Just A Thought

Does it ever bother you that your dreams and aspirations are truely kingsize but you are limited by circumstance? How frustrating that could be? Imagine that and then add to it the fact that very few would actually understand your frustration.

What if you were working really hard and your work had been appreciated and hence you are where you are but what if in the process your bosses have started taking you for granted and though you have now enetered into a different level of compensation and perks you feel absolutly frustrated professionally? A neo commercial slave if I may say so.

What would you do if you were in a position such as this and am sure we all come across such a situation every once in a while? Would you have the guts to call it quits?? Though it is very brave to say that am not going to tollerate any shit and will just give up, in reality would you be able to do so?

Well after loads of thinking and introspection, I am convinced that if ever I were faced with such a situation I will definetly quit, no two ways about it. However, given my responsibilities with my family etc I will first secure another worthy position before doing so.

Well by now you must be wondering why this negative line of thought when I have just moved back to India and landed what many would call such a plumb assignment. The answer is simple in the recent past I did come to a situation which was similar but thankfully I could talk my way through it and avoid any drastic measures.

Hope the situation stays the same going forward!!!

Cheers

Another step towards energy mitigation

Tata Motors is taking giant strides and making history for itself. First the Landrover-Jaguar deal, then the world’s cheapest car and now it is also set to introduce the car that runs on air, compressed air to be specific.

With fuel prices touching nearly $150 per barrel, it is about time we heard some breakthrough !
India’s largest automaker Tata Motors is set to start producing the world’s first commercial air-powered vehicle. The Air Car, developed by ex-Formula One engineer Guy Nègre for Luxembourg-based MDI, uses compressed air, as opposed to the gas-and-oxygen explosions of internal-combustion models, to push its engine’s pistons. Some 6000 zero-emissions Air Cars are scheduled to hit Indian streets in August of 2008.

The Air Car, called the MiniCAT could cost around Rs. 3,50,000 ($ 8177) in India and would have a range of around 300 km between refuels.

The cost of a refill would be about Rs. 85 ($ 2). Tata motors also plans to launch the world’s cheapest car, Tata Nano priced famously at One lakh rupees by October.
The MiniCAT which is a simple, light urban car, with a tubular chassis that is glued not welded and a body of fiberglass powered by compressed air. Microcontrollers are used in every device in the car, so one tiny radio transmitter sends instructions to the lights, indicators etc.
There are no keys - just an access card which can be read by the car from your pocket.

According to the designers, it costs less than 50 rupees per 100Km (about a tenth that of a petrol car). Its mileage is about double that of the most advanced electric car (200 to 300 km or 10 hours of driving), a factor which makes a perfect choice in cities where the 80% of motorists drive at less than 60Km. The car has a top speed of 105 kmph. Refilling the car will, once the market develops, take place at adapted petrol stations to administer compressed air. In two or three minutes, and at a cost of approximately 100 rupees, the car will be ready to go another 200-300 kilometers.

As a viable alternative, the car carries a small compressor which can be connected to the mains (220V or 380V) and refill the tank in 3-4 hours. Due to the absence of combustion and, consequently, of residues, changing the oil (1 litre of vegetable oil) is necessary only every 50,000Km.] The temperature of the clean air expelled by the exhaust pipe is between 0-15 degrees below zero, which makes it suitable for use by the internal air conditioning system with no need for gases or loss of power.

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The real reason why stock markets are crashing

M R Venkatesh

June 30, 2008
In a way it captures the irony of our times. Isn't it a bit strange that Saudi Arabia, the perceived beneficiary of the relentless oil price hike, should host a summit expressing 'concern' on the rising oil prices?This high-profile summit was held in Jeddah, Saudi Arabia, last week after crude prices more than doubled over the past twelve months, stoking inflation and hurting economies across continents, ostensibly to diagnose the problem and possibly prescribe solutions.

This meeting was a congregation of oil producing and consuming countries to discuss the biggest challenge to the world economy since the World War II. Much less provide solutions to the issue of global inflation, the summit exposed serious fault lines that exist between major players even on the fundamental issue of arriving at a consensus on what causes the problem in the first place."Given the vital importance of petroleum to modern life, the global nature of the oil markets and the far ranging social, political and economic impacts of high prices and market volatility, we all have a stake in this conversation," Ali bin Ibrahim Al-Naimi, the Saudi petroleum minister, said. "The current market conditions are in the interest of neither the producers nor the consumers, and none of us can be content with the status quo," he added.

Reiterating the arguments put forth by the Saudi minister, a summit working paper reportedly called for action to "improve transparency and regulation of financial markets through measures to capture more data on index fund activity and to examine cross exchange inter-actions in the crude market."In fact this is the predominant view of most consumer countries, including India. But in direct contrast to the concerns expressed by many players in the oil market, US Energy Secretary Samuel Bodman concluded -- even before the summit -- that ". . . there is no evidence that we can find that speculators are driving futures prices. It is clear that the financial markets have seen unprecedented movement of capital into commodities in recent years. Our view is that this capital is following the market upward, it is not leading that movement."

Importantly, Bodman went on to add: "Fundamentally tight market conditions in our view are the major driver of the dramatic price increases that we have seen over the last five years, and particularly in recent months."Crucial questions follow: if the current price is neither in the interest of the producers or consumers -- as the Saudi minister observed -- then, who is the end beneficiary of this relentless price rise? And even if we forget oil for a moment, is it not a fact that there has been a relentless price hike in virtually every commodity that is traded globally?So is there a demand-supply mismatch in all commodities across continents, as Bodman observed in the case of oil? Are China and India, with their robust growth, creating relentless pressure on the global commodities markets and thereby causing runaway inflation? Or is there something more to it than meets the eye?The impact of the Index Speculators

These questions were brilliantly, factually and logically answered by Michael Masters, managing member of Masters Capital Management, in a testimony before the United States Senate Committee recently.Emphatically stating that institutional investors (comprising corporate and government pension funds, sovereign wealth funds, university endowments and other institutional investors) -- whom he terms 'Index Speculators' -- are contributing significantly to food and energy price inflation, Masters analyses the extant global inflation phenomenon in far greater detail and from a macro-economic perspective, perhaps unmatched by anyone else on this subject in recent times.What is interesting in Masters' testimony is that he zeroes in on the crux of the issue straight away. Pointing out to the fact that never before have "investment majors had considered seriously investing in commodities futures markets as viable," Masters points out to the recent yet tectonic shift in the investment strategies of these players.

Correlating to the increase in the investment allocation to commodities index from $13 billion in 2003 to about $260 billion in March 2008, Masters points out to the resultant price increase of 25 commodities by an average of 183 per cent in this period.Further, rubbishing the view that relentless consumption in China was the cause for the demand-supply mismatch that had led to the price increase, Masters points out that annual increase in Chinese demand of 920 million barrels for petroleum since 2003 till date has more or less matched by the demand by Index Speculators in the same period -- a fact that is virtually un-debated by analysts. Naturally, Masters opens up a new paradigm in attempting to link the accumulation of commodities by these Index Speculators and the relentless price increase in such commodities globally.The following Table gives out the commodity purchases by Index Speculators during the past five years:

Masters does not stop there. Taking exception to the standard reply of economists on diversion of corn to ethanol production to be the reason for the rise in the prices of corn, he points out that institutional investors have stockpiled enough to potentially fuel the entire United States' ethanol industry at full capacity for an entire year!Turning to wheat, he points out that the current wheat stockpile of Index Speculators is enough to supply every American citizen with all the bread, pasta and baked goods they can eat for the next two years!Economists ignore collective psychologyMost economists believe that price and demand are inversely related. But in real world, it need not be so. That is because economists do not take into account the impact of collective psychology, which is difficult to predict. For instance, when prices rise, more people are tempted to buy more shares of that particular company in anticipation of greater price increases. Economists rationalise the same as 'healthy speculation' which is 'vital' for the orderly functioning of the markets. When the prices of stocks move up rapidly it is termed as a 'boom.'Strangely, when the same principles are applied to commodities it is termed as inflation! As the cliche goes, why not rename inflation as steel boom or oil boom, especially when similar financial instruments and rules are at play? Naturally, in the absence of a clear understanding of the impact of collective psychology, classical solutions don't work with new investors who are insensitive to prices and continue to buy even when the prices increase. After all, the net effect of all this has been to elevate commodities normally destined for consumption into an investment category by hoarding these commodities. This explains the price spiral as demand of these commodities for investment purposes far exceeds the normal supply.What adds fat to the fire is that when prices increase, Index Speculators benefit. This tendency is in direct contrast to the normal speculator who remains price sensitive. Strangely, as prices increase, the allocation of the Index Speculators too increases as they are virtually insensitive to any increase in risks as well as prices.The following table captures the resultant increase in the prices of commodity futures prices increases between 2003 and 2008.Toxic in Jeddah, nectar in New YorkIn effect, this is the new paradigm. Classical economists, trained in traditional methods to fight inflation, are no wonder finding their measures ineffective and are flummoxed by the turn of events. This explains the accelerating rate at which commodity prices are increasing globally.And, as Masters rightly points out, there is a crucial distinction between traditional speculators and Index Speculators. While traditional speculators provide liquidity by both buying and selling futures, Index Speculators never sell. Therefore, 'they consume liquidity and provide zero benefit to the futures markets.' Thus, today Index Speculators occupy 40 per cent of the long positions, while traditional speculators and physical hedgers occupy 27 per cent and 33 per cent, respectively. This paradigm is significantly different than what was prevailing even a few years ago where only the other two players -- physical hedgers and traditional speculators -- dominated.That explains why the Saudi King is worried as his country is no longer the beneficiary of oil price rise. Neither are consuming countries. Economists, oblivious of this paradigm shift, blame everyone from China to India for this conundrum.In the process they strain every sinew to explain the demand-supply mismatch when none exists, forgetting that it is the Index Speculators who are responsible for this price rise.Economics is often held to be a trans-national discipline implying what is good economics for Americans must be good for Saudis. But times have changed. No wonder, this speculation by the new breed of Index Speculators is held to be toxic in Jeddah.How, this is nectar in New York, London and perhaps in some other financial centres too.To conclude:Rising commodity prices erodes the profits of corporates; Naturally as this fuels inflation, interest rates are hiked globally (except in the US). Interest rate hikes in turn acts as a disincentive for stock markets; and Finally, increased allocation to commodities by Index Speculators makes returns from such investments far more attractive than from stocks.Investing in stock markets it seems is passe for now. No wonder stock markets are crashing.The author is a Chennai-based chartered accountant. He can be contacted at mrv1000@rediffmail.com

Back to Aamchi Mumbai

Its been a real good weekend. Have not stepped out of the house even a bit, just spending time with my lovely wife Minal and adorable son Evaan. Reached home back from a relatively long trip to KL and then Dubai only on early Friday morning. Was too tired and did not go to work, almost slept till the evening and then started working. Could not do much and decided to leave it for Saturday. Saturday morning was just work, work and work. Finally finished the strategy presentation I was working on for this Bahrain client and on the communication strategy for the Justice Party in Malaysia.

Having got work out of the way we all had a jolly good time last nite. Minal got a bit tipsy with half a glass of black dog and her sister Jaya maxed the dumb charades session we were playing with her 'Anda Upna Upna'. We finally slept at around 2.30. Utpal stayed over and was responsible for making breakfast. I'm telling you my wife and sister-in-law are going to turn him into a seasoned cook. Lunch was an amazing Batti party. Waz amazing given the awesome rainy weather. So in short have been having a really kewl and peaceful fun filled weekend, after quite sometime though.

But what actually got me logged on today was this ongoing global debate on fuel price rise (over $ 130 now) and its impact on the Indian economy. After having held it back for so long the Indian government finally raised the prices marginally bringing about some relief to the oil companies, much to the charging of the Left who are just looking for a credible excuse to exit the UPA and cut their so called losses. One thing is sure this price rise is definitely going to increase commodity and all other prices across board. Don't ask me what this will do the inflation which is already over 8.2 per cent, what with a hardening of interest rates just around the corner.

My point being that economists have been drawing up all different scenario's based on which side of the fence they lie left, right or centre. To me the solution is not very complex. The bane of the entire issue is crippling fuel prices which has already started even adversely effecting other sectors and spoiling the wonderful growth story we have been enjoying thus far. Why not just minimize or try and completely eliminate this source from the picture. All that needs to be done is that

Step I
Oil companies need to immediately switch to LPG/CNG as a source for auto and other fuel. This can easily be done as there are huge reserves of gas that can be commercially exploited. The only thing that needs to be done is that conversion kits need to be installed across the country on a war footing

Step II
We need to start commercially exploiting other bio-fuels such palm oil and oil from the Jathropa plant. CISR has said that this can be easily done as the plant is grown very fast in arid areas which our country has in plenty. the technology has also been extensively tested on cars including the ultra refined Merc.

Step III
Along with bio-fuels we also need to start exploiting alternate sources of energy such as solar, wind and hydro electricity. We have the necessary technology and know-how we just need to step up the game.

Step IV
Our nuclear energy programme should be made into our central energy source. Why are we so focused on Uranium. The entire scientific community has openly stated that Thorium, which is available in abundance in India and is also a non-fissile source, can be effectively used. The use of this fuel will not just eliminate the need for a 123 deal with the US (something that has caused a lot of heart burn and to me an utter waste of tax-payers money), but would also reduce our energy import bill ten-fold.

Imagine the combined impact of all the above on our fuel security and the overall national economy. Imagine an Indian budget where fuel imports accounted for only 20-30 or even 10-20 per cent of the total imports. Its not impossible guys, its extremely feasible if only our great politicians / technocrats have the will and show some direction.

I just wish that there are some other souls like me who think the same way and somewhere down the line we can start collectively articulating this philosophy, igniting a positive change.

Think we have had enough of heavy stuff for the day so will log of and get back with some lighter stuff tomorrow.

Cheers

Malaysia - A paradise going sour

One of the most interesting conversations that I came about in recent times was as recent as this morning. Here I am in Kaula Lumpur bragging about the place to all my friends, telling them how wonderful it was and how green the whole place is. Believe me it is one of the greenest places I have come across and the infrastructure is really amazing. And then I meet this gentleman from Dr Ibrahim's office who apologizes to me for the pollution, stating that the place in KL where we currently are is one of the most polluted and that the infrastructure was also really bad, and I am like thinking to myself - Dude what is wrong with this guy but this is one of the most wonderful places I have been too.

Anywayz having digested that when I started talking to a host of people right down to the cab drivers on what they think about Malaysia, the government and what was going on in general the real story and the real reason for the growing discontent and dissent started coming to the fore. Malaysia once a truly great economy is slowly but steadily deteriorating and slipping back to the dark ages be it on the fronts of education, sport, economic freedom, growth, etc. Today Malaysia which at one point of time was ranked as high as 4 or 5 on the global economic freedom index today is ranked even below some of the least developed countries. The education system sucks and the process of re-distribution of wealth going completely awry has ensured that the billions of petro dollars earned is being retained by only a select few and not peculating down to the Masses nor is it being used to better infrastructure - even today there are many regions within Malaysia that still do not have basic infrastructure such as drinking water or electricity.

But the most obvious manifestation of this plight is in the media which though constitutionally being a free press is one of the most state controlled and un-impressive media that I have ever come across. I thought some of the Middle East media was backward but the media in Malaysia is way worse then them, even the Nepalese media is far more advanced.

Work apart am now planning to enjoy Malaysia a bit and go do a lot of sight seeing tomorrow or day-after when am relatively free. Will post a lot of pictures. But for now got to rush as am going to meet with a gentleman who is not only known as the true voice of democracy in Asia but one who also most definitely will be the next PM of this fascinating country - Dr Anwar Ibrahim.

Cheers

False Commitments

Definitely Boss, Will call you back in the next 15 minutes and give you a complete update.

That was at 11.00 am, now it is 12.15 pm and still no signs of an update forget getting another notification saying that the work is on and it would take slightly longer.

Why do people always make false commitments like this it is not just so irritating but also is a complete mockery of an individuals time, through his/her entire schedule out of gear.

Interestingly this has come from an agency that I know has not delivered on its promise and is now trying to buy time so that they do not have to confront me on the coverage or lack of coverage if i may say so.

Having spent so many years in Client Servicing the one thing I have learnt is never to lie or overstate/over-promise delivery. To the contrary it is even prudent and advisable to be realistic and understate a bit as then delivery is always better than expected and also permits the client to plan accordingly. So what if I may loose some business. A disgruntled Client is far more dangerous and harmful to one's image and hence its better to be honest and rather not have the client in the first place than promise him the world and then not deliver.

Anywayz enough of that work bit. The good news is that one of my best friends Sean is finally getting married and Minal, Evaan and I am all ready to go down to Chennai on 25th for his wedding. Am sure we will have a blast especially given the fact that will be meeting all my college pals after so long. Also this would be both Minal and Evaan's first trip to Chennai. We also plan to go down to my college. This would be the first time since I passed out that I will be going back to college and hence am really excited about it.

K now got to get back to work. Will write in soon.

Cheers