Since my last post

Since my last post -

Lehman Brothers have filed for bankruptcy
AIG would have done down too if the US Govt. hadn't pumped them up with money
Merrill Lynch sold itself to Bank of America for $50 billion, much less than its actual value a few weeks ago
America's two biggest mortgage lenders are owned by the US Government
The US Congress is getting a $700 Billion package ready to take on people's bad mortgage assets
Goldman Sachs and Morgan Stanley turn into commercial banks
Of the 5 big independent investment banks that were alive in January 2008, only two remain, and like I said, they've turned to commercial banks
The 7 developed nations have pledged whatever investment is necessary to keep the economies from running into trouble
The Investment Banker's Wall Street as we know it is dead.

The artificial world that Wall Street had been living in and had been luring investors from all over the world seems to have been exposed as empty, and now we should see the trend of people going back to the real economy - investments made on deposits, a more stable, long term appetite for risk and yes, a lot smaller bonuses for our chaps on Wall Street.

There are a lot of rules that had to be rewritten to allow the government to bring stability into the market, from changing British monopoly laws to allow Barclays to buy HBOS, a mortgage lender. How the mighty have fallen. For the past many years, the US government, and its influential multinational corporations, have been forcing developing countries to open up their financial sector to allow these companies to bring in the kind of business they do at Wall Street, or rather, did at Wall Street. They were horrified that how could the government be ever involved in the financial markets - the government had no right to regulate the markets so minutely and should leave.

So the US government is now back in the saddle, owning the two biggest mortgage lenders, Freddie Mac and Fannie Mae, the Federal Reserve brokered the deal that allowed JP Morgan Chase to buy Bear Sterns, and the Government pumped billions to allow AIG to keep standing. And then the multi-billion dollar package that some call as a 'bailout', and some as necessary to keep the markets alive! 

What can I say, while the spate of bankruptcies is probably not over still, because this exotic securities, or as now they're called, toxic securities are in possession of a lot of companies, including ICICI, but fairly limited to $80 million. The artificiality of the markets will probably have to be flushed out, some semblence of order brought back in and it will take at least a few years before the markets really come out of this mess. Of course, I believe when the markets do come around, nobody will want to talk of toxic securities, they'll just be happy in trading in the ordinary, boring stocks that will give them less than half the return but have been surviving for many more years! 

Following up...

In my last post, I had said that I was, and were a lot of other people, eagerly awaiting the details of the outcome of the meeting between Mamata and Buddhadeb. Apparently, some sort of 'agreement' had been reached, and media channels had reported, and I had quoted one of them, some of the key points of the agreement, like returning a part of the land, I am still not sure the one that is under dispute or some other, and Mamata stopping the harrassment of Tata workers.

It turns out that the Tata's aren't happy at all with the way things have turned out, and the situation is back to being an impasse. Apparently I was mistaken in believing that a solution could be reached with only one meeting between the parties. I think the one meeting probably gave them the opportunity to exchange notes and get warmed up for finding a way out.

The Tatas have said that they do not want the government to disturb the autocluster in any way, but I hear conflicting reports that this is what the two parties had agreed to at Raj Bhawan.

I am reading today's Hindu, and it quotes the Industries Minister, Sanjay Nirupam, as saying some sort of 'final'deal has been signed.

The West Bengal government should not take any steps that will disturb the arrangement that ensures the integral nature of the auto-cluster, consisting of the mother plant and the vendor park, in the upcoming Tata Motors project site at Singur, company managing director Ravi Kant said on Tuesday in a letter to Industries Minister Nirupam Sen.

This was in reply to a letter by Mr. Sen to Mr. Kant on Monday that clarified the government’s position following the previous day’s talks with Trinamool Congress chief Mamata Banerjee and her associates on providing land to the “unwilling” farmers whose plots were acquired for the Tata Motors’ project.

“We would like to be clearly told about any future arrangements, understandings or commitments that will go contrary to the agreement, and which will result in not honouring the commitments [made to the Tata Motors earlier],” the letter said.

Amid this development, Ms. Banerjee reiterated that the agreement signed on Sunday in the presence of Governor Gopalkrishna Gandhi “is final.”

She said:

“In it the government has decided to give maximum land [to the land-losers from whom plots had been forcibly acquired] from the project area and the rest from that adjacent to it [the project site].”

“It is a policy decision made before the Governor, which cannot be violated. We have no confusion on the matter. Both sides are signatories to the agreement.”

I think this is another great example of extremely inept political maneuvering by Indian politicians. They usually get themselves into a corner because of their focus on rhetoric that it leaves very little room for a solution that doesn't turn into a zero-sum game. Of course, considering that it is their Rs. 1500 crores and their employees, the Tatas are completely justified about voicing their concern for being shortchanged by the government. Already it seems to me that the two parties have already decided in their minds what outcome they will fight for, and will leave overlook mutual interest for the sake of their position. So, it seems the situation is back to square one.

I had this thought that cropped up in my head about heading to the city and actually try to be a part of this whole hoopla. This situation is being followed all over the world, and I am very, very curious and eager to experience the mood on the street. I know where the Raj Bhawan is, and I know I will see groups from both parties and a lot of media there. Perhaps I could simply linger around without getting into trouble and just try to get a grip of whats going on. Of course, an IIMC shirt would be necessary to give me some legitimacy and respect. Hmm, I should consider this, because I think this statemate will probably linger for a while.

The Nano Solution is here

A few days ago I had written about Mamata Bannerjee and Buddhadeb sitting down at Raj Bhawan with the Governer, Gopal Krishna Gandhi and trying to find a way forward. It is being reported now that there is indeed a solution to this mess, with the government willing to return around 200 acres to the 'disgruntled farmers' and Mamata Bannerjee calling off her 'agitation.'

Like most other people, I am awaiting the details, but I think I can be reasonably assured that we will probably be withheld the dirt and muck thrown around in that conference room. Both the parties involved must have traded a lot of changes, and also stated a lot of true facts about each other's motives and aims, but we will probably end up hearing a cleaned up version of how everybody wanted to get along and did it for the greater good of the glorious state of West Bengal.

Somehow I am not able to digest the lack of Tata's role in this whole faceoff, other than the threat to move out. Given that they are the biggest company in the country, surely they must be party to the meeting, but I am really surprised that Ratan Tata gave his threat and eventually flew to the US on a business trip, leaving one of his deputies, Ravi Kant, in charge of affairs.

IBNLive.com is reporting the solution to the dispute, and I quote...

The West Bengal government and the Trinamool Congress have reached a consensus on resolving the land dispute. Sources tell CNN-IBN a new compensation package has been worked out according to which the government is likely to return around 200 acres of land in and around the factory to “unwilling farmers”. A committee will be set up to look into the land dispute.

Trinamool Congress leader Mamata Banerjee, who leads protests against the car factory, will call off her agitation in 24 hours as part of the deal with the government, sources say.

CPI leader D Raja told CNN-IBN the West Bengal government had offered a “meaningful dialogue” to solve the dispute. “This is a lesson for not only for West Bengal government but for all governments. When land is acquired for a project, consensus has to be arrived at. You have to win the confidence of people and of political parties,” he said.

There, we can see CPI ass D Raja giving us a totally meaningless and pointless statement that yes, when we acquire land, we must ensure that a consensus has to be arrived at. I am sure I've heard it from every politician's mouth who has been burnt by their overzealous taking over of land for a friendly corporation.

I had posted earlier that most probably Tata's threat to move out will bring the netas to realize they've probably gone too far, and it has happened. What I am really curious to find out now, is how long will the people of West Bengal, and particularly the people of the affected areas, remember what has just transpired and when the election comes and vote with some sense. For all I know, both the parties will spin this issue into their moral victories. Mamata will go to town how she brought the big bad Tata to their feet and finally got land back for the dispossed farmer. The Commies will go to town talking about the lengths they will go to, to protect and invite industry into the state. You know, I can see this all play itself out in the coming months, and I am pretty sure that the common man, glad to finally be back on track, will probably forget about this all, blame it on his/her kismat and move on.

after rhetoric, some harsh realities?

So everybody's been protesting and threatening lately, of course, led by Mamata Ban-her-jee. She and her party had been screaming off the top of their lungs, they have been blocking Tata workers from entering the factory premises, they set up barriers on the Durgapur highway and told the High Court that they havent, and basically calling for Ratan Tata to give up the 400 acres of land that he 'stole'.

It seems that Mr. Tata will finally be calling their bluff. Let me add that I think that Mamata was under the impression that since the Tatas had already spend Rs. 1500 crores on the project, they would not even think of leaving. You know, I don't know a lot of things in life, but I have studied some microeconomics here, and I know a sunk cost when I see one. The Tata's have spent this money and will not get it back, so there is no point crying about it and move on. Also, I think quite a substantial amount of their equipment can be salvaged. The tatas can take a hit of Rs. 1500 hundred, leave with their entourage and start shop in some other part of the country and deliver Nano to every part of the world. But what will West Bengal do. Mamata bannerjee has the loudest bark, but I doubt her ability to bite. Already, the Commies and Mamata are asking Gopalkrishna Gandhi, the Governer, to intervene and mediate this issue. This is the same Gandhi that the Commies so hate for getting under their collective skin for varied reasons. I have already mentioned about Mamata saying that she doesn't want the Tatas to leave, she only wants the land back. Cool, she has the same mentality as the commies - they don't owe anything to anybody, but everybody owes them something. Word is that the parties are meeting on Friday to try to find a way forward.

I don't even need to write about the agitations FOR the Singur project. The industry has spoken for it, the intellectuals are speaking for it (!), but maybe it is too late? Mamata Bannerjee has already murdered a poor daily wager who committed suicide because the work at the plant has stopped. On who'se head will his blood be? Given this medieval system we live in, I think he is simply a casualty of war, and the people involved will simply forget about it after trading charges.

Its not that the Left have stopped making moves. According to Business Standard, they have sweeted their deal to the owners of the 400 acres. According to the site -

The package was likely to offer a bundle of options like enhanced compensation, annuity scheme and some sort of job assurance for one member from each distressed family.

The issue of alternative land could also be brought to the negotiating table if the opposition wanted it and the government would try to accommodate that request to the extent possible, said a source.

When one plays Poker and ever gets in a situation in which you have put a lot of money into a bad hand, most times it is very difficult to simply back out and cut your losses. This quicksand that the politicians of West Bengal have gotten their people and their state into, will probably not be solved with more money and more incentives. Mamata's stand is "land for land", and she will not want to accept the offer for money or alternate land and be seen as backing down from her position. Of course, there is no issue of the commies giving up in the fight. They are planning their anti-Mamata campaign.

Looking at the big picture, the debate has started on what is in store for the state after this, and how has this issue, whatever its resolution may be, affected the image, the policies and the sensibilities of this country as a whole. A newspaper quoted an American businessman as saying if the Tatas fail in West Bengal, how could they succeed? A very legitimate question. One of India's most revered, powerful and rich companies seems to be getting ready to give up and pack its bags and start elsewhere. Of course, i am not implying that the Tatas should stay and fight, as businessmen, they are not there for that, but like I said, for the sake of the future of West Bengal, there needs to be a positive outcome of this whole episode. In these fights, the people on the ground are the real losers, and unfortunately, they aren't even a factor anymore, despite what some politicians will tell you.