Sunday, October 31, 2010

China vs India - Which model is better?

Michael Schuman raises an interesting question in his Time Magazine column. Which is the best role model for developing world, India or China? Schuman cites some of the reasons why Indian model might be better than the Chinese model - namely, the fact that Indian growth is more balanced between exports and domestic consumption, more independence of private sector and the market, and democracy. True, Indian model has not produced the same results as the Chinese model, but the difference has been seen mainly in the last twenty years. If India puts its head together, there is no reason why this gap cannot be bridged.

What is worrisome about the Chinese model is the corruption associated with the current model, despite central control. China's Dilemma | Foreign Affairs points to a growing problem in China, namely income inequality.

"China’s wealth gaps have also grown; according to Chinese media, the country’s GINI coefficient, a measure of income inequality, has risen to about 0.47. This level rivals those seen in Latin America, one of the most unequal regions in the world. The reality may be even worse than the data suggest. Wang Xiaolu, the deputy director of the National Economic Research Institute at the China Reform Foundation, estimates that every year about $1.3 trillion in income -- equivalent to 30 percent of China’s GDP -- goes unreported. More than 60 percent of the hidden income belongs to the wealthiest ten percent of China’s population, mostly CCP members and their families."

Income inequality and corruption are equally big problems in India. While China has been able to keep the income inequality under wraps through strict control over free speech, such a social control is not possible under Indian democracy. Already the issue of income inequality is raising their ugly head in the form of Naxalite violence in the north and north east prompting me to believe that India needs to do more to increase the participation of the poor in the growth of the economy. This is the only way to prove to the world that the Indian model is worth following.

Thursday, October 28, 2010

Study of Chinese workers links BPA to sperm problems

Scientists have long suspected that BPA causes hormonal imbalance in children, especially girls, but this study just published suggests that BPA has much wider impact than previously thought. Action item for us - eliminate any plasitcs suspected of containing BPA from our homes.

Study of Chinese workers links BPA to sperm problems: "The study of more than 200 Chinese factory workers found that those who were exposed to bisphenol A, or BPA, were more likely to have lower sperm counts and poorer sperm quality. The study, published in the journal Fertility and Sterility, is the first to produce evidence that the chemical could adversely affect sperm quality in humans."

Monday, October 25, 2010

WSJ Online has the electronic version of McKinsey report on Indian Pharma Sector growth to 2020. You can dowload it from a link in this blog article

Or, you can download it here

India's pharma industry set to quadruple by 2020

BIG opportunities await for those interested in the Indian Pharma Market

India's pharma industry set to quadruple by 2020: "The Indian pharmaceuticals market looks poised to grow to $55 billion in 2020, according to a new McKinsey & Company report — “India Pharma 2020: Propelling access and acceptance, realising true potential”. This will be a quadrupling of the market from the $12.6 billion the industry made in 2009. The report states that the pharma market has the further potential to reach $70 billion by 2020 if aggressive growth efforts are embraced."

Investing in Emerging Markets: The Chinese Stock Market's Secret Past

On the other hand, a very insightful column about the history of Chinese stock market points to the pitfalls of investing in a market which one doesn't understand very well. This is quite an insightful article that points to the need for caution as one considers investing in emerging markets, not just in China.
The Intelligent Investor: The Chinese Stock Market's Secret Past - "Stocks began trading in Shanghai in the 1860s. The first 'share mania' struck in 1871, when shipping stocks rose by as much as 70%. In 1882, there was another bubble, this time in mining stocks launched by provincial governments. From 1889 to 1891, Shanghai was gripped by a mania for real-estate development companies. In 1910 came a boom in rubber plantations.

Each time, officially sponsored banks flooded the market with cheap credit—much as their successors have done recently. Each time, investors were swept up with enthusiasm, and the boom ended up in an inevitable bust."

Emerging-Market Stocks: How Much Is Too Much? - BusinessWeek

A lot of pundits are recommending investing a greater share of the portfolio in Emerging Markets. The article below debates the crucial issue of how much of your portfolio should be in EMs.

Emerging-Market Stocks: How Much Is Too Much? - BusinessWeek: "Financial advisers say the past year has made it clear that emerging-market stocks are actually much less risky than once feared. Keith Amburgey, chief investment officer at Rutherford Asset Planning in Cresskill, N.J., says he has doubled his typical portfolio's emerging-market exposure in the past year, from 5 percent to 10 percent.

'A lot of the emerging markets have emerged,' he says. Amburgey notes that many emerging economies have better economic fundamentals—especially lower debt levels and faster economic growth—than developed economies."

India Malaria Deaths Are Underestimated by WHO, Researchers Say - Bloomberg

India Malaria Deaths Are Underestimated by WHO, Researchers Say - Bloomberg: "More than 200,000 people may be dying in India each year because of malaria, 13 times more than the World Health Organization estimates, a study found.

Researchers based their estimate on interviews with family members of more than 122,000 people who died between 2001 and 2003. The numbers “greatly exceed” the WHO estimates of 15,000 malaria deaths in India each year, the researchers wrote in the study, published today in the journal The Lancet."

Saturday, October 16, 2010

What is wrong with Mukesh Ambani?

How big a home do you need to make a lasting contribution to humanity?

On the left is the home in which Albert Einstein lived from 1936 until his death in 1955. On the right is the new monstrosity created by Mukesh Ambani, to house his family of five! The home cost over a Billion dollars to construct, and will reportedly need 600 servants to run and support. The man who will live in the glass and steel palace on the right will never be able to live up to the contributions of the man who lived in the modest home on the left.

This sort of crass exhibition of wealth is unimaginably tasteless, especially in a country where, to quote wikipedia,
42% of India falls below the international poverty line of US$ 1.25 a day

Granted the wealthy deserve the right to use their wealth as they see fit. However, at least the wealthy of yester years, while enjoying their wealth, gave back to the society in a visible manner. For instance, the wealthy Parsis of old Bombay, celebrated their wealth by building public hospitals and music halls and libraries that helped the Mumbai society at large; Mumbai is studded with such jewels. The Birla's splattered the country with temples (some say that spending wealth on temples smacks of religious bigotry, and I agree with that) and created hospitals and teaching institutions to benefit the poor.

But the wealthy of new India build bigger and bigger mansions for themselves - the society can go to hell. The country infrastructure is in dire need of repair, especially the infrastructure that caters to the poor. One has to just step into KEM or any other public hospitals in Mumbai to see the dire state of public health facilities. Instead of stepping up and contributing to the welfare of the society they live in, the neuvo rich spend the money on themselves, leaving large swaths of society struggling to meet their daily needs.

Utterly dissappointing.

Read more about Albert Einstein and his life in Princeton here and here.

Read more about Mukesh Ambani's glass and steel palace here.

Friday, October 15, 2010

Interactive Infographic of the World's Best Countries - Newsweek

If you ever wondered where your country stacked up on the parameters of Education, Health, Quality of Life and other such parameters, this interactive webpage should be very instructional. What surprised me was the rank of India - high on economic dynamism and political environment, but very low on quality of life, education and health. That it is low didn't surprise me - just how low it is was the surprise.

Interestingly, US ranks second in Economic dynamism, right behind Singapore!

And I thought that the action was in BRIC countries!

Interactive Infographic of the World's Best Countries - Newsweek

8 Bad Habits that Crush Your Creativity and Stifle Your Success | Randy Kepple Photographs Blog

We are often our own worst critics. Mired in self doubt, we sabotage ourselves into mediocrity. Randy Keppel has a great article on this topic, worth reading.

8 Bad Habits that Crush Your Creativity and Stifle Your Success | Randy Kepple Photographs Blog: "Here are eight of the very worst bad habits that could be holding you back every day:

1. Creating and evaluating at the same time
You can’t drive a car in first gear and reverse at the same time. Likewise, you shouldn’t try to use different types of thinking simultaneously. You’ll strip your mental gears.

Creating means generating new ideas, visualizing, looking ahead, considering the possibilities. Evaluating means analyzing and judging, picking apart ideas and sorting them into piles of good and bad, useful and useless.

Most people evaluate too soon and too often, and therefore create less. In order to create more and better ideas, you must separate creation from evaluation, coming up with lots of ideas first, then judging their worth later.

2. The Expert Syndrome
This a big problem in any field where there are lots of gurus who tell you their secrets of success. It’s wise to listen, but unwise to follow without question.

Some of the most successful people in the world did what others told them would never work. They knew something about their own idea that even the gurus didn’t know.

Every path to success is different."

Read more here..

you’re already perfect | zen habits

you’re already perfect | zen habits: "A powerful realization that has helped me is simply this: You’re already good enough, you already have more than enough, and you’re already perfect."

Why are we always chasing the next best thing? more perfection? This post makes a lot of sense.

Saturday, October 09, 2010

Low interest rates were NOT the cause of the financial crisis

I came across this quote recently...
Government intervention was the main cause of the global financial crisis, John Taylor, a Stanford University economics professor, said Wednesday. Interest rates stayed too low for too long in 2003, 2004 and 2005, exacerbating a boom in housing and pushing investors to stretch too far for extra yield, John Taylor said.

John Taylor, the Stanford Economist, was commenting on the research published recently. While recently it has become quite fashionable to cite data and blame Government for collapse of the financial system, the emphasis here seems to be misplaced. The paper draws conclusions blaming low interest rates when in fact it was lax regulation led to development of highly risky investment instruments that nobody could understand.

If anything, low interest rates were responsible for expansion of the economy that ushered in unprecendented prosperity for common man. I myself am a beneficiary of these policies, having purchased a small (and affordable) home in early 2000, which otherwise would have been almost impossible. If the financial industry had not fought tooth and nail against regulations to govern securitization of mortgages, we perhaps may never have had the melt down that happened.

It was the greed of investment bankers who were making money hand over fist selling these esoteric financial instruments that led to the melt down. But there is no metric to measure greed, so economics will never give us the right answer for the meltdown.

Mine Rescue Drill Reaches Chilean Miners

I'm reading about 'Breakthrough in Chile mine rescue'. Here is the link:

For a claustrophobe like me just following the plight of Chilean miners has been difficult. Their survival for 65 days is nothing short of a miracle. Can't wait until the poor souls are brought back to the surface.

Big day for the miners and their families!

Sunil Joshi