Creative Design Concepts

By RUCHIR SHARMA

The financial markets’ response to India’s budget yesterday was telling. Stocks inched higher, bond yields drifted lower and the rupee didn’t budge against the dollar. In other words, the budget just managed to exceed the low expectations of most analysts. But the muted reaction from traders still indicates how difficult a task Indian authorities face in the coming year.

With India’s total fiscal deficit—for the central government and the states—still nearly 10% of GDP, investors were intensely focused on the government’s finances before the budget speech. To their surprise, Finance Minister Pranab Mukherjee seemed to chart a path of fiscal responsibility by increasing total spending a mere 3.4% (over what it ended up spending last year) and projecting a 5% reduction in the government’s borrowing program for the fiscal year that begins April 1. These numbers represent a break from the past, as the current government has otherwise been on a spending spree in its apparent effort to create a welfare state for India.

Yet while investors weren’t exactly disappointed, they were clearly not impressed by the budget arithmetic. To wit, they doubt if the government can keep spending under such a tight leash and cut subsidies in oil, food and fertilizers by the 12% promised. It will have to do that in the face of surging oil prices and the ruling Congress party’s commitment to extending food subsidies to more than 70% of India’s population.

Doubts also prevail over whether the government will be able to meet its revenue targets, with the estimated 17% increase in tax receipts based on an economic growth assumption of 9% for the fiscal year. Recent data showing cement shipping in lower volumes (a sturdy proxy for construction activity) and less robust auto sales suggest that economic momentum is decelerating. Many were excited by India’s resilience to the global financial crisis, but it may not last.

Both fiscal and monetary stimulus played a major role in buoying the economy, and the stimulus effects are now beginning to fade as the government loses its enthusiasm for sustained stimulus spending. As it should. India’s public finances have never inspired great confidence, and now public debt is hovering around 70% of GDP. With high inflation, it’s necessary for the central bank to further tighten monetary policy.

This means that for India to achieve its ambitious growth target in a sustainable fashion, the private sector has to take the baton from the government. Private investment has to surge. Unfortunately, the budget signs on that front are not too encouraging in what they say about the government’s commitment to encouraging that kind of investment.

Large parts of India’s corporate sector have been reluctant to make fresh investment commitments at home given the widespread corruption involved in setting up new projects. Foreign investors increasingly find that the need to have the right government connections trumps any other business criteria.

Concerns about crony capitalism have been shoved under the carpet because New Delhi policy makers think that it’s part and parcel of quick development. And after many years of rapid growth over the past decade, aided in part by the boom across emerging markets, there is a sense of complacency that India is destined to grow at a trend rate of 8-9%, come what may, so combating corruption is needless.

Policy makers have also had little incentive to carry out any meaningful economic reform when growth seemed to effortlessly chug along at more than 8%. But in recent months, cracks have begun to show up in the much touted “India story,” with inflation surfacing as a major issue and the private sector showing more inclination to invest abroad than at home.

Indian policy makers need to realize that the global environment is unlikely to be as favorable in the coming years as it was in 2003-08, buoyed as it was then by easy money and relatively healthy demand in the developed world. Money is again easy in the West, but damaged balance sheets mean lower demand in that debt-stricken part of the world, which then hurts export growth. India isn’t as export-dependent as China, but it is still affected by trade slowdowns. And with commodity prices rising sharply, capital that would have gone to, say, emerging markets gets siphoned into commodities; India is dependent on capital inflows to fund a current account deficit of more than 3% of GDP.

The budget picture is not entirely bleak, especially compared to the budgets before this one. By not carrying on with the streak of populist announcements that characterized earlier budgets, the government did show greater sensitivity this time to the changed economic environment, where investors are more circumspect of India’s growth profile. Perhaps New Delhi isn’t taking high growth to be the birthright it assumed in the past, and isn’t simply preoccupied with dividing the revenue pie for populist measures.

But the less-than-enthusiastic reaction from the international community shows that a lot more economic reform must happen for the verve to come back into India’s markets. These reform measures need to include further liberalization of foreign direct investment in the multi-brand retail sector as well as legislative changes in India’s land acquisition laws and tax codes to entice more investment, and especially longer-term investment.

The budget gave few, if any, concrete indications along such reform lines. It was more in the nature of “do no harm” to the economy. That’s not a bad start. But it’s not good enough to get to the 9% growth and 5% inflation marks to which Indian policy makers aspire.

Mr. Sharma is head of emerging markets at Morgan Stanley Investment Management.

By LESLIE KWOH

Add investment banking to the list of things that could be dangerous to your health.

A University of Southern California researcher found insomnia, alcoholism, heart palpitations, eating disorders and an explosive temper in some of the roughly two dozen entry-level investment bankers she shadowed fresh out of business school.

WSJ’s Leslie Kwoh stops by Mean Street to point out that it might be time to add investment banking to the list of activities that could be hazardous to your health. Image: Scott Youtsey for The Wall Street Journal.

Every individual she observed over a decade developed a stress-related physical or emotional ailment within several years on the job, she says in a study to be published this month.

Investment banking has long been a beacon for ambitious people who crave competition, big money, steak dinners and paid-for town-car service. The 100-hour workweek, these ironmen and ironwomen tell themselves, is just the opening ante in a high-stakes game.

But investment bankers, salespeople and traders are only human. Under the immense stress of their jobs, many suffer personal and emotional problems that escalate into full-blown crises, with some bankers developing conditions that linger long after they have left the industry.

Of course, no one is being drafted into high finance. Aspiring Wall Street stars sign up for the punishing hours with eyes open. What’s more, the study’s small size and the lack of a control group raise questions about how closely the findings apply to the broader population of roughly 267,000 would-be masters of the universe.

But Lindley DeGarmo, 58 years old, a former director at Salomon Brothers who left the finance industry in 1995 to become a pastor, recalls how managers often worked the younger hires to exhaustion. “The culture was very much that these were dogs’ bodies,” he says.

John Chrin, a former managing director at J.P. Morgan Chase & Co. who left the firm in June 2009 to pursue an executive-in-residence position at Lehigh University, recalls seeing junior staff gain 30 or 40 pounds within a couple years on the job. When he worked at Merrill Lynch & Co., now a unit of Bank of America Corp., he recalls that one managing director ordered a chauffeur to turn on the air conditioning even though it was out of order, causing the car to burst into flames. The managing director then threatened to have the driver fired. Bank of America declined to comment.

“Maybe the job amplifies some of the tendencies that were already there,” he says.

The USC study began a decade ago at two Wall Street banks that granted access on the condition they remain anonymous.

Alexandra Michel, an assistant management professor at USC’s Marshall School of Business, shadowed the bankers at the office—sitting next to them, following them to meetings, mirroring their hours and even pulling all-nighters—for more than 100 hours a week during the first year, about 80 hours a week during the second year, and then followed up with in-person interviews.

“By the fourth year of the study, many bankers were a mess. Some were sleep-deprived; others developed addictions.”

The study will be published in the next issue of the Administrative Science Quarterly, due out later this month.

During their first two years, the bankers worked on average 80 to 120 hours a week, but remained eager and energetic, she says. They typically arrived at 6 a.m. and left around midnight.

By the fourth year, however, many bankers were a mess, according to the study. Some were sleep-deprived, blaming their bodies for preventing them from finishing their work. Others developed allergies and substance addictions. Still others were diagnosed with long-term health conditions such as Crohn’s disease, psoriasis, rheumatoid arthritis and thyroid disorders.

One mild-mannered banking associate spoke about exploding in rage at a cab driver after unsuccessfully attempting to open a locked door from the outside: “I became so furious that I kept banging against the windows like crazy, swearing at the poor guy. And then I turned around and saw that a managing director was watching with his mouth open. I was so ashamed.”

Meanwhile, company “perks” offered to employees, such as take-out meals and car service, had gradually blurred the lines between work and life.

One vice president described work as a never-ending nightmare, waking up every morning and wishing the day before “was just a bad dream.” Another vice president said he was so worried others might notice his drinking problem that he would “keep losing half of what they are saying.”

By the sixth year, the participants, now in their mid-30s, had split into two camps: the 60% who remained “at war” with their bodies, and the remaining 40% who decided to prioritize their health, meaning they paid more attention to sleep, exercise and diet and set limits on how much they allowed work to consume them.

Roughly one-fifth of the bankers left the profession, she adds. For fear of being exposed, the banks prohibited her from detailing the exact size of the study group, attrition rate and precise start date.

Bankers are at higher risk for burnout and mental-health problems due to the volatility in their profession, says Alden Cass, a New York-based clinical psychologist who specializes in counseling Wall Street professionals. In a study of 26 stockbrokers he conducted a decade ago, Mr. Cass found nearly one-quarter had clinical levels of depression, more than three times the rate among the general population. That was when the economy was booming and compensation levels were high, he adds.

Recent turmoil on Wall Street has served to heighten stress levels. That makes the roughly 40 patients who stream into Mr. Cass’s midtown office each week appear even more anxious and high-strung than before.

Most seek help after their personal relationships are affected by the job. Some are addicted to prescription drugs like Adderall or Ritalin. To cope, they resort to “depersonalization,” a feeling of numbness toward the rest of the world. A few have been suicidal.

Many have neglected their health for so long that Mr. Cass gets them to go for physical check-ups.

“There’s a reason you don’t find an awful lot of old investment bankers,” says Mr. DeGarmo, the former Salomon Brothers director. “It’s a tough life.”

Write to Leslie Kwoh at leslie.kwoh@dowjones.com

By MARY PILON

This summer, droves of school-age children will attend summer camp, where they will paddle canoes, play tennis and make crafts from paste and yarn. Others, will go to finance camp, where they will take excursions to a local bank or delve into budgeting and investing simulations. Rather than singing around the campfire, they will chant personal-finance mantras like these sung at Camp Millionaire in Santa Barbara, Calif.: “Financial freedom is your choice” and “Assets feed you, liabilities eat you.”

Ed Koren

In the past, business and finance camps attracted high-achieving high-school students. Now, with the country’s uncertain economy, financial education is expanding to an unlikely audience — younger kids, even grade-school students. They are also reaching out to those from diverse economic backgrounds. And the lessons are surprisingly sophisticated, teaching campers how to rebalance portfolios, invest in real estate and use credit cards without getting dinged on fees.

At Camp Millionaire, campers in five days create a minieconomy based around “moola” — mock currency that features a cow’s portrait — which kids use to spend, invest in stocks and compete with each other. They also use the fake currency to pay their “bills,” running around and depositing moola in large envelopes with labels like “phone bill” and “credit card bill.” Parents spend the real moola to send their kids to the weeklong session, which ranges from $279 to $300. Scholarships are available, based on financial need.

“Adults underestimate kids’ abilities. Investing — they’ll get it and be interested in it,” says counselor Pamela Capalad.

Andrew Adams, of Santa Barbara, attended the camp twice, once when he was 10 years old and again two years later. “He was coming home with words like ‘adversely affect your credit score,’ ” says his mother, Denice Adams.

Andrew pointed out to his mother that her credit-card billing cycle had changed, and that she wasn’t keeping up with payments. Her delays were racking up late fees, jacking up her interest rate and hurting her credit score. After considering her non-discretionary household expenses (his words), Andrew also pronounced that the mortgage on their Santa Barbara home was too high for her income. Now 15 years old, Andrew has launched his own small travel business and is a financial-news junkie.

Gauging Risk

At YoungBiz’s Smart Start to Money Camp in Sarasota, Fla., campers ages 13 to 18 are asked to toss a ball into a bucket, earning more points the farther away they stand. It aims to teach kids about risk tolerance and lead them into a discussion about stocks and asset allocation. How far away from the bucket they’re willing to stand might tell them something about their investing style.

Bonding Over Banking

Girls only? Read about finance camps for girls, and join a discussion on WSJ.com’s Front Lines.

Campers pay $100 to $300 for the three-day session, in which they form teams and compete to create the best portfolio. In 2001, during one of the first camps, one camper pleaded with his teammates to buy stock in a then-risky company, eBay. His peers lobbied for safer bets, like utility companies. After a fiery debate, the team passed on eBay but agreed on an alternative stock allocation. They won the competition because counselors were so impressed with their cooperation.

Camp Challenge, a joint effort between the North Carolina Bankers Association and 4-H, mixes financial education in the morning with traditional activities, such as horseback riding or swimming, in the afternoon. For $350, kids 10 to 14 years old learn the basics of everyday finance using the FDIC’s Money Smart curriculum.

Robin Diamond

Federal Reserve Chairman Ben Bernanke with campers from Camp Challenge.

Camp Challenge is also part of the America’s Promise Alliance, a business and nonprofit cooperative that works to reach students at risk of drug abuse or dropping out, for example. The weeklong overnight camp in Westfield, N.C., has drawn the attention of Federal Reserve Chairman Ben Bernanke and former Secretary of State Colin Powell, who have been known to mingle with campers when they’re in the area.

In Denver, the Young Americans Center for Financial Education takes a macroeconomic approach to financial education.

Creating a Ghost Town

In weeklong sessions that cost $185, fourth- and fifth-graders take part in large-scale simulations of the economy of a small town. Campers apply for jobs. They create business plans for 17 different businesses, patronize others along Main Street and even buy health insurance. (It costs two AmeriDollars.) One year, the counselors had a camp of savers, and AmeriTowne turned into a ghost town when the kids refused to spend any money. The incident sparked a fruitful discussion about free enterprise. Counselors asked campers to imagine what would happen to AmeriTowne’s Main Street if no one spent any money in the long term. The grim consequences of an inactive economy soon became apparent, especially when they realized that they, too, were business owners.

Global Economics

The fifth- and sixth-graders take the minitown approach and bump it up a notch to the International Towne. It is like a model United Nations with a robust focus on trade, currencies and deficits. They’re thrown questions about environmental protection and sustainability. When counselors asked campers to write down how they would cope with limited water resources on the planet, they ran out of paper.

“They really run the world at the end of the week,” former banker C.J. Juleff, vice president of programming for the camp, said.

Write to Mary Pilon at mary.pilon@wsj.com

Printed in The Wall Street Journal, page D1

By SARA LIN

LANCASTER, Pa.

$3 million

A 9,320-square-foot Romanesque house with eight bedrooms, three baths and two powder rooms on just over two acres

DETAILS: Built in 1896 by P. T. Watt, a founder of one of Lancaster’s first big department stores, the house has had only two owners. The property includes a carriage house with a 2,000-square-foot apartment.

TURRET
TRIVIA: The home has two three-story turrets with custom curved windows. On the first two levels, a music room and a bedroom extend into the turrets. The third floor of one turret was once used as a children’s playroom, complete with ballet bars.

VIEW FROM THE TOP: The city of Lancaster

FRIDAY’S FORECAST: Cloudy, high 42 degrees

SOURCE:
Anne Pyle, Long and Foster, 717-940-8369, anne.pyle@longandfoster.com

BRONXVILLE, N.Y.

$2.5 million

A 4,557-square-foot Norman Tudor house with six bedrooms and five bathrooms, on 0.77 acre

DETAILS: Built in 1929, the brick and stucco house was recently renovated and includes a chef’s kitchen, two working fireplaces and a pool. The master suite opens to a balcony.

TURRET TRIVIA: The first floor includes the main entry. The top of the three-story turret contains a carpeted children’s play area accessed by a small door.

VIEW FROM THE TOP: The front yard and neighboring houses

FRIDAY’S FORECAST: Rain and snow, high 40 degrees

SOURCE:
Jane Vergari, Houlihan Lawrence, 914-337-5400, jvergari@houlihanlawrence.com

COHASSET, Mass.

$2.69 million

A 5,445-square-foot Victorian house with seven bedrooms, four baths and two powder rooms

DETAILS: The stone-and-shingle house was built in 1880 and expanded and renovated three years ago. Set on about an acre, the home sits on a promontory off a private road. It has an enclosed porch and five fireplaces.

TURRET TRIVIA: Rising above the third floor is the turret, which also dates to 1880 and contains a 144-square-foot room, windowed on all sides and accessed by a spiral staircase.

VIEW FROM THE TOP: Cohasset Harbor, the Atlantic Ocean and the Minot Ledge lighthouse.

FRIDAY’S FORECAST: Morning snow showers, high 40 degrees

SOURCE:
Bill Good, Dean & Hamilton Realtors, 617-921-9619; REALTOR.com