Showing posts from October, 2012

Kingfisher’s Wings Grounded

On October 6, the Director General of Civil Aviation (DGCA) in India asked Kingfisher Airlines Ltd. to stop selling tickets. The airline hasn’t paid its employees since March, leading its pilots, technicians and engineers to go on strike as of October 1st. The strike compromised the safety of the airline’s flights since the engineers are responsible for certifying the aircrafts before flight, warranting the DGCA to suspend the airline’s license. Kingfisher and its employees were able to reach a compromise on October 25 regarding wage payment. Kingfisher agreed to pay four month’s wages by the end of the year, and the remaining three month’s wages by March 2013. The airline also announced that it would be fully operational within a month’s time, and its employees could resume work then. Sanjay Aggarwal, the airline’s CEO has said, “We expect to be in the sky soon and put forth our case to the Directorate General of Civil Aviation. We have addressed all the concerns of the employees

Cell Phone Deal-Making Frenzy Pushes Consumers Aside

MEHYAR AFKARI Maneuvers by American cell phone companies to acquire one another are threatening to erupt into all-out war. Not only am I wondering which will survive, but also whether the survivors will be destroyed by the prey they're rushing to eat up. The war began in 2011, when AT&T made a bid to acquire T-Mobile U.S.A., the American subsidiary of Deutsche Telekom, which had been looking to sell it for some time. Considering the well-known antitrust concerns, AT&T’s move was quite brave. It was a terrible move for AT&T. Regulators blocked the deal, and the provider walked away with a $6 billion loss: the $4 billion required to pay over the failed acquisition, combined with the estimated value of the broadband licenses it was required to grant T-Mobile. With recent M&A news in the cell phone space again, we are heading in the direction where three big wireless companies will dominate the US market, and not many more. The big will continue to get bigger as they s

Good Men Who Do Bad Things

            Rajat Gupta, former Goldman Sachs Group director, was convicted of insider trading and sentenced to two years in prison. Usually, a case convicting someone of leaking corporate secrets and gaining an illegal, unfair advantage, would be one of triumph. However, in the case of Mr. Gupta, it was an unfortunate reality.             Mr. Gupta’s rise to success from modest beginnings in India had been an example of unrelenting hard-work and fierce determination. When he was a teenager, he lost both his parents- his father, a follower of Gandhi, w as jailed in the fight for independence from the British and died in prison of tuberculosis; his mother, a schoolteacher, died two year after [1] . Despite this tragedy, Gupta continued his schoolwork, was accepted to and excelled in India’s most prestigious school - Indian Institute of Technology. From there, he rejected what was then considered a highly respected position from Indian Tobacco Company and, instead, decided

Manipulation: China's currency or American voters?

Recently, the Romney campaign issued a statement pledging to label China as a “currency manipulator”, claiming China is cheating. First off, to understand what he means by that on a broad level, he means that China is intentionally undervaluing its currency – because it is able to as a socialist market economy – and this undervaluing in turn hurts the US economy. This artificially low Chinese currency impacts the American economy by making Chinese goods comparatively cheaper in the US and US goods far too expensive for China. A further implication is that due to this price disparity, Chinese laborers are cheaper to hire and manufacturing factories are cheaper to export to China. So given his plan, what does this mean for both economies? Well mainly, the US will have to set tariffs or other trade barriers in order to allow the dollar to fall relative to the yuan (because right now, its relative price is very high due to this “currency manipulation”). But then what about the long-term re


College education has numerous critics these days.     I believe the recent fascination with MOOCs comes – at least in part – from dissatisfaction with the perceived quality of the current educational experience.    We promise development of critical thinking skills in our students but often appear to deliver little more than well-rehearsed memorization.     The argument then follows that we don’t need small classes and individual attention simply to teach memorization.    Massive online courses can achieve that goal with much less cost. In my spare time, I often ponder how modern college education can become better.    For example, is the education that a college student gets today really superior in any way to the norm 40 years ago?    Cars get more miles per gallon of gas than they did back then.    Computers run thousands of times faster.    But, has college education gotten better during that same period?    We are certainly able to teach more students but has the average educatio

Blasting Off Into the Private Sector

The United States has achieved some pretty amazing feats in space exploration. When Neil Armstrong first landed on the moon, it not only showed America's technological abilities, but also unified the nation as a whole. Since then, America has continued to expand its knowledge of outer space, completing more and more missions. However, as the costs of space research piled on, the US government pulled back funding for NASA and significantly limited its space travel programs. What does this mean for the future of space travel? Will America no longer shine as the leader in this effort? Have no fear, SpaceX is here. Space Exploration Technologies Corporation (SpaceX), a privately-held space transport company represents privatization at its best. Tonight, it successfully completed another cargo launch sending vital supplies to the Space Station. SpaceX became the first private company to get a commercial space craft to the Space Station last May and has since been gaining momentum. It ha

"Big Bang Reform"

India recently enacted policies to allow overseas investors to hold a larger stake in companies in various industries including airlines, insurance, retail and consumer. This news caused the rupee to cross a five-month high and the benchmark Sensex to rise 1%, as markets received a glimpse of the policy reform they have been seeking. The Department of Industrial Policy and Promotion (DIPP) stated that India received FDI of approximately US$1.33 billion this May. This makes the cumulative FDI inflows for the months April-May 2012 US$ 3.18 billion.  Keeping with its reformatory trend, the government stated that it would sell 10% of its stake in Oil India, 12.5% of its stake in Nalco, an aluminum maker. This push towards privatization will likely be seen as a positive one by foreign institutional investors.   The services industry received the majority of the April-May inflows followed by the pharmaceutical, metallurgical, construction, housing and power industries. The retail

Obama v Romney: The Economy

President Barack Obama and his challenger Governor Mitt Romney recently participated in the first of three presidential debates. The two debated a variety of issues, but one topic that came up more than any other was our economy.   Romney called out Obama for essentially dropping the ball in his first term as President, citing increasing unemployment and a stagnant economy.   Obama spent nearly $800 billion dollars in stimulus programs but still failed to keep the unemployment rate below 10 percent.   Furthermore, Romney discussed how Obama’s 4 years as president consisted of multi trillion dollar deficits and projects to borrow nearly a trillion dollars next year.   Governor Romney, for the first time since he received the nomination, seemed strong.   He persuaded Americans that his solution to revitalize the economy, focusing on energy independence, fiscal consolidation, and lowering tax rates will decrease our national debt and consequently stimulate our economy.   Pointing to