Greatest Badass you didn't know- Chanakya

 The man in the above picture, whose name has become a synonym for strategy and political wile in India, Kautilya, Vishnugupta, but more commonly known to most as Chanakya.  There is not much agreement on where he was born, some versions state it as Taxila and some state it was somewhere in the South. Educated at  Takshasila, he would later be an acharya there.

While there have been many texts about him, the most popular one has been Mudrarakshasa, the Sanskrit play by Vishakadatta. His major achievement has been the overthrow of the Nanda dynasty and creating the Mauryan empire. As per the play, he was insulted by the Nanda ruler, Dhana Nanda, and that made him swear, he would not tie his shikha( the tuft of hair worn by Brahmins) until the Nandas were overthrown.  And  in his quest for revenge, he found Chandragupta, whom he felt was the right man to replace Dhana Nanda. While some versions that Chandragupta was the son of the chief of Moriya clan, which also led to the name Chandragupta Maurya, another  states he was the son of a royal concubine Mura.

It was also a critical time in the country's history, with Alexander the Great waging an expedition to India, after having overrun Persia. Chanakya felt that the Nandas having become pleasure loving and weak, could not be relied upon to protect the country. Forming an alliance with Parvata( identified as King Porus), Chandragupta easily defeated Nanda, overthrow him, and became the King. However  the actual problems started from now on. Rakshas, the capable minister of  the Nandas was now swearing revenge over his master's death, and Parvata had passed away, with his son Malayaketu taking over the throne.

Malayaketu now wanted to take control over all the former Nanda territories that were now under Chandragupta, he was aided in this by Rakshas, who saw it as the best chance to take revenge. Chanakya faked a rift between him and Chandragupta,  and then in a double move made his agents feed false information to Malayaketu, that Rakshas  was now going to Chanakya's court. That achieved the desired effect, with the rift widening between Malayaketu and Rakshas. Chanakya's agents also spread information that the 5 allies who were part of Malayaketu's coalition were planning to oust him. Malayaketu ordered their killings, Rakshas moves over to Chandragupta's side, and in the end his grand plans come to naught. In one move, Chanakya not only ensured Rakshas services would be used for the Mauryas, but he completely neutralized Malayaketu too.

When the iniitial attempts to capture overthrow the Nandas were unsuccesful, Chanakya then changed strategy. Instead of  attacking directly at the center, which was Magadha, he attacked from the periphery capturing those areas,and then moved into the center.  He also used Rakshasa's mistress Suvasini to create a rift between Nanda and Rakshas, knowing very well, that  without the latter's advice, Nanda was ineffective.

Chanakya's greatest legacy to India, has been the Arthashastra, a treatise on economy, statecraft, military strategy, that continues to be relevant even now. The qualities of an ideal king, leadership are well defined. More important though is the way Chanakya lays out the principles of statecraft, be it in resolving disputes, espionage, and how to deal with neighbors.

Alexander the Great had to meet his Waterloo in India, retreating from there,and it was thanks to Chanakya's strategies, where he cleverly built  a series of alliances, that  effectively repelled the Greeks. And add to it, being responsible for creating one of the first great empires in India, the Mauryas, Chanakya to me is one of the most influential political strategist.


Credits: google images,Wiki, Ratnakar Sadasyula

1975 Emergency. What History in school didn't teach me

 We often come across what the Congress has done to the nation and what it could do. We have heard of the 2G, CWG, etc but not about the Emergency of 1975. And i do not remember reading anything about this in school.

1970s was the saddest time for many democracies all over the world. Amidst high inflation, unemployment and middleast crisis, democracies across the world grappled with plenty of existential crises.  In the US, Nixon & Agnew were threatening the foundation of US democracy by outright rigging & corruption. Both the President and Vice President were forced to exit in a period of a couple of years.

At the exact same time, India faced a much bigger existential threat under the worst of the tyrants. As her political position weakened, Prime Minister Indira Gandhi brought out a slew of constitutional amendments that threatened the foundation of Indian democracy.

1. Constitutional Amendment 24 of 1971 allowed the Parliament to dilute the fundamental rights by amendments to the constitution (a meta amendment). This was in reaction to the Supreme Court ruling that stated that fundamental rights enshrined in the constitution cannot be altered.
2. Amendment 25 of 1972 allowed the suspension of the right to private property allowing the government to take over anybody's property. 

But, the worst was yet to come.

In 1975, the High Court of Allahabad declared that the election of Indira Gandhi as fraudulent and nullified the election.  Although the nullification was based on minor charges, what followed was unexpected. To keep herself in power, Ms. Gandhi suspended Indian democracy with a variety of steps.

1. Amendment 39 of 1975 allowed an Indian Prime Minister to ignore the courts. Thus, the Allahabad High Court order was rendered invalid.
2. Invoked the rarest provision of the Constitution (Article 352) to declare an emergency (although no wars were in sight). Civil rights, Parliament and elections were suspended. The Prime Minister could now just rule by decree.
   
   
3. 1000s of politicians & journalists were jailed all over the country. Protests were contained with an iron hand. Over 140,000 people were detained without trial.
4. Censorship on newspapers was imposed. No one was allowed to write against the government.
   
   
5. Dismissed more than 8 state governments on a single day (29th April 1977) that were against Ms. Gandhi. President's rule
   
   
   
   
6. Forcible sterilization/family planning done on many people. In fact, this got her rule into trouble more than any of the constitutional amendments.
7. Amendment 42 of 1977 significantly changed the nature of Indian constitution. It changed over a dozen articles and added "socialist secular" words to the Indian preamble.

After 21 months of tyranny, Ms. Gandhi restored democracy for inexplicable reasons. Elections were held immediately and expectedly Ms. Indira Gandhi was voted out. For the first time, India would elect a party other than the "Congress party".

India's popular newspapers defiantly protested the imposition of Emergency on June 26, 1975 in the following ways:
Indian Express had a blank editorial.

Times of India ran an obituary to bypass censorship

D.E.M O'Cracy beloved husband of T.Ruth, father of L.I.Bertie, brother of Faith, Hope and Justica expired on 26 June

The species of Indicus is presumed exitinct.

Legacy:

Indira Gandhi was extremely adept at twisting the Indian institutions when it suited her. Although she had a few positive elements (even Richard Nixon did), her rule is one of tyranny, force and corruption. She strengthened terrorism movements (Sikh and Tamil) to help her score against her political opponents. She committed electoral frauds. She suspended democracy. She changed the nature of Indian constitution substantially (although the later amendments by the Janata Party helped nullify many of the amendments she did).

In short, there is nothing controversial about Ms. Gandhi. It was straightforward tyranny. Period.


Credits: Balaji Viswanathan, Anay Nagarkar, Wiki, Google Images, Quora.

Why Are Mortgage Rates Increasing?

In the mortgage market, mortgage originators rarely hold onto the portfolio of mortgages they help transact. Most mortgages are sold into the secondary mortgage market shortly after origination. A major reason for this is that they simply want to take the fees generated and keep the debts off their books.Once sold into the secondary market, these newly originated mortgages frequently become part of the mortgage-backed securities (MBS), asset-backed securities (ABS), collateralized mortgage obligations (CMO) and collateralized debt obligations (CDO) markets.

From Mortgage Originator to Mortgage Investor Smaller mortgage originators will often sell their mortgages to large scale originators or aggregators, which pool mortgages together and securitize them into mortgage-backed securities (MBS) through Fannie Mae, Freddie Mac or as private-label securities.The resulting MBSs are then sold to securities dealers, which sell them to investors or use them as collateral in structured finance securities such as CMOs, ABSs and CDOs. These are then sold to investors. A large percentage of these MBSs end up in structured finance securities, also known as structured finance deals. The Payment Waterfall Structure of CMOs, ABSs and CDOsUsing what is known as a payment waterfall, it is possible to take a pool of mortgages with lower credit characteristics and create tranches within a CMO, ABS or CDO deal with higher credit ratings than the pool of underlying mortgages.

"Tranche" describes a specific class of bonds within a structured finance deal. A tranche might be thought of as a security within a security. Most structured finance deals have several tranches. Each tranche within a deal is designed to have certain performance characteristics and a certain credit rating. Logic tells us that some of the tranches in a deal have a higher credit rating than the overall pool of underlying mortgages, some tranches in the deal must a have an equal or lower credit rating than the overall pool of underlying mortgages.For example, in a typical CMO deal, according to a payment waterfall, higher-rated credit tranches are given priority over lower-rated credit tranches on cash flow from the underlying pool of mortgages. In other words, the lower-rated credit tranches will absorb payment defaults in the underlying pool of mortgages so the higher-rated credit tranches will be unaffected by those defaults. The rules of the payment waterfall dictate the order in which each tranche in the deal will absorb losses. In general practice, about 80% of the tranches in a structured finance deal will receive a higher credit rating than the underlying pool of mortgages. The remaining tranches will have an equal or lower credit rating than the pool of underlying mortgages. The Demand for Yield, Complex Models and Pricing SignalsThe different tranches within CMO, ABS and CDO deals are priced based on their credit rating and the yield demanded by investors.Securities dealers and investors use complex models to plot the performance of the various tranches of a deal under varying interest rates and economic environments. These models are very important to investors in determining the yield at which a certain tranche of a structured finance deal might be purchased. In turn, that yield is a very important pricing signal for mortgage rates and credit terms offered to consumers. The yield is the pricing signal that is passed back through securities dealers to mortgage aggregators, then mortgage originators and then goes on to directly affect the interest rates and credit terms that are offered to consumers. This is the key to understanding how structured finance deals affect interest rates and mortgage terms offered to consumers. If the model's assumptions about the number of defaults in the underlying pool of mortgages of a deal prove to be correct (the lower priority tranches protect the higher priority tranches in the waterfall structure as planned), everything in the originator to investor mortgage machine runs smoothly. But, when the model assumptions prove to be inaccurate, or if a low probability economic event takes place, several things are likely to happen very quickly. Losses start to move up the waterfall structure of CMO, ABS and CDO deals. In other words, higher-rated credit tranches start to take losses.
Investors demand more yield as the credit ratings on their securities drop.
Securities dealers lower their bid prices for the mortgages and/or MBS they purchase to structure deals.
To preserve their profit margins, mortgage originators raise interest rates and tighten credit terms to consumers.

Conclusion

CMO, ABS and CDO structured finance deals are based on complex modeling with many rules and assumptions. Deal structurers, credit rating agencies and investors make decisions based on these models. If the assumptions and/or rules in those models prove to be inaccurate, or if a low probability event such as a severe economic downturn takes place, the lower-rated credit tranches in a structured finance deal fall in price (the yield demanded by investors rises). In addition, as the probability rises that all the tranches in the deal will be affected, the higher-rated credit tranches also fall in price (the yield demanded by investors rises). These pricing signals work their way back through the mortgage supply chain from the investor, then to the securities dealer, on to the originator and finally to the consumer in the form of tighter credit requirements and higher interest rates.