Archive for the ‘Uncategorized’ 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
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:
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
Funny Math Video
Who said recessions must be gloomy. Enjoy the fun with the recession math:
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
