Frank Dodd, Pharma Czars, Tax Design, Frank Sinatra and Vaccines: The Week’s Most Interesting

This week was simply a continuation of everything we spoke about last week. The markets kept going up and so did protests. Bolsonaro ensured that Brazil’s forests were on a continuous track on deforestation, oil supply was down by almost 3 million barrels and Jio landed another investor. Do read about the points above. They tend not to make the first page, but the world and test matches are changed outside of the highlights reel. The only saviour was Moody’s decision to not downgrade India into junk rating. Throughout the world they call it a paradox, good enough infrastructure to be investment grade but held back because of poor policy making. Taking the words of The Economist in an article this week : “India, they say, is like a Monet painting. Up close, it’s a big old mess. But from afar it still has the power to beguile


But taking the idea of the paradox, this week we focus primarily on a few paradoxes, different industries and countries face across the world. The entire global financial infrastructure in the last 10 years tried to get rid of CDO’s, but ended up building a close cousin, the CLO’s. Should pharma companies be rich and invest in R&D or should their ability to make insane profits be slashed? Is Europe friends with China, or is it at odds? What strategy should it apply? A paradox of a little lesser importance : should Roti and Parotta be taxed at the same rate? We end with not a paradox but a historical story that I found extremely interesting. Take the Silk Route to discover the history of the vaccine. On the Paradoxes, every one of us usually suffers from the confirmation bias. I would request you to read because your assumed or current viewpoint might have consequences you wouldn’t have thought of !


1. The Frank Dodd Act was all the hype of the early 2010’s. Made primarily to stop the biggest banks from failing, banks had to undergo huge changes in their entire operation, have less leverage on their balance sheets. Every bank was subjected to repeated stress tests and well it seemed that no bank important to the structure of the American and Global economy would fail again. The financial instrument CDO’s  were at the centre of the financial crisis. It’s been 12 years and history is about to be repeated. The last bubble driven by CDO’s was because of low and easy mortgages and now, that has been replaced with corporate debt. This article is not only for the follower of finance, but more importantly for the student of human behaviour. They didn’t even bother to change the name a lot. Read this because as the article says: luck is about to run out.

https://www.theatlantic.com/magazine/archive/2020/07/coronavirus-banks-collapse/612247/


2. Do you think Medicine companies and their owners should be driven by market dynamics? Give it a thought once. The paradox of the pharmaceutical rich is an unsolved one. You don’t know whether to admire them or admonish them. If they don’t earn enough there would be no incentive to produce better, faster and put more into R&D and on the other end if they do they are really profiting off the ill and weak. But this article doesn’t take you into that debate. The intersection of Wall street and Pharma labs is a fascinating story. This is also my profile of the week. This time again, we unearth a secretive billionaire  on whose dollars and shoulders lie the lives of many with sickness.

https://www.forbes.com/sites/nathanvardi/2020/06/12/meet-the-secretive-wall-street-investor-with-the-billion-dollar-medicine-cabinet/#4769f9bec361

3. Is KIt Kat a wafer or a chocolate? Is the Jeep a car or a “Jeep”? Trust me, some people put a lot of thought into this. Long back in Calcutta, Wow Momo’s had opened their first two stores. At that time it seemed like the greatest invention of our time. What was interesting was that in one of those early stores near my house they had a Paytm-esque poster which said that please sign this petition because in India Samosas are not taxed becuase of being a snack while Momos are, which is a discrimination. This article is very different and takes you in detail through the loopholes of tax design systems.

https://www.bloombergquint.com/gst/taxonomy-and-why-the-parotta-is-not-a-roti


4. China and Europe are like chalk and cheese. Their different principles of trade, economic openness and human rights are essentially the two poles of the spectrum. But sometimes principles take a beating when you have some billions to spare and that was the basis of the friendship between the EU and China. It doesn’t seem to be working out. China is realising that it is much more difficult to buy friends in a rich continent, as compared to Africa and Latin America. And Europe has decided that the only one who had figured out how to deal with China was Frank Sinatra: “I’ll do it My Way”

https://www.economist.com/europe/2020/06/11/europes-sinatra-doctrine-on-china

5. Hypothetically, if I told you, that the vaccine couldn’t be developed for a couple of years and the best chance of surviving COVID was to take a dose of a weakened virus from someone who was recovering and insert it into your body, would you do it. Would you be scared? That is how the history of vaccination began. Take a walk through a wonderful story and the story of the first chinese export: the Vaccine.

https://www.wired.com/story/who-discovered-first-vaccine/


Hope you have fun reading! 

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