Looting public money (Health Insurance)

This is a real story of one of my esteemed friend:

My dad suffers from COPD (chronic lungs failure) probably due to smoking during his younger days.
Invariably every month he gets admitted to hospital for 3-5 days, when he suffers from congestion and breathlessness. In the hospital they give him oxygen, nebulization (bronchodilators) and some antibiotic to prevent any infection.
I admitted him thrice to Manipal. First time in Jan 2007, I did it by cash payment and the bill was 9000 for 5 days.
Second time in Dec 2007, I used the TTK “cashless” method and the bill was 21000 for 5 days.
Third time Feb 2008 I again used TTK “cashless” and the bill is 30000 for 4 days.
For all the above cases, symptoms/ailment/treatment was exactly same but the cost was ever increasing. The hospital guys keep asking the same question many times “Does your insurance have enough limit?”

Most probably TTK will get this today’s bill of 30K, approved. The hospital gains, TTK also gains, Insurance Co. loses money and we end up paying more premium. It increased by almost 4-5K since last year, because TTK said that claims have been increasing in our company.

BTW its not just Manipal hospital, The “shitty” nursing home where my dad gets regularly admitted in Kolkata, also tripled their bill amount after they learned that we have insurance.




Class A vs Class B shares

This article is not relevant for Indian Stock market Investors.

In the US market, we often hear about Class A, Class B shares. Even wondered what they are? Let me give you an example.

Berkshire Hathaway Inc. has two classes of common stock designated Class A and Class B. A share of Class B common stock has the rights of 1/30th of a share of Class A common stock except that a Class B share has 1/200th of the voting rights of a Class A share (rather than 1/30th of the vote). Each share of a Class A common stock is convertible at any time, at the holder’s option, into 30 shares of Class B common stock. This conversion privilege does not extend in the opposite direction. That is, holders of Class B shares are not able to convert them into Class A shares.

Similarly at GOOGLE:

There is two classes of Google stock — one (Class B shares) with “super-voting” rights of 10 times those of the other (Class A) shares. This two-part equity capital structure ensures that power remains firmly in the founders’ hands. In addition, Class B shares will be convertible, whereas Class A shares will not.

What it means?
The founders use this tool to separate ownership and control of the company (i.e. they take the investor’s money without actually selling the company or giving any seat on the board.

eg: Ivar Kreuger (one of the biggest matchstick men) controlled his 600 Million Dollar empire (in 1920s) by owning just 1% of the company stocks.

Cartoons News Thoughts

Road to Prosperity

According to an research by IFPRI (International Food Policy Research Institute):

For every million rupees spent, roads raised 335 people above the poverty line, and R&D 323. Every million rupees spent on education reduced poverty by 109 people, and on irrigation by 67 people. The lowest returns came from subsidies that are the most popular with politicians – subsidies on credit (42 people), power (27 people) and fertilisers (24 people).

Swami has recently published a very good article on how roads can be one of the most effective way for poverty elevation.

Connectivity enhances the value of every other rural investment, since it empowers people through improved mobility and access. People can more easily buy agricultural inputs and sell their produce. Children can go more easily to schools, cattle can more easily get veterinary help, and the sick can get to health centres. Remote areas have, by definition, the worst connectivity. They are among the poorest and slowest-growing, but accelerate when given connectivity.

Roads can incubate a thousand small businesses, and can convert villages into towns. Government staff are much more willing to be posted to places with good connectivity, so roads improve administration. Rural productivity cannot be high without roads, but can be very high with them.

No wonder even in America the railroad boom came first and then came the rapid growth and development.

When will Indians understand it 🙁


Animator vs Animation

These are 2 very creative animation videos designed by Alan Becker. Here a stick guy goes crazy and plays havoc with the computer screen. You can download the MS Office files, or you could watch them at the following links

– Courtesy Dhruva


India trip more expensive than Foreign Trip

Hard to believe?
Well if you add the cost of Hotel, rental car and air line tickets, it would be much cheaper to go for a trip to Thailand, Singapore or Sri Lanka than to go for one in India. Here is a nice article which compares the prices.


Social Capital and Economic Development

This editorial from livemint highlights a very new aspect. How countries with higher higher interpersonal trust and civic cooperation have a higher growth rates.


Indian Companies and speculation.

Last week ICICI Bank lost 264 M$ in sub-prime lending.

Today L&T, posted over 50 M$ losses over Zinc futures.

A year ago Hexware software lost several millions on forex speculations?

Why are Indian companies taking the risky speculations. ICICI bank might be pardoned because it had taken huge quantities of US dollar bonds so it may have an intention of hedging it (but there are hundreds of analysts that are saying it was pure greed and not hedging). But what is L&T doing with Zinc futures.
Its main business is infrastructure (which requires concrete, steel), machine tools (which needs copper) and ship building ( which needs steel aluminum). But why Zinc??????

Indian CEO should realize that they should concentrate their attention in their core business and securities and trading are mere distractions. Most of the derivatives are zero sum game (i.e. losses = gain and no wealth is generated) but for them its a lose lose scenario. I.E. if their firm makes a loss, then the company stocks would be trashed, however if they make money then it won’t have any effect on the stock because stock market looks only at the future prospects of the company and these profits are not repeatable. Infact some analysts might downgrade the stock because speculative trades adds uncertainty to the company’s performance


Corruption for a cause?

Recently Indian Express published a very good article by a former director general, NHRC, and former director, National Police Academy. The editorial raises some valid questions about should Police/Law Enforcement be allowed to break laws sometimes for the greater good?
If so in what extra-ordinary circumstances? Does Ends Justify the means? How do we draw a line between abuse of power and breaking laws for the greater common good.

Its slightly long, but do Read if you have time


Credit Card and Savings Account

Over yesterday’s discussion, my friend Sachin raised a very genuine point:

Never apply for credit card from the bank in which you hold your savings account.

It looked odd to me at first glance, but he explained.
Suppose your accounts are with the same bank. Then, in case of a dispute/hidden charges/wrong billing, the bank in spite of all your protests and oppositions would first automatically debit the credit card dues and then offer you a chance to put your case and claim the refund of the balance.
However if the 2 banks are different, then its the onus of the bank to convince you the genuineness of the charges and if nothing works out, you could always threaten to close the account and sever all relationships.