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In the last week, American bonds were downgraded on their credit rating from AAA to AA+.. with a further Negative outlook for the future.

Finally... after a long long long delay.

It should have happened when America decided to re-elect Bush.. as his first term itself killed America's economy enough.. with Bush busily spending lots of money into policies like 2% housing loan subsidies, high health spending for the public.. etc.,.. to cover up for what he did on the other side, leading a war which was eating many billions in expenses.

It should have been done when America went to war .. with Iraq ???
At least you could explain why they went to war with Afganisthan, as a reaction to September 11... but Iraq? What interest was that to bring Saddam and his men down in a distant country with all your economic reserves committed on that war, when the reserves were already going of like quick sand

It should have at least been downgraded when America hit a no-return recession which claimed all America's who's who in Mortgage, Banking and Investment corps.
And American government, with all those intelligent guys there, committed extraordinary amount of money to bring back these bankrupt companies back on foot... with nobody, just no bad money hungry company boss brought to justice for having managed things badly(read 'greedily) to pull the entire country's economy down.

And still not withstanding any economic sense, instead of pulling up the sack of money and starting to fill it, Obama committed a large amount in public health policies than what was already a high amount committed by Bush before him.. just to score political points.

After all this.. it would be funny, if they didn't see this coming.. the downgrade of their economic credit rating from AAA to AA+.

.. and even now some people are talking like it was Deven Sharma, an Indian American who is to blame for America's downgrade. Deven Sharma, is Indian-by-birth, President of the rating enterprise S&P which downgraded American bonds.

I got a sudden interest in Economics.. to the extent that I study Economics atleast 2 hrs every day.. blame it on the Bench period I am put on in my new company, or the amount of interest Indian politicians have raised recently with huge amounts of financial corruption.

... oh Yes, yes, Indian politicians always looted money.. I should have gotten into Economics long back, but..

but now they are doing it in the open,
to keep everyone excited,
to make everyone understand the big numbers, the fundas..
and come on.. this is also a sign of India growing into an economic super power ?

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I will try to interest you also to read Economics .. by sharing something I learnt today.

In 1995, ING Bank, a Dutch Bank, purchased an entire Bank called Barings Bank, for one pound.. that should be about 65 Rupees in indian currency in 1995 I think.

And Barings Bank was not some stupid bank.. it was a huge bank, operating billions of dollars, having offices in Singapore, london etc., and one of the few banks that had succesfully survived the world wars I & II and also the Great Depression of the 1920's.

Related links:
Barings Bank - on Wikipedia (Check the AfterMath section in the big article for the one Pound sale related note)

I had an idea today.. may be something similar or even the same thing has been said before by some great Management Guru, or Enterprising guy.

But for me.. it was My Spark for the day. It is a novel idea about how Companies should be measured / rated with a simple formula.

First thought.. was "Should I try to patent it.. or write a book and sell it.." etc.,

Second thought.. was "I share it.. I will get another spark later.. " .. pretty over confident of myself most-often.

But .., lets talk about the idea.

It is like said above.. a simple formula, that everyone would understand.. to measure / rate companies and brands around us.. so we know which product or company is actually doing good.. to invest with them or buy their investment (their product).

The formula goes like this..

1. Companies should not be measured by thier earnings.. but by their "power"..

What power ?
2. Power of a company should be equal to, the product of its customer-base, the revenue they make, and the resistance they have in the market to their product.

inspired from.. P = VI (power consumed by an electric appliance = voltage x current )
and V = IR (voltage = current x resistance)

P (of company ) = V (customer-base-size) * I (revenue they make.. not negative if they make losses.. its just the cost of all products they has sold without deducting costs, salaries, taxes) * R (resistance should be calculated by taking the nearest, valid, visible competitor's cost for the product for a single unit, divided by our company's product cost for a single unit)

P = V I R (but this is irrelevant anymore to be compared with the electrical formula)

1.
If a company has more than one product / brand.. their total Power would be calculated by:

P = P1 + P2 +......

2.
By calculating power this way, we ensure that companies can be easily rated, the competitor parameter is brought into the rating so that companies are vary of competition at all stages... and importantly companies don't try to increase costs on the same customer base to make high revenues and become popular with investors.

3.
If a company increases cost of its products, say a mobile phone company raises 2$ in their costs and has 1 million subscribers.. they increase their revenue by 200 % and majority of the subscribers would not make an issue of the 2$ increase.. and the company makes higher revenues without doing any hard work at all... which is bad. and the current system which is like this, allows companies to fleece subscribers or customers after making a huge customer base over the years. Nobody I know would cancel their mobile phone subscription with their big branded operators because they charge 2$ extra per month on some reason.

Companies exist to make money.. but they cannot make more and more money without any pain affecting them. it should pain them. it should pain their power rating.. and if this power rating like thing was used in stock markets and other investor forums to rate a company, then a bad power rating would pain the company's investors.. which is correct cycle.

4.
What happens with big companies that by their business model have small customer base.. for example oil companies.

Using this formula for oil companies which usually have only whole-salers and distributors on their customer base will mean that those companies will not be able to improve their power rating much by increasing their customer base.

But then, they will only be compared with other oil companies which will also have the same problem. Or, probably this power rating model would provide motivation for the oil companies to do direct retail marketing which could bring good competitive costs, better quality of oil.. for the end consumer... without having to pass through all that intermediaries of the distribution network.

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So much for now.. about the spark.

What do you think about all this ? Intersting ?

I was terribly disturbed at knowing the marketing strategy behind the "Cannot Play Discs" problem I get on most DVDs on my DVD player.

It seems since many years back, the CD/DVD industry (and so follows the current blu-ray and HD-dvd industry too) practially decided and divided the world into money zones as depicted in the picture below.. and all DVD players sold in a particular zone were to have a setting 'NOT to play discs sold in another zone'.

The idea behind was to be able to sell the discs at different costs in different markets for especially movie and music discs. So, you cannot buy 100 english movie DVDs in china for a bummer and expect to play it on your DVD in your home in San Francisco.. because then that kills the DVD market of San Francisco it seems.

ok. The hard point is, they make the DVD player itself disabled partially.. to implement the strategy.

Even if justified that it is to survive all markets in a balanced way, they should have done the disabling thing in the CD/DVD technology, rather than the player itself which is purchased at a much costlier price that an average DVD by the consumer.

When we buy branded DVD players we all end up paying for a partially disabled player... because all companies that make branded DVD players have an agreement on implementing the region codes on the players.

The Tip: If you can find, by some means, a way to reset your player's region code to ZERO (usually done through some combination keys on the remote for the player), then you have enabled your DVD player to all the world's discs.

It so happens like my Mom got a letter from the Indian Overseas bank or IOB, two years back, informing of a Fixed deposit that has matured which they are automatically renewing. My mom tried to search for and think of when she made that fixed deposit some 10 years back and where she kept the original certificate of the deposit to claim it back.

She approached the bank, which requested her to search all places where she might have mis-placed it.. because without the original certificate it would be difficult for them to process it. My mom had agreed and over the next few months, in about 3 months she searched over at many places, including her ancestral home in her native town when she went there for a relative's wedding.

She couldn't find the originals.. She approached the bank, which said that it can provide a duplicate 'original certificate' if she filed a banker's bond document requesting for it saying she lost the originals at a cost of 250 indian rupees.

It so happens that, She made the request, got a certificate, and also the amount of the deposit on its maturity.

Two years after this, Yesterday, she gets a call from the bank saying that it wasn't her money, that they had processed it by error.. and the original depositor has approached the bank for the money with the original certificate.

They said.. 'We are calling up to notify you of this issue.. and request you to check your documents on this.. and we will call you again in one hour'..

My mom immediately recollected that it is why she could never remember anything about the deposit, and neither find the original 2 years back.. she waited to see what the bank tries to tell her in their next call.

The called to say that they would expect her to visit the bank and possibly re-credit the amount back to the bank.

It seems the original investor himself has been the bank's manager 2 years earlier. At the kodambakkam branch of IOB. And that he had deposited this in the name of 'Uma' which was his wife's name. Since my mom's name also happens to be Uma, the bank had sent the intimation of the renewal to the wrong address and lost record of the original investment temporarily (or permanently).

My mom consulted a relative who once worked in IOB, who told her that sending a wrong intimation letter can be understood as a clerical error, but they have went aboard to wrongly give the money itself to you, which is totally ridiculous.. and dont pay them unless you get it in writing from them that they made a mistake on this and are requesting a re-credit.

By common sense, most of us would say, the bank will never a letter like that confirming on its handling of the money which could be used to dis-credit the bank publicly.. and neither they can sue my mom because that would also prove they accept the error.

But my mom also had a point that they could try to make this a mistake on us by trying to screw up with other relationships I have with the bank in my savings account or other accounts in future... and my mom prefers to recredit the money back to the bank because she understands now that the money was never hers as she doesn't remember making any such investment, and she only had to believe it otherwise because of the bank's letter.

The amount was small.. 33.5 thousands and I told my mom that she is deciding to give it back only because the amount was less and she wouldn't if it was some 2 lakh indian rupees.. to which my mom quickly adds 'if it were 2 lakhs I probably would not have believed that letter at all firstly.. because I never had that kind of money to deposit then'

Whatever.. this episode proves how badly IOB is capable of goofing up.

Another similar episode:

This has happened in the Kanadukathan branch of IOB which is Kanadukathan near karaikudi town, some 10 hrs drive from Chennai.

My mom went to the kanadukathan bank to check on her account and stuff.. while she noticed the manager of the branch has changed. She came back home and asked her father (my grandDad) what was with the old manager who was a nice man and was there for almost 4.5 long years.. (it seems IOB managers are transfered only once in 5 years)

My granddad has narrated the below episode.. as reason for the manager change.

It so happened that somebody who had taken a jewel loan at the bank, came back to repay the loan and take the jewels. While the repayment was processed and jewel furbished back to the claim processing clerk who returns the jewellery, in those few minutes between the time when it was going to be handed over to the customer, the jewel got stolen.. The bank claimed that somebody who was at the branch that time had taken it.. these were old days and even these days IOB only have surveillance cameras in its branches in cities, not lesser towns/villages.

The guy bluntly said he wanted his jewels back and not its cost. This issue got on for a while as a disagreement when the bank chose to informally settle the dispute with panchayat like meeting with the branch manager, some of the clerks, the customer, and some outsiders who were influential. It was forced upon the customer that there is no way they could get back the jewels, and so he will have to take the cost value of the jewels. Also it was forced upon the manager that he bear the cost from his personal money because neither the bank can blame anybody to take up the responsibility or pay part of the amount, nor they could open-up on the lost article because it would discredit the bank's way of handling it.

More so, I think IOB managers decide things based on the cost of it and put the cost to the bank.. they write it off... except strange cases where the manager takes ownership of the error.

And so it happens that the manager paid up the 60 thousands from his pocket, and subsequently requested an immediate transfer from the branch because of the episode.