Deflation Can It Be Prevented?

Josef Sima:Deflation is a term used to denote situations of a general
decline in prices, a falling price level. For most of the history, such
coincided with prosperous times. However, 20th century changed
that perception. Prices have been systematically on the rise-inflation has
become a part of our life, (e.g., prices in the US multiplied between the
years 1900 and 2000 approximately 25 times, as opposed to 50% decrease
between, 1800 and 1900.) Rather than a sign of prosperity, deflation is
today often - though mistakenly -taken to be the cause of crises and
; economic breakdowns. In the following text, I will explain what economic
forces can cause prices to fall and bring some light to the consequences of-deflationary policies'.
It might be useful to start tackling the issues of deflation by noting that
deflation (and inflation) originally meant a great decrease (increase) in
the supply of money, rather than its inexorable consequence - the general
tendency towards a fall (rise) in prices- which is what it means today. This
shift in meaning may easily cause confusion: e.g., in a rapidly growing
with an increasing money supply but decreasing price level, our
predecessors would - using the original definition - speak of inflation,
whereas, today, we would describe it as deflation. Let us see now, in what
prices typically fall.


Deflation as a Result of Economic Growth
kind of deflation is a natural state of a dynamically developing
economy. As a result of growing productivity, more and more goods are
produced in the economy and, consequently, producers have to compete over
> existing money units, against which they supply their products. Assuming a
> given quantity of money, it follows that the value of money will go up,
> which means that more goods can be bought for a unit of money. Prices will
> have a tendency to fall. Money will keep acting as the medium of exchange
> and the resulting prices will precisely mirror market participants'
> preferences and underlying resource scarcity patterns. Therefore, the
> economy will not waste resources, which is a precondition for further
> growth. As rational economic calculation is possible under these conditions
> (prices correctly reflect the relevant market `data'), there is no reason to
> expect any obstacles for successful economic development. Such a development
> is a typical one for periods between several inflationary episodes in
> history generally initiated by states for the sake of waging wars. In the
> US, between 1880 and 1896, we can, for example, see a decline of wholesale
> prices by some 30% (which amounts to an annual fall of 1.75%), whereas real
> income went up by some 85% (which is 5% annually). Even today, despite the
> continual inflation orchestrated by central banks, there are sectors
> experiencing a boom within a `deflationary' environment (decline of their
> products' prices)- the most flagrant example being the electronics industry
> (computers, video and DVD-players, TV-sets, cell-phones, etc.). What is of
> interest to producers is the spread between buying and selling prices, i.e.,
> input-output spreads that give rise to profits. Changes in some `price
> index', which captures the changes of overall prices, are of no real
> importance to them.
>
>
> Deflation As a Result of Hoarding
>
>
> For many people, hoarding embodies a veritable bogey as it causes money to
> `disappear' from the economy. What hoarding means, however, is that some
> people for certain reasons, (such as uncertainty about their pensions)
> decide to increase their cash holdings. In this situation, it is only
> natural that selling the existing stock of goods for less money units will
> be possible only if the purchasing power of the money unit increases - the
> higher demand for money units pushes their price, in terms of goods, up.
> This adjustment is, strictly speaking, a productive activity - some people
> decided voluntarily not to exchange their money for so many goods offered as
> before, because they value holding cash more than the goods they could
> obtain for that amount of cash. The result is deflation, i.e., a new
structure of prices corresponding to the new market situation that emerges
in the same way as any new price pattern accommodating any change in
people's behavior, (e.g., a change in fashion).

Credit Deflation

We will now explore the third situation causing prices to fall. In modern
history, we can find several instances in which people, typically as a
of previous inflation and subsequent financial crises, started to
their demand deposits from banksen masse. As they withdraw their
money (or in the past redeemed gold), banks are driven into liquidity
problems that may ultimately lead to their bankruptcy. This intensifies the
crises, as more and more clients lose confidence in the overall health of
the banking sector and therefore come to their banks and demand that the
> deposits on their accounts be paid off. Banks attempt to accumulate their
> reserves in order to become able to fulfill their obligations. The
> accumulation of reserves (historically gold) leads towards a decrease in
> money supply, resulting in an increase in the value of money - prices fall,
deflation is underway. Before World War I, central banks themselves several
times initiated such a deflation to prevent the breakdown of the banking
system. Deflationary periods of that kind were typically very short and
swift, and so was the elimination of unavoidable results of previous
inflations.

Confiscatory deflation

Whereas the previous kinds of deflations were market-driven, now
confiscatory deflation is orchestrated by the state authorities by
people from using their cash in an attempt to solve the
' in the money market created by a preceding inflation. The case
of Argentina from the first years of the 21st century can be listed as an
example. Supply of money shrank and prices went down.
> As we have seen, deflation can be one of the result of economic problems,
> such as banking sector collapse. Under normal circumstances, however, if new
> money is not pumped into the economy it is a reflection of economic growth -
> a certain quantity of money chases more goods-and allocation of resources is
> guided by consumers' preferences. The pattern of income corresponds to the
> productivity of market participants, rather then being influenced by
> politically induced monetary shocks. On the other hand, the attempts to
> increase the money supply to fight deflation often lead to redistribution
> (as it equals taxing the cash-holdings) , discoordination and hence waste of
> resources (as price signals get wrong).
> Shobha Ahuja:From 2003 to early 2008, the world witnessed the most marked
> commodity price boom of the past century. The prices of oil, metals, food
> grains, and other commodities rose sharply, and over a sustained period. But
> the global economic crisis has reversed the commodity price boom in the late
> 2008 with commodity prices, notably the oil prices, falling sharply in the
> last six months. Besides, there is a sharp decline in metal and food prices
> as most countries have started experiencing excess (supply) capacity and a
> contraction in demand. These price declines have dampened growth prospects
> for a number of commodity-exporting economies. According to IMF projections,
> headline inflation is expected to decline from 3.5% in 2008 to a record low
> 0.25% in 2009 in the advanced economies, before edging up to 0.75% in 2010.
> India, too, is facing the prospect of negative inflation, as measured by the
> Wholesale Price Index (WPI). However, the paradox is that the Consumer Price
> Index (CPI), which measures inflation at the retail level, is still at
> double digit level. And there are a range of products within the WPI which
> are still rising. High food prices are still a cause for concern. Hence, at
> present, the fall in WPI is seen as a corrective mechanism from the high
> prices ruling in 2007-08 and the specter of falling prices is not so much a
> threat to our growth prospect.
> Indeed, our growth story is intact, even though it is weaker than last year,
> there is demand in the economy and investments are still taking place.
> However, if prices continue to fall, a prospect which we do not anticipate
> to hold for long , then it could be a setback to growth

Caught in Deflationary Spiral?
With the deterioration taking place in the global economy, the prospect of
outright deflation - and all the risks that it entails - is a clear and
present danger. The prospect of deflation in countries like US, Europe and
Japan is very much real, given the recession in their economy. The prospect
of falling demand and possibly falling prices is something that is catching
attention of policy makers the world over. Hence, the phenomena should
not be dismissed as a statistical quirk.
the current scenario, prices are falling, not because of improved
productivity, but because of fall in demand. The fall in demand and prices
> is adversely affecting the bottom line of companies and the manufacturing
> sector is not finding any incentive to increase production. If deflation
> sustains for a long period of time, it will lead to lower production and
> investment as industry would not invest in capacity addition. A fall in
> demand would result in lower wages and unemployment, which, in turn, would
> lead to further decreases in prices, causing a deflationary spiral. However,
> in India, the southward drift of inflation, which is now closer to zero, is
> more as a result of high base effect apart from falling oil and commodity
> prices. No wonder, policy makers have termed the phenomenon as disinflation,
> rather than deflation. Hence, near zero inflation is temporary and is
> anticipated to again show an upward trend once the statistical bias accruing
> from the high base effect, which compares present inflation levels from that
> prevailing during the same period last year, wears off.

WPI vs. CPI
phenomenon of measuring inflation on the basis of WPI is unique to
India. All major countries across the world measure inflation on the basis
of CPI or the Producer Price Index (PPI). Hence, this question pertains more
to India than to the rest of the world.
The plunge in WPI was mainly driven by the fall in prices of industrial
commodities and raw materials. The near zero inflation rate is largely the
of the dramatic decline in energy and commodity prices over the past
. For example, oil prices fell from the high $109 in September 2008 to a
of $37.4 in 2009. However, the WPI takes prices at ex factory level and
made up of a large number of primary, intermediate and manufactured
items. Excise duty, marketing costs and rebates are not reflected in WPI.
that matter, much of items which form the household consumption basket
> have a low weight in WPI. CPI measures inflation experienced by consumers at
> retail outlets. The weights assigned to items taken for measuring inflation
> are different. CPI assigns higher weight for items which are consumed by
> households. For example, the weight attached to food and beverages, etc.,
> account for nearly 48% in CPI, but around 28% in WPI. Likewise, fuel has a
> weight of 6% in CPI but over 14% in WPI. However, a decline in WPI would
> most likely be captured by CPI in times to come when the impact of price
> fall percolates down to the retail level.
> To reconcile the WPI and CPI and to have a cogent measure of inflation, it
> is imperative that we move towards a new measure of inflation given by PPI.
> This is presently being contemplated by the government.

Before the Central Banks

- Sufficient injections of money will ultimately reverse deflation.
- Increased government spending in areas, such as infrastructure and
housing.
- Global monetary and fiscal policies can provide substantial support.
- Fiscal policies and rationalization of taxes which would lower
production costs of industry and spur demand.

Less than a year ago, inflation was a major concern for many of world's
economies. Now its opposite, deflation, is emerging as the latest threat,
which could make the global recession worse if it takes hold.

1. (A) Comitment
(B) Comittment
(C) Committment
(D) Commitment
Ans : (D)

2. (A) Fullfil
(B) Fulfil
(C) Fulfill
(D) Fullfill
Ans : (B)

3. (A) Defendant
(B) Defendent
(C) Defandent
(D) Defandant
Ans : (A)

4. (A) Varstile
(B) Verstile
(C) Versatile
(D) Vorstyle
Ans : (C)

5. (A) Recomand
(B) Recommend
(C) Reconand
(D) Recomend
Ans : (B)

6. I always fall ……… old Friends in times of need.
(A) over
(B) through
(C) back on
(D) off
Ans : (C)

7. The party decided to take the shortest…… to its destination.
(A) root
(B) route
(C) distance
(D) direction
Ans : (B)

8. The girl was very pleased……… herself.
(A) in
(B) on
(C) over
(D) with
Ans : (D)

9. Because of deforestation birds are……… their nerting places.
(A) cooking
(B) conserving
(C) searching
(D) demanding
Ans : (C)

10. The thieves broke…… the museum to steal the painting.
(A) up
(B) side
(C) off
(D) into
Ans : (D)

11. Where was the battle of Plassey fought ?
(A) Karnal
(B) Haldighati
(C) Mysore
(D) Bengal
Ans : (D)

12. Who was the first Vice-President of India ?
(A) Dr. S. Radhakrishnan
(B) Dr. Rajendra Prasad
(C) C. V. Raman
(D) Jawahar Lal Nehru
Ans : (A)

13. What was the reason behind the mutiny of 1857 ?
(A) Cartridge containing fat
(B) Frustration in soldiers
(C) Failure of British Government
(D) Administrative research
Ans : (B)

14. Which of the following is UHF ?
(A) 40 MHz
(B) 400 MHz
(C) 400 KHz
(D) 40 KHz
Ans : (B)

15. Mass of a particle is m and its momentum is p. Its kinetic energy will be—
(A) mp
(B) p2m
(C) p3m
(D) p2/2m
Ans : (D)

16. S. I. unit of power is 'watt'. It is equivalent to which of the following ?
(A) Kgms–2
(B) Kgm2s–2
(C) Kgm2s–3
(D) None of these
Ans : (C)

17. Who among the following cricketers scored the highest runs—
(A) Brien Lara
(B) Sanat Jaysurya
(C) Sachin Tendulkar
(D) Virendra Sehwag
Ans : (C)

18. Which is the oldest Veda ?
(A) Samveda
(B) Rigveda
(C) Yajurveda
(D) Atharvaveda
Ans : (B)

19. Who was the founder of Pakistan ?
(A) Mohammad Ali Jinna
(B) Liyaquat Ali Khan
(C) Gaffar Khan
(D) Benazir Bhutto
Ans : (A)

20. Who invented television ?
(A) J. L. Baird
(B) Lawrance
(C) Frederick Trechithic
(D) King Gillette
Ans : (A)

21. Who invented wireless ?
(A) Marconi
(B) Charles Caterin
(C) George Cayley
(D) Zenobe Gramme
Ans : (A)

22. Which of the following was the battle strategy of Shivaji against Mughals ?
(A) Alert army
(B) Large army
(C) Political monopoly
(D) Guerilla warfare
Ans : (D)

23. Find out the next term of the series—
1, 2, 4, 7, 11, ……
(A) 16
(B) 12
(C) 9
(D) 4
Ans : (A)

24. Which of the following cities is termed as the Pink city ?
(A) Jaipur
(B) Jodhpur
(C) Ajmer
(D) Delhi
Ans : (A)

25. Who wrote the Meghdoot ?
(A) Kalidas
(B) Vatsyayan
(C) Chanakya
(D) Premchand
Ans : (A)

26. Find out the missing term of the series—
11, 13, 17, 19, 23, 29, 31, 37, 41……
(A) 43
(B) 47
(C) 53
(D) 51
Ans : (B)

27. Which of the following is a creation of Maithili-Sharan Gupta ?
(A) Saket
(B) Urvashi
(C) Prempachisi
(D) Gatha
Ans : (A)

28. Which is the longest railwayline of the world ?
(A) Trans-Siberian
(B) Trans-Canadian
(C) Orient Railway line
(D) Railwayline from London to Paris
Ans : (A)

29. Which of the following states has the highest number of voters ?
(A) Uttar Pradesh
(B) Bihar
(C) Rajasthan
(D) Gujarat
Ans : (A)

30. Garaba folk dance belongs to which of the following states ?
(A) Manipur
(B) Assam
(C) Gujarat
(D) Orissa
Ans : (C)

(Nearest Meaning)
______________________________

Many of you may already know that Hockey World Cup 2010 is being held in India. What a pleasant start it was when India beat Pakistan by 4-1 in the opening match.
Since this is an important event in Indian Sports history, we are providing some details which may fetch you some marks in the GK Section of forthcoming exams.

Hockey World Cup

Organised By: International Hockey Federation (FIH)
Started: 1971
Schedule: held every four years
Trophy Designed By: Bashir Moojid
Trophy Created By: Pakistani Army
Trophy: a silver cup with an intricate floral design, surmounted by a globe of the world in silver and gold, placed on a high blade base inlaid with ivory. At its peak is a model hockey stick and ball.
Five countries have dominated the event's history. Pakistan is the most successful team, having won the tournament four times. The Netherlands have won three titles, and Germany has won two titles. India and Australia have each won the tournament once.

History of Hockey World Cup:

Pakistan's Air Marshal Nur Khan originated the idea of a Hockey World Cup was. FIH approved the idea and it was decided that inaugural World Cup would be held in October 1971, in Pakistan.
The Cup could not be held in Pakistan, as Pakistanis led by cricketer Abdul Hafeez Kardar, protested against India's participation in the Hockey World Cup. So it was moved to Real Club de Polo grounds in Barcelona, Spain, a neutral and peaceful European site.

World Cup Winners:

Year	Venue	Winner	Runner Up	Second Runner Up
1971	Barcelona, Spain	Pakistan	Spain	India
1973	Amstelveen, Netherlands	Netherlands	India	West Germany
1975	Kuala Lumpur, Malaysia	India	Pakistan	West Germany
1978	Buenos Aires, Argentina	Pakistan	Netherlands	Australia
1982	Mumbai (Bombay), India	Pakistan	West Germany	Australia
1986	London, England	Australia	England	West Germany
1990	Lahore, Pakistan	Netherlands	Pakistan	Australia
1994	Sydney, Australia	Pakistan	Netherlands	Australia
1998	Utrecht, Netherlands	Netherlands	Spain	Australia
2002	Kuala Lumpur, Malaysia	Germany	Australia	Netherlands
2006	Mönchengladbach, Germany	Germany	Australia	Spain
2010	New Delhi, India	--	--	--

Most Successful Teams

Team	Wins	Appearances in Final
Pakistan	4 (1971, 1978, 1982, 1994)	6
Netherlands	3 (1973, 1990, 1998)	5
Germany	2 (2002, 2006)	3
Australia	1 (1986)
India	1 (1975)

Hero Honda World Cup 2010

Teams:
Pool A:
Germany, Netherlands, Korea, New Zealand, Canada, Argentina
Pool B:
Australia, Spain, England, Pakistan, India, South Africa
Host country: India
City: Delhi
Teams: 12
Venue: Dhyan Chand National Stadiums

Current General Knowledge: January 2010

ABBREVIATIONS
NKN: National Knowledge Network

AWARDS
Jeevan Raksha Padaks, 2010
Sarvottam Jeevan Raksha Padak: Braveheart Rukhsana Kauser and Delhi's Narender Kaushik (posthumously) have been selected for Sarvottam Jeevan Raksha Padak for their conspicuous courage in saving life under circumstances of very great danger to the life of the rescuer.

Rukhsana, 22, had killed a top Pakistani militant and injured another at Kalsian village in Rajouri district on the night of September 27 2009.

Uttam Jeevan Raksha Padak: The winners include Syed Areef Sujauddin from Andhra Pradesh, Umman Antony from Kerala, Rajan Kamble from Maharashtra (all posthumously), besides Karanbir Singh Kang from Maharashtra and Prachi Santosh Sen from Madhya Pradesh.

Kang, who lost his wife and two children in the 26\11 Mumbai attacks, had rescued many from Taj hotel and never dithered from doing his duty.

Jeevan Raksha Padak series of awards are meant for meritorious act of humane nature in saving the life of a person in three categories: Sarvottam Jeevan Raksha Padak, Uttam Jeevan Raksha PAdak and Jeevan Raksha Padak.

Golden Globe Awards, 2010
Best Director: James Cameron for Avatar
Best Motion Picture (Drama): Avatar
Best Motion Picture (Musical or Comedy): The Hangover
Best Actor (Motion Picture Drama): Jeff Bridges for Crazy Heart
Best Actor (Motion Picture Musical or Comedy): Robert Downey Jr. for Sherlock Holmes
Best Actress (Motion Picture Drama): Sandra Bullock for The Blind Side
Best Actress (Motion Picture Musical or Comedy): Meryl Streep for Julie & Julia
Best Supporting Actor (Motion Picture): Christoph Waltz for Inglourious Basterds
Best Supporting Actress (Motion Picture): Mo'nique for Precious.
Best Screenplay: Jason Reitman, Sheldon Turner for Up In The Air
Best Original Score: Michael Giacchino for Up
Best Original Song: "The Weary Kind" from Crazy Heart
Best Foreign Language Film: The White Ribbon (Das Weisse Band - Eine Deutsche Kindergeschichte) from Germany
Best Animated Film: Up

Dada Saheb Phalke Award, 2008
V.K. Murthy, the ace cinematographer of Guru Dutt's films who is best known for his camera work in Chaudvin ka Chand and Pakeezah, has been honoured with the award. He is the first cinematographer to get the award.

National Film Awards, 56th
Best Film: Antaheen (Bengali)
Best Direction: Bala for Naan Kadavul (Tamil)
Best Popular Film Providing Wholesome Entertainment: Oye Lucky! Lucky Oye!
Best Children's Film: Gubbachigalu (Kannada)
Best Film on Family Welfare: Little Zizou (English, Gujarati)
Best Actor: Upendra Limaye for Jogwa (Marathi)
Best Actress: Priyanka Chopra for Fashion (Hindi)
Best Supporting Actor: Arjun Rampal for Rock On!! (Hindi)
Best Supporting Actress: Kangana Ranaut for Fashion (Hindi)
Indira Gandhi Award for Best First Film of a Director: A Wednesday (Hindi)
Nargis Dutt Award (for Best Feature Film on National Integration): Aai Kot Nai (Assamese)
Best Child Artist: Shams Patel
Best Cinematography: Avik Mukhopadhyay for Antaheen (Bengali)
Best Screenplay: Sachin Kundalkar for Gandha (Marathi)
Best Art Direction: Gautam Sen for Firaaq
Best Make-up Artist: V. Moorthy for Naan Kadauul (Tamil)
Best Costume Design: Neeta Lulla for Jodhaa Akbar
Best Music Direction: Ajay Atul for Jogwa (Marathi)
Best Lyrics: Antaheen (Bengali)
Best Male Playback Singer: Hariharan for Jogwa (Marathi)
Best Female Playback Singer: Shreya Ghoshal for Antaheen (Bengali)
Best Choreography: Chinni Prakash and Rekha Prakash for Jodha Akbar
Best Audiography: Pramod J. Thomas for Gandha (Marathi)
Best Editing: A. Sreekar Prasad for Firaaq (Hindi)
Best Special Effects: Govardhan (Tata Elxsi) Mumbai Meri Jaan (Hindi)
Special Jury Award/Special Mention (Feature Film): Bioscope
Republic Day Awards, 2010
Padma Vibhushan: Nobel laureate of Indian origin Venkatraman Ramakrishnan, Apollo Hospitals chief Pratap Reddy, former RBI Governor Y.V. Reddy, Zohra Segal, Ebrahim Alkazi and noted Mridangam Carnatic artist Umayalpuram K. Sivaraman.

Padma Bhushan: Music maestro A.R. Rahman, Music maestro Illaiyaraaja, Bollywood actor Aamir Khan and controversial Indian origin businessman Sant Singh Chatwal, Prime Minister Manmohan Singh's cardiac surgeon R.M. Panda, eminent neurosurgeon Satya Paul Agarwal, prominent industrialist from Punjab S.P. Oswal, Manvinder Singh Banga, eminent journalist Fareed Zakaria and real estate czar K.P. Singh were among the 43 winners.

Padma Shri: Cricketer Virendra Sehwag, hockey player Ignace Tirkey, Formula One driver Narain Kartikeyan, badminton star Saina Nehwal, boxer Vijender Singh, Sachin Tendulkar's 'guru' Ramakant Achrekar, Yesteryear Bollywood diva Rekha, Oscar winner sound recordist Resul Pokutty and actor Saif Ali Khan were among 83 winners.

Bravery Awards, 2010
Kirti Chakra: Rukhsana Kausar and her brother Aijaz Ahmad have been awarded the second highest gallantry award in peacetime, for their act of bravery in killing a Lashkar-e-Taiba (LeT) commander in their Morha Kalsi village in Jammu and Kashmir in 2009.

Tagore Literature Award, 2009
Noted Kashmiri poet Naseem Shafai has been conferred the prestigious "Tagore Literature Award" by the Sahitya Akademi for her outstanding contribution in Kashmiri literature, especially poetry.

The award has been instituted by the Akademi at the initiation of the Korean government and the Embassy of Korea in Delhi.

Nasem was selected for this honour for her poetic collection, "Na Thsay Na Aks" (Neither shadow nor reflection). She has become the first women poet from Kashmir to be honoured by the Akademi. This was the second collection of Naseem's poetry after "Derche Machrith" (open windows) in 1999.

CYBER SPACE
Gmail adopts new protocol to encrypt data
Google has introduced a mandatory secure encryption for all users of its free email service Gmail, which will make it more difficult for hackers to break into the email accounts.

Gmail will now be accessible through what is known as the hypertext transfer protocol secure or HTTPS on internet, instead of the HTTP protocol which it was using earlier.

Under the new protocol, email data travelling between a user's browser and Google computer server will be encrypted, making it tougher for the hackers sitting on unprotected Wi-Fi to break into the user's accounts.

For users, the new encryption would result in higher level of security, similar to an online banking transaction. Hackers would also find it more challenging to steal credit card and bank statements stored by Gmail users in their mailboxes.

Thousands of users in the government departments and corporate sector across the world use Gmail for transferring official emails or storing bank confidential information. With this enable-ment, loss of such information or hacking of Orkut or Gmail accounts is likely to become less frequent. Many government of India documents also get exchanged through Gmail. The ministry of external affairs has, however, banned use of such private email providers for official use.

DEFENCE
India planning to buy C-17 Globemaster-III strategic aircraft from USA
India is set to buy 10 C-17 Globemaster-III giant strategic aircraft, each of which comes for about $220 million. The four-engine C-17 is capable of carrying payload of up to 78 tonnes, transport tanks and air-drop more than 100 combat-ready paratroopers directly into a battle-zone.

It can cover 2,400 nautical miles at a stretch and with mid-air refuelling it can go even longer distances. The plane has the capability to take off and land on 3,000 feet or less runway, as also on a semi-prepared runway.

EXPEDITIONS
Climate expedition to Antarctica
On January 11, 2010, an Indian team set sail on the first Southern Ocean expedition after the Copenhagen meet — the fourth to be taken up by the National Centre for Antarctic & Ocean Research (NCAOR), Goa — to study, among other things, climate change and its impact on life.

It will also be the first time Indian scientists will be crossing the 55 degrees South latitude to go almost up to the polar region on an Indian vessel.

Sagar Nidhi, the only Indian vessel that can cut through ice, left Goa with 25 scientists for Mauritius and head farther southwards on a voyage that will last till April 2010.

The scientists will take up about 20 studies in the ocean between 35 and 66 degrees South latitudes. Prominent among them would be paleo-climatic studies that involve collecting samples from the ocean bed at a depth of up to six kilometres.

Changes in sediment formation, water mass and other parameters would be compared with previous data to ascertain the impact of climate change.

PERSONS
Basu, Jyoti
The CPM patriarch and former Chief Minister of West Bengal, he died on January 17, 2010 at the age of 95. The "colossus of Indian politics" left behind a void that will be hard to fill, not only in the Left but also national politics.

He was born on July 8, 1914 in Kolkata. In 1935 he graduated from the Presidency College of Kolkata with honours in English. Then he went to London to study law and it was here that he was influenced by Communism. In 1940 he joined the then undivided Communist Party of India.

He was one of the founder-members of CPM in 1964. In 1977 he became the Chief Minister of West Bengal and continued to hold the office for 23 straight years, making him the longest-serving Chief Minister in India. He quit as Chief Minister in November 2000. His major achievements as Chief Minister of West Bengal were rural land reforms and entrenching of the Panchayati Raj institutions.
Jyoti Basu played a major role in formation of coalition governments at the Centre in 1989, 1996, 1997 and 2004. In 1996, he narrowly missed out on becoming Prime Minister of India after his party's veto.

Murthy, V.K.
V. K. Murthy is the first cinematographer, and second Kannadiga after Kannada movie icon Dr Raj Kumar, to get the Dada Saheb Phalke award for his contribution to the film industry. He is known for his work in most Guru Dutt films like Sahib Biwi Aur Ghulam, Kaagaz Ke Phool and Pyaasa.

Besides Guru Dutt, Murthy also worked with Pramod Chakravarthy (Naya Zamana, Jugnu), Kamal Amrohi (Pakeezah) and Shyam Benegal (Bharat Ke Khoj, a television series).

He also shot India's first cinema-scope movies, Kagaz ke Phool and is also one of the pioneers of colour cinematography.

Singh, Gen Vijay Kumar
He has been appointed as the chief of Indian Army. He was born on May 10, 1951, in Bapada village of Haryana. His grandfather—Mukh Ram—was also a soldier, who rose to the rank of Risaldar Major. His father Jagat Singh also joined the Army and retired as a Colonel.

Gen V.K. Singh, an infantry man, was commissioned into the Rajput Regiment in 1970. During his long career he has participated in the 1971 operations against Pakistan and the IPKF operations in Sri Lanka in 1988. His last posting before taking over as army chief was as the Eastern Army Commander, Kolkata. Prior to that, he commanded vital Ambala-based 2 Strike Corps of the Army.

He is also an honours graduate of the US Army Infantry School, Georgia. He studied at the Defence Services Staff College, the Army War College and the US Army War College, Carlisle.

PLACES
Bengaluru
The Electronic Warfare India Conference (EWIC) was held in Bengaluru. This was the first international conference on electronic warfare to take place in India.

Burj Khalifa
On January 4, 2010, blazing fireworks and dazzling lights marked the opening of the world's tallest tower, Burj Khalifa, formerly known as Burj Dubai. The $1.5 billion, 818 metres (2,684 feet) high structure is an "unprecedented" engineering marvel.

Burj Khalifa has been designed to be the centrepiece of a large-scale, mixed-use development that will include 30,000 homes, nine hotels, 7.4 acres of parkland, at least 19 residential towers, the Dubai Mall, and the 30-acre man-made Burj Khalifa Lake.

With more than 160 stories, Burj Khalifa holds the following records:
• Tallest building in the world
• Tallest free-standing structure in the world
• Highest number of stories in the world
• Highest occupied floor in the world
• Highest outdoor observation deck in the world
• Elevator with the longest travel distance in the world
• Tallest service elevator in the world

Not only is Burj Khalifa the world's tallest building, it has also broken two other impressive records: tallest structure, previously held by the KVLY-TV mast in Blanchard, North Dakota, and tallest free-standing structure, previously held by Toronto's CN Tower. The Chicago-based Council on Tall Buildings and Urban Habitat (CTBUH) has established three criteria to determine what makes a tall building tall. Burj Khalifa wins by far in all three categories.

The building has returned the location of Earth's tallest free-standing structure to the Middle East — where the Great Pyramid of Giza claimed this achievement for almost four millennia before being surpassed in 1311 by Lincoln Cathedral in England.

Davos
Over 2500 global leaders in business and politics gathered in Davos, Switzeraland, for the World Economic Forum. Davos is located on the Landwasser River, in the Swiss Alps, between the Plessur and Albula Range. At 1,560 meters, it is the highest city in Europe.

Haiti
The capital of this tiny island nation, Port-au-Prince, was hit by an earthquake measuring 7.0 on the Richter scale on January 13, 2010. More than three lakh people perished in the tragedy.

The earthquake caused major damage to Port-au-Prince, Jacmel and other settlements in the region. Many notable landmark buildings were significantly damaged or destroyed, including the Presidential Palace, the National Assembly building, the Port-au-Prince Cathedral, and the main jail. Among those killed were Archbishop of Port-au-Prince Joseph Serge Miot, and opposition leader Micha Gaillard. The headquarters of the United Nations Stabilization Mission in Haiti (MINUSTAH), located in the capital, collapsed, killing many, including the Mission's Chief, Hédi Annabi.

Jaipur
Who's who of the literature world descended on Jaipur in January 2010 to attend the Jaipur Literature festival.

RESEARCH
Super lozenge as cure for cold to H1N1
In a breakthrough, Australian scientists have developed a drug that prepares the immune system to effectively fight all cold and flu infections, including swine flu virus. The Veldona lozenge, which tastes like a sweet and dissolves in the mouth, prepares the immune system to attack every cold and flu virus.

The drug, that could be taken once a day before breakfast, would prevent everyday sniffles in otherwise healthy people and life-threatening infections in the elderly.

The lozenge contains tiny amounts of interferon alpha—a protective protein that the body naturally makes when attacked by a virus. When the lozenge dissolves in the mouth, the protein is released, tricking the immune system into thinking there is a virus in the body and gets ready for a fight.

Once the trial results are positive, the drug can be made available over-the-counter in the next two years. It would cost just around Rs 9 a pill.

SPACE RESEARCH
NASA's WISE probe
Nasa has published the first images from its Wide-field Infrared Survey Explorer, or WISE, which has been scanning the skies since January 2010.

The images include a comet, a "star factory" 20,000 light years away in our Milky Way galaxy and our nearest large neighbour, the Andromeda spiral galaxy.
Wise will search on until October when its supplies of frozen coolant for chilling instruments will run out.

The Wide-field Infrared Survey Explorer (Wise) had blasted off from Vandenberg Air Force Base in December 2009. The probe is expected to uncover objects that have never seen before, including some of the coolest stars and the most luminous galaxies.

The $320m mission will do this by scanning the entire sky in infrared light with sensitivity hundreds of times greater than ever before.

Indian scientists discover a large cave on the Moon
Human habitation or a permanent base on the Moon could soon be a reality. After the discovery of water, scientists analysing the data of Chandrayaan-I have now found a large cave on the lunar surface, which could possibly act as a natural shelter for humans.

This is an empty volcanic tube, measuring about two kilometre in length and 360 meters in width. Such wide tunnels could sustain underground lunar outposts, while the ceilings could help protect astronauts from space radiation, meteoroid impacts and wild temperature fluctuations (up 300 degree centigrade) that is commonplace on the lunar surface.

There are similar lava tubes on Earth. They are formed when molten rock, flowing from a volcanic eruption, cools and hardens on top while the lava underneath continues to flow. If the lava drains completely, a cavern is left. Scientists had long suspected that such rock formations existed on the moon, but lacked evidence until now.

The findings happened while the data from the TMC (Terrain Mapping Camera) was being analysed. The TMC was one of the five Indian payload that was on-board Chandrayaan-I.

MISCELLANEOUS
Algorithm trading
The rising number of brokerages with algorithm, or computer programme-driven trading, may turn out to be a second turning point in Indian markets after the introduction of electronic trading a decade-and-a-half ago, which closed about 20 stock exchanges and many local brokerages, but expanded the trading community and volumes by leaps and bounds.

The National Stock Exchange, which controls more than three-fourths of the trading volumes, has approved applications of 200 of its members, roughly a fourth, to trade using algorithms.

Algorithmic trading refers to automated trades executed through software programs which do not require humans to place orders. There could be thousands of programs written to buy or sell a security, currency or commodity at a particular level when one or more factors emerge. Those programs are so fast that people who look at various developments and decide trade would be left way behind because a machine has done it in milliseconds.

For example, a program could be to sell the stock futures of a particular company and buy the stock if the futures price is x% higher than the stock price. Also, it could be to compare a set of variables—if rupee is more than 45 to the dollar, and crude oil is less than $60 per barrel—then the software would sell Infosys futures and buy HPCL shares.

Other than investors who buy for a long term and traders who buy and sell on a daily basis to profit from minor movements, there's a section, called arbitrageurs, which looks to benefit from distortions in prices despite public information.

Profits from arbitrage have slumped in the past decade as investors across the country have access to same stock prices unlike in the past where various cities had different prices at a given time for the same share. Also, the common trading cycles between the National Stock Exchange and the Bombay Stock Exchange shrank arbitrage.

Now, with software programs taking over trading, it may well just disappear.

While trading volumes could surge as fat-cat brokerages hire maths wizards from the best of institutions, it could lead to severe disturbances in the market as was the case during the credit crisis. Some experts have said the credit crisis was accentuated by algorithmic trading which triggered millions of trades due to fast-evolving developments. However, some like Goldman Sachs and JPMorgan, with superior programs, have reportedly benefited through trading even during the crisis.

Algorithmic trading can create a class conflict too between haves and have-nots of technology. There could be charges of discrimination if two members of the same exchange are not on an equal footing. Even some US legislators are planning to restrict high-speed trading.

In India it may not immediately lead to a surge in volumes since Indian markets still don't have the depth of the western markets and related markets, such as commodities and currency are controlled.

Indian invention Infibeam Pi to give competition to Amazon's Kindle
On January 28, 2010, Vishal Mehta announced the Infibeam Pi, an e-book reader that looks like the Amazon Kindle, has the same e-Ink screen that the Kindle sports, and has a rights architecture that is more open than the Kindle. The Infibeam Pi, which can be ordered online and is priced at Rs 10,000. The Amazon Kindle, when shipped to India, costs about Rs 18,000. The Pi reader has no wireless connectivity, however.

The Pi supports 13 Indian languages and has a micro USB port to connect to a PC. Users will need to create an account with Infibeam.com, register the device and then download the ebooks. The ebooks can be read on the PC as well as on the Pi.

The Pi can also be used to read any document (word or pdf, for instance). It can store about 600 ebooks in its internal memory. It also has space for a 4GB card—that means about 3,000 ebooks can be carried around.

Pi can play music as well.

Copenhagen Wheel
Reinventing the wheel was not exactly what Myshkin Ingawale had in mind when he set out from NIT-Bhopal towards MIT-Massachusetts, with a stop-over at IIM Calcutta. The 27-year-old's Copenhagen Wheel, named after the Danish capital after it was unveiled during the climate summit in December 2008, could be about to do just that.

A smart disc that can be retrofitted on any bicycle, the device can boost the cycle's power and can also keep track of friends, fitness, smog and traffic. And if someone tries to steal the bike while its owner happens to be away, the device will send out an alert via a text message.

The Danish capital is set to embrace it whole-heartedly in its attempt to become the world's first carbon-neutral capital city by 2025.

Ingawale began working on the device in 2003, when he started fitting bicycles with electric motors. An early version of the device was made during his time at the National Institute of Technology campus in Bhopal, where he studied for a B.Tech in electrical engineering.

The big leap for the device and Ingawale came about when he got in touch with a team from the prestigious Massachusetts Institute of Technology (MIT) in the US, which was working on ways to make bikes efficient and green.

"From the days of the horse-drawn carriage, all we have done is replaced the horse with a beast of a different kind. Can we be creative, can we make something that radically improves things for the better? This was the motivation and thought process of the team," he says.

Tricolour to tower over nation
Naveen Jindal, MP from Kurukshetra who fought a long legal battle to ensure that individuals can hoist the national flag too, will put up monumental flag poles with flags about 3,500 square feet in size and hoisted on 206-feet-high steel poles—all across the country.

After putting up five monumental flag poles in his own constituency, Jindal now has plans to set up many more to create awareness and generate respect for the national flag in every Indian.

Jindal's Flag Foundation of India, set up after he won the legal battle in 2005 against the government diktat that only institutions can hoist the national flag, will work with local bodies to set up these poles. He has even had the government amend the Flag Code to allow these massive flags to fly even at night, with proper illumination.

The first monumental flag pole outside Kurukshetra will come up in Angul, a tribal district in Orissa, followed by Hyderabad, Mumbai and Kanyakumari. Each project will cost Rs 40 lakh, with the pole, made of high tension steel, weighing 12.5 tonnes, and the flag, made of knitted polyester, weighing 28 kg and costing Rs 60,000.

National Martyr Register
Sixty years after it became a Republic, India is about to share with its people the first authenticated list of martyrs, who helped it realise the dream of freedom. The list would, for the first time, cover the martyrs of 1857, recognised now as the watershed in the struggle for India's Independence.

Also, the list's focus would be the nation to avoid accusations that the existing works on martyrs are heavily tilted in favour of the North.

Till date the country had no National Register of Martyrs which could be taken as the basis of future historical research on the subject. Names that do exist in scattered works, including "Who's Who of Indian Martyrs' published by the Education Ministry in 1969, are the ones that figured in the national movements of the late 19th and 20th centuries.

However, the existing names of martyrs lacked historical referencing and could be dismissed as claims unless proved otherwise by evidence in primary sources like judicial records and jail files.

But now, thanks to experts under the Indian Council of Historical Research which is in charge of the project, India will soon have its first historically-tested list of martyrs.

India's first aero sports centre
Narnaul, a non-descript village located in the backwaters of Haryana has got India's first aero sports centre, which was inaugurated by Chief Minister Bhupinder Singh Hooda, at the local airstrip on January 31, 2010. The centre, named after the late Prime Minister Rajiv Gandhi, has been set up by the Department of Civil Aviation, Haryana, in collaboration with the Aero Club of India.

Liquidity Management in Banks: The Cash Flow Approach

Measuring and managing the liquidity needs are vital for effective operation of commercial banks. By assuring a bank's ability to meet its liabilities as they become due, liquidity management can reduce the probability of an adverse situation developing. The importance of liquidity transcends individual institutions, as liquidity shortfall in one institution can have repercussions on the entire system. Bank managements should measure, not only the liquidity positions of banks on an ongoing basis, but also examine how liquidity requirements are likely to evolve under different conditions.