Category Archives: Economics

Tick-Tock, Tick – who will fix the clock?

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A file picture showing Boeing 787 Dreamliners on the assembly line in Everett, Washington.
“More than one million engineers, for example, about 30 percent of the U.S. industry’s total engineering work force, will be eligible to leave in the next five years, according to a study by Deloitte”
Boeings decision to build the new wide body jets 777X planes with the latest technologies in Seattle is being forced by the reality; that skilled workers like engineers and machinists, are just not available in the other states that were ready to give billions in tax breaks, to welcome them to move there. Similarly Airbus’ plans to build a new plant in Alabama, is sucking in engineers from neighboring southern states. Aircraft manufacturing is getting more sophisticated needing advanced electronics and fiber composites and new engineering and manufacturing skills. Same can be said of the automobile industry and of many other manufacturing industries that are needed for our modern world. At a time when the US manufacturing is regaining its legs and a continued expansion of the economy appears on the horizon; the retirement of the baby boomers will cause a major shortfall, of engineers and qualified personnel.
A decade ago with the Y2K systems upgrades we had a similar situation; with a shortage of engineers and skilled coders for mainframes and major banking, financial, insurance and other large systems, that run most of the US computing. At that time the ramp up by what are now the IT majors in India to provide these services, helped bridge the looming gap. That problem was different as system maintenance and development does not need physical presence in the US; and can be done remotely from anywhere in the world, with the right information pipes and communication channels. You cannot build a car or an airplane remotely; and design and development has to be carried out near the actual assembly lines or plants, to ensure that they are practical and usable. While the Indian and Chinese universities are churning out millions of so called engineers they just do not have the right skill sets and need years of incubation and practical training to be able to do the jobs. In fact most Chinese engineers are not innovative enough and a majority of the so called Indian engineers are unemployable, without huge external help and training. Hopefully the setting up of research and engineering centers by giants like GE and IBM in these locations will help fill some of this gap.
Robotics and automation is now extensively used to replace skilled workers; and that has led to the demise of the working middle class, as union jobs disappear, as machines take over many repetitive and mundane tasks. So while a high school graduate could previously make a good living working on the assembly lines; now advanced mathematical and science skills are needed to use the machines and systems used in modern manufacturing. The collapse of the cities and the infrastructure decay is a result of the loss of these high paying jobs, for what was at one time one of the best educated workforces in the world. Now we need more advanced degrees and sophistication and it is at a time when the engineering colleges are not producing enough graduates for our future. The brightest engineers who are graduating are being pulled into the high-tech startups and internet age companies like Apple, Google and Amazon. Manufacturers are starved of talent and left scraping the bottom of the barrel for the dredges from the great universities.
The story is similar when we look across the economy at Pharmaceuticals scientists, bio-medical engineers, chemical companies, energy sector, petrochemical industries and the list goes on and on. While the US still graduates the largest number of PHDs in the world; they will not be enough to replace the baby boomers as they head off into their well-deserved retirements, sipping from tall glasses with strange little umbrellas after a round of golf or sunning themselves on a beach after a set of tennis or a jog or a swim. Instead of paying into the social safety net, they will start withdrawing social security and Medicare and Medicaid costs will continue to rise, putting a greater burden on future generations.
An engineering degree at a good private university now costs close to a staggering quarter million dollars and at the same time the high schools are not graduating enough qualified graduates, who want to enter science or engineering fields. Where will the next generation of engineers come from and the case in Europe is similar to the US or may be worse as their population is aging too and not enough replacements are available. Will the great western civilization reach its peak in our lifetime and die the death of a thousand cuts as the dearth of skilled personnel bring their mighty industries to their knees. Will the ‘Atlas Shrugged’ world depicted by Ayn Rand finally come alive; as the most capable retreat into their exclusive preserves leaving the masses to their fates, with less being produced and new innovation dying? The have and the have-nots are already living in different worlds, and the trend is multiplying all across the globe. Where will the resources and leadership come to raise the standards of the masses as poverty and hunger elimination can only come from raising productive citizens, who can better contribute to society and become self-sufficient? The race is on and the clock is ticking, as we fall further behind each day while billions more are adding to our earth’s burden.

Mammoths of the seas

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Awakening groggily I reached out and pulled the dark drapes apart in the penthouse room of the hotel and was instantly blinded by the rising sun, reflected off the Pacific Ocean. I turned my eyes away and saw the metallic arms of the loading and unloading cranes for the container ships, over the port of Long Beach. The port was piled with rows upon rows of stacked empty containers and there were not as many ships; as the rush of the incoming goods had abated, before the greatest shopping season of Thanksgiving and Christmas. Instead as I watched I saw a mammoth ship slipping out of port fully loaded with containers; many stories high, and slowly heading out to sea. The economy must be picking up and now it seemed that exports from the US are actually on an upswing; as a fully loaded ship was rare to see, as mostly only empty containers were returned to China and the trading nations to the east earlier.
I turn my eyes back and see the triple funnels of the giant Queen Mary ship; that has found its final resting place, as a hotel on this water front. Yesterday it had been dwarfed by a far large modern cruise ship; that must have brought tourists from far away, to enjoy the sights of the city of Los Angeles. It was many stories tall and a sight to behold, and ferried people in the latest luxuries with food and entertainment, for its travelers. The scale of these cruise ships appears to be growing larger and more opulent, with each successive generation. They are floating castles that ferry people about to resorts and exotic locations; as people escape from the bitter cold and ice and snow, of the heartland. People sun bathe on the decks and enjoy the passing sceneries; as palm trees and pristine beaches await their arrival, from sunny port to sunny port.
Late last night I had been watching the waves from the breeze seem to come in from the sea; but the water from the Los Angeles river was actually flowing outward, and it was just a mirage. I had seen a black long shape swim down the river and could not make out if it was a sea lion, or a dolphin or a very large fish, that was making its way back out to the sea. These used to be the giants of the sea like the whales and the sharks, which ruled the open oceans. Now man has launched his nuclear submarines, naval air carriers, and the giants that feed the world’s commerce. Far away in the distance I had seen a giant oil tanker pull away from the large Chevron refinery; and today I saw another giant waiting patiently for its turn, to feed the inexhaustible thirst of the naphtha crackers and petroleum refinery. America is turning into the biggest exporter of refined products like aircraft fuel, diesel and other petroleum products; and these giant vessels will only increase and grow bigger, to meets the needs of the teeming billions.
I take a walk along the river and as the wind shifts I can smell the familiar smells, and am transported back to exit 13 of the New Jersey turnpike decades ago; where I had first smelt the fumes of the giant refineries. Now I am a continent away on the west coast; but the smell remains the same, and reminds me that this is the bedrock of our modern economy. Fuel is what we need and energy from petroleum is overtaking the energy from coal; as carbon dioxide continues to build unabated into our atmosphere, at a scale where Al Gore had to use a mechanical lift to show, the extreme rising graph of the current century. Now scientists are saying that there are giant rock formations; where we could easily sequester the carbon dioxide and store it away safely, and help to reverse global warming. The oceans make up the vast surface of our dear Earth, and have turned our planet blue and they are the next frontier.
Will we be able to convert the oceans into the next habitation and source of food; just like we have done as sources of energy with deep sea drilling, and massive wind farms, which will supply our future needs for a hungry population? Will tidal power be harnessed for energy and will we have giant conversion plants that turn sea water, into fresh potable water to meet future human needs. There are mammoth projects that can be built for living and aqua culture, on a scale we cannot imagine today. We are confined to land for now; but the oceans await our quest for sustainable living, and all we need are the new technologies for harvesting the giant spaces, as Dubai has done with its sprawling palms housing developments. We are only limited by our imagination and our resources, to make great strides into developing these resources.
Already the giant tankers, container vessels and the development of ports and facilities for them; have unleashed a cheap and easy transportation system, that link the greatest economies of the world together. The more ecofriendly and economical we make these modern giants; will in the end show how well we can better utilize resources and labor effectively, for the betterment of man. The ability to move vast quantities of raw materials from mining and agricultural producers; to the modern processing plants, and then the finished goods to the hinterland for consumption, are required on ever larger scales if we want to meet the projected population of 7 – 8 billion, in the near future. Great strides continue to be made in technology and construction with new materials that are revolutionizing our capabilities.
The Queen Mary is a stately ship and as I walk by in its shadow in my after dinner walk; I am reminded of a gentler age where all the gentlemen and ladies that sailed its luxurious furnishings and trapping, lived in a different world. It was a world of formal dinner ware and music and dancing under the moonlit skies, to live bands and entertainers. The privileged few enjoyed the trans-Atlantic voyages between the great cities of London and New York, bringing the old and the new world together. A week at sea; was not hurried by instant communication, and 24\7 information overloads. The mammoths of today’s seas are of a different breed and a different technology. GPS systems navigate them and people spend more times on their personal devices, than staring at the palms floating gently by. I feel suddenly very small against the hull of the ship towering over me; and turn back to another restless night, of wondering where these mammoths will take us next.

Challenge of the future in south Asia

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The daily word from the web: pogrom Meaning: noun: An organized massacre, officially tolerated or encouraged, against a particular group. ETYMOLOGY: From Yiddish pogrom, from Russian pogrom (destruction). Earliest documented use: 1891. NOTES: The word is usually applied to the massacre of Jews in Russia and Eastern Europe in the late 19th and early 20th centuries. My earliest memories do not go back so far, but I do remember another such chapter in human history and my parents anguish at becoming refugees in their own land. The mass movement in 1946-48 of the Partition of South Asia into new nations hopefully will remain unprecedented; as millions left their homes on bullock carts, trucks, trains or just walking along the roadways to safety. The slaughter that happened between the communities; as the division was along Muslim and Hindu divide demanded by Jinnah and the visionaries of Pakistan, as the first new Muslim nation. A cancer of communal violence; that eats away at its soul even today, where poor communities are destroyed and war is threatened over Kashmir every few decades. The neighbors cannot live or trade in and harmony and peace with open borders. The divisions run deep now; and petty hostility prevails. that stops commerce and prosperity from spreading across these regions. They are soft states that struggle from political crisis to political crisis in an unending circle.
There is of course a better way and that is by breaking down these religious and cultural differences, and to rather embrace the modern reality that we live in a common world; and all of us are in this together. We rise and fall with each other; so it is much better to trade and expand commerce, across the area. If India is to go from 1.5 Trillion to the $ 15 Trillion by 2020, predicted by an economic research team’s recent projections; we will need a radical change is cooperation and openness across the nations. We should build the highways of the future through gas and oil pipelines from the best sources as that is what the third largest economy in the world will need. We need to ensure that Energy from solar, wind, biogas and all renewal forces like hydro, nuclear are utilized to their max, while cleaner coal continues to pay a great role in the mix. We need to build modern transportation hubs of railroads, highway, container ports and international airports that can facilitate the movement of goods and services so badly needed in this region.
There is a lot of thought leadership and entrepreneurial skill in the region; that is mainly held back, due to political considerations. Artificial constraints remain on the stock markets; and there is no mobility of resources, across the region. The World Bank and Asian Development Bank and other NGOs do commendable work in the region; and they can be leveraged to become the future ambassadors, of cross state endeavors. The ancient Grand Trunk Road at its imagined best; would become a true corridor of communication and logistics from Asia Minor, to the Indus and the Gangetic plains. From Tehran, Samarkand to Calcutta and Chittagong could be the land links. Then with their safe harbors in the Sundarban Delta of the Ganges and the Brahmaputra into the Bay of Bengal great waterways and river transports could bloom connecting the land to the oceans. Just like the mighty Mississippi is the artery of moving bulk goods through the heart of the US we could build waterways that link the south and the north. The energy and resources from land trapped nations could flow down giant pipelines; providing the needs of industry, that would serve the needs of billions across the region. For such a large bay and larger Persian sea and the expanse of the Indian Ocean; we should have a flourishing trade with container ports, railroad lines and highways servicing the interiors. We have the access to the fastest growing continent of nearby Africa; and are allowing China and other nations to overtake us in influence and trade, when we should be leading it.
The infrastructure build out required; would keep the region busy for the next century, if someone had the guts to envision the cross state proposals, that will truly transform the region. There are trillions of dollars just being wasted on a daily; basis because of crony capitalism and feudal living, which befuddles the villages and countryside (pheasants) which are the ones who need to transform themselves into the future. Let the people trade and just provide the means to do it efficiently, and the people will pay for it with their own effort. There is enough capability and knowledge as shown by the launch of the recent Mars mission and starting of the Russian plant in Tamil Nadu. There are enough natural resources in the region to provide for the next century if we only take the steps to harness them and share them with each other at an economical price. Greater education of the masses and the liberation of women can have a transformational impact on breaking barriers of ignorance and poverty.
The question remains that in a region where the huge Bamiyan Statues from ancient Buddhism could be callously blown away, and mosques and temples reduced to pages of history and destroyed since time immemorial; can a region of peace and civility be restored. It is said that the establishment of safe passage and open trade with towns and markets along a broad and smooth highway with no restraints; could truly transform the region into an urbanized miracle. This from the region that brought us the Indus Valley civilization, one of the earliest development of urban living. One could travel safely across the GT Road from Kabul to, Karachi, Tehran, New Delhi, Kathmandu, Dacca and Colombo in a matter of days and hours. Civil society and the rule of law is essential for this; with free trade treaties enforced, so no hiccups come in the way. Safety and speed should be the main points of effort; and the ability to scale massively, for the new urbanized population. Economies can only grow when savings can reach safely and quickly into investments, that better the investors. . The infrastructure for communication through use of satellites and towers and new wireless technologies; should connect the people, as information is a great equalizer.
The ideological dream would be to move away from decades of destruction into a world of reconciliation and progress. The passing away of Nelson Mandela could light the way to show how we can rise above our basic hatreds and build a new nation; where race, color, ethnic background do not divide, abut are used to build a better world. After CHOGM we could try for a new era of development between the Commonwealth nations; hindered by the narrow views of the sub-continent. UK, Canada and Australia would all gladly increase their trade with their traditional partners, if we can stop our petty squabbling. As nations of equals; there is far more to be achieved, than as nations of dividers, and regional destruction can at last become regional creation. Let us be creative and magnanimous; for our very own development is at stake, and that of the greater humanity. An economic miracle can unfold, or we can continue to plod along at our Hindu rate of growth. We could finally work on realizing Nehru’s Tryst with destiny speech “A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends, and when the soul of a nation, long suppressed, finds utterance…..Are we brave enough and wise enough to grasp this opportunity and accept the challenge of the future?”

Regional rennaisance

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Bamiyan
The daily word from the web: pogrom Meaning: noun: An organized massacre, officially tolerated or encouraged, against a particular group. ETYMOLOGY: From Yiddish pogrom, from Russian pogrom (destruction). Earliest documented use: 1891. NOTES: The word is usually applied to the massacre of Jews in Russia and Eastern Europe in the late 19th and early 20th centuries. My earliest memories do not go back so far, but I do remember another such chapter in human history and my parents anguish at becoming refugees in their own land. The mass movement in 1946-48 of the Partition of South Asia into new nations hopefully will remain unprecedented; as millions left their homes on bullock carts, trucks, trains along the roadways to safety. The slaughter that happened between the communities as the division was along Muslim and Hindu divide demanded by Jinnah and the visionaries of Pakistan as a new Muslim nation. A cancer of communal violence; that eats away at its soul even today, as neighbors cannot live or trade in and harmony and peace with open borders. The divisions run deep now; and petty hostility prevails. that stops commerce and prosperity from spreading across these regions. They are soft states that struggle from political crisis to political crisis in an unending circle.
There is of course a better way and that is by breaking down these religious and cultural differences, and to rather embrace the modern reality that we live in a common world; and all of us are in this together. We rise and fall with each other; so it is much better to trade and expand commerce, across the area. If India is to go from 1.5 Trillion to the $ 15 Trillion by 2020, predicted by an economic research team’s recent projections; we will need a radical change is cooperation and openness across the nations. We should build the highways of the future through gas and oil pipelines from the best sources as that is what the third larges economy in the world will need. We need to ensure that Energy from solar, wind, biogas and all renewal forces like hydro, nuclear are utilized to their max, while cleaner coal continues to pay a great role in the mix.
There is a lot of thought leadership and entrepreneurial skill in the region; that is mainly held back, due to political considerations. Artificial constraints remain on the stock markets; and there is no mobility of resources, across the region. The World Bank and Asian Development Bank and other NGOs do commendable work in the region; and they can be leveraged to become the future ambassadors, of cross state endeavors. The ancient Grand Trunk Road at its imagined best; would become a true corridor of communication and logistics from Asia Minor, to the Indus and Gangetic plains. From Samarkand to Calcutta on the safe harbor Sundarban Delta of the Ganges and the Brahmaputra into the Bay of Bengal great waterways and river transports could bloom. The energy and resources from land trapped nations could flow down giant pipelines; providing the needs of industry, that would serve the needs of billions across the region. For such a large bay and larger Persian sea and the expanse of the Indian Ocean; we should have a flourishing trade with container ports, railroad lines and highways servicing the interiors.
The infrastructure build out required; would keep the region busy for the next century, if someone had the guts to envision the cross state proposals, that will truly transform the region. There are trillions of dollars just being wasted on a daily basis because of crony capitalism and feudal living that befuddle the villages and countryside which are the ones who need to transform themselves into the future. Let the people trade and just provide the means to do it efficiently and the people will pay for it with their own effort. There is enough capability and knowledge as shown by the launch of the recent Mars mission and starting of the Russian plant in Tamil Nadu. There are enough natural resources in the region to provide for the next century if we only take the steps to harness them and share them with each other at an economical price.
The question remains that in a region where the huge Bamiyan Statues from ancient Buddhism could be callously blown away, and mosques and temples reduced to pages of history and destroyed since time immemorial; can a region of peace and civility be restored. It is said with the establishment of markers and towns and markets along a broad and smooth highway with no restraints could truly transform the region into an urbanized miracle. This from the region that brought us the Indus Valley civilization, one of the earliest development of urban living. One could travel safely across the GT Road from Kabul to, Karachi, Tehran, New Delhi, Kathmandu, Dacca and Colombo in a matter of days and hours. Civil society and the rule of law is essential for this; with free trade treaties enforced, so no hiccups come in the way. Safety and speed should be the main points of effort and the ability to scale massively for the new urbanized population. Economies can only grow when savings can reach safely and quickly into investments that better the investors. . The infrastructure for communication through use of satellites and towers and new wireless technologies should connect the people as information is a great equalizer.
The ideological dream would be to move away from decades of destruction into a world of reconciliation and progress. The COGM in Colombo could light the way for a new era of development between the Commonwealth nations except for the narrow views of the sub-continent. UK, Canada and Australia would all gladly increase their trade with their traditional partners if we can stop our petty squabbling. As nations of equals there is far more to be achieved than as nations of dividers and regional destruction can at last become regional creation. Let us be creative and magnanimous for our very own development is at stake and that of the greater humanity. An economic miracle can unfold, or we can plod along at our Hindu rate of growth.

Dow changes

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File:DJIA historical graph to jan09 (log).svg
There is a change in the 30 components of Dow Jones Industrial index as Bank of America, Hewitt Packard and Alcoa come off and Goldman, Nike and Visa are the new blue chips crowned in all their new glory. It is a change that represents our time and how we live. Alcoa the mighty producer of aluminum was always the first to report and represented the coming of age of the American Industrial power, earlier in the last century. From Carnegie’s huge new furnaces that first introduced the world to mass produced steel at an economical rate, that gave rise to the modern vertical city; to the likes of Alcoa that showed that human ingenuity can convert earth’s abundant resources for the use and upliftment of the masses, America was in ascendance and by the end of the second world war; was an industrial power house producing more that 50% of the world’s output of steel, oil, aluminum and other goods. We say goodbye to an era of industrial production and the age of the greatest generation that built it, which changed the way we live forever.
Goldman and Bank of America were on the two sides of the last crisis. BoFA had made a huge bet by acquiring Countrywide Financial at the peak of the mortgage boom, looking at its huge profits and growing revenues. Goldman however correctly analyzed that this was a house of cards; that would soon come tumbling down and bet heavily against the boom to continue foreve,r and may have even been the bad wolf who helped blow it down. There are always two sides to a trade and BoFA with its long history suddenly found itself at the wrong end of the calculation and lost. Greed and wealth know no limits and the big financial institutions continue to grow, and without the constraints of equality and a sense of fairness; will continue to increase the gap between the top 1% and the bottom 80%. The poor home owner got no respite, and billions went to feather penthouses of the billionaires; who did not really need it. The working families will continue to strive to carry the burden of over inflated houses from the bubble for their life; and the Goldman’s will make their storied bets on their ability to do so, in interest rate swaps and derivatives and instruments so complex, that a sane man would be hard put to understand the jargon. Suffice it to say the Goldman will continue to make huge bets for and against its customer base for the benefit of itself and its millionaire’s club. Welcome the latest member to this exclusive club as it has brought panache and refinement to this august institution. I am sad to say that in this case us poor piggys have lost the American dream, and the big bad wolf has been crowned a prince of the castle.
The replacement of Alcoa by Nike is a true changing of the guard. While Alcoa invested heavily in America and heavy industry and remains an industrial power house till this day; in the case of Nike it is the new globalization, and innovation that made it a leader. They have harnessed all the modern forces of production worldwide, and become a leader in their field. Their advertisements with the simple swoosh; have been iconic and with the birth of a super star in basketball Nike Air and Michael Jordan, rose to new heights. I remember seeing the huge modern factories in China; where the shoes were rolled out to the millions. The best brains designed the footwear in America and then developed the best assembly line processes invented by Henry Ford and refined it, into the modern consumer goods built by cheap labor, flooding the coastal cities of emergent China. Super power America brought the latest technology and methods of production; to an old and communist China, and our world changed for the better. Inner city kids killed each other for the expensive designs and the hype from the modern advertising machines. After all America does spend more on advertising than on education and many other human services. For inner city kids struggling without role models; and with the breakdown in their education system and society at large, the high top air from Nike was the ultimate status symbol and Jordan was a star, who they could all strive to be.
The saddest perhaps is the turning away of the company that started in the iconic garage and which later grew, into the new world known today as Silicon Valley. This was the ultimate representation of the pioneering spirit and the innovation that America has represented to the world. Here two young kids got together and started an entrepreneurship that truly revolutionized the world at large like nothing before them. The information age was transformed forever by their tinkering around; and the modern age that we take for granted, would not have been possible today without their efforts. With the demise of the personal computer they are off the prestigious list; but what a ride it was and how many modern marvels have come about, because of this one single company. We owe them a great debt for while the giant corporations plodded on in their set ways; it was HP that opened up the West into a new gold rush and drew the best and the brightest, from around the globe to become pioneers in new fields. Here the wildest ideas were tried out and venture capitalist’s funded bizarre schemes and who cared if you failed, as you could always move on to the next great idea. It goes to show that opportunity and hope are still the wild horses that the cowboys of old rode, and we should never give up on change. Even today while the world may has many divisions; it is still an open range for ideas and innovation to spread like wildfire, toppling age old regimes and loosening fanatical societies, with the tiny message from the air of common men, sharing new age ideals. Change is coming and the Dow and all else are only reflecting, what our spirit has brought about, in the continued pursuit of happiness.
The rise of Visa is a new chapter in modern commerce of catering to individual customers across a large geography; probably started with a railway clerk discovering that the new railroads were ideal for distributing goods, across the vast growing lands. Sears Roebuck catalogs became the prized possession of many people; across the Wild West, as their only connection to goods being produced in the huge factories, rising in the new cities. No longer did you have to wait for a wagon trail to come by and barter and trade for goods and tools, and could select an item from a vast catalog and then just wait for it to be delivered like magic through the railroads. The only credit that existed before that was the local merchant extending it to you; as he knew where you lived, and what you did. It was a cash economy and you worked hard and saved and paid for goods or service, up front.
With the return of the greatest generation from the second world war; there were suddenly fifty million people building homes, townships, suburbs and consumption shot up as the war machines turned to become purveyors of Fridges, air conditioners, TVs, and of course the love of the open road in the automobile. Where just 50 years ago the credit card was issued only to the rich; it soon became ubiquitous, and within a few decades trillions of dollars are being spent using plastic card with a strip of information. The baby boomers exploded into an era of unprecedented wealth building and development, which has never before been witnessed on this earth. The credit simplification has allowed the growth of modern commerce, and Visa has been at the forefront of this new revolution. Today it is such an acceptable way of paying for goods and services that the growing eCommerce new world; would not have been possible, without it. Now faceless consumers buy from faceless suppliers; and a few bits exchanged over the internet, allow any consumer to live like a king. The growth of Visa and credit fuel the largest economic engines ever built; and globalization itself would not be possible, without it. I am; so I consume, and hence my credit goes up. This little plastic has truly become my visa to the whole world; to enjoy with all my senses, anything that is available, for my consumption and pay for it later. Dante’s inferno beckons us and we romp happily in Sodom and Gomorrah, as if there is no tomorrow!

Spirits and quilts

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America was founded by the spirits of its pioneers; who uprooted themselves from the old world and set out to an unknown new world, where they believed they could make a better life. Even today this pioneering spirit lives on; as we remain one of the most mobile societies, where people will give up established homes and move for a better opportunity to an unknown new town or city. This spirit was what drew me here so many decades ago; when I moved my befuddled wife and confused children into a new existence, so far from where they were born. Maybe it was the open road that I had traveled on during my college years travelling across from New York to the west and back not once but twice over 2 long summers. Memories of the highway miles speeding by as one rolled across the eastern sea plain; to the endless prairies, and the desserts and the mountains across magnificent canyons, and slept on the shores of wondrous lakes of fresh water, to the amazing cities springing up in the wilderness. I learnt its history first hand; and found that the weave of the American quilt is unique, and the pioneering ladies who made up the early quilting bees, often had this as their sole source of socializing in their new homes.
Life on my return was different; as there was a family to provide for, and a home to build. Moving into a modified log cabin with minimum facilities; in a beautiful lake town, was the first anchor among many that came later. Commuting to Manhattan that I dubbed ‘maya nagri’ in my native tongue, or the city of masterful illusions, I was just another worker bee, servicing the queen bee of commerce and wealth. It drew in people from all over the world; and its financial systems had tentacles spreading across the globe, and the big money center banks were too complex, for even an MBA to understand. The NYC metropolitan area melting pot had communities from all over; and the cuisine was as varied and the languages spoken on its subways as diverse, and the cultural events held on weekends celebrated, long lost customs and festivals of the old world. There were many I found who lived in a time warp; raising children in old values, that even the countries that they had left behind, had forgotten or consigned to the pages of history. Thank God for the American High school as its bands marched on with their rousing Sousa marches; and the sport team played the local teams in rivalry games, that the die-hard fans could rattle off stats on for decades or more. Here the melting pot really worked; and kids picked up the accents and the mannerisms of the age and locality, as they slowly emerged as Americans at the end of the experience. Dual lives were lived by the immigrants as at home there was a different life; and in school it was a homogeneous amalgamation of shared experiences, and the spirit was infused and the young minds molded into a new world feeling. There were social divisions and prejudice; and all the ills of modern social interaction, but they were tempered by a common goal and a shared knowledge, starting each morning with the pledge of allegiance to the flag of the United States starting in elementary school. Irrespective of religious beliefs or cultural backgrounds you learnt what it meant to be an American. The Greco Roman facades of some of these institutions are testament to one of the greatest education systems ever built. They are as much a part of the American quilt, as apple pie and the Star Spangled Banner.

Most of my working life was spent in the pursuit of the mighty dollar, in what we simply called the city. Everybody understood what you meant when you said you were going to the city; as there was no confusion, as nowhere else in the world did such a confluence of five boroughs exist. Over time Queens, Brooklyn, Manhattan and their neighborhoods became household names familiar like an old aunt or uncle. Broadway, Fifth Avenue, Wall Street, Columbus Circle, Central Park, garment district became a part and parcel of life, and all that it had to offer. Identities merged with neighborhoods and life’s events were woven into a tapestry of locations and seasons and relationships, tied as much to a time and space, as an event. New Jersey was our home and the extended family became the focal point, of visits and celebrations. Births, marriages, deaths, graduations, divorces, anniversaries became the gathering points to discuss life and what pain, misery, joy or happiness it provided. Children grew up went on to college; and then took up professions and settled down with families, or otherwise branched off into their own lives. The American quilt grew; with its myriad pieces stitched together, and each new member contributed their own experiences into the larger whole.
Today it has become its own diaspora as the family is dispersed from the East to the West coast with some spread out like dots on a GPS map in various states in between. Not everyone is a failure; and neither is each one a roaring success, but sufficing it to say that they are largely middle class and the heart and soul of the spirit of America. Opportunity knocks and they answer with reluctance to give up the old, but then embrace the change and move on. The oldies may question change and these newfangled ways; but even they have to concede, that the spirit is alive and well. They may regale on some occasions about their own struggles and times that they went through, and do not realize that the next generation has to live through its own struggle and make their own lives as best as they can. They are not content with just a comfortable life that our struggle can help with; but must strike out on their own and build their own, in the American way. The quilt may become frazzled and unravel at times, but then someone has to make the effort and stitch it back together again. I look outside at the manicured green lawn and the large hibiscus bush; that adorns some of the apartment entrances, in small town Arkansas. We have standardized life and it could be anywhere in this vast land; and I realize that long as I can afford the rent, I could move anywhere that has gainful employment and live the same experience. The internet connects me to the world and smart phones and new devices connect to the TV, and the world is a click away. Circumstances caused me to move here; but it could have been anywhere else, and I would still lead a similar existence. Mediocrity and homogeneity are easy to adapt to when the society is developed; and we find pleasures in small differences, that bring flavor to one’s life. A particular film, play, show, book, magazine, town, TV channel becomes the definition of our individual preferences, and who we meet and interact with depends on it. Then as needed we uproot ourselves and start all over again and having traveled many miles; often find ourselves living the same life, in a new place.
So now the spirit is rising again and as my wife says; I am showing all the symptoms, of becoming antsy again. Where will I head off to this time I am not sure, but the time is not that far off that it will happen again. I do not want to change and would love to live this way in comfort and certainty about my tomorrow, but I know God and this universe have other plans. We live in the world of the spirit; and this physical manifestation, has to learn to adapt and change. If we allow it to define us, then we lose the point of this existence. Listen to the calling of your spirit, as only then will you give up this old world, for the new. Opportunity is calling, and to seize this moment is the only hope. I am, but in the end I am not this alone. The past is gone; and the future is uncertain, so this moment is it. Live it, love it and lift your head up to the heavens and bask in the glory of the sun and let the spirits move you. Weave your quilt with care and then leave it for others to carry on the work, and your spirit will live on in its beauty.

Soft State

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India’s falling stock markets, rupee valuations and rising inflation are now spreading to South East Asia also. The Indian Stock Market is swooning and the rupee is in a free-fall; as global investors pull out cash, to invest in more developed economies; fearing the withdrawal of the U S stimulus policies. Indonesia’s market is the worst performer among the global indexes; as it has lost 8% in the last two days, and 10% since the start of July. Thailand once considered an Asian tiger is now officially in recession; with two quarters of declining GDP, as it is affected by China’s slowdown.
As a young MBA student in the US I had found little research on the Indian economy; and was delighted to find Gunnar Myrdal’s study as he had in 1974, received the Nobel Memorial Prize in Economic Sciences with Friedrich Hayek for “their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena.” After reading his work on India I came away puzzled by his description that because India is a “Soft State,” development had languished and would continue to languish, for the foreseeable future. I never really understood what it meant at that time; as I had not experienced the checks and balances and disciplined systems, developed in the western economies. All I knew was that things just worked when you switched on the light, turned on the tap, caught a plane, train or bus as they were on time; as opposed to what I had experienced back at home. Having spent countless hours in foul smelling train stations where people heaped their whole house hold into the compartments that were stuffy beyond measure in sweltering heat; the air conditioned\heated splendor of comfortable travel was pleasant, and readily accepted as the new normal.
It was not till many decades later during the current reign of Sonia’s congress and Dr. Manmohan Singh’s second term that the meaning of the soft state has become stark and clear. It is a state that cannot take decisions and act to protect its own institutions. Truth needs to be armed and given the weapons to defend itself. It should not be a timid whisper spoken apologetically from the ramparts of the red fort; but thundered and enforced by the legislative and judicial bodies. The third rail of the administration its IAS and PCS cadre; should be held to higher standards, and allowed to do their job. Labor reform, land reform, equal justice for all communities, education reform, and infrastructure development should be the focus and not an afterthought of political gains. The pandering to selective vote banks; ensures that power is maintained, at a cost to the growth of the economy and the general good suffers, and morale and commitment of good hard working honest men is looked down upon. To be successful is not looked up to or emulated; as it is understood to mean that one is either corrupt, politically connected or at worse a thug and a cheat.
I read recently the recommendations of a leading body “Looking ahead,” the BBVA team wrote, “bolder structural reforms, including greater fuel price liberalization, land acquisition reforms, and higher foreign investment limits in insurance, pension management and the pharmaceuticals industry are crucial to regain investor confidence and shore up the rupee.” I almost laughed to myself remembering the soft state argument; I had read so many years ago, and wondered who could possibly implement a fraction of the medicine that is being recommended. I am not saying that there are not brilliant and dedicated leaders in India, as otherwise the society would fall apart, I am just saying that the power is in the wrong hands. The state has gone into the hands of leaders in India and Thailand for example who have accumulated mountains of rice in their Government storage, while the poor starve outside. The political economy of the state has corroded to the point, where common sense and law are byproducts and goals are set for the wrong outcomes. The state gathers economic power into its institutions; and disbars its own citizens from taking the right economic actions, to better themselves and pursue their happiness.
The road ahead is murky and fraught with danger as continued fiscal deficits and unfinished projects and unproductive state enterprises will continue to eat away the countries valuable reserves. There is no bold leader here who can persuade the legislative body and administration into taking the right action. We deserve the leaders we appoint in a democracy, as the public is neither gullible nor foolish. They have just become used to living in a soft state; and accept the latest scandal and shenanigans with a shrug of their shoulders, as this is how life has always been. There will be no Arab Spring or revolution here, as the people are too preoccupied with the price of onions and finding a decent place to live. They do however expect miracles to transform their life; as that of course is the essence of the soft state, where expectations run high and actions run low. It is a beautiful but poignant tale like the full moon rising tonight; which reflects the brilliance of the sun, but has no power on its own.

Wise fool

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All our life we are advised to save and put away for a rainy day; our retirement and sunset years, and the fool and the wise man, make their own interpretation of how to go about it. There are those of us who take up this goal seriously; and make task lists, and set goals, and work hard at achieving milestones, which will make us more secure. We work diligently all our lives; and if lucky we achieve a level of prosperity, that allows us to enjoy life, when we are mature and in greater needs of the comforts that a geriatric population needs. There are others who fitter away fortunes; on the latest craze, and consume as if there is no tomorrow, and have no goals except for pandering to their latest whims. Easy come and easy go; seems to be their motto, as they live in an age of abundance and feel that there are inexhaustible resources available, and the more they consume, the more will be created, to ensure that they can continue to do so.
For the first time in the history of humans we have the technology and industry available to feed, house, educate, protect and socially connect billions. Malthus would be amazed that such a vast population can exist as all his theories pointed to the earth’s resources drying up, in the case of such an assault for our species. We have standardized the basics; and created the means to productively provide vast quantities of goods and services, to allow us to continue to prosper. From the landless pheasant with his cell phone checking the market price of his\her produce; to the engineer who is writing the latest program to support the technology, we can rest assured that things will only get better. This is the information age and data is now counted in trillions of bytes; and we produce more each year than all our ancestors did, for all our evolution. We continue to live a modern life with brains that haven’t significantly evolved; since the first humanoids walked upright, and started to use tools and fire. We have transferred these tasks to microprocessors and machines and our tools are getting more sophisticated each day; allowing us to use our limited brain capacity, for greater good.
This journey is just starting and as we are using up the earth and its resources; we are now looking outward and find that there is a whole universe out there, just waiting for us, to evolve and move into it. If we harness a fraction of our sun’s energy; we can have more than enough for our needs for millenniums, so what more can we possibly do with the billions of other suns out there? By just using the Sun’s gravity as a slingshot (as an example) we could travel to distant stars and their planets and continue on to infinity. But I digress as the passage is meant to be about personal choices and savings, and how to live a better balance in our life. The wise man husbands his sexual energy to be more creative and achieve more in life; while the fool squanders it away on the first available opportunity, to satisfy his carnal needs. The one I call truly wise is the one who knows both good and evil; and then evaluates them at each step, and picks the right path.
The sage of Omaha looks for companies who have built moats around them; and will continue to reward their investors even if a fool takes over the helm, as he knows in his wisdom, that surely the day will come when a fool will run them. The US corporations remain his first choice as he feels that they will continue to outperform gold, bonds and other investment choices out there. So to discipline ourselves and invest in low cost mutual funds or to build portfolios with dividend reinvestment plans; with a large fraction of our current income, seems to be the only way to go. He has made many millionaires among his faithful and imitators, and we can follow the same path. So we can deprive ourselves today by not taking that extravagant vacation or buying that must have luxury, and live a happier life tomorrow. Luxury resorts that cater to every single whim imaginable; will continue to prosper, but we will leave the money to our descendants to enjoy them, after we die.
The choices are not stark or bleak as life’s journey will continue either way. We just need to make the choice, based on our own individual disposition and character. Circumstances will make us successful or failures; but a clearly laid out plan, gives us more chances for success. So indulge a little; and do not let guilt or frustration overtake you, on the journey. Enjoy what life offers up at every corner; and then make a choice, and move to do what is best for the long run. Live a little and look around you and enjoy what you have, for this opportunity is here today only. Do not obsess over the future; as the present is far more important. It is not the wise answers that we spout out to all around us, but the questions we internalize that are far more important. Wisdom is not shown by what we acquire; but what we examine, and shed. The choices are not always clear; as modern life increasingly offers multiple paths to the same goal, but we still have to choose wisely. As there is no one path; pick one and then run on it; enjoying the milestones that you achieve along the way, as that is the only way that you will reach you goals. Let the buffoons make the noises and become the idiot who is not normal, as the wise fool is one who sees what others miss. I would rather let truth and wisdom; write my history, than be counted among the current wave, of so called wise men.

Refine we must

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Driving down the New Jersey Turnpike for many decades drivers would smell the foul smell; and see the lights of the giant refineries, and wondered why on earth would someone name it the garden state. Then the refinery lights went down and slowly the production moved to the gulf states as it became more expensive to move oil stocks up to feed them in the North East. As the lights went out it seemed a portent sign of the decline of America and its petroleum industry and the oil majors sought profits and capacity outside the United States. Europe with its North Sea oil, the Middle East with its huge capacity of cheap oil and Asia with its burgeoning demand became the standard bearers for new refining capacity additions. A death knoll on American refineries; and the general demise of its petro chemical industry, was being called by talking heads on major TV channels. They saw only a continued downward spiral; as costs remained high, and capacity utilization suffered. Even today the North East continues to import a major part of its consumption from abroad.
Little known to them; there were still some ingenious folks around the gulf coast; who were ready to take the risks, to turn things around. Their efforts paid off around two years ago, as the major refiner’s added capacity at an unprecedented scale to fulfill growing American demand and also to add surplus capacity for exports. “All these companies are expanding their export terminals—Valero, Shell, Marathon Petroleum, all of them,” said Fadel Gheit, senior energy analyst at Oppenheimer. “Any companies with refining assets on the Gulf Coast are expanding their export terminals. …The profitability is not that clear, but the trend is very clear.” From being an importer just three years ago; today the US has become the largest exporter of refined petroleum products led by Diesel, airplane fuel and gasoline. The death of the US industrial capacity was prematurely announced it seems; and now it is well on its way from not only being the bread basket of the world, but also the refiner for the world. The petroleum hydrocracking industry is exploding it seems; and it is driven by cheap gas and shale oil, and at the current rate it will add substantially to the rate of GDP growth in the US. Trade deficits as a result will be driven down; and Europe with its higher cost of gas and petroleum products from the previous Russian republics, will continue to suffer.
President Carter had warned decades ago during the fuel crisis; that the US needs to become much more energy efficient, if it is to survive as a leader in economic development. It has taken decades for the conservation efforts to pay off and with President Obama’s declaration of still higher fuel standards for the auto industry; demand in the US will continue to fall over the next decades, as old cars are retired and replaced with far more fuel efficient vehicles. At the same time the US is finally looking seriously at renewals; and wind, solar, nuclear, ethanol, biomass and anything else that can be technically possible, is being explored and developed. Venture capital and investments in developing the fuel of the future continue, from the risk takers and entrepreneurs. The greening of America will have long term repercussions for the rest of the world; as more efficient cars, trucks, trains, planes, houses, appliances, buildings and cities develop. Warren Buffet is buying up solar plants; as if they were going out of style, and as I fly across the US I see more wind farms cropping up. After decades of decline new nuclear plants have been cleared for development and will come online to support the growing electricity needs of this vast land.
The national debt is an embarrassment to some; as we owe trillions to the Japanese and Chinese and anyone else, who wants the safe haven of US treasuries. In fact those folks are wise, as they are investing in the greatest economic engine known to man. What counts is that America continues to grow its economy, invests in new research and development and converts it into new technical products and industrial production continues to grow its GDP; all else is just rustling of paper representing doomsday scenarios. Talking heads will come and go; but it is the ingenuity of the people and the will to pursue the next big thing, that will make or break us. Today forward thinking people are placing risky bets on refinery expansions; and tomorrow the lights may go down on these ventures, leaving idle capacity and major losses. Yet I thank these enterprising folks; as at least they have a vision to be the best and largest in the world, and are leading us to a brighter and more efficient tomorrow.

Pendulum swings

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File:Using Kater pendulum in India.png
The pendulum of time swings heavily from bust to boom and back again, and I see my fortunes rise and fall with it. The last financial crisis was an outcome of unfettered greed; as everyone participated in a rising housing market, and the dream of ever bigger McMansions was a seemingly free for all. Banks lent without collateral; or verifying the ability of the borrowers, and brokers sold houses and mortgages to families who could not ever repay the loans. Politicians proclaimed the American dream of home ownership was finally here, and the rating agencies classified AAA ratings; with eyes closed, and fees in their banks. Everyone seemed to run out of money at the same time; and the cycle came crashing down like a house of cards, taking some big banks and a lot of pensions down the drain, with it.
Now we are at the other end with a seemingly inexhaustible flow of money; and corporations and big banks sit on trillions at low interest rates, with no borrowers in sight. Once bitten twice shy people sit on cash; as markets give all the signals of a bull run, that seems to push unknown companies into stardom, and make billionaires out of young people with innovative ideas. My life savings have been whip sawed so many times; that I no longer know what is a rational, or an irrational exuberance. My future seems closer to flipping burgers; than flipping houses, as I eye my sorry life time savings, and wonder how did I let it all come to this. The haves have it and all the others are just grist for the mill; as I taste the sawdust from their plunder, of our ecosystem, and decide to try to drown my sorrows yet again.
Sufficiently fortified I put my toes in the water to test the temperature; and watch in delight as Face Book soars, and Vale looks as solid as the Brazilian iron ore it produces. A few batted run does not win the game, but the inning is suddenly looking exciting again. CVS has a perfect 10 rating for a must buy, and United Health is fast catching up with a 9.8 rating. Happy days are here again; and we are off to the races, as every filly now looks like a winner, and the more adventurous are trading options and more advanced tools that I know nothing about. The pundits talk about puts and straddles, and the new vocabulary makes my head spin. Should I buy gold or silver; as copper soars, or will wheat futures be the thing, or do we short rice with the huge reserves in India and Thailand, that they cannot move. The world is suddenly there for me to buy and sell; but there is no capital here, and I watch on the sidelines as fortunes are made and squandered on the latest Tesla, American cup Yachts, luxury baubles and private jets. Everyday low prices attract the consumers; but the multiheaded hydra of inflation, is slowly creeping up unnoticed as easy money flows.
Abundance seems cheap only to the fools; as I know we all will have to pay a price eventually, for all we want to consume. Rising standards of living will push our capacity to produce; and deliver us into a tail spin, or an ever increasing circle of demand that cannot be met. Will the billions rise to grab their fair share from our mouths; or will we continue to spit out the seeds of contempt, at their wastrel lifestyles. They are not productive; and have no desire to produce, so they will continue to wallow in their well-deserved misery, we say. We have gone to school, worked hard, become ever more productive; at a high cost to our families and friends, and deserve all that we have earned. We deserve better and so we set our sights on that next status symbol, just as if it were our birthright, while others are left in our dust. Social re-engineering schemes leave us cold, political efforts at a more equal state are marked as shenanigans of the ultra-left, and when I try to enter your country club you offer me a bus boy’s job below minimum wage, or leave me to play tennis with your bored wives, as an afternoons entertainment.
The pendulum swings again and now I see that it is the poor who are hanging on to it desperately. They jockey for better positions and opportunities. They study and work hard and make sure their progeny is able to make its way higher, in this new world. The shackles of ignorance will be undone; as MIT courses and scientific knowledge, will flow freely to anyone on the web. Diligence and effort will make them equal; to the one with the privilege to attend an Ivy League, or play in the fields of Eaton or Harrow. Micro loans and the NGOs will bring much needed programs and capital flows, to the lowest strata. Ingenuity and opportunity will no longer be the realm of the few; and each brave new soul will blossom in a new world, with his or her own achievements. The have nots will not be denied; and they will rise on the sheer force of the need for betterment, hope and the pursuit of happiness, which is a fundamental right. We only have to get out of the way and let the pendulum of human endeavor take its course. Time will wait for none of us and we better start reshaping our thinking and our efforts; as in helping them, we will only end up helping ourselves.