The chain of events unfolding through the week have confirmed the worst fears of markets about the sub-prime crisis. Your editorial, “A crisis of risk, not liquidity”, Mint 19 September, correctly points out the crisis as being one of risk and not liquidity. It seems the US Federal Reserve and global financial markets will have to go for major restructuring. The US government and the Fed in particular must introspect on the financial system they had been advocating all along. Perhaps they might even lose their ability to lead the financial world, as the world would be wary of them. At another level, it might signal a changing world order where the balance might shift away from US. The US might face further pressure due to its fiscal imbalance and a severe balance of payment crisis may ensue. It would do well to restore order for its own sake than that of the world.
— Gautam Verma
This is with reference to the article on multi-level marketing being used for selling life insurance products that has also featured in Outlook Money (“Insurers flout norms, use pyramid selling schemes”, Mint 11 September. www.livemint.com/2008/09/10231346/Insurers-flout-norms-use-pyra.html)
My reactions to the same article published in Outlook Money and Mint are varied. Perhaps it has to do with your presentation in the headline that reads, “Insurers flout norms, use pyramid selling schemes”, which draws a conclusion about insurers’ involvement in the process of selling life insurance policies and, therefore, being at fault. Your article also states, quite clearly, that there is “no proof that insurers are aware of what’s going on”. While this could be due to a monitoring lapse on the part of insurers, it is not conclusive that insurers are intentionally allowing such a channel to be used.
I would like to bring to your notice that Max New York Life does not have any corporate agency relationship with any of the four multi-level marketing organizations mentioned in the article. Additionally, I would also request discretion in promoting such perspectives that state the lack of evidence on the one hand and default on the other. Needless to say, this is very damaging to the industry at large and the players specifically.
— Gary R. Bennett
Managing director and chief executive officer, Max New York Life Insurance Co. Ltd
My compliments for Bharat Karnad’s very well written, “Realpolitik, not woolly policy”, Mint, 19 September, although I do not totally subscribe to the views. The deal at Vienna was signed purely for the credibility that India has developed on the world forum of “keeping the word”. Mind you, without succumbing to any of the misgivings of the 45 member countries on the future vistas of “Nuclear India”, the deal was cleared due to the impeccable record of the Republic of India. So, the suggestion that we should now go the US and China way and treat international agreement as a piece of paper, to be violated in national interest, is debatable.
But, this in no way means that having come so far on this issue, we must continue and suffer material and intrinsic losses in the future. The best way forward, I suppose, would be to lay down such terms and conditions while negotiating the deal which would preclude the possibility of being held hostage to prevent these expensive reactors from becoming “non-performing assets”.
The most striking suggestion of the article was dealt in the last paragraph. There is indeed a most urgent need for constitutional amendment for ratification of treaties of strategic national importance with two-thirds of the votes in the Lok Sabha (this could well be handy if and when the WTO negotiations to cut tariffs and farm subsidies conclude, lest we take bow there). It can be even taken a step further, to include the possibility of a national referendum, on issues which have the potential to affect the sovereignty of the country. That would make us a real “for the people, by the people” democracy.