More banks than you need?

Recently the Central Bank of Bangladesh has declared their intention to issue licenses for new banks that, once issued, will almost double the number of commercial banks in a single stroke. The expressed reason has always been the fact that the majority of the country's population are outside the reach of formal banking channels. So, new banks will increase coverage as well competition in the financial sector. However, the latent motive can be something else as most of the licensees are leaders of the ruling party or their cronies. And, every indication is there to suggest these banks will target an over crowded segment of the populace. Although these do not surprise many, the important discussion is what this influx of new banks in a saturated market-segment will mean in the long run.

At present, there are 44 commercial banks with thousands of branches but almost all of them are concentrated in the urban population centers targeting professionals and business people within a narrow segment of the population. There is every indication that the new banks will target the same customers and share into the same capital base rather than creating new pies as promised by the Central Bank. Once the new ones start operating, competition in retail banking will be fierce prompting the risk of increasing percentage of bad loans. On the other hand a increasing portion of the capital base will be disbursed as consumer loans putting inflationary pressure on prices of consumer goods. At the same time, available finance for capital goods will shrink, negatively impacting industrial growth.

But, the gravest evil apparently evident in the pattern of government policies is the fact that distribution of wealth is becoming far more skewed toward the well-off section of the society. Be it the tax structure of the country, or awarding of government contracts, allocation of budgetary incentives or without-retribution-hijacking of people's money from capital market, it is always the cronies and extreme high end of the pyramid who are the beneficiaries. The weak justice system and lack of democratic institutions help to perpetuate the trend. And, the end result is a humongous gap in the wealth of the rich and poor that will shame even most capitalist of thinkers! 

What is life?

Once I thought of this world as a hunting ground, where I am the hunter and anything else is a prey! Later, I came to regard life as a Colosseum, where I am a gladiator fighting for my life. After that my conception of existence wavered between these two extremes, depending on the state of my mind at that particular time.

Although the allegories sound archaic they actually capture 2 of the most extreme perceptions of life, where everything else falls in between. Take, for example, the case of a 20-year old youth, who is young, feisty, deep in love with life. For that person, "nothing is impossible", 'sky is the limit' in its exact sense, and anything can be hunted with the right time & effort. The person will embody that spirit and try to live that philosophy in every aspect of life.

Now on the other hand, take the example of an older man of mid- 50s, with who life has been tough! For this person, hopes are hard to come by. Every road is fraught with demons and conspiracies, plotting his/her downfall. Every breath for this unfortunate soul is a struggle to survive!

So, what life actually is? which of the above thought process reflect life in its entirety? Is there really a single, all powerful answer to 'life' as a concept?

Let's continue our quest for finding the answers....

What is happening with Euro zone? (continued)

roughly one month ago the last post on this same topic was published -

Now that UK is keeping herself safely away from the Euro zone and French-German coalition is pushing for a more closely knit Euro 'State' (policy wise), one can not help but ponder the future. [Someone said a currency without a state can not sustain]. Looking at the strong commitment of big powers to save the Euro, it is likely that the current crisis will be warded off. But, at the same time there will be some irreversible changes in the European socio-political map. The Mainland  will move ever closer in terms of future policy with the exception of few 'rogue' states (who will fail to maintain the impending strong fiscal discipline to be imposed by the big two). However, here one must keep in mind the deep seated ethnic and national diversity among Euro citizens which are prominent through the national lines and can cause future separatist dissensions among small, disgruntled population groups, bringing future social unrest and rifts. But, the big scoop here is the increased self-imposed isolation of the UK from Euro zone. With the passing of current debt crisis, this divide along the English channel is supposed to get widen. So, it can pose interesting socio political questions in the future. Let's wait and see...

What do you think of the crisis and the outcome?   

'Education' system and human ingenuity

When I think of the word education, it brings picture of a school and classroom in my mind. I think it is same for many others. But think of the transcend-ing that had gone into the process over hundreds and thousands of years to put that kind of conditioning on present human mind. And, the extraordinary guile and intelligence on behalf of human to bring education from a purely one-to-one and primarily experiential phenomenon to a generalized & standardized, one-to-many experience that all human-lings are expected to go through during their formative years. Simply fascinating! Of-course inventions like fire, wheel, agriculture or domestication of animals are the fundamental stepping stones those made this civilization happen, but mass-ification of education is no less important in this journey from the caves to the present day glass & steel skyscrapers. One can simply get awed by the accomplishment.

Now, it was no way one individual's accomplishment. Rather, many of the great minds who lived this planet contributed to this evolution.... (to be continued: we will talk about the genesis and early steps and gradual progress)

What is happening with Euro zone?

Yesterday, the Greek government was on the verge of collapse in the question of holding a referendum on broader issues of staying with Euro zone and receiving debt relief... But, the real question is, has the modern financial system has come to a position where it can be called untenable?

look at the scenario from the background earlier crises - 90s' Asian stock market crisis & subsequent recession (although recession was limited to the zone itself), 2007/8 US housing market crash and subsequent capital market debacles and recession in wider world (except China & India), and now this European crisis which has the potential to be a global crisis with recessions looming - and you will feel something is not right somewhere. Factor in the US dot com bubble of the 90s or other crises of smaller proportions (suffered by a single country or a micro zone), and one can see how modern finance and it's entangle of nuances are dishing up crisis after crisis for humanity to deal with. And, the fact that most of them can trace their causes to transactional or distribution issues rather than real scarcity of goods or services makes one even more dismayed with the current system. Look how one 'rouge' trader or one greedy corporation on more than one occasions have brought misfortune to countless million, and the discontentment with the current system grows even bigger.

What can we do as individual citizens? Do we continue to pay our taxes, be good citizens and pray nothing untoward happens? or is the current ongoing wall street protest that is raging through regions is the answer to the problem in the sense that the movement has enough vitality and focus to take care of the issues? or, we expect the world leaders and agencies are honest and bold enough to take the bull by the horn?

Behavior economics, irrrationality and my eid shopping!

Today, something interesting happened. The story needs a little background... The next day according to the Islamic calendar happens to be the Eid day here, the biggest festival for the Muslims. Therefore, it's a big holiday in the national calendar, when people (not all but many!) usually leave big cities for their ancestral homes to spend the holidays with family & friends. The cities generally take a quiet and deserted look and it's common for shops and businesses to remain closed for 3 or 4 days at a stretch. On the other hand, the festivity of the day demands people to prepare exotic and rich menu of traditional foods to offer to the relatives and friends. So, you see, there takes shape an apparent gap between the demand and supply (lack of supply as many of the shops are closed vs. sudden spike in demand of consumable goods). Naturally, this opportunity to make some quick bucks does not escape the attention of some unscrupulous shop owners. So... maintaining tradition, today was also no exception and milk (one of the essential items for preparing Eid - day foods) experienced a sudden hike in price in my neighborhood grocery. I had to buy some... when I inquired the price, I found the grocer was asking 20% higher than the usual rate. (I was irked, but what could I do! so I kept my peace!!). Now there is this particular brand of milk that usually costs 10% more than the general categories. So, next I inquired price of this superior category, and to my amusement I found the shopkeeper in his haste forgot to increase the price of this brand. It was being sold in usual rate. Which means the expensive one (& supposedly the better-quality one) is now cheaper than the 'cheap' one. Now, here comes the interesting part... I was supposed to buy a certain quantity of milk, beyond that amount I really did not need as then I have to store it for future, which not a particularly attractive option... But, seeing the expensive item suddenly being 'cheaper', I bought substantially more than the amount I required! Moreover, it gave me mental satisfaction (I felt smarter and superior!) seeing others were not noticing this simple fact and were buying the usual one at a higher price than mine. This prompted me to buy even more of the milk than I needed!

August 28th 2011 as it happened...

Today is a Sunday. It's already night in most of the northern hemisphere.. On American East coast, the first hurricane of the Atlantic season, Irene is hammering the coastal metropolis'. At London, Manchester City has has just pummeled Tottenham Hotspur in English Premier League Football, sending a strong signal across the board. A little east to London, Belgium Grand Prix has just concluded and Sebastian Vettel, young German race car driver has all but assured his prospect of becoming the youngest F1 champion in history. And f-a-rther east in India Anna Hazare, the activist, has called off his hunger strike against corruption-in-his-country after receiving firm pledges from the political leadership of strong anti-corruption legislation. This last piece of events has ringed a bell somewhere....and couple of questions need answering!

I don't know how severe corruption is, in India, or whether this selfless & patriotic gesture of Mr. Anna will bring any real change. But one thing I know is, here in Bangladesh, we are a deeply corrupt society. Here, it (corruption) has long passed ankle deep or knee deep level and now it's almost nose deep, choking life out of our beloved country... India is just beside us, we share almost identical socioeconomic heritage and there in India, a guy is going almost 12 days without food or water forcing their mighty Government to take measure to root out corruption! and, in the process he is creating huge public opinion drawing thousands and millions to the cause... But, here we are sleeping. Oblivious to the silent hemorrhage that corruption is inflicting on us in every moment and every seconds of the day! Probably none of my fellow countryman will see my lamenting or see the great chasm that lie in front of us, but still I want to pose this question: What will bring our nation and its people to the senses? When will we get our Anna Hazare??