Showing posts with label US. Show all posts
Showing posts with label US. Show all posts

Monday, September 10, 2012

Rights behind bars

It’s a burning debate across the World – destroy the sin or the sinner? The issue of voting rights for criminals is a key aspect of that debate. The IIPM Think Tank looks at how various countries approach the issue, and why the prisoner-bashing attitude might not be so wise

On the very face of it, you may not even entertain the idea of allowing criminals to decide the political leaders of India. Yet, a common joke about our great nation remains that while lowly criminals get into prison, the really smart ones get into politics! Subsequently, allowing inmates to vote (currently India prohibits voting by inmates) may not affect the composition of our Parliament too much, considering its existing abysmal state. But their exclusion does bring human rights issues to the fore. We analyse how some major countries look at this issue.

First, the Barack country. There is no federal policy with regards to this issue in US. Different states have different laws on the voting rights of their felons. While Maine and Vermont are the only two states that have no restrictions over voting rights of felons, fourteen states including Alabama, Arizona, Florida or Iowa have disenfranchised the voting rights of inmates. The other 34 states follow a somewhat middle path. Interestingly, around 4.7 million inmates, who comprised 2.3% of the total voting age population, didn’t participate in the 2000 Presidential elections due to voting right restrictions.

A particular research on the 2000 Presidential elections by the noted American Political Science Association has revealed some interesting observations. Irrespective of their disenfranchisement, if felons had been allowed to vote, 35% would have voted in the Presidential elections, and out of those, 70% would have voted for the Democrats. Looking at past elections, evidently, this allowance would have altered the results of three close Senate results – Virginia in 1978 (John Warner [R] would have lost over Andrew Miller [D]), Kentucky in 1984 (Mitch McConnell [R] over Walter Huddleston [D]), and Kentucky again in 1998 (Jim Bunning [R] over Scotty Baesler [D]). There was hope for Al Gore in the 2000 Presidential election as well, had Florida allowed its 614,000 ex-felons to vote.

Moving on to other countries, the 17 European partners, and countries like Bosnia, Canada, South Africa and Israel allow their felons to vote without any restrictions. But courts can withdraw voting rights for up to five years if need be in Germany. Neighbouring France has similar laws, though it rarely uses them. In contrast, countries like Armenia, Brazil, Chile, India, Portugal, Russia and UK have complete restriction over voting rights of inmates.


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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Monday, August 20, 2012

THE BIG FIVE: ECONOMY

The IIPM Think Tank analyses the five largest economies (excl. China) – US, Japan, Germany, France, UK

European economies have given mixed results. Even though the German economy shrank last year by 5%, experts predict a growth of 1.5% this year (that means an absolute positive shift of 6.5%). Five leading think tanks commissioned by the government provided the silver lining with facts like growth in industrial orders, recovering exports, rise in business confidence, reduced layoffs and unemployment level being at par with the fall of 2008. Unemployment level is expected to dip slightly next year to 7.9% from 8.1% this year, compared to 8.2% in 2009.

Britain’s economy grew by a weaker than expected 0.2% in the first quarter of 2010, a rise of 0.4% over the previous one. Its GDP also shrivelled by 0.3% in the first quarter. France’s GDP dipped by a negative 2.1%, with unemployment at 10.1%.

Although the second largest global economy Japan’s real GDP in 2009 fell by 5%, its GDP actually grew by 4.6% in the last quarter of 2009, which is better than projected by the government’s preliminary report. It has been augmented by export rise in Asia and increased domestic demand supported by government’s incentives. In the third quarter last year, Japan’s economy expanded by 1.1% in absolute terms, which beat the average forecasts of 0.9% quarterly rise, according to Kyodo News survey. This quarter also witnessed a rise in consumer spending to the tune of 0.7%, the highest in last 7 quarters. In December, even though the industrial production grew by 2.2% and capital spending by 1.0%, public investment declined by 1.6%.

With oil prices hovering peacefully around $80 per barrel, with US and Japan leading the way in turning around, EU showing latent promise for the current year, and with the BRIC economies steaming ahead in their growth ambitions, it can be safely said that although pristine recession is over, the effects of the same will continue lingering across economies for the next six quarters at least.


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Tuesday, July 24, 2012

The Dark Side Of Private Equity in The Indian Real Estate Sector

PE Investors are Amassing Unusual Stakes in Indian Real Estate companies. But given their Short Term Profit Interest, there is a Critically huge Potential threat for The Industry. A close look at these Unregulated Flip Artists in The Indian Real Estate space.

It was in 1988 that the world witnessed for the first time the true power and colours of private equity when Charles Hugel, RJR Nabisco’s Chairman agreed to a $25.08 billion leveraged buyout by Kohlberg Kravis Roberts (KKR – a leading PE firm); rejecting a rival bid of $25.63 billion by a consortium of Wall Street investment bankers. Rightly so, the media then exclaimed, “Seldom since the robber barons of 19th century has corporate behaviour been so open to question.” A little more than two decades later, the same private equity investors who were then tagged as “barbarians at the gate” and slandered by Hollywood’s Gordon Gekko (portrayed by Michael Douglas in the movie Wall Street), have managed to undergo an image makeover. Quiet surprisingly, they have been able to shed the erstwhile perception of being corporate raiders plundering for profit to a great extent. In the present context, the ilk of KKR, Blackstone, Bain, Baring, Red Fort, Sequoia et al are no longer feared. On the contrary, they are revered as deep pocketed saviours who are willing to invest in companies, which otherwise have been overburdened by the law of the land and have been misunderstood by the bourses.

Frankly, private equity has been put on an exalted status globally. A 2006 Wharton seminar on Private Equity tried to prove how private equity investment for shareholders was apparently more efficient than standard equity markets! The Economist, no less, once described private equity as the “sharp edge” of contemporary capitalism; later on, in another report they even confirmed that “in an odd twist, all the money going to private equity has helped buoy shares of public companies!” Bloomberg’s Venture Economic report showed that over a period of 10 to 20 years, private equity has outperformed the equity markets by 66% in some cases, to even more than 100% in other cases! The National Bureau of Economic Research, in a paper titled The Cash Flow, Return and Risk Characteristics of Private Equity, showed that private equity always generated “excess returns” relative to equity markets. Mercer did its own stuff in its 2007 PE study, which said, “Not only has the rate of return for PE firms overall been substantially greater than that of public corporations, but such companies – once returned to public ownership – have outperformed the market as a whole.” According to the European Venture Capital Association, while the US and UK had the “broadest and most developed private equity markets in the world (ranked at number 1 and 2),” such PE investments had led to strong innovation and economic growth!

Now, the important lesson to take away from almost all these research reports is that PE firms harbour a fanatic orientation towards maximizing the returns to their PE investors – in other words, it doesn’t matter to a PE firm whether the company in which they are investing could well be doomed if the PE investments were withdrawn; all that matters is the right stock price at which the PE firm makes a substantial return on capital employed. And if all the global reports are any evidence, PE firms and their Gekko managers are giving the full performance for the money being thrown at them by their high net worth investors.

Now again, how has India been viewed with respect to PE investments? Five years ago, the Economist Intelligence Unit’s 2005-06 worldwide survey rated India ‘second from bottom’ in terms of promoting environment for PE. Apax Partners, in their 2007 survey, Future Trends in Private Equity Investment Worldwide, confirmed the same, “India has the second worst environment for private equity!” One wonders then, for all that it is worth, how did private equity investments from the world over find their way into India in the last decade or so (According to India Private Equity Report 2010 by Bain & Company, between 2004 and 2009, private equity and venture capital firms began to acquire critical mass; so much so that PE investors invested approximately $50 billion in more than 1400 businesses), a period that resulted in one of the biggest contemporary asset bubble bursts in real estate history in 2008/9 – helped with a gracious push by the PE investors, who pulled out of the sector en masse just when it had reached its peak, and ensured a swift fall of the sector subsequently?

Given this context, it was perhaps least surprising that when the real estate sector – both industrially and in the stock markets – crashed, one again saw a sudden spring in the PE step, running back towards India, to grab hold of stocks and equity at the undervalued rates. In the immediate periods succeeding the last asset crash, PE firms started forming investment vehicles left and right to invest in the Indian real estate sector, focusing on townships as well as infrastructure that surrounds communities. PE investors returned to investing in Indian real estate through projects rather than equity (as at the project level, the exit route is easy, even with the residential sector). Currently, statistics and market reports show that the PE investment proportion is heavily skewed towards residential projects; because as an asset class, the residential sector is seen to be self liquidating, while commercial and retail have exit related issues primarily due to non-availability of REIT and REMF (real estate investment trust and real estate mutual funds) vehicles.



          
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Friday, July 20, 2012

The Sarah Palin Quiz!

If you Answer even One Question correctly, You’re qualified to run in The US Presidential Elections... Er, almost...

Sarah Palin’s branding is ubiquitous – none expects her to have much general knowledge (Africa=country; a Palin copyright); yet, everybody expects her to run for the US Presidential elections. We decided to pit you against Palin in this war of geographical knowledge. If you get even one right, you’ve beaten her.

1) Puerto Rico belongs to which nation?
2) Greenland is a part of Denmark. So which continent is Greenland in?
3) Is Greenland a country, state or city?
4) Who is the head of Canada?
5) Sultan of Brunei is known for his oil dollars. Where is Brunei located – Middle East, South Asia, Eurasia?
6) Which is America’s largest border sharing neighbour in terms of geographical size?
So are you better than dame Palin? Here are the answers:

1) Believe it or not, Puerto Rico is a commonwealth of the United States, ceded after the Spanish American War in 1898.
2) Surprise surprise. Greenland belongs to the Kingdom of Denmark, but is geographically located in North America to the north east of Canada.
3) You’ll chew your head off when you hear this. Greenland is an autonomous country on its own. It’s also the world’s largest island, astoundingly with another island named Greenland ensconced within it.
4) The head of State of Canada is Her Majesty, the Queen of Britain. And we bet you never knew that!
5) Yes, the Sultan has many Rolls Royce beasts, and might smell of the Mid-East, but Brunei is in reality located in the island of Borneo in South China Sea in Southeast Asia, flanked by Indonesia and Malaysia.
6) America’s largest geographic neighbour is actually Russia, which shares its border in its north east with Alaska, America’s biggest state (which was in turn purchased from Russia in 1867).


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