30 Nov 2011

What are we preparing our children for?

In the video below, Chris Martenson clarifies his studied (and I must say, very convincing) observation that "the next twenty years are going to look very different from the last twenty."

Here's why.
Since all our money is loaned onto existence, our economy has to grow exponentially. [...] If we wanted to continue on this path, our debt load would have to double again over the next 10 years. By continually increasing our debt relative to GDP we are making the assumption that our future will always be wealthier than our past. (Martenson) believes that this assumption is flawed and that the debt loads are already unmanageable.

...Add to that, energy depletion, increasing social unrest, growing international competition and rancour over natural resources - and you will begin to recognise his point-of-view more clearly.

But why does 'understanding the future' even matter?

Well, I believe it matters a whole lot if you are a parent. It matters that you understand that your child is not likely to live life the way you have. In fact, you will have very, very little in common materially, and consequently, even in values!

The lesser aware we are now of the changing dynamics, the lesser equipped we are to imagine what life would be like for him or her, a decade or two from now. And the better aware we are of the possible variables, the better equipped we may be to prepare our child, and of course ourselves, for life - say, in 2020 and beyond.

Go on, hear Chris out. He isn't scare-mongering; he's merely holding up the facts for us to see and interpret.

What 4D technology is not...

No amount of technology (or loose purse-strings) can make up for the lack of creativity. Or cover up gratuitous narcissism, for that matter. Watch.

The world's most advanced '4D technology' used to deliver the world's most impressive damp squib finale... (DJ with alpha-numeric name and vacuous-looking teenagers with smartphones, included)

Or in their words,
Nokia Lumia 800 with Windows phone [...] created an amazing free light show at Millbank Tower, London. Each of the 120 metre high building's 800 windows were covered with vinyl as 16 powerful projectors, stationed 300 metres away on the other side of the river, beamed 3D images onto the structure.

The world's most expensive product catalogue... (giant-ego-in-the-window, included)

Or in their words,
Ralph Lauren London celebrates 10 years of digital innovation by putting on a virtual fashion show that brings it's building on Bond Street to life.

And finally, in their own words... Let there be rock! (real audience feedback, included)

(I am seriously beginning to think that the 'generational gap' exists mostly because smartphones seem to be frying what's between people's ears!)

23 Nov 2011

Guess what comes after an economic upheaval?

Kyle Bass seems to have made it his business - and a profitable one, at that - to see the 'big picture' evolving around world. First, the sub-prime mortgage crisis in the US; then the sovereign debt crisis in Greece; and now he is betting that the next domino to fall will be... Japan!

(Here's an interesting bit of trivia: Japan is the Indian government's single largest bilateral creditor! At end-March 2011, they owed Japan US$ 14.7 billion, followed by US$ 2.7 billion to Germany.)

Watch Kyle Bass spar ever so graciously with the lady presenter on BBC HARDtalk.

Towards the very end of 24-minute episode, Kyle points out that, historically, fiancial and economic upheavals tend to lead to social upheavals as well.

Which brings us to the next subject...

It's an interesting article on the Bloomberg-BusinessWeek website on the emigration, or more rightly, a near-exodus of China's super rich from the country.

Many of them are seeking foreign passports or residency permits in the US, Canada, Australia, Singapore, and New Zealand.

How many of them?
More than 500,000 Chinese have investable assets of over 10 million yuan ($1.57 million), according to a joint survey released in April by China Merchants Bank and Bain & Co. The study says almost 60 percent are considering emigrating, have begun the process, or have emigrated.

Want to guess why?
So-called mass incidents—riots, strikes, and protests—doubled in five years, to 180,000 in 2010, Sun Liping, a professor at Beijing’s Tsinghua University, wrote in a Feb. 25 article in the Economic Observer. “Some people in China are talking about class conflicts against rich people,” says Wang Xiaolu, deputy director of the National Economic Research Institute in Beijing. “Maybe some of those emigrating or getting residency are worrying about possible policy changes turning China ‘left’ that will put them in danger.”

And it's not just the crazy professors saying things...
One émigré in Boston (who asked only that his last name, Yang, be used since he still owns a factory in China) points out that the Chinese government spent more money on internal security (549 billion yuan) than on defense (534 billion yuan) in 2010. He says that if things got ugly, the rich would be targets not just for being rich but for their close connections with the government.

Wait a minute, this sounds familiar...

Blistering economic growth rate. Massive 'investments' in the infrastructure and real estate sectors. Financial sector joins the party, with absurd leverages and adventurous schemes. The economy overheats with excess money supply, sending inflation skyward. The central bank steps on the brakes with interest hikes. The inevitable slowdown sends the financial sector precariously close to tipping-point. This causes a credit / liquidity crunch.

Almost overnight, the starry-eyed ambition of the masses awaken to the realisation that the political and oligarchic classes manipulate the system at will, in their own interest. There never was, any 'trickle down effect'; and the 'middle class dream' was just that - a dream.

But the "good times" go on for the corporate kings... And if their country's circling the drain with economic woes and pollution that they caused - they've got dual citizenships now!

Live with it.

22 Nov 2011

A war waged with megapixels

In my previous post, Journalism 2.0 vs. Propaganda 1.0, I tried to explain how the mainstream media can (and does) hide, obfuscate or skew what the public views and hears via the News.

The analogy would be: A tree falls in the forest. Nobody hears it (and it's not in the News). Ergo, it never happened.

Now we shall see Journalism 2.0 at work.

From the Spratly Islands in the South China Sea to the Green Zone in Baghdad, and Zuccotti Park in New York to Tahrir Square (again) in Cairo, every place on earth it would seem is under some form of disputed occupation - and it is getting near-impossible to keep tabs on it all... But the recent pepper-spraying of students sitting peacefully on a sidewalk at UC Davis (first video below) - and the students' brilliant 'wall of silence' revenge trageting the UC Davis Chancellor afterwards (second video below) offers something of an insight.

Watch the students of US Davis (after being pepper-sprayed) force police in riot-gear to retreat using just their voices and their video cameras...

Later, the students of UC Davis use complete silence but keep their video cameras rolling in order to shame the Chancellor as she takes, probably, the longest walk she ever took to her car...

It seems the "weapon of choice" for today's generation is a video camera!

Videos of the incidents (in all its versions and interpretations) have been seen by millions. The action of the students and the police are now subject of intense discussions.

The analogy now would be: A tree falls in the forest. Nobody hears it (and it's not in the News). Ergo, it never happened. But wait, someone's posted a video of the tree falling/fallen. Now we all know what happened.

And now that we know it happened, we can have an frank discourse on the whys, hows and wherefores...

There is an excellent article titled: "What George Orwell Can Teach Us About OWS and Police Brutality" over at The Atlantic website.

The writer's astute analysis on why overly-armed police resort to disproportionate and uncalled-for force in non-threatening situations is based on a predictably rich short story by George Orwell, called Shooting an Elephant.

You may have read the above article (and possibly made a mental/digital note to read the short story, later). You see now how Journalism 2.0 can be not just about informing - but enlightening as well.

I think we might need it for humanity to evolve higher.

20 Nov 2011

Journalism 2.0 vs. Propaganda 1.0

(Update: Oops! The video is now added. Apologies.)

I want you to discount everything you see in the following video, and focus on just one thing: What is the statistical probability of what you are about to see occuring if there was more than ONE source of the narrative on ALL of mainstream TV?

I think it is time we disabuse ourselves from the illusion of choice... Right now! There are six giant media holding companies that own the airwaves - and your rapt attention.

The following are only their tentacles on the idiot box...

So the next time you flip through news channels on TV, please remember this: You hear what their "scriptwriters" want you to hear.

A thinking mind can sift through obvious biases. But to be blinkered and fed a repetitive 'scripted reality' is an insult to human intelligence.

That's why this year in particular is turning into the dawn of the Age of Journalism 2.0... With ordinary people around the world increasingly - many, unconsciously - turning to Internet-based alternate sources of news and information for a more believable narrative of what's happening around them.

And the minions of the mainstream media "scriptwriters" are shocked and appalled!

Thank you, Conan O'Brien.

16 Nov 2011

India's ticking debt bomb

According to Finance Ministry report, India’s external debt at end-March 2011 was US$ 305.9 billion, up 17.2 per cent over 2010. Government (sovereign) debt remained near-static 25.6 per cent of the total, while the share of commercial (corporate) borrowing was 28.9 per cent and rising.

The Finance Ministry is of the opinion that, "The changing composition of [external] debt in favour of commercial borrowing is also an indication of [...] the increasing role that corporate sector is playing in sustaining high growth rate."

(Also, the US$ is the predominant currency component accounting for 53.5 per cent of India's total external debt. The INR sliding in value against the US$ can't be good news. And already Moody's has warned that India's public debt burden at 70% of GDP is a "constraint". But that's another story...)

We need to focus on the growing corporate sector. And the unquestioning support they receive from individuals within the GoI - like our unelected Prime Minister (he's a Rajya Sabha 'nominee') and Kaushik Basu, the uneleced PM's unelected Chief Economic Advisor.

Because India's corporate giants seem to have the serious potential to trigger an economic collapse!

A BusinessWorld article is the only one I came across that mentions the risk for Kingfisher's bankers - saying,
The million-dollar question, according to airlines CEOs, is whether the government would actually step in and try to salvage the situation in some way through the public sector banks, since they cannot afford to allow Kingfisher Airlines to collapse. “The contagion effect on banks — many banks have large exposures to the airline — will be a cause of worry for the government”, says a ministry official. However, setting a precedent by helping in a bailout of one private company would be dangerous for the future — across industries.

The article quotes the CEO of the Centre of Asia Pacific Aviation (CAPA),
"The airline’s immediate cash requirement is estimated at Rs 1,000 crore. This includes dues to the private airports, AAI, oil companies and other vendors... [Moreove, Kingfisher] needs $800 million [Rs 4,000 crore] plus over the next two years. Out of this, $400 million [Rs 2,000 crore] is required urgently..."

Kingfisher's overall debt stands at over Rs 7,000 crore with annual losses exceeding Rs 1,000 crore.

In fact, it was just last year that a consortium of 13 lenders, led by SBI and ICICI Bank, restructured Kingfisher Airline's debt by turning Rs 1,200 crore worth of debts into equity paying a 50% PREMIUM (Rs 65 per share) over the market price of Rs 40. This year the price per share went down to Rs 17!

The sheer futility of everyone scrambling to save Kingfisher Airline should be obvious by now!

An article in BusinessToday by Harsh Vardh, former MD of Vayudoot, candidly questions the long term viability of the airline's business plan...

He says,
Mallya has recently tweeted "Why should Kingfisher operate on loss-making routes on government directive?"

[But] The main cause of losses for the industry is its excessive deployment of capacity on metro routes where over 70 per cent of capacity is deployed. Metro and international routes account for the majority of losses of Kingfisher, and not government directed sectors.

And on the Indian Prime Minister's response, Mr Vardhan rightly points out,
A PM who only few days ago has taken a firm stand on petrol prices being market driven should not be seen contradicting himself in favour of private enterprises.

Obviously, that there are different rules for corporate houses and individual citizens - but it is no time for indignation. We really should be worried about huge recklessness and profligacy in the corporate sector unleashing a financial contagion in India!

Yet again, it the hapless aam aadmi and his parivaar that will bear the brunt. The oligarchs will simply set sail to a tax haven on their plush yachts.

15 Nov 2011

Has the Debt Tsunami reached India's shores?

I don't believe the Kingfisher Airline saga is as mundane as it is made out to be - because the real pandora's box is not at the airline but at the Indian banking sector, especially the country's largest bank - and biggest lender - the State Bank of India (SBI).

SBI has an exposure of Rs 1,400 crore to Kingfisher Airlines. But that's not the point...

In September 2011, the credit rating agency, Standard & Poor's (S&P) downgraded SBI, and on 9 Nov, Moody's downgraded the entire Indian banking system from “stable” to “negative”, citing the likely deterioration in asset quality.

SBI's Chairman Pratip Chaudhuri had said at the time, “Perhaps they [rating agencies] are stung by experience elsewhere. But otherwise I feel Indian banks are well-regulated. We don't deal in exotic products. Also, the amount of leveraging is low, we do 12-14 times while the best of European banks leverage up to 20 times.”

What is hidden, but implicit, in his statement is that any event that destroys even as little as 1/14th of the assets of an Indian bank will actually wipeout the bank's entire capital base! Because that's what 'leverage' means in finance. One hundred rupees of your deposit in SBI can be 'leveraged' to give out a loan 12 to 14 times that amount to some disfunctional crony corporate client.

Moreover, SBI has been getting into bed illicitly quite regularly with corporate clients lately. An article in Businessline on June 9 notes that SBI has overshot the exposure limits fixed by the RBI while lending to three corporate clients - Reliance Industries, Indian Oil Corporation and BHEL... and exceess overshot the RBI's limit by around Rs2,000 crores on several occasions.

RBI's credit limit is 15 per cent of a bank's capital for single borrowers, and 40 per cent for groups. So how close to a financial abyss is the State Bank of India in reality?

In Europe, greedy bankers, leveraged their capital 20 times (and more), made bad corporate 'investments', whereupon the host nation stepped in to bail them out in the name of saving deposiors' savings. But what it meant was that corporate losses and bankers' bad bets both end up as the national (soverign) debt to be paid by taxing citizens - living and yet-to-be-born!

The Government of India WILL have to allow Foreign Direct Investment (FDI) into the aviation sector in order to save not Kingfisher - but SBI! Because if SBI tumbles, the GoI may be forced to essentially print money in order bail the bank out, both fuelling monetary inflation and perhaps a soverign debt ratings downgrade. Higher inflation will force the RBI to push interest rates up, making it more costly for industries to borrow, causing the economy to slow down further, forcing workforce lay-offs, causing economic hardship... And - well, the kind of social unrest that Europe and the US are witnessing.

With over one-fifth of humanity within our borders, India will just that have to multiply - ok, let's call it, 'leverage' - the unrest by one billion!

But what really shows how obnoxious SBI's actions really is, is the contrast of its 'accommodative' attitude to corporate borrowers with the way they have dealt with individual customers. I'd posted before about SBI's predatory lending practices with hapless customers. I'll conclude with the same words that I concluded that post...

Before I leave, I have a question for ALL bankers: Just how much profit is enough? Seriously, will there ever be a time that you will pull your usurous fangs from the throat of humanity?

Just remember, Mr Banker, that one day when his hungry children are in bed, Mr Humanity will step out of his home holding a torch in one hand and a pitchfork in the other. And in the streets, he may not be alone.

You remember that - and that alone.

12 Nov 2011

What does the Zeitgeist Movement have in common with the Vatican?

Can a stupid idea be contagious?

While I admit the film by the Zeitgeist Movement was a real eye-opener for me, the so-called Resource-based System called for by Peter Joseph feels extremely ominous now that (I believe) I know better.

"We have a resource-based economic model. It's a 'ground-up' approach to resource management. And we make everything as efficient and productive as possible - technically! No monetary evaluation, no monetary association - because all that does is interfere (and cause more problems)."

Nice. But perfectionist, techno-utopian societies have been expounded before. Take Alduos Huxley's Brave new World from 1931.

And more recently, a benevolent One World Government based on themes such as "self interest must become social interest" and "common values in a global community" is being propagated by lumineries of selfless service like the Vatican and the European Union.

All that is left is to 're-define' the IMF's Special Drawing Rights (SDR) as a sort of non-monetary entitlement based on one's "use to society". They won't even have to change its name!

Peter claims to have "worked at Wall Street and Advertising - two of the most meaningless occupations on the planet"... Then he should know better, in my opinion.