Once upon a time, there was an island where all the feelings lived:Happiness, Sadness, and all of the others, including Love.
One day it was announced to the feelings that the island would sink,so all repaired their boats and left.
Love was the only one who stayed. Love wanted to persevere until thelast possible moment.
When the island was almost sinking, Love decided to ask for help.
Richness was passing by Love in a grand boat. Love said, "Richness,can you take me with you?" Richness answered, "No I can't..There is a lotof gold and silver in my boat. There is no place for you here."
Love decided to ask Vanity, who was also passing by in a beautiful vessel,"Vanity, please help me!" "I can't help you Love. You are all wet and mightdamage my boat," Vanity answered.
Sadness was close by so Love asked for help, "Sadness let me go withyou." "Oh...Love, I am so sad that I need to be by myself!"
Happiness passed by Love too, but she was so happy that she did noteven hear when Love called her!
Suddenly, there was a voice, "Come Love, I will take you." It was anelder. Love felt so blessed and overjoyed that he even forgot to ask theelder her name.
When they arrived at dry land, the elder went her own way. Love, realizinghow much he owed the elder, asked Knowledge, another elder, "Who helpedme?"
"It was Time," Knowledge answered.
"Time?" asked Love. "But why did Time help me?
Knowledge smiled with deep wisdom and answered, "Because only Time iscapable of understanding how great Love is.
Author Unknown
Wednesday, October 20, 2010
Monday, March 22, 2010
Rudyard Kipling - If
If
If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or, being lied about, don't deal in lies,
Or, being hated, don't give way to hating,
And yet don't look too good, nor talk too wise;
If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with triumph and disaster
And treat those two imposters just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to broken,
And stoop and build 'em up with wornout tools;
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on";
If you can talk with crowds and keep your virtue,
Or walk with kings - nor lose the common touch;
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run -
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man my son!
If you can keep your head when all about you
Are losing theirs and blaming it on you;
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or, being lied about, don't deal in lies,
Or, being hated, don't give way to hating,
And yet don't look too good, nor talk too wise;
If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with triumph and disaster
And treat those two imposters just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to broken,
And stoop and build 'em up with wornout tools;
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: "Hold on";
If you can talk with crowds and keep your virtue,
Or walk with kings - nor lose the common touch;
If neither foes nor loving friends can hurt you;
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run -
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man my son!
Sunday, March 21, 2010
Life is beautiful....
A story is told about a soldier who was finally coming home after having fought in Vietnam. He called his parents from San Francisco.
"Mom and Dad, I'm coming home, but I've a favor to ask. I have a friend I'd like to bring home with me. "Sure," they replied, "we'd love to meet him."
"There's something you should know," the son continued, "he was hurt pretty badly in the fighting. He stepped on a land mind and lost an arm and a leg. He has nowhere else to go, and I want him to come live with us."
"I'm sorry to hear that, son. Maybe we can help him find somewhere to live."
"No, Mom and Dad, I want him to live with us." "Son," said the father,
"you don't know what you're asking. Someone with such a handicap would be a terrible burden on us. We have our own lives to live, and we can't let something like this interfere with our lives. I think you should just come home and forget about this guy. He'll find a way to live on his own."
At that point, the son hung up the phone. The parents heard nothing more from him. A few days later, however, they received a call from the San Francisco police. Their son had died after falling from a building, they were told. The police believed it was suicide. The grief-stricken parents flew to San Francisco and were taken to the city morgue to identify the body of their son.
They recognized him, but to their horror they also discovered something they didn't know, their son had only one arm and one leg. The parents in this story are like many of us.
We find it easy to love those who are good-looking or fun to have around, but we don't like people who inconvenience us or make us feel uncomfortable. We would rather stay away from people who aren't as healthy, beautiful, or smart as we are.
When we say no for others, often we don’t know whom we are saying no, and the consequences of that. People say life is not fair, but all my life the one important lesson I learnt from my own experience and from looking at others life, “ life is fair, Life treats you the same way as you treat others life”. But biggest problem with life is it disguises a lot. It gives blessings wrapped in problems and problems wrapped in happiness. Another fact of life is it won’t let you alone in problem, it sends guide in terms of friends. I remember the first class of our “management communication module”, professor said one thing; “Make your friends before you need them”.
When somebody asks for friendship, biggest mistake you can do is saying no. Accepted, it takes time to become good friends, but we should not forget that we are not making friends, life is sending them to us, Either you may require them at some point of time or they may require you, when you say no, either you are loosing a chance to be with a person when he needs you or you would be alone in times of problem. Never know what the future is. Never take too long to make friends. When people enter your life, allow them to enter because there is a reason for it. Have faith that they are not going to screw you up, and your faith will stop them from screwing up. If you dint allowed them to become your friends, today you may have many very good friends, but when the time comes, you will be requiring that exact person whom you said no. You may not even find them when you need them, because they might have been destroyed because you dint helped them. Friends come and go in your life, no one will be there forever. And one or two friends are not sufficient in life. Just like you require different resource to do a work, you need many friends to deal with life.
Bottom line is never say no to friendship, because life is fair and it is sending an angel to support you for the problem which you are going to face in your life. Believe in life, whatever happens, happens for good. Don’t try to control your life, let it go, then you will see how beautiful life is…….
Think over it……
"Mom and Dad, I'm coming home, but I've a favor to ask. I have a friend I'd like to bring home with me. "Sure," they replied, "we'd love to meet him."
"There's something you should know," the son continued, "he was hurt pretty badly in the fighting. He stepped on a land mind and lost an arm and a leg. He has nowhere else to go, and I want him to come live with us."
"I'm sorry to hear that, son. Maybe we can help him find somewhere to live."
"No, Mom and Dad, I want him to live with us." "Son," said the father,
"you don't know what you're asking. Someone with such a handicap would be a terrible burden on us. We have our own lives to live, and we can't let something like this interfere with our lives. I think you should just come home and forget about this guy. He'll find a way to live on his own."
At that point, the son hung up the phone. The parents heard nothing more from him. A few days later, however, they received a call from the San Francisco police. Their son had died after falling from a building, they were told. The police believed it was suicide. The grief-stricken parents flew to San Francisco and were taken to the city morgue to identify the body of their son.
They recognized him, but to their horror they also discovered something they didn't know, their son had only one arm and one leg. The parents in this story are like many of us.
We find it easy to love those who are good-looking or fun to have around, but we don't like people who inconvenience us or make us feel uncomfortable. We would rather stay away from people who aren't as healthy, beautiful, or smart as we are.
When we say no for others, often we don’t know whom we are saying no, and the consequences of that. People say life is not fair, but all my life the one important lesson I learnt from my own experience and from looking at others life, “ life is fair, Life treats you the same way as you treat others life”. But biggest problem with life is it disguises a lot. It gives blessings wrapped in problems and problems wrapped in happiness. Another fact of life is it won’t let you alone in problem, it sends guide in terms of friends. I remember the first class of our “management communication module”, professor said one thing; “Make your friends before you need them”.
When somebody asks for friendship, biggest mistake you can do is saying no. Accepted, it takes time to become good friends, but we should not forget that we are not making friends, life is sending them to us, Either you may require them at some point of time or they may require you, when you say no, either you are loosing a chance to be with a person when he needs you or you would be alone in times of problem. Never know what the future is. Never take too long to make friends. When people enter your life, allow them to enter because there is a reason for it. Have faith that they are not going to screw you up, and your faith will stop them from screwing up. If you dint allowed them to become your friends, today you may have many very good friends, but when the time comes, you will be requiring that exact person whom you said no. You may not even find them when you need them, because they might have been destroyed because you dint helped them. Friends come and go in your life, no one will be there forever. And one or two friends are not sufficient in life. Just like you require different resource to do a work, you need many friends to deal with life.
Bottom line is never say no to friendship, because life is fair and it is sending an angel to support you for the problem which you are going to face in your life. Believe in life, whatever happens, happens for good. Don’t try to control your life, let it go, then you will see how beautiful life is…….
Think over it……
Team work!!!
In a team when we work, we crib when the other is not working, when the things are not moving, we blame others for not putting effort. Whenever it’s a team work, we look for others involvement. Yes team work is all working together, but most of the time what we miss is its just a psychological satisfaction that others in the team are working as hard as we are. We are all get too focused with doing the work rather than getting it done. This is what is called management by objective. Some time back while I was surfing in the net, I found this story; interesting one, go through it…
A man was lost while driving through the country. As he tried to reach for the map, he accidentally drove off the road into a ditch. Though he wasn’t injured, his car was stuck deep into the mud. So the man walked to a nearby farm to ask for help.
“Warwick can get you out of that ditch,” said the farmer, pointing to an old mule standing in a field. The man looked at the decrepit old mule and looked at the farmer who just stood there repeating, “Yep, old Warwick can do the job.” the man figured he had nothing to lose. The two men and the mule made their way back to the ditch. The farmer hitched the mule to the car. With a snap of the reins, he shouted,
“Pull, Fred! Pull, Jack! Pull, Ted! Pull Warwick!”
And the mule pulled that car right out of the ditch.
The man was amazed. He thanked the farmer, patted the mule, and asked, “Why did you call all of those names before you called Warwick?”
The farmer grinned and said, “Old Warwick is just about blind. As long as he believes he’s part of a team, he doesn’t mind pulling.”
A man was lost while driving through the country. As he tried to reach for the map, he accidentally drove off the road into a ditch. Though he wasn’t injured, his car was stuck deep into the mud. So the man walked to a nearby farm to ask for help.
“Warwick can get you out of that ditch,” said the farmer, pointing to an old mule standing in a field. The man looked at the decrepit old mule and looked at the farmer who just stood there repeating, “Yep, old Warwick can do the job.” the man figured he had nothing to lose. The two men and the mule made their way back to the ditch. The farmer hitched the mule to the car. With a snap of the reins, he shouted,
“Pull, Fred! Pull, Jack! Pull, Ted! Pull Warwick!”
And the mule pulled that car right out of the ditch.
The man was amazed. He thanked the farmer, patted the mule, and asked, “Why did you call all of those names before you called Warwick?”
The farmer grinned and said, “Old Warwick is just about blind. As long as he believes he’s part of a team, he doesn’t mind pulling.”
Friday, March 5, 2010
Indian Brain . . ..
This is not a story but a true incident that happened in USA.*An Indian man walked into a bank in New York City one day and asked for the loan officer.
He told the loan officer that he was going to Indiaon business for two weeks and needed to borrow $5,000.
The bank officer told him that the bank would need some form of security for the loan. The Indian man handed over the keys to a new Ferrari parked on the street in front of the
bank. He produced the title and everything checked out.
The loan officer agreed to accept the car as collateral for the loan.
The bank's president and its officers all enjoyed a good laugh at the Indian for using a $250,000 Ferrari as collateral against a $5,000 loan. An employee of the bank then drove the Ferrari into the bank's underground garage and parked it there.
Two weeks later, the Indian returned, repaid the $5,000 and the interest, which came to $15.41.
The loan officer said, "Sir, we are very happy to have had your business, and this transaction has worked out very nicely, but we are a little puzzled. While you were away, we checked
you out and found that you are a multi millionaire. What puzzles us is, why would you bother to borrow"$5,000"
The Indian replied: "Where else in New York Citycan I park my car for two weeks for only $15.41 and expect it to be there when I return'"
Ah, the brain of the Indian... This is why India is shining . ....!
He told the loan officer that he was going to Indiaon business for two weeks and needed to borrow $5,000.
The bank officer told him that the bank would need some form of security for the loan. The Indian man handed over the keys to a new Ferrari parked on the street in front of the
bank. He produced the title and everything checked out.
The loan officer agreed to accept the car as collateral for the loan.
The bank's president and its officers all enjoyed a good laugh at the Indian for using a $250,000 Ferrari as collateral against a $5,000 loan. An employee of the bank then drove the Ferrari into the bank's underground garage and parked it there.
Two weeks later, the Indian returned, repaid the $5,000 and the interest, which came to $15.41.
The loan officer said, "Sir, we are very happy to have had your business, and this transaction has worked out very nicely, but we are a little puzzled. While you were away, we checked
you out and found that you are a multi millionaire. What puzzles us is, why would you bother to borrow"$5,000"
The Indian replied: "Where else in New York Citycan I park my car for two weeks for only $15.41 and expect it to be there when I return'"
Ah, the brain of the Indian... This is why India is shining . ....!
Wednesday, February 10, 2010
Negotiation.
3 ways of negotiating: hard soft and principled.
There are 3 ways of negotiation:
1. Hard: Where the party is not bothered about the other parties interest and stick to its original position. The vision here is only short term.
2. Soft: Where the party is very much concerned about the other parties interest and the probable losses due to the negotiation result. So it tries to minimize the loss of other party. The vision is long term and having a long term relationship.
3. Principled: Where the negotiation is based on the interest principle of both the parties and the outcome is towards win-win situation. This is the best method for the negotiation.
Positioning and interest
The positioning means for example when u go to purchase a gift item, shop keeper ask u to quote a price. You quote at 50$, then the shopkeeper puts his quote at 100$.
Now 50$ is your initial position and 100$ is shopkeepers initial position. Both you and shopkeepers has to change the initial position and has to come to a negotiating term.
Interest: Interest means the underlying reason why each party are taking their stand. Identifying the interest of each other helps to get the win- win situation for both the parties.
Take an example:
Two persons sitting in the room were arguing how much the window should open. Person A was arguing on the window should be 3/4th open while the person B was arguing on window should be 1/4th open. Both were firm on their stands and were not ready to compromise. Third person comes to room as a mediator and ask for their interest. Person A wanted the window to open because he wanted airflow in the room, Person B wanted the window to be closed because he was getting closed. So the the 3rd person closed the window of that room and went to the next room , and opened the window in that room. This solved both the problems. Both were winners.
BATNA: best alternative to negotiating agreement.
Always be prepared with the worst case scenario . This worst case scenario is called BATNA.
Options.
In negotiation, always keep multiple options for the opponent. So he will not get offended.
Case (as given by LN)
There are two pharmaceutical parties who wanted to procure a particular type of fruit from a farmer (This fruit is available only in brazil and only one farmer grows this). They both contacted the farmer for purchasing the fruit, but the farmer asked the two parties to negotiate with each other and come to conclusion who would do the purchasing.
The profile and intent of two parties given below:
1. Party 1: A pharmaceutical,
A pharmaceutical had developed a breakthrough in medicine, a drug for cancer. This medicine has a huge potential and was expected to sell for 100$. The one of the ingredient required was the extract of the seed of that particular fruit. This was the key ingredient.
2. Party 2: X pharmaceutical, X pharmaceutical had developed a drug for tuberculosis. Even this particular drug had the future prospect. One of the ingredients for the drug was the skin of the fruit. The drug was to be sold at 10$.
The above information was concealed from each other, and the only information available to A on X was that the X pharmacy is also need the fruit and developing some drug.
The information available to X on A was A is developing the drug for cancer. But both dint had any information on what actually needed by the other party.
The two parties are to sit for negotiation and come up with the solution.
One of the negotiation scenarios went this way:
The result: both parties dint able to recognize what actually needed by the other party. And the negotiation boiled down to setting up a joint venture with 50: 50 partnerships which would purchase the fruit from the farmer and then process it. The distribution was on a annual agreement basis.
There are 3 ways of negotiation:
1. Hard: Where the party is not bothered about the other parties interest and stick to its original position. The vision here is only short term.
2. Soft: Where the party is very much concerned about the other parties interest and the probable losses due to the negotiation result. So it tries to minimize the loss of other party. The vision is long term and having a long term relationship.
3. Principled: Where the negotiation is based on the interest principle of both the parties and the outcome is towards win-win situation. This is the best method for the negotiation.
Positioning and interest
The positioning means for example when u go to purchase a gift item, shop keeper ask u to quote a price. You quote at 50$, then the shopkeeper puts his quote at 100$.
Now 50$ is your initial position and 100$ is shopkeepers initial position. Both you and shopkeepers has to change the initial position and has to come to a negotiating term.
Interest: Interest means the underlying reason why each party are taking their stand. Identifying the interest of each other helps to get the win- win situation for both the parties.
Take an example:
Two persons sitting in the room were arguing how much the window should open. Person A was arguing on the window should be 3/4th open while the person B was arguing on window should be 1/4th open. Both were firm on their stands and were not ready to compromise. Third person comes to room as a mediator and ask for their interest. Person A wanted the window to open because he wanted airflow in the room, Person B wanted the window to be closed because he was getting closed. So the the 3rd person closed the window of that room and went to the next room , and opened the window in that room. This solved both the problems. Both were winners.
BATNA: best alternative to negotiating agreement.
Always be prepared with the worst case scenario . This worst case scenario is called BATNA.
Options.
In negotiation, always keep multiple options for the opponent. So he will not get offended.
Case (as given by LN)
There are two pharmaceutical parties who wanted to procure a particular type of fruit from a farmer (This fruit is available only in brazil and only one farmer grows this). They both contacted the farmer for purchasing the fruit, but the farmer asked the two parties to negotiate with each other and come to conclusion who would do the purchasing.
The profile and intent of two parties given below:
1. Party 1: A pharmaceutical,
A pharmaceutical had developed a breakthrough in medicine, a drug for cancer. This medicine has a huge potential and was expected to sell for 100$. The one of the ingredient required was the extract of the seed of that particular fruit. This was the key ingredient.
2. Party 2: X pharmaceutical, X pharmaceutical had developed a drug for tuberculosis. Even this particular drug had the future prospect. One of the ingredients for the drug was the skin of the fruit. The drug was to be sold at 10$.
The above information was concealed from each other, and the only information available to A on X was that the X pharmacy is also need the fruit and developing some drug.
The information available to X on A was A is developing the drug for cancer. But both dint had any information on what actually needed by the other party.
The two parties are to sit for negotiation and come up with the solution.
One of the negotiation scenarios went this way:
The result: both parties dint able to recognize what actually needed by the other party. And the negotiation boiled down to setting up a joint venture with 50: 50 partnerships which would purchase the fruit from the farmer and then process it. The distribution was on a annual agreement basis.
Wednesday, January 27, 2010
Special Drawing Rights-SDR
The SDR is an international reserve asset, created by IMF in 1969 to supplement its member countries official reserve. This instrument was created basically to support the then existing Bretton Woods fixed exchange rate system. To maintain a fixed exchange rate each country has to maintain the asset reserve, but USD and gold the proved to be inadequate measure to peg the currency. So SDR was created under IMF. But with the failure of Bretton Woods system the need for SDR reduced. Now in addition to its role as a supplementary reserve asset it serves as a unit of account of the IMF and some other international organizations.
How SDR value is defined?
Initially SDR was defined as 0.888671 grams of fine gold which was equivalent to one US dollar. After the collapse of Bretton Woods system in 1973, SDR was redifend as a basket of currencies. Today it consist of Euro, Japanese Yen, pound sterling and US dollar. The prices are based on London market value.
SDR interest rate:
The SDR interest rate provides the basis for calculating the interest charged to members on regular IMF loans, the interest paid to members on their SDR holdings and charged on their SDR allocations, and the interest paid to members on a portion of their quota subscriptions. SDR is the weighted average of representative interest rates on short term debt in the money market of the SDR basket currencies.
SDR allocations provide each member with a costless asset. If a member’s SDR holdings rise above its allocation (for example, if it purchases SDR from another member), it earns interest on the excess; on the other hand, if it holds fewer SDR than allocated, it pays interest on the shortfall at the official SDR interest rate.
Buying and selling SDR’s
IMF members often need to buy SDR’s to discharge obligations to the IMF or they may wish to sell SDRs in order to adjust the composition of their reserves. The IMF acts as a broker between members and prescribed holders to ensure that SDRs can be exchanged for freely usable currencies. Earlier trading was voluntary.
In the event that there is insufficient capacity under the voluntary trading arrangements, the Fund can activate the designation mechanism. Under this mechanism, members with sufficiently strong external positions are designated by the Fund to buy SDRs with freely usable currencies up to certain amounts from members with weak external positions. This arrangement serves as a backstop to guarantee the liquidity and the reserve asset character of the SDR.
Although there are no notes or coins denominated in SDR, it acts as a interest bearing international asset.
The allocation of SDR by the IMF boosts member countries’ reserves because they can be turned into usable currencies. Once the SDR have been added to a member country’s official reserves, the country can voluntarily exchange its SDR for hard currencies, such as the US dollar, euro, yen, or pound sterling, through voluntary trading arrangements with other IMF member countries.
In view of the expected increase in the volume of transactions following the 2009 SDR allocations, the number and size of the voluntary arrangements has been expanded to ensure continued liquidity of the voluntary SDR market.
With the world still in recession, in Aug 2009, IMF, to booster its member countries reserve, allocated new issue of equivalent 250 Billion US Dollar, followed by another issue of 33 billion US dollar of SDR in September 2009. This created an outstanding SDR of total 316 billion US dollar. The allocation is based on a long-term global need to supplement IMF members’ existing reserve assets and it provides liquidity to the global economic system. Before this decisions to allocate SDRs have been made only twice. The first allocation was for a total amount of SDR 9.3 billion, distributed in 1970-72. The second allocation was distributed in 1979-81 and brought the cumulative total of SDR allocations to SDR 21.4 billion. And both times there was a huge inflation exactly at that time. And SDR was termed as monetary kerosene at that time. So will there be another inflationary year after the recession?
Another argument that is in favor of SDR is the debate over replacing the US dollar as the world’s reserve currency. Shortly after IMF declared the new allocation of SDR to its member’s, UNCTAD joined the debate over replacing the US dollar as the reserve currency. In its report published in September said that the trade imbalance and the breakdown in the way currencies and capital rules work was largely responsible for the financial crisis. In effect, it is suggesting that a new composite or artificial currency be created, that would be a weighted basket of major currencies. In other words, rather than having the US dollar as the sole reserve currency, the new system would bring in a range of currencies that should balance out into a more stable system* .
The most probable candidate for the artificial currency is SDR. Many have welcomed this move as it would bring stability to the capital market by reducing the dependency on one single currency. But how long it would take to implement this? and how much it would cost in terms of inflation? .
Ref:
* http://en.mercopress.com/2009/09/10/unctad-joins-the-replace-the-us-dollar-debate
IMF: http://www.imf.org/external/np/exr/facts/sdr.htm
How SDR value is defined?
Initially SDR was defined as 0.888671 grams of fine gold which was equivalent to one US dollar. After the collapse of Bretton Woods system in 1973, SDR was redifend as a basket of currencies. Today it consist of Euro, Japanese Yen, pound sterling and US dollar. The prices are based on London market value.
SDR interest rate:
The SDR interest rate provides the basis for calculating the interest charged to members on regular IMF loans, the interest paid to members on their SDR holdings and charged on their SDR allocations, and the interest paid to members on a portion of their quota subscriptions. SDR is the weighted average of representative interest rates on short term debt in the money market of the SDR basket currencies.
SDR allocations provide each member with a costless asset. If a member’s SDR holdings rise above its allocation (for example, if it purchases SDR from another member), it earns interest on the excess; on the other hand, if it holds fewer SDR than allocated, it pays interest on the shortfall at the official SDR interest rate.
Buying and selling SDR’s
IMF members often need to buy SDR’s to discharge obligations to the IMF or they may wish to sell SDRs in order to adjust the composition of their reserves. The IMF acts as a broker between members and prescribed holders to ensure that SDRs can be exchanged for freely usable currencies. Earlier trading was voluntary.
In the event that there is insufficient capacity under the voluntary trading arrangements, the Fund can activate the designation mechanism. Under this mechanism, members with sufficiently strong external positions are designated by the Fund to buy SDRs with freely usable currencies up to certain amounts from members with weak external positions. This arrangement serves as a backstop to guarantee the liquidity and the reserve asset character of the SDR.
Although there are no notes or coins denominated in SDR, it acts as a interest bearing international asset.
The allocation of SDR by the IMF boosts member countries’ reserves because they can be turned into usable currencies. Once the SDR have been added to a member country’s official reserves, the country can voluntarily exchange its SDR for hard currencies, such as the US dollar, euro, yen, or pound sterling, through voluntary trading arrangements with other IMF member countries.
In view of the expected increase in the volume of transactions following the 2009 SDR allocations, the number and size of the voluntary arrangements has been expanded to ensure continued liquidity of the voluntary SDR market.
With the world still in recession, in Aug 2009, IMF, to booster its member countries reserve, allocated new issue of equivalent 250 Billion US Dollar, followed by another issue of 33 billion US dollar of SDR in September 2009. This created an outstanding SDR of total 316 billion US dollar. The allocation is based on a long-term global need to supplement IMF members’ existing reserve assets and it provides liquidity to the global economic system. Before this decisions to allocate SDRs have been made only twice. The first allocation was for a total amount of SDR 9.3 billion, distributed in 1970-72. The second allocation was distributed in 1979-81 and brought the cumulative total of SDR allocations to SDR 21.4 billion. And both times there was a huge inflation exactly at that time. And SDR was termed as monetary kerosene at that time. So will there be another inflationary year after the recession?
Another argument that is in favor of SDR is the debate over replacing the US dollar as the world’s reserve currency. Shortly after IMF declared the new allocation of SDR to its member’s, UNCTAD joined the debate over replacing the US dollar as the reserve currency. In its report published in September said that the trade imbalance and the breakdown in the way currencies and capital rules work was largely responsible for the financial crisis. In effect, it is suggesting that a new composite or artificial currency be created, that would be a weighted basket of major currencies. In other words, rather than having the US dollar as the sole reserve currency, the new system would bring in a range of currencies that should balance out into a more stable system* .
The most probable candidate for the artificial currency is SDR. Many have welcomed this move as it would bring stability to the capital market by reducing the dependency on one single currency. But how long it would take to implement this? and how much it would cost in terms of inflation? .
Ref:
* http://en.mercopress.com/2009/09/10/unctad-joins-the-replace-the-us-dollar-debate
IMF: http://www.imf.org/external/np/exr/facts/sdr.htm
Friday, January 1, 2010
Copenhagen Accord & A war of morality!!!!
There is no end; end is just a beginning for another chapter. Finally the Copenhagen summit or COP15 ended. But the summit dint ended the political dilemma of global warming or called in a macro sense climate change. Rather it also started a new war of morality. Everyone accepts that the end of Copenhagen was a disaster. The world has agreed on these important Copenhagen accords which are to be operational immediately.
1. Emphasize on strong political will to urgently combat climate change in accordance with the principle of common but differentiated responsibilities and respective capability. To achieve the ultimate objective of the convention to stabilize greenhouse gas concentration in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system, by recognizing the scientific view that the increase in global temperature should be below 2 degree C, on the basis of equity and in the context of sustainable development, enhance long term cooperative action to combat climate change.
2. Enhance action and international cooperation is urgently required to ensure the implementation of the convention by enabling and supporting the implementation of adaptation actions aimed at reducing vulnerability and building resilience in developing countries, especially in those that are particularly vulnerable, especially least developed countries, small island developing states and Africa.
3. Annex 1 parties commit to implement individually or jointly the quantified economy wide emissions target for 2020.
4. Recognize the crucial role of reducing emission from deforestation and forest degradation and the need to enhance removal of greenhouse gas emission by forests and to provide positive incentives to such actions through the immediate establishment of mechanism including REDD-plus, to enable the mobilization of financial resources from developed countries.
These are 4 out of 12 accords signed in the summit. From the first look it looks a complete disaster for two reason, one no clear proposed action, two it looks like a proposal rather than a dictating action plan. The whole attention has been diverted from reducing the GHG emission at the source, to providing a sink for the emitted GHG.
The two important issues with all these efforts:
1. Though it is recognized that the scientific and technical measure should be taken to avoid the climate change, why there is no serious and determined effort to reduce the emission of GHG at the source? Why overemphasis has been given to developing carbon sinks? Why REDD is given so much importance?
For economic development, contribution of industry is vital. For industry it requires land and natural resources. All developed countries completely utilized their land to build industry by sacrificing the natural resources. So technically speaking the option they have is to use technology to reduce the emission they produce. How far it is acceptable to offset the emission by providing a carbon sink at some corner in the world at the expense of some other countries economic development? Providing an incentive against the deforestation, will it increase the leaving standards of the millions of jobless people in those countries? If we are using a capital market model to deal with the carbon emission reduction, then why not imposing strict carbon cap on the industries be implemented on a global scale. Let these industry decide on which is more economical, whether to reduce the emission at the source or to offset it by investing in CDM in some other part of the world. The economic model should be similar to that of taxation. Government should impose carbon tax on all the industry. In taxation, interest and donations will reduce tax burden, but is there any tax credit? Similarly industry should buy carbon credit only from the country for which it is paying the tax in the form of carbon tax.
2. The second most important issue is the moral war that has started. Every country want to have a green earth, but at the expense of some others economy. If you have followed the news of what happened inside the summit you will understand what this moral war I’m talking about.
http://www.guardian.co.uk/environment/2009/dec/22/copenhagen-climate-change-mark-lynas
This is just one of the links to what actually happened inside the summit. As per the internal news its china who dint agreed to get to the conclusion of any sort. To quote the article “Copenhagen was a disaster. That much is agreed. But the truth about what actually happened is in danger of being lost amid the spin and inevitable mutual recriminations. The truth is this: china wrecked the talks, intentionally humiliated Barack Obama, and insisted on an awful "deal" so western leaders would walk away carrying the blame.” But what did china official say about this?
As per them china has committed to reduce carbon emission by around 1.5 million tons of CO2 by 2020. In response the US has offered only 17% of 2005 level which technically is equivalent to only 4% of 1990 level, where as Kyoto protocol demanded 15% of 1990 level.
If china really wanted to contribute on climate change, why it dint forced the west to commit on something more sensible with its massive political and economic power. If the west wanted to contribute on the climate change is their response sufficient enough?
Everyone wants to show that they want to lead this climate change, but only in words. Its such a global phenomenon that, one country cannot do any good to the change in global temperature. It should be a collective effort as agreed in Copenhagen Accord. But then why there is no macro picture to handle the climate change?
Global warming or climate change is a anti nature activity, if we dint solve this problem, probably we are forcing the nature to take corrective action forgetting the price we would be paying for that. If there is no collective action there will going to be a collective distraction.
Hope world leader to take strong collective action as well as let’s pledge to take action at individual level to combat climate change.
1. Emphasize on strong political will to urgently combat climate change in accordance with the principle of common but differentiated responsibilities and respective capability. To achieve the ultimate objective of the convention to stabilize greenhouse gas concentration in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system, by recognizing the scientific view that the increase in global temperature should be below 2 degree C, on the basis of equity and in the context of sustainable development, enhance long term cooperative action to combat climate change.
2. Enhance action and international cooperation is urgently required to ensure the implementation of the convention by enabling and supporting the implementation of adaptation actions aimed at reducing vulnerability and building resilience in developing countries, especially in those that are particularly vulnerable, especially least developed countries, small island developing states and Africa.
3. Annex 1 parties commit to implement individually or jointly the quantified economy wide emissions target for 2020.
4. Recognize the crucial role of reducing emission from deforestation and forest degradation and the need to enhance removal of greenhouse gas emission by forests and to provide positive incentives to such actions through the immediate establishment of mechanism including REDD-plus, to enable the mobilization of financial resources from developed countries.
These are 4 out of 12 accords signed in the summit. From the first look it looks a complete disaster for two reason, one no clear proposed action, two it looks like a proposal rather than a dictating action plan. The whole attention has been diverted from reducing the GHG emission at the source, to providing a sink for the emitted GHG.
The two important issues with all these efforts:
1. Though it is recognized that the scientific and technical measure should be taken to avoid the climate change, why there is no serious and determined effort to reduce the emission of GHG at the source? Why overemphasis has been given to developing carbon sinks? Why REDD is given so much importance?
For economic development, contribution of industry is vital. For industry it requires land and natural resources. All developed countries completely utilized their land to build industry by sacrificing the natural resources. So technically speaking the option they have is to use technology to reduce the emission they produce. How far it is acceptable to offset the emission by providing a carbon sink at some corner in the world at the expense of some other countries economic development? Providing an incentive against the deforestation, will it increase the leaving standards of the millions of jobless people in those countries? If we are using a capital market model to deal with the carbon emission reduction, then why not imposing strict carbon cap on the industries be implemented on a global scale. Let these industry decide on which is more economical, whether to reduce the emission at the source or to offset it by investing in CDM in some other part of the world. The economic model should be similar to that of taxation. Government should impose carbon tax on all the industry. In taxation, interest and donations will reduce tax burden, but is there any tax credit? Similarly industry should buy carbon credit only from the country for which it is paying the tax in the form of carbon tax.
2. The second most important issue is the moral war that has started. Every country want to have a green earth, but at the expense of some others economy. If you have followed the news of what happened inside the summit you will understand what this moral war I’m talking about.
http://www.guardian.co.uk/environment/2009/dec/22/copenhagen-climate-change-mark-lynas
This is just one of the links to what actually happened inside the summit. As per the internal news its china who dint agreed to get to the conclusion of any sort. To quote the article “Copenhagen was a disaster. That much is agreed. But the truth about what actually happened is in danger of being lost amid the spin and inevitable mutual recriminations. The truth is this: china wrecked the talks, intentionally humiliated Barack Obama, and insisted on an awful "deal" so western leaders would walk away carrying the blame.” But what did china official say about this?
As per them china has committed to reduce carbon emission by around 1.5 million tons of CO2 by 2020. In response the US has offered only 17% of 2005 level which technically is equivalent to only 4% of 1990 level, where as Kyoto protocol demanded 15% of 1990 level.
If china really wanted to contribute on climate change, why it dint forced the west to commit on something more sensible with its massive political and economic power. If the west wanted to contribute on the climate change is their response sufficient enough?
Everyone wants to show that they want to lead this climate change, but only in words. Its such a global phenomenon that, one country cannot do any good to the change in global temperature. It should be a collective effort as agreed in Copenhagen Accord. But then why there is no macro picture to handle the climate change?
Global warming or climate change is a anti nature activity, if we dint solve this problem, probably we are forcing the nature to take corrective action forgetting the price we would be paying for that. If there is no collective action there will going to be a collective distraction.
Hope world leader to take strong collective action as well as let’s pledge to take action at individual level to combat climate change.
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