Author: Apeksha Bansal | 15th Jan 2021 | Read Time: 8-10 mins
I am Apeksha Bansal, an artist at living and my work of art is my life.
What can I say about myself that has never been said before? All I can say is that my life has been nothing short of a roller coaster ride of sorts (Disclaimer: Not because of any tragedy but only due to the sheer choices that I have made in life)
After working with topmost MNC’s and public sector banks viz. Citibank, AMEX and IDBI Bank for close to seven years, one fine day I just decided to quit my job, just like that, with no plans but just a blueprint of how I envisaged my life ahead (I know, it sounds a little filmy and dramatic but to me it seemed like a perfect plan to discover my true self so I convinced my mind into taking a few calculated risks to make living this life worthwhile)
So here I am today, a soon-to-be-CA, a budding writer and an avid learner, giving you a glimpse into how the changing face of economy and forever stimulating world of finance has shaped a father- daughter relationship through a 2-part blog series titled: “Intellectual conversations with my father: How experience trumps knowledge……”
In the blog below, I have touched upon how the sub-prime crisis of 2008 evolved into a far bigger learning experience for me than the crisis itself.
I hope you enjoy reading it as much as I enjoyed writing about it.
It was the summer of 2018, when I had just got back home after a really long day, too tired and too unwilling to pick up my book and revise the day’s lessons. Probably frustrated with too much work pressure or may be annoyed over the obsolete education system which stresses more on mugging up rather than true learning (well CA articleship followed by coaching usually leaves a person in such an exhausted state). Yet, reluctantly I picked up my notebook and started flipping through the pages.
‘VARIOUS TYPES OF RISKS’ read the heading, followed by various subheadings and their ensuing explanations: Credit risk, political risk, liquidity risk, reinvestment risk, sovereign risk, systemic risk …. etc…. etc.
SOVEREIGN??? SYSTEMIC??? I ponder for a while and then look up at my father with an annoying inquisitiveness, to which my father gave his usual what-is-wrong-now look???
Well, that was my cue to start talking, and in the process- vent out all the day’s exhaustion by immersing myself into yet another conversation (or may be a debate or an argument, it’s hard to tell the difference) with my father.
“Papa, they teach us irrelevant things all the time. I mean why teach us the kind of risks that are completely hypothetical and are never ever going to occur in real life.”
“Take this ‘SOVEREIGN RISK’ for instance. It says sovereign risk is the risk arising on chances of a government failing to honour its debt obligations or ‘SYSTEMIC RISK’, which refers to an event that can possibly trigger a collapse of the entire industry or economy. But I find these absurd and absolutely hypothetical.” Before my father could ask me why, I went on to explaining the absurdity of my feelings myself.
“Do you think in this era of globalisation with so many bilateral agreements and never-ending regulations and compliances in place, any country will ever reach a situation where they will actually be facing one of these?” not giving my father a chance to respond, I continued.
“I mean I am constantly struggling to mug up the various topics of the humongous CA- FINAL curriculum, for instance:
• The infinite ‘PENALTIES’ that are levied on an entity if it fails to submit the required information or document within the stipulated timeline – in LAW & DT
• The enormous ‘ROLE OF AUDIT AND AUDITOR’S’ – in AUDIT
• Then the ‘SEBI (LODR) regulations’ and ‘ROLE OF CREDIT RATINGAGENCIES’ – in FSCM (elective)
• The ‘TRANSITIONAL PROV(s) and APLLICATION OF IND AS (S)’, which have drastically changed the way accountancy once used to be. From the traditional historical based accounting now the concept of time value of money has suddenly become relevant even while recording the accounting transactions ……. etc. …… etc……”
My father shot me a what-is-your-point look?
I replied- “So my point basically is that with so many checks and counterchecks in place, even if some risk arises wouldn’t it get warded off (eliminated) automatically at a very preliminary level. Why and how can things ever get so escalated so as to lead to a situation of such magnanimity that would lead to a sovereign or systemic risk manifesting itself into reality?”
After having listened to my endless questions (more of arguments actually) my father responded by giving me a-you-know-it-already-look and then went on to citing some examples to me, as if trying to refresh my memory from the past.
“Don’t you remember the subprime crisis of 2008?” he reminded me. I weigh his words in my head when he shoots another question at me.
“Wasn’t that an example of the systemic risk?” he says
Recalling I drift back to the September of 2008 (10 years ago).
I was all of 20 then, just out of college and too excited to be working with Citibank, India. I and my team were all geared up for a company sponsored trip to Bali but soon it was called off citing some logistics issues. Obviously, we were disheartened, but it wasn’t long before we knew why?
What ensued was unimaginable and scary, at least for a just-out-of-college kid like me. Studying economics and finance as a subject while graduating, was one thing and seeing the events unfold themselves into reality was altogether a different ball game. What happened was beyond comprehension and something I had never witnessed before.
People called it “SUB-PRIME LOSSES”. Warren Buffet called it a “BUBBLE”.
Well back then all these terms sounded alien to a simple DU graduate like me. But reading the newspapers and listening to those working around me gave me basic understanding of what this debacle was all about.
I could understand only this much, “The entire economy was hit badly due to the subprime losses in the US mortgage market, resultantly, the stock markets crashed like never before and the entire world economy came tumbling down like a pack of cards. The so called systemically important institutions like Lehman Brothers had already filed for bankruptcy and in a chain reaction many more institutions like Citibank were on the verge of collapsing. To put an end to all this mayhem finally FED Reserve came to rescue by bailing out the too big to fail entities, by infusing money into them.”
My father nudged me, and I came back to the present. I knew my question about the relevance of why we are taught these so-called hypothetical risks had been answered. Today I knew the meanings of the most terminologies that seemed alien to me back then and may be a little more.
My father knew this, yet he went on to saying, “I know you have got the message but just to answer your question as to why they are teaching you irrelevant things? I guess, I can only say that of late you seem to be talking about more intelligent and relevant stuff, so maybe it’s a positive side effect of studying the so-called irrelevant stuff.”
We shared a hearty laugh and called it a day. I was back to my chirpy self, feeling relaxed and content with my life and all things around me (secretly feeling relevant again)
Well that’s my father and his ways of teaching me some of the most invaluable lessons of life.
Though that wasn’t the end of this conversation, because little did I know, that almost a decade later, a similar catastrophe was about to hit the Indian economy, in the not so distant future and this time the stakes were really high as I had my own money invested in one of these so called too big to fail entities.
(To be continued in part 2 of this blog……..)
Thanks for Reading!