Author: SK

Sorry Vennai. Sorry MJ. Sorry Baal

But Lehman has to go. In the “larger interests” of continuing a vibrant, risktaking and efficient worldwide financial system, it is best that the Fed does not bail out Lehman.

I had written about this a few months back, in hindsight, after Bear was bailed out by Fed who arranged for a hurried takeover by JP Morgan. Given that Lehman is still alive, though just, I think it’s time to revisit the arguments that I had made there. Quoting from the earlier post:

However, I think the easiest method of regulating these banks would have been to convince them that they are not too big to fail. Yes, they allowed Bear to almost fail, and its shareholders almost got wiped out. However, my belief is that this episode will be quickly forgotten and people will be back to the same old risky practices once the current crisis is over.

Most wall street banks used to function under the assumption that they are “too big to fail” and  that if they make huge losses, the US Taxpayer would somehow bail them out. This led to the oft-repeated unhealthy scenario of “private profits, socialized losses” and encouraged extremely risky behaviour. The Bear bailout has set a bad precedent in this regard, and might lead banks to go back to their bad habits once they are out of the current crisis.

Then, I had written that

What if Bear would have been allowed to fail? People with whom it transacted would have all lost tonnes of money. So how would that have helped? Basically, in future, banks would become more wary of counterparty risk. They would be continuously monitoring each other. If one guy behaved badly, other banks would stop talking to him. Which would push up the level of everyone’s behaviour. I think being boycotted by your friends is a bigger punishment by being caned by the teacher.

The near-failure of Lehman has presented the Fed with an opportunity of setting right the mistakes that it did when it arranged the Bear bailout. They are lucky that there is an investment bank, not too large, which is on the brink of failure, and whose complete failure can change the way wall street functions.

I hope Lehman doesn’t fail. I hope they manage to do something on their own, or arrange some sort of funding, to pick themselves up from this crisis. However, if these efforts fail, they should be allowed to fail, however ungracefully. A bailout can only worsen the way major investment banks function.

Facebook App – how do you know each other?

Ok i know i’ve blogged this before. It was sometime in December 06, and it was on my old blog. About situations where you meet two people who know each other, and you don’t nkow how they know each other. And then it’s the time for long explanations and all that.

The same happens online also.  People you least expected to know each other will be friends on facebook, and you’ll need to know how they know each other. I wonder if an app can be built on this idea. And this is al that is there in my head right now.

Something like you can pick 2 people in your friends list and ask them how they know each other. There will be a page for every such pair of people, and this page will be visible to all those who are common friends of both. The page will be initialy populated with the answer to the question that facebook asks you when someone friends you – “how do you know XXXX”. and you  give an answer such as “I went to kindergarten with her”. this will form the basis of that page, and people can grow that page by asking questions and putting answers (say let’s restrict size of each message to 140 characters, to preent people from boring us)

Actually we can have a hypergraph here – a “how do you guys know each other” need not be addressed to just two people. It could be addressed to more people, provided they form a clique (for the uninitiated, a clique is a set of people where everyone knows everyone else). and there can be a page for these. and then you can have cliques being subcliques of supercliques, and all that.

will be max fun, i think. and can b e supported by advertising. let me know if any of you want to develop this (i’m too lazy, of course). I give you full permissions, as long as you credit the idea to my name. you can keep the money.

going through old mails

On sunday morning I leave for Gurgaon. This computer (which I’ve been using since IIMB days) will remain in Bangalore, and my mother will continue to use it. Just remembered that I have all my IIMB mail on this. And thought I should go through the lot. just for the heck of it. a few pertinent observations (I’ll keep putting in bullet points here as i go through the mailbox)

  • It seems in my first term at IIMB, my contact with the outside world (apart from parents) was minimal. Most email is from others at IIMB,and mostly acad related. And I clearly remember I’d stopped using my yahoo id then – the IIMB id was my primary ID
  • For some reason I can’t remember right now, I’d nicknamed Neha Jain as “Exception”. Of course I was to go on to later name her after a Mallu band, and that nickname happened to stick. And I’m still the only person who knows the real real reason why she’s called what she’s called. And I still plan to keep it a secret
  • God Sriram used to mail me fairly regularly back then. It’s kinda surprising now, but back then he seems to be the most frequent non-IIMB mailer to my IIMB ID. And in one mail he writes “Looks like the pertinent obs. are becoming vaguer and vaguer”. And for the uninitiated, it was God who had first come up with the phrase “pertinent observations”
  • My sense of humour back then seems quite weird – at least in hindsight. For example I wrote Ranga, who was studying in UMich saying “how many times have you drowned in Lake Michigan? And is it cold out there?”
  • I found this mail from Manish Chiddarwar which said “Hi, I wrote yesterday’s cluedo mystery. The intention was to have fun and not to hurt anyone’s feelings. I’m sorry if I took it too far. Regards, Manish”. This mail had been sent to Vikram Dua; Neha Jain; Arushi Nehra; Padam Chhabra; Venkataraman Aswath; Karthik S; Dawanchya Anita; Arnab Deb; Amitesh Rattan with a CC to Vinit Mahadevan. For context, please ask Kodhi. And kodhi replied saying “no hard feelings especially considering the fact that having wimpy for a son would make anyone proud”
  • A number of mails from friends back at IITM replying to my mails to them asking them to send proof of some “positions of responsibility” that i held at IITM
  • Muthu Mohon had sent a mail titled “Apex: Finally some progress”
  • Back in 2004, I used to start all my mails with a “hi!!”. somehow find that slightly rude now
  • Rachit Prasad had sent me a mail in early 2005, before he joined IIMB. He introduced himself thus: I’m a dig from Bangalore in IITM Mech who also stays in Banashankari, but in 2nd stage”

Ok I put NED now. Will publish.

Instant D Moments

I don’t know how manyeth time it was. I don’t normally keep count of these things, though given my superior long-term memory, you might expect me to. There have been two earlier instances where this kind of a thing has been documented. There was one more yesterday, which I’m not going to write about since I didn’t think it was too significant. After all it lasted for hardly a minute.

I’m talking about instances where you see a girl and instantly feel the desire to put blade on her. Going by the AIDA framework these are cases where D happens within a couple of seconds of the first A. Where before you know it, there is a strong attraction that you face towards this person. And you are usually so shocked or so stunned that you finally end up doing nothing, and fritter this opportunity away.

Madwoman tells me that the total worldwide supply of such “instant D moments” (as I’ve christened this just now) is limited, and that by enjoying a large number of such moments, and yet doing nothing about it, I’m doing a great disservice to society in general and myself in particular. I don’t know about this. But I’m not sure if this kind of thing can be really manufactured. In case you drive yourself to desperation, “instant I moments” (again going by AIDA) can be manufactured – you get interested in every girl you meet. But instant D moments – I think – cannot be manufactured.

Given that there is some sort of an “extrernal force” which decides upon these moments (note that this statement doesn’t imply that I’m religious), the first thing I wonder is what the distribution of these moments is like, and whether Madwoman’s statement about the same holds. I’m reminded of this case where when brains were being distributed across India, a fixed quantity was allocated to each state, which meant that per capita, the larger states (BIMARU; let’s not count Maharashtra or AP here since there are several states within states there) got shortchanged. Also, there is the accusation that the giver of brains forgot to stir while distributing in Bihar.

That bad digression aside, I once again wonder about the distribution of these moments, and wonder if I’ll feel like that ever again. Given that I’ve let at least three opportunities let go, I don’t know if I’ll get another chance. I dont’ know if i’ll get another chance which I can convert. Over the last few days I’ve been telling myself that I need to ask to get things done. That by not asking for something I’m giving myself a zero chance of getting it. But then, when an Instant D Moment strikes you, you stop being rational and forget the theory you formulated an hour ago.

Such is life

Law of conservation of willpower and other stories

Every time I think about this article in the New York Times, I find myself agreeing more with it. The basic premise of the article is that in the short run, one has a limited “supply” of willpower, and by every activity you do that consumes willpower, you are reducing your ability to do other similar activities. In the longer run, the article goes on to explain, you can increase your willpower over time. This you do by keeping on pushing yourself marginally on the willpower scale.

Back when I first read this article (it was written this April), I used it to justify to myself as to why a normal management consulting job requires heavy amount of willpower. The argument I put forth back then was that in a mgmt consulting job (the kind of stuff done by McKinsey,  A T Kearney, etc) you have to work for long hours, mostly in the presence of members from the client team, and a large amount of work you do is mostly routine, and boring.

Given that the work is mostly boring, it consumes willpower to keep doing it. The long hours mean that you need to keep doing it for a long time, which means a high rate of willpower consumption for a long time – making your daily consumption of willpower really high. Typical work usually involves your exhausting close to your daily supply of willpower. One option would be to periodically recharge your willpower batteries – by indulging in activities that don’t require any willpower, and will also go into removing your frustration with the depleting willpower.

One of the most high-pressure jobs, one that consumes copious amounts of willpower, is trading. Though the hours aren’t too long, the rate of consumption is so high that you easily come close to the daily limit. However, traders usually manage by frequently recharging their willpower batteries. By indulging in activities such as shouting, screaming, throwing down the phone and breaking pencils. This way, they manage to survive until the time they get paid their bonuses (assuming they get a bonus – which is not the case with most traders this year).

The clincher with consulting is that you are usually based at the client’s location. This means that you must behave. And thus, a major source of recharging willpower batteries is gone! Hence, the only way you can survive in that profession is if you have an extremely large daily supply of willpower.

Every time I think about this NYTimes article, I also realize that my willpower is less than average. Though I must say that it’s been steadily increasing, it’s nowhere close to the average level. Initially, in school and college, I managed to get by because the amount of willpower demanded wasn’t very high, and within my limits. Then, I started working, and got exposed.

There was this guy called Yaso in my class at IIT who on one fine day started writing with his left hand (he is naturally righthanded). He explained that he was doing this to build up his willpower. I don’t know how successful his attempt was, but I clearly remember we’d made a hell of a lot of fun of him for this. Maybe I should check back with him. And start implementing some measures for improving long-run willpower that the article talks about.

Life update

Today I complete four months of joblessness. Time seems to have flown quite quickly. Looking back, I don’t really know how I spent these months. I think I read quite a bit. I chilled out a bit. Slept well. Ate well. Hardly travelled. Hardly got bored. One one hand I’m happy that I didn’t get bored for most of these four months. On the other hand, I believe I’ve wasted these months sitting at home.

I spent a considerable amount of time trying to figure out what I wanted to do in life. Professionally. Unprofessionally. There were no easy answers to this question. Every time I thought I had the answer, something would happen which would make me change my answer. I have spanned the entire spectrum just in a matter of days. Thought about some stuff, only to discard them only a day later. Nothing particularly concrete came of of this time.

My joblessness is going to end next Monday, the 25th. I’m moving to Gurgaon. I’m yet to book my tickets, but will probably go there on Sunday. Once I find a house and settle down there, there is a very good chance that my mother will join me there. Bangalore will continue to be my “hometown” but I’m not sure if it’ll still be home. Yes, I’m getting uprooted.

The popular saying is that most people have two careers – they do, on an average, two kinds of jobs in their entire careers. The saying also goes on to say that “successful” people have an average of four different careers. I don’t know what to make of it, but I’ll be starting my fourth job next week (counting one internship also as a job). The new job is “orthogonal” to my last two jobs, which were mutually orthogonal. The new job is slightly in line with my first job (the internship) but the similarity is slight. So, at the age of twenty five, with a total working life of a little more than two years, I’m entering my fourth career. I don’t know if I’ve “achieved success” because of this.

When I was a kid, I used to read Misha. I still remember one cartoon from that. A hedgehog stands under an apple tree, and wants to get the apple. It shakes the tree. A few leaves fall off. It shakes the tree again. A few more leaves fall. The penultimate panel shows the hedgehog shaking the tree really vigorously. The last panel shows the hedgehog covered with leaves from the tree. The fruit is still up there. Based on this, my father used to “do a hedgehog on” me. This treatment involved him catching me by the shoulders and shaking me vigorously back and fourth, well at a faster rate. It used to be fun. This treatment has since been extended to all kids who have cared to visit our house.

For a large part of my childhood, it was common for me to go up to my father and say “make a hedgehog out of me”. And he used to proceed to give me the “hedgehog treatment” that I’ve mentioned above. Finally it seems like all those requests have come to fruition. In the lingo followed by the financial industry, people who work in hedge funds are called ‘hedgehogs’. And starting next Monday, this set is going to include me.

A few random thoughts on statistics and terrorism

In the world of statistics and operations, people usually talk of two kinds of error – omission and commission. For simplicity, they are referred to as “type 1” and “type 2” errors. I can never remember which is which, but after a little bit of googling, I can tell you that type 1 error is the error where a correct hypothesis is rejected, while type 2 is one where we fail to reject an incorrect hypothesis.

The most common example for this is one of a quality control department. Suppose you are in the business of checking the quality of widgets. There are two kinds of errors you can make – you can classify bad widgets as “good”, or you can classify a good widget as “bad”. Which of this is type 1 and type 2 depends upon how you frame the hypothesis. However, let’s not get into those details – they don’t matter. All that matters is that you understand the two ways you can err – which is not hard to understand at all.

Continue reading “A few random thoughts on statistics and terrorism”

random

I’m hallucinating a lot nowadays. I see things that don’t exist. Hear sounds and words that have never been spoken. Imagine a number of random things. Dream a lot. A hell of a lot. And usually wake up scared. And I can never remember any dreams. In fact, I can never remember what I was thinking of a few moments back.

Very frequently, thoughts literally slip away from my mind. I think I know what I’m thinking, but in a few moments, I don’t have that good an idea and a couple of frantic steps, when I’m trying to get hold of the thought, later, it’s all gone. I don’t remember a thing.

It seems like the awful short term memory is the price that one has to pay for a superior long-term memory.

Extending the effects of the Bangalore bug

A few months back, Ravikiran had written about what he called the “Bangalore bug”. He said that due to the outsourcing revolution, most of our best web designers and engineers end up serving foreign markets which offer better margins, and thus Indian websites are the scum, as is software designed for India.

I think it is much deeper than this. Check out this article by Janmejaya Sinha about cashing Travellers Cheques. If any of you have tried to get some work done at an Airtel or Vodafone service center or call center, you’d have noticed that most people manning this are fairly incompetent. It’s likely that you would go through the same experience at the Big Bazaars and Food Worlds. You must have also definitely noticed this in college – in terms of your teachers there.

What the “bangalore bug” has done is much more than what Ravikiran had talked about. It has diverted the reasonably smart people who might have gone into banking, or teaching, or become shopkeepers, and has made them switch to IT or other services which can generate export revenue. The “export industry” pays reasonably well so jobs which had been respectable half a generation ago are not so respectable any more. And the quality of service that we get has gone down drastically.

Thinking about it, there’s nothing much we can do about it. We can’t stop exporting becasue that destroys the quality of goods we consume here (actually this has been implemented in the case of some foodgrains). The only way smarter people will come into the service industry which serves local markets is if this industry pays as well as the export jobs that they’re currently doing. And for this to happen, service fees have to go up significantly. And i’m not so sure too many people are willing to pay too much more just for the sake of superior service.