Imbalances and how they manifest….

Jim Rogers is the biggest Agro commodities bull you’d find on the earth, for his logic is very simple – “I don’t see any supply coming in any of these commodities and the demand is ever increasing’. For instance, if there’s an increasing demand in crude, there’s more plantation of Corn and that crowds out Cotton, so the best way to play crude is play cotton or wheat. Of course, he’s taking the examples of US crops predominently.

Let’s look at this from the Indian Perspective. While all of us know that the official government inflation figures are completely meaningless and we’d not discuss them, let’s try to identify the root cause of this runaway inflation in food items (100, 200% YOY is runaway inflation in my opinion).

The root cause of this runaway inflation is the artificially maintained dollar-rupee exchange rate. Now people will find it hard to believe that this could actually lead to inflation in food prices. Let me explain this in a bit.

Assume that there’s a vast piece of land lets call it Indiland. In the Indiland, you can exchange Goods and Services for exchange of Blue Papers, which all the Indilanders do. So if anyone has to do any business with Indilander (s)he has to get these blue papers. You are the only one who are responsible for providing this blue papers to outsiders in exchange of their papers. Let’s say someone comes with a Green Paper and you decide that, in exchange for the Green Paper I am going to offer you 40 Blue Papers. This you arrive at mutual agreement, based upon what you think Green Paper is worth (though it is notional, its still okay). This is how Indilanders start trading with the outside world, whenever they get Green Paper from outside, they give it to me, I give them Blue Paper. (Let’s come back to what I do with the Green Paper Later, thats far more interesting). Now when I fixed that 1:40 Ration for Green to Blue, I had assumed that every year I’d have to issue say 40000 Blue papers for 1000 Green Papers. Move forward 10 years and the dynamics are changed completely, possibly thanks to the change in demographics and other things, consequently the supply of Green Paper now is 10000 Green Papers every year and I have still maintained that 40 Blue Papers to 1 Green Paper ratio. Let us see the consequences of this. Indilanders are still producing same amount of wheat,  vadapaavs and motors, slightly more thanks to the improved efficiency (over the period through gained knowhow) but whatever being produced is being chased now by 400000 Blue Papers instead of 40000 as before. Some of the Indilanders are smart they say – this is excellent, why should I sell to Indilanders, I might sell what I produce to someone outside and get 40 Blue Papers instead. which is like adding Fuel to the fire. In short we are coming to a point where, there’s just too much of Blue Paper that is chasing limited resources. As a consequence, this leads to what we call ‘inflation’ – The inflation always manifests in one of the the following ways – 1. Asset price inflation (the rise in ‘value’ of Real Estate/Stocks’) which we all feel great about for it gives a notion of being wealthy. 2. Commodities inflation – The raw materials that we use for producing, steel/motors/cement or even finished food products. What we are witnessing currently is the massive Commodities inflation. Now a natural question one would ask, is Government so stupid that it cannot understand this simple phenomenon. Stupid not in the least in-fact quite the opposite, the Government perfectly understands the system and yet runs it ‘cos it does it for the vested interest of the important lobbying groups.

Now, for the benefit of a million people, we are sacrificing the rest of the billion people.

The imbalances thus created if left unchecked do lead to consequences that cannot be foreseen, the consequences could be as dire as ‘civil war’.

Now let us come back to the ‘Green Papers’ that I stored with me – The common terminology for that is – “Forex Reserves”, we feel very proud for XXX Billion dollars of forex reserves. Actually there’s nothing to be proud about, you are hoarding something thats loosing value every day, so eventually all the ‘forex reserves’ will be as useless as Tendulkar’s 175. There’s another twist to this,  the guy who gave me the Green Papers initially (for he was ‘investing in indiland’) comes back to me and asks me ‘Hey I need someone to lend me Green Papers, for I am running on deficit and the only way I can finance running my business is through borrow it from someone. Why don’t you lend me the Green Papers that you are keeping with you, I will also pay you interest (in Green Papers). Of course he’s not as nice to say in these precise words.. or else you’d not lend him.. If I don’t appreciate the fact that the guy with the ‘Green Paper’ will eventually be going to go bankrupt, I am just waiting for the trouble to happen if I lend him and yes it certainly will.

The only right way for this system to work is – let there be a place where periodically (the periodicity can be as low as mlilliseconds) it is decided what one would exchange for one Green Paper, and there’s a true ‘price discovery’ of the Green Paper and Blue Paper happens. In the common terminology it is called making your ‘currency free float’. A very common argument for that is – but that’d lead to drastic consequences if people suddenly start withdrawing Green Papers from you.  Possibly yes, in the short term, but in a steady state, it will lead to true price discovery, which is decided by the productivity of your land, demand for your products and services and your demand for outsider’s product and services. Well, some would agree, thats like ‘ideal world’. Let me remind them, this ideal world worked for good 2000 years, except last few decades, when the Governments across the world are running this Grand Ponzy scheme.

Now lets assume for the arguments sake that there’s indeed such a system, and thanks to market forces taking over, the recent agreement is 20 Blue Papers for 1 Green Paper, what it leads to is something very interesting, if I observe that its indeed cheaper to obtain wheat from the Green Paper guy, I might prefer to do that, instead of just relying on what wheat is produced by the farmers in my land. This does not in anyway mean that the ‘wheat will be cheap, what is guaranteed is there’s a true price discovery, and consequently proper allocation of resources for production’

Of course, will this system not have victims – Certainly there’d be victims – the victims would be the people whose business model relied on that artificially maintained rate of 40 Blue Papers to 1 Green Paper. If they didn’t adopt to this changing dynamics, they certainly deserves to be extinct, but not someone who for no fault of his has to face the consequences (‘cos the guys who are supposed to be running the show are running it for someone else.)

Now just replace Green Paper with US dollars and Blue Paper with INR, the picture would be self evident. This is not ‘technically perfect’ but gives an idea of the imbalances that are prevalent in the current system.

Eventually, the forces of nature do ‘take over’.

Analyzing the election results..

Mr. Market always gets it right – as one of my friends Harish would say it. If you’ve to follow the election results, they are always priced in by the market.  The ‘charts’ were clearly showing a very favourable market result, the question was how much.. (note: This is not with the benefit of hindsight)

I had offered to my friends even before a single vote was cast that it’d most likely be going to be congress, with even a better mandate than last time, ofcourse however I kept asking myself where the numbers would come from? The reason I was thinking along these  lines was fairly straightforward for me – Though there was a considerable negativity about the present government then, there was not a factor that could sweep against it, and people were generally Okay with MM Singh . The arrogance of the third and fourth front was clearly a precursor to what lied ahead for them (perhaps they were not confident enough or over confident that’d work against them.) Though I still expected BJP to do substantially better than what it did in the recent elections.What came as a surprise was the result in Maharashtra – for I was inclined towards a favourable outcome for BJP-SS vs. INC-NCP. The MNS factor was much larger than  I had thought that made the results look much different than what they were.

I even told my friends the biggest suprise will come from UP and it’d either go in favour of Congress or BJP and whoever wins there is likely to make it to the poll position.

There was an easy parallel to draw between this election and the 2004 US presidents election, where everything that could conceivably go wrong against Bush was wrong and yet he managed to get elected with a record-breaking victory. The situation looked vastly similar over here for the Congress (that was one of my main thesis for predicting an easier congress win.)

My friend Harish offered me that left would be decimated in this election and he said I’d be surprised if they cross 20 in this election. Frankly, I had no idea about the politics in Kerala or WB, but he was certainly right about it.

Now lets look at the results more closely and see what ‘themes emerge’. First and the most important thing is – The national elections in India are largely Federal. Every state votes for a very localized issue and a sum total of all that happens eventually results into a national mandate. So the numbers do lie to some extent. I am not sure whether such a federal nature of election is the right choice that the voters make or if it is so, does it not make sense to look more closely at our democratic system more closely and move towards a much more Federal structure?

For the congress – First heartiest congratulations for showing the best ever performance since 1991. And most of that Credit goes to Rahul Gandhi he’s that nice-likable-can-do-nothing-wrong type of a guy and has delivered for its party and lets give the credit where it is due.Mr. MM Singh deserves his fair share of the credit for being a soft-spoken guy and bringing a credible image for the people to vote for (I’d not go ahead and call him performing in any ways.)

Lessons for BJP from this election – There’s a long list but I’d briefly go over a few very obvious. The single problem with BJP this time was – it miscalculated the elections as national elections and tried to keep projecting ‘Majboot Neta – Nirnayak Sarkar’. With the benefit of hindsight, I’d say this was a wrong strategy. Had there been a little localized efforts the results would have been notch better (though I still doubt to create any meaningful dent to congress.)

Second and it is the most important lesson – they’ve to ask themselves where’s their next level of Growth coming from? It seems like they cannot go beyond their presence in the few states.

Third – it’s much easier for a voter to shift towards Congress than other way round, that has been amply demonstrated in several elections across several states (when there’s no choice, Congress becomes a default choice) so it is of fundamental importance to make sure not to loose whatever you get. (Rajasthan and Delhi a few years ago case in point..)

Fourth – Evaluate the allies – if they are not working get rid of the baggage (and build from the ground up again and not look for different allies.) ‘cos it seems the allies that work for you eventually want to get rid of you (BJD and JDU case in point..) so you may have to evaluate the long term benefits of going alone vis-a-vis short term losses (which are not going to be big anyways)

For the regional parties – Have they lost relevance? Quite the contrary, the way they could play it is – taking a senior role in the local politics but offering a senior role to one of the national parties in national politics is important and staying away from opportunism is extremely important. You have to make a choice to go with either of the parties (or none at all) and stick to that stand forever, people don’t like jockying on different horses. They wait and wait patiently before they say enough is enough. (Ram Vilas Paswan case in point.) and the presence of regional parties in the other state is of even greater importance where one of the two national parties is clearly ahead because they keep the necessary checks.

For the next general elections though the task will be cut out for Congress, remember replicating an extraordinary performance is lot harder than doing somewhat better than last time and yet do good enough (that should be the only silver lining for the BJP.)

The task cut out for the next government is substantial (and I am of the opinion Governments can’t and generally don’t do anything useful,  but they can cause harm. With the present government the later seems an unlikely scenario in the short term atleast.) and hope they live upto it atleast 50bips to the par.

To the voters at large – I am completely at a loss to comprehend the complete apathy of the voter for the elections. Perhaps to a large extent many of them believe that whom they vote for doesn’t make a difference with the government in center. To an extent they may be right, but I’d urge everyone to vote in your local elections – the corporations and the vidhansabha because, their outcomes directly affect our day to day life (Pune Corporation and the Debris problem a case in point here.)

Finally, I’d like to conclude with an interesting thought that came to my mind and an analogy if I could call it to draw – Congress is like Microsoft – they are everywhere, anywhere you go you’ve to fight them. BJP is more like Yahoo, has got an act of screwing up when the least needed. The natural Question is  – Who is Google? BSP ( I know some of my friends would laugh at it) or they are still two guys in a garage?

and the credit goes to….

An interesting thought – Let’s for the arguments sake assume that BJP wins and comes to power and is able to bring in black money from Swiss Bank Accounts. Thirty years from now Congress will take credit for this, Saying “Just ‘cos our leaders had black money in swiss bank accounts, you could build the roads, generate electricity and educate Children”… Just as they are taking credit for nationalizing banks!!

Mr. Bhatia Why Should I Vote For You?

After having spent a few years living near Satara Road and the chaos that has been created by the proposed and horribly implemented BRT, it was clear that I’d not vote for anyone behind this. The mad rush with which the project was started suggested of sinister motives behind it. OBviously Mr. Kalmadi was out of choice for me (the fact that he is candidate of a party, I am principally against was enough for me to not vote for him.) The next choice was the BJP candidate, However I have decided to vote not for anyone going with Shivsena. If someone goes with ShivSena, they must pay the price. Naturally, the choice for me was Mr. Honest, Mr. Upright Arun Bhatia.

Now coming back to you Mr. Bhatia Though I have read your thoughts about “fighting terrorism” – They appeared naive at best to me.  Also, your plan of changing Pune with few hundred committees is beyond me, however regardless, I decided to vote for you for I thought and still think, you are one honest man and let me do my best to not just vote, but also suggest my friends to vote for you.

To take this a little further I offered a few suggestions about campaigning and send those to you. The email address that I used – campaign@arunbhatiaelect.org was “unreachable”, I retried it with same error. Based upon my previous experience dealing with eminent people, I am used to not getting replies from them. So that was the best that was expected of you. Having the email address unreachable is not just lame, its atrocious. Inspite of this, I took this issue and posted this message on your website -  To which I have not got a simple reply as yet on the website. Obviously that post has not been read or been bothered about being replied to.

So here is my question to you Mr. Arun Bhatia – If a person, whose political career rests upon maintaining proper communication channels with his prospective voters is not serious about maintaining his web presence properly. Can I trust the person with an administration of a city of 3 and a half million people?

On your website, I do not see any plan where you suggest what is the date and time on which you are going to visit a particular area. Now unlike many mainstream political party candidates (who also have other compulsions) nothing stops you or it did in the past to visit all the wards individually over last few days. I am afraid you’ve not done it to the best of my knowledge – nor there is a plan to do this. The elections are not faught sending pamphlets through newspapers and critising mainstream newspapers for banning your pamphlets. No one bans you from visiting your voters.

How many public issues in Pune have you prominently protested against in the last five years? eg. There certainly was the BRT issue, I have not heard a single word on your stand about this. So while I agree, you are one honest man, I have serious reservations about your ability as an able administrator. In view of this, I fail to reason to myself to vote for you. Can you please put forward your case beyond the usual blabberings about fighting corruption?

Etcetra…….

An excerpt of a conversation between me and one of my friend Harish.. Found it so hilarious that I thought it’d make a terrific blog entry. No offence intended (if you love Obama more than your favourite Pet or Buffet for that matter or any respectable personality, you can choose to stop here and not get offended.) Though we do not intend to offend, one might get. I think this should be a good enough statutary warning (atleast better than “Cigarette Smoking is Injurious to Health!”)

If you are still with us -

harish: who?

gabhijit: our friends

anil and mukesh

harish: chhota and mota

gabhijit: yeah

i guess their time has come!!

retest now?

Sent at 4:03 PM on Monday

harish: I mentioned this caution in my blog when Satyam and Madoff news were out

but aam public looks at bros like Gods of new Millenium

by the way, here is a good news….. BSNL has launched 3G services in our town

hope its not like their broadband

Sent at 4:08 PM on Monday

gabhijit: hey chal gotta go .. later

Sent at 5:36 PM on Monday

gabhijit: btw.. how can buffett promise best days ahead?

harish: Buffet is a failure

gabhijit: now there are no known supports for SnP and Dow……

o come on

thats a gross statement

he’s not a failure

he’s just growing old

harish: its the fact

whatever, but he is a FAILURE

gabhijit: NOO!!!!!

he

he’s created wealth for his shareholders

harish: Success is not something one achieves and then destroys. Its the “upkeeping” and maintainance that makes success SUCCESS

gabhijit: now if you hang on too long with one guy…

harish: and he has failed miserably

gabhijit: he’s not destroyed yet man

the put options he’s written will expire in 2019

and there’s a good chance that SnP will be 1400 then

of course dollar will be available for 20 Rs. thats a different story

harish: what about his buying advice when SnP was above 1000?

gabhijit: oh well..

he ’s bought the best of the breed

harish: and my bet is we will see 400-500 on SnP

gabhijit: thats not a problem

GS and GE wont go down

harish: that’s only a matter of time…

gabhijit: finally after so much of noise DOW is at a point where Bob Prechter had called it a top!!

I guess these ellioticians are overrated

harish: GS, GE, MS all will suffer

gabhijit: yes for a period

a few years may be

but not forever

I can say so about these companies at least

and IBM

not sure about others

harish: but, by then his reputation will be torn apart

gabhijit: perhaps not!

anyways gotta rush

later..

going out

harish: out? out of india?

gabhijit: no no

Sent at 5:58 PM on Monday

gabhijit: reading john maudlins commentry

he’s a very good author

harish: yes, he is good author, but, he is also chela of ur ideal Mr Buffet

John was convinced (as late as DEc last this year) that a sustainable rally will come (just like you hoped) but, read his letters today and he is in repentance hahahahaha

anyone who is optimistic about economy, is bigger than meaning of four letter lettered word, (not fu**) but, FOOL

As I’ve said UMPTEEN number of times, the only indicator of “THE bottom” will be when almost all are pessimistic

gabhijit:

i dont loose hope so easily

yeah i hv been saying umpteen number of times that the market will rally now now

but note one thing which is very important

most of the world indices are within 5% of their lows in november

and we are still healthy 20% above the nadir

doesn’t that itself tell a story?

anyways will catch u in a bit

also note

nobody is shorting

its just selling

Sent at 10:22 PM on Monday

harish: 20%? that means we are even more optimistic

gabhijit: yes

harish: means we will suffer even more

where is RR? his 1818 looks like cakewalk now

Sent at 10:26 PM on Monday

gabhijit: no clue!!

Sent at 11:01 PM on Monday

gabhijit: a big bad news is around the corner?

i mean citi going bankrupt wont even be a news let alone bad.. ditto for GM… so what can be a bad news? GE going bankrupt?

Sent at 11:02 PM on Monday

harish: obama planning a suicide? how is that?

gabhijit: I said about “BAD NEWS”

harish: blacks are ruling the world, what can be “badder” ?

gabhijit: oh come on you racist!

harish:

btw, I like obama for one reason, he’s pro-science

gabhijit: my ass is more pro – science

obama is more pro cheap publicity

harish:

gabhijit: don’t you think this conversation of ours will make a terrific blog entry?

harish: now who is racist?

yes, it can,

gabhijit: I am not a racist.. I just hate obama. I never said I hate blacks and infacat as a matter of factly I DO NOT hate blacks and as one great man has once said “Being human beings is problematic enough for me!”

harish: now its an even bigger case for a blog post

gabhijit: ya.. I am going to put this as a blog post.

I was re-reading this entire conversation and it made a lot of sense to have this as a blog post…. it just sums up our mutual thinking…….

so crisply

harish: don’t forget to mention me with my blogs list

gabhijit: yeah yeah ….

harish: btw, when r u getting engaged?

in any sense

gabhijit: is there a news thats going around like that?

harish:

feeling, that’s all

gabhijit: thats so self elating.. that I actually think that people care about spreading rumours about me!!

harish: but u r getting older, AND that too eithout co of women. That can age u fast

gabhijit: so much the better! or u r plain jealous?

Sent at 11:18 PM on Monday

harish: I just read in sciencemag that men who are away from women age earlier

gabhijit: o rite!! they are written by the same guys who were deprived of pleasant company of women

harish: or jealous ones, like me

gabhijit: perhaps!

Will this century belong to India?

When i woke up in the morning and logged in to gtalk, one of my friends spidya (aka GS) told me that Slumdog won 2 out of 2 so far @ the oscars. I offered him, may be they’d give everything to SMD Millionaire except the Best Motion Picture award. I was not so sure about my own not so RPOD. Then around 10.30am I switched on the Television to see whats happening at the 81st academy awards to find that I have switched it on just at the right time when the award for  the best motion picture was being announced. And then I was pleasantly surprised @ finding my own predictions coming true. I considered it just prudent to take this occassion to elaborate another thought and associated RPOD to offer thats been taking shape in my mind. Let me start with the RPOD first and then elaborate why I think it might just happen. So here it goes “This century might belong to India just as the 20th century belonged to the US”.

For people who know me and my position about India, this might come not just as a surprise but even a blatant claim  – and they would be left wondering what made the biggest pessimistic on India to turn  into larger than himself optimist on India?  I’d elaborate the thought process, what can go wrong and what can be done to realize the day-dream (well quite literally). First of all, before I say further, I do not think and would not want India to become SuperPower. People should read Dimitr Orlov’s articles here and here to find out what happens to the superpowers. I might even be taking the danger of suggesting an RRSesque picture of India where everything Indian is great and everything western is secondary. That is definitely not my point.

1. It might sound just as absurd to everyone to think that this century will belong to India when we are struggling with so many problems of our own – The internal security problem, the divided population largely looking inwards than looking outwards. But one must not forget that united states went through a Civil War just before the dawn of the 20th century. Perhaps it’d have been as absurd to think that the century would belong to the United States at the dawn of the twentieth century. But remember, the progress of United States started with then Industrialized economies investing heavily in the US.

2. The Global Recession is going to create new opportunities, new winners and will punish the erstwhile sinners. As it is evident now that all the major western “ism”s have met their fate, perhaps there’s a need for a new ‘ism’, which need not even be an ‘ism’ but broadly an outlook and a lifestyle that’d fit in the ensuing age of Globalization. I foresee in the future the World Population aligning itself to the best of the both schools of thought The Western thought (that analyses thing in details by breaking down into pieces) and the Eastern thought (that always looked at things as a whole than breaking them into pieces.) One of the best places to exploit this ensuing development is India, which still understands and appreciates the Eastern thought and has got a far bigger exposure to the Western thought, first Through the English thought and subsequently thanks to the Information Revolution and the Internet. Of course one must not be under the impression that being able to exploit the situation best does not mean its going to be the sole property of India, it is just that India is better positioned, whether it does or not depends a lot on its people. Before I leave this point – I must also mention the likelyhood of the emergence of new Reserve currency of the world – the Gold and India’s distinct advantage in having fifteen thousand tons of Gold.

3. One of the biggest Marketing departments of a society is its art and in the contemporary form Cinema is perhaps the best medium. An important reason why we see that the American lifestyle is so ubiquitous is thanks to its marketing department “The Hollywood”. You’d not make it to the top of the world without letting world believe that a person from an iron curtain country can be a super hero in your country without a medium as strong as this. India has got a potential medium that can serve as the marketing department of “Indian Lifestyle” – The Bollywood.  A delhi-6 jalebiwala selling Jalebi’s on the Time Square is perhaps the best fitting example of what I mean by “exporting your lifestyle”.

4. Demographics – A country is not made by the borders, the oceans or the rivers. It’s made by the people, what made America successful was the people and their attitude. In Indians that attitude is there – to welcome people, to treat them with respect – Indians were traditionally never xenophobic. It’s only during the past century or may be little more they have developed this trait (quite unfortunately). The time has come to shred that. The well known fact about the largest young population in the world being Indian etcetra can be a big advantage to India.

So far I have discussed what are the reasons why? Let me explore what challenges India faces

1. The arrogance – The Indians still live in the glorious past and are unnecessarily proud of their 5000 saal puraani sabhyata. While it is important we preserve the achievements of our previous generations, often we end up preserving their idiocyncrasies. While it may be true a great amount of knowledge was developed in this part of the human society, the claim that it is ours is incorrect. I find that attitude largely prevalent in every Indian. Our Vedas had this our Vedas had that. While there is nothing denying the knowledge and the wisdom in the ancient literatire, it is absurd nay arrogant to have a claim on that knowledge. While the Vedas were perhaps developed this part of the world, they do not belong to Indians, they belong to humanity, you are at best the janitors of that knowledge and not the owners, which puts an additional responsibility and further more humility to preserve it.

2. Investments (or lack of) – India needs to learn a lot to invest in right things. The single most important thing to invest is in education. One of the biggest problems of the current Indian society is lack of proper attention paid to the education. The definition of right education always changes in times. The right education does not get limited to providing a free and compulsory primary education to every child, but it goes way beyond that to establish itself as an education hub. One of the reasons why US became so successful in the twentieth century was that because it developed not just great universities, but all the allied systems in place to attract the best talent around the world. While there might be great universities in Europe and other parts of the world, it is far more difficult to get into those universities for a foreigner to get into. US snatched this opportunity and created a great ecosystem for technological developments. (This is in no ways a claim that no technology development happened outside the US.) The second most important thing is infrastructure – The inefficiencies that creep in as a consequence of lack of proper infrastructure (this includes social as well.) This has been a largely neglected area and a lot really a lot needs to be done.

3. Competition – Someone looking forward for the top spot cannot be ignorant about the competition and more so in the globalized world. The main competition would come from China of course which enjoys almost all the advantages that India enjoys and of course the United States – Never ever write them down. That country has shown resilliance (atleast in the past century) to come out of every difficult position time and again. To stand in front of such a solid competition is a daunting task in itself.  First, India needs to project itself as a place that welcomes talents from all parts of the world.  I’d want an American, a Korean, a German, a Kenyan and even a Pakistani to think that India is a land of opportunity and this is the place where they can come and realize their dreams. This is not so easy for the population, which still cant get rid of the caste system thats not just so deeply engraved on the society, but the psyche of its individuals. This alone can be the single largest hurdle for the Indians to be competitive, someone else might take this opportunity and move ahead and India will be left entangled in this problem of its own.

I’d like to conclude this about what I observe around – Are these the early indicators?

In the last few years I have seen things around me changing substantially (in a positive way), the generation is lot unlike their former generation, is open, confident and risk taking. The politics is changing in a big way – Omar Abdulla – whose very existence is solely a consequence of divisive politics is speaking about “development”. The leaders that put development on the agenda and deliver are elected again and again (Narendra Modi, Sheela Dixit) regardless of what the media thinks about them. Even the bollywood is finally out of cluthes of the standard “love etc.” movie themes. Emergence of people from less known places to the helm of a Sport that was dominated by Urban Rich. I can witness and experience  this welcome change. Will this change lead to a sustained, viable development that’d prove my not so RPOD? Who knows

May be it is written

(Note: some of the ideas in this essay might appear reflecting the same thoughts as those in Paul Graham’s essay about why startups Condense in America? I must admit, while I have recently read the essay, most of these thoughts I have arrived at independently myself. )

The real ‘kaala bandar’ is …

After I saw “Welcome to Sajjanpur”, I asked myself a question “Can anybody make a movie worse than this?” However, I suppose we live in times where illusions are quite short lived. Further, after my complete disillusionment from RDB, I should have thought twice about watching “Delhi-6″. Temptations are meant to fall prey for and so did I.

If one reads around – one can figure out what briefly the story line of Delhi-6 is. I’d not get into the details of that. Just posting some of my observations here.

Within first 5 minutes you are left wondering whether this is a Rakeysh Omprakash Mehra Chopra movie? It has got all the elements of being a Chopra movie – The not so happy family living in New York missing India, the over enthusiastic family members of our hero. The movie was just short of the grandson calling his grandma sexy to make it an authentic chopra movie and of course SRK was missing. In a few minutes this Chopra movie starts becoming Swades (again minus SRK, thankfully).  Then we are presented about the usual menu of Indian cinema, Hindu-Muslim, Ram and Allah. I bet both Ram and Allah themselves must be tired of them being abused in the movies by now. Oh and don’t forget the Taj. I can imagine lack of creativity on the part of a British director about depicting India in SMD millionaire, but our very own director seems to be not able to cross the self imposed limitations of story line.Did I forget a corrupt police officer leching on a lowercast woman?

Then our hero has to fall in love and can’t explain it to the heroine and if there was KBC in SMD millionaire, its Indian Idol here in the movie ( I guess this whole deal is part of movie sponsorship). Then there’s a parade of arty types actors which reminds us of ‘nukkad’ a beautiful television serial telecast a loong time back and there’s this counter trend somewhat pleasant Rehman’s music.

All of this happens on the backdrop of a mysterious ‘kaala bandar’, who has supposedly created havoc in Delhi-6. I guess originally intended as Pun on the television channels, but later on elevated as the central theme of the movie, for, the story writer realized that he didnt really have a story to tell. Subsequently through the twists and turns, the bade dilwaale of delhi 6 realize their fault, in the meanwhile creating an irreparable damage. The song ‘masakali’ had to be “included” in the movie – somehow. And we are again being reminded of “Why India Works!” by an America borne 20-30 year old who has barely spent a few days in India and that too not beyond the few mohallas of Delhi-6.

The only silver lining on this kaala cloud er bandar er whatever was – depiction of Times Square with our friends of Delhi-6 being part of it in the imagination of our hero Rohan Roshan. Like most other things it was symbolic, but I for once liked it  – for I thought the director whanted to show – These residents of Delhi-6 could as well be the people walking in Times Square and still doing the same things as they are doing here, and it may not be too odd. Its just that we are not used to seeing it or perhaps as a sheer pun on America. Whatever may be the intent, I thoroughly enjoyed. I’d have liked the making out scene as well, but the details of the scene were left as a homework for the imagination of the audience.

Also, I believe that the movie makers should also adopt some kind of smily subtitles – to help us naive (and somewhat stupid) audience know when we are supposed to laugh and when we are supposed to cry. For instance there’s a scene thats going on and the story teller expects you to laugh then the director during post – production should add smileys to the scene as subtitles and we’d oblige, otherwise its impossible to laugh at any of the humour (they have a name for it black humour.. kaala humour!). I thought the only kaala thing in the movie was an Ape, but there’s this kaala humour as well.

The story ends  with “Gobar” a character (which means dung) – who is supposedly an idiot telling all the wise Men of the society that the real kaala bandar who’s created the havoc is within each one of us and not some imaginary animal. I guess this guy was somewhat  nay completely wrong – the real kaala bandar is the story teller, the real kaala bandar is the director, the real kaala bandar is the producer and the biggest kaala bandar is the viewer who has spent a precious few hundred rupees of his(or her) hard earned money and even more valuable time in watching something as pathetic – in a movie hall where the quality of the movie print is worse than the food and beverages they serve there (not to mention served above MRP) .

Merb on Windows – Not there quite yet??

I was beginning with a new web app, so I thought I’d give ‘merb’ a try. Sometimes, you just don’t choose the right thing. So I started dutifuly as one starts in the ruby world with

‘gem install merb’

perhaps that was not a very sensible thing to do. It started downloading and installing gems that it felt necessary. Things were moving fine till it came to a gem ‘dm-types’, which had  a depenedency on ‘bcrypt-ruby’. Frankly so far I was not paying attention to what was happening inside… simplying hitting enter like a layman. To install bcrypt-ruby, the native extension needs to be built. To build that native extension, I hit the error ‘nmake’ not found. Thankfully, I had visual studio installed, so when I appended the necessary path to the path environment variable, I moved a step forward when it spit out a million errors. This got resolved when i found “patch” for bcrypt-ruby for windows. This is when i thought I am almost there. Thats when my luck hit a roadblock where I hit upon the “MSC_VERSION unmatch” error. Basically, my native ‘ruby’ was compiled for visual studio 6 and such ruby does not like extensions built using other versions of Visual Studio due to MSVCRT dependencies. Perhaps I could have commented those lines and moved ahead, but didn’t do that. It seems people have done it for other projects when they encountered this problem.

I decided, lets work around this by building the bcrypt-ruby using ‘mingw’, no need to explain, this did not work either. Then back to googling again to find a version of ruby that was built for mingw. Thats when I found a lot of work that is done by luis lavena around this and could finally find a git repository where the sources for installer were there.  Unfortunately for me, all the installation process was built using rake. I had never paid serious attention to rake before. So this means learning ‘rake’ (atleast a little bit)  so as to understand whats happening inside. This basically downloads mingw/msys/ruby and a bunch of other dependencies and builds ruby.

Like previous things this did not work out of the box, I hit upon a nasty ’sourceforge redirect bug’. Basically, it is a side-effect of sourceforge’s smart mirror redirecting. What happens is – if you request a file on a sourceforge that doesn’t exist, sourceforge redirects it to next mirror using HTTP 302 and then next and next, this goes to a point where the number of file descriptors limit is reached. The way around that was to figure out the ‘exact names’ of the msys latest files. So finally managed to download all the required files that were required to build and went a step further.(This experience tells me that downolading msys/mingw as a part of building ruby isn’t perhaps the best choice)

When I started building ruby inside this the Win32API extension won’t built ‘cos the new ‘mingw make (3.81)’ did not like the windows style paths (C:\something\something). Previous versions of make would still build the Win32API and other APIs.  Thankfully there was a patch to mkmf.rb that fixed this problem and I could build ruby using mingw. The next step was to actually create the ruby installer. Luis’s package contains two installers one for the rubt runtime and one for the ruby devkit. Creating a working ‘devkit installer’ is not going to work because there are references to few gnu utilities hardcoded in the ‘wix config file’. However I could manage to create the runtime installer and install the ‘mingw-ruby’ on my windows.(I’d not get into the details of Paraffin and other paraphernalia thats required to get started with Windows wix, for I understand nothing of that)

Ofcourse then irb would break because it doesn’t like the “RUBYOPT” environment variable set by ‘original windows ruby’. Unsetting this finally, I came to a point where I could again do a “gem install merb”. I was really curious to find out whether I could really build the bcrypt-ruby. However, I didn’t even reach that far when my do_sqlite3 build failed due to a header not found (looks like I need to install some devel library for that). This when I hit the ’stop loss’. ‘cos I realised this path is fraught with danger. Because I have no idea where I will hit the next road block.

Now, I am going to relook at the whole exercise again. Possible choices are -

1. To build ruby for mingw from scratch (like without having the native mswin32 ruby) and go step by step installing all the components of the merb stack. But then I don’t know for how many components the native components will have to be built?

2, To explore whether the new one click ruby installer is built with Visual Studio Express (and then simply build the bcrypt-ruby with windows patch and move on)

3. To just get the basic merb stuff that is required for me to get started continue working on the web app and in parallel perform #1 above.

Right now undecided about which path to take, perhaps I’d take option #3 above, if it turns out that #2 is not the best choice. For now this has got ‘reniced’ to a lower priority.

Perhaps there’s still an easier way out somewher, which I have not figured out yet. Hopefully I will.

On – Why Slumdog Millionaire

A few days back I made an RPOD (for the uninitiated ones RPOD stands for Random Prediction Of the Day) that “Taare Zameen Par” (TZP) will win the Oscar for the best foreign film. I was wrong on that prediction. The basic theme behind that prediction was TZP will serve as a good India Proxy at the Oscars, now why that should be so – Lets look at some historical facts, I’d rather pose those as questions ” Why Did Arnold Shwarzeneger become one of the most successful filmstar (actor would be an overstatement)?” or Another one why did Bruce Lee movies started coming during nineteen eightees. I hope you get the drift. Ultimately, the India proxy part was provided by slumdog millionaire (SMDMillionaire). When I figured out that Chris Nolan had not won a single Oscar and “The Departed” won the best film award – I realized, filmfare awards are far more authentic than Oscars.

I should have figured out before making the prediction that – depicting India through a sensitive, empathetic teacher, helping a dysphlexic child realize his world would be largely un-American. Instead, it’d be more American, if you depict, India through slums, beggers and now call center guys. Then of course if you are showing India, how can you not show the Taj? Uh oh and without communal violence (Ram and Allah) shown India is incomplete for a foreigner. Plain simple isn’t it? So SMDMillionaire lives true to its promise of showing to American audience what India is through the eyes of an American.. So far so good. Of course, I do not intend to say that this does not exist in India, infact in India there are far more terrible things than depicted in the movie – the point is “intention” or “point of view”.

Now coming to the movie per say – the movie is fairly okay – The screenplay is quite terrific, I must admit except for a few goof ups -

- A blind beggar knowing Benjamin Franklin on a 100 dollar bill, but an ordinary Indian not knowing who Gandhi is (or perhaps thats intentional?)

- I bet ninety five percent of the gangsters in India would not know what a “coltpoint 45″ is.

However the climax is superbly build (kicking myself for not able to predicting the climax). Rehman music is downright pathetic – I think Rehman is making lower lows in successive movies (ghajini was horrible, this is worse). It’d only be fitting if this receives an Oscar.

Spoiler :

I’d rather have liked the ending as follows – At the last question our boy can’t answer the question – who is the third muscketeer (‘cos he never knew the answer) and looses all the money he’s made but ends up finding his love – After all isn’t it for the Love that he was doing all this?

I’d conclude with another not so RPOD – SMDMillionaire will win the Best Picture award this year.

“May be it is written”

On Fossil Fuels, Cold War, Globalization and Terrorism

On Fossil Fuels, Cold War, Terrorism and Globalization

Note: This is a rather long (read as boring) article. Hope people don’t sleep by the time they go to the last para.

I was thoroughly disturbed after the recent terrorist attack on Mumbai. Not just because, a lot of innocent people lost their lives, but also because, I was completely perplexed to understand the nature and causes of this “terrorism”. Inspite of huge outcry about “Islamic Fundamentalism” being the root cause of this globalized terror, somewhere deep inside, I was convinced, it is not so. We human beings do not keep on doing things for reasons other than economic reasons. However, the pieces were not fitting together to explain the cause completely, in fact had “Islamic  Fundamentalism” been real cause of global terror, I have offered solution, that if enacted would actually do a better justice to the cause than terrorism.

Then I came across a couple of articles written by Dimitri Orlov and thats when picture started becoming clearer. Though, I must admit with a benefit of hindsight – that I do not belong to the camp of runaway prices in Oil. Both (1 and 2)  of his articles are worth a read.

What I am attempting is to understand the things happening around as I see and offer my best guesses as to how we things might unfold in the coming few years. There is a certain amount of guesswork in this – and I don’t claim to be smart or prophetic, but this is how the whole pieces of puzzle are fitting together at-least according to me.

Role of Fossil Fuels in the Post Industrial Revolution based economy

It is often considered that with the invention of steam engine, the industrial revolution started in earnest. The progression of this revolution lead first development of schemes of mass production, emergence of cities, colonization (though it started much earlier) and eventually leading to the world wars. One of the basic themes of the Industrial Revolution was – use of fossil fuels. Initially it was coal and natural gas, then with the advent of automobiles and aircrafts – to gasoline and diesel. The importance of fossil fuels and thus controlling their sources became far more prominent when the Industrialization was becoming globalized. What more can explain the perceived importance of Oil (and similar natural resources) than one of the most significant political military developments in the four decades post world war II, viz. the Cold War.

Cold War – What it really Was

As per Wikipedia, On April 16, 1947 Bernaurd Baruch coined the term cold war on the relationship between the post WWII  United States and the Soviet Russia. The reason I mention the date here, is because it happens to be my Birthday as well. Up to this point I always believed Cold War was a war between two ideologies – a free market based capitalism on one side Vs. the government controlled/managed socialism (or communism – I don’t understand the difference) on the other side. However, the recent plans of Washington about bailing out the failing corporations led me to question Washington’s intentions of being Free Market Capitalists ever at all? Some of the acts Washington is doing will put strongest Socialists to shame. So afterall, it was not about ideology. And if it is indeed about ideology, why the same logic does not apply when US is happily in bed with China, another so called Communist country? what was it about? When I read Dimitri orlov’s article, it became clear, afterall, it was about a singluarly important thing called oil. This is the conjecture part – Perhaps, this all started with some intelligence report in Pentagon, suggesting that the oil reserves of the World Will come to an end by the turn of century and if we are dependent on oil for others, we better have a military control over it. So Cold War essentially was alignment of forces between Oil Consumers (by United States of America) and oil Producers (Russia or formerly USSR). The ensuing power struggle for superiority in space, nuclear weapons was all lead by this fundamental economic reason, viz. to control Oil as was perceived to be important. In hindsight, it is not hard to assume, why the producers aligned along the “government control” vs. “market controlled”. It is also not quite surprising, US exported “consumerism” to the world, as it was essential to align maximum forces in it’s direction. However, it was important to give this clash some ideological background, so that a lot of people (who are easily gullible) can become party to it. It is not entirely surprising that important military and political developments to align these forces happened during the early days of Cold War , eg. NATO in late forties and early fifties. Infact a certain Secretary of State of the United States went on the record indicating its real intentions – “To control Natural Resources.” The Cold war Activities were at its peak when the oil made its peak in the late 70’s and early 80’s. Then came the supply side shock to the Oil, with the discovery of new oil fields and new technologies of exploration, it started  becoming evident, afterall oil resources may last well beyond the turn of the millenium and this lead to a dramatic collapse in oil prices that lead to the collapse of one side of the Cold war, the oil Producers or in this form the USSR. This is where the real trouble started.

Before moving to next section, I am going to ask a question “So what Exactly is global terrorism?” One answer I can think of is – “Is it an unintended consequence of Cold war and thus a misplaced belief about importance of fossil fuel in the post WWII economy?” Before, I would make an attempt to answer that question, we are going to digress a bit and understand a different force acting “inspite of” or “alongwith” the cold war viz. the globalization. That’d help us understand the true nature of Terrorism and then we’d  explore terrorism in details.

Globalization

Even today, the word globalization draws a certain amount of xenophobic or anti american sentiments (for largely due to the fact that globalization to some is synonymous with americanization). However, globalization is not so much about americanization, it is a natural progression of our civilization, through stages over past few centuries. It is a different fact that only recently we’ve been able to put a name to this phenomenon of human endeavour. This process of globalization started almost five centuries back – to give an example, Christopher Columbus, an Italian was sponsored by Spain Government for his voyage towards West, for which he used a technology developed by Portugeese and information from Chinese and Vikings ( source – Adventure Capitalist). The discovery of America, perhaps symbolically was a first step in the ensuing globalization, which was further progressed by the Industrial revolution first and in the last couple of decades by information revolution. The way it has progressed, is as follows – first the common peoples (deliberate pluralization) were able to learn about it – that yes it is possible (by reading stories about ), then actually seeing people do it (through television) and finally participating in it.  It might be unfair to claim that a very large section of humanity is participating in globalization, however, certainly the number is substantial. To site a recent experience of mine – On my recent visit to Nepal, I happened to visit a Tibetan refugee village. The image of a Tibetan refugee village that I had conjured up in my mind was about people of all ages clad in long red cloth, rotating the some mystical drums and chanting mantras. What I found there was certainly startling – The first shop that I found there was selling Coca-Cola. There were a couple of small kids, all right clad in red cloth, but they were playing a game of cricket, a British game, now popularised by India,  using the yo-yo ball and a make-shift bat. And I did observe a bunch of kids walking past me, wearing a “Seiko watch” which were probably made in China. This is not what one would imagine in his or her wildest dreams about finding in a Tibetan refugee village. Such is the extent and reach of globalization.

Is terrorism a force against Globalisation?
Globalization is a natural consequence of human endeavour to question, to explore to seek out .. or as Mr. Gecko in the famous movie Wall Street would say it is the consequence of “Human Greed”. And as more and more nations are participating, globalization is truly achieving its promised destiny, a common humanity with tastes as diverse in religion, politics, languages and arts, but living in harmony with mother nature and itself. When we look at this ultimate goal of globalization (or as I would called it the Golden Age of Globalization), we’d start to understand the undercurrents, the forces that are acting against this very promise of globalization and this is where I believe in my opinion we find some answers to the current global terrorism.

Now let’s try to understand what is Terrorism in the first place and how it obtained the current form.

On Terrorism

I am not sure if any of you have seen this wonderful movie called “Lord of Wars” and in which there is a scene our narrator Yuri, while enjoying a vacation with his family watches the news of destruction of Soviet union and kisses the TV screen in sheer excitement. There are plenty of reasons for our guy Yuri to get excited about, the most important being, this opens a huge stock-pile of military weapons erstwhile controlled and held tight by russian government through its influence on military.

We now have two ingredients for the Global Terrorism

1. The force against globalization – Let’s look at the states that are patronizing terrorism, these are the states which are left behind in globalization viz. Pakistan, Afganistan. It is not entirely impossible to harness this frustration of not being able to participate into something that is “anti-islamic” and create a force (which calls itself “islamic fundamentalists”) that threatens to stall the progress of globalization.

2. Second important aspect – Easy availability of sophisticated weapons. This is certainly a consequence of the debacle of Soviet Russia (thanks largely due to supply side shock for the erstwhile important commodity viz. Oil) and an easy transit through russian maffia to the hands of this brand of neo Islamic Fundamentalists.

This was actually made possible by something else “A reserve currency of the world, the US Dollar”, a consequence of Breton Woods system, (which was perhaps motivated by Cold War in the first place?) Thus these three ingredients are largely constituting for the current state of global terrorism. Thanks also to the US hegemony, that there is an element of animosity that would lead to an ideological excuse of “Islamic Fundamentalism”, which can be proclaimed as cause of World Terrorism.

Thus perhaps, Terrorism is an unintended consequence of Cold War?

Now let us try to answer the question “Why the forces against globalization are acting thus?”. Everyone knows about the sour grapes story of the wolf. The states that are sponsoring terrorism are the very states that have been miserable failures in globalization or as I would say in the progress of human civilization. Take for instance Pakistan, a state that obtained independence exactly at the same time as its neighbouring state India. Which inherited almost an identical history, culture, political and education system. However, after five decades, where are we – India, despite its horrible economic policies,  uncontrolled inefficiencies is still way way way better than Pakistan, thanks largely to a single most factor and that is Globalization. Pakistan has thus failed miserably in globalization, so it is but natural that states similar to Pakistan would be involved in activities that will hamper globalization. Not surprisingly, such states are biggest patrons of terrorism.

Recently, a so called terrorist was captured during Mumbai terror attacks, allegedly he’s Pakistani. Wherever he belongs, he certainly is not benefiting from globalization or I would even go on to say he’s not participating in globalization. Given a choice what would a 21 year old kid like to have – An Apple iphone  or a Kalashnikov. Of course the former. But some kids are preferring the later. Unfortunately for them they don’t grasp the promise and reach of Globalization and are taking the other path, under the pretext of yes you got it right an ideology – “Islamic Fundamentalism”. If you tell them, what essentially they are doing is an Inventory cleanup of large stock of weapons developed during the Cold War, they’d not happily take up to the cause of terrorism. You tell them about “Kingdom of Allah”, Martyrdom in the cause of Jihad and so on, to which they can relate with, and they’d willingly pick up the Kalashnikov. Ideologies are important to promote a cause – For they help people just like their notions of God, to relate things with they know. Hence all the human activities have so far been performed under the pretext of these “isms” – The Free Market Capitalism, The Socialism, Islamic Fundamentalism and so on…..

So after all, Islamic Fundamentalism is not really the cause of this Global terrorism. There might be an argument which would say that – Well its not only poor 21 year olds (allegedly) from Pakistan that are taking up this path. There have been people, well educated in top notch “Western Universities”, working for Multinationals who are also participating in a few “acts of terror so to speak”. The answer to that is – Of course, since those people don’t understand the real economic reasons of terrorism, they are trying to belong to the ideology of “Islamic Fundamentalism” and incorrectly believe in achieving the path to “Kingdom of Allah” through these acts. Just as the best nuclear scientists in Russia were perhaps believed in the “Equality for Everyone” promise of the Socialism and were participating in an activity, which was driven by purely economical reasons they didn’t understand and wouldn’t appreciate.

To Wit – Global Terrorism is an unintended consequence of the Cold War (and associated proliferation of Weapons), which itself was a fallout about misconceptions about the supply of the  Fossil Fuels and its role in Global economy. This force is largely acting against the process of globalization.

Where will this all lead?
Possibly, the recent economic crisis would lead to a war, possibly of larger proportion, which would be fought for wrong reason again that is “Control of Oil?” Just as Second world war was fought for wrong reasons – “Control of Land and Human labor”. What would become a world order post this war, is difficult to predict as of now. However, whether the war may or may not manifest, we’d see an interesting development. The threat of terrorism will vanish almost as mysteriously as it came into existence. The reason I think for this is not a sudden realization of peaceful means, but an ensuing important economic development. Destruction of dollar as a reserve currency (as we approach this, it might itself trigger a geopolitical conflict).  Subsequently all the governments world over would take the credit for eliminating the threat of terrorism. (Just as all the central bankers took credit for controlling inflation which primarily happened due to near capitulation of oil prices). Why a demise of dollar would lead to end of terrorism? -  It will become economically unviable to fund terrorism without the reserve currency. When the Russian mafia realizes the dollar payments they are getting for the weapons they are selling are becoming as worthless as their former currency, there’d be a natural curtailment to the spread of sophisticated weapons. Without the reserve currency, it’d not be easier to obtain funding for the “terrorist activities”. This would lead to an “economic crisis” in the underworld and the very perpetrators of terrorism will find themselves at receiving ends, for they no longer can support their recruits. They’d become as I call it – victims of their own success.

In the coming years post war (assuming the war actually happens and doesn’t lead to a nuclear holocaust), fossil fuels based economy will come to an end and a new industry based on Green Energy will be developed. Just as post WWI, there were massive developments in Organic Chemistry, Post WWII period saw development of Semiconductors industry, we are likely to see developments in Green Energy. What that will be nobody knows – It may not even be in the current “non-conventional” energy forms, just as nobody could imagine the Internet in current form, but it came into existence, we’d see new sources of energy and related industries, coming up in the years that follow in next couple of decades. That will be an important driver for global economy, possibly for centuries to come.

This is when the true promise of Globalization will be realized. Eventually Globalization would win, but not before paying its price.