Author: Siddhant_kulkarni

Kyoto Protocol

The Kyoto Protocol is an international agreement that aimed to reduce carbon dioxide emissions and the presence of greenhouse gases in the atmosphere. The main goal of the Kyoto Protocol was that industrialized nations needed to lessen the amount of their CO2 emissions. It was adopted in Kyoto, Japan, on December 11, 1997, and entered into force on February 16, 2005. Talks begun by the Kyoto Protocol continue in 2021 and are extremely complicated and involves a lot of money and politics.

The Kyoto Protocol mandated that industrialized nations cut their greenhouse gas emissions at a time when the threat of global warming was growing rapidly. The Protocol was linked to the United Nations Framework Convention on Climate Change (UNFCCC). Countries that signed the Kyoto Protocol were assigned maximum carbon emission levels for specific periods and participated in carbon credit trading. If a country emitted more than its assigned limit, then it would be penalized by receiving a lower emissions limit in the following period.  Each nation had a different target to meet by that year. Members of the European Union (EU) pledged to cut emissions by 8% while the U.S. and Canada promised to reduce their emissions by 7% and 6% respectively by 2012. The Kyoto Protocol also recognized that developed countries are principally responsible for the current high levels of GHG emissions in the atmosphere as a result of more than 150 years of industrial activity. Hence, the protocol placed a heavier burden on developed nations than less-developed nations. Developing nations were asked to comply voluntarily, and more than 100 developing countries, including India, were exempted from the Kyoto agreement altogether.

The United States, which had agreed to the original Kyoto agreement, dropped out of the protocol in 2001. They believed that the agreement was unfair because it called for industrialized nations only to limit emissions reductions, and it felt that doing so would hurt the US economy. Things seemed to be going smoothly in 2005 for many countries, including those in the EU. They planned to meet or exceed their targets under the agreement by 2011. But others continued to fall short. The USA and China, two of the world’s biggest emitters, produced enough greenhouse gases to negated any of the progress made by nations who met their targets. In fact, there was an increase of about 40% in emissions globally between 1990 and 2009.

In 2021, the dialogue is still alive but has turned into a complex mess involving politics, money, lack of leadership and bureaucracy. Today, despite various plans and some actions, solutions to the problems of GHG emissions and global warming have not been implemented.

The Pink Tax

Pink Tax refers to price discrepancy that calls out products and services marketed to women that cost more than identical versions marketed to men. About five years ago, the issue got a lot of attention when New York City’s Department of Consumer Affairs found many instances of gendered pricing. The pink tax is not an actual tax, the additional revenue from the women’s product does not go to the government. Very few state and local governments have regulations to prohibit gendered price discrimination. The U.S. federal government does not, though bills have been introduced. A study that compared 800 products across 90 brands specifically targeting a particular gender showed that toys and accessories targeted at women/girls were 7% more expensive than those targeted at men/boys.The same stood for children’s clothing at 4% more for girls, and 8% more for adult women. A whopping 13% more for personal care products and 8% more for senior or home healthcare products. This phenomenon however, is not limited to just western countries. In India too, women pay pink tax on a wide variety of products and services marketed specifically to them.

Most discussions of the pink tax are not about an actual tax, but in one instance they are: import tariffs. In the United States, clothing companies pay higher import tariffs on women’s items such as silk shirts, wool jackets, blazers, leather shoes, and golf shoes according to a study published by Texas A&M University’s Mosbacher Institute, which focuses on trade, economics, and public policy. On the men’s apparel side, import tariffs are higher on cotton shirts, wool suits, synthetic fiber suits, and swimwear. Some goods have no gender-based tariff difference, while others have large differences. Overall, tariffs on women’s items are sinificantly higher. Clothing companies can price both items equally, which means either the producer, the retailer, or the consumer takes a hit. A 2007 lawsuit by clothing companies against the U.S. government tried but failed to eliminate these tariff discrepancies.

Social scientists and retail experts say that the pink tax stems from the fact that society in general, typically, holds women to a higher standard when it comes to their appearance. One way to beat pink tax is to not fall prey to the bright pink packaging. Go for generic versions instead as they usually do the same job for cheaper. Evidence of gendered price discrimination clearly exists, even if there is room to debate why it exists or how serious or expensive a problem it is.

Business Ethics

Business ethics are the moral principles that act as guidelines for the way a business conducts itself and in its transactions. The law often guides business ethics, but at other times business ethics provide a basic guideline that businesses can choose to follow to gain public approval. The practices mostly revolve around matters involving corporate governance, insider trading, bribery, discrimination and corporate social responsibility. The same guidelines that individuals use to conduct themselves in an acceptable way, in both personal and professional settings, apply to businesses as well. Following business ethics ensures that the public receives fair treatment.

The concept of business ethics began in the 1960s as corporations became more aware of a rising consumer-based society that showed concerns regarding the environment, social causes, and corporate responsibility. The increased focus on so-called social issues was a hallmark of the decade. Since that time period, the concept of business ethics has evolved. Business ethics goes beyond just a moral code of right and wrong; it attempts to reconcile what companies must do legally versus maintaining a competitive advantage over other businesses. the most recent and continually developing aspect of ethics is the third piece – the idea that companies are building business ethics into the core of their companies, making them a standard part of their operational blueprint. As the world continues to grow more political and more politically correct, an increased focus on proper business ethics and strong adherence to them has become ever more the norm. Buisness ethics also keep workers safe, help trade and interactions between companies remain honest and fair, and generally make for better goods and services.

Buisnesses display ethics in several ways. If a customer comes into a store looking for a product that meets very specific needs, it’s important to provide them the best product for the situation described instead of upselling them or encouraging them to buy a product that won’t meet their needs. However, it is important to ensure that this “customer first” attitude does not unintentionally result in the unethical treatment of employees.

If a company is faced with a public relations crisis, companies should call a meeting and address the problem directly with their employees. It’s important to truthfully describe the situation as it unfolded, present solutions, and accept criticism humbly.

If an employee notices that management tends to hire the same type of person (race, caste, gender etc.), they may suggest getting employees more involved in the hiring process. This will introduce different perspectives to the hiring process and increase the possibility that different kinds of applicants will be selected for a position.

These are some ways that companies practice business ethics.

The International Revenue Service (IRS)

The Internal Revenue Service (IRS) is an American government agency responsible for the collection of taxes and enforcement of all taxation laws. It was established in 1862 by President Abraham Lincoln and operates under the authority of the United States Department of the Treasury. Its primary purpose includes the collection of individual income taxes and employment taxes and is headquartered in Washington, DC. The IRS also handles corporate, excise, and estate taxes, including mutual funds and dividends.

Individuals and corporations have the option to file income returns electronically, thanks to computer technology, software programs, and secure internet connections. The number of income taxes that use electronic filing has grown steadily since the IRS began the program, and now the overwhelming majority are filed this way. Nearly 90% of tax returns are filed electronically in the US. Nearly 92 million taxpayers received their returns through direct deposit rather than a traditional paper check in 2019, and the average direct-deposited amount was $2,975.

As part of its enforcement mission, the IRS audits a select portion of income tax returns every year. For the 2019 fiscal year, the agency audited 771,095 tax returns. This number breaks down to 0.60% of individual income tax returns and 0.97% of corporate tax returns. However, the number of IRS audits have been on the decline each year since 2010. There are various reasons an audit might occur. The main reason is higher income. In 2018, the audit rate for all individual income tax returns was 0.6%, but for someone who made more than $1 million in income, it was 3.2%. Even running your own business carries a great risk. Individuals making between $200,000 and $1 million in one tax year who don’t file the self employment forms have a much bigger chance of being subject to an audit. Other reasons for an audit include failing to declare the right amount of income, claiming a higher amount of deductions, making disproportionately large charitable donations compared to income, and claiming rental real estate losses. But, no single factor determines who does or does not face an audit each year.

In recent years the agency has struggled with multiple budget cuts and reduced morale. As of 2018, it saw a 15 percent reduction in its workforce, including a decline of more than 25 percent of its enforcement staff. In spite of this, the agency processed more than 245 million returns and collected more than $3.4 trillion in gross revenue, spending a mere 34¢ for every $100 it collected.

Economic Impact of the Olympics

Many believe that the level of tourism and foreign investment that result from hosting the games can be an economic boon. However, hosting the Olympics actually tends to be more negative for the country’s economy than anticipated. Many countries bid tens of millions of dollars for the chance to host the Olympic games. Most cities have ended up falling massively in debt after hosting the games, cities without the necessary infrastructure may be better off not hosting the games. Submitting a bid to the International Olympic Committee (IOC) to host the Olympics itself costs millions of dollars. On top of that a small fortune is spent on consultation fees and event organization. For example, Tokyo lost approximately $150 million on its bid for the 2016 Olympics and spent approximately $75 million on its successful 2020 bid. When a city wins a bid for hosting the games, cities commonly add roads, build or renovate airports, and construct rail lines to accommodate the large influx of people. Housing and facilities for the thousands of athletes must be provided as well. All these costs add up to well over $5 billion.

There are certainly benefits to hosting the Olympics. Hundreds of new jobs are created for the building of infrastructure and its improvement. Additionally, thousands of sponsors, media, athletes, and spectators typically visit a host city for six months before and six months after the Olympics, which brings in additional revenue. In 2008, Beijing spent over $22.5 billion constructing roads, airports, subways, and rail lines, as well as almost $11.25 billion on environmental cleanup. This created a lot of jobs and did help the economy.

However, The boost in job creation for cities hosting the Olympics is not always as beneficial as initially perceived. Most of the jobs went to workers who were already employed, which does not help the number of unemployed workers. Moreover, many of the profits realized by construction companies and hotels go to international companies rather than better the city’s economy. The icome generated from the Olympics has often never covered the total expenses incurred. London brought in $5.2 billion and spent $18 billion on the 2012 Olympics. Actually, Los Angeles is the only host city that made a profit from the games. This was because the required infrastructure already existed. It is actually very difficult to ascertain exactly which benefits come from hosting the Olympics.

To summarize, hosting the Olympics tends to put the city in an economic defecit. Unless a city already has the existing infrastructure to support the surge of tourists and athletes, it would be best to hold off on hosting the games.

The World Bank

The World Bank is an international organization dedicated to providing financing, advice, and research to developing nations to help their economic development. It was created in 1944 out of the Bretton Woods Agreement, which was secured under the United Nations after World War II. The Bretton Woods Agreement included several components: a collective international monetary system, the formation of the World Bank, and the creation of the International Monetary Fund (IMF). The World Bank is headquartered in Washington, D.C. with over 10,000 employees globally.

The bank predominantly acts as an organization that attempts to fight poverty by offering developmental assistance to middle and low income countries. They aim to end extreme poverty by decreasing the number of people living on less than $1.90 a day to below 3% of the world population. They also want to increase overall prosperity by increasing income growth in the bottom 40% of every country in the world. The World Bank has expanded to become known as the World Bank Group with five cooperative organizations, sometimes known as the World Banks. These organizations include The International Bank for Reconstruction and Development (IBRD), The International Finance Corporation (IFC), The International Development Association (IDA), The Multilateral Investment Guarantee Agency (MIGA) and The International Centre for Settlement of Investment Disputes (ICSID).

The World Bank has 189 member countries, staff from more than 170 countries, and offices in over 130 locations. The World Bank supplies qualifying governments with low-interest loans, zero-interest credits, and grants, all to support the development of individual economies. Debt borrowings and cash infusions help with global education, healthcare, public administration, infrastructure, and private-sector development. The World Bank also shares information with various entities through policy advice, research and analysis, and technical assistance. It offers advice and training for both the public and private sectors. They also have a Human Capital Project that was started in 2017 which seeks to help nations invest in and develop their human capital to produce a better society and economy. World leaders are urged to prioritize investments in education and healthcare to strengthen the human capital resources of the country. Another project that was started by the World Bank was the Learning for Future Project. It was created to enhance children’s readiness for school and the effectiveness of secondary instruction in Kyrgyzstan communities. The project established 500 community-based kindergarten programs, which allowed for the enrollment of over 20,000 children.

Behavioral Economics

Behavioral economics studies how individuals behave, and how thinking and emotions affect individual decision making. By adding insights from psychology, behavioral economics tries to modify the conventional economic approach, and to analyze how people act in social contexts. It is the study of psychology as it relates to the economic decision making processes of individuals and institutions.  Rational choice theory states that when humans are presented with various options under the conditions of scarcity, they would choose the option that maximizes their individual satisfaction. It assumes that people, given their preferences and constraints, are capable of making rational decisions by effectively weighing the costs and benefits of each option available to them. The final decision made will be the best choice for that particular individual. The rational individual has self-control and is unmoved by emotions and external factors and, hence, knows what is best for himself. However, behavioral economics explains that sometimes humans are not rational and can’t make good decisions.

As humans are emotional and easily distracted beings, they make decisions that are not in their self-interest. For example, according to the rational choice theory, if an individual wants to lose weight and is equipped with information about the number of calories available in each edible product, he will opt only for the food products with minimal calories. Behavioral economics states that even if he wants to lose weight and sets his mind on eating healthy food going forward, his end behavior will be subject to cognitive bias, emotions, and social influences. Behavioral economics draws on psychology and economics to explore why people sometimes make irrational decisions, and why and how their behavior does not follow the predictions of economic models. It seeks to explain why an individual decided to go for choice A instead of choice B.

Companies are increasingly incorporating behavioral economics to increase sales of their products. As companies begin to understand that their consumers are irrational, an effective way to embed behavioral economics in the company’s decision-making policies that concern its internal and external stakeholders may prove to be worthwhile if done properly. For example, in 2007, Apple priced the first iPhone at $600 but then quickly reduced it to $400. However, If they had introduced the phone for $400, the initial reaction to the price in the smartphone market might have been negative as the phone might be thought to be too pricey. But by introducing the phone at a higher price and bringing it down to $400, consumers believed they were getting a pretty good deal and sales surged for Apple. This is how companies use behavioral economics.

Warren Buffet

Warren Buffet is an American buisnessman, investor and philantrophist. He was born on 30th August 1930 in Nebraska. He developed an interest in the business world and investing at an early age including in the stock market. He is the current CEO and chairman of Berkshire Hathaway, a very successful holding company. They hold shares of other companies to form a corporate group. Buffet is considered one of the most successful investors today with a net worth of over $100 billion. He is the 9th richest man in the world.

Buffett started his education at the Wharton School at the University of Pennsylvania before moving back to go to the University of Nebraska, where he received an undergraduate degree in business administration. Buffett later went to the Columbia Business School where he earned his graduate degree in economics. He began his career as an investment salesman in the early 1950s and formed Buffett Associates in 1956. Less than 10 years later, in 1965, he was in control of Berkshire Hathaway. Recently, Buffett began collaborating with Jeff Bezos and Jamie Dimon to develop a new healthcare company focused on employee healthcare.

Buffett follows the Benjamin Graham school of value investing. Value investors look for securities with prices that are unjustifiably low based on their intrinsic worth. There isn’t a universally accepted way to determine intrinsic worth, but it’s most often estimated by analyzing a company’s fundamentals. Like bargain hunters, the value investor searches for stocks believed to be undervalued by the market, or stocks that are valuable but not recognized by the majority of other buyers. He’s not really concerned with the activities of the stock market at all. Rather, he looks at each company as a whole, so he chooses stocks solely based on their overall potential as a company. Holding these stocks as a long-term play, Buffett doesn’t seek capital gain, but ownership in quality companies extremely capable of generating earnings. He isn’t concerned with whether the market will eventually recognize its worth when he invests. He is concerned with how well that company can make money as a business.

Before investing Buffet analyses the company’s performance, its debt, profit margins and whether its a public company. The answers to these questions help him make his investing decision. Buffett’s investing style is like the shopping style of a bargain hunter. It reflects a practical, down-to-earth attitude. Buffett maintains this attitude outside of work too. He doesn’t live in a huge house, he doesn’t collect cars and generally does not live a lavish life. This is what made him so successful.

Behavioral Finance

Behavioral finance talks about the psychological influencers and biases affect the financial behaviors of investors and financial practitioners. These influences and biases can be the source for explanation of all types of market anomalies and specifically market anomalies in the stock market, such as severe rises or falls in stock price. The purpose of the classification of behavioral finance is to help understand why people make certain financial choices and how those choices can affect markets. Stock market returns are one area of finance where psychological behaviors are often assumed to influence market outcomes and returns but there are also many different angles for observation. One of the key aspects when it comes to behavioral finance studies is the influence of biases. There are many types of biases such as confirmation bias, experiential bias, loss aversion and familiarity bias. Understanding and classifying different types of behavioral finance biases can be very important when narrowing in on the study or analysis of industry or sector outcomes and results.

Concepts of Behavioral finance:-

  1. Herd Behavior: People tend to mimic the financial behaviors of the majority of the herd. The herd mentality is notorious in the stock market as the cause behind dramatic large scale purchases and sell-offs.
  2. Anchoring: Anchoring refers to attaching a spending level to a certain budget or reference. Examples may include spending consistently based on a budget level or rationalizing spending based on different satisfaction levels gained.
  3. Emotional Gap: The emotional gap refers to decision-making based on extreme emotions or emotional strains such as anxiety, anger, fear, or excitement. Emotions are often a key reason why people do not make rational choices.
  4. Mental Accounting: Mental accounting refers to the propensity for people to allocate money for specific purposes.
  5. Self-attribution: It refers to a tendency to make choices based on overconfidence in one’s own knowledge or skill. Self-attribution usually stems from a flair one may have in a particular area. Within this category, individuals tend to rank their knowledge higher than others, even when in reality, it may not be correct or enough.

The applications of behavioral science to finance are now broad and well researched. They encompass activities such as spending, investing, trading, financial planning, portfolio management and business commerce. It also provides a blueprint to help us make better, more rational decisions when it comes to financial matters. Behavioral finance is still young and is only now beginning to make its way into mainstream academics, industries and society.

Anomalies that occur in the Stock Market

A market anomaly is a price action that contradicts the expected behaviour of the stock market.

Days of the week: Research and past history has shown us that stocks tend to move more on Fridays more than mondays and that there is generally a bias toward positive market performance on Fridays. On a logical level, there is no particular reason that this should be true. Some psychological factors could be at work. Perhaps an end-of-week optimism permeates the market as traders and investors look forward to the weekend. Alternatively, perhaps the weekend gives investors a chance to catch up on their analysis on the market, and develop pessimism going into Monday.

Small firms: Firms with a smaller capital amount often outperform larger companies. A company’s economic growth is the driving force behind its stock performance, and smaller companies have much longer runways for growth than larger companies. A company like Google may need to earn an extra $3 billion in revenue to grow by 10% whereas a smaller company may need only an extra $10 million in revenue to grow the same amount. This is why smaller firms tend to perform better.

The January effect: What happens is that stocks that underperformed in the fourth quarter of the prior year tend to outperform the markets in January. Investors will often look to drop underperforming stocks late in the year so that they can use their losses to offset capital gains taxes. This “tax selling” can push these stocks to levels where they become attractive to buyers in January. Likewise, investors will often avoid buying underperforming stocks in the fourth quarter and wait until January to avoid getting caught up in the tax-loss selling. As a result, there is excess selling pressure before January and excess buying pressure after January 1st, which causes this effect.

Reversals: Stocks that either perform extremely well or extremely poorly in a fiscal year usually do a complete 180 and follow a reverse course in the next period. If a stock is a top performer in the market, odds are that its performance has made it expensive. Likewise, the opposite is true for underperformers. It is then expected that the over-priced stocks would underperform (bringing their valuation back in line) while the under-priced stocks outperform. If enough investors habitually sell last year’s winners and buy last year’s losers, that will help move the stocks in exactly the expected directions.

Low book value: Extensive research has shown that stocks with below-average price-to-book ratios tend to outperform the market. Numerous test portfolios have shown that buying a collection of stocks with low price/book ratios will deliver market-beating performance. Cheap stocks should attract buyers’ attention and revert to the mean. This is a relatively weak anomaly. It takes very large portfolios of low price-to-book stocks to see the benefits.

Biotechnology

Biotechnology is the technology that uses living organisms or parts of living organisms to develop and create various products. It harnesses cellular and biomolecular processes to develop technologies and products that help improve our lives and the health of our planet. Today, biotechnology covers many different fields (eg. genetics, biochemistry, molecular biology, etc.). New technologies and products are developed every year within the areas of eg. medicine (development of new medicines and therapies), agriculture (development of genetically modified plants, biofuels, biological treatment) or industrial biotechnology (production of chemicals, paper, textiles and food). Biotech is being used in the medical field to reduce rates of infectious diseases, create tools for precise disease detection and combating everyday biological threats.

In the agricultural field, biotech is being used to improve crop insect resistance, enhance crop herbicide tolerance and it also facilitates the use of more environmentally sustainable farming practices. Through this, higher crop yields are being generated and food produced is free of any allergens or toxins. Biotech has also reduced the amount of input needed for a good yield, helped produce crops that need fewer applications of pesticides and helped develop crops with enhanced nutrition profiles that solve vitamin and nutrient deficiencies.

Biotech has also immensely helped the industrial world. It uses biological processes such as fermentation and harnesses biocatalysts such as enzymes, yeast, and other microbes to become microscopic manufacturing plants. It has helped streamline chemical manufacturing processes and has improved the efficiency of manufacturing processes. This has saved companies millions of dollars in operating costs. Biofuels are being used much more today and have cut greenhouse gas emmissions by over 50%. Hence, the dependance on and usage of petrochemicals has reduced significantly. Biotech is also helping decrease water usage and waste generation and is tapping into the full potential of biomass waste products.

Overall, the revenues of U.S. and European biotechnology industries roughly doubled over the five-year period from 1996 through 2000. Rapid growth continued into the 21st century, fueled by the introduction of new products, particularly in health care. By 2020 the biotechnology market size was estimated at $752.88 billion globally, with new opportunities for growth emerging in particular from government- and industry-driven efforts to accelerate drug development and product-approval processes. Recent advances in biotechnology are helping us prepare for and meet society’s most pressing challenges. It is no doubt, very important for the future of our species as well as the planet.

Japanese Bullet Trains

The Japanese bullet train, or “ The Shinkansen”, is a type of passenger train which operates on Japan’s high-speed railway network. It is capable of reaching a maximum speed of 320kms per hour and it offers riders an exceptionally unique and efficient travel experience. The railway network is spread across the cities of Akita, Hokuriku, Joetsu, Kyushu, and Yamagata. They offer high speed travel to the destinations of your choice, as well as frequent and punctual departures. Rail passes that include travel on bullet trains will help save a lot of money and time travelling through the cities of Japan. The bullet train max speed can vary from 240 to 320 km/h (150 to 200 mph) which is much faster than in the United States, France, Spain etc.

Most shinkansen trains in Japan offer seats in two classes, which are typically found in separate cars. These classes are the ordinary class and the green car class. Ordinary class seats are the regular seats found on all shinkansen trains. Although the size and foot space of ordinary seats varies between train sets, ordinary seats on shinkansen are generally comfortable and offer a generous amount of foot space. They usually come in rows of 3+2 seats. The Green car class is comparable to business class on airplanes, green cars offer seats that are larger and more comfortable than ordinary seats and offer more foot space. The seats are arranged in rows of 2+2 seats. Green Cars are often less crowded than ordinary cars. Now, the new Gran Class is available on new train sets. It is Comparable to first class on airplanes, Gran Class offers seats that are even more spacious and comfortable than Green Car seats (in rows of 2+1 seats) and additional amenities and services.

The first train was built in 1964 with the inauguration of the Tokaido Shinkansen line for the first Tokyo Olympics. Speed travel in Japan started at least 10 years before the rest of the world. Since then, speed travel continued to evolve by creating new lines and using even more up-to-date technology. Also, there has never been any passenger casualty in more than 50 years. There are over 15 different types of shinkansen trains. Some of them are Komachi, Hayabusa, Hayate, Sakura and Kodama. Riding the bullet train is a very comfortable experience. These amazing high speed trains have wide seats (even in the ordinary class), they don’t need seat belts and you can eat and drink on the train. What makes the shinkansen travel so relaxing is that people keep their voice down and don’t answer the phone while in the shinkansen. The Shinkansen trains are truly a technological marvel of the modern era.

Future of Electric Automobiles

We are now in the biggest automobile revolution since the 1913 motor revolution led by Henry Ford. Electric cars are going to take over much sooner than we think. Many industry observers believe we have already passed the tipping point where sales of electric vehicles (EVs) will very rapidly overwhelm petrol and diesel cars. Companies like Jaguar, Volvo and Lotus have already said that they plan to go fully electric by 2030. General Motors says it will make only electric vehicles by 2035, Ford says all vehicles sold in Europe will be electric by 2030 and VolksWagen says 70% of its sales will be electric by 2030. But what makes the end of the petrol and diesel engines inevitable is a technological revolution. And technological revolutions tend to happen very quickly.

Global sales of electric cars raced forward in 2020, rising by 43% to a total of 3.2m, despite overall car sales slumping by 20% during the coronavirus pandemic. By 2025 20% of all new cars sold globally will be electric, according to the latest forecast by the investment bank UBS. That will leap to 40% by 2030, and by 2040 virtually every new car sold globally will be electric.

Companies like Tesla have already proved that there is a huge market for electric vehicles. In 2020, they sold almost 500,000 units in the US alone. The Company’s segments include automotive, and energy generation and storage. The energy generation and storage segment include the design, manufacture, installation, sales and leasing of solar energy systems and energy storage products, services related to its products, and sales of solar energy system incentives. The CEO of Tesla, Elon Musk beleives that as soon as electric vehicles become cost-competitive with fossil fuel vehicles, the game will be up. He also said that they’ve seen a real shift in customer perception of electric vehicles, and their demand is the best they’ve ever seen. But, they beleive that there is still work to be done before EVs can completely outclass petrol and diesel engines. Some of the problems are the availability and accessibility to charging stations and of course, the actual affordability of the vehicles themselves. If these problems are worked on and solved in the next few years, we can surely say that electric automobiles will take over in no time as they are much better for the environment and we need them now more than ever.

The YES Bank Crisis

In March of 2020, news rapidly spread that there was a very high chance of Yes Bank collapsing. This caused widespread panic among the people and soon even the Reserve Bank of India (RBI) had to step in. On 5th March 2020, the RBI foisted a 30-day moratorium (temporary prohibition of activity) on the bank and replaced the entire top management to prevent it from collapsing. So, what exactly happened?

Well, when a bank lends money to its borrowers, it does so by charging a certain amount of interest on the loan amount. However, some of it always is in arrears or ends up as bad debts. When a borrower defaults in the payment of the principal or interest amounts, it is said to be in arrears. In finance terms, these loans are referred to as Non-Performing Assets (NPA). These NPAs are precisely what brought Yes Bank down on its knees. For any bank to survive, its deposits need to be more than the amount it lends. When we take a look at the bank’s books of accounts, we can notice what exactly went wrong. At the end of the financial year 2013-14, its loans stood at Rs.55,633 Crores and its deposits totaled to Rs.74,192 Crores. By September 2019, the loans almost quadrupled to about Rs.2,25,000 Crores. The amount in the deposits, however, failed to keep up with the pace and stood at Rs.2,21,000 crores. Also the kinds of people the bank lent money to were not as financially capable of repayment. This led to an increase of NPAs from 2% a year earlier to 19% in the year 2019-20. This surge led Yes Bank to post a loss of a whopping US$2.5 Million in the period from October to December 2020.

The founder of the Bank, Rana Kapoor, had a reputation for being good at sanctioning loans to those who were sure to repay. However, in his greed to increase the loan count, he started treating the Bank’s money as his own. He even gave loans to companies that were reporting repeated losses and manipulated the books to show the NPAs lesser than how much they were. Many of the companies that Yes lent to were caught in a vicious cycle of borrowing more to repay their previous debts. Rana Kapoor was ordered by the RBI to step down from his chair and was arrested for fraud. He was accused of deteriorating the relationship between the Bank and the Central Government. The Finance minister, Nirmala Sitharaman, proposed a plan to reconstruct the management under which the State Bank of India would have a 49% stake of ownership. Prashant Kumar was made the new CEO. However, the help came at the wrong time as the pandemic forced the financial sector to plummet. At the end of the day, the story of Yes Bank and Rana Kapoor teaches us that more does not always mean better. He sought to expand without even considering the risks or the consequences, which led to its ultimate downfall.

Top 10 Internet Companies in the World (Part 2)

5) Alibaba: Alibaba.com is a Chinese multinational technology company specializing in e-commerce, retail, internet, and technology. Its initial public offering (IPO) became the world’s largest IPO ever.  They enable businesses to transform the way they market, sell and operate and improve their efficiencies. They also provide the technology infrastructure and marketing reach to help merchants, brands and other businesses to leverage the power of new technology to engage with their users and customers and operate more efficiently. It is based in Hangzhou, China and was founded in 1999 by Jack Ma. The current CEO is Daniel Zhang. The e-commerce giant had a market cap of $581 billion on June 30, 2020. In 2019, Alibaba’s revenue amounted to $56.15 billion.

4) Tencent: Tencent Holdings is a Chinese multinational technology conglomerate holding company. They globally market various Internet-related services and products, including in entertainment, artificial intelligence, and other technology. It is well known for its apps, online games, advertising, and messaging services like WeChat. It is headquartered in Shenzhen, China and was founded in 1998 by Ma Huateng, Zhang Zhidong and Chen Yidan. Huateng is still the CEO. On June 30, 2020 Tencent had a market cap of $614.68 billion and its 2019 revenue amounted to $56.6 billion.

3) Facebook: Facebook is the world’s most popular social networking site according to NASDAQ. They build technologies that help people connect with friends and family, find communities, and grow businesses. They also own WhatsApp, Instagram, Oculus and Onavo. It is based in Menlo Park, California and was founded in 2004 by Mark Zuckerberg, who is also the CEO. It had a market cap of $647.15 on June 30, 2020 and reported a total revenue of $70.7 billion in 2019.

2) Alphabet: Alphabet Inc. is an American multinational conglomerate and is the parent company of the multinational technology giant, Google. It was created through a restructuring of Google on October 2, 2015, and became the parent company of Google and several former Google subsidiaries. It was founded by Larry Page and Sergey Brin and is now headquartered in Mountain View, California. Alphabet’s current CEO is Sundar Pichai. Google had a market cap of $964.51 billion on June 30, 2020 and reported total revenue as $161.86 billion in 2019.

1) Amazon: Amazon is an American multinational technology company which focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. It is one of the Big Five companies in the U.S. information technology industry. The company has been referred to as “one of the most influential economic and cultural forces in the world”, as well as the world’s most valuable brand. It was founded in 1994 by Jeff Bezos and is headquartered in Seattle. Amazon’s current CEO is Andy Jassy. It had a market cap of $1.38 trillion on June 30, 2020. In 2019, it reported $280.52 billion in revenue.