Post the great depression in 20s, the Glass Steagall Act was enacted as it was found that the twin functions of banks – corporate banking and investment banking carried conflicting interests. After many years, in 90s the Fed decided that banks were mature enough to let them perform both the functions and repealed the Glass-Steagall Act thereby showing its commitment to the capitalist system of markets. While it’s debatable if that repeal was the result of recent fall of investment banks in the US, the demand for combining the two functions in India has indeed taken a back seat and RBI’s conservatism on this is being praised.
In my opinion, it was the absence of regulation for investment banks in US that led them to their present state and not the repeal of Glass Steagall Act. But then, the regulation of investment banks is not easy with financial innovation in play every hour across various segments of financial markets. Combinations of money, credit and forex markets produce complex, envious but dangerous products and if we had regulation, approval of such products would have delayed introduction into the markets and affected competition – the sole soul of capitalism.
However, indirect regulation for example extensive audits of mortgage firms would have lessened the effect if not avoided. We were once talking how in India regulators fight to have control of one sector/industry (example = tussle between RBI and SEBI, between SEBI and IRDA) seems funny, when US is all ready to deregulate any sector/industry. Well, I still do not know if the fun continues and if it does, where? When on fun, lets see this good video and have some good fun:
Due to my two swift and longer than usual breaks in Delhi I could not keep a daily tab on market indicators and could gather the usual data only yesterday after last doing it on 18 Aug, a good one month ago. The movement in the data was not a surprise given the recent turmoil in developed financial markets. However, it’s a respite to see O/n $ LIBOR at 3.25% after hitting 6.44% just a couple of days before. Nevertheless, AAA Spreads over 200 bps and a drop in sovereign yields indicate that funds are being pushed to safer havens. Coming to sovereignty, though commendable, I found the alacrity exhibited by the US govt to bail out Freddie, Fannie, and AIG rather ironical given the way it espoused capitalism as the only way to govern. It will be appropriate if the west esp US could tone down their demand for faster implementation of aggressive capitalistic practices in India when it is amply clear that a higher level of capitalism/self regulation does not necessarily lead to an ever growing economy, a lesson that US should have learnt now. A reasonably strict and consistent regulation is a must to avoid the flag bearers of capitalism to face the music of their own doings under the impression of bull rage and reaching the verge of harakiri! Just think of it, would the Tatas been as sanguine on taking over the Tata-AIG if the holdings were vice-versa? By the way, I am in no way an admirer of Marx. The Central Banks around the world have braced up well to tackle the financial tsunami and it was good news that they have doubled dollar swap lines amongst them which should ensure ample supply of dollars in the markets facing tight liquidity. More solidarity among them would be on display in Thailand when they meet next week. I was going through the Aug edition of “Projects Today” and did not get an iota of a feeling that investments in India or the plans for them were under any adverse affect; though the funding for the same is actually coming under constrains. While in India the constrain is more on account of liquidity reasons introduced by the RBI to tackle the #1 problem faced by India - inflation, in the western hemisphere the liquidity is constrained, surprisingly, on account of fears of losing the parted funds/money! And if this fear spills from the corporate finance to consumer finance and/or consumerism, then the pessimistic concerns over its effect on Indian economy may well come true and it will come all the way from US of A to Asia affecting China, India and all emerging markets. So while RBI, to pre-empt this possibility, has started taking steps to ease liquidity in India and ECB, BoE, Fed and other central banks have doubled their swap lines, the world would need some political support to tide over this situation which currently seems to be going to lurch.
You will hate me for this, but I think to save that from happening, US should consider waging war on some other “declared” enemy of its (maybe Iran?) or discover and make a new enemy. It will be in the larger good of the world economy.
Well, so much for the bad news around us. Let’s watch some nice video:
The August’08 issue of GEO carries a good description of honeybee lifestyle. And any reference to the insect does invoke my interest as it immediately takes me some years back when a whole swarm of honey bees chased me and beat me in 400 m dash though I still think I would have rescued myself had my brother not refused to open the main gate of our house out of fear on seeing me chased by hundreds of bees. Well, on a lighter side I think not many are as fortunate as me being chased by hundreds of females at the same time (that too without any axe effect) though it’s a different matter that the chase ended in painful stings and resulted in visits to the doctor.
Anyways, coming to the theme, I was wondering why no one is talking of the declining population of honeybees as is reported in the mentioned issue of GEO which states that the worker bees are being found to be disappearing across different places in the world with India being one of such places. Some very funny but plausible reasons are being given like mobile phones’ affect besides parasites, disease, genetically modified crops and climate change. A theory also reasons that the disappearance could be because of stress and overwork for the worker bees!
Should we bother? I too would have not even bothered to answer this question if I had not known that one-third of all of human consumption is dependent on bees and as per a study human beings would survive just four years in a world without honey bees!
So, should not the honey bee get atleast half as much attention as given to the tiger, elephant and the panda before it gets late?
