Sub-prime lending has to be banned; no two ways for it

IIPM PUBLICATION

The once gravity defying escalation in the US housing market seems to be coming to an abrupt and screeching halt. But that’s just the outer crust; the real problem lies deep within something known as the subprime mortgage. And what’s that? Well, these are the mortgages based on blemished borrowers who have a credit record not suitable for obtaining conventional financing (in other words, they’re ‘sub-prime’ and less creditworthy).

Of course, the lenders charge the borrowers interest rates that are 4-5% higher than the market average because of the risky nature of the borrower. And truly, it all went on well until 2006. But the horror of it all was that the US housing market kept on ballooning with money sloshing in from the subprime market. As per a report published by Credit Suisse in March 2007, the subprime market dangerously grew about 400% to $665 billion in 2005 from $138 billion in 2000. Utterly malignantly, the Alt-A mortgage segment – a worse category of non-conventional loans, where a borrower is one with limited funds or a poor credit record (such as being 30 days delinquent once or twice in the past year), but with anticipated capacity to resolve outstanding credit issues – zoomed upto $400 billion in ‘06 from less than $50 billion in ‘02. It’s unbelievable but true that currently, these two segments make up a terrifying 40% of total mortgages.

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Surce : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

The Nigerian public needs to throw out corrupt and anti-nationals

MANAGEMENT GURU

The ensuing April elections have introduced a fresh set of problems and despair in the Nigerian capital. And the ‘clash of civilization’ rather than issue based political debate is the predominant theme this time. All this has resulted in a vicious atmosphere of mistrust not only among the Christians & Muslims but also among and within the political forces, for Vice President Atiku Abubakar has been denied participation in the ballot for alleged corruption charges supported by President Olusegun Obasanjo. These facts have come out explicitly in the latest report of International Crisis Group, which states, "Approaching vote would offer Nigeria the first opportunity to achieve a genuine constitutional succession from one civilian administration to another since independence in 1960. Failure could provoke violent rejection of the results by wide sections of society & intensification of the insurgency.”

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Beautiful Mind

MANAGEMENT GURU

Finally, it’s time for the wireless king to relinquish direct operational control of Bharti’s telecom business. But Sunil Mittal also realises that his role in shaping the future of the group is far from over...

In late 2005, when the entire media world was ballistically reporting Sunil Mittal’s mammoth expansion plans, B&E stood out & warned against such unrelated diversifications, considering that the telecom domain itself was far from won. Today, with competition intensifying on every front, the question remains the same – has Bharti bitten more than it can chew?

For starters, let us clarify one key point. The spirit of entrepreneurship is in fact the lifeline of a country that seeks to break free from the shackles of poverty, depression & unemployment. And there is no way one can doubt the enterprising ability of Sunil Mittal, which created India’s largest telecom company by market share & revenue. And we also value the undying spirit of enterprise, that desire of unlocking potential in sunrise sectors, which lured the Mittals away from the bicycle business to mobile ‘express yourself ’ solutions and now to diverse emerging sectors. What started with forays into insurance, airport restructuring (which failed) & fresh food exports is now taking Bharti into retailing with Wal-Mart.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Grrrr! I had food poisoning

MANAGEMENT GURU

It seems lifestyle maladies are not just restricted to humans. This time it’s pets who are its new victims. A large number of dogs and cats in North America succumbed to death after eating wet pet food, manufactured by Canada-based company Menu Foods. Eating the tainted food led to kidney failure and other severe illness among the pets. According to scientists at the New York State Food Laboratory, Aminopterin, a toxin, found in the recalled foods is said to be the real culprit for all this mess. The company has recalled 95 brands of “cuts and gravy” style dog and cat food (that were suspected of being tainted), irrespective of their date code.

A wave of rage struck North America, and there have been calls from 4,400 pet owners (FDA reports), storming with queries on recalled pet foods. The company officials have confirmed death of 16 pets (15 dogs and one cat), which seems far behind the reality. Market reports claim that more than 450 pets have breathed their last breath after having that food. Menu Foods is a leading North American manufacturer of wet pet food products with production of more than one billion containers in 2006. Controversies like these will shake consumer’s trust in the brand and tarnish the image of the company. Stringent rules are called for; to avoid such mess in the future.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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