Lie Down Mr Goodwin

Arise Sir Fred, the Queen of England said in 2004 after tapping the kneeling Fred Goodwin lightly on the shoulder with her sword. This archaic ceremony is the conferring of knighthood by the Queen of England. If you are a citizen of the UK or one of its dominions then you can call yourself  "Sir".

Fred Goodwin was the CEO of the Royal Bank of Scotland in its boom years. An unknown, middling bank in Scotland (where's that for Gods sake), he took it to become one of the largest banks in the world. First the acquisition of Natwest, a big British bank much bigger than RBS. And then the mega takeover of ABN Amro, just as the financial crisis was unfolding. The bank was growing wildly through mega acquisitions and was cheered on by all and sundry - the shareholders, the market and even the government, including Gordon Brown, the then Prime Minister of the UK. Hence the knighthood. Sir Fred could do no wrong.

Of course the party couldn't last. It came crashing down with the financial crisis. Sir Fred was axed after the bank reported a loss of £24 bn - the largest in UK corporate history. The UK government had to inject £45 bn to bail out RBS. The public was baying for his blood. He compunded his misery by trying to keep his £16m pension pot - for the years of service he had rendered. Public outcry forced him to give up part of this, although that's an unfair step - if you have to give up your accumulated PF because of a mistake you made, how unfair would it be for you.

Now the UK government has decided to withdraw his knighthood. This is very rarely done. He has for company, Anthony Blunt (a spy), Nicoale Ceausescu, the notorious dictator of Romania and Robert Mugabe, the tyrant of Zimbabwe who were all knighted and the knighthood subsequently withdrawn when it was realised what scoundrels they were. Fred Goodwin is however no scoundrel. The withdrawal was the result of a baying mob (otherwise called the British tabloid press) just wanting to inflict its own brand of punishment.

Fred Goodwin wasn't the first, and certainly won't be the last, to mistime a huge acquisition (ABN Amro) and get killed in the process. He made a bad misjudgement of the extent of the financial crisis - after all who didn't. But he did no crime. He hasn't even been charged, let alone convicted of any wrong doing. If business misjudgement was a crime, each one of us is a criminal. At that time, the shareholders of RBS enthusiastically supported his every move. There are many others who have been conferred knighthoods and were equally in the mess of the financial crisis.

The British are justifiably famous for their sense of honour and fair play. In this instance however, that noble quality seems to have deserted them. Punishing Sir Fred, with Mr Goodwin isn't cricket, old chaps !

The breaking in of a newbie

Newbies have to be broken in. If you throw them at the deep end, they'll simply die of shock. This blogger has a substantially inflated opinion of himself and proclaims expertise in matters that he knows precious little about. But even he readily admits to being a complete newbie in one matter . And he was very privileged to be broken into the said field by two acknowledged experts.It must be clarified right here that this blogger has not indulged in this activity for some 30 years and therefore approached it with some trepidation.

They were very kind. They chose the shallow end of the pool for the first dip of the toe. Apparently this specimen which I was introduced to is not "typical".  But was sufficient to give a good general idea. They prefaced the experience, by a good nourishment of the body (otherwise called lunch) in preparation for nourishment of the mind.

As it started, they very helpfully explained who was who. I was advised that the sum total of people in the city who did not recognise the main protagonists  was one - that specimen being yours truly. But they didn't rub it in. They kindly explained the antecedents of the worthies. They however drew a line, when on being told that the chief was titled "Young Thalapathi", I respectfully asked who was the older version !

Matters went on predicted lines. I stared rather open mouthed. I fancy my  minders were trying to observe me with the corner of their eyes rather than staring straight ahead. There was whistles and oohs when the gentleman with the title previously referred to appeared . He , alas, was not tall, dark or handsome - in fact he looked rather like my neighbourhood Romeo. I had mistakenly assumed that there would be many gorgeous women I could at least ogle at. Unfortunately I was advised that there was just one in this example they had chosen for me and that I would have to wait a while before feasting my eyes - to be fair, the lady was worth the wait.

The start was "electric" if you will pardon the pun. Dropping of pants and a lesson on conductivity of liquids was not what I had expected. After some inanity, the time came for breaking into song and dance. The flower train rather boggled the mind. I chuckled at some outrageous costumes and gyrations, but I couldn't help guffaw loudly at the sight of Tamilians trying to do the Bhangra - there are some things Tamilians can't do and imitation of  Bhangra is certainly one of them.  When a  break came, I thought the experience was over until my advisers informed me that it was only the first instalment. More was to come. I had presumed that the moment was usually a call to fortify oneself with exotic preparations of the cola nut. However the experts were somewhat wary of the possibility of their subject bolting through the door - they wisely suggested that quenching of thirst be somewhat deferred and that being glued to wherever one was , was a safer course of action.

More did come. Another song and dance which morphed suddenly from an attempted kiss featuring rather scantily clad foreign beauties gyrating to forgettable music. Some lessons on the causes and effects of bodily activities best left unmentioned. Some incredible Tamilian names that would even flummox the most creative of new baby names handbooks - Come on; have you ever heard anybody named PP and KP. Also featured was a very detailed primer on innovative obstetrics. An elaborately worked example of how to snatch the bride from the altar. And an answer to the eternal dilemma facing mankind - can you kiss without bumping noses !

All was well that ended well. The beauty and the "beast" finally got together and presumably lived happily ever after. The breaking in was successful. To my eager experts, I opined that the experience was "not bad" and that an encore might even be a possibility. After which the two sorely tried champions, the wise one and the breezy one, to whom I am eternally grateful,  shooed me off . Thereafter, I am told, they retired to a vegetarian version of the proverbial watering hole !

Coffee, wine or me

Remember the old book series "Coffee Tea or Me" - well readers of this blog are probably too young to remember it. Maybe now its time for Coffee, Wine or me !

Why does a coffee chain want to serve alcohol ? Starbucks wants to try out having wine and beer on its menu in a few outlets in Seattle and Portland. At first sight it seems an odd combination. Why would Starbucks want to do that ??

The problem, as always, is growth. Starbucks hit a rough patch, if you remember, in 2008 which prompted the founder Howard Schultz to retake the reins as CEO. Currently it is doing well. Revenues in 2011 grew 9.3%. But how do you keep on growing the revenues. After all, how much more coffee can you stimulate your patrons to have. You  can push the "eats", but that's a limited range. They are trying to enhance that with an offering of " premium foods" - whatever that means. And now alcohol.

But is Starbucks a bar ? No serious drinker will go to Starbucks for a pint or two. So the only opportunity is to attract a a mixed group of whom some want a cup of coffee and some want a glass of wine. How much is that opportunity ? Can't be really a growth driver. And what would happen to the brand - Starbucks is synonymous with coffee now. You want to dilute that ?

Of course the company is no fool. Its dotted with marketing types spewing Kotlerspeak. The trouble is that marketing types are often wrong. For the moment, Starbucks is only testing. If the test bombs - they'll quietly bury the idea.

An obvious avenue for growth is geography. Expand overseas - Starbucks is pretty much ubiquitous in America. Go abroad. Especially to magnetic China. They have actually started to become quite widespread in Chinese cities. China is a tea drinking country, but there are enough youngsters willing to swill coffee. Especially an American brand which carries a halo in that country. But the problem is that the Starbucks formula in the US is a disaster in China - free wifi, stay as long as you want ..... That's taken literally in China and giggling girls , four of whom sharing a cup, sit there all day. I hated going to a Starbucks outlet in China simply because I could never find a seat as "long term residents" had made themselves comfortable everywhere. Instead when I wanted a coffee I went to McDonald's where the coffee was superb , they served it within 20 seconds, and I could find a place to rest my bum - all at half the price of Starbucks. Screw the ambiance - the taste of great coffee drowned everything else. Global formulas don't always work.

So Coffee Wine or me ? I would stay with the coffee, thank you.

Shampoo for lunch

It must have happened to you too. Standing in a long checkout line in an Indian "supermarket". Rajalakshmi , in front of you, has 742 items to bill. You wait patiently (as if you can do anything else). The bloke behind you is poking at your spine as he wills you to advance. Rajalakshmi is intently watching the  amount totalling up on the display. It now stands at Rs 3742.50. After 18.5 minutes when all the 742 items have been billed (and not one second before), she digs into her purse and comes out with three fat wads of Sodexho coupons. All in denominations of Rs 5. And then proceeds to count them out laboriously. Being mathematically challenged, each time, she comes up with a different answer. 14 minutes later she discovers that she is Rs 5 short in coupons. She then proceeds to dig in to packed bags, go to the bottom, remove an item and ask the checkout guy to deduct that from the bill. She is now Rs 7 excess. She wants change back. He refuses ........You can do precious little but curse at the injustice in the world.

Forget Foreign Direct Investment. The biggest change required in Indian retail is the banning of Sodexho coupons. I don't mind Walmart not being there. I just want Sodexho to disappear.

For those unfamiliar with the Sodexho problem in India, this is a by product of feeding the thousands of coders who throng Indian cities. The office canteen providing free meals was always a part of the corporate landscape. But when the IT lot descended on the scene, they brought with them the Sodexho coupon. Each employee is given a thick wad of these blasted coupons. She's supposed to exchange them when buying lunch . Of course she does no such thing -she either starves, or has a banana or brings a tiffin box. Saves these coupons which then can be used to buy grocery in shops.

This is tax evasion on a grand scale by the relatively well to do. Food coupons are tax exempt with the ostensibly laudable objective of feeding Rajalakshmis. They are meant to be used to buy food when in office. Not to buy toilet paper for home. By Indian standards, coders are well paid. Their effective rate of taxation is usually low at 10 or 20%. This is blatant tax evasion which everybody indulges in. Before throwing mud at politicians, one should ensure that one's own shirt is white.

The problem has grown into an epidemic. Apparently there are 300,000 people using Sodexho coupons like this. Nobody knows the value , but the speculation is some Rs 3000 crores. This is parallel currency sloshing around along with the rupee. I have sometimes been offered these coupons as change. The look I give the retailer who suggests this, gives meaning to the term kolaveri !

Pre budget consultations are currently going on in India. Here's a free suggestion to the Hon'ble Pranab Mukherjee. Remove the tax exemption on Sodexho coupons. And just watch them disappearing at lightning speed. I shall cheer mightily if Dada would do that.

Can we win ?

Down and out is one of the worst moments in life. It comes to everybody at some time or the other, save for the blessed few that God has chosen to spare. It comes to businesses, it comes to sports teams, it comes to people, it comes to you and me. The Indian cricket team is in that situation now. British Petroleum and Lehman Brothers faced it not so long ago. To many in Greece or Portugal, it might be that way at this moment. It all appears bleak. There is much darkness and little light. Even the air seems suffocating. The world seems to be an approximation of Hell.

This is the moment when strength of character shows out and is sorely needed. The strength to struggle and stand up despite the ferocious battering. Perhaps with a few more ingredients that might help enlarge the glimmer of light, such as it is.

Hope , of course. If you look at it,  Pandora did humanity a service, releasing all the evils, but also releasing Hope. For an utopian world with no evil, but also no hope, does not seem to be an attractive version of Paradise.

Perhaps something to lean on. A friend perhaps. Or a family. Or one's faith. Just to provide an anchor. A support, as strength is gathered for the long climb out of the hole.

Steely determination surely. The past is past. Tomorrow is another day. The Phoenix can rise from the ashes.

Action for sure. Moping is natural, but action is better. Not the plodding along as of old, but bold new action. Decisiveness, discipline, and energy. Small milestones that get larger and larger. 250 next time. 300 thereafter. Each one achieved with no quarters asked or given. Easily said; tougher to do of course.

Belief. That's a difficult one when in the bottom of the hole. Especially as everybody peering from the top is nodding their head at the futility of it all. But the spark should not be allowed to die out. It is what will light the fire along the way.

And above all some compassion as the climb is begun. For some unfortunate soul further down and struggling, a helping hand perhaps.

Why this touchy, feely, vague post in an ostensibly hard headed business blog ?? Don't ask. To quote William Cowper - Variety's  the very spice of life, That gives it all its flavour".

So the response to the rhetorical question at the title of this post. Of course, yes we can. Even if the voice is squeaky and barely audible, the throat with a lump and perhaps a tear shining at the corner of the eye.

OMG; Where did Friday go ?

How would you feel if you fell asleep on Thursday night and woke up on Saturday morning. No No; you didn't oversleep like crazy. Somebody moved the clocks. This is exactly what happened on 30th December if you were a Samoan - actually there was no 30th December. The world magically went from 29th to 31st. The reality behind the magic is quite prosaic. Samoa simply decided to come "this" side of the International Date line from "that".

The international date line is an arbitrary line that dictates where the easternmost and westernmost part of the world is. As you can see from the picture below it is not a straight line at all - quite arbitrary. If you fancy  such things, you could have celebrated New Year's day in Tonga ; hopped across on a short plane ride to Samoa on the west of the line and celebrated New Year's day again. Alas, no longer.

Samoa does such things. Sometime ago they moved from driving on the right of the road to the left of the road - chronicled in this post. Now they have made everybody older by a day by just a wave of the wand. Such are the serious issues that the government of Samoa tackles.

The official explanation is that Samoa is on the side of the time zone which makes it one of the last countries to finish the day. That way they are on the same date as Hawaii and the rest of the US. But their biggest trading partners are now New Zealand and Australia - Kiwibloke, a regular commentator here has helpfully pointed out that there are more Samoans in Australia than there are in Samoa itself. But the time zones are such that Samoa is never on the same day as Australia - so when the Samoans are working (presumably) on a Friday, it is already the weekend in Australia (every sensible Aussie is on the beach ogling at Sheilas) and when the Samoans are "resting" on a Sunday, the Kiwis are already working on their Monday. This mismatch is apparently hurting the Samoans economically - hence this move !! Its amazing what you can justify on the grounds of economics these days.

We can hereby grant Samoa the title of the most entertaining and quixotic country in the world.

Eyes left : Look towards Nigeria

There is endemic corruption that beggars belief. There is a highly educated, superb English speaking elite and large masses of illiterate poor. There is insurgency and terrorism around the edges. There is organised loot of the country's finances with a few getting extremely rich and the lot remaining dirt poor. Misguided subsidies are ruining the state finances. There is a thriving film industry that churns our the second largest number of movies in the world and provides opium to the masses. No this is not India. Welcome to Nigeria.

Nigeria is an oil producing country. You would expect that to be a huge blessing, right ? Wrong. It has proved to be a curse. Nigeria is suffering from an unsustainable petroleum subsidy burden. So unsustainable that this week it announced abolition of the subsidy. Predictably there will be chaos on the streets as large scale protests have commenced.

The petroleum subsidy case in Nigeria is a textbook case of how pathetic government policies can ruin a country. Nigeria is an oil producing nation. However it has not set up refining capacity. It therefore exports crude and imports refined products. It then massively subsidises petroleum prices. A litre of petrol costs Rs 20 (US$ 0.40). The government spends some $1bn a month in subsidies. This is simply unsustainable. 

Subsidies like this distorts every economic activity. There is, of course, large scale smuggling into neighbouring countries where the prices are four times higher. The largest per capita incidence of petrol pumps in the world is in the border towns like Idiroko - organised smuggling designed to fill the coffers of the masters in Lagos.

From the perspective of the poor, the subsidy is the only thing the government does for them. It is otherwise almost a failed state. The government says the money wasted on the subsidy will be used to build infrastructure, schools, hospitals, etc - things that the government ought to be doing. The trouble is that nobody believes them. Given the highly sophisticated levels of organised corruption, few doubt where the money will land up.

Replace petroleum subsidy with colour TVs or colossal statues or free power and you'll look at a country, readers of this blog are more familiar with.

India often likes to compare itself with China. It should instead look up to Nigeria. That is the true role model - of how bad things can become if the deterioration in governance and the state continues in its present trajectory.

Yes, we can

To many, the year gone by was a bad year. Natural disasters took their toll - the earthquakes in Japan & New Zealand, the floods in Thailand, Brazil and the Philippines,  Irene slapped the US earlier in the year, and just as the year was slipping by, Thane kicked Tamil Nadu. Unemployment remained rampant in the developed world ; there is nothing more demoralising than losing your job and not having a hope of getting another one. Large parts of Europe are in crisis. Austerity measures are hurting badly, especially in Greece, and now Italy. Inflation has hurt people in China and India and growth slowing down in both countries is ominous. The Arab world had a new spring, but winter seems to have set in somewhat prematurely.  You could be forgiven for ushering in the new year in a somewhat sombre mood.

But there is every reason to look forward with hope. Adversity often brings the best in man. We can find strength that we did not even know we possessed. The Euro zone will hold together and the crisis will pass. Belt tightening will be required, but with courage and fortitude, there will be less suffering. Joblessness in the developed world will start to reduce as a slow recovery happens . There is no better a mood lifter than getting and holding a job. Inflation will ease in India and China - signs are there already and more and more people can lift themselves out of poverty. An encouraging part of the world is Africa. Long abandoned as a basket case, many countries are showing good growth and the Asian achievement of lifting people out of poverty is slowly, but surely, being replicated in Africa.

The year ahead is going to see significant elections in France and the US and a generation change in leadership in China. Each one of these is going to be momentous - none more so than the change looming in China where for the first time, such a change is going to happen without a strongman like Mao or Deng lording over it. Perhaps a leadership change might happen in India too.

We can look forward to 2012 with hope. I am surmising that the worst is over economically. The upturn might be slow, but upturn it is going to be. We can do much better this year and when the time comes to ring out the year, we can be in a much more cherful mood than we are today. Yes , we can.
Copyright © Kizh Blog. All Rights Reserved.
Blogger Template designed by Big Homes.