Lehman Brothers' bankruptcy (part-I)

Bankruptcy is a legally declared inability of an individual or organization to pay their creditors. Creditors may file a bankruptcy petition against a debtor ("involuntary bankruptcy") in an effort to recoup a portion of what they are owed. In the majority of cases, however, bankruptcy is initiated by the debtor (a "voluntary bankruptcy" that is filed by the bankrupt individual or organization).

Now, lets get back into the actual story and know what actually happened.A Korean Development Bank(KDB) was considering buying 25% stake in Lehman Brothers.This resulted in the plunge down of shares of Lehman Brothers to 52% amid worries and the investment bank was finding difficult to find new investors and raise capital.Lehman Brothers says it lost $3.9 billion in its fiscal third quarter and plans a number of moves to shore up its balance sheet. The firm says it will consider all "strategic alternatives," a Wall Street synonym for seeking a buyer.The Federal Reserve Bank of New York holds an emergency meeting with top Washington policymakers and major financial institutions to discuss Lehman Brothers' future, as the firm struggles to find a buyer.After a weekend of furious negotiations, U.S. regulators make it clear there will be no government bailout of Lehman Brothers. Fearful of the likely fallout from a Lehman failure, Merrill Lynch & Co. arranges a hasty deal to be bought by Bank of America Corp. for $50 billion in stock. Lehman Brothers is forced to declare bankruptcy, the largest ever in the United States.

TRIVIA

1. INFLATION : It is the general rise in the level of prices over time in general or for a particular set of goods and services. High rates of inflation are caused by the high rates of growth which has an increase in the overall demand (real or apparent) and with currency appreciation. Inflation is basically measured on the basis of a number of indices like CPI(Consumer Price Index) , Cost of living Index, Producer Price Index, Commodity Price Index. A very small amount of inflation can be viewed as beneficial to the economy. With generally increasing prices, it is quite easy to adjust the relative prices. Inflation may compel producers to buy goods sooner or later depending on growth rate so Inflation is a kind of booster to the economy.
   

Closure of Reliance Petrol Stations

Reliance Industries , headed by Mukesh Ambani is heading for a closure of its gas fuel stations across the country citing less profits. Reliance Industries , which ventured in all sectors like health care, mobiles, digital electronics, footwear, jewelery etc, started its network of fuel stations for vehicles five years back . Though the price of a litre of petrol and diesel were a bit more than the price in other gas stations, the reliance gas stations were very popular among local taxis as it provided both CNG and LPG gas filling options. Is Reliance losing its ground in this sector or is it regaining lost ground?

SMARTEST UNKNOWN INDIAN ENTREPRENEUR

In an interesting article in Forbes titled ‘The Smartest Unknown Indian Entrepreneur’ , Sramana Mitra profiles Sridhar Vembu, the founder and CEO of an Indian firm called AdventNet. The firm today, is a ‘100%, bootstrapped, $40-millio-a-year revenue business that sends $ 1 million to the bank every month in profits’. But we have never heard of Sridhar Vembu, founder and CEO of Adventnet that launched a productivity suite called ZOHO. Vembu maintains a low profile which fortifies his entrepreneur image and is cheap as hell. But we know that frugality is a virtue ad among entrepreneurs, a tremendous one.
So, what does he do is the question you get in your mind.He sells network management tools. He has a staff of 600 in Chenai, India and a mere 8 in Silicon Valley further cutting his costs. His staff doesn't include the alumni of the prestigious institutes or from the ivy league adding to his cost advantage.
Vembu says, "We hire professionals who others disregard. We dont look at colleges,degrees, grades. Not everyone in our country has come from a socio economic background that helps him/her to study in the top most schools. But many are very smart regardless. Agreed that their resumes' are not marketable as others',but they can code just as well as the others , Often well."
Vembu has first done a network management product , then he has come out with ZOHO a productivity suite. No doubt that Vembu is a rare species in India and is one of the few entrepreneurs who had a big vision and executed his plans flawlessly.

ADVANTAGES OF ENTREPRENEURSHIP

Every successful entrepreneur brings about benefits not only for himself/ herself but for the municipality, region or country as a whole. The benefits that can be derived from entrepreneurial activities are as follows:

1. Enormous personal and financial gain.
2. Self-employment, offering more job satisfaction and flexibility of the work force.
3. Employment for others, often in better jobs
4. Development of more industries, especially in rural areas or regions disadvantaged by economic changes, for example due to globalisation effects.
5. Encouragement of the processing of local materials into finished goods for domestic consumption as well as for export
6. Income generation and increases economic growth.
7. Healthy competition encourages high quality products.
8. More goods and services available.
9. Development of new markets.
10. Promotion of the use of modern technology in small-scale manufacturing to enhance higher productivity .
11. Encouragement of more researches/ studies and development of modern machines and equipment for domestic consumption.
12. Development of entrepreneurial qualities and attitudes among potential entrepreneurs to bring about significant changes in the rural areas .
    
13. Freedom from the dependency on the jobs offered by others.
14. The ability to have great accomplishments
15. Reduction of the informal economy
16. Emigration of talent may be stopped by a better domestic entrepreneurship climate.

Source : www.tsummit.org