terms of presidency, the commander-in-chief has many peace initiatives as badges up his sleeves.

Troop Draw down was one of his poll promises and he made good of it, due to poll compulsions or not, and it has shown good results in security situation in Iraq and Afghanistan from the American perspective with less war casualties.

Iran was another bone of contention. At one point it looked like invasion was imminent and stories of 'leaked' battle plans doing the rounds. Then there was Stuxnet, a complex worm which disrupted fast spinning centrifuges, sending the Nuclear program of Iran back by several years. The president stood his ground against the hawks in the war department and chose financial sanctions instead of firing Tomahawks. Now it emerges a deal would likely be clinched limiting the Iran Nuclear program.

With Syria on the boil, it emerged Syrian President al-Assad used banned chemical weapons against his own population, a la Saddam Hussein. The policeman of the world was furious and calls for punishing the Syrian state was in the air. However, sense prevailed, largely thanks to the efforts of Russian Tsar President, Vladimir Putin.

When the Ukraine protest movement gained a critical mass resulting in its President Yanukovych fleeing to Russia and the annexation of Crimea by Putin, Obama did a balancing act of reassuring his allies and repudiate Russia through economic sanctions.

Finally the talk of lifting of the United States embargo against Cuba, a communist state right next door confirms USA has been making peace with most of the world.

Not just buying peace with enemies, the US seems to be cold shouldering its allies too.

Israel, the Jewish state on whom USA's middle east policy is based on and whose security it views as most important next only to its own has been cold shouldered off late. Be it the controversy surrounding Israel's expanding settlement policy or Iran Nuclear standoff, the Israelis weren't taken along.

Saudi Arabia, the next important US ally in the middle east had got a similar deal. Not being taken along in the Iran Nuclear deal, they have turned to Pakistan, a nuclear power. There are talks of how the Pakistanis have even pledged to deliver the Saudis, nuclear weapons, all for a price. Saudis also feel by not providing the Syrian opposition forces with more powerful weapons the Americans have let gone a golden chance to cripple the Saudi's regional rival duo - Iran and Syria. The Iran Nuclear Deal only cements the suspicion of the Saudis.

Japan is scrambling for defense ties with India and Australia to offset a possible US dormant position as China is asserting itself with new air bases and infrastructure in the South China Sea. United Kingdom the most trusted and closest ally, next only to Israel, recently went ahead and joined the China-led World Bank slayer, Asian Infrastructure Investment Bank (AIIB). Most European allies have joined AIIB. Eastern European allies are kept in the dark as well. Poland and Czech Republic were promised a missile cover which never came to fruition. Georgia and Ukraine still await their NATO membership.

All this seems to suggest that USA would enter a period of consolidation - economical and political. The shale reserves, favorable demographic situation, though shaken not flattened transparent markets, innovative and enterprising, highly skilled immigrant welcoming community, all allows for this consolidation to happen. This may not result in a multipolar world as envisioned by Putin but would result in a 'neutral' almost pre-WW2 United States.

Unless there is a Republican victory, which could change everything.

Is the Oil Rout a Russian Roulette?

Russian Roulette, is a lethal game of chance. It involves a person with a revolver and a single round. The round is placed in the cylinder and spinned into position. The muzzle is put against the head and the trigger pulled leaving to chance the outcome.

The Oil Rout (2014-2015), is an ongoing crisis in the oil markets. It has been triggered by the reluctance of the biggest oil producers (OPEC especially) to cut supply despite sagging demand driven largely by the slowing Chinese and European economies.

There are rational reasons as to why the Oil rout is happening. The United States of America is tasting success with the Fracking process in exploiting the Shale Reserves abundant in their country and is poised to overtake many existing Oil economies including Saudi Arabia in production. It is alleged that the OPEC members fearful of losing their market share have kept supplies constant.

Keeping the tap flowing serves dual purposes for OPEC. It enhances delivery mechanism and infrastructure with the client thereby strengthening the business relationship wherein the client won’t look for alternate oil exporters. The other sinister purpose is with falling prices, Fracking, a laborious and costly process, would lose some of its sheen, breaking the balance sheets of the companies involved. This would be the ‘sweet crude’ news the OPEC members would be waiting to hear, Pun Intended!

A few years ago the US would have lunged into the situation in the middle east, brought a war or instability about, constraining production of crude which would lead to stabilizing of price. They are not interested in stopping OPEC this time. The reason, they are happy to see their other, old adversary, Russia, suffer. Russia being a predominantly export economy with Oil and arms as major exports is hurt. Once seen as the solid wall in the BRIC, the Russian Bear is expected to post its first negative growth rate this year.

But what if all this was grand game from the country that once dominated Chess. Therein lies the conspiracy (albeit, a far fetched one)!

Islamic State or ISIS or ISIL, a Sunni militant group is involved in fighting Shia governed countries - Syria and Iraq. It is not a secret that ISIS enjoys some patronage from other Sunni nations like Saudi Arabia and UAE. Even NATO member Turkey was reluctant to let the Kurds fight ISIS even after USA designated ISIS a terrorist organization. The reason was simple, in order to play a regional power Sunni nations needed to have proxies like ISIS to keep Shia dominant Iran and Syria at bay.

In the earlier days of victory ISIS controlled vast swathes of land adjoining Iraq and Syria. They were able to sell oil in the black market at discounted prices to maintain their war machinery. It was said the revenue was in millions of USD. They looked indestructible and was seen achieving a critical mass wherein their expansion furthered their oil revenues which feeded their expansions. 

However, the wheels of fortune greased by crude changed. With fall in prices, the revenue of ISIS probably fell. They have lost territories they once held. They had demanded ransom of $200mn from Japan for hostages. It seems they are no longer the fearsome power they used to be. 

And mighty Russia might, just might, be silently celebrating their master strategy yielding fruit. They helped their allies, warned its neighbours, took possession of a leased port along with Crimea, tested NATO’s resolve and reassured its ethnic population all in one big game plan.

Hillary Clinton likened Putin to Hitler. I feel Putin might be playing a Stalin - initiating a Scorched Oil Policy, burn a little and return victorious!