Prudential measures should be put in place

This is followed by $287 billion in loans & bonds rated below investment grade raised by European companies, since the beginning of 2007. With PE firms and hedge funds pumping truck loads of money into debt ridden & virtually moribund companies, investors are gambling on their life. Asia too has an unusual spending story to tell. Never before in the history of Asia, people have witness such huge credit card lending boom and never before Asians have used credit cards to purchase houses. Bank for International Settlement (BIS) in it’s June Bulletin, anticipates a credit card bubble for the Asian economies, which till now has been individually experienced by Hong Kong in 2002, Korea (15% indebtness in 2003) & Taiwan (9% indebtness in 2005). According to BIS, the total credit card usage volume, increased by 200-500% in many Asian markets between 1998 and 2005. By 2005, credit card receivables in these markets ranged between 3-15% of total household lending. At a time when profits are raining, it is difficult to ring alarm bells, but prudential measures should be put in place.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Things aren’t the way they used to be...

Flow of capital has to be reduced; BIS and the IMF must take action
One thing that is all pervasive from Washington to Wellington is ‘debt’ in its very true nature. Riding high on the profligacy of consumers & asset markets, debt has taken shape of all possible forms – from highly leveraged deals by the Europeans to growing credit card distress among Asian nations. But the assumption of fund managers about their gains from leveraged deals, those of who are issuing these credit derivative that the counter-party default won’t occur, and that of an ordinary consumer that credit cycle will continue to be like what it is now, is perhaps the biggest fallacy gripping fund managers & individuals. Optimism of investors is at an all-time high; the gap between the yield demanded by investors to hold high yield, high risk US corporate debt and government bonds fell to the lowest ever on June 5, 2007.


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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Exxon Mobil and Wal-Mart of India, rolled into one

Reliance estimates that the market price of the gas is $4.8 per mmbtu. Though the matter is under litigation and charges fl y thick and fast, there is little doubt that Anil’s power sector ambitions will get completely derailed if he doesn’t get gas at a discounted price. Till the matter is settled in his favour (if it is), the third prong of Anil’s growth strategy will remain weak. Meanwhile, Mukesh continues to showcase his audacious growth strategy. In corporate jargon, you could well say that he wants to be both the Exxon Mobil and Wal-Mart of India, rolled into one. Anil, in turn, seems to be aiming to become the GE of India (GE is a big player in financial services, media and power, apart from other things). At the moment though, it does look as if the elder brother has the upper hand.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

'Visionary'

But the interesting part of it all is that, even the same ‘visionary’ American leaders of yesteryears have changed over time to appreciate the fact that unless zero vision is passionately embraced by the organisation, radical and dynamic growth beyond preset benchmarks can never be attained. Fascinatingly, the IT industry of today exemplifies the zero vision theory to a large extent. From the $39 billion Microsoft (with Bill Gates as the Chief Soft ware Architect) to Fortune’s 8th fastest growing tech corporation in the world Infosys (with Narayana Murthy as the Chief Mentor), from the $91 billion IBM (with Sam Palmisano as its zero-visionary Chairman) to the $39 billion Intel (with Paul Otellini and Craig Barrett leading the organisation), leaders of Fortune’s most admired companies have fanatically and obsessively endeavoured to educate their top management in the art of nurturing unhindered vision; and succeed they have, “like nobody’s business!”

For Complete IIPM Article, Click on IIPM Article

Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative