Negative Juice Theory

If you have come across the professional race of equals in the corporate world and couldn’t get the reason why one lost to another then the “Negative Juice Theory” will help you give a deep insight on it. Often I have found people, subscribing to this theory, are those in a weak position rather than those who are in the position of strength. People at strength are major contributors to negative juices in others and my effort is make people believe in the Negative Juice Theory.

Every transaction leads to juices in others. Motivation leads to positive juices and anything unreasonable generates negative juices in others.

Negative juice credits in corporate world are mainly due to Corruption, Misrepresentation of facts to seniors/peers/juniors, issuing unreasonable Transfer orders to remote locations, Sexual discrimination, suppression the truth, Incorrect appraisals, delays in leave approvals, delays in claim settlements, providing unjust rationales while handing over the pink slip so on …

All those who are victim of sadistic pleasures taken by the seniors have a reason to cheer. Remember negative juices that they generate in you by being unreasonable are all getting credited to their account.

Believe me, the impact of the Negative Juice is HUGE. Some of common symptoms in those who score high on negative juices credits are: Losing from their position of strength or divorce or Disturbed married life or No children’s or Loss of loved once or Getting diseased or meeting with accident or theft or property disputes so on.

Remember every rise has a fall and every fall has a rise. Strength to remain at the peak purely depend on you scoring low on negative juice credits which are unlike carbon credits.

I am scared of this negative juice and make sure that my team finds me reasonable in decision-making. Hoping that my negative juice account always remains in debit balance.

I should have written this blog few years back. May be this excerpts/passge would have helped B Ramalinga Raju of Satyam avoid the situation he is in today.
Hope this will save many others CEO’s going forward.

So,don’t wait any more, get your seniors read this blog as this will help them and also will do good to you.

Happy new year 2009.

FINANCIAL TERRORISM - " Lehman Brothers crisis"

Any one who leads to such panic in the market should be termed as “ Financial terrorist”. Reason for using the term “ Financial terrorism “ is that even the good assets are being badly hit because of negative sentiments and many small investor like me lose .

Ask the best brain about the problem with Lehman and they will confuse you by using terms like “ Institution being over leveraged “.

That's truly CONSULTING - “Simple things being made Complex “

I am not saying its wrong but the common man will never understand the real problem.
Always Credit Crisis occurs when loan and investment books are much bigger than its capital.

I will attempt to simplify it further …

An Investment bank uses its own money to lend other and invest. Banks like Lehman, buy mortgage loans (like housing loan etc ) from other banks and then package them to sell bonds against the loan pool. If mortgage earns 5%, than investment banks sells bonds at 3.5 % . The difference between 5% and 3.5% (i.e. 1.5%) called as spread is the earning of investment bank. They also add cash to make loan pool look attractive so that the bonds are sold at higher prices. These banks sell these structured bonds to raise money and frees the capital . BUT WHEN THE HOME BUYERS START DEFAULTING THESE BONDS LOSE ITS VALUE.

Banks like Lehman face redemption when these bond start losing its value. Also Lehman has to repay another bank it has borrowed from. Under such situation it sells mortgage –backed bonds whose prices have fallen . Since this selling will not raise funds as expected ,so investment banks sell some of the good assets or bonds which has nothing to do with mortgages. As a result situation in the markets dips prices of these good assets /bonds . This crisis spreads which termed as DOMINO EFFECT .

This impacts balance sheet as all the banks are required to mark –to- market their investments. So , if the price of an instrument falls , the difference between the price at which the instrument was brought and the current prices is to be provided by deduction from the earning . But the bigger problem which has deepened crises is “ How to provide when there is NO MARKET “ ie when bank actually goes to sell the derivative , it discovers that there are no takers . This is due to derivatives being marked –to –model than being marked –to- market.

Huge Loses are suffered with difference between the prices thrown by these artificially constructed financial models by best brains and prices that buyers are willing to pay in the market . Problem compounds further due to strange accounting practice and also disclosure issues.

Such Crisis shows banks /financial services industry should employ not just the best brains from IIT/IIM but also those who are best on ethics & can relate to comman man.