Archive for the ‘Other topics’ Category
India – a poor man’s America?
Apart from the fact that India is pretty poor, it has a lot of similarities with USA. Here are 12 of them.
1. Both economies are run by their domestic consumers. In contrast, the economies of China, Japan, Germany and East Asia are powered by overseas customers (through exports).
2. Both economies are heavily dependent on services, particularly information, entertainment, education & knowledge related. In contrast, China, Germany and Japan are dependent on manufacturing.
3. Both countries import far more than export. In contrast, Japan, Germany and China have reverse.
When will India and China overtake US in GDP (nominal terms)?
Here are some charts from Goldman Sachs research. China is expected to overtake US around 2035 and India is expected to overtake US in 2040 and then it will be the race between the two Asian giants.
iPad: Apple’s Tablet has finally arrived
People in tech were anticipating this device for a long time. In Microsoft we had plenty of informal watercooler discussions on this gadget, and the past year the media has been running plenty of rumours. Finally here is the much awaited device, announced by Steve Jobs yesterday. For most of the jouranlists it was underwhelming and while it is a great device it is not yet a complete replacement for you laptop.
Gross Domestic Product per unit area
Gross Domestic Product (GDP) is a very important measure in macroeconomics that measures the total value a nation (or a region) produces. It is the fundamental unit through which most measurements of wealthiness, growth and economic importance are measured. Higher the value of GDP, richer the country is.
However, in computing the GDP the area of the region is never taken into account. Though a 1999 paper by John Gallup and Jeffrey Sachs introduce the concept of GDP density (Per-capita income * population density), they didn’t elaborate it and use it to understand the economies. Area Intensive measure could show some insight into an economy – whether the value produced by an economy is people centric or whether it is resource centric. For a country like Saudi Arabia (sitting on world’s largest oil reserves) almost all value is produced from the land, while for a country like Singapore almost all value is the people. GDP’s area intensity can be a useful measure for policymakers and analysts to understand the nature of an economy. There are some interesting insights that this measure can show.
Here is the GDP per sq.mile. The extremes are Russia and Singapore, with Singapore producing 2500 times more value per sq. mile. Russia and Brazil as the chart shows are primarily land centric in GDP value additon, while Germany, UK and Japan are highly people centric. This means the fortunes of Russia and Brazil would swing hard with commodity and agricultural prices and these economies will be highly impacted. Western Europe and Japan on the other hand will remain stable with commodity prices, but will see their fortunes impacted by labor demographics and productivity. As labor force ages and diminishes, economies with more people centricness would face major upheavals.
The three major economies of tomorrow – US, China and India are very close to each other and in the middle of pack. They will partly be impacted by commodity price change and partly from demographic changes, but would be on far better footing due to the balance.
| Area (sq. mi) | GDP_PPP ($ million) | GDP in $million per sq.mi | |
| Russia | 6,601,668 | 2,260,907 | 0.342475114 |
| Brazil | 3,287,612 | 1,981,207 | 0.602627987 |
| China | 3,705,407 | 7,916,429 | 2.136453296 |
| India | 1,269,219 | 3,288,345 | 2.590841297 |
| USA | 3,717,813 | 14,264,600 | 3.836825575 |
| Germany | 137,882 | 2,910,490 | 21.10855659 |
| UK | 93,800 | 2,230,549 | 23.77984009 |
| Japan | 145,920 | 4,354,368 | 29.84078947 |
| Singapore | 272 | 238,755 | 877.7757353 |
Interestingly this measure also indicates India is not as poor as other statistics show. Unlike US or China, it doesn’t have enough area to increase food production, the land to build dams, industries and infrastructure, and the mineral and energy resources to spur the industrial revolution. Given the lesser area, it means India has to emulate Western Europe and Japan in building more of a people centric economy rather than emulating just China and USA.
Business models and Entrepreneurs
Wonder 1:
What is the difference between startup entrepreneurs and non-entrepreneurs? Is it that one of them has a great notion about business strategy while the other doesn’t? No. In fact, both of them don’t have a friggin clue about business models. The difference is one of them takes the forward step with a mix of guts, greed, passion and appetite for risk. The other doesn’t.
Wonder 2:
Why do all those strategy and business professors, with apparently lots of business ideas, don’t make a dime making something, while Steve Jobs or Larry Page who don’t write about strategy still make billions? The difference is the profs are waiting for a perfect business idea that satisfies all their models, while an entrepreneur lifts up his finger and just does it. The people who talk about strategy more often than not have little clue of actually building a business. They can talk & analyze post-facto, but cannot predict the success/failure before it actually happens.
Fix up the US healthcare
While me might all argue about why US healthcare is broken and how to fix it, I guess the fact of the matter is clear – US healthcare is broken. In fact it is ridiculously broken. There are plenty of research works out there with generous stats. In almost every health stat, US looks extremely poor.
- US healthcare spending/GDP is the second highest in the world (next to Marshall islands)
- US spending for healthcare of $6102/percapita is almost double than most other OECD countries – $3165 in Canada and $3043 in Germany and $1149 in Korea – highest in the world
Funny video on economics principles
70% of Small investors turned bearish – Indication of bottom?
70% of small investors are bearish. This could mean that the temporary bottom is getting closer. While I still believe that the long bottom is much lower, maybe even below 5000 for Dow, we might be due for a bear rally based on various indicators.
Image source:http://www.ritholtz.com/blog/wp-content/uploads/2009/03/aaii-bears.png
Globe mail article on this Retail Investors say “Run”
Barron says this might indicate a bottom:
Also see:
http://latimesblogs.latimes.com/money_co/2009/03/panic-equals-op.html
Ford – A relative bright spot in Detroit
Ford is substantially transforming its company and only major car company not asking its government for support (even Toyota is asking Japanese government). To be sure, it is still has a long way to go, but atleast they are going in the right path.
Here is a relevant Forbes article on this:
Ford has put its two Detroit rivals on the spot. Chrysler and General Motors are already on the hook to the U.S. government for some $18 billion between them, and pleaded for more last month.
In return, they’re supposed to be striking deals to reduce their liabilities with stakeholders – unions, dealers and lenders. But Ford (F, Fortune 500), which hasn’t tapped Washington for aid, is beating them to it.
Here is a Wall Street Journal interview with its CEO:
Field report – Future of India and commodities
In January, I was visiting a few villages in India partly to understand how global markets are affecting them. After spending a week in Europe and a few weeks Indian cities, the villages marked a refreshing contrast. As I walked in the fields, I saw that the villagers were happy, gave me free juicy sugarcanes and they were more upbeat about economy that anybody else. As we will see, if India were to consume as much oil per-capita as a relatively poorer Eastern European nation like Slovenia, it alone needs 30 million barrels/day (mbpd) more (40% of world consumption) apart from another 35 mbpd from China. If they both want to consume as much as US, India needs about 60 million addition barrels apart from 70 mbpd for China (current world production of the order of 85 mbpd).
These villages might never get to the economic level of an average American or European countryside, their per-capita income might never get closer to that of an average American, but the changes going on in these nameless places will have a profound impact on world’s commodity, tech and consumer markets. And this could change the wage-commodity price relationship substantially.
Auto Sales screwed up everywhere
A slew of bad news is hitting the world auto markets. Three of the biggest markets – Japan, Europe and USA are simultaneously hit with problems.
Source: BusinessWeek
‘Slumdog Millionaire’ – A Stimulus package for India?
India started out deriding slumdog millionaire “poverty tourism”, but now has completely embraced. While 8 oscars is surely a big boost, it is the 2 Oscars given to A.R. Rahman that holds very special for most Indians. While it maybe just a movie, it might actually set off an interesting chain reaction.
It could help spread globalization and bring India more to the global markets. And it can open up newer products and newer markets to be created, and that could partly help economic revival. The story of 300 million middle class and 500 million other aspirants for middle class, all of whom barely tapped by global corporations, is not going to be lost even if S&P cuts Indian bonds to Junk tomorrow. Indian growth story is for there to stay, even if going with lesser hype and more reality. Slumdog is really the symbol of it. It shows India’s realities, but still manages to capitvate the global audience. Indians have no real reason to be embarrassed with the realities – it just happens for any growing country.
Funny Math Video
Who said recessions must be gloomy. Enjoy the fun with the recession math:
World’s best companies – Fortune list
Funny video on Optimism
This video is awesome. How many times we take modern things for granted? The credit crisis is partly led by customers who felt entitled to various things – new homes, biggest Plastma TVs, shiny cars… all on credit.
My 2020 Wishlist
1. Economical solar power (less than $0.05/kWh)
2. Economical water desalination (less than $0.001/gallon)
3. 100% global literacy
4. Democracy and Law & Order returning to Sub-saharan Africa
5. Poorest countries of developing world getting within a factor of ½ or more of developed world’s per-capita income (around $40K/yr)
6. Significant protection of coral reserves & tropical forests and help rebuild the damage to nature
7. Reversal of global warming using the cheap energy from #1
8. Eradication of most preventable, communicable diseases (including Polio, Malaria, Cholera, Tuberculosis and Typhoid)
9. Programmable homes, enabled by Nanomechanics, to enable changing in color, structure and other physical properties on demand, and making homes extremely cheap, mass producible and still satisfy consumer choices
10. Foldable, collapsible cars that can completely compact on demand (you can park the car in the closet) and give options to hold from 1 to 10 passengers, with adjustable sizes, and passing all the crash tests.
Header Image from: http://www.flickr.com/photos/66164549@N00/2455160742/
H1b and Innovation
Here is an interesting paper on H1b and the contribution to innovation.
http://www.hbs.edu/research/pdf/09-005.pdf
It’s a pretty long paper and some parts of it are too technical. So, I have reorganized into two main themes and summarized the contents below.
Short story: Max Claus goes to New York
I have always wanted to do fiction, but never got around to complete my dreams. Except for a small science fiction that wrote in the college, I have never finished any of my fiction works. I have three novels in various stages but got into writers block every time. This time, I converted an unpublished novel into a short story and I was particular to release it today. Since it was converted in a hurry, I didnt do a lot of proofreading. If you like or hate the story, do send me a mail.
Blog will be refreshed back from Jan 1
Sorry for keeping the blog stale the last 2 weeks. I was traveling around Europe and India and then fell sick. I will be in hospital the next couple of days and hoping to get normal shortly. I will then fill up posts for the last 2 weeks.
Happy Holidays!
Regards,
Balaji Viswanathan
Brutal carnage in Mumbai: Where do we go from here?
The carnage in Mumbai is still going, 48 hours after the crisis started on a Black Wednesday. Terrorists have been mostly neutralized except for the Taj Mahal hotel, where one suspected terrorist seems to be holing out still. In size and daringness this is comparable to only September 11 – when a group of hijackers synchronized their attack to destabilize the commercial capital of the US. 9 different locations where attacked killing Jews, Europeans and scores of Indians. Once, the crisis ends we have big questions ahead of us. Read the rest of this entry »
Major terror attack in Mumbai
Terrorists have yet again struck Mumbai, the financial center of India. The attack around 10:30 pm Indian standard Time, was one of the most daring things in the recent times.
India has been plagued by insurgents for the last couple of decades and is related to the global terror attacks emanating from Islamic insurgency in Afghanistan and Pakistan. The attacks seems to have been highly coordinated and aims to scare away away the tourists and other foreign visitors from the Indian financial capital. The information available currently is pretty sketchy and a detailed report will be made in this blog soon. One only hopes that International community will collaborate stronger with India in rooting out this global terror mania.
Image source: Guardian
World moving towards Mediocrity?
There is a possibility that Citi might be broken up and other financial firms chewing portions of it. They ran out of options after the Wachovia debacle and world’s one of the most oldest and globalized bank might meet its end. Sad 
. I think this year would mark one of the greatest points in world history. Never before were so many major corporations were close to extinctions in this way. Not during Great Depression. Not during Japanese lost-decade. Not during Asian financial crisis. It is not the end of the world, but depressing and the fact that not many great leaders are arising in the world. Its though we are leading into a vacuum lead by a lambs. In the 30s and 40s there were so many great political leaders – Churchill, Gandhi, Roosevelt, etc who could lead us the vision and hope, when world faced dire situation. Does anybody, in any walk of life command that much respect?
This is an article that I wrote a few years ago and I think it makes sense once again.
And the Winner is – Barack Obama
Barack Obama has won a landslide. I just watched McCain’s speech and it was awesome. He was brilliant, moving and gracious. In spite of all the acrimony over the last few months of campaign it was great of him to concede so early and so gracefully. I think this is the greatest thing about American democracy. It was sad to see him going for his last race, and now he has no chance of competing for an office he was very close to achieving. On the other hand, Obama’s coming will also be a great thing, atleast for international relations. Except for a few allies like India and Israel, a lot of rest of the world grew to disliking this administration and Europeans particularly will look forward to the change. And they are celebrating big already. I believe that will move overseas markets enormously. Nikkei is going up now as
