Best of the Web - 2008: Geopolitics, global economics, US, Europe, China, India

Not dead yet: the newspaper in the days of digital anarchy: I didn't know about Hugo Young or Bill Keller, however I have deep respect for both The Guardian and the NYT (now-a-days I visit Guardian less, less even on Google News). Where is Indian journalism on value like this? 'Newspapers, including at least a few very good newspapers, will survive, simply put, because of that basic law of market economics: supply and demand. The supply of what we produce is sadly diminishing. And the demand has never been greater.' I absolutely agree. 'My little realm, the newsroom, consists of about 1200 people, journalists and support staff off all kinds. Every one of them has opinions about a lot of things. But just as doctors and lawyers, teachers and military officers, judges and police are sometimes expected to set aside their personal politics in the performance of their duties, so are our employees.' I am afraid I am not following if often now-a-days...dangerous!...'As my country grows more polarised and cynical, there is pressure on journalists to abandon the effort to be impartial, to openly take a side, and to write accordingly. Some of our critics insist that pure objectivity is unattainable, so why try? To me that is like saying that because much of our children's future is ordained by nature, by genetics, we should abandon the business of being parents. ' And here is something I can use for my research: ' I can't draw you a neat map from our current predicament to this new destination. Indeed, I would regard with deep suspicion anyone who claims to have such a map. Isaiah Berlin famously divided the intellectual world into foxes and hedgehogs -- the hedgehog knows one big thing, the more promiscuous fox leaps from idea to idea. The internet is a fox medium, that's fox with a lower case 'f'. It is perilous to get locked too firmly into one big idea - that people will pay for content on the web, or that they won't; that the key to success is brand loyalty, or, on the contrary, that it's all about scale. Anyone who gets too declarative about this medium is likely to be hedgehog road kill. But while I can't tell you quite when, or quite how, we reach the Promised Land, I will offer up a few reasons for my optimism that we will get there...The printed newspaper may eventually become a cult product, like vinyl LP records, but we are some years from that day.
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'Because the web is organised more by search than by the configuration of pages, we have turned all of that biographical and investigative material into a robust reference work. Stories that used to live for one cycle and then disappear into microfilm now are repackaged into candidate pages. If you are interested in how Rudy Giuliani really performed in the aftermath of the September 11 attacks, or in Hillary Clinton's tortured relationship to the war in Iraq, or in who is supplying Barack Obama with foreign policy advice, you can get it in a click.'. Simply great...I read a good article after a long long time. Forgot the scoring mechanism I had when I started best of the web blog...*****
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As America crash lands, the world looks east: 'A few decades ago, looking to China as the driver of global growth would have been unthinkable. Henry Kissinger, Nixon’s Secretary of State, who was instrumental in opening up the channels of communication with China in the early 1970s, told the World Economic Forum in Davos, Switzerland, last week that he had no idea at the time that Beijing could emerge as an economic competitor...Now it is the turn of the banks to feel the growing muscle of the Chinese. There could have been no more potent symbol of the shift of global power than the spectacle of America’s mightiest banks begging for cash from government-backed sovereign wealth funds from China and the Middle East to cover the vast losses they have clocked up through reckless lending. But America has relied on Asian cash for years, locked in a bizarre financial embrace with the country that has become the world’s factory, and in many ways its banker. Like many nations with a strong export sector, China has earned more than it could spend and has accumulated vast savings in the past decade. '
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The world crisis of capitalism and the prospects for socialism: 'Last May, the International Monetary Fund’s “World Economic Outlook” (WEO) noted that the average world growth rate for the period 2003-2006 was 4.9 percent and predicted it would continue for at least the next two years. The only stronger spurt was the period 1970-1973, when world growth averaged 5.4 percent. If the current rate were sustained, the IMF report explained, it would represent the most powerful six-year expansion of the world economy since the 1970s.''
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Why Is Bernanke Trying to Fight the Bear?: I absolutely agree with the title, though I am not sure on the impact (it may work and save US economy from recession or it may even aggravate the problem. However where are the free markets? You create money supply by lowering rates, create asset bubble and when they correct, again you stand by them. So bulls and Central Bankers effectively work against the common man and bears (don't take common men and bears to be synonymous, however bear market helps common man without ANY credit access to live better, own cheaper assets with own money than on borrowed money). The world has more commoners than bulls or bears
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Bernanke's Fed: an "academic in a china shop?": ''A commenter passed this along -- economic analysis from the blog of former Labor Secretary Robert Reich: "Most consumers are at the end of their ropes and can’t buy more. Real incomes are no higher than they were in 2000, while food and energy and health care costs are all rising faster than inflation. And home values are dropping, which means an end to home equity loans and refinancing. ... Add all this together and there’s just not enough consumer demand out there to keep the American economy going."'I believe it's equally if not more true for Japan also.
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Asia gripped by volatility after Fed rate cut: I also read the MSn article on Arson and Economic slowdowns...nothing conclusive as such. However the comments are interesting.
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China's Reserves Fit Harvard Linguist's Law: Interesting...in 1948 India had 20% of global forex reserves (in Gold or equivalent?)
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The Prime Minister delivers: Indeed a bold move 'Today's speech announcing that every teenager will have to stay in school or some other form of education or training until they are 18 will prove to be a quantum leap in terms of upskilling the workforce.'. It's more needed in poor literate societies like South Asia and Sub-Saharan Africa.
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Fees on 401(k)s Rock Boomers Facing Flawed Disclosure: Someone said, Government cheats, and they lie too.
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Believing (and Believing and Believing) in Bullion : I don't see mainstream focusing much on unsustainability of paper currency, nor economists talking about it (or I have become one of those so called gold-bugs, phisophically). Could it be really so that not Pravda, nor communism, nor China's Socialism; but what would sort of bring western civilization back by many years would be gold standards? Comments of Sinclair really proved to be true...
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Kidney racket scandal in Gurgaon shocks India: Not unexpected in a country that saw Nithari killings...matter of fact is the 'GDP-Cult' country, governance has failed.
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Legg Mason Names Fetting CEO, President: I didn't know anything about this trillion-dollar Legg Mason MF. 'The move caps a long, tough search for a successor to Raymond "Chip" Mason, the 71-year-old co-founder of Legg Mason -- and the only CEO in the firm's 27-year history. The $1 trillion Baltimore money-management firm has searched for a successor for years, and now desperately needs one that can turn the firm around.'
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Suharto's Corrupt Legacy Lives On in Indonesia: I must say I disliked this deploring 'cult-of-GDP' in India also...And India, like Indonesia (and much of Asia) Indonesia, is increasingly practicing at any cost how to grow faster, not how to grow better. 'It's the great Suharto paradox. During his tenure, per- capita income in the fourth-most-populous nation quadrupled and the ratio of those living in absolute poverty declined from more than three people in five to about one in 10 by 1998. Yet Indonesia's development model proved to be a house of cards that crumbled in a matter of months. Perhaps the bigger question is how a nation as resource-rich as Indonesia -- oil, gas, timber -- could do so little. This is among Suharto's biggest failings. Kleptocracy (I used it for Governance in African Nations, more in the past when leaders at times colluded with Western Governments, took loans in national accounts only to enrich their personal pockets) A decade after Suharto's ouster, some argue corruption hasn't been reduced, so much as decentralized. In Suharto's day, you knew who was in charge, and who should be paid. Now, the nation's system of graft is a more multilayered phenomenon.'

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China's Yuan May Gain More Than 10%, Sakakibara Says : Before the full fledged blow-out of this economic problem and turmoil in financial markets, I too was little bearing on Yen (in an article I talked about the range of 110-125 against dollar, ruling price then was 114 or so). So when I see Yen at times nearing 105, I understand how wrong I was. However over the longer term, I still remain bearinh on yen, and would put a target of 110 by 2009 Jan. Prof. Sakakibara however says it to be close to 95 even before that...a payment crisis on yen-carry trade can't be ruled out of Prof. Sakakibara is right, and no collusion made in the banking system.
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Bankers at Davos See Recession, Companies Yet to Feel Slump" : Same old stuff...'Morgan Stanley's Asia Chairman Stephen Roach called a global recession a ``close call.'' He said there's no substitute for the $9.5 trillion spent last year by American consumers. Households in China spent $1 trillion and those in India $650 billion, he calculates.'
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Statism Beats Capitalism; Gazprom Squeezes Exxon, BP: A situation like this in India can't be ruled out if the high decibel noise on gas and oil find in KG Basin and other places by private operators come true, more so when the OMCs are bleeding, and taxpayers losing out. 'Petrobras shares gained 46 percent in the past six months, while Gazprom, the world's largest gas producer, advanced 12 percent. Exxon Mobil lost 4.9 percent, and Shell dropped 8.6 percent. London-based BP fell 6.5 percent.'. '``We're making a shift away from the vertically integrated companies,'' said Daniel Genter, who helps manage $2.8 billion at RNC Genter Capital Management, a Los Angeles firm that sold more than 60,000 Chevron shares last year. ``As we go forward, the benefits of higher oil prices will go more toward the national oil companies and away from the major oil companies.''' We so far see an opposite of that at the cost of Indian citizens...'OPEC, along with Russia, Kazakhstan, Azerbaijan, Turkmenistan and Brazil, sit on 1.06 trillion barrels of oil, or 88 percent of global reserves, estimates from London-based BP show.' ' In the first nine months of 2007, production at Exxon and Chevron declined by about 2 percent from a year earlier, while output at Shell, based in The Hague, fell 4 percent. Most state- run producers had increases during the period, with Russia's OAO Rosneft reporting a 29 percent gain.'


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Rio predicts political strife as China’s appetite grows: I did harp on this point often, more so in comparison with the US post WWII and how the scenario has changed. 'Rio Tinto, the world’s second-largest miner, said last week that China already accounted for 47 per cent of all iron ore consumption, 32 per cent of aluminium and 25 per cent of copper. Tom Albanese, Rio’s chief executive, has predicted that within the next couple of years this will move to 58 per cent of all iron ore, 45 per cent of aluminium and a third of all copper. He said: “Even with the assumption that the current growth intensity will slow, we are looking at China consuming a higher percentage of global supply.”' What they haven't got there is coal, energy (oil+electricity), cars, computers, mobiles...and assuming these to be still less than iron ore, Al or Cu in %, in all China is number 1 or 2 anyway. And that's my puzzle in understanding GDP orders. 'Vivek Tulpule, Rio’s chief economist, said that with China likely to consume more than half of the world’s key resources within a decade, political concerns would be raised as the country seeks to control access to the resources its economy needs. In 1990, China accounted for only about 5 per cent of all copper demand and 3 per cent of aluminium and iron ore. The country is already the largest buyer of nickel, copper, aluminium, steel, coal and iron ore. Only in oil does it fall behind, coming second to the United States.' The shift in 17 years, put another 10-20 years, and we get the picture more so with slowing developed world economy. 'Mr Tulpule said: “The US’s consumption of the key metals has been going backwards while China has continued to grow. Its share of global demand will continue to rise until about 2020 when other economies like India start to challenge.”' Possible provided we in India gets our acts right.





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Wall St. Journal to Continue Its Charges for Web Content : I won't like it anyway, and believe there's a human tendency to feel good in being (so called) elite. So there's merit in this argument: 'But Dow Jones executives argue that the firewall not only generates revenue, it also creates an elite audience of high-income business-oriented readers whom advertisers pay a premium to reach. The Journal has a million paying online subscribers, some of whom also subscribe to the paper in print.'. However the online force may be much more powerful than that.
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Key quotes on the shift in global power: Coming from Davos, it itself exemplifies that key shift. Many said insightful things, but when it comes to practice, I don't see much.
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Atonement Comes to Wall Street as Exiled Risk Guardians Return : Yes, that's the way firms and CBs work. We rarely learn from history. Interesting to see the conflict between risk management and trading management (just like operations and sales at times). 'Goldman Sachs escaped subprime-related writedowns partly because it insists that risk managers and traders work together. Goldman CEO Lloyd Blankfein said during a November investor conference that the firm rotates people between trading and risk management so they better understand both sides of the business.' ...Interesting other than the opposite positions that Goldman supposedly took.
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More Risk for Fannie, Freddie?
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Bush and House in Accord for $150 Billion Stimulus : What again strikes us in India is how the policy-makers in the US responds to emergency and how Indian policy-makers escalate the emergency. Even right now in financial markets as brokerages pay rampant with margin money and shares of retail investors.
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Earnings illusion threatens Chinese market: 'The snake is eating itself' is a good phrase, no doubt. However 41% earning growth is also no small deal. Problem would be when the 29% earning growth from investment gains reverses totally and evan erases the 41% operational gains. 'Investment income for all non-financial companies listed in China has more than tripled from a year ago. HSBC found that after stripping investment income out, about 130 companies would have sunk into the red in the third quarter.' That's a disease...'Consumer and healthcare companies are likely to feel the most pain on the downside. They almost doubled net earnings in the third quarter, but their core earnings actually fell 20 percent and 7 percent, respectively. Now both sectors trade at above 100 times forward core earnings, while energy firms, telecommunications companies and banks are trading below 40 times.' However ultimately accounting is a jargon, if not followed in principle. crisis like Sub-Prime or Enron would routinely strike us. 'To make matters worse, a new accounting rule is also inflating earnings. China now allows companies to mark certain assets on their books at their present market value, in line with the international standard. The rule is supposed to be applied prudently, but many Chinese companies treat 'mark to market' as a tantalizingly easy way to boost profit. Those with a memory of not-too-distant times will recall that widespread cross-shareholdings were a big factor when the bubble burst in Japan. At the market peak in 1989, Japanese companies traded at price-to-earnings levels of about 40 to 50, similar to where China stocks are now. After the crash, even after the companies had lost about a third of their stock value, the PE ratios soared to about 70 -- a result of inflated "earnings" evaporating.' Yes, probably I need to be cautious on China and not get swayed by its Forex reserves, growth rates or trade surpluses alone.
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Wal-Mart Chief Offers a Social Manifesto : Good to see it coming from the world's largest (revenue wise) firm. 'In a lofty address that at times resembled a campaign speech, the chief executive of Wal-Mart Stores, H. Lee Scott Jr., said that “we live in a time when people are losing confidence in the ability of government to solve problems.” But Wal-Mart, he said, “does not wait for someone else to solve problems.”' no doubt looks very ambitious, but tha moment has come. So when one sees the following article on future of capitalism, in this we see another going forward where even government has failed. And that's what I like of capitalism, but surprisingly the focus of policy-makers is more for the speculators and less for productive firms. And the next para looks like a story from a science fiction...'He then laid out sweeping plans for the company on several health and environmental issues, and he hinted that even more ambitious goals might be on the horizon. Mr. Scott said, for instance, that Wal-Mart is talking to leaders of the automobile industry about selling electric or hybrid cars — and might even install windmills in its parking lots so customers could recharge their cars with renewable electricity...“We believe there should be one framework of social and environmental standards for all major global retailers,” he said....If an industrywide effort falters, Mr. Scott said, “Wal-Mart will in fact lead; we will move forward by ourselves.” ' The leader has indeed spoken, now remains to be seen what it delivers...true the promises are indeed tall.
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Market Bloodbath Highlights Cracks in Capitalism: I often repeated Schumpeter on his views why he felt Capitalism won't survive, and it's coming back. Like when a doctor says the patient is going to die, it does not mean s/he wants it.
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U.S. Policies Evoke Scorn at Davos : Well, now comes theories on reverse coupling, however who has been permamnently decoupled from the world's economic decision making processes are the 'have not's. numbering more than half the people of the world. And as HIGHLIGHTS 2-China replaces US as Japan's biggest export market, and so for India (here as trade partner, true); increasingly US loses its economic clout. The dependence of rest of the world economy (Europe, Japan) would be on China and not on US; so they would slowly be forced to decouple the 'dollar hegemopny'. At Davos, the Growling of Bears defined 'Roach doubts the world economy will decline to just 2.5% gross domestic product growth—the definition of a world recession—but he says it may come a lot closer to that level than current thinking holds. Chinese growth could even fall as low as 6%, he warns, well below current forecasts of more than 10%. The bears were on display in the Swiss Alps and Goldilocks was nowhere to be found'. My views sound bullish compared to that (at least on China), and I can well be proven wrong.
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Viewing another article (Bernanke Battles Wrong Ghost in Deflation Specter), I must say that I have a lot of respect for Bernanke as an academician who understands economics of past (almost a century early) very well. However what he does not probably understand is the complexity of derivative and derivatives of derivatives and financial engineering. back in the times of Great Depression, markets were not complex as it is today. Warren Buffet stated that deribatives are one of the banes of present world. And Bernanke, without having much idea (I understand the importance of his Chair, and therefore a statement like that may sound immatured; still it is so) on how present day financial markets work. Even the article believed so ('The focus, however, is a shame, for the 1930s comparison isn't the only relevant one. Some of my blogging colleagues have been debating whether 2008 is more like 1971 than 1929. The argument for the '71 analogy is strong. In the summer of 1971, unemployment was in the high 5s and low 6s, something like today.')


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Motorola Says Profit Slumps 84%; Forecasts Loss : Winning big...losing big. I also came to know from another article that Texas Instrument happens to be the largest mobile phone chip supplier in the world. 'Now Sony Ericsson Mobile Communications Ltd., the fourth- largest handset maker, is threatening Motorola's third-place spot. The company posted an 18 percent increase in unit shipments last quarter and may overtake Motorola this year, according to a report from Cowen & Co. analyst Matthew Hoffman in Boston. Motorola's share of global phone sales fell to 13.1 percent in the third quarter from 20.7 percent a year earlier, according to Stamford, Connecticut-based researcher Gartner Inc. The company probably lost more share last quarter, McCourt said. Nokia increased its market share to 38.1 percent in the third quarter, while Samsung boosted its share to 14.5 percent, according to Gartner. Sony Ericsson lifted its share to 8.8 percent.'

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Soros Sees End of Dollar as World's Reserve Currency : Would it really happen under market forces, or others (Europe, Japan, Australia, OPEC & Canada with obvious China) would collectively delay the process(or there can be conflicts within these few). '``The current crisis is not only the bust that follows the housing boom, it's basically the end of a 60-year period of continuing credit expansion based on the dollar as the reserve currency,'' Soros said in a debate today at the World Economic Forum in Davos, Switzerland. ``Now the rest of the world is increasingly unwilling to accumulate dollars.'' The dollar's share of global foreign-exchange reserves fell to a record low of 63.8 percent in the third quarter as demand for U.S. assets waned after the collapse of the U.S. housing market, according to International Monetary Fund data. It accounted for 65 percent three months earlier. The euro's share rose to 26.4 percent from 25.5 percent. IMF quarterly figures go back to 1999, the year the euro was introduced.'

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From Panic to Penicilin Bernanke Blogged: I have been developing for a liking for FT (compared to Bloomberg). The market cheers on naked Bernanke stated 'Bernanke says that the main reason to reduce US interest rates was “a weakening of the economic outlook and increasing downside risks to growth”. Rubbish. The problem is not the US recession or US growth – that’s merely a symptom. The problem is the staggering potential losses that are faced by the $2,300 billion in global lenders who relied on AAA-ratings that turned out to be false (the monoline insurance disaster).'.
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Hands Can Save EMI by Making Music Free on Web:'Making music freely available needn't be commercial suicide. Almost four out of 10 listeners chose to pay for a download of Radiohead's new album, chipping in $6 each on average. You can view that as being a glass that's half-empty or half-full, according to preference. When the record was released in a physical version this month, it went to No. 1 in the U.S. album charts, selling 122,000 copies in a week. Realistic Prices:
Just because it's free doesn't mean lots of people won't pay for the compact disc. So long as you price them realistically -- $5 to $10 -- buying a CD is a lot less hassle than downloading and burning an album. You get better sound quality and a picture on the cover as well. Next, there are opportunities for sponsorship and advertising. Free tracks could come with a sponsored message attached. Songs can be licensed to advertisers and film producers. Then there is touring revenue, which is soaring even as CD sales decline. Record labels can demand a share of that money. When you consider the multiple revenue streams, ``free'' music makes more sense than trying to bully people into paying for songs by threatening legal action. Slashing costs at EMI might work for Hands if it is part of a strategy to create a business that can survive the switch to a free system. But if it is just about saving money while the business declines, and if he can't take the artists with him, it simply won't work. Just attacking the music industry isn't enough. Hands needs to lay out a genuinely innovative strategy now. Given the rate at which the stars are heading for the exit, he doesn't have much time left. Incidentally, now the gaming industry has more sales than paid music sales (last year stats...)
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Greenspan Put Is Dead. Long Live Greenspan Put: 'Perhaps the Fed wanted to avoid the invective of consumer advocacy groups. More U.S. households own homes (68.2 percent in the third quarter of 2007) than equities (50 percent of households, according to the Investment Company Institute), either outright, through mutual funds or in 401(k) accounts...Households had almost twice as much of their net worth in real estate as stocks as of the third quarter of 2007, according to the Fed's Flow of Funds report.' .
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Chinese, Gulf Funds Deserve U.S. Welcome Mat: 'It's their growth curve that has won global attention, and they are poised to quadruple in value from $3 trillion now to $12 trillion by 2015, equal to the capitalization of the Standard & Poor's 500 Index. Morgan Stanley predicts the funds will have assets of $28 trillion by 2022, more than double the size of the U.S. economy today. That ensures their investment decisions will move markets and shape the financial system.

An important article by Treasury's Kimmitt in the newest issue of Foreign Affairs lays out a policy approach that boils down to this: voluntary multilateral agreements that ensure the West resists protectionism while the SWFs get more transparent and don't let politics drive their investments.

Such a reasonable approach won't be easy in a political season.' The last line has deeper implications beyond the US Presidential elections, which the author may have intended.

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Japan's Nikkei 225 Falls in Biggest Two-Day Drop in 17 Years : (Bloomberg changed the title and some content in between) I again have my empathy...bears are making money, bulls made enough but pigs always lose (I was one in 2006). In India, market froze two subsequent days...now at least I didn't lose sleep. In many of articles and blogs, I did caution Indian regilators on maturity of Indian markets to have sophisticated derivatives (and now short stock by sorrowing). Others felt otherwise...true, it's a global fall. However the 1.3 lakh crore derivateive markets would lose close to $5-6 billion in last two days, and that would further put selling pressure in a cascading effect. Government bail-out would give FIIs more opportunity to short as this time, the correction/bear phase may last longer. There's enough prove that Indian markets were manipulated by some influential people (which may even include some of the well-known billionnaires having direct interest lately); however they are more than Harshad Mehta or Ketan parekh. So Indian markets would have fanfare and routine murder and riot. It happened in 2006, 2007 and twice in 2008. In also happened in 2004 (or 5) when UPA came in power. And that's stable market for Dr. Singh - Indian PM. Why this original Bloomberg article is put here is because of Japanese m-cap. We have talked about $50 trillion global m-cap and US having nearly $20-trillion. The earlier version of the Bloomberg article suggested that the loss of 8.8% of m-cap in Japan over last two days wiped out around $324 m-cap, which would give a rough $4 trillion m-cap for Japanse market.
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Time Warner's Pricing Paradox: Well, many did talk about such a model...more in Management Class for IT blog.
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France gets military base in Gulf: Interesting, I am not a historian or geopolitical expertt. However when one takes the view that whether US-led western world' control on the oil-rich Middle-East has actually gone up or down over last decade; I don't have any firm answer.
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Recession risk as British bills come due: Can be a natural outcome as the heaven of the financial world and ingenuity, innovations of different instruments where trading alsone with credit drives the economy. 'And, when compared to the U.S., Britain can expect less support from either falling interest rates or increased government spending.' Because pound is not dollar, and sovereign funds may not go out again and again after those who may not be superpowers. 'But that very stability has encouraged a borrowing binge that has juiced economic performance, taking the ratio of debt to disposable income to 173 percent and nearly tripling house prices.' Debt to disposable income...can be a good ratio. '"It's not been an investment-led productivity project, it's been a consumption boom. The idea that ploughing ever more money into the housing stock is raising the productive capacity of the system is just a joke."' I wanted to say something (well not like a seasoned economist can do) in few of my articles. 'Unlike the Federal Reserve, which has a dual mandate of maintaining price stability and maximum employment, the Bank of England has a specific inflation target. But given that British consumer price inflation has been running persistently above that 2.0 percent target, an aggressive run of rate cuts to stave off recession cannot be taken for granted.' I am not sure who assigns this role-responsibility, however I never heard anything like this before. 'UK commercial property values fell 12 percent in the second half, and there is a bumper crop of new office buildings just coming on line. This makes the outlook for credit this year even dimmer.' In US, such a fall could have led to much more worse situation...that's the differentce of the US and the UK.






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China defends price controls as skepticism mounts: China indeed is a mystery, and they have strange ways to achieve something. What's interesting (and therefore credit should be given to Chinese policy-makers) is it mostly works, as per their plan. In India (and also in developed world now-a-days), it rather results in something opposite. '"It's very difficult to have partial capitalism and partial socialism," he said. "Market mechanisms will eventually kick in and a shortage economy will force the government to make adjustments later." Tao gave the example of restaurants in Lanzhou, a city in western China, which were forced to cap the price of noodles last year and responded by cutting back on portion size.'
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China stocks plunge over 3 pct after reserve hike: Chinese authorities and Rogers (? - the commodity Guru) must be happy that Chinese markets are finally showing some sanity. However what baffles me is this: 'Institutions dumped stocks with dual listings in China and Hong Kong after the average premium of China's A shares over Hong Kong-listed H shares .HSCAHPI soared to a record 108 percent on Wednesday as the Hong Kong market plummeted. Many institutions see levels near 100 percent as a signal that Chinese stocks are seriously overvalued once again.' This clearly shows market imperfections.


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Northern Rock Tumbles as Brown Weighs Nationalization : As a shareholder I know how it pinches, however there is no denying that nationalization still serves the best interest of all stakeholders in given situation for Northern Rock. $25lbs of British Money is already in Northern Rock, it would have defaulted long back. It also shows the fundamental draw-backs of fractional reserve banking system, where shareholders can take any risk knowing well central bankers would be forced to bail them out. That does not happen for a GM, or Enron; and therefore it's high time that central bankers instill high degree of control and (ownership as otherwise control may not work) effectiveness in this private banks. No doubt that we could have seen a few Northern Rocks in the US still had these US banks (including Citi) been in developing/emerging nations (no big sovereign fund or billionaire money along with Fed. would have tried to save it). 'Brown has support from all three of Britain's main political parties for placing the interests of taxpayers and depositors before those of shareholders.'
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Apple Unveils Movie Rentals, Thin Laptop at Annual Show: The expectations were built up, and now comes the intent.
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India's $2,500 Car Stirs Detroit Show, Isn't There : Quite expectedly. Also looking at the lowest cost cars in US, Japan or Europe ('The cheapest car in the U.S. is the $9,995 Chevrolet Aveo from GM. In Japan that distinction goes to the Daihatsu Esse at about $6,000. In Europe the Dacia Logan from Renault SA starts at just under 8,000 euros ($11,900)'), one may wonder why the $6K car of Japan sn't there in Europe or US (Emission norms? For Europe, it may be true). One can expect some high clockspeed in this ageold industry with new low prices, new technology (hybrid or fully battery driven) and also driven by external factors like oil prices, environmental concerns (hoping it really improves) and also legal concerns. 'Even Chinese automakers, which have plans for low-priced models in Europe and North America, aren't sure a $2,500 car is possible or a good idea. Suzuki Motor Corp.'s Alto, at 29,800 yuan ($4,112), is among that nation's cheapest. ``That car doesn't have air conditioning, power steering, air bags and other features. Do you dare to buy that kind of car?'' said Wang Chuanfu, founder and chairman of BYD Co., which is selling its first model at the price of 59,800 yuan. ``Some Indian consumers may buy it, but I don't think Chinese consumers will.'' I thought Alto is Indian model of Maruti Suzuki...
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Study: $90 wine tastes better than the same wine at $10: And probably it holds true in other aspects (as the article itself noted...cigarette, food, or even when it comes to our perceptions from the opposite sex, or even same sex: meaning how we perceive the attributes behind the person rather than what the person directly brings to the table for that brief time of interactions).
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Posted following message at http://chevy.nytimes.com/ (covered the issue in another of my blog y'day):
Hi,

I am Ranjit Goswami from India. I incidentally read about Volt and Toyota's Prius (on which we did some case studies earlier) yesterday. Yes, it's better late than never to have this dialog.

I don't own a car. I am not sure whether I will own Nano of the Tatas, though emission would be much less with Nano. The reason for not owning a car is mostly economical, however it gives me a sense of responsibility as well. And I would love to retain it, even if economic prosperity comes.

I read at one place that Volt would have almost 40-miles run after one 6-hour charge. A rough calculation as given for Prius also showed that using hybrid technology would reduce operational costs (I used power tariff rates in India). China's BYD group has also promised a hybrid car by 2010.

Is it the urge and concern for the environmet that is fueling all these initiatives, or suddenly market forces also mean there is money that's here. One school of thought says that the oil-lobby is too strong (evident from the size of oil-sector in any economy), however it will be really good to see of auto-sector can break away from this oil-lobby. There's been no bargaining power of this sector - between OPEC in the supply side and consumers in the demand side.

If your efforts are successful, and you introduce these models in developing nations like India also (at a price that we can afford), many like me can own a car and still feel good in our heart to be responsible global citizens. While stating that, I am not denying that power, more so when produced from coal, also pollutes. However there are efforts there again too to use cleaner fuels.

Best wishes,

Ranjit Goswami
Associate Professor, Indian Institute of Foreign Trade
India

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Gold, Platinum Rise to Record on Declining Dollar; Silver Gains : Nothing new in this report barring it's long expected. Goldbugs (and to some extent, i belong to this school) also felt that Central Bankers have again and again attempted and brough down any gold-rally by unfair means (dumping gold in large volume suddenly). And it's a bit of a surprise that it hasn't worked so far in this bull run. May be the reason is China as couple of days it was reported that Chinese buyers were buying at quite a high premium over the futures rate. Question is: how soon would it hit the 1K mark, in the 1st half itself or there may be the fact that CBs would again succeed. 'Gold has had a correlation of 0.71 against the euro-dollar exchange rate in the past three months, compared with 0.67 in the previous three months. A reading of 1 would mean the two moved in lockstep. Adjusted for inflation, gold is still below its all-time high. The metal is trading at $430.26 an ounce, adjusted for the U.S. urban consumers price index.' I never believed in technicals, however need to know how to exactly interpret the given data with this article: 'Following are technical gauges for gold:

20-day moving average 844
100-day moving average 778
200-day moving average 722

14-day relative strength index 77.49

Fibonacci Start End 50% 38.2%
745 904 825 806'
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Boomers eagerness to retire could cost them: There's been enough discussion on this and also impct of it on US economy and indebtedness. I also discussed this in my book, Wondering Man, Money & Go(l)d. The D-day finally comes (true, it's a rolling process). The figure of 79 millions are almost 27% of the US population (add to it existing retirees). Well, some detailed analysis is given in this article, however it didn't talk about sustainability of Social Security for over next 20-30 years (when the 62-year of today becomes 82-92 or so).
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World Bank Disgrace, and here is another report (the one I prefer most in India, even now)World Bank unearths fraud in health projects : Could have sounded frustrating to me couple of years back, but no longer. I probably did talk about that experience 1st hand with the callous WB people sometime back in my blogs, and then there was the ouster of its last chief. And I believe there's been an overdoing of this statement (I agree it is true in certain areas, but it can't be given as an excuse every time): 'The foreign aid lobby sometimes says that corruption is the inevitable price of "doing good" in the developing world.' At the same time, one must remember that WSJ was one of the strong defenders of Wolfowitz, and though India remained neutral in the front end; many Indian media (including myself) was against Wolfowitz. Now both must be looked independently, and WSJ, I hope isn't taking a stand to show the clear conscience of Wolfowitz here. Sack all those involved like Wolfowitz here again.
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A rose or a ladder?
: This is the real challenge India faces today. The article also prompted me to think whether I should hold Hindalco stocks. Ethically no, however as a real smallllll investor, how do I matter? And then the stody continues for Reliance, STerlite (IT firms little better) or even for banks (the way they recover loans, ICICI). One of my acquaintances once told me he never bought ITC because they are in the business of tobacco. Yes, I myself criticize me on my record of ethics; however at the same time I wish I had guts to look beyond my personal gains. Hindalco incidentally was awarded one of the CSR awards in Asia couple of years back (Debu Bhattartarya received it in one of the ASEAN nations, if I am not mistaken). Can we have a right balance - the stakeholders are essentially three. The firm, the environment and the local people. I tried various times to influence policy making by creating a win-win-win scenario; however they all failed to get any response. I am also aware that another person can take an opposite view from what shubhranshu choudhary has taken in this article. Both may be partly true; however when one keeps in mind the population explosion in India; we increasingly understand the challenges at the bottom of the pyramid. Can we have better balance of environment and local people's interests getting protected?
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Li Ka-Shing Rushes Into China Where Bond Angels Fear to Tread : The likelihood of a Chinese real estate slowdown is less, however it's also less likely that prices will move up at the rate they have been. And that's the paradox - one must give up. The challenge is how that stability returns. However in the rare event of a meltdown (of any form, stocks to real estate to excessive capacities) in China with slowing US (or already in recession?) economy will be nightmarish for people like me (who in-spite of being long desires a healthy correction).
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Indiabulls Targets Top 5 Slot Among India Funds With $6 Billion : It's actually worst of the web case where Bloomberg lowers it standards so much to start marketing a company. I know Indiabulls, true they have achieved a lot. But the way they cheat their customers D-mat holders/customers and also their employees (bonuses never paid and even salaries not paid, that's the feedback I got. I must admit my samples can be biased). And I also have the apprehension (and I would love to see) that few of these speculative players in India would go bust during any of the down economic cycle. Real estate, stocks - you name it; and it's all a mess created by moneysupply and manipulations.
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Medicare Spending in 2006 Rises at Fastest Pace in 25 Years : Though much of it was known, few numbers were interesting.
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India's Future May Depend on Eggs and Condoms: I was taken by little surprise by the title, however indeed a great article. Many of the stats I didn't know. And also on correct estimations on poverty levels in India (and what's the BPL mark: $1-a-day on PPP basis or $0.4 or something as the local govt. says and if the WB lower revision on PPP economy size is accepted by local government...the complexities are too many.
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Fed's `Inflation Problem' Gets Some Ad Hoc Help: This article is here only for impact of asset price deflataion on economy (and Interest Rate). '``Japan is a perfect example of what asset price deflation can do for you,'' Kasriel says. For the last decade, consumer prices in Japan have fallen at an average rate of 0.2 percent. Rock-bottom interest rates -- the Bank of Japan's benchmark rate has been below 1 percent for 12 years -- have done nothing to alleviate the modest deflation, or decline in the price level. Hard to believe, but Japan's double asset bubble -- in real estate and stock prices -- burst in 1989. And it still can't dig out from under.'
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Since this morning, I found Google to be a bit irritant as they ask me to verify as an individual before they proceed my search query. True, I do search often; and many of the search tags may not be common words/phrases. However I said earlier also that Panama of Yahoo! is getting better; and if Google does not change it - I would slowly shift to Yahoo!
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Engg. colleges to get satellite based tele-edu facilities : I must salute my amla mater IIT B for this noble effort so that education become open-sourced (like OCW of MIT). At the same time, I also feel that projects like this would have had more impact say couple of decades ago because all the recipient colleges now have Internet, and no better way of learning than doing self-research over the web.
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China Flexes Its Muscles: A nice article to start 2008. However I don't subscribe to the title: The Coming Collapse of China (2001), and in this short period, it has rather been the opposite (true, it';s too short a period). The article goes well with the views expressed by (I believe) Remo in his Brand China article. Yes, Chins is shifting gear from the Peaceful Rise of China theme.
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Missing Evidence from Bhutto's Murder: I was taken by deep pain as the rest of the world when I saw this on TV on the 29th (and was surprised at why the washing took place at the blast scene). That's the sad part of story in politics in South Asia. I am also more pained to see the 19-year old Bilawal being chosen as a successor. One fatal event does not mean democracy being sacrificed. Moreover democracy is never a top-down approach (what the US preaches for the rest of the world but democracy in developed world is actually a bottom up approach). And if there no bottom-up approach (selection of a party leader in the case of PPP after the demise of Benazir), effectively there is still no democracy. So effectively one can have (true democracy (driven by bottom up), or (2) top down only (what we have in Iraq, Afghanistan, Palestine where top down did back fire as Hamas came to power or even in Lebanon), Bangladesh and India even, in some respect do present this scenario as well or (3) Pseudo Top-down (something which would be in place if Votes take place in Pakistan under President Musharraf if PPP comes to power and the PM becomes a crony to Bilawal or Mr. Asif Ali Zardari.