Intelligentguess

In his column in the Mint today (free registration required), Ramesh Ramnathan, ex- citibanker and founder of Janaagraha writes

One morning, early in my banking career, a business manager publicly chastised a colleague for what seemed like a fairly minor infraction.

“Man, I wish I didn’t have to take this from him. Wish I had enough money to tell him what he could do with his opinion,” Pablo said.

I asked, “How much would be enough? What would the number be for you?”

This got the conversation going among our group of young associates. Chris, the American, wanted a million, so that he could get a sports car and a summer home. ‘The Number’ was different for each person. Pablo wanted two-and-a-half million, so that he could go back to Ecuador and start his own tennis club—his original passion.

Soon, other senior colleagues got involved and highest value that The Number got to was 10 million, with justifications about children, parents and mortgages. By now, the discussion was loud and lively, with a lot of ribbing and day-dreaming, when the head of the trading floor saw the cluster and walked over.

“What’s going on?” he asked. When told about The Number and what it was at, he said, “Sounds reasonable,” and then added, “I’d say double your numbers, just in case you get divorced,” as he walked away.

Ramesh goes on to expound on the changing relationships that Indians have been having with money, and the financial fever evident everywhere.

The killer lines come at the end of his piece

As hard as it is to get on to the financial treadmill, I guess it is equally hard knowing when to get off it. Knowing The Number. After all, even John Rockefeller, the world’s first billionaire and for long the richest man alive, when asked, “How much is enough?” replied, “Just a little more.”

Well Said!

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Today’s Economic Times carries an editorial on the Indian Government’s pusillinamity on the decision relating to interest rates on Employee Provident Fund (EPF) balances.

As the editorial argues, it is high time we align the return from EPF to market interest rates. Better still, the fund should be allowed to be managed professionally by fund managers (instead of the directed investement policy being currently followed).
Additionally it should be allowed to take exposure to alernate asset classes to boost return from the fund for its constituents.

You may have notice my use of the term “return from the fund” instead of the traditional usage of “interest rate on the fund”. I have never understood why we continue to use the term interest rates (signifying, incorrectly, debt) when in reality it should be understood as returns from the fund (signifying, correctly, investments).

To the uninitiated EPF is a defined contributory (pension) scheme managed by the Government of India for the workers (both blue and white collar) of the organised sector of India. The returns (somewhat erroneously called interest rate) from the fund are announced and credited each year. The rate of return announced is a political decision having little or no relevance to the return generated by the underlying investments of the fund. The investments of the fund are made in a fixed pattern (predominantly debt instruments of government owned entities; no equity exposure). More details are available on the EPFO website

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Forbes magazine has released its annual list of billionaires (report here)

The Economic Times coverage is here.

Key facts on the list:

• The number of  dollar billionaires stood at 946, a 19% increase over last year.
• There were 178 newcomers which included 19 Indians.
• Bill Gates continues to top the list, followed by Warren Buffet. Both are however fast losing ground to Mexico’s telecom tycoon Carlos Slim.
• Carlos Slim’s fortune grew by a record 19 billion to reach 49 billion last year. His wealth is worth more than 6% of Mexico’s economic output.
• India now has three (Lakshmi Mittal and the Ambani brothers) in the top echelons second only to the US.
• Yoshiaki Tsutsumi, of Japan’s Seibu railway group, is no longer a billionaire. He was the world’s richest man in 1987. He was also, recently, convicted for falsifying financial statements and insider trading
• India had the highest number of billionaires (36) from Asia, overtaking Japan (24) which had long held this position for decades.

Sure shows which way the world is heading.

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