Best of the Web

Best of the Web - October 2009 onwards

2009-10-27T00:43:00.000-07:00

I started this blog back in 2006...when my wife, my mother all were there. In November 2008 I lost my wife. In October 2009 - I lost my mother. However the Sun still shines, the earth rotates, birds chirp and my son still loves going to school and watching cartoons. I need to live, true the heart is heavy and asks...why blog again?
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How to fill the gaps left by dollar decline
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China pushes CO2 capture, storage questions loom.
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My Seven Wonders of India
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Debate Still Rages Over Who Won the Cold War
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African nations make a stand at UN climate talks
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Internet Turns 40 Today: First Message Crashed System
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The Chinese Disconnect : Although don't agree fully...as many others say there's no country that ever grew richer by devaluing its currency. Presently the US intends to do that, and China merely is following. Moreover, when $ strengthened in the peak of crisis, Yuan also did, many other Asia currencies trade weaker (than Yuan to $)compared to their 2008 rates.
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Push to Legalize Marijuana Gains Ground in California
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Micro loans bring light to rural poor
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Best of the Web - August'08-Sept'2009

2008-08-02T07:32:00.000-07:00

China's overcapacity: A waste but not a mortal danger
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David Einhorn, Greenlight Capital, “Liquor before Beer… In the Clear”
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Roadside doctors with no degrees thrive in India
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Indian royal splendour on display
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Particle beams injected into LHC
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Hungry to learn across the world: The youngest headmaster in the world
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Shanghai Cooperation Organization
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Russia ready to abandon dollar in oil, gas trade with China
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China's super-rich bounce back from financial crisis
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The Collider, the Particle and a Theory About Fate
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On Cluttered Ballots of India, Families Proliferate
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Rogoff Slams Four Toxic Words, ‘This Time Is Different’: Books
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Barack Obama Wins Nobel Peace Prize. For What?
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Will California become America's first failed state?
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Dollar Falls on Report Gulf States May Stop Using Greenback
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China Yearns to Form Its Own Media Empires
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Sixty years on: veterans of Chairman Mao's China remember
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Top 10 most significant events in shaping today’s China Mode
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China’s Mr. Wu Keeps Talking
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Patent Revolution
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Our One-Party Democracy
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Play It Cool, Mr. President
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Why capitalism fails
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ANALYSIS-Can we predict next world crisis?
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China vs United States: A Visual Comparison
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GDP Fetishism.
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U.S. Is Finding Its Role in Business Hard to Unwind
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The Father Of the Green Revolution
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China heaps scorn on U.S. tire duties
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50 million chemicals, and accelerating
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Trust in News Media Falls to New Low in Pew Survey : My respect and trust for NYT however has gone up (whereas most others have followed same trend as in the Pew survey findings).
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French president announces carbon tax collection program : How much does it become /barrel of crude, /mbtu of gas or /ton of coals?
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How Did Economists Get It So Wrong?: Liked the cartoons on the page as well...
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China showcases commercial jet at Asia air show
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China Tightens Grip on Rare Minerals
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It’s High Time to Ruffle a Few Billion Feathers: 'By Roach’s calculations, Americans account for about 4.5 percent of the world’s population and its consumers spent about $10 trillion in 2008. China and India, which account for roughly 40 percent of the world’s population, consumed about $2.5 trillion.'
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Victors in Japan Are Set to Abandon Market Reform
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Chinese learn credit card perils the hard way. And this section: 'According to Professor Wang, small and medium sized enterprises (SMEs), which tend to be private companies, account for 99 percent of the total number of firms in China; 60 percent of the country’s GDP; 70 percent of employment; 65 percent of the patents filed each year; 60 percent of exports and 50 percent of tax revenues. Despite this large contribution to the Chinese economy, SMEs only use 20 percent of China’s financial resources. Per yuan of investment, they are eight to 10 times more efficient than China’s large companies in creating jobs and four to six times more efficient in generating GDP.' is quite interesting as well. I doubt how these SMEs do it.
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ISB Founding dean Pramath Sinha...
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Opening new chapter of China-U.S. dialogue: It's more important now to see how the Chinese view it.
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Pope Criticizes World Economic System, Urges Social Responsibility
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Universities test morals, knowledge: It's a much welcome change, however it must also reduce the 'rote learning' stress that most students in countries like China and (probably more so ) in India face. Therefore it should not necessarily increase the stress, rather make it enjoyable for them to read and learn. During a recent visit to Tanzania, students their said how competitive Indian education system is (in urban middle-class society), and it sort of kills a kid-boy-teenager's early life. At the same time, in-spite of such huge loads, countries like India (or even China) fail to produce globally recognized scholars, nobel laureates. That means somewhere up the value chain, system collapses (it's not alone rote learning or holistic development - facilities in colleges/universitiesand capabilities of faculties are also important).
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Harvard Begins Case Study as Tainted MBAs Reveal Damaged Brand
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The Rise of the Underground
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China to Open Yuan's Role in Trade
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CEOs Give Thanks to Hank This Thanksgiving
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Christian Science Paper to End Daily Print Edition
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TIMELINE: Milestones in the yen's history
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Japan Returns to Pre-Thriller Era as Nikkei Slumps to '82 Level
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Apple Q4 earnings: Analyzing the analysts: Can the same be said about professional journalists and bloggers/citizen journalists?
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China Allows Short Sales, Margin Loans to Help Market : I must say I am quite surprised by part of this decision. That's China for rest of the world! I also sense that China is trying to send a message (snub?) hereby to market economy that where the US has failed, China would succeed. No doubt a bold move, however probably it was better to move more carefully at this particular juncture.
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Japan logs trade deficit as exports slow: That indeed is a news, and most unexpected (since 1082!). I expected the real trade figures (number, for imports and exports in $bns), however that's missing from the article.
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U.S. to lose financial superpower status - Germany & Asia Needs Deal to Prevent Panic Selling of U.S. Debt, Yu Says : Interestingly, 1st one comes from Germany and 2nd one from China. The OPEC voice can send the market in a real turmoil.
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Morgan Stanley's Mack Seeks Protection From You: I didn't expect such a harsh criticism of ongoing policies from Bloomberg...
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Treasury Seeks Authority to Buy Mortgages Unchecked by Courts : I have managed various reverse auctions in my earlier career with e-business service providers, but wonder how RA can be applied in such a case. Every house is unique, so for every house (mortgage), there's only one seller (or mortgage owner). If they club the mortgages in lots and based on quality of mortgage (what's likely), then again no two lots are same. Reverse auctions work when all suppliers are more or less equal in their quality of goods/services; which isn't largely true for this case. Therefore I foresee that the tresury would start buying the lowest quality of mortgages; and now one would like to be seller in the early days, believing that as the RA with $700 billion moves through (and also economy improves/liquidity/home prices improve), they would get a better price either through market (or through subsequent round of RAs). Only the mortgage holders desperate for cash would indulge in some sort of distress sales (what's the value Tresury can buy for every dollar in its 1st lot...asset of 3 dollars? I will rather put it at a less value...anyway let's see as more clarifications emerge).
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GM puts Volt through its paces in Milford
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Wall Street Journal to go into wine retailing
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China paper urges new currency order after "financial tsunami": Watch the timing...
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How to Handle a Market Gone Mad
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Sell the U.S. Dollar into Strength: Last few days I haven't written much/posted much as I am again bit active in market (and stressful with leveraged position...and in wrong foot at times). However I have been following all events closely. Surprisingly, this is the 1st article that talked about intervention as the ongoing phenomena whereas when dollar was weak, there was active talk about it. To me it surely looks like an intervention - then why not the Russians, Chinese, OPEC world shifting their forex in this rally to Euro. Or even buying gold? Something fishy...true, the job of trading in derivatives is more stressful than a bomb-diffuser. Hope I survive this time.
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UAL Story Blame Is Placed on Computer: I didn't know many things in the article...more about the computer-based trading (25% - astonishing!)
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UAL shares walloped by new posting of old news: Sometime back, I talked about Indian media broadcasting/printing news without any quality check (the Goa and Nazi story); however this highlights what's happening in so called western press (many of which I consider to be reputed ones!). Hilarious indeed - only not so hilarious who sold believeing the story.
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CERN fires up new atom smasher to near Big Bang: I briefly touched upon it in my book Wondering Man Money & Go(l)d...interesting developments. And there is a small fear in the mind as well.
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Here is one of the better measure of Indian inflation...and here is the official website. Unfortunately, as one Reuters article suggested even today, the data always leaks out before the scheduled time for market manipulation. And it happened today also.
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Asia leads mobile growth, but lags on Internet.
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Google Offers Web Browser for Download to Challenge Microsoft
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Text of Sen. Barack Obama's speech: Wish India gets a politician with similar idelogies...
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Japan Goes on Buying Spree, Shrugging Off '80s Bubble : It talked about Ranbaxy-Daiichi as well. One particular aspect, in which I never thought about, came out here and that's 'Japanese companies have cash equal to 11 percent of their assets, the second-highest amount after China among the world's 10 biggest equity markets, according to Bloomberg data'. It's good to always have cash - just as Mutual Funds or investors have. More so in boom time...
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Stocks Under 'Short' Order Fell During Protection Period & Did It Help to Curb Short Sales?: Markets are too powerful and its all about confidence...once the genie is out of the bottle, it's difficult to control it.
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India Sounds `Death Knell' for Jobs With Perks: And when one adds the complexity of withdrawing this PF in one's need (e-governance in India: a status report), one understands that this is another poverty tax that govt. employs on the informal sector and unorganized employees. Could anyone in India withdraw his/her PF when one of his/her family member needs some costly treatment at a short notice? I think not. The process takes minimum few months, and probably hell lot of applications and follow ups. Makes a sense for govt. employees, otherwise it simply does not have any relevance.
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China to overtake US as largest manufacturer: The FT subscription models (3-categories) show another interesting online trend. Regarding the article: 'China is set to overtake the US next year as the world’s largest producer of manufactured goods, four years earlier than expected, as a result of the rapidly weakening US economy.' I long felt it so, and I still don't understand how service economy (where Wall Street alone can be nearly 30%) can be more than 80% of a large economy.

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Asian Yahoos Don't Give a Google About Free Web
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Microsoft $20 Billion Buyback Signaled After Slump : It's surprising to see so much buy-back when possibilities are huge...true there's no point in spending the money in the drain either.
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China Wins Financial Olympics as Losses Hit U.S. : Remember Socialist China creates Capitalist records...
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Korea's No. 1 Money Manager Says Genghis Khan Model for Funds : Mirae picked up some stake in LIC Housing Finance, one of the scripts I follow (and occassionally hold, as I am doing now). I believe they entered at > Rs. 300. During the July slump in Indian markets, one day I was shocked to see the volumes in its futures. Normally the counter sees thin trading, at times to sell one contract, one needs to wait for minutes. And when NIFTY was close to 3800 or so level, with LIC Housing Finance at around Rs. 230-level; there were sale orders that numbered 100-s at one time. And there was a flood of sale orders for couple of days. Few days later, I read Mirae did close their India-specific fund, in which they had high realty exposure. There were another FII seller that month (some Mauritus-based funds like TCI or so); whereas Morgan Stanley and Credit Suisse picked up the stakes. Markets are indeed as dangerous and as fluid and as volatile as fire and water. Always be careful...

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The Trolls Among Us : We see increasing online collaboration amongst MSMs as Bloomberg directly linked to this. The article is interesting, and in-spite of being a member of pro-internet lobby; makes me think about its healthy future in an absolutely unregulated environment

May-June-July 2008

2008-05-07T22:52:00.000-07:00

SAP 2Q Beats Views; Fiscal Year Guidance At Top-End: The constant currencies part is interesting...
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MSM Stealing Blog Content: Times Joins Growing Trend?: I see it as a both-way process where many bloggers also do the opposite. However reputed news-agencies must not do it, and the reason offered for not acknowledging content from blogs is ridiculous.
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China to Turn Economic Growth Into Olympic Gold, End U.S. Reign:
'Hawksworth's calculations show that the top 30 countries will win 82 percent of the medals, mirroring their 84 percent share of the world economy.'

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Temasek Invests in Merrill After Getting Compensation : So new instruments keep evolving, and they always favor the large bargaining power of large buyers.
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So Long, Capitalism
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Randy Pausch: The lecture of a lifetime: 'Sincerity translates, in other words, on a far more primal level than language...'

Makes one wonder on the sincerity level of Crocodile Hunter or Randy Pausch or people like them, and then people like me (or us) and then the so-called decision makers who are supposed to be the most sincere about the plight of mankind at large.
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Obama addresses 200,000 in Berlin with message of unity for world's people & Obama Speaks to Germany on European Ties
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Another Meeting? Say It Isn’t So
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Berliners welcome Obama as they did JFK: '76 percent of Berliners would vote for him, and he's been dubbed by influential news magazine Der Spiegel as "the president of the world." He could "stand on his head" and it wouldn't matter, said one media critic.' Lately I am seeing Der Spiegel online (in Google News), and do like it also.

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GM Teams With Dozens Of Utilities on Plug-In Cars: Oil dependence indeed looks to be slowing down...with such innovations now a possibility. Good article.
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The Inflation Haymaker Comes A Cropper: Interesting to know the history...also I found a new thing in Foxnews 1st time...stock-proces changing in real time basis...makes better sense than the quotes that Reuters or Bloomberg gives!
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Fannie and Freddie's Enablers
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Darkness on the edge of town: Newspapers 2008.
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Trouble at Fannie Mae and Freddie Mac Stirs Concern Abroad
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A Big Party Without the Guest of Honor : True...what a nostalgic moment...and what changes we saw in last 100-years
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For Short Sellers, It Doesn’t Get Much Better : And imagine, a market regulator like SEBI in India is introducing these monsters in India. FIIs would come and short-sale India; and RBI and SEBI would watch (rather facilitate).
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Chinese president meets Indian PM on bilateral ties, global issues : I believe it's time for India and China to take these words to action. China should take the initiative and India should be more open, rather than uttering the same-old dimplomatic words. Trust must be built first on the disputes regarding borders, and a status quo should be maintained. I liked the words of Hu Jintao, and hope he really meant it, with due understanding of complexity of Indian systems.
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UAE GDP revision highlights region's data problems: Because they are not yet professional liars, that's why they goofed up. I take all GDP and inflation figures with same degree of credibility, Money Supply is something that can be clearly quantified; but for some reason isn't, in a single global scale.
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Internet propels Obama but also creates risks: I rather disagree...Internet allows better control than the distortions often made by the mainstream/alternate media. Here one keeps the control and clarifications. True, close coordination amongst the different groups who are manahing the campaign with the candidate is needed.
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Old Harvard Ties Failing in New Egalitarian Age: Very much true globally...
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Came across Reportr.net as a blog and Prof. Alfred Armida as its founder.
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A Classic Final That Began So Harmlessly, and So Much Earlier : Indeed. I saw the match till the 2nd rain disturbed play in Star Sports. And like Rhoden, I also supported Nadal (true, from the 2nd set onwards). Federer was invincible...till 2008. All eras end. And I was wondering at the characters...be it Nadal (22-years) or Federer (26). What was I in 22 - or most of us? Mostly immatured but arrogant, about whatever strengths we had, without knowing much of the world. Great staff. Thanks to both the players. When he lost the 4th set in tie-breal from the 5-2 lead position, I felt inexperience is costing him. And Federer, with his serve-strength, always had an advantages in tii-breakers (probably the records also showed that). 'All that remained was to crown a champion, not determine the better (sports) man (for the day)...From Wimbledon to the streets of London, this was a great moment, a moment of transition in men’s tennis and transformation in one player’s life.
' Yes, too early to say about the era...shaken or broken? I remember Federer also lost the chance almost a year back to have the largest match winning-record. He was such a person that opponent always felt he was invincible. Probably not any more...
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Biofuels May Be Even Worse than First Thought: Lately I am seeing more of Spiegel Online in Google News. I must say 'I'm liking it (Google News)' as they say for McDonald or so. On more serious note, I wonder on these two figures: 75% (as the WB says) to 3% (as the US feels). No doubt top minds are involved...that's what I say about qualitative research.
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Glaxo Scientist's `Aha' Moment May Result in Malaria Vaccine
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The Weak-Dollar Threat to World Order
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India: A billion aspirations: Ha Ha... some laughter does help. Yes, I too saw the headlines (don't remember whenther on print or online), however didn't read it (the age impropriety, and not my line). True, I read a lot of stuff online (even trash), however this is something! Would be interesting to see whether these four media-firms change their articles or not (TOIN hasn't so far, the comments clearly saw the joke), and how they run the correction.
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Benedict Benjamin Bernanke
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Entire US financial system is to come under the scrutiny of the IMF
: 'macroeconomics textbooks are no longer worth much in the age of globalization'.
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GM Falls to Lowest Since 1974 on Goldman Rating Cut : Interesting point would be to note how Hindustan Motors (HM) performed over this period...I believe not so badly. So with so many management gurus and stories on GM and so much bad publicity (normally) against HM, I wonder who sustains, finally.
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Warren Buffett Says Sell to Me, Not `Porn Shop,' as Growth Dips : A must read for people in M&A space. Though I am, like millions others, is a Buffet fan; I wonder whether the Halo created around his personality is vulnerable. History says yes. Question is - for him, or for his firm?
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Hong Kong to Start Commodities Exchange to Trade Oil : Interesting part is, it will be all in dollar. I suspect, too early for any such conjecture so early, that going down, few years (2013 or even early based on geopolitics and global economy), they may shift to Euro or even their own currency (or as OPEC favors).
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I liked http://theinvestingspeculator.com/ (June 2008 posts), the BP chart of A dance to the music of time, energy sources by category and comparison of oil prices with other useful liquids.
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'Markets funny, fed prints money
Says it sunny, lies like honey, too sweet for me'... from IMF: Fed Should Leave Rates Steady
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Two Sides to Story Define Wall Street in Cioffi's Tale at Bear
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Weary Americans can't fight global inflation: 'Stephen Jen of Morgan Stanley estimates that at $120 a barrel, oil exporters are getting $6.8 billion a day. At $135 per barrel the six Gulf Cooperation Council countries have proven reserves worth about $65 trillion, as compared with global stock market capitalization of about $50 trillion.'.
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Why Paul Miller in Virginia Is Wall Street's Best Stock Picker .
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Fed's Bear Stearns Books Look Prime for Cooking
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Mostly irregular these days...
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Sometime back I stated that the world loves American people and values, but its policies (foreign policies). Here is the best example of that, not in the article, but in the 1st comment as posted by WillH. The article is one in which I took interest sometime back, Supreme Court maintains post-9/11 course on Gitmo. And here is the jewel of a comment, on America really is (on which I was confused like many): 'It's truly saddening to see posters using the American flag as an avatar making comments to the effect that constitutional rights ought to be suspended for security interests. I say you are no Americans at all, you do not share American values, you disrespect that flag and all that it stands for. Shame on you. This is the land of the free, we do not sacrifice our God given rights for fear, hate, or foreign policy. The moment we sacrifice our core values for security we've sacrificed the one thing that's truly worth protecting. The terrorists hate us and everything we stand for, when we give up these precious freedoms we're doing their work for them.

Many of these detainees are scumbags, I have no doubt. But they have rights and *because they have rights I know that I have rights.* If they are guilty then bring them before a jury and let them receive the punishment they deserve. If anything, this business of detainees only hurts our cause. It shows that we are hypocrites - claiming that we support freedom, equality, and justice (e.g. the after-the-fact justification for the Iraq war) but we deny those same values when it is expedient for us to do so. Gitmo is destructive to our values and our foreign policy interests.

I find these comments truly disappointing and would encourage those of you who disagree with the Court's ruling to go to Cuba or China, do us all a favor and take your fear mongering elsewhere. Your rhetoric smacks of totalitarianism, its un-American, and un-welcome in this country that I love.'
Thanks WillH, That should not be American value, but the global human value (borrowed from America! or there historically were other instances of such values elsewhere?)
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Google Diplomats Bend Free Expression to Preserve Global Power
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Mobile Phone Is Best Way to Provide Bank Access: The role of Central Banking itself should change...
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World Bank `Destroyed Basic Grains' in Honduras, Fueling Hunger : I don't remember exactly, however following another research report, in one of my article, I did talk about either same Honduras or another similar nation's plight under the WB advice.
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Argentine Farmers Block Grain Trucks, Withhold Crops to End Tax : The food shock of which I was comprehensive was for a long time is finally here, and I believe it's likely to last longer and be short of permamnent phenomena with temporary blips. Yesterday, one TV channel showed that local (Indian) prices of rice and wheat to be around 35-40% cheaper than global prices - and here is the big dilemma. In one way, govt writes off farmers' loans and subsidizes them (how much of it actually reaches them remains a question mark), it again exploits them by 'forcing' them to sell it at 35-40% cheaper! And imagine the import-price based formula that Indian industry adopts for almost everything from cement to steel to Aluminium to plastics (barring mobile call rates!). So we encourage the rich to exploit us, and the exploit the poor to help the rich (there is also significant number of poors and non-farmers, true). And in Argentina, the farmers are protesting. I suspect similar developments in India unless our policies become fare to the farmers.

Best coverage of global news - March-April: 2008

2008-02-27T05:25:00.000-08:00

Wall Street Grain Hoarding Brings Farmers, Consumers Near Ruin : When 50% or more of agri-outputs are speculated by the Wall St., many elite Indians say that futures don't affect grain prices. Remember Schumpeter again on the future of capitalism...and Fed. prints more easy money for the Wall St. to hoard even more!
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Phillips Slams Wall Street, Feckless Politicians in `Bad Money' : This only validates the many posts I have written on GDP, economic growth and productivity growths. If financial services contribute 20% and manufacturing 12%, it merely means a country of traders with borrowed money where agri+ manu contributes only 15% or even less of GDP. And I have often doubted these GDP measures with very high services components, more so from financials.
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Due to following, I have been and probably would stay away from posting articles for few more days to months...
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There's been again some challenging times in my life where the challenges essentially drags one down. My son (6+ years) has been diagonised with Gall Stone and report for Hepatitis is due. This is on top of the benign mesothelioma cyst with which my wife's been suffering. I have rarely talked about my mother, and how little to nothing I could do for her. And now there's another challenge which like the others have also been talked about in my book (Wondering Man, Money & Go(l)d). I really don't know what to do...am I not following what I preach or talk about or write on? Yes...at times I feel I am fighting a losing battle. However then comes some optimist driven by our strong believe in God and the way my father acted against all adversaries. I am sure this cloudy phase would also pass and brighter days would emerge soon.
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Behind the Deal, the Hand of the Fed : Add to that the fact J P Morgan happens to be a shareholder of the Fed. (true?) as we found already in one post. And should one say anything more? And here is the BusineeWeek photo of Bernanke as a communist.
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Forbidden fields: Oil groups circle the prize of Iraq’s vast reserves: In line with one of my earlier posts. Would the big US gamble on Iraq war after five years pay-off? Depends on Iraqis...but interesting to see the gambling point here: 'Although no decision has yet been made in Baghdad over the nature of the development or the eventual exploration contracts that will be on offer, Iraq could prove one of the rare countries in the region where companies will be allowed to claim reserves as their own. “This is the big frontier,” says Raad Alkadiri, a senior director at Washington-based PFC Energy.' At what price...what would the Iraqis gain if companies (that too primarily US, UK and at times from France-based) claim the reserves to be their own. We know how good American back door policies are - however Iran, Russia, China or even India must also get close with Iraq and ensure that Iraq's oils are most used for Iraqis first, and then for the rest of the world, equally.
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Bear Economists Snipe at Bernanke: Can this comment be indeed true - 'The Federal Reserve is there to protect them. What is so well forgotten is that the Federal Reserve is not a part of our Government. Need further insight? JP Morgan is a shareholder in the Federal Reserve, you and I are not. Who benefited from the Bear Stearns bailout?'

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Somewhere else I read that Bear Stearns had derivative position of $13.4 trillion, and its money of $17 billion ran out in 2-days. God save this system. Sooner Fed bail-outs than the 1930s revisited : 'It has $13,400 billion of derivative positions, and has underwritten $491 billion in options contracts. Topple this domino at your peril. It risks a chain of cross-defaults through the entire "shadow banking system", that vast untested nexus of paper commitments.
Bear Stearns had a liquidity cushion of $17 billion early last week. It vanished in two days.' . Also by reading so many comments online, it's clear that 90% or even so people in the US or Europe isn't happy about the practice of this form of capitalism. However the question comes - where are these voices in mainstream media - in CNBC? Probably mainstream business media still favor a lot to the immoral side because of obvious business gains, though these comments would be an indicator that they better change. Otherwise it will be fools (who will burn their fingers at some point of time in future) and immoral investors alone would subscribe to these mainstream business media!
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The Fed Is Too Easy on Wall Street: If these numbers are true, we get around $140 billion of the already booked losses...'Here's a staggering figure to contemplate: New York City securities industry firms paid out a total of $137 billion in employee bonuses from 2002 to 2007, according to figures compiled by the New York State Office of the Comptroller. Let's break that down: Wall Street honchos earned a bonus of $9.8 billion in 2002, $15.8 billion in 2003, $18.6 billion in 2004, $25.7 billion in 2005, $33.9 billion in 2006, and $33.2 billion in 2007.'
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JPMorgan to buy Bear as Fed opens lending to Wall St: At $2 a share, less than its $80 a share book value and much less than its holding of land and buildings? As reported by Bloomberg also, I wonder whether shareholders would approve this deal. Had I been a shareholder of Bear Sterns (and only of Bear Sterns, which traditionally is my style against port-folio investments, and know it's fundamentally wrong), I would have forgone this $2 also and firmly would have said no. Dimon and J P Morgan gains...what a pity!
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Behind the Fed’s Bear Loan: Systemic Risk Fear: The desperation in getting the four votes and the manner in which it was done kills all the faith in Central Banks.
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Bear Stearns Bailout Was `Finger in the Dike,' Historians Say : 'Ever since Treasury Secretary William Gibbs McAdoo shut the New York Stock Exchange for four months in 1914, to prevent foreign investors from cashing out and throwing the U.S. into financial chaos at the outset of World War I, American policy makers routinely have suspended their support for free markets when confronted by economic peril.' History is so important, however unfortunately rest of the world which sort of preaches free market economy never learns from history. 'Morgan, 70 and semi-retired, obtained an emergency pledge of $25 million from the U.S. Treasury. He persuaded New York's leading bankers and trust executives to put up another $25 million, after locking them in his library all night, according to ``The House of Morgan: An American Banking Dynasty and The Rise of Modern Finance,'' by Ron Chernow (Atlantic Monthly Press, 812 pages, $45.95)...Congress authorized $250 million in loan guarantees to rescue Lockheed Aircraft Corp. in August 1971, over the objections of the late Democratic Senator William Proxmire of Wisconsin. By today's standard, the stakes were small: about $1 billion in potential losses and 60,000 jobs.' The scale just gets bigger. 'Representative Ron Paul, a Texas Republican who ran for president this year, told the House Financial Services Committee in February that financial services bailouts would reward bad behavior. Paul doubts the Bear Stearns rescue will prop up the economy, he said March 14. ``It won't work,'' Paul said. ``It's like drug addiction. You feel withdrawal pains, but you save the patient.'' This is the man of whom gold bugs speak highly about...
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The Twittering of Ben Bernanke: I liked this part very much...'But Fake Steve Jobs (aka Forbes editor Daniel Lyons) maintains a blog. That is so old media. This is Twitter, an attention-deficit-disorder medium for an attention-deficit-disordered age.'...I am very much in old media

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Dollar's plunge pushes eurozone past US, Goldman Sachs says: I expected this long back though my fundamental doubt on currency-related fluctuations in GDP is still not answered.
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Bernanke Discards Monetary History With Bear Stearns Bailout : I can be reasonably certain that no one could think about it as forthcoming, that too almost a year back. Now here you have it: Fed. to bail out failed hedge funds of Bear Sterns. The article was written as a spoof (all my spoof articles are like that only!), and true, one needs to go beyond the hedge funds to Bear Sterns itself now.
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‘India has conducive environment for gold mining’ : I don't know on what facts this story is made. China, S. Africa and the US are the three largest producer (I am not very sure...) whereas India is the largest consumer. The only commercial gold mine in India was closed years ago (somewhere in the south). However this must be explored (along with Uranium and other radio-active materials and technologies) as policy-matters.
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LS dismisses US govt’s observations on Nandigram: I saw the news in TV this morning, and thought...here we are...Indians (and many other nationalities are no different!). What are we first, what values do we stand for - no one is perfect. But do we value human rights and dignity first, or do we take empty pride in 'India' sort of being perfect, which all knows no nation is. I don't agree with many US policies, decisions, their double standards (middle-east, Palestine, Lebanon) but in this case, I will appreciate US decision. Yes, there was human rights violation...now whether US government says that or Pakistan or Indian political parties...that's immaterial. What rather is needed (and knowing India well, which is unlikely to happen for sure) is what learning did we have from it...none. Rather the ruling government learned that they can crush any opposition any time whereas Indian democracy would watch it as another piece of fun, and comment as we do on while watching violence on movies, rather than acting meaningfully on it. Shame on you - Indian parliamentarians, once again. '"Anything happening in India is a concern of the people of this country" and the US should have nothing to do with it.' What a joke...I am worried at unnecessary deaths in the Middle-East, and I am even more worried at Nandigram violence also. Being a human being matters first, then comes nationality. These guys can change their colors...and sad thing is 'Anything happening in India is a concern of the people of this country', but the people of the country just saw another violent act whereas the guilty proudly roamed about, even in the same parliament.

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Sab Maya Hai: Mukesh Ambani on Forbes' billionaires list: I like it Mukesh-bhai. You indeed are a genius...lekin desh or dus keliye bhi kuch karo (SEZ serf profit keliye mat karo...)
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Dollar's Clout Sinks Worldwide: 'And in neighboring Brazil, the Confidence Cambio money-changing service was the first to start offering yuan so travelers to China no longer have to change the money into dollars first. The service is already a hit because Brazil does big business with China, and lots of Brazilians are heading to the Olympics this summer.' Makes good sense...

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Iraq, the US trump to avoid a dollar collapse: This is the 1st time I accesses this site from GNews, this stats are intteresting at this hour of global economy: 'Referring to the weakness of the dollar, Ching Siwei, Vice-President of the Permanent Committee of the People's National Congress said last November that China "is going to readjust and diversify its monetary policy in financial and economic transactions around the world because we prefer strong currencies".(2) Putting deeds to words, China is already buying oil in Euros from Iran, which provides 13% of China's energy requirements...Maintaning the alliance with the US is ever more costly in political and economic terms. In Saudi Arabia current inflation rates are the highest since 1980, running currently at 7%. In the United Arab Emirates, inflation is even higher at 9.3%. (3) The reason is none other than the weakness of the dollar in economies completely dollarized as those countries' are. That is what has led the Saudis finally to let their arm get twisted and to accept now a discussion about the dollar in the terms proposed by Venezuela and Iran...And that is what the US is trying to stop, come what may. First, it is bolstering the presence of Iraq's collaborationist Oil Minister, Hussein al-Sharistani, in each and every one of the preparatory meetings for the next OPEC summit meeting. Secondly, it is pressing for final approval of the Iraqi oil law, which would leave that strategic sector in the hands of the US oil multinationals. Thirdly, Bush carried out his recent regional tour - not for peace, as the mass opinion forming media broadcast - to directly threaten the Gulf countries against changing their reserve currency. Fourthly, the US is pressuring these countries not to establish trade links with Iran at a time when that country has just set up its oil exchange to operate in Euros rather than dollars...Despite the fact that the US has literally bought off a large part of the Iraqi insurgency with the creation of the "Awakening" militia - which serves to confront insurgents and as a buffer for the occupying soldiers - it has not managed to pacify the sector controlled by Muqtada al Sadr despite the Mahdi Army's ceasefire holding firm and the one controlled by Sunni guerrillas, who carry on their struggle against collaborationists and occupiers. After almost a year of "normalization" armed attacks still occur throughout almost the whole country, not just against the occupying troops but against mercenaries - those "private security companies" - and collaborators...Nonetheless, if one has to note a credit side to the US strategy, the attacks against oil pipelines have certainly dropped noticeably in the last few months and that has made Iraqi oil production rise to 2.4 million barrels a day, the highest level since the country was invaded five years ago. The US has come very close to completing its energy strategy. It had reckoned on ending 2007 with production at 2.8 million barrels a day in Iraq (4) and made it to 2.4 million. Now it is being more modest and reckons on 2.6 million barrels a day for 2008, although the ultimate target is to reach no less than 6 million barrels a day within the next four years according to what the Iraqi Oil Minister has said in an interview to the British Times newspaper. (5) That would permit the US to break up OPEC from the inside, considerably increasing the number of barrels on the market and bringing down the price of oil to the amount the US considers "fair" : US$30. A figure that leaves out one important fact, namely, that it does not cost the same to extract a barrel of oil in Saudi Arabia or Iraq, to name the cheapest places, as in Venezuela or Iran, to name the dearest places. In Iran, it costs US$15 to extract a barrel of oil. So the proportionate profit of 1 to 6 in the Saudi case (a high quality oil which, from extraction to sale, is easy to find and cheap to produce) drops to 1 to 2 in the Iranian case since its oil is not good, sweet and cheap like that of the Saudis and the Iraqis...On January 24th this year, al-Sharistani met in Amman, Jordan with the leading oil multinationals to discuss "technical assistance contracts", or in other words to share out the oil fields, pending approval of the Iraqi oil law by the Iraqi parliament. Guess who was the first company he met with? Exxon-Mobil, the very same company that is in litigation against Venezuela for the nationalization in 2007 of wells in the Orinoco oil belt. If one believes the newspaper reporting the event, a contract will be signed during this current month of March. And so that the contracts will be profitable and operational the US has to keep a large contingent of troops in Iraq permanently...Even according to polls by the collaborationist local media, 70% of Iraqis are against what they consider the "handover of national sovereignty"...But the country is more divided than ever and that leaves the imperialist strategy a free hand. ' It gave references, which I am not quoting/checking. Indeed, a very interesting story.
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'Helicopter Ben' Bernanke and the 'Bankers' Bailout': So many suspect that beyond what's already overt, a covert bail out plan may already be operational...nothing new. 'Since there is so much opposition here to the idea of using taxpayer money to bail out borrowers and lenders who made bad choices, it's worth facing the facts: a stealth government bailout of the mortgage industry is well underway, and a bigger, more ambitious rescue plan appears more likely every day...Fed Chairman Ben Bernanke's latest dollar-dumping mission (they don't call him "Helicopter Ben" for nothing) is the latest chapter in what Cassidy calls "The Bankers' Bailout." It's too late to write your congressman to protest -- the bailout began last summer: "'It is no exaggeration to say that the mortgage market was effectively nationalized" in the third quarter, BNP Paribas economist Richard Iley wrote.' Watch this comment as people get disillusioned by this capitalism: '...and all of this from a government who decries socialized medicine!!!

We have socialized corporate welfare in this country. We taxpayers get nothing, except rising costs for everything.' or this one: 'This is the American way:

"Privatize the profits, socialize the losses."

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Gold Trades at $1,000 an Ounce in New York on Demand for Haven : As I was reading last article, I myself saw Gold at 997.7, but in between sometime it happened. Sad...this gold bug has no gold!
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Meltdown Looms Larger as Credit Markets Freeze: Watch this here: 'So, why is the Fed issuing loans to foreign banks? Isn't that a tacit admission of its guilt in the trillion dollar subprime swindle? Or is it simply a way of warding off litigation from angry foreign investors who know they were cheated with worthless toxic bonds? In any event, the Fed's largess proves that the G-10 operates as de facto cartel determining monetary policy for much of the world. (The G-10 represents roughly 85% of global GDP)...Wonderful. So now the Fed is planning to expand its mandate and bail out investment banks, hedge funds, brokerage houses and probably every other brandy-swilling Harvard grad who got caught-short in the subprime mousetrap. Ain't the “free market” great?' Echoes what I said in Wondering Man Money & Go(l)d...America is going broke and the rest of the world knows it...UBS puts the banks’ total losses from the subprime fiasco at $600 billion. If that's true, (and we expect it is) then the Fed is out of luck because, at some point, Bernanke will have to throw in the towel and let some of the bigger banks fail. And when that happens, the stock market will start lurching downward in 400 and 500 point increments. But what else can be done? Solvency can only be feigned for so long. Eventually, losses have to be accounted for and businesses have to fail. It's that simple. Looks scary because I still have some small money (whatever I am left with after the riot I had in May'06. Thanks to my wife, she has again doubled that in less than 2 years in-spite of the ongoing turmoil). Excellent article.
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India's Rupee Declines as Asian Stocks Fall, Crude Oil Advances : I am really concerned about this, with existing trade deficits high, exports down and now oil prices shooting new high, dollar rising against rupee but falling against most other currencies (includes BRC of BRIC), and stocks falling - India has all the ingredients right. It will be sell India sell story - FIIs know they can sell India and get it much cheaper later. And oil subsidy never help the needy...
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I also liked this one: On Helicopter Ben becoming Air Marshall from being the Fed. Chairman. Poor guy...I have full empathy for the bookish academician! "The risk of losses on U.S. Treasury notes exceeded German bunds for the first time ever amid investor concern the subprime mortgage crisis is sapping government reserves, credit-default swaps prices show," reports Abigail Moss at Bloomberg.' And I talked about it just minutes ago below: 'U.S Vice President Dick Cheney has been dispatched to the Middle East to try and talk down oil prices from $108. Good luck with that Mr. Cheney. Gulf States are importing inflation through their dollar pegs. Keeping oil prices high by refusing to increase supply may be the Saudi's way of getting back at Bernanke for gutting the dollar.' Even CNN sounded like conspiracy school: '"The Fed's actions are keeping banks from having to write down large losses and quite likely go into bankruptcy," he writes on his blog at the American Prospect. "The result is that the bank executives, whose inept management pushed them into bankruptcy, get to keep their jobs and their salaries, which run into the tens of millions a year." Meanwhile, homeowners facing foreclosure - not to mention ordinary savers who are watching inflation erode the value of their nest eggs - remain quite unbailed-out.'.
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Increasing Systematic Risk Portends Cartel ‘End Game’ Attempt: Reading conspiracy school theories help at times...I also believe that economists not having monetary fundamentals linked with gold as an absolute basis is bound to err. Surprisingly this article of 6th March or so sort of predicted what the Fed. did on 11th March. Would Bernanke succeed in bringing down the dollar, capitalism? I doubt that. Would he succeed in bringing up China, Russia...I would agree more here. 'Not only does the sacrifice of the U.S. Dollar penalize savers, as pointed out in the interview, it also hurts the purchasing power of all Americans and, particularly the middle-class and working poor. Indeed the purchasing power of the Dollar has declined over one-third in the past five years, vis-à-vis other major currencies. That is one reason why everything costs so much more.' . Who will explain that to Bernanke who is hell bent on svaing the Wall Street. 'What was all but explicit was the fact that the dramatic increases in money supply debase the currency. The logical conclusion is that the Fed is knowingly destroying the U.S. Dollar. This conscious destruction of the U.S. Dollar and its systemic implications are key components of the Cartel End Game (which Deepcaster first described in its 8/13/06 Alert, and then elaborated on in its June, 2007 Letter “Profiting From the Push to Denationalize Currencies and Deconstruct Nations” and most recently in its January, 2008 Letter).' True the words of strong dollar policy and bailing out in different forms contradicts...so is it a deliberate ploy to destroy dollar as they succeeded in destroying the gold window? 'Thus it is understandable that one (of several) key components of The Cartel’s End Game (clear even to some members of Congress) is to eventually replace the U.S. Dollar with the Amero (see Deepcaster’s June, 2007 Letter for details). Needless to say, the Amero would be another Fiat Currency whose issuance is planned to be controlled by the same Central Bank Cartel which now controls the fate of the U.S. Dollar.' Interesting theory...what happens to emerging countries forex reserves? All paper to be thrown to the sea?
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Bernanke Playbook Gives Hints on Fed's Next Moves: Why Bernanke's policy may not work, in the strictest economic sense (and not that the US uses its influence on OPEC or Saudi Arabia to increase production or similarly manipulates gold prices) is Bernanke remains a pure academician. Keynes himself I believe was a trader, and if Bernanke would have traded even for months in equities to the various derivatives of derivatives with leveraged positions, he would have realized the hollowness of the system. Capital (ponzy money) can't create capital by itself, it rather is a tool. And the tool was overly misused. US sort of provided money to all over the world, and capital markets globally are tanking to protect the US economy. Too much of anything is bad...remember Schumpeter...'So what other unconventional measures might we expect from Bernanke's Fed in the coming months, based on the speech that tagged him as ``Helicopter Ben'' because of its reference to Milton Friedman's phrase about helicopters dropping money into the economy?'. I am afraid that the Fed. do not enjoy the luxury of all the policies of his academic paper when the Fed. lives on borrowed money from other nations. 'So, brace yourself for a Fed funds rate close to zero, interest-rate-free loans in exchange for a much wider range of debt collateral, and further dollar weakness. And, if Helicopter Ben sticks to the script, the Fed might even guarantee the value of two-year Treasury notes. Strange days indeed.' I agree.
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Bernanke Seeks to Avert Deeper Slump by Accepting Mortgage Debt : My bias on this matter is clear. Let me see what happens, in a similar case, where you and I have bought some financial assets at price P1, and now it's down by significant amount, P2. If I need liquidity, I will have to accept the market price, which at no point no one says is the best judge of valuation, at times being even extreme and book losses. So can you and I also go to the Fed., pledge our assets and get value closed to P1 (keep aside AAA rating as yesterday it said S & P & Moody's have made fun of it as it didn't downgrade many yet!). So banks can take risk to maximize their profits and find lender of last resort at fair value, not you and I. Why?
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Bernanke Policy to `Destroy' U.S. Dollar, Faber Says : Faber said so before also, when Fed had its 1st interest rate cut in recent times. I absolutely agree with his statement that the ``In the U.S., they pursue essentially economic policies that target consumption, which in my opinion is misguided,'' Faber said in an interview with Bloomberg Television from Chicago. ``They should pursue economic policies that stimulate capital investment and capital formation.'' ...He predicted shares in India and China could lose 30 to 40 percent of their value as markets decline worldwide. '.
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Would-Be Borrowers Still Go Begging as Fed Cuts: I expressed my concern about this many times...reaching out to the people who need something most isn't easy.
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Government: U.S. needs foreign cash: 'A majority of American voters think these foreign infusions harm both the national security and the economy of the United States, according to a recent survey by Public Strategies Inc.' Quite expected, but that goes true for other countries also when mostly US-based FIIs poured money in other countries financial markets to create bubble and exited by creating a mess. Although I understand the vast difference between SWF and FIIs, however foreign funds of FIIs has historically not been responsible market participant, as such and SWFs are too new an entity to have much of any record on their responsible behaviour.
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Stiglitz the Nobelist Gets Math Wrong on Iraq War: A non-issue as $3 or 1.7 or whatever trillions is all based on your assumptions. US defense spends stats are only good.
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India Mustn't Kill Loan Sharks to Help Farmers: 'According to a 2003 assessment of farmer indebtedness conducted by the government, eight out of 10 farming households in India have 2 hectares (4.9 acres) of land or less; slightly more than half of them have no debt. As for the rest, half of each household's average 9,000 rupee debt is to ``non-institutional agencies,'' which is the government's euphemism for moneylenders. The smaller a farmer's land holding is, the more indebted he becomes to the loan sharks. This is not by accident. Banks Don't Lend - The formal credit-delivery system, which in villages consists of government-owned and cooperative banks, lends hardly any money to marginal farmers. The latter have no alternative except to agree to pay usurious interest rates -- often 100 percent a year -- to individual lenders. And farmers aren't alone.
Jena, the failed Orissa shopkeeper, was fortunate to have obtained cheap funds under a special government plan that seeks to promote self-employment among educated jobless youth. Not everyone is so lucky. Almost every small-business owner in the fast-growing economy is hungry for credit. Effective interest rates of 50 percent a year and more are quite common even as the State Bank of India's published prime-lending rate, the one at which the bank lends to its best customers, is 12.25 percent.'

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Trade Case Takes Aim at China on Financial Data : At times, decisions like this by Chinese policy-makers (to whom I have probably overpaid my respects repeatedly) act funny. One can surely gauge their deep suspicion and concern in case a financial catastrophe takes place, however market rumours anyway spread. Authentic news can alsways help, and these news-organizations, in-spite of their obvious bias, can't do any more damage than unfounded market rumors at time of disasters.
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Bovespa Beats Biggest Stock Markets on Brazil Consumers, Steel : Here's B of BRIC and some comarison with China. However I doubt the statement that said Chinese m-cap is less than $500 billion. And Brazil again here: Brazil Sends in Police, Sacrifices Jobs to Protect Rainforest
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Buffett says U.S. in recession, stocks not cheap: So the million dollar question finally gets answered from the Omaha...and I believe him more than the Fed or other Federal reporting agencies. And here's another on same topic: Warren Buffett withdraws bond re-insurance plan
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News from the schools, February 2008: ICFAI was in the process of getting accredition from AASCB (The Association to Advance Collegiate Schools of Business). Though I looked at the Economist just to see how it's been doing lately, I found this interesting piece here: Business schools and research, Practically irrelevant?. The article I wrote long back (and now many uses) on Web 2.0 and Academic Publishing is getting more elite recognition. Here is the final report of AASCB on Impact of Research.
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Peloton runs out of road: Being a victim of leveraged positions myself, I wonder why such products got created in the name of hedging and liquidity. All leveraged products should have a statutory warning. This is where I see Economist also coming out with Readers' comments. I also saw What's in the journals, February 2008 which led to Roll up your sleeves—midlife is your best and last chance to become the real you. and thereby following for other journal articles. I am not sure whether this is the vindication that contents (whatever sources, if meant for people at large) must be free, or similar practices have been there for long.

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The Reckoning : A different type of article from Bloomberg, and with lot of insightful numbers, as usual. '"A year ago, everyone thought trees were going to grow to the moon," Jamie Dimon, chief executive officer of JPMorgan Chase & Co., said in an interview on Jan. 27 at the World Economic Forum in Davos, Switzerland. "Obviously, 2007 was a much tougher year than expected, and 2008 is probably going to be the same."'.
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M&A Drop Presages Lean Year for Leaders Goldman, Morgan Stanley : '...investment banks raked in a record $42.4 billion in M&A advisory fees for 2007 for their work on $4.05 trillion in announced acquisitions'. SPeaks for itself...'By year-end, $865 billion in deals had been canceled, more than in any previous year...On Feb. 6, Rio Tinto rejected an all-stock offer from Melbourne-based BHP that would have been worth about $147.1 billion. A deal at that price would trail only the $186 billion sale of Time Warner Inc. to America Online Inc. in 2000 and Vodafone Group Plc's $185 billion takeover of Mannesmann AG in 1999.'

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UBS Faces Dearth of IPOs After Vaulting to Top in Stock Sales : 'The cut bankers got on U.S. IPOs last year averaged 6 percent, according to data compiled by Bloomberg. European initial share offerings generated an average fee of 2 percent.' I assumed these numbers to be much less...surprisingly high if equity is to be used as a low cost financing means of productive assets.
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Rupee weakens to 5-½ mth low as equities weigh: I am really concerned about the fall in Indian Rupee. Out of currencies of all major economies, it may be the worst performing globally. When US$ is in sort of a free-fall, INR still falls against US$ meaning the fall must be higher against other leading currencies. What a pity...the cries for subsidizing the exporters still abound everywhere in the lobby circles.
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Derivative Trades Fell Most in 14 Years in Money Market Freeze : The world trades nearly 10-15% of its annual GDP in derivatives trading everyday. Amazing.
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Venezuela, Ecuador send troops to Colombian borders : I saw the death of Raul Reyes in BBC as well, however as my funda of Latin American geo-politics is not as strong (Kumar has some knowledge of it, like Che Guevara and contemporaries like that). Understand that this is a significant news, but not sure of the implications much (nor know well the relationships the latin American leaders share amongst them).
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The Fall of the Dollar Empire : Came across this article with one of mine on crude, gold and inflation: I often wondered about the currency depreciation (the race to the bottom for export competitiveness and US being a late comer in that club though so long it was the founder and beneficiary of it) impact in US, and saw this: There are two views about the impact of the dollar decline on the US economy: one holds that it would eventually benefit the US economy through boosting exports while others believe that it damage the US economy. What is your opinion?

A.The export view is sheer unadulterated nonsense. The Dollar has been in fundamental decline since the end of WWII, as has its trade deficit!!! A weak currency is not a panacea for economic health. It merely delays the inevitable drive to increase competitiveness, as demonstrated by Germany which has again become the world's No. 1 exporter despite an 80 % appreciation in the Euro since 2001! The drop in the Dollar has, on the contrary, caused only a minimal reduction of its annual $ 750 billion trade deficit, which proves that US lack of competitiveness is truly endemic and not a function of exchange rates. A weak currency also boosts inflation as imports become more expensive. In America's case it represents a 'double whammy' because, while imports become more expensive they are unavoidable since the US doesn't produce many of the consumer goods it needs...The US is totally dependent on China's goodwill. If the US were to ban all imports from China tomorrow morning the US economy would suffer a heart attack as it would have to import those same goods more expensively from elsewhere. In retaliation, the Chinese would sell their surplus Dollar mountain and precipitate a global economic depression. The emerging economies would be better able to withstand such an Armageddon scenario because they are accustomed to hardship, while decadent US consumers are already bankrupt despite an environment of extended global economic growth. It went on to paint gloomier picture...
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Auction Supply `Tsunami' Foreshadows Deeper Municipal Losses : It's the chain reaction triggered by sub-prime to housing to CDOs to Muni-bonds and underwriters to student loan organizations ...to God knows what. A society running on insulins of credit is bound to face the squeeze at any place as the squeeze intensifies. All important question is, would it have a short-term impact or long term one. And even in long term or short term, how short and long they can potentially be? As I see it now, $: Yen stands at 102.88, I myself was bearish on Yen, and if this carnage continues, Yen can be at less than 100 a dollar within weeks. That still will not undo even half of all the carry trades, and I still keep my stand to be bearish over yen over the longer term (I am actually bearish on both dollar and yen, relatively more on yen). And on 3/3/08, as the world's financial markets bleed again from 29/2 losses of the NYSE/Nasdaq, China again shows that it has decoupled from the US markets.
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Gaza Pitfalls in Every Path : A solution must be found and this massacre must be stopped. Many say that's easier said than done, however I still believe it's difficult but possible. Abbas must ensure Palestine is united, and just for the sake of some useless power, he should not be a puppet of Israel/US. Neither the Hamas should run terrorist campaigns against Israel (though out of the two sides, which side is a worse terrorist is open to debate).

Copyright: Ranjit Goswami.

Best of the Web: February 2008: Geopolitics & Economics (With China Focus)

2008-01-31T22:34:00.000-08:00

Subprime Mess Highlights Need for Tough Rules: 'A modest proposal: Force banks to redesign bonus structures to reflect long-term results and avoid such risky practices.' I must than Sesit for this great proposal. It's not modest one, it's rather the most appropriate one.
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Yen Rises to Highest in Almost Three Years on U.S. Bank Concern : Not the smaller, but the excessive risk-taking banks should fail. Fed. should not only bail out the large ones, which if fail, may do long term good to the economy. US economy needs major operation, not small tumor removals.
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Central Banks and Gold: Manipulation or Money Management?: Another balanced article as Gold continues its journey to $1000. Can this comment be true: 'Think about it? There is more shorts than all silver on earth.' I doubt...and here is another: The Current State of the Gold Market (though actually it dated back to 2002, like many Gold related or classic articles in this blog)
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Microsoft Fined Record EU899 Million by EU Regulator : Whoa...what a piece of news for open-source supporters and Windows haters! '``Microsoft was the first company in 50 years of EU competition policy that the commission has had to fine for failure to comply with an antitrust decision,'' European Competition Commissioner Neelie Kroes said in a statement today in Brussels. ``I hope that today's decision closes a dark chapter in Microsoft's record of non-compliance.''' . No doubt a slap in the face...

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The gold standard: A precious metal that's not just an investment but a worldview too: And I may be the only (or rarest) goldbug who never bought any gold other than gifting my sweet wife couple of bracelets (that too only once in our ten years of married life). Yes, I take a philosophical view of being a gold bug. 'All of the dates Blumert brings up are occasions when the federal government took actions to divorce currency from its precious-metal backing.' . The comments lead me to this article: New York Merchants Embrace Euro. Amazing...yesterday I was reading the 100000% inflation and currency depreciation in Zimbabwe; who can ever think even a microscopic fraction of that hitting the veru USA. I liked this comment as well: 'Anyone who thinks that diamonds and gold are stored up so that they don't flood the market doesn't understand economics, or has bought the lie." I suggest you Google "diamond" + "stockpile", and read about the $1.5 billion diamond hoard in vaults in Israel, the $2.7 billion stockpile in de Beers' vaults or the $5 billion in vaults in Russia. If even a portion of these tens of millions of carats were dumped on the market, the price for the standard -- a 1ct. D-grade flawless diamond would drop from the artificially propped-up $15,000 to a fraction of that. It's all a monopoly -- the DTC -- a cartel run by the Oppenheimer family. Look 'em up on Wikipedia. This stuff is all common knowledge with unimpeachable documentation.'
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Commodity boom means double whammy for food groups: Yesterday we saw the FT. multimedia, and this today: 'food products account for only 9 percent of UK consumer's wallets compared to 12 percent in the last UK recession in 1991.' What worries me is the same figure may be 50% or even more for 70-80% of people in developing nations (or true for 5 billion people of our world). Even if I think about my family, it would be closed to 50%, if not more.

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ANALYSIS - Google winner as Microsoft and Yahoo face off: I also believe so, however without putting too much on the ComScore search-ad findings; I believe Google would also face challenges eventually if they don't own content eventually. 'Mountain View, California-based Google could also see its R&D advantage shrink with a combined Yahoo-Microsoft. According to Wolk, Google spends about the same amount of money on Web R&D as Microsoft and Yahoo combined, but as separate entities, there is a lot of overlap in that investment.' That was surprising...I thought Google spent less and was more efficient.
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Help hard to get for troubled U.S. home owners: I must say that I was taken aback by this line '"They're lying bastards," said Mark Seifert, executive director of East Side Organizing Project (ESOP) in Cleveland, on a tour of the city's ravaged Slavic Village district. On some blocks here almost every last home is boarded up.' but then...that's how many sees.

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Doomsday vault for world’s seeds is opened under Arctic mountain: Great idea, strategic move and that's what I call 'fail-safe' planning and implementation. 'Many varieties of seed kept in the vault are no longer used commercially but it is possible that they will prove invaluable as world conditions change.' As I was reading the comments (the one on McDonald and Obesity was great!), the NASA Saturn probe did raise some doubts. Never heards of it...can it be so devastating as some felt? Most, most probably no...still...however...

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TVS Motor — learning a key lesson : I did cover the story between Bajaj and TVS spark-plug patent case which Bajaj won, and I said them these are (were) early days for India. Without having the technical knowledge, and therefore not buying fully the TVS side of the story; I believe the learning should be fast; otherwise it will be another area of failed democracy and judiciary as visible in many aspects in India.
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McCain, Obama Remind Asia It Needs to Decouple: The columnist apparently has done great analysis and still got the wrong conclusions. He seems to have forgotten that financial markets rely on money chasing assets. And due to the financial integration and easy credit policy and lack of credit in Asia (can someone tell me what's the credit money/person in US against that in India or China? I believe it would be much higher even when one factors in real size of economy/person in these areas), it's FII's easy money that drives Asian markets significantly. And these FIIs know that there is Fed. to bail them out anyway, so why not own/grab/speculate cheaper Asian assets with borrowed money from the Fed.?
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Dollar Falls to Record Low of $1.50 per Euro on Rate Outlook : I can't help but get a feeling that my forecast (how stupid it is for any to forecast anything in financial markets!) is coming true when global media was agaog with Yen appreciation and possibility of dollar rising against Euro. Why yen can't appreciate is simple: that would lead to another round of financial shocks as carry trades get fully trapped, and it soaks up the already scarce liquidity. On top of that I have fundamental doubts regarding strength of Japanese economy in-spite of its latest 3%+ growth rate as stated. It will be up for Euro, however it's already reaching unsustainable level here too. Long term up is Yuan only...
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I must also state that all the Indian hollah-bollah regarding exporters loss and Rs. rise is also falling apart. Since last couple of months, although dollar has stedily weakened against Yuan and other emerging leading currencies, it did remain steady or even appreciated again INR. And if more shocks (bound to be at some point) hit global financial markets, I am deeply worried with $100+ crude and Indian huge trade deficit (20-25%% of its trade). No doubt, much of the global financial problems are attributed due to uncontrolled rise in M3 in Yen and Dollar.
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Google Falls as Fewer Search Users Click on Text Ads : Expected as we get bombed by ads everywhere. The success would depend only on the exact positioning. 'Clicks on Google's sponsored links -- text ads that run alongside search results -- fell 7.5 percent in January from a month earlier to 532 million, Reston, Virginia-based ComScore Inc. said late yesterday in a report. Sponsored search links accounted for most of Google's $16.6 billion in 2007 sales...Billions Erased: Google fell $22.25, or 4.6 percent, to $464.19 at 4 p.m. New York time on the Nasdaq Stock Market, the lowest since May. The stock has tumbled 37 percent from its high on Nov. 6, wiping out about $17 billion in combined wealth for co-founders Larry Page and Sergey Brin. ' . That's awesome as it touched $700 as well if I am not wrong.
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Goldman, Lehman May Not Have Dodged Credit Crisis : If both the facts of Citi having $320 bn in VIEs and VIEs being worth 27 cents to a dollar are true, Citi is sitting over $250-odd bn of losses. That, again if true, and allowed to be operated with market forces, should be the death knell of Citi. So something is amiss somewhere, or as expected, market forces will be tethered again.
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Lou Suffers Blackstone's 'Fat Rabbits' in China Fund : It's too soon to judge Lou on his investment decisions, and all said and done, SWF, more so from China, would look at strategic interests more than investment returns. The article again shows how China develops professional policy-researchers and makers.
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We must curb international flows of capital: Excellent...I need to visit FT more often.
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Why are food prices rising?: The price rises, starting with inputs to agri-commodities, many by almose 7-10 times in last as many years, are phenomenal
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Yang: Microsoft Bid Was a “Galvanizing Event” for Yahoo: Insightful, philosophical statement; however time may be running out. The comments are also interesting.
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Wheat Breaches $12 for First Time After Biggest Gain Since 2002 : EVery alternate day I see wheat prices closing at upper circuit and something inside me tells me: it's an awful sign. Like Indian peeny stocks, but happening with the most used food item globally. Something fundamentally wrong. And inflation is contained...wonder how.
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Pearson Isn't Making Web Trade Better Than Newspapers : It may still be the trailer, the actual movie, when begins, will be fast and bloody. Text book publishers (and authors too) still make a lot of money in India, China and other populous emerging nations where books are comparatively cheap and online access is less (also awareness amongst faculty is less, the biggest reason). 'U.S. college students using Pearson's online learning programs jumped 44 percent to 1.3 million this school year.' .
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Google, Gates, Indian Diaspora Bet on Children: '...at 30 U.S. cents per child per year, the basic math, reading and writing skills required to help young learners retain their interest in education and keep them from dropping out of school are ridiculously cheap...Together, the two charities offered to help 10 million students for three years by pledging $9 million last year to Read India, an initiative of Pratham, a Mumbai-based not-for- profit organization for which Patel is a fund-raiser. Google.org, the philanthropic arm of Google Inc., chipped in last month with a $2 million grant to help fund Pratham's annual survey of the qualitative aspects of primary education in India. ' I also had a look at their (Pratham) site, and they deserve credit (it's being operational for long...)...'The remedial Read India program will have been administered to every child who needs it by 2010. But that, as Patel says, is just a ``one-time antibiotic shot.'' ' That's right. Education and information gathering is a continuous process.
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FCC Head Says Action Possible on Web Limits: As a researcher, I have been following network neutrality (and unlimited tariff plans mostly in place in the US). The future would have challenges as no firm directions emerge. 'Industry watchers said the chairman's comments were his strongest yet against the carriers. The prospect of punishment for those who violate the FCC's 2005 policy statement safeguarding net neutrality could pave the way for legislative action, some analysts said. With the backing of Martin, a Republican, the FCC's two Democratic commissioners -- both supporters of net neutrality -- would have the majority. "Martin has never had a clearly elucidated position on this, but we're seeing what Martin thinks now and he has the swing vote on this," said Tim Wu, a professor of law at Columbia University, following his testimony at the hearing. "He thinks that it's a consumer rights issue; whether that is a principle for the ages or principle for the case we don't know, but he certainly sent a message."' It also is covered well here: Comcast, net neutrality advocates clash at FCC hearing
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Bill Keller: "I'm proud to stand by this story." Times Public Editor: You Were Wrong To Run It: NYT seems to have lost this case...though (again not knowing much), I was for the NYT. Does it speak about my bias, my stupidity or my dislikings of the Republicans (as seen by the Cheney lot).
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I also saw certain articles in the Asia Times Online and from there went to the daily reckoning. I heard about it many times before, but visited it (probably, and consciously) for the 1st time. 'Until now, central banks could get away with soft money policies, because the Chinese offset increases to the supply of money with massive increases to the supply of labor. Millions of Chinese moved from the farms to the factories - lowering the price of labor worldwide…and with it, prices of consumer products.But there are many things cheap labor can't produce - oil, for example. And gold. And copper. And food. Copper is up 22% so far this year. Gold is up 11%. Wheat is off the charts. And oil broke through the $100 barrier just this week...Everybody loved inflation when it pushed up their stocks and house prices. But they hate it when it boosts the cost of their bread and taxi fares. Only gold investors like consumer price inflation. Hence, the smart money is wagering that the price of gold will go up…and so is our money!..These fellows (read central banks, Fed.) challenged the gods - pretending that they could control the markets and the business cycle. Of course, they couldn't. All they could do was to use the old familiar Keynesian flimflam…print a little extra money so as to trick people into thinking they were wealthier than they really were...And when you add in the states and local governments also borrowing and spending, borrowing and spending, borrowing and spending, too, you are suddenly talking about 75% of GDP being government spending! ' Can the last part be correct (when consumer spending is also 70% of GDP, true both can overlap). As I read, I understand inflation in Zimbabwe is more than 100000% (annual)...my stand is same here: 'All we know is that, now, the Gods are having their revenge. And while it may be painful to investors, homeowners, workers, and just about everyone else, it is nevertheless instructive. And for a mischievous economist - still fun to watch.' As I read this (I thought the US exports weapons and food and Boeing) '*** The United States is now a net importer of food, we read recently. If we understand that correctly, there is no longer enough food Made in the USA to feed Americans' appetites. Colleague Dan Denning began a nervous discussion on the topic when he sent this article from the Financial Times, with its headline reading: "The next crisis will be over food"'; I am deeply worried about India and all the middle-class and poor people in the developing world (South Asia and Sub-Saharan Africa particularly). One can look at Goldman Sachs foresight in Housing, now they are bullish on agri-commodities. '"But outsourcing your supply of food and water…depending on unfriendly or unreliable trading partners to keep sending fresh fruit and poultry…or thinking the global system of trade will forever expand and never again contract…these are all dangerous assumptions that could leave you with an empty national stomach at night."' '"In 1908, good farmland in England was worth about 45 pounds per acre. Similar land would now be worth about 4,500 pounds an acre…On that basis, land has risen by about 100 times…over the last century. "We can be more precise about gold. In 1908, an ounce of gold was worth four sovereign coins. At the current dollar price of $900, an ounce of gold is worth about 450 pounds, or about 110 times what it was worth a century ago."...Barclays Equity Gilt study, which the bank has been publishing for the last 53 years, takes a long view of the performance of British stocks and finds that for nearly 100 years - from 1899 to 1985 - U.K. stocks actually lost investors money. Compared to retail prices, the real return on equities over that entire period was negative. But in the 20 years following, share prices - in real terms - more than doubled. In America, the capitalists' stock rose even more. The Dow index went up more than 1,000% from '82 to 2000. Nor was this boom confined to the Anglo-Saxon economies. The Russians wised up fast, knocked down the wall, renounced communism and cut tax rates down to a third of the level in Britain. The Chinese kept their government but changed their creed: 'To get rich is glorious,' said Deng Shao Ping. The Indians dropped the "license raj" and got down to business. The whole world bustled and boomed. ' And still we don't learn...''Capitalism doesn't work,' said the sore losers and whiners. 'It favors the rich,' said the envious. "It needs to be controlled," said those who wanted their own fat fingers on the knobs and levers.' Very true...'The baker, for example, wants his own costs controlled and the bakery across the street put out of business. The factory owner wants the borders sealed against foreign imports. And the working man thinks he should have his job as a matter of right. What they all want is protection from capitalism…from the future…and from the unknown. Everyone wants a softer cushion under his derriere and he'll vote for the politician who offers it to him most convincingly. And almost every voter wants to stop free markets from doing what they do best'

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Internet & the US election: I took a look at both Obama for America and also at Hillary for President. Both look good with points that I didn't like also, however Obama apparently had an unconventional approach.
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Bernanke, Bush Fail to Build Better Economy With Cuts, Stimulus : Though my opinion on this issue had primarily been same (or even more severe), I also acknowledge that it's too early to make any comment on the impact of those decisions. Interesting to note this point: 'Households reduced their savings rate to virtually nil in December from close to 10 percent of disposable income 15 years earlier. That trend may reverse as credit becomes scarcer and home prices fall...Allen Sinai, chief economist at Decision Economics in New York, calls the pullback by consumers ``a seismic shift. For several years, the growth of consumer spending is going to be significantly below its long-run average of 3.5 percent.''
' . Meaning around 2.8% of growth came only from consumer spending (at the cost of savings or even by borrowings?). 'The increase is stoking fears of more to come. The yield on the 10-year Treasury note, which acts as a benchmark for mortgage rates, rose to 3.80 percent on Feb. 22 from 3.44 percent a month earlier, even though the Fed reduced its overnight lending rate by 1.25 percentage points during the period...Robert Gordon, a professor at Northwestern University in Evanston, Illinois, says the surge in productivity that began around 1995 was a one-time event sparked by the advent of the Internet. He pegs the underlying growth rate of productivity at about 1.8 percent, down from a high of 2.9 percent earlier this decade. Nobel laureate Edmund Phelps says there's little the Fed can do when faced with such a structural change. ``We've had a series of booms, and it seems to me they are now over,'' says Phelps, an economics professor at Columbia University in New York. ``As a result, we're going to see a period of slower growth than in the past.'' '.
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Hong Kong Stuck Between a Peg and a Hard Place: No doubt a well-written and researched article from this veteran. However all said and done, the need of this comes only due to misuse of its superpower status as often followed by the US (abd thereby status of $ in global currency market).
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Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish : Sounds ludicrous, but that's how corporate world works. Rules are meant for end-consumers, rarely for the corporates and implemented that way only.
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Nader Says He's Running for U.S. Presidency Again : Although I don't know anything about Nadar (and my knowledge about other candidates again being poor and superficial to a certain extent), what I appreciate is this reckoning: '``When you see the paralysis of the government, when you see Washington, D.C., be corporate-occupied territory, every department and agency controlled by overwhelming presence of corporate lobbyists, corporate executives in high government positions, turning the government against its own people, one feels an obligation to try and open the doorways,'' he said'.
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Investor group ready for New York Times proxy fight: Again on NYT...
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McCain story proves incendiary among journalists, conservatives: I saw the original story in NYT, and we also had Bill Keller's article on quality some time back. This article now shows how much research and investment these guys make for one story...any single example from India (I know there are few, but those also focus more on creating a hype rather than the issue). And on 23rd came 2nd NYT on this...one can be sure that NYT was not shooting in the air
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Microsoft targets sizeable online ad market: Interesting keeping my research interests and domestic market. $130 million and 50% or so growth rate isn't bad keeping in mind some 50-100 million (and all the figures in India vary) users. So roughly $2-3/user whereas total comes to $5/user. 'Bahat na insaafi hain' if one had to use the words of immortal Gabbar of Sholay.
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Conservation ‘halts cross-species plagues’: Good reading in a new area...never thought as such about it! The 1st comment was wrong about India.
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Magazines Up for Sale, Including Variety : It happened with Life, and more of it will happen as the evolution of content takes place. I was wondering whether Reed-Elsevier and Elsevier are part of same firm or parent-child. Probably. What would be interesting to observe is how academic publishers would get over the tide.
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Google Health Begins Its Preseason at Cleveland Clinic: Though I was expecting something different (How internet can help in diagonosis of rare medical cases)...however this gives me an idea that just like one stores photos, why not have a site to store the scanned copies of all your health records (till automatic updating takes place).
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'Benefit everyone, not just people like ourselves,' Gates tells Stanford students: I am a fan of this gentleman, and have great respect for him. '"People shouldn't graduate without having an understanding of the average living conditions of the poor," said Gates, pacing the stage at Memorial Auditorium. It is a "focus, a value system, that will drive more rapid change. "If you look at medical research - consider how much money is spent on (preventing) baldness compared with malaria," he said. "It's 50-to-1 for baldness. Malaria kills a million people a year."' And we want free capital market economy in India too!
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Yuan Climbs After China Pledges New Policies to Curb Inflation : For long I have been an admirer of Chinese policies, more so on monetary, financial and globalization related (with geopolitics too). What I would like to stress is the word 'Innovate' and searching for new policies continuously. What US Fed. and Govt. has done lately is nothing but innovating policies to help US economy (though I doubt its sustainability over the longer run); and by doing that they again try to pass the inflation to the rest of the world as they have done many times before. Developed world produces paper money, developing world produces goods...now it has gone too far as developed world borrow from poorer developing world to consume more! And traditional tools may not be much effective with free flow of capitals, people of developing countries not having credit access and assets being comparatively cheaper again. So one needs to always ensure that the real asset of people of developing world does not get transfered to the developed world for credit money alone. This is a complex thing...however China has so far been able to manage it excellently. Can it do it again as inflation shoots? They may but again without allowing Yuan to appreciate faster (mid-term measure) and finally by not allowing free credit to US (long term measure), they can do it; but both would have counter-effect as productive capacities would go down as demand falls.
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India struggles to tame its heart of darkness: Good article, however the question is not about 10% of Bihar's population alone. It rather is about anywhere between 50% (to 70 or as high as 85%) of people getting marginalized. 'Bihar's economy failed to register any growth in the first half of the 1990s, and has grown at just under four percent since, less than half the current national growth rate and barely one percent in per capita terms...Criminal convictions were almost unheard of in the reign of Laloo Prasad Yadav and his wife Rabri Devi. A new system of speedy trials helped secure nearly 10,000 convictions in 2007. Kidnapping for ransom, Bihar's biggest industry in Laloo's days, has fallen four-fold. In the past two years, more than 200 cases have been registered against corrupt government officials.' And then some faculties of IIMs or HBS think that the same man who ruined Bihar for a such long time is revamping Indian Railways...to get merely some political mileage. 'But the problem of Bihar -- and by extension the problem of India's widening inequality -- has even broader implications.'

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Wheat Shreds Goldman, USDA Forecasts Belied by Gains : Can be much more disastrous for a large number of people, more so in India, China, SOuth Asia, Africa than the impact of crude on economy.
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Equity Trades Defy Economy as Wall Street Transformers Abound : I am indeed surprised to see the volume (and thereby depth) of the NYSE. Almost all the m-cap got traded already...whereas in India (and not including derivatives, and also NYSE does not have derivatives), yearly turnover would be around m-cap. Another difference is, volatility (with a downward bias) increased trading there whereas it reduced trading in India. Speaks for itself on how Indian markets are susceptible (and therefore can be manipulated) easily by large players, primarily large FIIs.
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Alibaba has say in Yahoo, Microsoft talks & Alibaba, Beijing Fear Microsoft's Business Tactics: The earlier Bloomberg article raised few of these concerns which now are growing. I didn't know Yahoo! stake in Alibaba is as high as 39% (whereas Google apparently did sale its stake in Baidu).
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Looming end to DVD war cheers consumers: I followed this story for almost last 4-5 years (?), and Chinmoy did a case on that (like many of his works, he gave me credit for that too although other than the topic, I didn't even add a single word to it. I miss this great young guy (he helped me with lot many things, now even with this blog); and I have probably seldom seen such great character, honesty, sincerety, simplicity, modesty. Back to Ranchi now to look after his family.
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HC restrains TVS from launching Flame motorcycle : Interesting case for Indian patent office and judiciary...hope they are doing a good Job.
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Bernanke's Rate Cuts Force Asia Back to Price Limits, Subsidies : I can't help but state - 'Look. Who's preaching...and to whom?'
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Preparing For The Aluminium Boom: At times, I find the best analysis in many of this gold, commdities or off-main-stream media (which aren't strictly speaking alternate media as well). I read about Chalco & Alcoa picking up Rio shares, but until now no one talked much on the Aluminium side. Real good indeapth article
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Yahoo's Chinese Math Proves Miller Is Right at $40: Good and timely article...should have been there even before
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Hong Kong shares end morning sharply higher on Wall Street lead: I fail to get this again...the cheer in global equity market on 13-14/2, all led by o.7% change, upside one, in the US retail spend. That means US consumers did spend roughly $7 billion more in January (month on month or whatever these 0.4% drop and o.3% increase mean). And global financial markets, more so equity one, went up by a cool couple of trillion of dollars. Rather than focusing on fundamentals, savings, productivity, real economic growth and not on credit-driven economic growth; I don't understand on what we have been focusing. US economy is in a mess...irrespective of whether consumer spending reduces by few points or goes up by that. Tightening of consumer spend is quite good on the long run (only negative can be jobloss). So here you have someone, if someone has that interest, spend $7 billion more to get couple of trillion dollar of return within month in global equity markets. And credibility of Fed. to treasury to banks to governments is right that they cal easily manipulate that.
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Africa bright spot in Bush foreign policy legacy: Is it clearly so? I was getting the picture from global media that it is China who build its influence the most in Africa over last few years. True, many of the ruling regime in Africa may be having their loyalty to US (and President Bush), however on ground the alienation is more as more and more terrorist/violence acts get reported (in few cases with increased activities of Al Qaeda also).
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Japan Economy Grows 3.7%, Twice as Fast as Expected : I really really fail to understand this...after months of speculations on low growth rate, the sudden rate jumps to 3.57%. And Inflation, though lately on the rise, but still probably in 1-3% (or whatever) again defies logic when foodgrain prices globally are up by close to 100% in last couple of years, and so for oil, metals, shipping freight, one does not understand what inflation indeed measure (excluding energy and foodgrain, talk about services, real estate, rent...anything). Probably the inflation they measure follows Moore's law as applicable for electronics sector...a lot of hogwash indeed. However sometime back we saw a report that showed China to have replaced US in term of largest trading partner (both import and export even, if I remember right), and that again explains how Japan is more insulated now from a US recession than in earlier times. 'Rising oil prices may have boosted growth in real terms. The GDP deflator, a broad measure of prices used to calculate real growth from nominal, fell 1.3 percent from a year earlier, the biggest drop since the first quarter of 2006. The deflator is adjusted downwards when oil prices rise. In nominal terms the economy grew an annual 1.2 percent in the fourth quarter.
The GDP figures are preliminary and will be revised on March 12.' Amusing, indeed...
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Americans Selling Homes See Prices Go Below Mortgage : Nothing new as such, barring few more stats and numbers (like the wealth of an Average American is around $200,000 of which 33% is in real estate...I wondered what may be the debt/American again... at most a fifth of that?)
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Comcast Investors Seek Buyback, Payout as Shares Drop : We are yet to see similar investor activism in India, say against the Government for killing MTNL slowly (or the oil maretsing firms), against ABG for not rewarding anything in Hindalco and going through massive expansions and acquisitions. Cases are many, many more involve corrupt businessmen (Essar, Videocon...lot more as few are not corrupt).
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Developing Countries Grew More Biotech Crops in ’07 : The dimension of sustainability often gets linked with this (at least many believe, I am still confused about it). 'In 2007, 282.3 million acres of the world’s cropland were planted with soybeans, corn, cotton and other crops genetically altered to resist pests and herbicides, an increase of about 12 percent from the previous year, according to the report. The report drew criticism from advocates of traditional agriculture, who warned that adopting genetically engineered crops could trap poor farmers in a cycle of debt to the multinational companies that own patents on the seeds. Clive James, the report’s primary author, said reduced pesticide spraying and increased yields had brought down the price of production in “a very significant way and a sustainable way.” American farms continued to dominate biotech agriculture, devoting more than 142 million acres to engineered crops, led by soy. The planting of biotech corn rose 40 percent in 2007 from 2006, to nearly 20 million acres, driven mainly by the demand for ethanol. Argentina led developing countries with 47.2 million acres in biotech corn, soy and cotton. Brazil was second with just over 37 million acres of biotech cotton and soy. India grew 15.3 million acres of genetically engineered cotton in 2007, its only biotech crop. Spain ranked highest among European countries with about 173,000 acres of genetically engineered corn but was 12th over all. European countries have been among the most resistant to genetically engineered crops because of health and environmental concerns. According to the report, 8 of 27 European countries planted biotech crops in 2007, up from 6 the previous year, totaling about 260,000 acres.' Cotton farmers in India pais dearly, many even with their lives...
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From a Bloomberg article, came to know about Kishore Mahbubani, and his book The New Asian Hemisphere: The Irresistible Shift of Power to the East. 'Will the West resist the rise of Asia? The good news is that Asia wants to replicate, not dominate, the West. For a happy outcome to emerge, the West must gracefully give up its domination of global institutions, from the IMF to the World Bank, from the G7 to the UN Security Council. History teaches that tensions and conflicts are more likely when new powers emerge. This, too, may happen. But they can be avoided if the world accepts the key principles for a new global partnership spelled out in The New Asian Hemisphere.' STated often, but true...'alternative weltanschauung'...new concept but no doubt needed now.
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Asians Shouldn't Have to Be Reborn to Get Rich: Though the findings are good, I won't agree with many of the interpretations. Take for example Reliance Power IPO debacle, the failure lies more in fundamentals than a global market meltdown. The whole issue was a hype and fooling people, true in case equity market remained high, selling a hype is easy. However one can fool others quite a few times, but not always. Or even 'The poorest 5 percent of Germans are, as a group, at the 73rd percentile of the world income distribution, which makes them more affluent per capita than the richest 5 percent of Indians' has any meaning on per capita income basis. However I agree with this, again on a per capita basis or even more holistically: 'If each nation's population is divided into 20 income classes, then climbing nine rungs from the bottom -- a tough task in societies where vested interests allow only limited social mobility -- will take a person the same distance as can be more easily traveled by being born in a country twice as rich.'

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U.S. Payrolls Decline for First Time in Four Years : Many times they come up with revised data later on...however this is in expected line.
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Exxon Profit Rises as Oil Surges Toward $100 a Barrel : Quarterly profit of $11.7 billion and yearly $40.6. I am not sure what's the highest quarterly or yearly profit recorded by firm...number are mind-boggling (they can buy ONGC with one year's profit!). BP reported around $27 billion (annual) profit...'Profit for all of 2007 was $40.6 billion, topping Exxon Mobil's own record for full-year earnings by a U.S. company. Fourth-quarter revenue rose 30 percent to $116.6 billion.'
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Here's the big news of 2008: Microsoft Bids $44.6 Billion for Yahoo and Microsoft Offers to Buy Yahoo for $44.6 Billion : BW did have an article on that long back (where I had a comment, and I have been proven wrong now). 'Google, based in Mountain View, California, captured 56 percent of U.S. Web queries in December, almost double the combined share for Yahoo and Microsoft, which attracted 18 percent and 13 percent. Searches will account for 37 percent of the $27.5 billion U.S. online advertising market in 2008, estimates research firm EMarketer Inc.' By 2010 online ad market expected to be $80 billion...'The purchase would be the largest acquisition ever in the technology industry, surpassing Kohlberg Kravis Roberts & Co.'s $26 billion acquisition of First Data Corp. last year, according to data compiled by Bloomberg.' . Here's another article on it (Microsoft offers to buy Yahoo for $44.6 billion) and the 4th one (INSTANT VIEW: Microsoft bids for Yahoo). 'Internet audience researcher comScore estimates Google's share of the worldwide Web search market has reached 77 percent, while Yahoo is second with 16 percent and Microsoft was a distant third with 3.7 percent...Microsoft said the online advertising market is growing rapidly and expected to reach nearly $80 billion by 2010 from over $40 billion in 2007. It added it is "increasingly dominated by one player," referring to Google..."I would not be surprised to see this bid have to be raised over time," he said. "I think there are companies out there like Comcast (Corp) and Viacom (Inc) and others that still need to address the emergence of online media and haven't. So there are clearly other strategic companies out there."...The Microsoft-Yahoo deal would be the largest in the Internet market since the $182 billion purchase of Time Warner Inc by AOL in 2001, which was seen as the worst merger in recent corporate history, with clashing corporate cultures and many of the promised synergies never materializing. ' The other stated: '"It's about time. Great for Microsoft. Great for Yahoo shareholders. These Internet markets are winner-take-all markets and they cannot be built. Time is too valuable. Yahoo has one of the best positions on the Internet because it's integrated brand (advertising) with search..."They're in a pole position in several major industries. I expect News (Corp), Comcast, and GE will look at it. But Microsoft is paying a lot because they're trying to scare away other bidders..."Shocking! To me, the premium seems exorbitant, for what is a dwindling business. I personally don't see how the synergies of Microsoft-Yahoo is going to take on Google."It will obviously help the stock market immensely -- the overall market loves a big deal, here you go, and the futures are screaming.
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My views were similar...

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China Tries to Reassure U.S. About Its Investing Plans : '“We are like farmers — we want to farm our land well,” said Lou Jiwei, chairman of the China Investment Corporation, a so-called sovereign wealth fund established last year to invest some of China’s foreign exchange reserves...Referring to the $5 billion stake in Morgan Stanley that the fund purchased in December, Mr. Lou added: “Of course when there is good market opportunity, we can also make some direct investment, such as the Morgan Stanley deal.” Mr. Lou said Morgan Stanley had approached the Chinese fund rather than the other way around and that “after analysis we realized that this was a good opportunity.” He added: “If there is a big fat rabbit we will also shoot it. Some people may say we were shot by Morgan Stanley. But who knows?” China made headlines last May when it announced it would purchase a $3 billion stake in the Blackstone Group, a private equity fund. But Mr. Lou said only a third of the fund’s $200 billion in assets would be used to buy foreign assets. The other two-thirds are to be used to shore up three Chinese commercial banks, he said...Echoing what he said was a pledge by Prime Minister Wen Jiabao, Mr. Lou said that the Chinese government would not interfere in the operations of the Chinese fund or dictate its investment decisions, and that the fund would have its own corporate governance structure.'. Looks like the gentleman is answering various concerns of SWF raised in Davos recently.
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Sprint Plans Big Write-Off Of Assets: $31 billion write-off...I wonder any large scale telecom acquisition (where parties both not present in market) did pay off. 'Thomas Watts, an analyst who follows Sprint for the New York investment bank Cowen and Co., said the announced write-off was characteristic of a regime change. "Frankly, it is a fairly classic move by a new CEO," Watts said. "I come in, and I take a lot of charges. I write things off, and I blame it on the previous management." A $31 billion write-off would likely result in a big fourth-quarter loss. In the corresponding quarter of 2006, the company reported a profit of $261 million...The failure has led to deteriorating service and an exodus of customers. "They are at a big competitive disadvantage," said Bruce Greenwald, a professor of finance and economics at Columbia University. "They don't have a dominant share in any market that they compete in." ' Yes, many times to create competitive advantages, we rather do the opposite.
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China advises millions to abandon travel plans: 'The trip is often the only bright spot for workers who toil all year long in factories far from home. For an estimated 178 million people -- the size of the combined population of Italy, France and Britain -- the annual trek is sometimes the only opportunity to see family that they leave behind. This year, the holiday begins February 6.'
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Budget Hits $3 Trillion As Debt Marks Bush Legacy: 'The longer-term picture is darker. Despite his efforts, Mr. Bush failed to work out a deal with Congress to tackle the spiraling costs of government health and retirement programs. The next president, if he or she serves two terms, could find the U.S. government so deeply in hock that it would face losing its Triple-A credit rating, something that has never happened since Moody's Investors Service began grading U.S. securities in 1917.' Many never thought about it...we assumed that US Government by default enjoys triple-A credit rating. Great to see these institutes that capitalism has created, however behind the veil, there is a different game. As bond insurers cry for more money now as losses mount, and municipal bonds count losses from their sub-prime buying and other credit businesses; I would still like to keep my fingers crossed (although stocks responded quite well to the rate cut). 'The president's critics say his failings are twofold: He has squandered surpluses that could have helped pay down the $5 trillion federal debt. And he has let two terms pass without persuading Congress to take action that would preserve the government's social programs. According to the Concord Coalition, a fiscal watchdog group, the shortfall in Social Security and Medicare through 2080 will total $72.3 trillion, a number that dwarfs the impact of Mr. Bush's spending and tax cuts.' Good that someone studies that far (given a choice, I may at best do some ball park calculations, but not study or research); wonder if anyone in India ever bothers! 'In 1999, Moody's started a series of five downgrades of Japanese government debt after the debt reached 90% of the entire economy. "That could happen in the United States if these programs aren't reformed" as 2020 nears, says Moody's Vice President Steven Hess.'

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

2007-12-04T21:12:00.000-08:00

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.

बेस्ट ऑफ़ थे वेब - इकनॉमिक ऎंड गेओपोलितिच्स - दिसम्बर 2007

2007-11-30T17:42:00.000-08:00

China to push telecoms overhaul in 2008 -Xinhua: 'Industry sources have speculated for more than a year that Beijing intended to split up China Unicom's (0762.HK: Quote, Profile, Research) wireless networks and hand them off to fixed-line players China Telecom (0728.HK: Quote, Profile, Research) or China Netcom (0906.HK: Quote, Profile, Research). But that, and other proposals have been dogged by infighting and local interests, the sources say. Now, Beijing realises that full-service players serve the industry's best interests, the Xinhua News Agency reported.' This is the market that probably accounts for 30% of global phone users (and soon would be on Internet as well), therefore any moves would affect what will be the norms in the world in future too. True, today they take signals from the world, but going forward it may be partly reversed as well.
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Japan's Nikkei index falls 11% in 2007, first loss in 5 years: Looks a bit ironic that the country that fules much of the asset bubble thro' Yen-Carry-Trades, itself deflated. Probably that's the natural outcome and it's been seen again and again with $. Take money away from costly domestic assets, create bubbles in emerging markets, sale and make money and reinvest in domestic market. The cycle has worked well so far, and must stop now for better equality and to stop the siphoning of assets from developing nations to the developed ones. 'The dollar has lost about 5% against the yen for the year.'.
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Dollar Is Near 2-Week Low Against Euro as Housing Slump Deepens : I wonder whether Fed. needs any reason to cut rates (matter of fact is they will anyway cut rates...that's been the foregone conclusions so far. Only thing is media will speculate and so would markets). On the other hand, this looked a bit surprising...Dollar Strategists Predict End of Bear Market in 2008 : Yes, I have rather different opinion...both yen and dollar will remain weak or at best maintain status quo. Buffett bets on America with latest purchase is less about America and more about fundamental business: 'Buffett generally favors companies with easy-to-understand businesses, strong management, consistent earnings power, good returns on equity, and little or no debt.'
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Sector Glance: Apple Passes $200 Mark: May be, following Google, one can also say 'Investors hate a matured Apple'. So long Apple was immatured in releasing products before their time, and now they get it right. If I am not mistaken, before iPod, the share may be languishing in 20s or so (and last year low was $76 as the article said). What's the m-cap - 167.67 billion...I believe that's higher than IBM again (no...not really IBM at 176 billion+...). But that's awesome for Apple. PE for Apple is at 50 whereas for IBM it is at 16.5, and for Google, PE is at 55 and m-cap is at 210 billion ($). Microsoft is at $389 billion (m-cap) and PE of 24-25.
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Mr. Market's Dear Santa List Has Fed Funds at 1%Hilarious, and hard but true...
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Home Prices Fell Faster in October : The story still unfolds. 6.1% or so down since July 2006, and expectations are 10-30%. And I said earlier, the various attempts by the Wall Street and the Fed. in not allowing the corrections to take place would rather hamper the economy longer than a quick sharp correction (true, it's painful and that's why I advocate Fed. should directly aid the end-consumers than trying to bail out the Wall Street where resources spent will be more, ineffective and also would take years).
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Savannah Cries About a Bicycle Left Behind in Reset of Subprime : ``Derivatives don't reduce risk, they shift risk,'' Kasriel says. ``The development of the derivatives market enabled investors to shift risk at a lower cost, and that encouraged them to take on more risk.'' Who knows it better than me...'From 2001 to 2006, as U.S. home prices rose 50 percent nationally, owning the debt and guessing that borrowers would keep current paid off. Since July 2006, however, when housing supply began to outstrip demand and the number of late payments started to rise, the short position, or wagering against the performance of mortgages, has prevailed...Mortgage salesmen peddled loans ``based on the borrowers' ability to refinance rather than the borrowers' ability to repay,'' said David Einhorn, co-founder of Greenlight Capital LLC in New York and a former director of New Century Financial Corp., the second-biggest subprime lender in 2006, at an investors conference in October. If the borrowers defaulted, the mortgage salesmen still got their commissions. Now many of them are jobless and broke. '
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Dollar May Fall to 95 Yen on Housing Slump, MUFG's Mizuno Says : 95 took me also by surprise, because Japan's economy also look no better (other than savings rate of public and trade surplus; however govt. debt is one of the highest). I see both the US and Japanese economies to be very much inflated; and therefore yen:$ would rather gyrate within a range, and that range can be as wide as 95-125. But no uniform directions can be stated. 'The dollar depreciated in five of the past six years against the euro, leading Asian and Middle Eastern nations to diversify their reserves. The dollar made up 64.8 percent of central banks' currency reserves in the second quarter, down from 71 percent in 1999, the year the euro made its debut, according to the International Monetary Fund. The euro accounts for 25.6 percent. ``Now is the beginning of the end to dollar standard system,'' Mizuno said.

Housing Slump

The Fed will be forced to cut rates from 4.25 percent to 2.25 percent by the end of 2008, Mizuno said. Interest-rate futures on the Chicago Board of Trade show traders see a 76 percent chance the Fed will cut its benchmark rate to 4 percent at its Jan. 30 meeting. Home prices in 20 U.S. metropolitan areas slumped in October by the most in at least six years, a private survey may show today, according to a Bloomberg News survey. The S&P/Case- Shiller home-price index, which has data back to 2001, may show prices dropped 5.7 percent in the 12 months that ended October, a 10th consecutive decline, economists forecast.

``The U.S. housing bubble saw prices overshoot,'' Mizuno said. ``The S&P/Case-Shiller home-price index may drop as low as 10 percent in the first half of next year.''

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China repeats pledges on energy security, price reform
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Unpaid credit cards bedevil Americans: The obvious question is: how far this credit-led growth can continue? Some of the comments are interesting...
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Toyota sets an ambitious sales goal: At 9.95 millions (production and sales of 9.85 millions), it will be probably higher than all cars sold in China (and marginally lower than figures of the US and Japan itself). 'Its recent growth has put Toyota Motor on track to beat General Motors to become the world's largest automaker by sales. GM has estimated that sales this year would total 9.3 million vehicles, against Toyota's estimate of 9.36 million sales...The Detroit automaker (GM) holds the industry record for annual global vehicle sales - GM sold 9.55 million vehicles in 1978.'
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Holiday Spending Is Weak, as Retailers Expected : Quite a few reports so far stated same. 'Spending from Thanksgiving to Christmas rose just 3.6 percent over last year, the weakest performance in at least four years, according to MasterCard Advisors, a division of the credit card company. By comparison, sales grew 6.6 percent in 2006 and 8.7 percent in 2005...Luxury purchases rose 7.1 percent, as the well-heeled splurged on $600 Marc Jacobs trench coats and $800 Christian Louboutin shoes. Footwear, at all prices, proved a bright spot for the clothing industry, with sales surging 6 percent...In the end, analysts said, the biggest winners are likely to be Wal-Mart, which emerged as the undisputed low-price leader this season, and Best Buy, which became the destination for competitively priced electronics...MasterCard Advisors predicts that shoppers will spend up to $60 billion over the next seven days, as they redeem gift cards and exchange unwanted ties and sweaters for the items they truly want...Like MasterCard, ComScore, a research firm, found that online spending rose steadily to $26.3 billion.
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BOJ Was Concerned About Global Growth, Minutes Show : Unfortunately the assessment remains so for nearly two years (and five years before that during the 0% interest rate); and no actions on tightening liquidity was seen. The money simply flows in emerging markets (less liquidity) and damages those economies. stripping assets from local ownerships (true, productivity improves, but what about the longer run?).
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Japan Mines `Flammable Ice,' Flirts With Environmental Disaster : Said feasible after $54/barrel of oil, and pilot project being tested in Canada. 'If successful, the gas drilling project could help Japan reduce a liquefied natural gas import bill that last year was 2.66 trillion yen ($23.3 billion). The country's LNG imports totaled 62.2 million metric tons, equivalent to 3.03 trillion cubic feet, according to the Ministry of Finance's trade report.'
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Wipro Gains Most Since May 2004 After Report on Cap Gemini Bid : The quality of the article is as such poor in terms of Bloomberg standards. However the news was in the air for quite some time (at least within people in IT circle in India). Cap Gemini, incidentally is 'Europe's largest computer services company Cap Gemini SA' and 'Cap Gemini is ``almost four times the size of the Indian player,'' Deshpande said '. I wonder whether it's in terms of m-cap (because in terms of people, it may not be so).
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Farm earnings may go down further in West Bengal: Some stats interesting (though I earlier had and still have bitter opinion on this publication media).
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Singaporean inflation hits 25-year high of 4.2% in Nov.: The one para-report makes much sense. One wonders when wheat is up 65%, crude up, commodities up over last few years and so are housing prices; how can we still have inflation in low single-digit numbers? Here at least it includes food and housing...
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$500,000 a Year Means You're Still Only Middle Class: Interesting, I must say. More so, when with my income of hardly $12000/annum (that too with INR's recent appreciation against $), and a family; where do I belong? At the Bottom of the Pyramid, ha ha...
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Putin's Military Might Fails to Keep Pace With His Ambitions : 'The nation's armed forces remain beset by manpower and morale problems, aging equipment, graft and unfulfilled promises to overhaul their Cold War-era structure, Western and Russian analysts say. While Putin, 55, has increased Russia's defense budget to a level four times greater than when he became president in 2000, it is still less than 6 percent of U.S. spending.' true, but all leads to the measurement system of currency valuations and GDP measurement practices. Just remembered that one speaker (faculty of a US University) in a conference that I attended yesterday talked about 'Goondas' taking over the public sector units in Russia under privatization (and this article also talked about corruption, question is if the view is so negative in the west, what drives the popularity of Putin in Russia. It's not limited to the elite (who can benefit from corruption the most), but it's in the masses? 'The Moscow researchers said that if present trends continue, attrition will reduce Russia's intercontinental missile arsenal to between 100 and 200 in a decade. Russia's Defense Ministry didn't respond to written questions about the military's capability.' I wonder if the US Defence Department regularly responds (or even receives queries) on its military capabilities. 'Aided by a 255 percent surge in oil prices during Putin's eight years in office, Russia's 2007 defense spending was about 821 billion rubles ($33.6 billion), about 15 percent of total government expenditures, according to the London-based International Institute for Strategic Studies. U.S. military spending in 2007 was about $582 billion, or 21 percent of the total federal budget, the institute said. Russia also suffers from endemic draft avoidance, with as many as nine out of 10 of those in the eligible 18-to-26 age group escaping service. ``If you've got 90 percent draft evasion, those who show up are just too stupid to evade it,'' Pike said. ``Imagine what kind of military you can put together with that.''' Whenever it comes to Russia, Venezuela or Iran, West's parroting theme is oil-prices. In same context, the US spend of $582 billion is totally based on money borrowed from others (less than its trade deficit).

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Bush Seeks to Restore Tattered U.S. Image With Heavy '08 Travel : 'A Pew study of public opinion in 47 nations found ``extensive'' anti-Americanism and ``increasing disapproval'' of the cornerstones of U.S. foreign policy. A perception that Washington acts unilaterally was shared by 89 percent of the French, 83 percent of Canadians and 74 percent of Britons. America's image in most Muslim nations is ``abysmal,'' Pew said. The exception, Pew found, is Africa, where the U.S. image remains positive, especially in Ethiopia and Kenya.'

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Holiday Internet Sales in U.S. Rise at Slowest Pace on Record : 'Online spending from Nov. 1 through Dec. 21 increased 19 percent from the same period a year earlier to $26.3 billion, Reston, Virginia-based ComScore Inc. said yesterday in a statement. Sales trailed last year's 26 percent growth and the research firm's forecast for a 20 percent gain during this year's holidays...ComScore hasn't recorded growth of less than 20 percent since it began reporting online sales figures in 2002. ' Is it sign of consumers spending less (with discounts on) or maturing Internet? Too early to say...primarily looks the former...'Wal-Mart Stores Inc., Best Buy Co. and Circuit City Inc. offered discounts of 50 percent or more and promoted savings for in-store pickup of products purchased online to attract shoppers during what may be the worst holiday shopping season in five years. The peak period for Internet purchases has passed, ComScore Chairman Gian Fulgoni said in the statement...Sales rose 25 percent in the five days through Dec. 21 from the same period a year earlier, ComScore said. ``Online has done well considering the tough economic spending situation,'' said Larry Freed, chief executive officer of online research firm ForeSee Results Inc. in Ann Arbor, Michigan...U.S. retailers' shares have dropped during the holiday season, with the Standard & Poor's 500 Retailing Index falling 10 percent since the start of November, compared with a 4.2 percent decline by the S&P 500...Spending through Web sites, which makes up more than 3 percent of all retail sales, may climb to $29.5 billion in November and December, ComScore estimated. That's a slower pace than the 26 percent growth in online sales during the holidays in 2006. '

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And here is that WB article: Economic clout of China and India is overstated, World Bank says, on which I beg to differ.
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India May Cut Taxes, Raise Subsidies After Ruling Party's Loss : Only for this stats: 'Gujarat hosts the world's third-largest oil refinery, owned by Reliance Industries Ltd., and is home to 5 percent of India's 1.1 billion people. It accounts for 21 percent of the nation's exports and 13 percent of its factory output, according to Gujarat's Industrial Extension Bureau...Reducing subsidies is unpopular in India, where the World Bank estimates more than half of the nation's 1.1 billion people live on less than $2 a day. India hasn't raised fuel prices this year even as crude oil costs surged 53 percent because of concern it will stoke inflation and alienate voters. Keeping fuel prices at their current level will have cost the government an additional $12 billion in subsidies in the two years ending March 31, equal to almost a 10th of India's annual budget. ' Now this $2 a day is PPP based (I believe), and on top of the recent WB findings that PPP economy size of India and China may have been overestimated (by 40%), this figure (of more than 50%) is likely to go up significantly. And who receives the major part of oil subsidy - not the poor, farmers - but the car-owners and heavy consumers...

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">ArcelorMittal Offers to Buy All China Oriental Shares : I do have respect for both Lashmi Mittal and his son (aditya), the sort of signals they send. 'China has accounted for 65 percent of global growth in steel production in the past 10 years, and is now four times the size of the U.S. steel industry.' ohhh...in an article I stated five times (my apologies) . The father must be good in managing relationships (getting the nod from Beijing in-spite of being an Indian!). 'The Chinese steelmaker, which has its main production plants in China's northern Hebei province and southern Guangdong province, controls closely held Hebei Jinxi Iron & Steel Co., the nation's 29th-biggest steelmaker, according to the company Web site...Hong Kong-listed China Oriental makes billets and strips, producing more than 3 million tons of crude steel a year. It posted a 769 million yuan ($104 million) profit from sales of 6.65 billion yuan for the six months ended June 2007.
' The valuation roughly meant $800 million/ton of steel capacity (what about captive resources, does this unit have it?)
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Libya to Invest $100 Billion Abroad, Spend $155 Billion at Home : Interesting to know this 2nd largest African oil exporter, sitting on oil funds.
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Two Koreas restore rail link after 50 years: I visited this place when I was in S. Korea during May'07. A trip to the DMZ and also this station (where one puts a symbolic seal on one's passport). And yes, the talk was about this: 'South Korea's next goal is to run its freight and passenger trains through North Korea and into China and Russia and onto Europe.'. If only India could learn!
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One Night in Bangkok Shows the Folly of Bali: 'Thailand's capital has the dubious honor of being among the 10 major cities most at risk from rising sea levels. Kolkata, formerly known as Calcutta, headed the Organization for Economic Cooperation and Development's list of high-population cities vulnerable to climate change by 2070. Also in the top 10 were Mumbai; Dhaka, capital of Bangladesh; Guangzhou, China; Ho Chi Minh City and Haiphong, Vietnam; Shanghai; Yangon, the capital of Myanmar formerly known as Rangoon; and Miami.' And to say the least, I live in Kolkata (this year was marooned a few times already!)
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Arab Stocks Lure BlackRock, Goldman, Blair as Europe, U.S. Fall
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Gore Urges Bold Moves in Nobel Speech : I respect this man and his mission (yesterday night, it was broadcast in BBC, however as my son now keeps more control of the TV remote, I had to give up). I also talked about many of these issues in my book: 'Wondering Man, Money & Go(l)d'. But the sad thing is another piece of news: U.S. says no to firm emissions targets. 'The ceremony marking the 2007 prize, given to Mr. Gore and to the Intergovernmental Panel on Climate Change, comes as representatives of the world’s governments are meeting on the Indonesian island of Bali to negotiate a new international agreement on reducing greenhouse gas emissions. The new treaty would replace the Kyoto protocol, which expires in 2012...In an interview before his speech, Mr. Gore said that the Bush administration was “the principal stumbling block to progress in Bali right now” but that he foresaw a change in American policy, regardless of which party won the 2008 election. “I think that they do not accurately represent the wishes of the American people,” he said of the United States government. “We are in the midst of a process of massive change. The world is coming to grips with this crisis, but we are in a race against time. The United States of America, the natural leader of the world community, should lead instead of obstructing...He wrote the speech himself, he said in the interview, “with the help of Mr. Google.” '
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South America launches rival to the IMF, World Bank: So these guys moved from words (covered in my blog during Wolfowitch crisis) to actions. Good show...there should be accountability. What I have not written about so far is: couple of months back, there was a vacancy post in the World Bank (ad in the ET, leading Indian business daily). And application was to be online. When I visited the WB site and searched for the job-code, I didn't find any. I wrote to them, they send me a link which is intranet-based (actually I was surprised at this height of goofishness!). Again I write, and then they give me another link which works. I still applied but even in my application I didn't lose the chance to criticize them (for this goof up). No wonder again I received rejection. However in my 1st mail I told them that I smell a collusion where an ad comes for ads sake, as no one can apply because the job does not exist online. And then they puck-up someone's girlfriend. And hold-on, they digested it, said sorry and then in their 2nd mail sent me the right link (and all these mails are there in my mailbox). On more lighter issue, in India reality TV shows have become very popular. This Sunday, while looking at one in bengali, a head-master of a school says when he asked there the largest mental asylum of the world is, the students respond: it's the headquarter of the UN. And sad but true, these Institutes, by following US dictates even if those are wrong, have effectively become spineless mental asylums.
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Rio Tinto in "put up or shut up" challenge to BHP: The contest to own or control natural resources, be it with private capitalistic set-up owning allegiance to certain nations or other block would only heat up. I am not sure whether Rio as a firm would prefer, given a choice, to be acquired by Chinese funds or by BHP. However I sense, China won't give up the chance and control easily. With $27 billion of trade surplus each month, it can afford buying a Rio every five to six months, a BHP, a Google, A Shell (if allowed) and don't forget the war-chest of $1.5 trillion. As US economy increasingly looks weak, China would love to diversify its asset holdings to natural resources than US bonds. So as of now, though prematured, I would bet for Blackstone+China fund.
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UBS makes $10 bln writedown, raises new capital: These developments make me wonder whether professional management can bypass shareholders and can issue fresh shares/inject capital at its own terms anytime. I assume here that the shareholders of UBS (or take the case of Citi) were unaware of these fund-injection, at what value and what terms. It may lead to a situation where professional managers would deliberately create a crisis, and then in collusion with new investor, offer them stocks at attractive rates (I am talking about the possibility, and not suggesting it happens all the time). The coupon rate of 9% for UBS is no doubt 'exceptionally high. "It shows what a pitiful state they are in," said the source, who asked not to be identified.' From SIngapore, I was thinking about Telasek Holding, however it turned out to be GIC (Govt. of Singapore Investment Corpn, I didn't know about it until now!). 'UBS has been the hardest hit among Europe's major banks. CEO Peter Wuffli left the bank in July and was replaced by Rohner. The bank has since replaced nearly all of its top managers.' So only solace investors can have is that the management which almost sank the ship is not rearranging funds now.
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China's PPI surprise surge adds to inflation worry: I wonder whether all these are a result of cost-push inflation or market-pull inflation. It's more likely to be cost push, although increased demand also can't be ruled out because, expectedly in China, a larger and larger section of affluent and middle class consume more now. Now the question is - what's the benchmark of the price point for this additional demand? My point is - as a country turns from exporting economy to domestic consumption story, the benchmark of price should also be against the earlier export level prices. Today, the question is - is exports more remunerative for Chinese, or selling in the domestic markets. As capacity is not much of a problem (leaving aside agri-products and items like pork), it may be due to cost-push (imports + domestic tightening of money supply - in interest costs) and also export-substitutions at new-found domestic opportunities. Anyway, the answer would be known better in future (as usual!).
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Wheat to Increase to Record, USDA Undersecretary Says : Matter of fact is I see a great bull run in agri-commodities now (which will affect India badly unless it can have a 2nd Green Revolution, fast). 'Wheat for March delivery gained 13 cents, or 1.4 percent, to $9.3450 a bushel in after-hours trading on the Chicago Board of Trade at 11:06 a.m. in Singapore. The price soared 87 percent this year, reaching a record $9.6175 a bushel on Sept. 28.' (1 bushel = 27.2 kgs) (comes to Rs. 14/kg around, and five-kg packs of atta by Indian manufacturers cost near Rs. 100; in same measures, gasoline in US at $3 a gallon costs around Rs. 32/liter, much lower than cost of petrol and around same(?) foe Diesel)). High grain prices would help US trim its trade deficits further (as this happens to be the largest exporting area with surplus in the US). I find it quite amusing that the most developed nation of the world, having less than 2% of its GDP reliance on agricultures gets maximum export competitiveness from agriculture!
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Paulson Mortgage Plan Surfaces Too Late to Stem Housing Slide
: Remember Fed. to bail out failed hedge funds of Bear Sterns (though came as a spoof article back in July). 'Paulson's plan is being introduced as the number of Americans who fell behind on their mortgage payments rose to a 20-year high in the third quarter, the Washington-based Mortgage Bankers Association said in a report yesterday.' Figures of future foreclosures (till 2009) varied from 0.775 millions to defaults of 2.8 millions. 'The government-led initiative may ``reduce the severity of the decline,'' said Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University in New Haven, Connecticut. Still, ``if past cycles are a guide, we could have weak or declining markets for five to 10 years,'' Shiller said...Zandi estimates new and existing home sales will bottom at an annualized rate of 5.25 million units in early 2008 from a peak of 8.5 million homes in mid-2005. New home sales are projected to fall 13 percent in 2008, according to estimates from the National Association of Realtors in Chicago...Subprime borrowers face an average mortgage increase of 26 percent, or $400 a month, because of higher rates, according to data compiled by Santa Ana, California-based First American CoreLogic, a unit of the biggest U.S. title insurer.
'. That's less than the mortgage I pay in India, for a ten year-loan.
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Fed's Inflation Measure Says Rates Can't Fall as Traders Expect : Although theoretically it makes much sense to have a model that can predict inflation rate five years down the line, practically I think it is an immatured idea due to the various dynamics involved (uncertainties in global economics and geopolitics). Bloomberg itself in another article talked about risk and uncertainties - risks can be quantified (and therefore modelled, not uncertainties). However if it indeed works, not always but even most of the time (>90% confidence level), that's great!
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Mad, mad, mad money: Yes, it's more of entertainment, not only for Crammer but most of investment related TV channels (at least in India).
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Intimate Enemies, Shadow Doubles: The reason for putting the article here is this information, which came like a big surprise to me: 'Jawaharlal Nehru had envisaged an Asian federation of which India and China would be the two poles. After the People's Republic of China came into being India was the second country to recognise it, on December 30, 1949. When a permanent seat on the UN Security Council was offered to India in the early 1950s — something it would give an arm and a leg for half a century later — Nehru turned it down and offered it to Beijing instead. Nehru construed the offer to India as a move against China, a gesture replicated in recent times when Prakash Karat, on behalf of the CPM, interpreted the nuclear deal lifting technology barriers on India as a ploy to encircle China.' So India effectively gave up its UN post to China and now China opposes any move that plans to include India! I am increasingly getting more and more sceptical on the prudence of Nehru, other than probably setting up some basic industries (and the IITs).
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Hindu gods get summons from court & Hindu gods get court summons (2-different sources, but same title): In India, everything is possible, cheques issues by PMO can bounce, government can give aids to farmers amounting to couple of cents throug account payee cheques involving minitries and IAS officers, and many more. 'You failed to appear in court despite notices sent by a messenger and later through registered post. You are hereby directed to appear before the court personally," Judge Singh's notice stated...The newspaper notices were published, in keeping with accepted Indian legal practice, after two summons dispatched to the plaintiff deities were returned because their addresses were "incomplete". The dispute is over ownership of a 1.4-acre plot in Dhanbad which adjoins a temple dedicated to Ram and another one dedicated to the monkey god Hanuman. Worshippers claim the land belongs to the gods but the priest, Manmohan Patnaik, insists that it is his.' ' See, we follow rules...and our rules state that we follow standards set in 1880s for land acquisition. We don't have brains and our government expects that because they don't have any, and thereby sets rules accordingly.
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Student-Loan Problems Add to Debt Worry: A society where everything runs on credit...and in India one wonders. And it's for nature also. Nature doesn't give any credit. Student loan market itself is around $400 billion in size every year, and that must be ten times more than Indian budget for education. 1.12% default rates are anyway not alarming, though growth rate needs to be watched. 'The biggest student-loan player, Sallie Mae, officially known as SLM Corp., said that in the third quarter, charge-offs in its private loan portfolio were $110 million, more than double the amount a year before. Sallie Mae's private student loans total $28 billion.'
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Ping An Battles AIG for Title of World's Second-Biggest Insurer : Another usual China story, which is a paradox to the regular mining accidents. So after China Life, AIG now comes Ping An...the orders are changing fast everywhere. 'Ping An was the first Chinese insurer to receive approval to use local-currency assets to invest overseas, giving it potentially $3.4 billion to spend on foreign stocks.'. I didn't quite follow it...does it mean that the premium it collects can be converted into other currencies, and invested abroad? If so, what happens in the most likely outcome of Yuan appreciation? 'The U.S. insurance market is close to saturation with 77 percent of Americans owning some type of life insurance in 2004, data compiled by the American Council of Life Insurers show. Only 4 percent of China's 1.3 billion people have insurance, KPMG International reported.' 'Ping An's profit from banking rose 10-fold in the first half to account for 13 percent of net income. The company bought 89 percent of Shenzhen Commercial Bank last year and, along with China Life, Ping An paid 10.8 billion yuan ($1.5 billion) in March for about 10 percent of China Minsheng Banking Corp., the country's only privately controlled bank.' So China does have a privately controlled bank...?
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On Mortgage Relief, Who Gains the Most? : It seems that policy-making has been hijacked by the influential ones, not only in emerging lowly developed countries like India, but even in the US. What I still don't understand from the limited few articles on this Paulson-led bailout package is - who bears the cost of freezing interest rates (at unbelievably low entry rates) for five years. '“Talk about moral hazard,” remarked Representative Barney Frank, Democrat of Massachusetts and chairman of the House Financial Services Committee. “We’ve all told people, don’t go any more deeply into debt. Now we’re saying that people who go more deeply into debt will have an advantage over people who don’t go more deeply into debt.” The administration’s theory is that there is a “sweet spot” in the market where it makes more financial sense for lenders to offer some relief than it does to foreclose on homeowners.' The last part probably answers my question - rather than booking losses now on CDOs, show book value of assets that has not gone down much. 'Most analysts agree there is a sweet spot of some sort. Investors typically lose 40 percent or 50 percent on homes that go into foreclosure, and the cost of shielding borrowers from a big jump in rates can be much less.' In some way, this sounds similar to the US stand on climate change...postpone the problem for a future date, when probably there will be less pressure on housing, and the people who get the 5-year freeze would (1) either be able to to finance their increased interest burden after 5-years, or (2) be able to sell it at an improved housing market, reducing his/her loss and that of mortgage provider. 'Indeed, there were rumblings of rebellion among some institutional investors. “Why would anybody in his right financial mind agree to a five-year price freeze, especially when we’re staring in the face of possible inflation?” asked Roger W. Kirby, managing partner at Kirby McInerney, which has represented investors in class-action lawsuits over securities. “Mr. Paulson has overestimated the generosity of people on Wall Street.”'. At times, I like NYT financial reporting more than Bloomberg, because they are not standardized like Bloomberg, covers basic relevant answers and queries, and are not repetitive (repetitive may be because I visit Bloomberg more often). Effectively this looks like a riot management...there has already been blood, there will be more blood but some blood will get saved based on in which direction the riot-police looks at.
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105 Killed in China Mine Explosion At times I get a feeling that I have the wrong picture of China based on its superficial growth rates, forex reserves and production capacities. The news yesterday showed 93-94 deaths, today 70 and now 105...China must ensure that it's people are not being sacrificed in order to pile up the forex reserves, or the cheap exports or even the domestic growth. With 5000-death figures in mining industry alone in a year, it is high time China does something about it.
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China Shipping Stock Sale Oversubscribed, People Say : Experts in India also say logistics is the area to be in. Unfortunately, as per some, from 1947 to 1997, there'e been any significant additions in road or rail network in India. And China has moved miles ahead. Now there is some slow movements, but scale is absolutely insignificant compared to China again.
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Teen births tilt up, unmarried rate hits record: Good article on population statistics, birth rates, sociology and demographics in changing social scenario. 'Unmarried girls and women accounted for 38.5 percent of all U.S. births last year, up from 36.9 percent in 2005. Among blacks, they accounted for 70.7 percent of births. Among Hispanics, it was 49.9 percent and among whites 26.6 percent.' That's sort of incredible in Indian standards! 'About 40 percent of unmarried women giving birth are in cohabiting relationships, she added.' 'There certainly is greater acceptance of children being born out of wedlock. For instance, you see many fewer marriages after conception but before birth than you did in the past,"...The U.S. fertility rate was about 2.1 births per woman of child-bearing age over her lifetime. It is the first time since the early 1970s that the rate was above the replacement level, at which a given generation can replace itself, the CDC said. The total numbers of births in the United States in 2006 was about 4.3 million, up 3 percent from 2005. The CDC also said 31.1 percent of all births last year were by Caesarean section, a record high. The proportion of births by Caesarean section has risen 50 percent in the past decade. '
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Subprime Rate Five-Year Fix Agreed by U.S. Regulators : So finally the deal that defies markets, that defies contractual values and obligations are done with, just to save guard a few. Well, one may think of that the beginning of the death of this type of free-wheeling capitalism driven by Bernanke, Paulson & Wall St. Co.
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Two contradictory picture, abd decoupling-validation: Fed May Couple Rate Cut With New Measures to Increase Credit and China Plans `Tight' Monetary Policy Next Year to Cool Economy : One isn't finding credit shooting inspite of lowering rates, and another is getting fruatrated to slow down investments even after increasing rates for five times. The decoupling story indeed looks complete on the surface level, but just like water moves to lower levels naturally, money - irrespective of $ or yuan, or move to higher returns. And therefore China would not be able to control its investments boom with domestic policies alone, unless the flood of money stops at Fed. (remember - Bubble in China? The answer is both Yes and no). What I fail to understand that if Fed. (and others like Treasury) can engage into lot many unethical and hypocritic measures to bail out the Wall St., why not directly tell them that whatever is in your account and has any resemblence of being NPAs; Fed. will reimburse equivalent full money. Doesn't that sound better? Here is another example in UK, on the other side of the Atlantic: Northern Rock's Bailout by U.K. Wins EU Approval, Aiding Sale , and now house prices there also fall, indicating rate cuts.
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Pentagon chief Gates in Iraq as violence drops: I did talk highly about Gates (compared to Rumsfeld). He talked less, and delivered much better than any could think of. And it's a good relief for all to see that the bloodshed in Iraq has slowed down, now it's time for normalcy to return normally.
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OPEC agrees no output change: delegate: I am not sure whether to read it as a sign of weakening US influence over OPEC. One way of looking at interest rates not strengthening further in Europe (or Japan) is their proximity to the US where opposing forces may cause further damage to dollar, and US economy. US would have definitely liked to insert the same influence over OPEC to have cheaper oil prices that could have made balancing inflation easy in light of higher liquidity, and lower interest rates. However OPEC rejecting it at a crucial time may therefore show that they care for their own interests more now (at least for a change) than caring for US alone all the time. The news was even out few hours before the official declaration, and US pressure in the interim period also can't be ruled out. 'But ministers argue that they (OPEC) cannot control prices because speculators have divorced prices from market fundamentals.' Very true, however unlike speculation over stock prices where firms don't pocket/lose anything against rise and fall, in this case I believe the OPEC gains (or loses) as prices move up or down (we also saw daily turnover in NYMEX to be 3-4 times the daily oil demand/supply).

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Fannie Mae to Raise Capital and Cut Dividend : The malice has been spreading for some time, and has affected these two giants (Freddie Mac)
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House to vote on "historic" deal to raise fuel economy to 35 mph 35 miles per gallon by 2020. Keeping in mind that 4.54 litre = 1 gallon, and 1.6km = 1 mile, it comes to 12.4 kms/litre of fuel. Not bad...for sustainability. yes, we must reduce usage of those oil-guzzlers (anyway I still don't have a car...). I am sure other nations would follow suit. 'Phyllis Cuttino, director of the Pew Campaign for Fuel Efficiency, noted the bill would reduce greenhouse gas emissions by 192 million metric tons by 2020, the equivalent of taking 28 million cars of the road."This is nothing short of historic," Cuttino said.'

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Lust in Lebanon, Low Pay Lead to Temporary 'Pleasure' Marriages : The statistics, along with the phenomena, no doubt is interesting.
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(by Stiglitz)Subprime crisis highlights hypocrisy of the IMF and the US: It's been highlighted in sections of this blog often. Just wonder the prescription of East Asian Financial Crisis, 25-40% interest rate, if is mandated on the Fed. again now. Even now, US is enjoying relatively lower interest rate, flooding our markets with liquidity where we have been paying the price with higher interest rates...crazy globalization and dollarization and monetary policies.
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China's U.N. envoy says "things have changed" on Iran: So China, staying in line, has been first to raise support for Iran again. And when I think about India, which does not have any intelligence of its own, dances to what Fed. or Pentagon or White House says delay-dallied on the Iran India gas pipeline (which no one knows the status of and whether Iran at all is interested) or even take that Iranian LoC for tea imports not being honored. No doubt a big slap at Indian foreign policy again, due to the goof up of US intelligence.
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New report ranks U.S. teens 29th in science worldwide
: I was more interested to see where emerging economies are, I found Hong kong (China) ahead of the US, Russia close and Brazil down. No mention of India or RoC.
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Dollar Slide Threatens African Cotton Farmers, Splits Families : Thanks to Bloomberg for reminding us the plight of cotton-growers in Africa again. They had already been pushed against the wall. And no doubt there will be no lobby to safeguard their interests in with subsidies or equal platforms in global trade discussions...'With cotton selling for about 9 percent less than a decade ago'...I think there are no other commodity which suffered this much (but why, even in the US, the costs must be up. Does it mean that the subsidy in the US has been rising?). 'While cotton prices have risen about 13 percent this year, ``the appreciation of the CFA franc has offset the benefits,'' according to Stephane Alby, an economist at BNP Paribas SA, France's biggest bank.
`Sinking Into Debt'
Most of the region's ``cotton producers are now on the verge of operating at a loss and sinking into debt,'' Alby wrote in the October issue of the Paris-based bank's Conjoncture publication. ``Meanwhile, the main ginning and marketing companies have chalked up heavy losses over the last two seasons, of which a large part has been supported by the government.''
Cotton accounts for 5 to 8 percent of gross domestic product across West Africa, according to the World Bank.Rural areas in the Sahel, the region that stretches across the continent from Senegal, Gambia and Guinea-Bissau, can be entirely dependent on it because few other crops grow there, says Terry Townsend, executive director of the International Cotton Advisory Committee, a Washington-based association of cotton-producing and consuming countries...The region, Sub-Saharan Africa's fastest-growing area during the 1990s, has been its slowest since 2004, according to the World Bank. For people in the poorest countries, a shift in the exchange rate can eliminate a month's food, says Daniel Sumner, an economist at the University of California, Davis, who wrote a study on cotton subsidies for Oxfam America, a Boston-based aid group.
Fifty dollars can be ``enough to feed a child for a year,'' he said. ``It's enough to pay the school fees for three to four children.''
Payments to farmers from cotton companies in western Africa have fallen an average 15 percent since 2004, International Cotton Advisory Committee data show. Production in western and central Africa may decline 21 percent this year, according to Dagris SA, a Paris-based company owned by the French government that holds stakes in African, Asian and Latin American cotton producers.

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The Fallout from the Iran Nukes Report: It's interesting...definitely it takes away some of the propaganda (and parts of myth) that the world slowly was beginning to accept.
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U.S. defense outlays seen staying high: The world (west) looks at $40 billion (or double of it) Chinese spending on defense with doubt, and it spends astronomical amount on its own defense year-after-year. (The page also carried ads of the Economist, as I stated earlier on NYT for McKinsey Quarterly. It surely shows that by not using a marketplace of news (like Google News, where earlier on Friday's I used to find articles from the Economist, but didn't see any last few weeks)).
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IITians spurn Dow jobs over Bhopal tragedy: This is an encouraging move by students' bodies to put pressure on erring corporates, as in developing countries like India, the law and policies are too laxed about their legitimate responsibilities.
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The November Newsletter of IIT Bombay says: ' No Indian varsities, including the prestigious Indian Institutes of Technology, figure among world's top 200 universities this year while six Chinese universities were listed. However, IIT Delhi and IIT Mumbai find mention among the world's top 50 technology institutions, with the former at 37 and latter at 33 - both way behind China's Tsinghua University, placed at 16'. . Sad state of affairs indeed...And the other day when I was having a caht with one of my friend exploring to pursue PhD, I told him that getting it from Beijing University (or other leading Chinese institutes) would be much better than the Ivy-league of the west, one looks at the past and one for the future.
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Chimps Exhibit Superior Memory, Outshining Humans : I didn't quite follow the split-second test, but it's interesting finding. No doubt that they have sharper sense organs than us.
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Chinese Steelmakers Study Bid for Rio to Counter BHP : BHP raised a Hotnet's Nest, and China understood the threat perception (if not now, even later; if not from BHP-Rio now; from some others at some other point of time later). I believe China would ensure picking up strategic stake in many of the natural resources firms as it's doing for energy. 'BHP and Rio would together control 38 percent of the global seaborne iron ore trade, according to the Australia & New Zealand Group Ltd., rivaling the largest producer Cia. Vale do Rio Doce. The proposal has met with objections from steelmakers in China, Japan, South Korea and Europe. ``Chinese steelmakers are so fragmented, putting them in a weaker position when negotiating with giant iron ore suppliers,'' Helen Wang, a Shanghai-based analyst at DBS Vickers Hong Kong Ltd., said by phone today. ``They have to face the reality that they have no choice other than teaming up with the government for a possible counter bid for Rio.'''

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Paulson Sees limited aid in rate plan: I stated same concerns in my article Growth, when derived from socialism for Wall St. & Financial Terrorism, not desired. The article further explains the operationalization problems. Another Bloomberg article also talked about slowing pace of manufacturing growth in US.
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No Sign of `Sell' on Wall Street as Analysts Say: `Buy,' `Hold' : It's always been similar story, there was an Economist article was covering it (the 90% wrong recommendations or so...). 'Only 7 percent of analysts' recommendations have been sell this year, down from 11 percent in 2003, data compiled by Bloomberg show...The ratio of hold recommendations has climbed to 48 percent this year from 40 percent in 2003, Bloomberg data show. '
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China, Japan schedule 2nd high-level economic dialogue for 2008 after 1st round success: It's an encouraging sign, however as an Indian what's painful is how India isn't moving forward. The problem does not rest with the rest of the world (or ASEAN, SAARC or Malayasia, for example), but it rests with our incapable leadership, governance and foreign polocies (and inconsistencies therein).
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Why Dollar May Be Set for a Rebound: I believe so, as Yen looks even more weak (and a bigger culprit), though it has appreciated a lot in last couple of months. 'By that reckoning, the dollar needs to drop an additional 20%. And the Fed's new openness to cutting interest rates, if the textbooks are right, should further weaken the currency as global investors flock to places with higher returns.' Yes, I don't see textbooks to be relevant, at least for short-to-mid-term (5-years or even more). 'One argument: Comparing what a dollar now buys in the U.S. (at U.S. prices) and abroad (at foreign prices) suggests that the dollar is undervalued. "You can't go to Europe and not think it's really expensive, and a European can't come to the U.S. and not think it's for sale," says Brad Setser, an economist at the Council on Foreign Relations. The Organization for Economic Cooperation and Development calculates that $1 converted into euros could buy a basket of goods and services in France that would cost only 80 cents in the U.S. A dollar converted to yen would buy things that would cost 82 cents in the U.S. Over time, markets are expected to narrow such gaps by pushing up the dollar and pulling down the euro and yen. Goldman Sachs economist Jim O'Neill says that by this measure, the dollar hasn't been so undervalued against major currencies since 1995. "You don't get these degrees of misalignment for long," he says. Hey...that's fine but what about India and China, you get in a dollar in these two parts what you can't get in $5 or even more in the US, Europe and Japan. And that's why you bring in your currencies and acquire our natural assets cheap.

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Venezuelans Reject Chavez's Plans for Constitution : On one side Putin's party received 62% of votes (as expected), many expected this also as the 1st election loss of Chavez. I believe (though I liked this 'crazy' man till some time back) is people fall in their own traps, try to play 'God', and don't know when to retire.
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Florida Schools Struggle to Pay Teachers Amid Freeze : We are used to similar stories in India, but this hitting the US, sort of unbelievable. In India, it's due to govt. apathy; and there...whatever it may be due to for ('classic run-on-the bank meltdown') is unimaginable.
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Paulson Presses for Subprime Accord, Investors Wary on Details : I am sceptical about this (Growth by socialism for Wall St. & Financial terrorism). The size of $7 trillion mortgage market makes it open for manipulations...and I doubt that no clandestine government money will not be involved. Looks a whole lot of hogwash...read with hundred other articles like Housing Slump's Third Year to Be `Deepest' Since WWII .
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SMS in 11 Indian languages by MTNL is an interesting development. Recently I worked on a policy-paper for making content available in local languages. I found surprising correlation between linguistic diversity and poverty, underdevelopment and illiteracy/poor literacy in both South Asia and Sub-Saharan Africa. We supported needs for converting existing content in local languages and some generation as well. Yesterday I also saw I-shakti (an initiative of HUL) towards this initiative, e-Chaupal also supports these). These are encouraging.
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This morning when I looked at Google News (where from now I study a lot, and try to keep me updated with global affairs), I was surprised at the cricket score (India-Pakistan match in Edens, 3rd day) in Google (India) News page on right hand corner. I am sure many of the Indian web-service companies (and mobile firms) will now see the competition from Google...they all have been 'me too', and they should now realize what innovations mean. It showed other ongoing match scores, and may be from cricinfo.com (any tie-up or just another news).
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Had a look at Jonathon Torritt's 'Capitalism: as if the world matters', and liked it. Concepts like Human Capital, Social Capital, Natural Capital, Manufactured Capital, financial Captal (and spiritual capital) made good sense. How China is facing the environmental challenges...and more on how financial capital is grosssssly being misused. many of the facts and numbers (the economist from Peru,Lima or capital market in providing capital to firms) were not known to me. Makes good reading...few of the points were on:

1. Out of $ 100 traded in financial markets, only $1 reaches firms for manufactured capital, and there's been cases with buy backs that there's been decapitalization. For one year in US (2002?), out of $20.4 trillion traded in US bourses, IPO was only $100 billion+. Many doubted this right of shareholders (short-term owners/speculators) against employees.

2. In Britain, out of incremental money supply, only 3% gets created by CB as debt free, and rest 97% by fractional reserve banking system, and make profit on it. Now if they speculate on it, and faces closure...who is to be blamed?

3. The examples that the tribals/rural people are undercapitalized came out well in that Peru-economist's work ($9 trillion). It's equally true for tribals and rural farmers in India...they own natural capital, but it's not financially capitalized. An average US or Japanese or British citizen is indebted (I am talking about personal loan, not govt. debt) by $25000 or even more (can be $10000 or even more).Now think if our government could hand over similar money to our people as credit. They could have improved their productivity many times. The study also pointed out of lack of property deal/ownership papers in rural areas which forces people not to avail credit. If they can, it does by 9 times. So we have two systems - one ets credit and acquires natural capital from people who does not have access to credit. THIS MUST BE STOPPED IN INDIA ASAP...DEALS CAN HAPPEN, BUT BOTH MUST HAVE ACCESS TO CREDIT, EQUALLY.

4. What I was surprised about India's energy efficient (compared to China by more than 100%). Chinese stories of pollutions are really concerning...that's why they may be thinking in nuclear powers (also the coal to liquid oil, coal gasification project).

Lot more insightful ideas...research findings

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Treasury near deal to aid struggling homeowners: Well, I was thinking about growth. Growth when achieved through socialism for the Wall Street and financial terrorism, it's not desired. But it seems that nothing will stop Bernanke, Paulson and Wall Street & Co, as nothing stops Bin Laden and Co.
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This month, having the other blog running on IT, I would focus only on geopolitics, global economics and environmental issues in this blog.

बेस्ट ऑफ़ थे वेब 2007

2007-10-31T22:01:00.000-07:00

Asian nations face "unprecedented" water crisis - ADB: Many of us in Kolkata this year felt that the rainfall was probably more than twice than the average yearly ones (I saw one statistics also of more than 600mm rainfall, and then came more downpour). Though India was not studies, being in Kolkata many of us should feel lucky at the luxurious supply of water we get, all around the year. Hope that the holy river Ganges is not affected...
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Money markets threaten year-end blowup: Makes good reading...
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China Nuclear Power Poised for Export in `Self-Reliance' Bid : India debates and fights over 123 agreement, and adding to its 10K MW nuclear capacity in snail's pace. 'The Chinese nuclear program took another step forward Nov. 26 when Anne Lauvergeon, chief executive officer of Paris-based Areva, signed an 8 billion-euro ($12 billion) contract to sell two new European pressurized water reactors, or EPRs, and a long-term supply of uranium to China Guangdong Nuclear Power Group Co. French President Nicolas Sarkozy and Chinese President Hu Jintao stood at the table. In July, Monroeville, Pennsylvania-based Westinghouse clinched a $5.3 billion deal with China's State Nuclear Power Technology Co. and partners to build four of its new AP1000 reactors. The contract was the company's first for a nuclear reactor since 1987 and its first in China.' Surely the people in polcy-making in India must be illietartes...they can't read (but can party...). That position contrasts with China's safety record in other industries. In nuclear power, international manufacturers are using China as a proving ground to demonstrate to potential U.S. customers that new reactors are safer than older designs. What's more, Chinese suppliers may help make nuclear power competitive with cheaper energy sources such as coal and natural gas by bringing down the price of components. ``In the Western world, we talk about nuclear renaissance, but in China it's not a renaissance,'' said Gavin Liu, Westinghouse China's chief representative. ``They're working on the nuclear project on a day-to-day basis, accelerating the whole development process. It's important to build the first AP1000, no matter where we build it, and China's market demand puts it into the best position.''...Power Hungry: Driving China's nuclear push is the skyrocketing energy demand of its power-hungry heavy industries. This year China became a net importer of coal for the first time. It's the third-biggest buyer of foreign oil behind the U.S. and Japan.
...The country's nuclear power program was just getting started in 1986 when the Chernobyl disaster happened in Ukraine, forcing the industry to grind to a halt in much of the Western world. That made the Asian nation a prime market for reactor makers. ' I assume India started before that, and rests nowhere now...
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'``China will be very disciplined about safety,'' said Andrew Brandler, CEO of CLP Holdings Ltd., Hong Kong's largest utility and a partner in operating China's first atomic reactors, at Daya Bay. ``Their focus is very clearly on safety. They recognize that one incident anywhere will set the industry back decades.'' The country already has 11 commercial nuclear reactors in operation. Most were built in partnerships with Areva's predecessor, Framatome SA; Canada's AECL; and ZAO Atomstroyexport of Russia. There are also three domestically designed reactors.
``Last year, in just one year, China added almost 100 gigawatts of new coal plants, so you can believe that in 45 years, China needs and can build 300 gigawatts of nuclear power,'' said Yang Q. Ruan, chief representative and director of technical programs in China for Canada's AECL.
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Cutting Prices

In the nuclear industry, Chinese companies may be able to cut prices more than foreign competitors. In the past decade, Chinese makers of power equipment have slashed construction costs for supercritical coal plants -- which use less coal and emit less carbon dioxide to produce the same amount of power as traditional units -- by 35 percent to $650,000 a megawatt, according to CLSA's Powell.' It means same savings for India too...I am aware of Sterlite alone from India going for some Chinese power plant designs in their expansion plans...' No doubt China is the future...
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Solar Power as the Next Great Investment Bonanza: Is there any Indian stock where one can put money into? I don't like Suzlon (even when it was 600-level); believe it to be a manipulated script, held artificially high and not sustainable at present valuation (it's into wind-power although). 'So profitable that First Solar, which went public a year ago at $20 a share, closed yesterday at $215.88. The company now has a total stock market value of almost $17 billion, exceeding that of either General Motors Corp. or Ford Motor Co.' That's what markets are...sounds a bit odd. I was also under the assumption that these two auto-giants have been able to regain some of the lost ground. But it seems no...
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Consumers Can't Hang on Forever as Trouble Brews: 'The U.S. consumer has stayed remarkably resilient, even in the face of a recovery with declining family income...One deferred wound could be the result of declining mortgage-equity withdrawal. I have long said that consumer spending has been unusually dependent on the dramatic increase in Americans using their homes like automated teller machines, as equity withdrawal increased from a little more than 1 percent of GDP in 1995 to a peak of more than 8 percent in 2005...Adding to the lagging storm is the timing of when interest rates reset for a large block of adjustable-rate mortgages. Simply put, we haven't hit the high-water mark of ARM distress yet. Data from Banc of America Securities suggests that ARM resets in the first four months of 2008 may exceed the value of ARM resets for the first eight months of 2007 combined. Cagan estimates that a whopping 81 percent of borrowers with loans due to reset in 2008 have costly mortgages with initial interest rates of 6.5 percent to 12 percent. Oil Prices: After adjustment, monthly payments for these borrowers could rise by almost a third on average. From May through October, the average monthly price of Brent crude jumped from $67.21 to $82.34 a barrel, while retail gasoline prices actually fell from $3.15 a gallon to $2.80. In other words, oil prices rose almost 23 percent while gas prices declined 12 percent. It turned out that refiners had been running exceptionally high profit margins on transforming oil into gasoline and heating oil -- the so-called crack spread -- and were able to take the hit without passing it on to consumers. Yet with crack spreads now narrower, many analysts predict gas at $3.25 a gallon or more by the spring. And the Department of Energy's Energy Information Administration projects that heating oil users might spend 26 percent more to heat their homes this winter than last, while those using other fuels might spend 11 percent to 20 percent more.' Both the consumtion and the GDP growth in US (interlinked, true) has confused me as well...and that's why I doubted the measurement system...remember the deflation in Japan in-spite of all commodities being high by 100% or so...and now Japan Shows First Inflation Signs as CPI Rises 0.1%: Doesn't make sense...does it?
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Study Details How U.S. Could Cut 28% of Greenhouse Gases : Would there be any takers? The point is not the best solution, but a feasible solution which will eventually improve as one starts accepting any that looks feasible now. 'The report said the country was brimming with “negative cost opportunities” — potential changes in the lighting, heating and cooling of buildings, for example, that would reduce carbon dioxide emissions from the burning of fossil fuels even as they save money. “These types of savings have been around for 20 years,” said Jack Stephenson, a director of the study. But he said they still face tremendous barriers.' (Let me warn readers about McKinsey & Co, the people behind this report...since I read the Bloomberg report on how this firm helped insurance firms improve profitability by exploiting customers, my respect for them has rightfully gone down.). It no doubt talked about a few good things, but what it didn't say is exploiting nature to improve profitability beyond sustainability isn't justified. They talked about starting the movements from end-consumer (no doubt, sounds great), but who would bear the cost? Not the oil giants, nor others. So why not have both approach where one also puts restrictions on the polluters who make profit by polluting our world.
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Paulson Negotiating Accord to Stem Foreclosure Surge : Effectively we are coming to the case which follows Fed. to bail out failed hedge funds of Bear Sterns. Looks funny...isn't it? US house prices fall sharply said median home prices fell by 8% (in a month...that's preposterous). And probably a bit of market forces and a bit of manipulations would help the US economy in the short term; but over the longer term US is no doubt passing the baton of world economy to China. (I also see a lot of Indians writing in global news-agencies now...this morning I saw two). Surprising is the different pulls and pushes as 'Gross domestic product rose at a revised 4.9% annual rate instead of the 3.9% reported a month ago'.
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Freddie Selling Stock at $25 a Share: 'With a price of $25 each, the 240 million shares of preferred stock have a fixed dividend rate of 8.375 percent through Dec. 31, 2012, when Freddie Mac will have the option to redeem all or part of the shares.' The interest rate looks to be higher, and that may explain the oversubscription.
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I must also highlight on the Tamil-Indians right violation in Malaysia. What particularly strikes me, the incident being unfortunate, the stand that Govt. of India takes. Our politicians are quite when similar violations routinely takes place in cases like the recent Assm-riot (where a tribal girl was stripped...) to Nandigram...and we don't act (forget condemning) to stop these again and again. I believe the world will listen to us once we ensure human rights are protected in India first; then we will have right to preach others in case of any violation of any, particularly people of Indian origin, in their nations.
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I took part in one of the survey's of Avaaz. and liked the statistical findings immediately. Coupld of weeks back, Ricken Patel of Avaaz was in HardTalk of BBC with Stephen Suckur. (I talked about Avaaz in my article on Citizen Journalism). True, at certain points one could make out that Ricken didn't have the complexity of few of the problems that Stephen talked about; however there were moments when I felt Stephen wanted to create 'more complexity' to many of the problems in order to protect the interests of the west.
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Today only I also joined another online movement called unsubcribe-me. Hope these groups are indeed able to put the required pressure on our global and local policy-makers.
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Fed Official’s Remarks Send Stocks Soaring : If wealth creation was so easy...and we say it's free-markets. Where the chain of the free market is primarily with central bankers controlling fiat-currency. Couple of charts were also interesting...and now there were people voicing concerns that 'Don't Bail Out Fannie and Freddie'. Even if there's not a direct bail-out, these interest rate cuts which may prove to be harmful for the local and global economy in the long run is nothing but an indirect way of bailing them out (so that interest burden reduces and default rates fall). However 'With portfolios of almost $3 trillion, capital of $65 billion, and no obvious end to the fall in home values, the continued solvency of Fannie Mae and Freddie Mac has to be in question. Last week, Freddie shocked Wall Street with a quarterly loss of over $2 billion, and in their subsequent discussion with analysts, Freddie's management indicated more and larger losses could be expected' like scenario, a simple 2% default would wipe out all that capital of these two institutes. And that may have already happened, or may not be far. Therefore a direct bail-out is also likely - a clandestine operation probably is already on. What's S&L industry by the way? WSJ is really good when it choses to be good...
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Chávez Says He’ll Cut Ties With Colombia and Its Leader : Since my article showing my liking for this man (in-spite of disliking his madness) I must say that he has turned even more crazy lately. The developments of South America are interesting; and I am not aware of any Chinese influence there as of now (there should be some...). Although many of these LA nations are closer to Russia than China. It would be interesting to see how LA, the US, China and Russia moves on...diplomatically and economically. Chavez, if he himself finds a strong feet, may prove to decide the winner/s.
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Chinese Stocks Face Biggest Monthly Drop Since 1995
: Jim Rogers, only this month (or last month) asked for 30% correction, and it's nearly there. Rogers is one of the most bullish man on China; and I also feel that this correction (further deep the correction runs, better for long term upto Olympics) is indeed healthy for China. The weak hands (unfortunately) and also the impatient leveraged ones along with the weak speculators must get out. 'Chinese stocks are poised for their steepest monthly decline since at least 1995 as the government deflates a bubble that caused prices to quadruple in a year. The Shanghai Composite Index fell 19 percent so far in November, the most since February 1995, when Bloomberg started keeping records of the benchmark. Shares in the index trade at an average 44 times earnings, according to data compiled by Bloomberg. The MSCI Asia Pacific Index and the Standard & Poor's 500 Index are valued at 17 times profit. While this year's rally turned Beijing-based PetroChina Co. into the biggest company by market value and made Industrial & Commercial Bank of China Ltd. the largest bank, five interest rate increases by the People's Bank of China and higher taxes on trading shares sent the index down 21 percent from its Oct. 16 record. The last five times the Shanghai Composite Index dropped 20 percent or more from a high, losses deepened to an average 35 percent before recovering, Bloomberg data show.'
ET quoted another Bloomberg article and gave one of the indicators/early definition of bear market is a fall of 20% in one year, but I doubt that definition/validity of bear market indication (in India too we also saw quite a few sharp corrections - oct'05 then May'06...). 'The decline in China compares with a 21 percent decrease in Japan's Topix index from its February record to Nov. 22, the first of the world's 10 biggest stock markets to enter a bear market since the summer's U.S. subprime-mortgage collapse... Chinese stocks rose as households shifted more of their $2.3 trillion of savings into the equity and property markets in search of returns that beat inflation. The yuan's 6.1 percent appreciation against the dollar in the past year has also increased the appeal of assets denominated in China's currency. Chinese companies have sold 420 billion yuan ($57 billion) in stock this year, more than in the previous five years combined, according to data compiled by Bloomberg...The People's Bank of China ordered banks this month to set aside the highest level of deposits as reserves since at least 1987 to slow the economy's 11.5 percent annualized growth in the third quarter. Consumer prices rose 6.5 percent in October from a year earlier, matching a more than decade-high, compared with the one-year bank deposit rate of 3.87 percent.' Just to highlight the importance of China, Bloomberg on an average may have ten articles on China whereas hardly one would be on India - that too not on real economic progressions.
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China Investment Seeks to Stabilize Equity Markets : In India, one section boasts about our quarter-trillion reserves as strength of economy not realizing where others are. 'State-run investment funds will grow to $7.9 trillion in combined size from $1.9 trillion now as currency reserves keep accumulating in countries including China and Russia, Merrill Lynch economists wrote in a report last month. Abu Dhabi's investment followed purchases by U.A.E. fund Dubai International Capital LLC in companies including London-based HSBC Holdings Plc, Europe's biggest bank by market value...``This investment is not a charitable activity,'' said Lou, ``From a long term point of view, this is a stabilizing force for the financial market. We will do the same, that is, to become a stabilizing force in the global capital market.'' ' However I am not convinced that stabilizing global financial markets would be beneficial to 'the peaceful (or otherwise) rise of China' theme all the time; because it will anyway help maintaining the status quo with the US in the top. Therefore the obvious interest of the Chinese would be (1) to stabilize their internal financial markets and that of their close allies and what all would have higher +ve influence to China and also (2) Destabilize financial markets where it would hurt its opponents interest more (like that of the US, India here also needs to be cautious). However unlike the Goldmann Sachs and financial terrorists, I believe China would not misuse this often, rather they would wait for the opportunity to strike a deadly blow rather than striking mildly with every rush/panic situations.
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'The MSCI World Finance Index has lost 11 percent this year, the worst performance among 10 industry groups on the MSCI World Index. Shares of HSBC trade at 1.7 times the book value of its assets, which is about half the 3.1 times average of the Hang Seng Index's 11 finance-related stocks.

Today, China's Ping An Insurance (Group) Co. bought a 4.2 percent stake in Fortis, Belgium's biggest financial company, for 1.81 billion euros ($2.7 billion). In October, Bear Stearns Cos., the second-biggest underwriter of U.S. mortgage bonds, sold a stake to China's government-controlled Citic Securities Co. for $1 billion.'
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NYT ($200 Billion to Invest, but in China) however made it clear that the fund is meant for China only...$200 billion for nearly $2 trillion m-cap stability. Great. And I strongly believe China does need it, to protect it from financial terrorism that often takes place at the winks of the west (more so of the US)

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China Rebuffs European Call to Hasten Yuan's Gains : So after another high profile European leaders visit of China, where they preached China again and again what they should do; now comes China's way of telling them just to shut up, in a mild way. BBC showed yesterday that China enjoys some $227 billion (or nearby, this article gives an annualized figure of around $155 billion) figure of trade surplus - that's even more than what it enjoys with the US. Within Europe, Germay enjoys maximum trade surplus (again more than $200 billion or so, if I remember rightly). Therefore I wonder there must be other European nations who may be highly trade deficit (like the US or India) overall. China can well tell the EU that why not solve it between you and the US - let dollar emerge as a strong currency which will automatically lead to a strong yuan.
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Japan Factory Output Rises to Record on Export Demand : So when Japan isn't facing exports problems due to risingYen (or even China does not face so, or South Korea as the article pointed out), we wonder all the noise from Indian exporters, who anyway doesn't export much and always takes domestic consumers for a ride.
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Asian Stocks Rise on U.S. Rate Cut Speculation; Samsung Climbs Markets (read rather the Wall Street and associated ones) continue to dictate what they want the Fed. to do; and Fed. simply delivers that like a puppet of the rich-interest groups of the market. And steps like this will only ensure the problems lingers longers, draws further and finally rots the global ponzy-based financial system.
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I was watching an Indian business channel yesterday, and was aghast to see some Rs. 3800 crores (and Rs. 1300 odd crores again on interest rate subsidy) is to be given as aid to Sugar-mills. A simple calculation based on sugarcane growing acreage (4.4 million acres, 2002-03) in India shows the amount to be around Rs. 9000/acre. Now what is well known is the background of Sharad Power. A drainage of the exchequer in this manner is really something what the most corrupt government anywhere also can't think of doing. When sugar manufacturers made huge profits just couple of years back, nothing wrong in it but in any business there will be cycle, more so in commodities. Even if one wants to give aid, pass it on directly to the farmers - Rs. 9000/acre isn't bad for farmers, on top of market price (or MSPs) of sugarcanes they get.
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Time to Hedge Your Home?: Sounds a good idea, but how does one do it...any instrument can't have only pluses. 'Futures traders are betting that home prices will fall more than 20% in markets such as San Francisco and Miami over the next year.' And that will be really preposterous...'Investors' predictions about these real estate markets are certainly not guaranteed to be accurate. But they do provide insights into what people with skin in the game think lies ahead. These types of "predictive markets," have proved surprisingly accurate in forecasting everything from housing movements to the outcome of political elections. They tend to be especially on the mark when the participants have money on the line, as they do in Chicago...That's the theory. In practice, the housing contracts may not have yet evolved to the point where they would work well for individual investors. The futures contracts for individual cities are thinly traded and on some days, certain contracts don't trade at all. A spokesman for Standard & Poor's says that it's normal for such contracts to start off with low volumes and higher volumes typically come after a catalyst, like the current housing slump.

Shiller thinks such contracts would have quite a bit of value for homeowners as they face an historic downturn in housing. He says the current market is "out of the range of historical data" because the boom was far beyond any previous one for which reliable data exist. In response to one question on the conference call, he said declines of home prices of 50% were certainly feasible (BusinessWeek.com, 11/27/07). "I'm not going to forecast that, but I think it's a real possibility," he says. ' And the housing future, for individual house owners, may solve a present problem and create many more through financial innovations, as seen earlier with any instruments in the derivatives side.

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JPMorgan, Deutsche Bank Keep Mum on Indian Intellectual Capital : The article looks fine, however without evidence (how much, global share, etc.) this may well be a trap of what media does well - putting content in the guise of promotional material (like Copal here). 'One reason for the secrecy: Investment firms and brokers may be afraid they'll be cut out of the equation as clients shop directly in India, says Manoj Jain, Pipal's 39-year-old founder.' Sothing I talked today in class...about what to be outsourced and what value addition the interface is doing (IBM - Windows - Intel).'``Whenever a company announces earnings, we have to come out with an update in four days,'' says Srivastava, 29, referring to one of the reports he generates for Goldman Sachs.' We know how these get done... For now, India's young research industry rises and falls on the fortunes of Wall Street. Pipal got its start in 2001, when investment banks were reeling from the Internet bust and the Spitzer campaign against analysts who talked up questionable, mainly dot-com, stocks.

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Yuan Falls on Signs China to Resist Faster Gains; Bonds Advance : Looking at the way China continuously ignores the calls from the west reminds me another management theory - I don't remember the name or title. It essentially focuses on the costs of servicing the existing customers of any firms, and an analysis would show that all customers are not value+. For many, they just are value-ve, that means it costs the firm more to service these customers than the revenue these customers generate. Common sense tells any to dump these customers. For China similarly, they have internally dumped these customers from the G-7 blocks of North America and Europe. Because whatever they do for China's interest would never gain support from the west - so better build credibility in Latin America/Africa/South Asia. Makes perfect sense anyway...whereas India is continuously investing on customers that are value-ve for India if India indeed wants to be a global player. 'While the yuan has risen about 5.7 percent against the dollar this year, it's fallen 6.1 percent versus the euro, hurting Europe's competitiveness.' Last few weeks, Rupee has been trading within 39-40 range, and appreciation of rupee has slowed down again (expectedly). I need to find what's been the depreciation of rupee against Euro. One post , not of good analysis but with a graph for last two years show Rupee declining by 3%. 'Forwards contracts in the currency (Yuan:dollar) show traders are betting on a 9.5 percent appreciation to 6.7505 over the next 12 months.'

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Recession Signs Grow as Winnebago Leads U.S. RV Drop : I had some initial problem in understanding these firms and industry, that has acted well as a belweather of recession over the last three decades. Motor homes and travel trailers - recreational homes -....? The odds of economic meltdown, an interesting article on recession that appeared more than a year back was enriching in similar contexts, but far more insightful.
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China Uses `Tai Chi' Diplomacy to Build Soft Power : I don't understand why West can't stop cribbing these...they did it, still do it much more (remember sending war-equipments to Israel and simultaneously donating some $30 million to Lebanon during the last summer war!). 'The source was China's Office of the Chinese Language Council International, which has opened 135 Confucius Institutes worldwide. The office is part of a broad campaign involving investment and diplomacy as well as cultural outreach, all aimed at hastening China's progress toward great-power status. The campaign, combined with China's economic growth and military modernization, forms a challenge that U.S. politicians are starting to notice and policy makers will likely be fending off for years. It is a classic example of what Harvard University professor Joseph Nye has dubbed ``soft power'': building authority through persuasion rather than coercion.' Smart guys...the more I watch China and its various actions; what strikes me are the stupidity and various inactions of Indian policy-makers...my dad, in his style, used to talk about a milking-goat and her calves (is goat-kids called calves? I need to learn from Sonu) where three two drank all the milk and the 3rd just danced around, to be weaker day by day and eventually succumbed. India similarly dances around with 8-9% (that too for four years only, and increasingly looking unsustainable) growth rate and economic super-power stories; whereas China is drinking the milk arising from global imbalances, and a fall is US influences. 'Guan Anping, a Beijing-based lawyer and former aide to Vice Premier Wu Yi, calls it China's ``Tai Chi approach'' to diplomacy. ``When you fight Tai Chi, you use your opponent's power against him,'' Guan said. ``It's the soft approach to offense.''' must be some old ideas of Confucius or Chinese philosophers that allow forces to be multiplied than merely added on. 'Success in a global information age, he wrote, ``depends not only on whose army wins, but also on whose story wins.'' ' A powerful statement indeed! 'China has weakened the influence of the Western-dominated World Bank and International Monetary Fund in the developing world by providing loans that aren't conditioned on the adoption of certain policies, as are funds from the bank and IMF.' Venezuela made a lot of noise here, and China, silently acted on. And just a few days back, we saw how Angola happens to be the largest crude exporter to China...they just create opportunities by scanning continuously the global landscape, India when presented with opportunities in a plate kicks it in the name of unnamed virtues.

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“Rural health scheme becoming a mockery”: Yes, indeed a mockery (extending MBBS by 1-year, and the other day a Doctor told me how poor the rural infrastructure is - no facilities, medicine...so what does the doctor do there?). Two other news-reports - one on providing higher subsidies for power consumers (upto 200 units a month) and 2nd is the NYT report on poor working conditions of forging unit (manhole covers) in Howrah. We watch with shameless apathy in Kolkata how some people work in underground drianage systems by opening manhole covers to clean the sludge/dirt. It probably is more unhumanly than the workers of that foundry. And at times, people dies from underground poisonous gases too - and all these happen under Municipality. Today, while coming to Salt Lake Sector V IT unit, I again saw those mediaeval practices on road and the great Indian paradox was again out. The NYT report (as published in the TOIN) however didn't focus on the pollutions these units make and that's why, other than cost advantages too, these units have been shifted to developing nations.
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For Abu Dhabi and Citi, Credit Crisis Drove Deal : Nearly 10% of Citi now owned by Middle-eastern investors, and ' Abu Dhabi Investment Authority, the largest sovereign wealth fund in the world, with assets estimated at $650 billion. Despite its size, Abu Dhabi’s royal family has been largely content to pour money into low-return, low-profile investments — until now.' At times I think all the billionnaires list to be meaningless as many of the royal families from Middle-eastern OPEC nations may be worth much more (it will be interesting to know how the oil-revenue gets shared amongst its people and their non-democratic rulers).
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Google to seek cheaper, cleaner energy sources: Had it come from any other tech-giant, it would have raised surprising eyebrows. However Google is different (they also do have some space-plans!). And what's indeed is encouraging that the organizations who should be focusing on this grave issue makes for of a sounbyte than takes meaningful actions (take oil-giants or nations negotiating on quantum of cuts). '"Our goal is to produce one gigawatt of renewable energy capacity that is cheaper than coal," Google co-founder Larry Page said Tuesday. "We are optimistic this can be done in years, not decades."' The quantum of power it's talking about is comparable to what Google itself consumes to run its thoudands of servers (may be more, both power and servers); so are they coming from the conscience that they should be self-sufficient, or they talking from global challenges perspectives (when it's cheaper than coal, there is a global market!). If I remember right, I think one of the spouces of the two founders work with energy-renewable firms. '"They seem to be getting into so many areas outside of search. There's a quality to this aspiration that's a little hard to accept, because it's so ambitious." In the last year, Google announced moves outside of search, including an attempt to develop an open operating system for cellphones based on Google technology, and buying wireless spectrum for a cellphone network. "If we look ahead to Google in five years, it will be primarily a search company," Munster says. "Their core business will be unchanged."' Yes - that's also true; however do something good as long as search engine cash-cow yields.
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Mideast Talks Yield Promises To Press On: I am not sure on the outcome and optimism. Mehmoud Abbas, if he indeed represents the interest of the Palestines, would not yield much. Following this story, I get an inkling on how Israel and US may have achieved few numbers of past deals that it keeps on parroting - the strategy is divide the community/nation; find someone who is open to the ideas of west and have a puppet government under him and get a deal signed. The obvious question is - does that puppet government have the people's backing? I have respect for Mehmoud Abbas - but one can't blame him when he has seen all the violent and otherwise fractional internal fights over Palestine. 'Notably absent were representatives from Iran and Hamas, the militant group that won Palestinian legislative elections and now controls the Gaza Strip -- effectively half the population of any future Palestinian state. ...However, the presence of so many Arab figures, including Saudi Foreign Minister Saud al-Faisal, was a rare event in the long history of Israeli-Palestinian negotiations, and signaled a broader Arab willingness to give the U.S. peace effort a chance.'
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'But the two leaders sprinkled their speeches with references to diplomatic code words that point to the tough path ahead. Abbas, for instance, referred to a U.N. resolution that Palestinians believe gives them the right to return to their land in Israel, while Olmert mentioned a 2004 letter that Bush gave former Israeli prime minister Ariel Sharon that said that such refugee returns were unrealistic.' In one case, it's the UN (which often is indistinguishable from the US anyway), and the other is US (President's letter). So the facilitator itself favors one...and it will be difficult for Abbas to sell the Peace-deal back home over the longer term. There would have been better credibility had it happened at a neutral mid-east location (and there are none!). Bush's urgency can also stem from a target of attacking Iran...
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Iran says has built new long-range missile: The all-important question arises on when and how for 'Washington has not ruled out military action if diplomacy fails to end a row over Iran's nuclear program, which the West says is aimed at building atomic bombs...Iran regularly says it has made major advances in its weaponry. Western experts say it rarely gives enough detail to confirm the capabilities...While no technological match for U.S. forces, experts say Iran's military could still disrupt Gulf oil shipping routes.'.. I will put a 50:50 chance within the next (and last) year of present US-administration. Was also surprised to see another news-article in todays Economic Times that Indian banks are not honoring LoC of Iran for tea exports. Sounds strange...in one side the country is struggling in exports growth, needs energy-partners and on other side; it just fails to capture on some of the global opportunities. In one side, it's sort of clear that nations from Russia to China (and even Pakistan) are making money and friends by exporting even nuclear technologies; and India is getting concerned even with tea-exports.
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Home Prices Post Big Drop in Survey : No lights are yet seen at the end of the housing tunnel, which started from sub-prime and is, no doubt, spreading. 4.5% drop in a single quarter (and the overall drop over this crisis being anybody's guess) may wipe out the equity of many home-owners totally. 'An index of consumer confidence, meanwhile, fell to 87.3 in November, a sharper-than-expected drop, reaching to its lowest level since October 2005, the Conference Board said yesterday.'

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BHP Bid for Rio Tinto Loses Confidence of Investors : Though my observations are that these type of consolidations, once out, eventually happens (though may get new players; and now there's speculations that China may be interested in Rio Tinto). However the articles has good content why big isn't beautiful, most of the time, for society and overall value-chain (and not for that particular firm where it may be more often so; but again not always).
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Dollar Displaces Yen, Franc as Carry Trade Favorite : They say (and I also said in my book Wondering Man, Money & Go(l)d)that market evolves. And now dollar emerges as Carry Trade instrument...
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China Foreign-Exchange Reform Smooth, PBOC's Su Says : Can't call it a 'small step' for China; but definitely can call it a giant stem in restoring the global economic balances from the height of imbalances.
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U.K. Union Says 'Tata, Ford': Remember Reverse Colonization: Tata Acquires Corus. This time I am indeed impressed by the HR side of work done by Tata to generate and build the good will. And although many interpreted a racial/nationalistic angle of reverse colonization concept that I talked about subsequently; my intention was to look at it as a natural progression - with examples of Japan, China, etc. So after British Steel (earlier avatar of Corus), now its Jaguar and Land Rover. And remember, not too long ago Tata was trying sell its Indica through the dealer network of Rover (I hope I am correct, or was it another one). Although That deal felt apart, now it's likely to be the parent...
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China's snub of U.S. vessel sends murky message: True, it's hard for the sailors and their family; but the US must ready itself for the changing geopolitical order. And therefore they should stop crying foul over each of these issues; and look what they would have done had China/Russia asked for similar favor from US homeland in the Atlantic/Pacific. 'It (the slap) just wasn't terribly clear whose face it was aimed at.' - for rest of the world; China achieved dual goal by giving in in the last minute. And yes, we know who got the slap - if that's the way they see it. (I do understand that China is a real big threat to India, I repeat a real big threat...follow my China and India: So Near and yet so far, but that does not mean that I blast China and support the US on every ground).

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Chronic diseases to cost India $237 billion in 10 years: Interesting study, and CNCDs as a terminology is also new to me. I better watch out...signs are not good for our family.
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Crushed bus lifts China dam area landslide deaths: I wonder with awe as I hear/read/watch over TV about some of the seemingly impossibel (which can also prove to environmentally catastrophical in future) infrastructural projects - the Three Gorges Dam, The Tobet rail-link...'660-km (410-mile) Three Gorges Dam reservoir'...I am not sure whether Reuters is talking about the tributary or the dam - for China, all impossible looks possible. But look at the plight of the labors...it's high time Chinese government should initiate good practices for its labor as they can afford it. Here's another seemingly unbelievable info: 'dam's rising waters, which are due to peak at 175 metres (574 feet) above sea level next year.' I am not sure whether any Indian dam is that deep (or even any in the world?). 'In September, dam officials warned of potential "environmental catastrophe" unless erosion and geological instability around the reservoir were controlled -- an abrupt departure from bright propaganda about the world's biggest dam.' I favor progression - but I also strongly feel that one should be careful in destabilizing nature in large scale because the disastrous effects can be visible years later (the Farakka dam over the Ganges and catastrophic erosion of the Ganges that's paining hundreds of thousands of villagers in WB, India).
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China Railway Is On Track: 'China Railway Group, the world's third-largest construction contractor in terms of revenue, sold 4.675 billion in yuan-denominated Class A shares at 4.8 yuan a share, the top of the indicative price range of 4 yuan to 4.8 yuan, people familiar with the deal said...China Railway Group built more than two-thirds of China's 75,000-plus kilometers of railway links and 95% of the nation's electrified railway lines. China has earmarked 1.25 trillion yuan for railway construction for the five years ending 2010.'
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$300 Billion in Write-Offs Is Predicted : Question is - how much of it to be for retail or is it fully for finance firms? 'In particular, mortgage resets — the point at which the interest rate on a loan shifts upward to reflect current borrowing costs — have not peaked, but will probably do so next May, the organization said in the report.' So probably this crisis trailor would unfold most by 2nd-half of 2008 (as Olympics proceed? Dangerous coincidence...remember Moral of Stocks up and Housing Down story...it seems I was over-optimistic. 'The group estimated the losses based on a 14 percent default rate on subprime mortgages, high by historical standards but entirely plausible under the current circumstances, economists say. Losses on subprime loans — those made to the least creditworthy borrowers — would cost lenders $125 billion, the organization said.Factoring in so-called Alt-A mortgages, ones given to people with better credit but still not high-end, the organization concluded that an overall loss level of $300 billion looked feasible. Banks and other investors are exposed to the mortgage market through securities backed by housing loans. The problem in financial markets could force write-offs far in excess of what actual defaults turn out to be. By contrast, if they can hang on until the American housing market bottoms out and allows a fuller picture of what losses are, economists say, those losses can probably be absorbed with relatively little shock.' Yes - that's the key as I talked about y'day...
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Rudd plans changes to key policies: It's yet to be a reality...as of now it's only a scenario. After Spain's (what's his name) demise for supporting Bush in War On Terror, then came Blair, then Abe (true, it was more of domestic policies) and now Howard (not yet). And Bush got Sarkozy. My bias is well known - however whan I met CJs from Australia last this June, it was not so bad then for Howard. It seems things turned from good to bad to worse in last five six-months (one issue is interest rate, but there Howard's policy - or his allowing CB to be independent seems to be right). Yes, Australia may follow suit of Japan and Britain and withdraw troops from Iraq (partially even). Good news for climate groups, but there may be bad news from NSGs point for India. 'His avowed goal is to "transform Australia into the most China-literate and Asia-literate economy in the Western community of nations." At the same time, Rudd says he would stress to Beijing Australia's "enduring alliance relationship" with the United States" and would engage China on issues such as human rights and the environment.' No doubt it will be big gain for China, some loss for US and India...
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Howard's End: Labor Wins by a Landslide: And here's how a young Australian citizen journalist sees this coming end of another stalwart.
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Dollar Falls Below 108 Yen on Outlook for More Fed Rate Cuts , & China's Yuan Rises Past 7.4 Per Dollar Before Trichet Visits : Highlighting on those volatilities, uncertain times and bigger economic imbalances, when I wrote When currencies trade with volatilities of stocks almost a month back, well I didn't think the range of $:Yen can move so fast to less than 108 level. 'The yen has risen 3 percent against the dollar this week as concern global economic growth will slow prompted investors to reduce carry trades, in which they bought higher- yielding assets with loans from Japan.' And Japan's economy neither looks to be strengthening, nor the IR is up, nor M3 is controlled. 'The dollar dropped to $1.4967 per euro... It will fall to $1.57 per euro by the end of the first quarter, Halmarick said. The yen rose to 107.69 per dollar, the highest since June 10, 2005, and was at 160.71 versus the euro from 161.07 yesterday...The euro has gained 13 percent against the dollar this year, prompting European Central Bank President Jean-Claude Trichet to say yesterday in Paris he opposes ``brutal moves'' in currencies. U.S. Treasury Secretary Henry Paulson last week reiterated he favors a ``strong dollar.''' Now RCB interest rate, and one by purely currency hedging gets a return of nearly 17%...quite high in developed world standards (or even in any standards). 'Citigroup predicted on Nov. 21 that the Fed will reduce the target for the overnight lending rate between banks to 3.5 percent from 4.50 percent by March 31. Merrill Lynch, the third- largest U.S. securities firm, sees the rate at 2 percent by June 30, 2009, David Rosenberg, New York-based chief North America economist wrote in a report dated Nov. 19.' Let it be free - solves all problems - doesn't it? Remember my spoof article 'Fed. to bail our failed hedge funds of Bear Sterns'. Helicopter Ben can be seen in its best role... Amidst all these market related movements, what's really interesting is how Wall Street markets its case for further and further rate cuts as % of people surveyed immediately after a rate cut, expecting the next rate cut, starts increasing with every passing day. 'The Organization for Economic Cooperation and Development yesterday estimated losses from U.S. subprime mortgage foreclosures could reach as much as $300 billion' As these figures vary from 200 - 400bn, I wonder who is going to fund it at the end of the day. Remember US savings rate is almost negative, so who funds these losses?
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'Losses in the dollar accelerated as traders sold the currency to trigger knockout clauses on options that would be worthless should the currency decline beyond $1.4900 per euro, said Takashi Yamamoto, chief trader at Mitsubishi UFJ Trust & Banking Corp. in Singapore. Traders agree to such clauses to reduce the premium paid for the option...The pace of the dollar's drop has surprised economists and businesses. The median forecast of 41 analysts and strategists was for the currency to trade at $1.45 to the euro by year-end, according to a Bloomberg News survey. Airbus SAS's Chief Executive Officer Tom Enders was reported by Der Spiegel magazine yesterday as saying the company may have ``massive losses'' due to the dollar's drop. The European Commission this month cut its forecast for euro-area economic growth next year to 2.2 percent from 2.5 percent.' So Europe would also feel the pains to allow the US to write unlimited cheques...'The next target for the yen is 106.55 against the dollar, Kyriakopoulos said.' I am sure many currency traders lost all and many are partying...Japan's currency gained the most this week against Brazil's real, a favorite of the carry trade, rising 5 percent to 60.6324...Brazil's benchmark rate is 11.25 percent, compared with 0.5 percent in Japan.'
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The 2nd article stated: 'While the yuan has risen about 5 percent against the dollar this year, it has weakened by almost 7 percent versus the euro...The median forecast of 24 analysts and strategists surveyed by Bloomberg News was for the currency to trade at 7.30 by the end of the first quarter. Westpac predicts 7.36...Forwards contracts show traders are the most bullish on yuan gains since the end of the dollar link, betting the yuan currency reach an implied rate of 6.8030 in 12 months, a gain of 8.9 percent from the current spot rate. The People's Bank of China signaled it wanted the yuan to gain today by setting the reference rate for the day's trading at 7.3992 from the close of 7.4145 yesterday. The yuan is not allowed to fluctuate more than 0.5 percent from the daily rate...China tempers advances in the currency by buying dollars to protect exporters, limiting yuan gains so far this quarter to 1.4 percent compared with 4.5 percent in the Philippine peso and 2.8 percent in the Singapore dollar.A report this month showed China's October trade surplus rose 13.5 percent from a year earlier to a record $27.05 billion. Exports climbed 22 percent to $107.7 billion and imports increased 26 percent to $80.7 billion. China GDP: China's bid to replace Germany as the world's third-largest economy is being blocked by the euro's rise against the dollar, Zheng Jingping, chief engineer of the National Bureau of Statistics, said Nov. 21.' sounds funny when basic senses tell me that China's GDP (not the way we measure it, but by the sense it should make) should be couple of times that of Germany (I respect Germany economy for its robustness, and export competitiveness in engineering goods).

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Derivatives Grow at Fastest Pace in Nine Years to $516 Trillion : While looking at a case sometime back (on oil prices), I first had a look at size of global derivatives market. And that was around $300-400 trillion, more towards the lower one. The components are also interesting - the interest rate swap part and within that the single curreny interest rate swaps.
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Industrialized Countries' Greenhouse Gases Hit Record High: The discussions of cut back happens in its place, the emissions go up in their places. Expected. One of the picture of power planst may have mistaken cooling towers as chimneys (though there were chimneys as well).
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Loan-Sharking Accusation Hits Harvard, Yale, Princeton Funds : We covered the amount of money these universities own, and how they manage it. And keeping that in mind, it's not unexpected that controversies like this result from time to time.
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Paulson Finds Bush's Treasury No Career Enhancer Like Goldman : It further lends credibility to the manipulative (or even unethical) crisis management cell that Bloomberg earlier talked about. And it also shows how Fed. is governed (or arm twisted) by Wall Street, and not by the American people as such. I am sure that the Chinese understand it well, and 6-ft-1-inch Paulson found a much better match in 5 ft tall Chinese Vice Premier Wu Yi. I really don't understand why starting from Paulson to Fed. is trying to artificially prop-up the house prices. True, a major crash in a short-period may result in a shock that the economy can't absorp; whereas same correction over a longer period would not give radical shock to the economy. The choice therefore is to go through severe pain for a short period and bounce back, or go through lasting pain of less magnitude for a much longer period and wait for global opportunities (to destabilise others and bounce back faster).
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Yesterday I saw one WSJ article on ASEAN, and today it clearly gave the dge to China. Here's the Bloomberg article:Asean Steps Up China Free-Trade Talks as Deal With India Stalls . 'The 10-nation bloc, which is forging an economic community modeled on the European Union, is expected to move closer to an agreement with Asia's second-largest economy as China's Premier Wen Jiabao meets Asean leaders this week in Singapore. China's trade with Asean is about seven times that of India, underscoring its importance to the export-dependent grouping. Southeast Asia's developing economies are almost twice as reliant on exports as the rest of the world, with more than 60 percent of overseas sales ultimately destined for the U.S., Europe and Japan.
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I also wonder why suddenly my blog title and labels are coming in Hindi...however recently I worked on a paper discussing lack of content in local languages in South Asia and in Sub-Saharan Africa...so in that sense, it's OK.
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A look at Indian financial markets showed Essar Oil having almost same or more m-cap than Hindalco...ridiculous. Are the regulators sleeping?). .
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Auto sales could hit 15-year low: With housing down, financial industry in bad shape, this indeed is bad news. And I wonder how a recession can be avoided, in genuine sense and not by manipulating through currency markets or political influence or military might.
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Chavez Urges OPEC to Press Political Aims, Combat `Imperialism' : Rather than targeting US, Chavez would do better to focus on real issues in developing world. Otherwise it becomes more of rhetorics, again and again. With Saudi Arab controlling nearly a third of OPEC production (and having, what many believe, the single handed power to sway price either way, which they used in 1990s), unless common consencus is built; this will be some noises (required again).
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Great wall of money: $250 billion to flow from China: On one side, India is ready to sell the country to attract a paltry amount of $450 billion to any in the name of infrastructure developments, and on another side; China is looking for opportunity to invest. And then there are traditional power questions/issues/trust. Sad that India is where India is today and great to see China is where China is today. If both these two countries can only work at the common interest of their people, I know that's an unrealistic wish!
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Toll in Bangladesh Cyclone Hits 2,300 : Being in West Bengal, I have also been watching this natural disaster and its aftermath in local media. And what I am surprised is an eerie of silence from the Government of India to be by the side of the people in Bangladesh at this hour of their need. This indeed is baffling keeping in mind other similar actions and inactions of GoI. Storm brews over Bangladesh weather warnings explained some of the confusions this region is accustomed with (on that evening, even in Kolkata many of us were surprised by the warnings alone, though we were certain the ground level preparation was poor).
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China Freezes Lending to Curb Investing Frenzy: It would be interesting to see how this works - because there is no dearth of domestic savings (more than $ 1 trillion a year) and the trade surpluses ($27 billion in last month itself) and the money inflows. Regarding one part of it, the domestic savings must get some return - bank rates of 3-4% is less than inflation, stocks are already high and can fuel another rally to bubble, and consumption levels remain low. If it at all has to become effective, the consumption must go up; and that's the sustainable solution. Two information is worth noting: (1) 'Gross-domestic-product growth, at 11.5% in the first nine months of 2007, is on pace this year for its fastest rate since the blowout years of the early 1990s, when growth peaked at more than 14%. and (2)Foreign banks in the important Shanghai market -- including Britain's HSBC Holdings PLC and Standard Chartered PLC, New York-based Citigroup Inc. and Hong Kong's Bank of East Asia Ltd. -- controlled 6.2% of industry deposits at the end of September and more than 16% of loans outstanding, according to official figures.'
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Saudi Arabia Won't Include U.S. Dollar in OPEC Talks : Expected, but interesting developments.I wonder whether the PR fiasco (the mike on incident) happened during market hours or after markets closed (Euro:$ impact, if any?)
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World Bank Reports Progress in Sub-Saharan Africa: 'But some African leaders now condemn the bank and the fund for persuading them to cut budgets and trim the ranks of teachers, nurses and other trained workers at a time when their countries, arguably, needed them most. And critics argue that in some nations with oil or other natural resources, growth has enriched an elite class but passed over the poor. Mr. Page acknowledges some ill-advised outcomes. But over all, he said, many nations managed to reduce debt, tame inflation and set competitive exchange rates, setting the stage for economic growth. “The alternative would have been much worse,” he said.' What apparently looks like a trade-off may not be so...growth with focus on health or education could also been achieved (at least in economic sense). The sole reason is again US deficits and flooding of the market with dollars, everywhere. 'More than 60 percent of the region’s direct foreign investment in 2005 was in its oil-exporting nations. South Africa and Nigeria, the continent’s leading oil producer, accounted for more than half of sub-Saharan Africa’s gross domestic product.'. I believe the world has to move away from the myth of growth (and GDP which I never understand on measurement side) as JFK suggested.

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Buffett backs estate tax, decries wealth gap: The wise man says: '"Dynastic wealth, the enemy of a meritocracy, is on the rise. Equality of opportunity has been on the decline," Buffett said. "A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy."' And in India, it's everywhere (other than sports probably). '"In a country that prides itself on equality of opportunity, it's becoming anything but that as the gap between the super-rich and the middle class is widening." Under present law, maximum estate tax levels have edged down to 45 percent from 55 percent in 2001. The rate goes to zero in 2010 but returns to 55 percent in 2011 if lawmakers do nothing, which looks unlikely.'
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Murdoch Said to Stress Free Access to Wall St. Journal’s Web Site : So the manyfold increase can be “instead of having one million, having at least 10-15 million in every corner of the earth”. The news is in expected line anyway, and we academicians hope that leading academic publishers take a lead from mainstream/alternate media. Unfortunately the trend here is quite in the opposite direction, and as an academician I am concerned. Follow Web 2.0 and academic publishing
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Foreclosure filings: No slowdown yet: 30% increase in last quarter, and extimated 2.2 million families to lose homes...roughly comes upto $400 billion as some other agencies reported. However the total write off will be in some double-digit % of that, it should not be the full amount. So something is missing...
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China's Industrial Output Growth Slows to 17.9% : I wanted to have a look on contribution of industries in China's GDP. China Economic Structure offered data of few years old, whereas People’s Republic of China of ADB is interesting. 'Industry, including manufacturing and construction, contributed 7.0 percentage points (out of 10.7% growth of 2006), or 65% of total GDP growth, and services another 3.2 percentage points, or 30% (Figure 2.8.1).'. The accompanying chart is difficult to read, but it won't be wrong to say that in China Industry contributes much more than services and agriculture. China's service sector contributes less to GDP did put the figure for services at 38-39% for 1st nine months of current year. One ppt gave Service Sector to be around 64% of World GDP in 2000 (57% in 1990). It will be interesting to find employment figures.
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FCC Chief Proposes Letting Newspapers Own TV Stations : Well, now it makes sense why we have the existing media structure in the US. Also interesting to note is the scope of work under FCC (not only media but broader communications) and also how it gets followed (compared with India).Zell committed to Tribune buyout: source showed light on the acquirer and the port-folio of media firms under Tribune
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Google Shares May Rise to $1,000, Fund Manager Jacob Predicts : I remember our case Investors Hate a Matured Google (a case I coauthored with Chinmoy - a friend and brother whom I will love and respect; and whom I will miss a lot from ICFAI).
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Dollar Is Battered and Bruised, Not Yet Out: I don't agree with this article in few areas, but this stats is interesting: 'The dollar survived these episodes with its No. 1 status intact. The dollar's share of global official reserves fell from 79 percent in 1977 to 49 percent in 1992. Now it's back up to 65 percent, with the euro a distant second at 26 percent, according to the International Monetary Fund.' What also needs to be considered is the manyfold jump of global official reserves, and thereby the share of USD in it. 'Reserve-currency status allows the U.S. to enjoy low interest rates and reduced transaction costs. It enables the U.S. to borrow large sums in its own currency, which French President Charles de Gaulle criticized as America's ``exorbitant privilege.'' '.
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China's Monthly Trade Surplus May Top $30 Billion : Other than having an interest here, I also wondered on putting the median estimate here. Mean is 30.6 and median 30.8; and from the sample given at the end; it's a bit confusing. I agree that I am poor in stats (and need to revise my basics again), in many cases adding median may be just routine. And this is one of those cases, I believe. I need to ask some Prof. with real good funda in both stats and economics...
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Today is my last official day at IRCK. Unknowingly, I slowly liked its people, and the place. Today with a deep heart, I feel so. Many people, moments...
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I started many things in last two years - blogging, writing a book, having a serious academic inclination than just pursuing the PhD. I wish all the best to all the people with whom I worked in IRCK...
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And for me, the wondering continues...
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Business on the brain: I will rather go with the Bloomberg view here too (and the poll of some 3500 persons can be questioned for bias/rigging), still it gives some information on who is doing what.
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Students to get health cards: This is a good move, true implementation challenges remain. Few states are already doing that. And as problem is mosr between class 1 to V, this should eventually be extended to Class 1 level as well as another incentive to attend schools (with mid-day meals).
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Seeking Competition for Competitiveness Rankings: An excellent article where I comveyed my appreciation to the author...
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Sarkozy Lauds Bonds With U.S., Backs Bush on Afghan War, Iran: Reflects Sarkozy's France in Iran = Blair's Britain in Iraq?: And this tango needs to be observed closely till the Bush-administration is in office. Actions of Russia and China will also be closely observed in the year of the Olympics - would they allow their friend's to be sacrificed one-by-one (I am not taking any stand on principle here!). At the same time, in-spite of Blair's empty rhetorics, Sarkozy is even less impressive on rhetorics. Reuters stated Chinese stand (China tells Iran to heed international pressure). Interesting to note here that an African nation is the highest exporter of oil to China: 'Iran is China's third biggest supplier of imported crude oil, behind Angola and Saudi Arabia, and China also has major investments in Iran.' .
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Hedge Funds + Asian Debt = Don't Panic Just Yet: I am not sure what can the impact be when PE market is more than bonds market. Keeping in mind all the unscrupulous ways money moves, more so in emerging countries, one would never know whose money owning whose asset and for what purpose and why and what the actual deal is. Markets also can be maniputaed, but their is transparency in it (and open to all for scrutiny). So I won't be positive about PEs outnumbing a market for bonds. Even lack of transparent bonds in both buyers and sellers make me cautious and nervous.
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BRICs Prove Cheap Even as Greenspan Warns of Bubble : I talked about it earlier (Bubble in China? The answer is both yes and no'). Bloomberg went by shares available for trading, and the figures look even more skewed (or favor undervaluation of emerging markets) because in emerging markets, promoters own a large and significant part of listed firms (unlike in the west where firms are truly professionally owned and managed). And it reflects in the high number of billionnaires many of these nation show (and their wealth compared to economic welbeing of the nation).
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Pakistan's Supreme Court repeals former judges' decision on emergency: China's stand on Pakistan gets clear, and it's unfortunate. What strikes us is this is the only news of Chinese origin on Pakistan that I saw in last couple of days in Google News (headlines). I also wonder whether Musharraf dared to declare emergency if all the western power (led by the US) advised him strongly against it without a tacit Chinese support obtained beforehand.
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Dollar Falls to Record on China's Plans to Diversify Reserves: The nervousness is out from this: 'The currency slumped after Cheng Siwei, vice chairman of China's National People's Congress, told a conference in Beijing the country should improve the structure of its $1.43 trillion of foreign reserves by favoring stronger currencies. It pared losses after he later added that doesn't mean buying more euros. The dollar also slumped to a 26-year low against the pound and a 23-year low against the Australian dollar. ``Cheng Siwei, a China adviser, apparently said China should diversify into strong currencies,'' said Lee Wai Tuck, a currency strategist at Forecast Singapore Ltd. ``This is one of the comments that triggered the buying of the euro and selling of the dollar.''' . Various reports so far indicate that no major central bank has yet sold dollar reserves, who have actually done is only speculators/investors. The figures as given in Bloomberg or in others for last couple of months varied at most from single digit to $50-60 billions of dollars. The lower one is probably more accurate...
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Then there was Oil Rises Above $98 to a Record on Dollar, North Sea Disruption , and Gold above $830/oz.
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Behind the mask, the face of King Tut revealed: There were few snaps in Reuters as well.
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Japan Boosts Wheat, Barley Budget as Costs Increase : Wheat prices are up 58% this year, oil up around 50% (or more) and take the other commodities/sea freight; and one wonders how come inflation is so low from the US to Japan to India. Are we really measuring some genuine inflation (ex-food and energy even) which should take into account higher rent/EMI/Real estate costs at some direct or indiret forms at some point of time, right?). For some transparency (and competition is good... isn't it? when we look for economic data), I would love to see (and there are many more) the basket of inflation and economic growth. There is a possibility, may be absurd or even sound conspiracy school of thought that the US and apan, both with their loose currency policy (and when the control almost 30% of global GDP together) is destabilizing the emerging markets, more so countries like India which does not have policy-makers like China, and who as such go by Washington-Consensus' policies. Even Mark Tully in an interview in a local media channel couple of days back stated that capitalism in the west is not suitable for India. In some form and in some time, these loose monetary policies would hit Japan (and countries like India as well).
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Dubai's Promised Land of Luxury Lures Women Into Sexual Slavery : There are certain facts that everyone, or at least the well-informed ones do know about, but does not talk about. And this is one of those. And the bottomline is: 'Affluence has increased the demand for laborers and housemaids, and the development of laws to protect them from exploitation hasn't kept pace, the International Labor Organization said in an e-mailed response to questions.' And another fact is this statement holds even more true for the two emerging sections within India with its sort of 'exclusive' growth.

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More Readers Trading Newspapers for Web Sites : Fall of another 3% in n-paper circulations. 'An analysis of 88 major papers showed that in the last two years, about half had seen no significant change in combined print and online readership, or showed an increase, said Bob Cohen, president and chief executive officer of Scarborough.

The industry also hopes that the new readership figures will make an impression on advertisers, who have broken with historical patterns by retreating from newspapers despite an expanding economy. Executives noted that newspaper Web sites — unlike their print counterparts — drew a lot of young adults, who are sought by advertisers.

But advertisers have generally not considered an online reader to be as valuable as a print reader, so it remains to be seen what effect the numbers will have.

The audit bureau report showed a 2.6 percent decline in paid weekday circulation from the year-earlier period for more than 500 newspapers whose figures were available, and a 4.6 percent drop on Sundays for more than 600 newspapers.

USA Today, the top-selling weekday newspaper in the country — it does not publish on weekends — had a 1 percent increase in circulation, to about 2.3 million.

Sales of The Wall Street Journal, which does not publish on Sundays, fell 1.5 percent, to about 2 million. The Journal charges for access to most of its Web site, and the paper said yesterday that online subscriptions, which are included in the paid circulation figures, had topped 1 million.

The New York Times, which shed less-profitable circulation and increased some prices in the last year, lost 4.5 percent of its weekday circulation (to less than 1.04 million) and 7.6 percent of its Sunday circulation (to 1.5 million).

The circulation of The Los Angeles Times, which reached 1.1 million daily early in this decade, may have bottomed out after several years of steep declines. For the second straight six-month period, weekday sales held steady, at 780,000, but Sunday circulation dropped 5 percent, to about 1.1 million.

In New York City’s tabloid war, The New York Post fell slightly behind The Daily News in weekday circulation, 667,000 to 681,000, and The News continued to lead in Sunday sales by a wide margin. But both papers lost circulation, after topping 700,000 in the six-month period that ended March 31.'
Sorry...I had to copy a significant part...hope the NYT does not mind because I liked the way they did put it.
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Alibaba Market Value Soars in Hong Kong Trading Debut: So Alibaba at $21.5 billion m-cap and Yahoo! Japan being the highest in Asia (and I didn't know that...hey hey, need to read more in my core area!). 'The IPO price valued Alibaba at almost 66 times its projected 2008 earnings as estimated by the investment banks arranging the sale. That compares with about 56 times for Tencent Holdings Ltd., operator of China's most popular Internet chat service, and about 117 times for Baidu.com Inc., according to data compiled by Bloomberg. Beijing-based Baidu is the provider of the country's most-used Internet search engine.

Projected Earnings

Alibaba's initial public offering last month was the biggest by a Web company after Google Inc.'s $1.9 billion share sale in August 2004, according to Bloomberg data. Google, the owner of the world's most popular search engine, sold shares at $85 apiece. The stock closed at $725.65 yesterday. Google trades at about 35 times estimated earnings. South Korea's NHN Corp., which operates South Korea's most popular Internet site, is valued at about $15 billion. Yahoo Japan, operator of the nation's most-visited Web site, has a market value of about $27 billion.

Alibaba and its parent company sold 858.9 million shares in Hong Kong at HK$13.50 apiece. Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley arranged the sale.

Buyers and Sellers

Alibaba's profit will nearly triple to 622 million yuan (=less than $100 million, so with $21 billion m-cap, m-price/earning is more than 200)this year, the company said in its listing prospectus...Chairman Jack Ma founded Alibaba in his apartment nine years ago with $60,000. He graduated from Hangzhou Teachers' Institute in 1998 and stayed in the city to teach English after completing his degree.

China was home to 162 million Internet users at the end of June, second only to the U.S., according to the government- backed China Network Information Center. The nation may surpass the U.S. next year, according to Liu Bin, an Internet analyst at Beijing-based research company BDA China Ltd. ' And as per Steve Balmer in paper here this morning, India has 40 million Internet subscribers.

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China Gold Output to Beat U.S., Challenging S. Africa : I didn't know when I wrote my book (Wondering Man, Money & Go(l)d) about Chinese production being so high (260 tons and increasing?) whereas the US and SA stagnates or even declines(?). 'Production may rise 8 percent to 260 metric tons from 240.1 tons in 2006, Hou Huimin, deputy head of the China Gold Association, said in an interview in Shanghai yesterday. U.S. production should be about 250 tons this year, he added...China boosted output of the precious metal by 13.1 percent to 191.5 tons in January to September, from a year earlier, the government's top planning body, the National Development and Reform Commission, said in a statement on its Web site Oct. 30...China will probably be the second-largest gold market by volume this year, overtaking the U.S. and clinching the No. 2 spot after India, Klapwijk told a conference in Seoul Nov. 1.' And I checked up one source about India's production...one source put a altry number of less than even 10 tons: 'India's gold production increased 12.26 per cent to 3,742.7 kg during April-August 2004 as against 3,334 kg in the corresponding year-ago period.
Out of the total gold produced, Hutti Gold Mines Ltd produced 1,639.7 kg yellow metal and Hindalco, which processes gold from the ore stage, recorded 2,103 kg production during the period in question, an official statement said.' and that's for a five month period. Hindalco is only refining unit...

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Gore Nightmare Wins as Europe Pays to Ship U.S. Coal : It gives certain stats that I was in the look out for...e.g. A ton of U.S. coal is so cheap at about $47 that European utilities will pay $50 to ship it across the Atlantic, according to Galbraith's Ltd., a 263-year-old London shipbroker. While oil and coal cost the same as recently as 1998, West Texas Intermediate crude is five times more expensive after climbing to a record $96.24 on Nov. 1... Coal use worldwide has grown 27 percent since 2002, three times faster than crude, said BP Plc. U.S. East Coast coal has risen 71 percent, while oil tripled on the New York Mercantile Exchange. ...``Coal is by far the cheapest fuel because there's no price on how much damage it causes,'' said John Holdren, a Harvard University professor of environmental science and director of the Woods Hole Research Center in Falmouth, Massachusetts. ``Unless you get policies to put a price on carbon dioxide and other emissions, no other plants can compete.'' U.S. coal prices are equal to $1.98 for each million British thermal units of energy, compared with $12.51 for fuel oil and $6.91 for natural gas, data compiled by Bloomberg show. A million British thermal units is the equivalent of eight gallons of gasoline. ...More than 1,000 coal-fed power plants will be built in the next five years, mostly in China and India, according to the U.S. Department of Energy. .
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The hidden costs of free tradeIf the findings are correct, the it's a matter of concern. And that's the same concern when it comes to globalization...many say it's a win-win game in its present form of 'dollarization' where the US produces money and rest sweats in a race to the bottom to produce goods, many state it's a win-loss or loss-win based on the perspectives. And the other alternative can only be loss-loss, and this article gives apparentlt evidences for that (NAFTA).
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Supermodel Bundchen Joins Hedge Fund Managers Dumping Dollars : ood stroy, only thing is I didn't know about this richest model (Gisele Bundchen, a Brazilian) till date. '``We've told all of our clients that if you only had one idea, one investment, it would be to buy an investment in a non- dollar currency,'' said Gross, the chief investment officer of Pacific Investment Management Co. in Newport Beach, California, and manager of the world's biggest bond fund. ``That should be on top of the list,'' said Gross, whose firm is a unit of Munich-based insurer Allianz SE.'
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PetroChina Surpasses Exxon as Shanghai Shares Surge : I am increasingly becoming dumbfounded about both China (and the US). 'PetroChina Co. became the world's first trillion-dollar company, surpassing Exxon Mobil Corp. as the shares started trading on the Shanghai stock exchange' - Had it been anywhere else, I would have stated it to be rubbish...but it's from Bloomberg. And $ 1 trillion...that's nearly 2/3rd of Indian market or even same as Shanghai m-cap only couple of years back. I can't think of what lies ahead if things happen at this rate...'PetroChina's Class-A shares almost tripled on their Shanghai debut, rising as high as 48.62 yuan from the sale price of 16.7 yuan. The listing gives mainland Chinese investors their first opportunity to own the stock' it's all insanity...'PetroChina reached 43.96 yuan at 11:05 a.m. in Shanghai, valuing the company at more than $1 trillion. Exxon is worth $488 billion on the New York Stock Exchange. In Hong Kong, PetroChina fell 7 percent to HK$18.20' so at nearly 48 yuan, it was valued at $1.1 trillion, and I am concerned about RIL valuation at only $100 billion. 'The Chinese oil producer trades at almost 60 times earnings in Shanghai, compared with Exxon's valuation of 13 times. PetroChina's market value is higher than Russia's gross domestic product. ``I feel very excited today and also feel a very strong sense of responsibility,'' Chairman Jiang Jiemin said at the Shanghai Stock Exchange. ``This is PetroChina returning to our investors and the society.'' ' The comment looks little immatured. 'The company had 20.5 billion barrels of oil and gas reserves in 2006, compared with 22.1 billion for Irving, Texas- based Exxon, data compiled by Bloomberg show. PetroChina has been adding new reserves at an average annual rate of 5 percent for the past three years, a faster pace than Exxon, Royal Dutch Shell Plc and BP Plc, the world's largest oil companies by sales. ' So even one values the oil reserves (excluding geopolitics and additions of reserves), the valuation is $2 trillion...so fundamentally when oil is at $100 level nearly, not totally baseless (and expecting oil may further go up, over the longer run and E & P costs at $20 or so per barrel).
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NYT stated it right in advance: 'It (China) has the biggest bank, insurance company and airline by market capitalization. Five of the world’s 10 largest companies are here.However, the prices set on the Chinese exchanges are still largely isolated from the rest of the world by regulatory barriers that limit the amount of foreign money entering the markets and domestic money permitted to leave. As a result, equities here bear little relation to company performance or potential. For example, PetroChina’s share price may double after its debut in Shanghai, permitting the company to overtake Exxon Mobil, but PetroChina is about half as profitable as its rival. In the first half of 2007, PetroChina’s profit was $10.9 billion, compared with $19.5 billion for Exxon Mobil.'
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The movement of Indian financial markets in last few trading session beats logic. That's an understatement, when on 3rd November Market went up. This morning also market looks like some forces are deparate to keep the market from falling. I just had a look at NSE on the most active contracts on derivatives. And I was surprised that out of top ten or so, 6-7 were Reliance group firms. Many in ndian called it a M & A affair (Mukesh and Anil). However the levels are alarming...and Indian regulators must wake up before another scandal of some form may hit its market, now or even later as no one can time when the gates are going to break open.
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Plan to Open Hong Kong Market To China Investors May Be Delayed: The decision may be right ow wrong in light of global financial turmoil, what many call a bubble in China and also a near bubble in HK, and in light of the fact that shares in mainland Chinese stocks trade at a wide and unsustainable discount in HK (30% on an average?). However what I would like to highlight is the competency andcapability of Chinese policy-makers that they understand the challenges and difficulties (Wen Jiabao, China's Premiere and HK's Finance secretary John Tsang). Compare that with the understanding of the Prime Minister, Finance minister, RBI Governor (who is having lately a better understanding in Indian standard) or even SEBI Chairman (on recent P-note implementation delays), and one clearly understands how Indian policy-lakers look like boys in the presence of men in China. The flood of FII flows in light of a desperate attempt by Fed. to major financial institutes is there to destabilise the whole world at the cost of bringing in stability in the US. In another article in Bloomberg, it stated ``The `through train' is hitting the rocks, possibly permanently,'' said Aaron Boesky, who manages $200 million as chief executive officer at Marco Polo Investments Ltd. in Hong Kong. ``I expect a significant correction in the Hong Kong market over the next few weeks.''
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In another article, on Paulson (US Treasury Secy), it's stated: '``I can't help but notice that when middle-class homeowners were losing their homes to foreclosure, he was pretty nonchalant about it,'' Miller said of Paulson. ``But when Wall Street CEOs start seeing trouble in their absurdly complicated financial instruments built on the mortgages of middle-class homeowners, he feels their pain.'''

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A Sanitation Crisis That’s No Joke : After lot of regular (and boring staff of Merril, Fed., and Citi stuff), this sounds like refreshing air. 'The nation with the greatest lead in potty technology is, no doubt, Japan. Toilets there aren’t just self-flushing; that’s Jurassic technology by Japan’s standards. The best detect you as you enter the bathroom, lifting their lids and firing up their seat-warmers. When finished, you have a choice of warm spritzes — “bidet” or “shower” — followed, if you like, by a drying blast of hot air.' In my recent South Korea trip, I had a brief exposure of that (and for couple of days, I was at a loss on how to use those potty technologies! Not a fault of mine...I come from India where the majority still believes that one should be in nature while responding to Nature's call). 'Experts all agree that the two most important public health measures in the world, measures that saved more lives than either vaccines or antibiotics, were in place by the time of the Roman Empire: running water and toilets that carry feces safely away. But, because of the expense of pipes and plumbing, they have remained for over 2,000 years the province of the relatively rich of the world, even though measures that save far fewer lives — from cinchona bark for malaria to antiretrovirals for AIDS — have been hailed as godsends...Or, as he (Jack Sim, a Singapore real estate mogul who grew up in poverty and remembers seeing children in his neighborhood shedding worms as they ran around diaperless. In 2001, he founded the World Toilet Organization, which has a blue toilet seat for its logo.
) lamented in an interview with Agence France-Presse in September: “No movie star has died of diarrhea. No politician has died of poverty.”
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Credit Crisis+Mortgage Mess = Deflation?: Certain interesting perspectives on the time dimension...I didn't think about that earlier.
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Big Trouble for Big Oil: The fall is refining margin is yet to affect Reliance in India anyway, though it's true the agressive expansion of its SEZs/retail and also the hidden gas/oil reserves may drive the stock jigher than $100 billion of its m-cap. However this should become a concern as a lot of cash flow still is generated by this refining business (and its expansion when margins are already low - about RPL as well).
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Citi suddenly hitting headlines. Citi: That Sinking Feeling was less harsh than Citi's Fallen And It Can't Get Up. I however don't agree with the 'can't get up' part, though the truth is all these western banks and FIs are actually nothing but a fiat-spreading institutions that create asets out of thin air (2.8% tangible capital for citi, and assuming even a 2.8% margin, it effectively means 100% return on tangible capital. The spread of banks, from its old business of interest rate differentials from lending and deposits are more than 2.8% anyway...
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These words of Whitney is good: '“Our thesis is simple,” Whitney wrote, “we believe over the near term, Citigroup will need to raise over $30 billion in capital through either asset sales, a dividend cut, a capital raise, or combination thereof. We believe such a catalyst will pressure the stock significantly lower.”'. And there's a possibility of this too: 'Morgan Stanley analyst Betsy Graseck downgraded Citigroup and other large banks, saying she believes "there will be contagion from subprime housing to prime housing to auto to card loans."' . And then there were others who wanted a break up: Breaking Up Is Hard to Do.
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Credit Crunch: More To Come also talked about other ratios to talk about the financial health of Citi.
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With ICBC much ahead of Citi now in m-cap, an unthinable proposition even years back, gives me idea to write a spoof article: ICBC takes over Citi. And it may not be a spoof by 2010 or even earlier.
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With my very limited understanding, I have realized it's better not to expect sanity from both the markets and the Fed. And couple of articles - like Is America the next Argentina? and Is Bailing Out Reckless Investors Wise? Don't Bank on It. showed same concern. At the same time, let me also state that that future may again show a strong US economy. But that may be more due to even more manipulations, insanity, developments in geopolitics (take Iraq resolved and US gets cheap oil, or some oil reserves within US or Canada/Australia comes to help with their tremendous resources) or on some developments like sudden crisis in China. Economically, does not make any sense.
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On 5th November, BOJ's Fukui Says Keeping Rates Too Low Is `Risky' thereby gets this response: '``Eight months have already passed since the previous rate hike and the bank's credibility with investors will suffer without some action, similar to the boy who cried wolf,'' said Takehiro Sato, chief Japan economist at Morgan Stanley in Tokyo.' .
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The WP article nicely explained this: 'Central banking is a pretty imprecise science. At best, it is marginally and occasionally effective; at worst, it is a disastrous fraud...central banks continue to rig the most important price of all: the price of money. ' And this too happened with my money but due to the irresponsibilities (and my greed too) of authorities: 'When you make a mistake with your own money, you may go broke, you may despair, you may even kill yourself. Not to sound callous, but the damage rarely goes much further than that. Make a mistake with borrowed money, on the other hand, and it sets off a chain reaction of losses. You lose money, the lender loses money, savers lose money and the investors who bought shaky financial instruments tied up with the original debt lose money.' I didn't do with borrowed money...it was my own money...
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'It's easier to yield to temptation than to resist it. Paul Volcker, the Fed chief from 1979 to 1987, was the last one who could stomach a recession. Determined to correct the macroeconomic blunders of the 1970s, he jacked nominal interest rates up to 20 percent. Politicians were outraged, and the public was horrified. Volcker's effigy was burned on the steps of the Capitol. But his forced correction worked: Inflation fell from 12 percent to 4 percent. After the smoke cleared, the U.S. economy was ready for its biggest boom ever. But since Volcker left the Fed, interest rates have generally gone down, and American consumers have taken advantage of it to borrow and spend. In the process, they have become addicted to cheap money. Now total credit has grown from 150 percent of gross domestic product to 340 percent. In fact, Americans carry so much debt that if Bernanke were to raise interest rates even to 10 percent, as he clearly should, they'd probably scorch him for real. '
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'Instead of wiping out bad decisions, the Fed's rate cuts keep the cheap money flowing, letting errors compound and spread. Instead of sticking the losses to the people who deserve them, it redistributes even bigger losses to bystanders: innocent savers, hapless householders and dollar-holding, dollar-earning chumps everywhere. That's the problem with meddling in markets: Once you get started, it's hard to stop.' Yes stop blaming sub-prime, credit rating agencies, speculators, predatory lending...blame it all on the central banker. Nice article
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The Ghosts of Halloween Haunt the US Dollar is also interesting. 'Tokyo Warlords Repeat the “Big Lie”

'“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State,” remarked Nazi propaganda chief Joseph Goebbels, the master of the “big lie” tactic.

For the past eight months, Tokyo apparatchniks have repeatedly told the big lie. Japan is the world’s largest food importer and fourth largest oil importer, yet the Japanese government says consumer prices are 0.1% lower today, than a year ago. Tokyo’s fuzzy math indicates that Japan is the only place on earth that is not feeling the pinch of soaring commodity and sea borne shipping rates.' Has some logic indeed! 'Contrary to the government’s “big lie” however, the price of crude oil in yen terms is up 44% from a year ago, soybeans are up 42%, and the Baltic Dry Index, which measures the cost of shipping dry goods by sea, is up 250% from a year ago, for local importers. Yet on Sept 7th, Bank of Japan deputy Toshiro Muto said, “There is not yet any evidence of inflationary pressure in the economy.”

Propaganda artist Goebbells used to say, “Think of the media as a great keyboard on which the government can play,” and no one does it better than Tokyo’s warlords, who provide the central bank with the necessary political cover to keep its interest rates pegged at an abnormally low 0.50%, spawning the $1.05 trillion “yen carry” trade, which inflates global commodity and stock markets worldwide...On Oct 11th, with Tokyo gold hovering around 85,000-yen /oz, Fukui acknowledged, “While the official consumer price index is barely moving, there is a chance the public’s perception on prices is changing significantly,” he said.' I was thinking in same line...'The G-7 accounts for two-thirds of the $53 trillion world economy and includes the US, UK, Japan, Germany, Italy, France and Canada. But the G-7 called for an “accelerated appreciation of the Chinese yuan” as Europe and Canada joined the US, calling it grossly undervalued and threatening their trade balances.

China’s trade surplus is expected to reach $250 billion this year, as exports surge to $1.2 trillion and imports grow to $950 billion, the Xinhua news agency reported on October 28th. Total volume of foreign trade could exceed $2.1 trillion, up 20% over last year, and could rise another 15% to $2.4 trillion in 2008, Xinhua said. China’s trade surplus of $185.6 billion in the first nine months of 2007, exceeded the record surplus of $177.5 billion for all of 2006.

Su Ning, vice governor of the People’s Bank of China (PBoC), signaled a further tightening of monetary policy in the weeks ahead. “We will continue leaning toward moderate tightening. We will enhance economic control efforts at appropriate times to ensure money supply and credit growth remains stable,” Su said. China’s economy expanded at a 11.5% annual rate in the third quarter and consumer price inflation in September slowed to 6.2%, not far from a 10-year of 6.5% in August.'
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'China’s foreign currency reserves rose by $367.3 billion in the first nine months of this year, to a record $1.434 trillion in the third quarter, already exceeding last year’s increase of $247.3 billion. The PBoC inflates its M2 money supply at a 18.5% annualized rate to sop up the tidal wave of money flowing into the country.' This gives us an idea of FD/FII in China to be around $180 billion in first none months! Add another $1 trillion savings by domestic investors...and the problem gets Halloween nature...it also showed the Korean (Won) perspective...a thorough global one...
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'The Bernanke Fed is expanding the growth rate of the US M3 money at a 15% annualized clip, its fastest in history, and creating headaches for Persian Gulf central bankers, who are pegging their currencies to the US dollar. In order to maintain a stable dollar peg with the Kuwaiti dinar and the Saudi riyal, Gulf central bankers have been forced to accelerate the growth rate of their money supply to prevent the dollar from collapsing under its own weight.

Last year, as a result of sharply higher oil prices, Saudi Arabia’s income soared to $194 billion, and the kingdom posted a $95 billion surplus in its balance of payments account, while Kuwait had a $50 billion surplus. That’s in sharp contrast to the US, which ran an $840 billion external deficit. With the Bernanke Fed slashing the fed funds rate below Persian Gulf rates, traders are wondering if the dollar pegs might become unglued against the dinar and riyal, to stave off inflation at home.' ALso interesting to note is the M3 growth in the US to be nearly equal to that of China whereas the frowth rate is one-fifth or so...' Riyadh is inflating its M3 money supply at an 18.8% annualized clip, to keep the dollar from tumbling against the riyal. But explosive Saudi money supply growth could ignite faster inflation towards a 6% rate in a matter of months, according to local economists.' Money opposite water finds its low levels and moves to higher returns. And this can't be stopped...one only needs to build bigger dams that will eventually break under its own weight some day.
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'Explosive money supply growth did revive Saudi demand for gold, which rose to 42.5 tons in Q’2 of 2007, up 30% from 32.6 tons a year earlier. Global traders are always interested to know how Kuwait, the United Arab Emirates, and Saudi Arabia are investing their “oil windfall.” The three oil-rich kingdoms held an estimated $1.55 trillion in foreign assets as of May 31st, exceeding China’s $1.43 trillion FX stash.

OPEC is likely to discuss creating a basket of currencies for pricing its oil basket at its Nov 11th summit, said Venezuela’s Energy Minister Rafael Ramirez on Oct 26th. “The need to establish a basket of currencies will probably be a point of discussion in the next OPEC summit. The dollar as a benchmark currency has been weakening quite a lot and it creates distortions in oil markets,” Ramirez said.'
Excellent article...
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Hong Kong Forward Currency Traders Bet on Revaluation : the one nation (or country) two systems for HK and Mainland China helps China carrying many experiments. Yuan has already been depegged, but controlled. Now they probably had some good experience and want to carry next experiment with HK Dollar. And would they allow it to float freely or it will also trade like Yuan? Prbably 2nd and slowly...however when can we see freely floating Yuan/HK Dollar and even integration of these two currencies (may not happen even because of democracy in HK). However this has linkage with China's plans on US relations/helping or sabotaging the US economy.
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Don't bet on China rescue if U.S. economy tanks: Interesting perspectives, and there can be different schools of thought. 1. What's been the current role of China? Is US economy tanking already (leave aside GDP numbers and I have often doubted these numbers), and if so - is it small or big? Is China helping reverse the tanking or further acerbating the situation? So long, China is no doubt helping US economy, but that help is no way sustainable. So by doing that, it's getting more ammunition in cae it plans to attack (or look for opportune moment to attack) US economy with more and more dollar researves (and Federal bonds). The other possibility could be China would continue helping US economy in its own self interest (at least upto August 2008, the Beijing olympics). And 3rd, China mistimes its position and thereby help the US gain strength again (and US then uses to bring down China - not like the case of USSR but in a similar manner to certain extent). So China must play its cards closely depending on its long term objectives and interests. However the way I see it, it's really difficult to accommodate China as much as it wants in present global order. Whether the give and take will continue diplomatically and be able to avert conflicts; or they will stall at certain point is all open for all to see. Ten years - even maximum - that's what I will say would be adequate to see this development. China exported $288 billion to the US last year alone. '"There will be more import substitution in China, more and more goods produced locally," he said. This is also the view of Dominique Dwor-Frecault at ABN AMRO in Singapore, who analyzed data showing that Chinese exports to Asia have expanded strongly over the past five years, whereas the growth of Asian exports to China has slowed.'

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Mobile 2.0 is here — and Indians are making IT happen & In Search of a Google-Verizon Deal is of research interest to me
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More child workers 'rescued' (articles from global media on this was covered earlier) and 90 Indian workers to be prosecuted for resorting to violence scarce proactive attention by local Indian government is given. That's teh paradox of present booming India as I talked about in my last research paper (Brand India).
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Japan to order navy ships home from Afghan mission: This was expected after the departure of Abe, and now it's to be seen on Japan's involvement in other joint military operations (in Iraq and part of Japanese troops may still be in Afghanistan, but that's unlikely - needs to be verified).
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Backwardation "vortex" fueling oil's rally: As oil closed above $96, gold nearly $800, one looks at this explanation (Gold can't be consumed like oil, true. EVen Natural Gas prices in last 3-4 sessions have shot up by closed to 20%). It's interesting which states: 'Since July the market has been "backwardated," where the price of oil that is about to be delivered is higher than for later deliveries. Backwardation encourages the sell-off of stocks and is seen as a sign of supply tightness or even shortages, which further boosts prompt prices.'. So immediate delivery always commands a premiun from future delivery, and therefore one is motivated to sell from stock and replenish stock with future order (month 1 or two) resulting in fall in present stocks as well.
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'U.S. crude oil inventories have tumbled by 41.4 million barrels or 11.7 percent over the four months since the end of June, according to U.S. government data.' So the US inventory is around 400 mbp? I feel it should be much more (that's only 3-4 days global production, and only 12-16 days US consumption. True, US meets around 40% (am I right or it is much more) of its demand by domestic production. 'The drop has been even more pronounced at Cushing where stocks have plunged by 36.5 percent to 15.05 million barrels.' So not sure whether it's one component or the full of it.

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China Unexpectedly Raises Fuel Prices as Oil Surges : Good to see this tough decision of China even when inflation is already high. No point in subsidizing auto-owners to pollute our world more. The subsidy can be spent much better to the other sections of have not in a much better way. In India, it's surprising to see how Government apathy in subsidizing the rich and also in killing its erstwhile bluechip oil firms (IOC, HPC and BPC). RPL has more m-cap than IOC now, and no one cares as in some way, IOC makes losses as Reliance uses its oil to make even more profit. 10% hike in one go shows that China can take hard but right decisions at any time they want.
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This is interesting, but I doubt on China's influence on Saudi (or on OPEC) to be equal to that of the US: 'China will be of ``equal'' importance to Saudi Arabia in oil markets in coming years, Birol said, citing the countries' respective influences on demand and supply.'. So importance equal, influence much less. And no doubt both are working hard to look for mutual benefits in strengthening that.
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Sometime back I did write China, India and the Fed. interest rate cut, and 1st November again resembled 18th September. China was down (true, very marginally by 0.07%) whereas most of the other markets, inclusing India and the US cheered as Fed. cut interest rate again on 31st October by 25 bps.

October - 2007

2007-10-03T00:16:00.000-07:00

The Fed's Inflation Scam, How Americans Get Screwed By "Their" Central Bank: This may be an extreme view, and Rob is not denying that. However this info is interesting: 'The U.S. money supply is still expanding at a 14% annual rate - six times faster than GDP. All that moolah has to go somewhere. For the moment, it’s going into deals. And the deal makers - such as über-dealer Goldman Sachs - are making big, big money.Inflation is commonly defined as money media expanding faster than production of goods and services. The question is who creates "our" money, and who really generates inflation?...It also appears the head of the Fed always checks with Goldman Sachs, et. al., before any pronouncements – after all, this is who Greenspan and now Bernanke work for – i.e., the real owners of "our" central bank.' WHat is interesting is the loss of credibility of the Fed. not only overseas (or for that matter of any central banker), but within the US as well. The comments are also interesting...
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or watch this...Jim Rogers on hina's bubbles and Bernanke's printing pree 'The dollar is a flawed currency. America owes the world $13,000bn - a figure that is growing by $1,000 (billion?) every 15 months. Rogers finds this terrifying and cannot for the life of him think why anyone would want to own a currency that has been debased in this way.' ' Rogers on Bernanke: 'The head of the central bank has been printing money since he got there. This is a man whose whole intellectual career has been spent studying the printing of money — and now America has given him the printing presses. I don’t want to be in a currency like that.Bernanke, Rogers says, has been a disaster - witness his decision to bale out his friends on Wall St in the summer, cutting interest rates because the stock market had fallen 6 per cent. What’s he going to do when the market is down 36 per cent? What’s he going to do when there’s a real crisis?
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And on China : 'China’s stock market is a potential bubble - but, in Rogers’ view, it isn’t a bubble as yet.
If it keeps going up - say by another 40 per cent by February - then I will have to sell, because then we will have a fully fledged bubble.
I don’t want to sell — I want my daughter to own my Chinese shares some day.
This is from a man who has described the Chinese as the greatest capitalists on the planet. He first bought Chinese stocks in 1999 and says he has never sold a Chinese share. But he is worried the country’s stock market is now headed the way of Japan 20 years ago.
If something happened that were to bring the market back down 30 or 40 per cent, then I’d be a buyer of shares in China. And that would be very good for China - which may sound strange from someone who owns Chinese shares. But if they don’t then it is likely to be a bubble - and bubbles always end very badly.' I wanted to buy Chinese stocks with my very very limited money in 2005, didn't do it (probably neither could I with my resources, and now it's in FIIs pockets). My views are similar (as in few of my earlier articles). The comment is also interesting: 'I assume BenB ‘bailed’ them out (as in a leaky rowboat) rather than ‘baled’ them out (as in a bale of hay or cotton) … though ‘bale’ may be more appropriate if we are talking about bales of recently printed money '…
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Price of MIT professor's '$100 laptop' hits $200: So it's out before this X-mas. Now what's to be seen that what price does it reach its target segment/shelfs and customers all over. A look at the site on 30th showed the different prices for different order quantity (inclusive of freight? yet to ascertain that) for 100+, it is $299, for 1000+, it's 249 and for 10,000+ it's 200 as given in that Reuters story. And the other thing to watch out for is its performance reviews and then, based on these two, how other manufacturers respond. Out of these money, a certain part is reserved by OLPC for children as, e.g the $299 club, it said 'OLPC uses $99 from each $299 donated to fund an additional 50+ laptops to be sent to children in a country of our designation.' Mind the words, it says the whole of $299 as donation though it provides the customer with a machine, probably a good one for value too. The article also stated 'Two weeks ago, a foundation executive confirmed recent estimates that the computer would cost $188, which was already higher than the $150 price tag in February and $176 in April.

The laptops are scheduled to go into production next month at a factory in China, far behind their original schedule and in quantities that are a fraction of Negroponte's earlier projections.

It is unclear when the machines will be ready for customers, as the Web site said version 1.0 of the software that runs the machine will not be ready until Dec. 7.' SO OLPC too in China, and then what about the exchange price hike...true it makes best sense now.

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Regarding P-notes, Bloomberg (India Raises Banks' Reserve Limit to Slow Inflows) stated 'These offshore derivatives, known as participatory notes, rose 11-fold to 3.54 trillion rupees in 3 1/2 years, the regulator said Oct. 16. They accounted for 52 percent of foreign brokers' assets under custody, the regulator said.'. Now as per India Money Supply (M3) Growth , and expecting another 15-20% rise in M3 since 2005, we can estimate M3 in the end of 2007 to be around Rs. 34 - 37 lakh crore (around $ 900 billion, which roughly matches the other thumb rule of 1:1 ration of GDP to M3, true, now M3 growth rate is faster than GDP growth rate). Out of that, FII component is around 10%. And as this FII component has been primarily growing very recently (and expected to move with global tidal waves). My question is, assuming this will become say 12% in another year to 20% in five years (one scenario, there may be outflows as well suddenly) which will mean that all the incremental M3 which is needed in the economy for the productive growth or for productive assets/infrastructure is being brought in by FIIs alone, or an increasing % of that is through them. What I essentially mean is the end result of central bank is to monitor M3 - now RBI plays around with accessory instruments whereas the key task has been assigned to FIIs and it's now being managed by Fed., to a large extent.

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And this one too...'Titanic' Tactics When the Fed Hits an Iceberg: For a change, I browsed this site that gave me best content when I wrote Wondering Man, Money & Go(l)d. And it didn't disappoint me this time. Honestly speaking, these two (last three and this one) is of much better quality to me than the most of the other posts. Only if I can have time to browse these sites daily...'This brings us back to something that Ludwig von Mises warned against in 1912: when central banks manipulate money in order to lower market interest rates, the entire capitalist class is deceived into believing that more capital is available. Today, almost a century later, this deception is not only still widespread, it is worse. Investors believe that the central bank's ability to lower a target overnight rate enables it to raise stock prices by fiat – not by creating capital, but merely by making a public announcement of a target rate. What Mises described as an error regarding the actual supply of capital has descended into something bizarre: faith in the ability of a central bank to increase the value of capital (stocks) merely by making an announcement – with or without a change in monetary policy. On the basis of this announcement, investors redeploy money from debt to equity. They will do this even in response to a rumor about the announcement...But as Anderson Homes searches for the bottom, those who bought from the developer at the top feel betrayed. Sherry and Percy Berquist, who paid $597,000 last year were shocked to see $335,000 set as the opening bid for an identical house to be auctioned. The developer may be able to absorb that loss. The Berquists can't.

"It's gonna be very tough," said Sherry Berquist.

Across the street Amy Sturdevant paid $585,000 for a house. But now the developer has set $295,000 as the opening bid for similar houses down the street.

"I feel like my parents' grave has been robbed. This was an inheritance. I sit out here and I look at this," said Sturdevant. ..There is no indication that anyone will be able to do so in time for these now debt-burdened people to get out from under their upside-down mortgages. They must now make mostly interest payments for the next 15 years just to pay off the equity that they have lost in one year...This is the price of central bank policies designed by very smart people. They are very smart people who think that they are wiser than free markets.

They aren't.

The U.S. housing market is down – on paper – by over a trillion dollars, CBS News reports. But who knows how much? The report cited one forecast that says it will be down by another $3 trillion in a year. I think this estimate is plausible.

Median prices are down by about 4%, year to year – the first national decline since 1933. Sales are down by 25% in some regions, including the Southwest.

Why are prices not falling faster? Because sellers think this decline is temporary, that in a year, their homes will be worth what they were a year ago. Sellers learn slowly. Their homes will not rebound just because sellers think they are special, that they can beat the market
' . And if that happens, that will be real bad...the euphoria in stocks all over will not sustain for ever. It may also reverse, and take with that this possibility. 'Some sellers will run out of bargaining room. That is when you should be there with cash.

If you are seller, think "Titanic." Lower your price now and get out while the ship is still afloat. The water will be just as cold next year. Put on a life vest and jump, before the lifeboats float out of swimming distance.' True, it's hard for the seller. But that's life (My broker sold my long positions as I expected that in hours and days, water will be warm again!). Markets don't have any hearts...we individuals should have some empathies.
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Junk mortgages under the microscope, As the Subprime Turns are good as since quite some time I was trying to get something beyond the routine coverages of sub-prime. And on gold, here is Goldseek The COT’s are Running!. Oh, well back in sixties it says “down to the last ounce!” promise could not be kept, in-spite of manipulations. This is also interesting: 'Let's go back to the beginning of 2002. Oil was $15.89 a barrel and 17.96 (in euros). Oil has since risen 3.5 times in terms of euros and 5.8 in dollar terms in less than 6 years. The difference clearly shows the depreciation of the dollar.'
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China Passes U.S. in Top 10 List as China Life Surges : Just couple of days back, I was talking about it. And here it is. Out of top ten (in m-cap), five are Chinese, 3 are US (rest two: HSBC/certain pharma/oil giants from Europe?)). And no doubt it will be dominating as we move ahead - from 50% to 60-70-80...how large can it get because some sort of typhoon hits China? 'China Life, PetroChina Co., China Mobile Ltd., Industrial and Commercial Bank of China Ltd. and China Petroleum and Chemical Corp. are now in the list of the world's 10 biggest companies by market value. Only two of those are in the top 50 by sales.'
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Gap Admits Possible Child Labor Problem: I have reduced my daily morning dailies to two now, and none unfortunately carried this story (at least highlighted it). Honestly, I don't see any value in keeping these dailies - one carried pages of its own events on shining Indian Inc. The question that strikes us, Indians, are why do we need Dan McDougall, a reporter of The Observer to find when there must be 100o-times more reporter working on various Indian media outlets. Is it that we believe that if these news comes out, it takes out the shine from Indian Shining story? Is it a collusion? Or is it sheer incompetence of Indian media again. At the same time, we need to be cautious on validity of many such stories that will hit global media as it has done for China. Many will be true, a few may be propaganda also against outsourcing. The news stated: 'It shows children who appeared to be between the ages of 10 and 13, stitching embroidered shirts in a crowded, dimly lit work-room. The video clearly shows a Gap label on the back of each garment...the children were working without pay as virtual slaves in filthy conditions, with a single, backed-up latrine and bowls of rice covered with flies. They slept on the roof, he said.' ALl these in Delhi in India...'"They had been trafficked by train," he said. "Its nickname is 'the child labor express.' At any time, you can see 80 children on this huge train. Most are trafficked to work in the garment industry, which is huge in New Delhi."' Read this news with headlines of Indian media that claim loss of export competitiveness by Indian textile sector due to rise of Rupee against dollar, and government's plan to subsidise exporters. This unit may have also received/would have receive some amount of this largesse...and Government can't spend that money on education or well being for these children.
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And here is coverage by TIME on the next day...Gap Threatens India's Clothing Boom .
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On a different context, following an article from the ET this morning (30/th as Sensex touched 20K on 29th), out of the total wealth created by Sensex in its journey from 10K to 20K, around 75% of the wealth is accrued only by promoters, around 15% by FIIs and only by 10% or even less by MF + Indian public put together. It roughly meant Rs. 40,000/Indian for a rise in Sensex from 10K to 20K, whereas the quantum of wealth created was more than 10 times of that. Number of D-mat accounts in India in my guss will not be 10% of Indians (no genuine accoutability, and in terms of family penetration, it will be even less). So 90% of the country's interest or even more is sacrificed over celebrations over the stock indices.
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Brand China & Baidu.com: Is there some commonality...the look of Baidu is surprisingly similar yo Google - clutterfree. One of my colleague (and many researchers) talk about Chinese paying scanty regard to IPRs...even Baidu may be a case (true, I am nobody to talk about it, and in my knowledge, Google too never complained). The root lies in Chinese culture, by copying one pays tribute (true, too); and for two millenniams, China invesnted where much of the rest of the world copied. So if China copies for less than half a century as well - why the noise? SOme funny and serious side of the debate on China (and Baidu...). Baidu.com's quarterly net vaults as market share grows.
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South Africa: China Reaches for Its Africa Dream: Looks like an almost $5 billion+ stake acquisition. And thus develops the largest bank of today's world (and probably of largest economy of future), away from the limelight, silently...prwaling all the time away from Iraq, Iran, Sub-prime, carry-trade, etc...Just strengthening itself cutting all the crap; economically, geopolitically and militarily.
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It’s Not the Stress, It’s How You Deal With It : And that's why I like the NYT...an article on stress that destresses you.
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China, Emerging Markets Can't Fill U.S. Shoes:Although I don't subscribe to this view, I see this as a possibility due to the financial terrorism and militancy actions as continuously being spread by the US and Japan (victims are emerging nations). The statistics are interesting: 'Too Small - Although developing countries are projected to account for about three-quarters of global growth in 2007, their size is still too small to power the world economy. Take the four BRIC nations: Collectively their GDP amounted to $5.6 trillion at the end of 2006. That's 43 percent of U.S. GDP, 56 percent of the 13- nation euro area's and 130 percent of Japan's. When it comes to stock markets, the gap is even wider. The aggregate free-float value of the Brazilian, Russian, Indian and Chinese stock markets is a mere 4.9 percent of world market value, according to Morgan Stanley Capital International. The four BRICs are 12 percent of the U.S. market value, 16 percent of Europe's and 56 percent of Japan's. China's CSI 300 Index has more than tripled in the past 12 months. Still, the country's stock market represents just 1.9 percent of total world-market value compared with U.S. equities' global share of 42 percent. Even though developing countries are trying to boost domestic demand, they remain dependent on exports, accounting for about 45 percent of the world's cross-border sale of goods, according to Merrill Lynch.' And that's why I am so skeptical about GDP figures - because economically these numbers don't make any sense. BRIC isn't economically even so poor, true countries here don't transact everything (water to watermelon - many of these things are free to consumers/growers as numbers of growers are aplenty and significant). 'No doubt, developing countries have come a long way since the 1997-1998 Asian financial crisis and the Russian default in 1998. Back then, Asian countries were starved for cash; now emerging-market economies, led by Asia, account for 66 percent of global foreign-exchange reserves. Inflation is down. And many countries have adopted flexible currency regimes. ' That's the problem - as they have become part of the problem of the west. 'Nonetheless, ``there are still plenty of vulnerable economies in the emerging-market space,'' says Gray Newman, New York-based senior Latin America economist at Morgan Stanley. South Africa, Turkey, Hungary and the Czech Republic have run current-account deficits averaging more than 4 percent of GDP for three years, while Turkey, Poland, Hungary and India have posted fiscal deficits of 3 percent to 8 percent of GDP in the last three years.' I highlighted this vulnerability of India many times (I stressed more on current account deficit though).

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Google, Microsoft, Yahoo (& Amazon too?) acquisitions: I saw it in September, sent it by mail to my colleague (researchers), and then lost it. I have been searching for this page for some time, but could not retrieve it. Oh...finally got it. Hope the owner of this site continues to update this site with recent developments (Post-August, no new acquisitions?). Thanks shumla.com...
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Intel opens plant, starts production of 45nm Penryn chip: would be of research interest to me, where I am technically weak. '"The march downward in nanometer manufacturing is great news," said Charles King, an analyst at Pund-IT Inc. in Hayward, Calif. "The new processors that will be produced [in the new facility] leverage the company's Hafnium-based high-K materials, which are designed to significantly reduce energy leakage. It's not a be-all, end-all solution for some of the processor industry's most fundamental challenges, but it should help in the creation of dependable next-generation processors and systems.' Does it mean that the shift has happened already from Pentium to Hafnium? I said I am weak in this area; but I need to develop a working knowledge here...'Freeman noted that IT managers should expect to see 45nm technology in PCs in six months to a year, though some early adopters may already be using it in server farms. "For the IT manager, he can expect that data retrieval will be quicker, processing instruction sets will be faster and more information will transfer faster," he added. "And the chip will run as cool as a 65nm so you get more performance using less power." One nanometer is equal to one-billionth of a meter.'

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You Say ‘Tax Reform’, I Say ‘Tax Hike’: Prima-facie, 'Mr. Rangel’s proposal would increase taxes on many people with incomes above $200,000, but would cut taxes for a majority of others' looks the remedy that the US needs; and the article highlights the decaying nature of political will and debate to solve most of our problems. It's rotten in India; and it's getting bad to worse in the US as well. The comments express the anguish of people on the street as well.
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Buffett Says Investors Should Be `Cautious' on China : History is getting rewritten too fast. Watch this: 'Buffett has sold shares of PetroChina Co., which has risen 76 percent this year to become the world's second-biggest company by market value.' So after Exxon Mobil, now its PetroChina. And probably now it's only a question of time when most of the Fortune 10 (or FT 10) firms come from China.
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Jim Rogers Shifts Assets Out of Dollar to Buy Yuan : Let's take this statement of Rogers here: 'Rogers, delivering a presentation late yesterday at an investors' meeting organized by ABN Amro Markets in Amsterdam, said he expects the Chinese currency to quadruple in the next decade and that he is holding on to commodities such as platinum, gold, silver and palladium.' Now quadruple sounds extreme, but I believe that may be possible, true chances are around 10%. However tha's in term of Yuan: Dollar only, and what happens to rest of the currencies. What I wonder is about would that be appreciation of yuan against all other currencies or depreciation of dollar against rest or combination of both? And then what happens - to Chinese exports, income inequality or investments/stock markets. China, in such a situation (and taking into accout the growth rates) would be nearly twice as big as US economy (in nominal terms as well). Would US allow that by merely observing this economic development without any military interventions? So...tighten your seatbelts. There would be more actions on China front. Watch this: '``The U.S. dollar is and has been the world's reserve currency, the world's medium of exchange,'' he said. ``That's in the process of changing. The pound sterling, which used to be the world's reserve currency, lost 80 percent of its value, top to bottom, as it went through the whole period of losing its status as the world's reserve currency.''...Commodity prices have surged as demand for raw materials, especially from China, rose faster than producers were able to increase output. Agricultural prices have led recent gains, including a record high for wheat last month and a three-year high in soybeans. ``The number of hectares devoted to wheat farming has been declining for 30 years, the inventory levels of food are at the lowest level since 1972,'' Rogers said. ``Suppose we start having droughts again. God knows how high the price of agriculture is going to go, so that's where I'm putting more of my money now than in other things.'' He added, ``I think I'm going to make more money in agriculture than I make in precious metals.'' ' The last part would be bad newsfor billions and millions of poor people around the world and India whose basic food prices may make them even more hungry as speculations over agri-products increase. And we have seen that having its impact already in India where Govt. is forced to ban agri-products trading at times.

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Oil & Housing: A Volatile Combination : Like following, nothing new here again other than this info: 'Analysts who think oil's impact will be minimal argue that prices will fall because they have been raised by speculation, not fundamentals. Joel Fingerman, president of OilAnalytics.net, estimates that oil prices are $30 to $40 higher than they ordinarily would be, given the current level of U.S. inventories. According to one research house, John S. Herold Inc. in Norwalk, Conn., the average cost last year to find oil, develop the field, pump the product, and deliver it to storage was only about $25 a barrel. That leaves lots of room for prices to fall without wiping out profits. "Industry fundamentals do not support prices above $60, let alone $80," says oil analyst Fadel Gheit of Oppenheimer...But other analysts worry that business and consumers will soon have to cope with even higher oil prices. Even if finding and producing it still isn't all that expensive, not enough fields are being developed. John Kingston, global director of oil for Platts, a unit of The McGraw-Hill Companies (MHP ), says it's no surprise prices are high when worldwide oil production is falling short of consumption. More than 1 million barrels of oil per day are being sucked out of inventories in the current quarter. That's more bad news for an economy that already had plenty of trouble to begin with.
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Greenspan Says Dollar Drop May Reflect Falling U.S. Debt Demand : Nothing new in the topic as such; however why I blogged it is because of following piece of information: 'The dollar's share of world foreign-exchange reserves has slipped as central banks sought alternatives to the currency in recent years. The dollar's proportion fell to 64.8 percent in June, from 71.8 percent seven years before, International Monetary Fund figures show. The euro jumped almost 8 percentage points, to 25.6 percent.
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Paulson Pressured by G-7 Calls to Aid Dollar, Market : '``The U.S. is no longer able to give a flat `no' to some of the suggestions'' coming from overseas, says Brad Setser, a former Treasury official and now a fellow at the Council on Foreign Relations in New York...``You have a Treasury secretary who comes from Wall Street, who is supposed to know about markets,'' says John Kirton, director of the G-8 Research Group at the University of Toronto and a former Canadian government official. ``We haven't heard from him that he's got a handle'' on the situation. European nations are leading the charge against him. With the euro hitting a record high versus the U.S. currency, European exporters are being priced out of foreign markets. ``Sales of German exports are falling off drastically in the U.S.,'' says Anton Boerner, president of the Berlin-based BGA association of wholesalers and exporters. ``We've stepped beyond the pain threshold.'' France has been particularly vociferous in advocating action to stem the euro's rise, with Finance Minister Christine Lagarde, 51, even pushing the European Central Bank to sell the currency. She has also called on Paulson to say ``loud and clear'' that he still backs a strong dollar. While Paulson has said repeatedly that a strong dollar is in America's interest, he says the value of currencies should be set by the market. Under President George W. Bush, the Treasury has never intervened in the currency market, either to buy or sell dollars.' Bloomberg surely got the last part wrong as evidences state that post 9/11, there was manipulation (to protect value of dollar). Well, I am not sure which Federal agency did it, but there was manipulations to back USD!'``Europe is not speaking with one voice yet,'' ...What's more, the dollar's fall -- it's dropped more than 8 percent this year against a broad basket of currencies -- has helped boost U.S. exports and the economy at a time when the housing slump has slowed the expansion. Trade added 1.3 percentage points to growth in the second quarter, its biggest contribution since 1996.' So why the noise in India against INR's 10-12% appreciation (against USD only) on bailing out exporters. 'It has risen about 10 percent against the dollar since China loosened its peg to the U.S. currency in July 2005, while falling about 5 percent versus the euro.'

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Hong Kong-China Stocks' `Obscene' Gap Lures Investors : 'stocks in Shanghai are three times as expensive. Based on cash flow, Hong Kong is the cheapest among the 20 biggest markets, data compiled by Bloomberg show. ``It's crazy to have that kind of a discount,'' said Mobius,...Household savings in China total $2.3 trillion and JPMorgan Chase & Co. estimates $60 billion of that may flow into Hong Kong in the next year...Chinese companies list in Hong Kong to lure international investors prohibited from buying shares on mainland exchanges. The market value of so-called H shares and red chips accounted for 53 percent of the total for the Hong Kong stock exchange's main board at the end of September, up from 26 percent at the end of 2002, according to the bourse's Web site. In 1997, when the U.K. handed Hong Kong back to China, they accounted for 16 percent...China Life Insurance Co., the world's largest insurer by market value, China Mobile Ltd., the biggest mobile-phone company by subscribers, and Industrial & Commercial Bank of China Ltd., whose $325 billion market capitalization exceeds that of New York-based Citigroup Inc., are based in Beijing and trade in Hong Kong. The 10 most expensive Hang Seng stocks include six companies based in Beijing, Shanghai or Shenzhen. As of the previous close, their shares traded between 34.9 times and 62.8 times profit, Bloomberg data show. The same stocks are valued at 42.5 to 70.4 times on China's mainland exchanges...After more than tripling in the past year, shares in the Shanghai Composite Index traded at an average 50.7 times profit last month, the widest gap with the 40-member Hang Seng since the start of 2002. ``That's going to be the benchmark for the domestic investor,'' said Miller, who helps manage $48 billion at Baring in Boston. ``There will be less and less of a distinction to be made between mainland China and the Hong Kong market. This is kind of a one-off chance.'' Of the 45 Chinese companies with equities traded both at home and in Hong Kong, the so-called H shares are about 34 percent cheaper than their yuan-denominated A shares.' We did see similar ADR premiums for India sometime back, but now they exist no more (in India, restrictions of capital flows were less; and most probablt lately the ADR listed stocks underperformed).

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Google Shows Vulnerability After Losing Time Deal : Quigo Technologies Inc., a closely held New York company got the TIME deal of $100 million for three years (what does it mean - TIME will pay $100 million to Quigo Technologies Inc., and accept direct revenue from advertisers; or out of total ad-revenue (whatever that be), TIME is ensured of $100 million?). 'After beating down rivals, Google's dominant position in the $40.6 billion online advertising market is showing cracks. Google has mined keyword auctions, where the highest-bidding advertiser may end up on a heavily trafficked news site like the New York Times and the lowest bidder might end up on an obscure blog -- neither knowing in advance where their ads will land. Quigo (pronounced KWEE-go) targets better-known publishers such as Time, ESPN and Slate, arranging deals that let online advertisers specify which pages they want to appear on rather than taking what they get. While Google now offers a similar bid- by-page option, Quigo may have an edge as the model's pioneer...With Quigo, publishers can sell ads directly, using their own sales forces. Other Google rivals, such as EyeWonder Inc. and PointRoll, specialize in video and animated spots, which are growing in popularity. Sales growth at Mountain View, California-based Google slowed to 58 percent in the second quarter from 77 percent a year earlier. While the company now sells ads embedded in YouTube videos and on Web sites customized for viewing by mobile phone users, those initiatives have yet to prove they can generate the same growth rates as its main business.`Scary' Dependence ' We covered many of these right (Thanks to Chinmoy) in our case!

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Yuan, Rupee Rise at Record Pace in Fight on Inflation : What will be interesting to observe is its impact on Indian trade deficit when the tide turns. China with huge trade surpluses is in a more comfortable position by allowing its currency to appreciate, India faces the double edged sword. 'China's money supply still has expanded more than 18 percent in the last three months. Salaries in India will climb an average of 14.5 percent in 2007, the most in Asia for the second year in a row, according to Hewitt Associates Inc., a Chicago-based human resources company...China's purchases of dollars pumped yuan into the economy, where foreign-exchange reserves climbed $101 billion in the third quarter to $1.43 trillion, the most in the world; India's climbed by a record $34.2 billion in the period to $248 billion.' I have an apprehension that some scapegoat will pay the price for this global surge (as East Asian Nations did during 1997); and India increasingly looks ripe for that. 'Asia's economy, excluding Japan, will expand 9.3 percent this year at almost twice the global average, helped by a 15.7 percent rise in exports, according to Deutsche Bank AG. The U.S. will slow to 1.9 percent, the Frankfurt-based bank said.' If that's so, India will be growing at same or even less that Asia (excluding Japan). 'India's export growth slowed to an average 14.4 percent in the first eight months of this year, compared with 22.4 percent (rise) in the same period in 2006, according to data compiled by Bloomberg...In Malaysia, exporters met with the central bank and concluded the exchange rate wasn't a concern because ``the ringgit has strengthened at the same time as other currencies,'' said Paul Low, vice-president of the Kuala Lumpur-based Federation of Malaysian Manufacturers...Asian countries added $2.1 trillion to reserves in the six years ended in 2006, New York-based consulting company McKinsey & Co. said in a report this month...``People are waking up to the fact that there has been a massive underperformance of the Asian currencies,'' said Paul Barrett, chief foreign-exchange trader at JPMorgan Private Bank in New York, which oversees about $430 billion. ``Asian currencies are cheap.'' ' That we all know from PPP levels. But if it has to adjust, all exports will vanish!

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Treasury Sales May Rise 50% as Deficit Suddenly Grows : So budget deficit after coming down to $200 billion levels may grow again to $500 billions level, if tax cuts continues (and corporate tax declines). 'Companies paid $92.7 billion in income tax during the third quarter, 11.3 percent less than in the same quarter of 2006, when they had a temporary incentive to declare overseas profits, according to Charlotte, North Carolina-based Bank of America, the second-largest bank in the U.S. behind Citigroup Inc. '
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Alibaba.com set to raise $1.3 bln in Hong Kong IPO: As it's 17% of the enlargedcapital base, the firm is valued at around $7.5 billion. No Indian dot.com company comes closer (although I must admit that I have not been tracking the valuations of listed or private dot.com firms of India lately). 'Yahoo currently holds a 39% stake in Alibaba Group.' And it will also subscribe to 4100 million more, as reported. 'Analysts say Alibaba.com is classed as an export facilitator, helping match small and medium-size buyers and product distributors from China and elsewhere in an online marketplace. The company earns fees from product suppliers who list on its Web site, but it enables buyers to browse for free. The company's marketplace for domestic China trade had 21 million registered users, while a similar marketplace for global commerce had 3.6 million members by the end of June, according to Alibaba.com's Website. Alibaba Group also operates the online auction site Taobao.com, and the online payment system Alipay.com.'

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India's hungry poor dominate latest health survey: Same old findings, again and again, amidst deafening noise of economic boom, rise of Sensex and all types of hypes. 'Nearly 80 percent of infants now have anaemia, up from 74 percent in 1998/99. The condition can damage mental development in young children. More than half of all women are anaemic...Just under half of all women -- 45 percent -- cannot read. Among women aged 20 to 24 years, illiteracy drops to a third...Fifteen percent of boys and 18 percent of girls between 12 and 14 years are child labourers, either working for their family or outside the household...Nearly sixty percent of women were married -- illegally -- before their 18th birthday...More than half of all Indians are forced to use a field or other outdoor space as a toilet...A third of all households have no electricity. Around 60 percent use wood or animal dung for cooking fuel.

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BusinessWeek's Ad Slump Sparks Redesign of Magazine : My household income is less than $10k, and I read most of them...well for the stupid purpose of research. And the article is interesting for my research again.
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Hu Invokes Confucius to Appease Masses, Save Communist Party : I have talked and listed few articles of similar views; however till now I am not in a position to accept these views fully. That does not mean I am a great fan of Chinese leadership and policies. And I am not denying atrocities, injustice, abuse of human rights, corruption, etc. in China. I rather look at these with the comparative basket of India. Western press is much more moderate about India, probably due to India's 'Washington Consensus policies' and they see China as a threat. Now that does not mean I am right. I am rather confused because I feel there is more of atrocities, injustice, abuse of human rights, corruption, or even pseudo democracy in India. Now what should be the benchmark? It's surely the quality of life for the masses in these two large nations. So the internal view is more important. And China was probably more backward even in 1980s (and do in 1950s) than India; but they have come a great way so far. There is also the possibility that western journalists are not biased; but they rather feel what's true for the US or West Europe should be true for the rest of the world. However the complexity of billion plus people, that too coupled with the poverty and lack of proper literacy, that these two nations faced is beyond their comprehension. And that's why I hve different views on China. Well, I don't rule out being wrong myself...(I also wrote about against China's aggression sometime back). 'In 2005, there were a record 87,000 mass protests in China, according to the latest government statistics.' is an important indicator...I am wondering what can be equivalent figure in India? And it happens in Urban India also...'While the boom has created 320,000 U.S.-dollar millionaires, according to New York-based Merrill Lynch Cap Gemini, rural areas have been left behind. The World Bank estimates that more than 300 million Chinese live on less than $2 a day.' in India, probably 70-80% of population lives at less than $2 a day. And moving away from one-dollar-a-day to two here is indicative of the bias of western press. In India, closed to 30% even now lives at less than one dollar a day. No global press talks about looting subsidized ration shops in Bengal, which has widely spread. 'Per capita income in urban areas rose to 10,493 yuan in 2005, compared with 3,254 yuan in rural areas, according to data compiled by Bloomberg. By contrast, city incomes averaged 607 yuan in 1978, less than the 624 yuan earned by people in the countryside.' That's been referred by me as well in one of my works. 'Hu was sent to join 30,000 others building Liujia Gorge Dam on the Yellow River, just south of the Gobi Desert. He carried baskets of gravel and bent iron bars for a year, earning 54 yuan a month, said Yin Weide, Hu's first party supervisor...During an independence uprising in Lhasa in March 1989, Hu told the police chief not to fire on demonstrators until he gave the command. Hu then cut the phone line, forcing the chief to give the order to open fire, said history professor Lam, who interviewed senior party officials about the incident.' If it's true, truth ultimately wins. And it does not talk good about Hu. 'Hu then imposed martial law. His strategy ensured that he received credit for putting down the riot while escaping blame for instigating the violence, Lam said. The government said 12 people were killed in the riots. The International Campaign for Tibet cites estimates of 40 to 130 deaths on its Web site.' Again, we all know there will be tens to hundreds of views on any issue. I have my full sympathy and empathy for peaceloving Tibetese, and I deplore loss of lives. 'Three months after the Tibet riots, Deng ordered troops to clear thousands of students from Tiananmen Square.
Hu was among the first to praise Deng's move, Lam said. In 1992, Deng recruited Hu into the halls of Zhongnanhai, the party leadership compound, and made him Jiang's successor, Lam said. While Jiang embraced capitalism, his policies exacerbated the pollution and corruption that are feeding unrest in the countryside. In July, Premier Wen Jiabao said the state of China's environment was ``grim,'' and the official Xinhua News Agency reported that pollution had fueled a rise in ``mass incidents.'''Party rule also is threatened by public anger over officials who steal state funds and take bribes. A total of $3.6 billion was ``misused'' in the first quarter, state-controlled China Daily reported Sept. 20. The Communist Party punished 97,000 members last year, according to the National Audit Office. In July, chief drug regulator Zheng Xiaoyu was executed for accepting bribes and approving fake medicines, Xinhua reported. The situation confronting Hu is crystallized in a jumpy video shot in June 2005 that shows men in hard hats attacking protesting farmers an hour's drive from Beijing. The riot, triggered by land seizures for a power plant, left six farmers dead and 48 wounded...Hu's approach may be showing results. The number of mass protests fell to 17,900 in the first nine months of 2006, Xinhua said April 18. ```Harmonious Society' is his effort to take China back to its cultural traditions, to Confucianism, which give Chinese a code of ethical values focused on social harmony and order,''
' No doubt, a complex comparison between India and China on who is better governed...

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How China Got Religion : Ludicrous, but that's what it is...
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China Announces Gains in Air Defense : Interesting, but in expected lines. Also I didn't know the fineline between 'Republic of China' and 'People's Republic of China'
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Google And IBM Partner To Push Cloud Computing : Interesting developments, however how much of the decision is driven by technological innovations/change in computing environments and how much by pure business interests - it's difficult to state (more so for a lay man of my stature).
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Some Calls on Google: $610, $630, Even $750: We have not yet been proven wrong on our case titled 'Investors hate a matured Google'. Surely one day, we will be wrong. But till then what, how much...The trigger of the case was Google share crossing $400 sometime in the beginning of of 2006, it crossed $ 400 (or 475 before the fall) and overtook IBM in terms of m-cap. And now $ 600+. And lots of innovations in pipeline.
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Homebuilders Liquidate Assets in Desperation Sales : Quite some amount of numbers are there in this article.
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London to Get $32 Billion Railway to Help Aging Tube : Harvard has more than $34 billions, and now London gets $32 billion to upgrade its metro (I never had been to London, but the infrastructure and even the metro is for sure much better than couple of metros in India and infrastructure in all major Indian metros). And with all hypes around India, Indian metros sort of beg even for a billion dollar. Government would never spend this sort of money for Indian people, even take urban India (where infrastructure is again much better than rural India) combing all Indian major metros. When would we wake up?
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Jobs: A September Shocker: So the temporary blip of job losses in August was wrong...and Fed. did cut interest rate by 5- bps based on that, at least relying substantially on that. Even I passingly referred to that in one of my articles. So what does all that mean? A total fabricated bail out of present capitalism society and financial market (even if it was not needed, correction would have helped its long term health rather) or just a slip?...
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As a researcher again, it's important to define everything. But the problem lies in the complexity. Another one is literacy, and here is the 'loose' but still a definition: 'The traditional definition of literacy is considered to be the ability to read and write, or the ability to use language to read, write, listen, and speak. In modern contexts, the word refers to reading and writing at a level adequate for communication, or at a level that lets one understand and communicate ideas in a literate society, so as to take part in that society. The United Nations Educational, Scientific and Cultural Organization (UNESCO) has drafted the following definition: "Literacy is the ability to identify, understand, interpret, create, communicate and compute, using printed and written materials associated with varying contexts. Literacy involves a continuum of learning to enable an individual to achieve his or her goals, to develop his or her knowledge and potential, and to participate fully in the wider society."' from Wikipedia.

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India on 20 cents a day - The fine print in the reporting of global poverty estimates : As a researcher dabbling with poverty figures occasionally, I myself had many unanswered questions. Thanks to Asheem Srivasrava (and my access to this article), many got clarified. Lots of insightful comments - the author argues global poverty figure may be much more than what's popularly projected:

'However, if their belief was in fact correct then (assuming Rs.20 a day to be the minimum needed to supply the 2200 calories of food intake – and minimal nutrition - that agricultural economists and the UN take to be the survival norm appropriately averaged across age groups, locations and kinds of labor) at least the additional 450-500 million who would be living in the Rs.45-90 a day range would be well out of poverty. In fact, a substantial proportion of the people living under the lower poverty line would be out of poverty too. There might perhaps remain some 50 to 100 million poor, malnourished Indians whose long-term welfare could easily be looked after by the prosperity all around.

Not only would Indian politicians, government officials, businessmen and heir consultants be jumping out of their seats in sheer disbelief that their superpower fantasies may actually be realized, but if this state of affairs was representative of the impoverished world as a whole, the World Bank would be out of business, their achieved goal of a “world free of poverty” having ironically led them there!

Sadly, the reality is closer to “a world free of the poor”. Thanks to the subtleties of PPP calculations it may quite possibly be the case that the number of people across the world who are not able to meet the minimum standards for adequate nutrition is anywhere from 3 to 4 billion, rather than the officially estimated 2.7 billion who are estimated to be living under $2 a day. No one really knows. In other words, we could all be off by a whole continent!

Some experts in the field, such as Sanjay Reddy of Columbia University or Robert Wade of the London School of Economics advise deep skepticism about prevailing official estimates, especially of alleged changes thereof on account of globalization. Wade advocates that “the political economy of statistics” is crucial and argues for greater competition in the market for the generation of international poverty data, so far a de facto monopoly of the World Bank. No free market there! There is intense debate among economists and policy-makers as to just how much poverty there is in the world and whether it is going up or down with globalization. According to one expert Angus Deaton, “it seems impossible to make statements about changes in world poverty when the ground underneath one’s feet is changing in this way.” ...

When these are taken into account it becomes clear that what the experts call the “poverty line” is actually more accurately labeled “starvation line”, as some people will have it.

Moreover, in our increasingly packaged consumerist world even global poverty figures must ultimately arrive in a wrapping that is not unpalatably unattractive to the public. Trickle-down will ultimately work, we are repeatedly assured by growth economists. But like the late John Kenneth Galbraith is said to have remarked acerbically, faith in trickle-down is a bit like feeding race horses superior oats so that starving sparrows can forage in their dung. All indications, especially in parts of the world like rural India, are that a decade and a half of corporate globalization has left undernutrition and malnutrition all but intact, and might quite possibly have worsened the predicament for many millions.

Perhaps, we would do well to remember Einstein’s counsel: “Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.” The poverty measurement industry loses much sleep and sweat over details that do not matter much. The big picture, perhaps unsurprisingly, is inaccurately reported. The propaganda efforts of governments and corporations succeed in the end in keeping some of the more terrible effects of prevailing economic policies from clear public view, undermining democratic transparency and potential accountability.

We only count and measure what is useful, important or interesting. By measuring we indicate that we care about what is measured. The score on poverty, especially if it is shameful, is worth keeping, if only to remind us of the extent of the failure of globalization not merely to change the lives of the poor but perhaps in turning them for the worse. (If China has lifted tens of millions of families out of poverty, the secret of their success lies in the years and decades preceding globalization – in the early 1980s rural reforms were carried out, among other things, granting access to land to the rural poor. Besides, the strong foundations of the social infrastructure – education and health – were laid down in the era of communism. Globalization has only allowed the country to reap the harvest of pre-existing investments better.) (however I had different views on China from other articles - the truth is Chines BPL line is artificially low; and 2nd; China didn't grant land accord to rural poors. What's the truth?)

Even another article (Poverty lines around the world: a new methodology and internationally comparable estimates) by Richard Anker supports above views.
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China bubble stories are again hitting headlines. There are many (1) What's really going on in equity markets, Greenspan is again back after causing that 8% correction sometime in May(?), then there are others - Just How Big is the China Bubble?., and China's Outrageous Rally: Largecaps, Property Stocks Lead comparing it with the party time of 1999. I wrote back in June Bubble in China: The answer is both yes and no. Do I still have equal conviction on yes and no. Probably no because it's all manipulated. I still have equal or even stronger conviction in China's growth story. However I am increasingly getting concerned with developments in US (and Europe, Japan etc.) and also by rising Chinese inflation. In the end, one must admit the interest rate differential in China (return from markets and banks), and also that the trillion dollar reserve can't find its ways into stocks year-after-year. It will further cause inequality as large % will never be invested in China (now about 10%?). So the problem is itself the cause of the rise. And US won't let a smooth China rise for ever. So the action will no doubt be interesting. Earlier I suggested party to last before Olympics (August'08). Would it? Probably still yes; but then what?
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U.S. steps up its military presence in Africa : Although various reasons have been cited (from oil to Al Qaeda), what's missing is China. And the primary reason, anyone would guess is in the order of China, Oil and Al Qaeda...
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EBay's Skype Bubble Bursts: This is of interest to me as a researcher, because I did a management case titled, VoIP, Skype and disruptive telecom revolution; and also because I worked with baazee now aen eBay company). Did I go wrong, or did I get it right (in the beginning of 2006). I will say it both...

Best of the Web - Septembe'07

2007-09-01T00:43:00.000-07:00

Stay in India for free via blogger Web site: That's something interesting. I didn't know about both these two sites (www.extrabed.in or www.couchsurfing.com). This one is true: "The blogger I stayed with had a small house and he could only offer me a mat to sleep on," said Shankar, 34, who had tired of staying in hotels during his travels. "But we had a lot of fun and ended up playing videogames all night. I preferred sleeping on the ground at this guy's place rather than stay in irritatingly clean and inhuman hotels."

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`Greedy Bastard' Moulton Mocks Buyout Firms' U.K. Tax Dodging : Oh yeah!... again for present day capitalism and various derivative products of capitalism...
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Yale Fund Earns 28 Percent, Best Return Since 2000 : They have so much, and we have so less! Harvard ($34 billion+) alone may have more money than the whole education sector spending by Government of India (around 6% of GDP spend on education which probably still is not well-spent!). At most the money that Harvard and yale has exceeds that for 1.1 billion people. Amazing...I am lost of words. True these institutes of excellence earned it, invested it, managed it well and created assets. Where is the scope of doing any of that for any Indian institutes of excellence. People have mostly made short-term business out of educations (aided by Government's failure again!). 'Managed by Swensen since 1985, the Yale fund has gained an annual average of 17.8 percent in the past 10 years, with assets more than tripling from $5.8 billion. Harvard averaged a 15 percent return in the decade.' No doubt that most of them managed their funds much better than so-called Wall Street guys...I am not sure whether they get those fat bonuses or not!...'Swensen earned $1.6 million in salary and benefits in fiscal 2005, the most recent publicly available information. El- Erian received $2.3 million over the five months in fiscal 2006 that he worked for Harvard Management.' And they get it as well (may still be pea-nuts compared to Wall Street levels). 'Yale beat the Standard & Poor's 500 Index of stocks, which rose 20.6 percent in fiscal 2007, including dividends, while international shares gained 27.7 percent. Yale devoted about a quarter of its assets to stocks, 23 percent to hedge funds and 16 percent to buyout funds at the start of fiscal 2007. The fund also had placed 28 percent in real assets, a category that includes timber and property.'

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The Credit Ratings Blame Game: "There's a mismatch between the ratings and the results," "They're central to this whole debacle. They're conflicted. It's driven by money, not responsibility and ethics." ...oh yeah...let's hear that more ogten! '"They are one cog in the machinery. They've developed more of a collaborative relationship with the investment banks that are their customers. They get paid for every rating they give," Dann tells BusinessWeek. "At some point in time, everybody in the country knew or should have known that many of these loans were being fraudulently obtained. They knew or should have known that the loans they were endorsing were fraudulently obtained."'

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Microsoft, Google square off in Washington: Many of these decisions of today may be of historic ones of tomorrow for unprecedented number of people around the world.
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Citic Surpasses Lehman, Schwab as Savings Lift Stocks : 'Founded just 12 years ago, Beijing-based Citic now has a market capitalization of $40.7 billion, or $8.8 billion more than Lehman Brothers Holdings Inc., $24.4 billion more than Bear Stearns and $16.4 billion more than Charles Schwab Corp., after rising more than threefold in 2007. Haitong Securities Co., China's No. 2, also eclipsed Bear Stearns as the seven largest U.S. brokers lost $37 billion in value this year.' So after ICBC, new ones come in new sectors

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Buy a cheap laptop, give one to world's poor: I have been following OLPC project for some time, and the D day is drawing near. Can it achieve what present day ICT revolution could not? Probably a new wave of innovations and low cost machine will flood markets. Moves by private players would be interesting to see, as would be the move of the underdeveloped countries and their governments.
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WTO creates panel to investigate China IP protection: They say it takes years for WTO to deliver judgement, and present day issues may no longer be relevant by then. However the matter needs close observation, from US-China relationships, and for both economies and also for geopolitics.
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The week that changed the world: Good one, particularly I didn't know the origin of 'Helicopter Ben'. It wasn't out of some one's fancy, afterall! 'Much like the profound significance of Bernanke's announcement in November 2002 wasn't appreciated then, I'm not sensing that the watershed implications of this week's Federal Reserve decision to cut a half percentage point off both the Fed Funds rate and the discount rate is being fully recognized. Those moves put to rest even the Federal Reserve's pretense of protecting the greenback's value, and that is earth-shattering news for a world economy that for generations has used the U.S. dollar as its reserve currency. The process has been going on for the past five years, but now any of the familiar talk of a strong dollar policy in the face of contrary action would be laughed at...Of course, every export company in the country has been trying to adapt for the past three to four years, but my worry is that for many of them absorbing a 59-per-cent rise in their export price in just over four and a half years, along with record high oil prices and weakening consumer demand in the States, may be too much to overcome...The new economic world will require a new level of flexibility on the part of policymakers, management and labour leaders in order to meet the challenge. Some will be up to it, while other will continue to stick their heads in the sand and measure their legacy in bankruptcies and layoffs.'.

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Ericsson launches rural broadband project: Interesting development. Though I don't understand WCDMA/HSPA technology (and Ericsson's interest in pushing it), need to keep an eye. Hope this really helps...
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Microsoft Office under fire: This is a critical development...I talked about Google docs sometime back (even in the enterprise version Google can get in soon). However what may favor MS in the end is fragmented attack on it MS Office. Therefore the questions to ask are:

1. Are we going too fragmented but compatible Office Applications packages now-onwards?

2. Or there would potentially be only two (MS and another, most likely contender Google). And in the long run if Google wins, what power would Google have? This company (Google) rarely gets things wrong.
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Fed Cuts, BOE U-Turn Show Limits of Independence: I liked the 1st para very much (and decided it should be here): '``Dear customer, congratulations on your new Hokey-Cokey Bank Plc deposit account! You'll enjoy substantially higher interest rates than you can get anywhere else, because we'll be betting your life savings in the local casino. Should the roulette ball land on red rather than black, no worries! The U.K. government guarantees your money!'' '
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Dollar Near Record Low Versus Euro Before Bernanke's Testimony STATED ' Saudi Arabia:
The dollar may accelerate losses against the euro on speculation Saudi Arabia will abandon its peg to the U.S. currency. The Middle East nation failed to lower its interest rates in line with the Fed, the Daily Telegraph reported. This may pave the way for Saudi Arabia and other countries in the region to scrap their currency pegs as a weak dollar stokes inflation, the newspaper said. ``The Telegraph article is saying the Middle East might want to start selling dollars because of inflationary risk,'' said Luke Waddington, head of interbank currency sales in Tokyo at Royal Bank of Scotland Group Plc. ``Once the market reads that, the market will probably want to buy euros and see if they can move it higher.'' nOW THAT'S SOME INTERESTING PIECE OF INFORMATION - HOW LONG THE WORLD WILL GIVE GOODS & SERVICES TO THE US CONSUMERS AGAINST CHECK NEVER TO BE ENCASHED?

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Times to Stop Charging for Parts of Its Web Site : I have deliberated over the issue, and my stand on that. Thanks NYT.
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A Weekend With Greenspan’s Iraq War Comment: 'I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil...Their (Cheney & Rumsfeld) decision (to invade Iraq) had been made prior to my discussions with them,” he said.'. Bernanke...
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Alan Greenspan: In his own words: An interesting interview at an interesting time...with the insights that come from a man of Greenspan (& Fortune).
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Investment adviser asks if wealthy are necessary: I myself have been wondering about it for some time looking at the rising ineqaulity globally and locally. Unforttunately I find the article very superficial, and nerely scratches the surface of the core issue.
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Reality TV shows text SMS revenue earnings for telcos: The numbers and business modelsare interesting - from disintermediation angle as well.
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Bernanke Spurns Greenspan Quick Fix, Seeking Data, Deliberation : A good article (more so academically speaking) that talked about risks, uncertainty, judgement, modeling difficulties aut need and also highlighted past era (of Greenspan) with present time (of Bernanke). I myself would be against a drastic rate cut (or even moderate quick-fix rate cuts - they really work for the short-while but creating more long term problems. However a balance of priorities (a dying cancer patient can not be asked to flex his/her muscle) need to be maintained.
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Forbes list: Indian banks lose ground: All the losers are from Public Sector, whereas barring two, all the winners are from private sector. Learner class 2 (In my theory there are three categories - one the stupid believer of socialism, 2nd the stupid believer of capitalism, markets competition, etc. and the 3rd who examines all with close experience and scrutiny to know what failes when and why and how - remember Socrates - Examine life!) would call it something for more privatization; whereas I believe a strong lobby and government is deliberately trying to kill many of these PSUs.
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Business 2.No More: Time Inc. Folds Magazine Of The 'New Economy': Interesting development, but expected. One may wonder how could Business 2.0 survived so long with Business 1.0 model - any inflection point in Business 2.0 itself?
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Israeli Court Orders Barrier Rerouted : Surprises one that this rule had to come from Israeli judiciary (and thereby building confidence in Israeli judiciary and judiciary all over) while UN and all global/local bodies/countries failed to act.
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Other couple of developments are GAO report on Iraq war and then the other one that thinks about three day aerial bombing of Iran.
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Google News redirects wire search web traffic: This indeed was long overdue. Now the non-value adding intermediates can be eliminated. Sometime back I pointed out the sheer plagiarism (CNN-IBN/Moneycontrol) did and also on lack of original content in Indian media. They should now wake up and produce more of original content than rely on wired news sources. As online revenue increases; we should award most the originators and less to the single chain (which can be something like a market place for news, in this case Google News). B2B marketplaces failed, and now we have news marketplace - great!

August 2007

2007-08-03T21:52:00.000-07:00

On the Verge of a New Crisis: Although I don't agree with the article completely (& 8 year-cycle), I do agree mostly. And it's indeed quite informative. Moscow, Beijing, New Delhi, Latin America and Africa should reassert themselve (I know one may laugh at the suggestion ven by seeing the diversity).
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US rural poverty rate unchanged despite farm boom: There are too much information/data on global poverty, however I have not seen much coming from the US. So it's interesting...NYT reported: A Sobering Census Report: Americans’ Meager Income Gains and WP reported U.S. Poverty Rate Drops; Ranks of Uninsured Grow. Reuters stated: 'Nationwide, 36.5 million people, or 12.3 percent of the U.S. population, earned less than the poverty threshold of $20,794 a year for a family of four' giving urban and rural poverty at 11.8% & 15.2 % respectively for 2006 (80% people live in Urban areas). WP stated: 'Although the poorest households had the largest percentage income gain from 2005 to last year, income inequality remains at a record high. The share of income going to the 5 percent of households with the highest incomes has never been greater.' NYT stated: 'In 2006, 36.5 million Americans were living in poverty — 5 million more than six years before, when the poverty rate fell to 11.3 percent.' which probably adjusts the drop in poverty (12.6% to 12.3%) with increase in population. WP stated: 'In all, 15.8 percent of Americans lacked coverage last year, up from 15.3 percent in 2005.' NYT further concluded: 'Sputtering under the weight of the credit crisis and the associated drop in the housing market, the economic expansion that started in 2001 looks like it might enter history books with the dubious distinction of being the only sustained expansion on record in which the incomes of typical American households never reached the peak of the previous cycle. It seems that ordinary working families are going to have to wait — at the very minimum — until the next cycle to make up the losses they suffered in this one. There’s no guarantee they will...Over all, the new data on incomes and poverty mesh consistently with the pattern of the last five years, in which the spoils of the nation’s economic growth have flowed almost exclusively to the wealthy and the extremely wealthy, leaving little for everybody else.Standard measures of inequality did not increase last year, according to the new census data. But over a longer period, the trend becomes crystal clear: the only group for which earnings in 2006 exceeded those of 2000 were the households in the top five percent of the earnings distribution. For everybody else, they were lower.'
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Treasury's Plan Backfires as IMF Targets Dollar Instead of Yuan : I know I shouldn't; but to explain one more point (why I have drastically reduced posts and references here); I must say 'I told you so'. In Help! How to read global financial markets? and also in 'The World Bank - Whose World?'. So I do read as I used to, but now I write less because my arguments are already out there that explain the imbalances (economic, environmental, and in all aspects) - why, how and what to be done to resolve that on a longer term basis.
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I.B.M.: The Net Trumps Television: Sooner than expected...
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Welcome to management hell: Bloomberg, sometime back stated that money managers in highly uncertain, volatile world at times feel they should have taken up less stressful job, something like a bomb-diffuser. And as a trader, I did experience that well.
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Robert Fisk: The Iraqis don't deserve us. So we betray them...: Fool me once, shame on you; fool me twice, shame on me. And that's why rest of the world (barring the US, UK and few of its allies that would stick with them come what may) is increasingly closing their doors on the west (and its multilateral institutes, including the UN).
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Wikipedia and the art of censorship : Ultimately let truth win, and the vandalist gets more marginalized.
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New to the Job, Bernanke’s About-Face Is Weighed : When I saw many articles on that this morning, I was initially a bit sceptical to read any. However this one is really enriching, barring the reference to Merrill Lynch. Fed does not work for the interests of MLs alone.
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Home Insurers' Secret Tactics Cheat Fire Victims, Hike Profits : SO this is how corporates and management consultants work to make profit at the cost of legitimate claims of customers - McKinsey gets its due. However what I am increasingly surprised at is this new people-first-profit-later approach taken up by Bloomberg. definitely a welcome change; however the drivers need to be explored.
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China's Healing Power: This also needs to be viewed with following. China normally doesn't have a strong interference on external policies; however it's success rates (be in North Korea or now in Darfur) seems to be high...know it also suggests something else.
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After claiming the Pole, Russia looks south: Developments are getting interesting...China is just watching how global influence of the US declines by its own actions and imperialism; and now Russia is also putting more pressure. South Korea (with hostage crisis) and Japan (with defeat of Abe's party) is also looking more and more cautiously at US policies as they contibuously give more and get almost nothing. Many in the world has claimed US to remain as the sole superpower till 2025 or even 2050; however with the rapid pace of change; I would cann for review in every five years...even that can be quite long.