IPL and ICL- shall the twain meet?

It is always only a matter of time before economics and greed get the better of individual egos. And it now appears that the ICL may be no exception to this rule. After more than two years of threatening and bullying, the BCCI may be forced by the ICC to make peace with the ICL. After all, the ICL has been making threatening noises about hauling the ICC to court; the ICC’s lawyers have advised their client that the ICL is on a pretty solid legal wicket. Sri Lanka has allowed cricketers who played in the “rebel ICL” tournament to play in domestic matches and Bangladesh may do the same. Some of these countries have a smaller talent pool than India has and can ill-afford to keep out their better players for long. Exactly how much longer before ICL and BCCI kiss and make up is anybody’s guess. But that they will do so sooner rather than later, is perhaps without question. It may start as an IPL winner vs ICL winner match and then over time, all restrictions will be removed. Personally, I think that can only be good for cricket everywhere.

India trounces Australia at Mohali

Earlier today at Mohali, India beat Australia by 320 runs in the second test of the Border-Gavaskar trophy series to go 1-0 up with 2 more matches remaining. This is India’s largest victory margin in terms of runs (i.e. not counting innings victories). That it comes against Australia is sweeter. But sweetest of all is the manner in which every single player contributed to craft this win. Ganguly and Dhoni shone with the bat in both innings, building on a good start provided by Sehwag and Gambhir. The speed with which Sehwag, Gambhir, Dhoni and Ganguly scored on Day 4 demonstrated a rarely-seen sense of urgency by Team India. Zaheer Khan was absolutely brilliant, producing some deadly spells of reverse swing. He was ably supported by fellow fast bowler Ishant Sharma and the wily spin of Harbhajan Singh and debutatnt Amit Mishra, who had a five-wicke haul in the first innings and picked up two scalps in the second. Dhoni and Sehwag took sharp catches and overall, the fielding was much better than what was on display at Bangalore last week. Indeed, Ponting was forced to admit that his team was outplayed in every department of the game.

So what happened to the Australians? Well, they fell prey to the same laws that cause business cycles and in the past, have caused the decline and fall of once-mighty empires. Essentially, half of the side- their best players over the past decde or so- have recently retired. Their replacements do not yet have the experience. It is a normal process of rebuilding. But yes, Symonds’ absence definitely has hurt them. As also Stuart Clark’s injury and Bryce McGain’s forced return to Oz.

Ponting has stated that the clear week they have before the 3rd test at Delhi gives them enough time to recoup, re-strategize and prepare. Knowing the Australians, it would be foolish to dismiss this as mere bravado. But then again, if anyone had predicted at the start of the Mohali match that Australia would lose by over 300 runs, that person too would have been dismissed.

Whether Kumble will come back to one of his favorite hunting grounds (the Kotla) is a function of his fitness. But with the emergence of leg spin bowlers like Amit Mishra who are not afraid to flight the ball, one can reasonably hope that the future of Indian cricket is brighter than one might have expected it to be. And remember that if Australia is rebuilding now, soon, India too will bid adieu to its Fab Five. The BCCI must be complimented for its bold policy of blooding young talent. No doubt, the IPL has played a part too.

Tata says goodbye to West Bengal

It’s official. At least for now, the Tatas have decided to move the manufacturing of their low-cost car (Nano) out of Singur in West Bengal.  They are actively looking for another location; states like Karnataka, Andhra Pradesh and others are wooing the Tatas.

But what is not clear to me is who, if anyone, finally won?

• Not the Tatas, investors of Tata Motors or other stakeholders- for they collectively stand to lose more than Rs500 crores of investment, not to mention revenue loss caused by possible delays in the launch of the Nano.
• Not the farmers who were against offering the land for industrialization- they have effectively lost 2-3 cropping seasons and given the construction activity in the neighborhood, who knows how good the soil remains to support agriculture?
• Not the farmers who were willing to sell the land, for the entire issue has cast a shadow. Besides, if the compensation was indeed inadequate, they may have under-sold.
• Definitely on the state government. This entire incident only reinforces the perception that the Left is against progress and development (assuming that promotion of industrial activities is in fact, “progress” in the desired direction).
• Not Mamata Banerjee and the Trinamool Congress- after all, the constituency they supposedly represented- the farmers- have not won either.

So what could have been a win-win-win situation has been converted into a lose-lose-lose situation, thanks to the intransigence of the political forces involved. Perhaps the only “winner” will be some other Indian state.

Another India-Australia test cricket series

Going by just the frequency with which Australia and India have been playing each other over the past couple of years, one cannot argue with those that describe this rivalry as having surpassed the intensity hitherto associated with the Ashes or an India-Pakistan series.

Be that as it may, we are less than a week away from the start of the first test at Bangalore on October 9th. Australia has a new-look side, and India too is planning to rebuild its test side. The lack of much prior bowling experience in Indian conditions has been mentioned by cricket gurus as a big reason why India has its nose slightly ahead. But think back to just 9-10 months ago, when Ishant Sharma (a rookie himself), RP Singh, Peeyush Chawla et al did a terrific job for India. They were playing against Australia in Australia.

Will Ponting set right his dismal record in India? Will Sachin add to his tally of test 100s and in the process also overtake Lara as the batsman with the highest number of test runs to his credit? Will players like Badrinath and Amit Sharma come into their own? How badly will the recent retirements of Warne, McGrath and Gilchrist affect Australia? Can Shane Watson and/or Cameron White step into Symonds’ shoes? Will this be a controversy-free series? Can Bhajji keep his cool? And finally, will India win the rubber?

Watch this space as the drama unfolds over the next 4 weeks.

History repeats itself…

It is said that those who forget history (or do not learn from it) are condemned to relive it. Think back to the late 1980s and ear1y 1990s, when several hundreds of Savings & Loan associations (S&Ls) in the US went belly up. The US government of the time had to pump in more than $150B to absorb the impact and keep the thrifts afloat.  Sound familiar? Dig into why many of these S&Ls failed, and you will find imprudent real estate lending and asset-liability mismatch as the primary causes. Of course, insider trading and inadequate regulation simply accelerated their demise and catalyzed the spread of the crisis.

Bush Sr was VP when the mess began to unravel. He became President in 1989. The US was at war with Iraq in 1990-91. His son Neil Bush was alleged to have given himself a loan (when he was with Denver based Silverado Savings & Loan, which went under). Neil’s brother is today President of the US. The US is fighting both in Afghanistan and Iraq. More than $800B has already been earmarked to bail out many ailing banks and financial institutions- including Fannie Mae and Freddie Mac (that, ironically, were part of the solution to the S&L crisis twenty years ago). In the early 1990s, the US economy went into a tailspin and was in recession through 1992/93. I do not know what will unfold in 2009 and beyond but perhaps someone with a crystal ball can help us see the writing on the wall.

And perhaps in 2035, someone may find this blog and read it- again.

Contagion and collateral damage

The much-touted $700 bailout package has been passed, and at least some people are heaving a sigh of relief. But methinks it’s far to early to even do that, let alone rejoice. There are many reasons for my pessimism.

1. The malaise has clearly crossed the Atlantic. Bradford & Bingley in the UK and Fortis in the Benelux region of Europe have been impacted. Although there has been no known (and publicly declared) impact yet, High Street banks in the UK and Continental Europe too will have some exposure to the “toxic assets”, just as ICICI Bank in India has announced a potential write-down of between $80 and 100M. To be fair, though, Barclays has gained through its acquisition of one of the erstwhile Lehman Brothers’ businesses in the US. UFJ has acquired 20% stake in Morgan Stanley, but that does not mean Japanese, Chinese or even South Korean banks are immune.
2. Globally, the BFSI industry is the biggest spender on IT- driven in part by the volume of data processed, degree of regulation and of course, need for top-notch data security and privacy. The nature of the business means that complex risks need to be constantly modeled and decisions made on a daily, hourly or even minute-by-minute basis. The industry is also the most mature in terms of embracing outsourcing- whether for IT services or BPO. Not surprisingly, IT services companies are worried about the impact of this crisis on their revenue and margins. In countries like India, the IT and ITES industries contribute significantly to GDP growth and if that engine slows down appreciably, the entire economy will slow down. Of course, the IT companies themeselves are aware of this dependence on the BFSI industry and have been diversifying into new sectors. But the volume of business that accrues from BFSI companies is too huge for revenue from other industries to compensate in the next 12 months.
3. The economic slowdown that has been casting its shadow over the global economy for the last 12 months will join forces with the financial crisis, and amplify the resultant impact on the global economy.
4. Especially in countries like India, the burgeoning middle class draws heavily on the IT and ITES industry. As pay raises and bonuses drop across these and other industries, demand for higher-end goods and services too will decline, setting in motion a vicious cycle. On the Indian stock markets, sentiment is largely determined by the quarterly results of “bellwether stocks” (many of which will announce their Q2 results in the next 2 weeks). Perhaps the market has already priced in the bad news, judging by how volatile most stocks have been in the last month or so.
5. It is naively assumed that $700B will solve much of the problem. But pumping this money into the system does nothing to improve the quality of the underlying toxic assets. The question of how long taxpayers can fund (or subsidize) the bailout too does not have a ready answer. Finally, the biggest question of them all: is $700B adequate? I think not.