Wednesday, December 08, 2010

More about Linux

I  now have all my office machines on Linux. The only concession is that on 2 machines, I have a Windows partition too. Just in case I need it. I now have the following delightful FREE packages installed on my personal Netbook:
  1. Squirrelmail - an email server with browser-based client interface for internal email across my virtual office. No more need to browse the folder on the network . Just attach and email anything to your colleague(s) (each colleague gets a user ID and one desktop also serves as the email server during the day.
  2. A package that allows me to edit the contents of the clipboard, and keep a history of clipboard entries (upto 100, configurable). I have not seen the edit clipboard feature in Windows -- need to think how to creatively use this unusual capability.
  3. A mass file renaming facility, again another shiny pebble on the beach. Unusual, attractive, but what use to put it to?
  4. An "Art Manager" that allows me the choice of nearly 350 themes, with multiple colour choices for each, besides font rendering choices, icon set choices and cursor set choices (the last two in the hundreds).
  5. A beautiful, transparent analog clock with a second-hand that can unobtrusively stay on top even in applications. Handy to keep time during Powerpoint presentations.
  6. A 3-D modelling and animation software called Blender (haven't used it, though).
  7. VLC Media Player that can play almost all formats, a Video Editor (Pitivi)
  8. A Desktop Video Recorder (I can videotape something that is running on my desktop).
  9. FreeMind, the mind-mapping software under Linux, is much more advanced than its Windows equivalent, I have found to my delight.
The biggest benefit of all is the speed -- I feel like I have changed the chip on my Netbook. The enhanced animation effects for all windows are really pleasing.

Monday, November 22, 2010

Have you experienced Linux for the desktop?

First about how delightful it looks and feels. 
It has configurable, semi-transparent menus and panels. I can have four panels, on each border of the screen. I can configure them either as Auto-Hide or with Show/Hide Buttons. These leave only an unobtrusive patch or arrow sign which, if clicked, exposes the Panel when needed. Allows me to make best use of the 1024x600 resolution of a NetBook.

It offers multiple, exciting desktop themes, way ahead of Windows. When I drag a window, the entire window animates like I am pulling a piece of cloth or paper. More like Mac than Windows (I haven't used Mac very much but have seen that the UI is way ahead of Windows). Linux is probably somewhere in between, and catching up with Mac much faster than Windows is.

Then about how efficient it is.
I have installed Ubuntu on 4 machines - two Intel Atom-based desktop, one Intel-Atom-based netbook and one really old, Intel Celeron-based Toshiba Satellite laptop, which I had stopped using because it ran Win XP so slowly that to start up, log in and finally open a blank Excel 2003 file took not less than 20 minutes (and I am not exaggerating!).

On the first three, I installed Ubuntu, and on the last, I had a much lighter version of Linux called Fedora, because of the extremely slow chip in it. 

On the Netbook, I already had Win XP Home Edition pre-loaded. The performance was acceptable, but barely so. I needed to regularly defrag and be careful not to have too many apps in the startup because degradation in performance would then become obvious. Now, on the same machine, everything moves like greased lightning under Linux. The Netbook could well be an i3 with a fancy graphics card, looking at the speed at which applications run on it.

OpenOffice Word Processor, Spreadsheet and Presentation files open up (after the QuickStarter is loaded once)  instantly. No WorldWideWait.

Not only that, I have choices: AbiWord as a Word Processor; GNumeric as a Spreadsheet, and choices of KDE, GNOME, XSCF or other desktops  environments (ie, desktop along with theme choices are a product that one has a choice of).

Then, about the applications.
Ubuntu Software Centre has equivalents (equally sophisticated, and in some ways, better than popular Windows software). GIMP (Photoshop clone); Dia (Visio equivalent);  Scribus (PageMaker equivalent); Planner and KPlato Project Management software (MS Project clones); and several PDF Creators and viewers (OpenOffice allows export to PDF format directly from within the software itself).

All of these are FREE, stable and completely compatible with the operating system. They are almost as feature-rich than their Windows counterparts, and in many ways, are more intuitive and easier to use.

I have choices of browsers, too. I have Firefox and Chrome installed currently, but have at least 6-7 others to choose from. Similarly, there are a host of applications for sound and video applications, including VLC media player.

There are applications that have no free/ shareware equivalent except from the Open Source community itself, like Mind-mapping software (4 choices: FreeMind, Labyrinth, Semantik and VYM), Stellarium and Celestia Planetarium simulations that can interface with a range of models of USB-compliant motorized telescopes and become a personal astronomy tutor at night-time, and molecular modellers (Avogadro).

Oh, I forgot. Two things:
  • All these softwares are available for single-click download from the Ubuntu Software Centre, that simply queues all applications that you want to download, and installs them using spare bandwidth.  No fear of applications that interfere with one another.
  • Under Linux, one does not need to bother about viruses or virus guard software, because of the way Linux is constructed. A file does not execute unless the user specifically allows it to run. If all software is downloaded from Ubuntu's servers, one does not need to bother about infection. One need not, for the same reason, worry about viruses on USB drives. They simply won't replicate because Linux presumes that all files are not executable unless instructed by the user to execute them. If you are affected by a virus on a Linux machine, you have only yourself to blame. And windows viruses do not run on Linux because they cannot reach the Linux kernel at all; and there is no "registry" where the virus can ensconce itself.

Then about Compatibility with Windows
Excellent range of Export and Import filters and options in every software ensure compatibility with any Windows software. For example, OpenOffice documents can be saved as Office 2007 .docx formats, or Wind 95/XP .doc format. Any of these format files can also be perfectly converted and opened. Ditto for Excel and Calc, the OpenOffice Spreadsheet. Impress, the presentation software, is impressive, and has an impressive constantly expanding template gallery online to choose from and use free of cost. Open ClipArt installs a huge clip-art library onto your disk (nearly 200 MB download) which is completely integrated into OpenOffice. Bibliographic References can be tracked and maintained using JabRef, again free. These can insert bibliographic citations within the articles written in OpenOffice. Equivalent under MS Office is EndNote, an expensive, separately purchaseable plug-in.

OpenOffice now runs Word macros (ie, VBA) but a bit patchily. It supports macros in 4 programming languages ( BASIC, Python, Beanshell and Javascript). It has a competent Record Macro feature that allows you to hit the ground running with macros.

My employees and my daughter have changed from reluctant converts to complete evangelists in barely 3-4 weeks. They are users and creators of BASIC macros as well.

Chat clients abound in the Open Source world. As also mail handlers like Evolution (Outlook clone) and Thunderbird (which has a Windows version as well, and can import from Outlook .pst files.

Linux machines are part of the same LAN as Windows machines in my office. Linux machines can browse Windows networks easily, but Windows machines cannot browse Linux machines. Transferring files over the LAN is done easily because I need only one way network browse capability.

Databases like Post-GRE SQL and several other open connectivity database applications allow me not to lose hair (I don't have much left to lose, so peace of mid is that much more valuable) over usability of data in existing databases.

WINE (a WINdows Emulator) is an extreme form of Windows compatibility. It allows me to run Windows-based software from within a Window running on the Linux OS . For example, I can click on Excel.exe and have Excel that is "installed" for use under Wine run. I can even open *.chm (Compiled HTML Help) and *.hlp (Win32 Help files) by simply right-clicking and selecting Open With|WINE Program Loader. This is still a Work-in-Progress, and not all software, and not all features of all software, are currently supported. But they are getting there. I am not yet Microsft-free, but, like the OpenSource movement, I am getting there. The effect is that I do not any longer have to worry too much about missing drivers or what to do with files and data created under Windows OS applications.

All HP Printers are supported by printer drivers. There is a Universal Printer Driver that works with almost all printers, but it may not be able to use some of the more model-specific features like Document Autofeeders, etc.. In case there is an issue with any printer, I can always create a PDF, transfer it to a Windows machine and print it onto any printer with a Windows driver installed.

The Open Source community has left hardly any reason now for Windows afficianodos to continue to justify their use of Windows on any ground other than inertia. All-in-all, the stage has been reached where one no longer needs to hesitate to shift to Linux. It is now time to ask why Microsoft does not support Linux. Indeed, in many ways, where they cannot beat them, they are joining the. Example: The xml-based file format, which OpenOffice had adopted probably 10 years back, and made its debut in Office 2007 for the first time, is an example.

Then about the economics and ease of installation.
After making the USB drive as the bootable drive and creating the partitions carefully, the OS and several bundled application software including OpenOffice loaded in 10 minutes flat. The Internet connection configured itself, as did all peripherals.

What can be cheaper than free? All I needed was assurance of technical support. I got that in the form of Nandan Bhat, who runs a consulting and training business for corporates on Linux. He is based in Thane, which is also my base of operations. I requested him to give me either a software support AMC or an  incident-based chargeable support at a fixed charge per visit, beginning with installation and configuration. For large corporates, there are companies like RedHat who do the same.

While an Intel Atom-based desktop is available for Rs.15,000 or less, with an LCD flat screen minotor, Windows 7 Professional Edition costs nearly Rs.8,000. Add at least Rs.5,000 for MS Office and 3,000 for Adobe Acrobat, and the software cost rivals the hardware cost, if one chose Windows. Choosing Linux meant only one visit charge payable to Mr.Bhat for making 2 machines usable under Linux immediately. He finished installing Linux (including OpenOffice) on one machine before the hardware supplier had fixed the wires on the second machine, which astounded him. The hardware guy told me that Windows takes at least 45 minutes to load, and MS Office took extra time, after Windows installation was completed.

My pleasant experiences meant that I called Mr Bhat twice more, to convert two more machines to Linux. On these machines, Linux and Windows are both available under different partitions. But Windows feels like driving with the handbrake on, after having used Linux.

For those who are hesitant, I suggest: Add Linux on a partition on your home machine, experience it, and then decide.

Sunday, November 21, 2010

IPR Survey

India has signed the Patent Co-operation Treaty, and its laws, after successive amendments, are TRIPS and WTO-compliant. However, Indian companies have yet to appreciate the threat this could pose. Over 80% of patent filings in India are still by foreign companies. The IPR Culture certainly needs a big boost in India both, in large and small companies and among leaders and managers of these organizations.
I am conducting what promises to be a seminal pan-Indian survey of IPR, funded by the Accounting Research Foundation set up by the Institute of Chartered Accountants of India. The research project aims
  • to investigate the processes and practices followed by consistently innovative  companies worldwide to build their IPR asset portfolios,
  • to observe and evaluate processes and practices followed by Indian companies in building awareness of IPR, and
  • to identify key factors and processes and practices influencing the IPR culture and rate of creation of IPR assets.
Names and company affiliations will be kept confidential. Only aggregates and summaries will be made available publicly. Participants in this survey will be entitled to an executive summary of the findings.
You can enrich the understanding of Indian companies' IPR processes by participating in the survey. This should take about 25-35 minutes of your time. Please write to me at or on +91-9619451254 with your name, designation and company name. You can also link with me on
Do participate in the survey and contribute towards creating a thriving culture of IPR in India.

Saturday, October 02, 2010

Are Apologies Enough?

Here's a Simple Quiz:  What do you see in common in all the following brief extracts from random news stories?
The US has apologized for what some of its scientists did between 1946 and 1948, which has now come out into the open. These scientists deliberately infected about 1,500 prisoners, soldiers and mentally ill asylum patients with syphilis and gonorrhea, in order to study whether penicillin can prevent infection from these scourges. At least one died; and the record is not clear on how many were cured. This unethical research was not publicly disclosed until October 1, 2010. The Surgeon General of the US at the time acknowledged, it could not have been done in the United States. Barack Obama and Hillary Clinton have telephoned and apologized to the Guatemalan President. The US Government has instituted a task force to investigate into the detailed facts. Apologies over and done with. Pesky problem out of the way.

The US Homeland Security has apologized for questioning Praful Patel, India's Civil Aviation Minister, in a case of what they called mistaken identity.

The US Department of State has apologized to Russia for effectively kidnapping a Russian pilot in Liberia, suspected of drug smuggling, and failing to inform Russia immediately.

The US State Department has apologized for comments made about Libyan leader Muammar Gaddafi

The US government apologized for displaying the Philippine flag upside down at an event in New York attended by US President Barack Obama.

The US apologizes for soldier using Koran in target practice. 

The United States formally apologized to American Indian tribes Wednesday for “ill-conceived policies” and acts of violence committed against them.

The US apologized to Italian Prime Minister Silvio Berlusconi, one of its staunchest allies in Europe, for an "insulting'' biography that was handed out to White House reporters at the Group of Eight meetings in Japan. 

The United States has issued a written apology to a jet-setting billionaire businessman with close ties to former President Bill Clinton whose name was added to the no-fly list in the wake of the attempted Christmas day bombing of an American passenger plane.

Nearly 60 years after the United States forced more than 2,000 Latin Americans of Japanese descent to be deported to the United States and detained in camps during World War II, the federal government apologized yesterday for their "wrongful internment" and agreed to pay each former internee $5,000.

The Pakistani Defense Ministry said the United States has apologized to Pakistan over mistreatment of a military delegation.

You guessed it. The US is apologizing! But hey, there's a lot of apologizing still remaining to be done. 

The US Government has yet to apologize for the Abu Ghraib excesses in Iraq. Donald Rumsfeld "accepted full responsibility" but neither has he or the Government that he was part of, apologized for the shocking atrocities that has forever alienated every Arab from the US. President Bush once apologized for the "humiliation" some Iraqi prisoners suffered at the hands of U.S. troops but in the same sentence, he said that Secretary of Defense Donald Rumsfeld is safe in his job. The US administration has consistently characterized the Abu Ghraib torture scandal as an isolated incident uncharacteristic of US actions in Iraq; this view is widely disputed, notably in Arab countries, but also by organizations such as the International Red Cross as "a pattern and a broad system". Not a dollar of compensation has been paid to anyone who suffered or died in the torture scandal. 

The US continues to kill innocent civilians in drone attacks in Afghanistan/ Pakistan, but has yet to issue an apology or halt these drone attacks. Civilian death are mere "collateral damage" while attempting to eliminate "insurgents".

The US has brought Iraq to its knees. Iraq seems in hindsight to have been well-governed, albeit undemocratically, and are now running away leaving the country in an ungovernable mess, because, while they had a plan to win the war, naively enough, they had none to win the peace. And all this, with provocations that have been shown to be lies and fabrications.

Is apologizing enough? If so, then BP should be allowed to resume their business without further costs or damages for the Deepwater Horizon oil spill, as they have apologized, and even brought in a new CEO, that expresses their contrition.

Sunday, August 22, 2010

The New Delhi bacteria should have been named the USA bacteria!

We all think that the name has been "conferred" by an article co-authored by 30 researchers, of which 14 have distinctly Indian names, and 3 others could well be hailing from the Indian sub-continent. And what does this article say? (You may have to register (it is free) on Lancet's website to see the full text of this article).

"We identified 44 isolates with NDM-1 in Chennai, 26 in Haryana, 37 in the UK, and 73 in other sites in India and Pakistan."
" The CTX-M-15 extended-spectrum β-lactamase (ESBL) encoded by blaCTX-M-15 was first reported in India in the mid-1990s."
"Recent surveys have identified ESBLs in 70—90% of Enterobacteriaceae in India and; although these collections might be a biased sample, they do suggest a serious problem, making the widespread use of reserved antibiotics such as carbapenems necessary."
"We recently reported a new type of carbapenem resistance gene, designated blaNDM-1.22 A patient, repatriated to Sweden after admission to hospital in New Delhi, India,..."
"22 Yong DToleman MAGiske CG, et alCharacterization of a new metallo-β-lactamase gene, blaNDM-1, and a novel erythromycin esterase gene carried on a unique genetic structure in Klebsiella pneumoniae sequence type 14 from India.Antimicrob Agents Chemother 2009535046-5054"
"We sought molecular, biological, and epidemiological data on New Delhi metallo-β-lactamase 1 (NDM-1) positive Enterobacteriaceae in India and Pakistan and investigated importation of the resistance gene into the UK by patients returning from the Indian subcontinent."
"Isolates of bacteria were identified from Chennai and Haryana in India. UK isolates were identified from referrals to the Antibiotic Resistance Monitoring and Reference Laboratory by UK microbiology laboratories between 2003 and 2009. We also identified isolates from other sites around Bangladesh, India, and Pakistan."
"Isolates, NDM-1-positive bacteria from Mumbai (32 isolates), Varanasi (13), and Guwahati (three) in India, and 25 isolates from eight cities in Pakistan (Charsadda, Faisalabad, Gujrat, Hafizabad, Karachi, Lahore, Rahim Yar Khan, and Sheikhupura) were also analysed in exactly the same manner but in laboratories in India and Pakistan."
"In addition to the collections of isolates from Chennai and Haryana detailed above, we have confirmed by PCR alone the presence of genes encoding NDM-1 in carbapenem-resistant Enterobacteriaceae isolated from Guwahati, Mumbai, Varanasi, Bangalore, Pune, Kolkata, Hyderabad, Port Blair, and Delhi in India, eight cities (Charsadda, Faisalabad, Gujrat, Hafizabad, Karachi, Lahore, Rahim Yar Khan, and Sheikhupura) in Pakistan, and Dhaka in Bangladesh"


An extract from the abstract of the cited article 22 states, "A Swedish patient of Indian origin traveled to New Delhi, India, and acquired a urinary tract infection caused by ... The third region consisted of a new MBL gene, designated bla(NDM-1), flanked on one side by K. pneumoniae DNA and a truncated IS26 element on its other side" This last sentence is the culprit for naming the bacterium after New Delhi.
The common co-authors of both articles are Timothy Walsh and Mark A Toleman, both from the Department of Infection, Immunity and Biochemistry, School of Medicine, Cardiff University, Cardiff, UK. 
The damaging part of the Lancet Infectious Diseases Journal article is reproduced below: 

"Several of the UK source patients had undergone elective, including cosmetic, surgery while visiting India or Pakistan. India also provides cosmetic surgery for other Europeans and Americans, and blaNDM-1 will likely spread worldwide. It is disturbing, in context, to read calls in the popular press for UK patients to opt for corrective surgery in India with the aim of saving the NHS money. As our data show, such a proposal might ultimately cost the NHS substantially more than the short-term saving and we would strongly advise against such proposals. The potential for wider international spread of producers and for NDM-1-encoding plasmids to become endemic worldwide, are clear and frightening."

This is the last paragraph of the article, apparently written blithely and off-the-cuff, and has nothing whatsoever to commend it scientifically. They were obviously stung to the quick by this article that has been cited. Hence, this paragraph was obviously intended to defend the NHS. There is no data whatsoever to back up this contention -- that elective, including cosmetic surgery in India caused the UK infections studied. Consider that they haven't mentioned the following before they rattled off such a paragraph: 
  • How many of the 37 UK patients underwent elective surgery in Indian hospitals? 
  • What is the proof that the surgery in those cases caused the infection? 
  • How did the other UK patients contract the infection? And the question that has the most devastating answer:
  • How many countries' hospitals have exported similar bacterium to the UK?
What is totally beyond me is how can such obvious personal biases be allowed to creep in into articles that are published after being scientifically peer-reviewed in a journal that many think is the holy grail of medical science?
There is a Health Protection Report put out by the UK's Health Protection Agency  which contains something that indicts other European countries as the source of the same health risks. Consider this extract from that Report: 
"Laboratories should be especially alert to carbapenem-resistant isolates from patients with a history of hospitalization in countries where carbapenemase-producing Enterobacteriaceae are prevalent - particularly Greece, Turkey, Israel and the USA, as these have been a repeated source of introduction to the UK."

Why did the authors not cite this Report put out as long back as 30 January 2009? Instead, they chose to malign an article in the mainstream press dated 17 January, 2010, and conveniently ignored this much earlier important Health Protection Report of its own Health Protection Agency. Instead, they chose to echo the name given to the same bacterium by an article first published in September, 2009. The New Delhi bacterium has thus been unjustifiedly and inappropriately named. This bacterium  got its name, however unjustifiedly,  because of a Swedish tourist to India getting a urinary tract infection, and has nothing to do with elective surgery done in India

Apparently the bacterium deserves the moniker, USAM-1 bacterium more than its current name. Surprisingly, the same HPA issued a more recent National Health Alert in which it refers to its earlier (30 Jan 2009) report and quotes it thus: "that many producer isolates were from patients previously hospitalised in Greece, Turkey and Israel." The mention of USA as a source of repeated introduction into the UK has been quietly edited out in the more recent National Health Alert. What's worse, queries of the public are directed to one Dr David M Livermore who is also a co-author of the article with the paragraph  damaging to the medical tourism industry. Despite his otherwise sterling reputation, he is apparently compromised by severe conflicts of interest: He admittedly "has received conference support from numerous pharmaceutical companies, and also holds shares in AstraZeneca, Merck, Pfizer, Dechra, and GlaxoSmithKline, and, as Enduring Attorney, manages further holdings in GlaxoSmithKline and Eco Animal Health.

I have written to Dr Livermore asking, inter alia, how the reference to the USA as a source of repeated introduction of carbapenemase-producing Enterobacteriaceae into the UK while drafting the National Resistance Alert 3 ADDENDUM.  His immediate response has been unenlightening. I am hoping that he will respond more openly. .

Friday, August 06, 2010

How Schools in Denver were cheated by Bankers

Here is another sordid story of bankers' greed -- where they sold sophisticated structured products to a School Board who lacked the expertise to assess the risks of such a product realistically -- while the bankers laughed all the way back to their offices!!
Another sordid tale of how greedy bankers shortchanged an unsophisticated body of funds meant for education.

Thursday, July 08, 2010

I love my India

There has recently been a furore about an article by Joel Stein in the once-venerated TIME magazine. 

This is not the first time someone has denigrated India. Another instance is a blog entry authored by another American, Sean Paul Kelly. A fitting reply to such stupidity is this.

Besides, Joel Stein has actually denigrated himself more than he has denigrated Indians, which becomes clear if you read the article carefuly. Joel Stein should, but does not, understand that culture is never frozen in time; once the population composition changes for whatever reason, the square pegs need to adapt to their now round holes. Which the Indians have done, exceedingly well, by Stein's own admission. Darwin and Evolution is on their side! Others who cannot adapt, like Stein, get out of the place. And moan.

Stein, notice, says that
the A&P I shoplifted from is now an Indian grocery. What credibility can one attribute to a self-accclaimed shoplifter with other shoplifters as friends? Further, he says during his time, when the Indians started arriving, they had slightly deteriorating, post–WW II housing and now they have many Indians, many of whom, fittingly for a town called Edison, are inventors and engineers and sometime after I left, the town became a maze of ... housing developments. That's a bad thing? Then what is good? Becoming rich and having mistresses who live like hookers of yore? Or being part of a gang or being a gay or a transvestite hooker? Choi the Mayor knew something about Stein -- which of these changes did he allege that Stein was a participant in and Stein went quiet on?

Alas, TIME is no longer the kind of magazine it was, it now caters to half-wit Americans whose span of attention is that of 3-year olds, and the only kind of writing they now disseminate is the kind that can penetrate the Americans' thick skulls within the nano-second attention span they have. Joel Stein knows his market, that is the only good thing one can say about him.

The fitting way to respond to dissemination of such stupidity is to disseminate writings such as this equally widely.

So here we are! Are we up to this task, of telling the world about the real India? Or about allowing such tripe and drivel go around the world?

Do tell your friends about this write-up using the Tell-a-friend widget below. Please also put in your comments by clicking on the comments link.

Rajesh Haldipur
Proud to be an Indian

Wednesday, July 07, 2010

It's deja vu all over again!

We saw what Nick Leeson did to Barings Bank. We have also seen how a Japanese brokerage house was brought to its knees by a single trade where the quantities and rates were mixed, in Japanese yen!

We now have the strange, bizarre case of Steve Perkins of PVM Oil Futures who bought 7m barrels of crude past midnight from a laptop at his home while in a drunken stupor. He accounted for 69% of all oil futures trades between midnight and 4 am on June 30, during which time, the oil prices rose by $1.50 within a 30-minute time span!

As Yogi Berra said, it's deja vu all over again!

Monday, June 14, 2010

US Consumer Debt : Income 50 cents, expenditure 65 cents

Since June 2008, the US household debt mountain has shown the seventh consecutive quarterly drop. This should be heartening. However it is not so for two reasons:
  1.  The figure is down by a minuscule US$0.37 trillion, out of the US$ 13.9 trillion -- just 2.66% deleveraging in nearly two years. Not fast enough, when you consider that the bigger figure represents 131% of personal disposable incomes. Aamdani atthanni, kharcha 65 paise (Hindi proverb that translates into the second part of the headline of this blog entry) is the condition of the entire US population!
  2. Most of this reduction has been achieved by banks writing off mortgage and credit card defaults. If one adds back to the debt figure the amount of write-offs, the bad news is that US household debt has actually gone up slightly, by only US$ 186 Billion! No sign of de-leveraging. The spendthrift habits of two generations are obviously refusing to die away.
 In the meanwhile, Government (Federal) debt has swollen from US$$5.16 trillion to US$ 8.16 trillion. So now, the Government has joined the excessive leveraging game. Not good either, for anyone. A healthy US economy is good for all, but today the US economy's condition is pink -- the pink of high fever, not the pink of good health.

Friday, May 14, 2010

An ancient parable with modern characters

A dear friend of mine, Kiran Sreedharan, pointed out a great piece by Aadisht Khanna. AK says that this old  parable of "the weaver and chariot maker is one of the Panchatantra stories that usually doesn't make it to primary school textbooks or Amar Chitra Katha, mostly because it's full of sex, war, and moral hazard".
Like most really great stories, this one is a cutting commentary on recent events in the US financial markets, and rip-roaringly hilarious because it is so true. Only, we are looking at that truth through the goggles of an old parable. 
Aadisht writes a very interesting blog at  However, in my view, this ancient parable with modern analogies is something that puts most of his blog entries in the shade. 
PS: 8 Mar, 2011
This page seems to have moved, but I found the same parable here. Obviously, this is an un-attributed lift, because this blog entry is dated after the date of this blog entry of mine. 

Thursday, May 13, 2010

Another Great Feature from Google Labs

The guys at Google are really something.

Now, it is an app still in the Labs stage (i.e., pre-beta) that I noticed today. It is called Google Public Data explorer. What it does is that it brings Economics and Macro-economic indicators alive.Way, way beyond what any spreadsheet applications have done. This feature currently works on specific datasets that Google has compiled. I am sure that the next step will be to allow you to upload your own datasets and use the same engine to animate the stuff.
Take for example this picture.  It clearly shows how hypocritical the developed countries are, when they refuse to talk about sharp reduction in emissions, and expect countries like India and China to commit to emission reduction. See their per capita profligacy over the last few decades by clicking on button below the graph. The underlying data is from the World Bank.
Take this picture, that shows how the preparation for the Olympics and the huge increase in steel manufacturing in China made for a sudden acceleration of China's absolute CO2 emissions.
Macro-economics and statistics will never be the same again.
I salute Google. This would be a godsend for researchers and for number-crunchers in companies, once it graduates to allowing us to upload and analyse our own datasets. No more huge money to be spent on data mining and analysis software. 

PS: Those of you who read this and some of the other entries on my blog are invited to comment  on the entries they have a thought to share, and to subscribe to the blog feed. I promise interesting posts, and not too many of them. Nice to know that someone is reading all this!


Sunday, May 09, 2010

Residential Property: Time for a Simple Reform

Recently, I visited an exhibition organised by an builders' confederation (MCHI) in Thane, where I live. I was struck and amazed by the unfairness that the industry has been able to visit upon buyers. The biggest unfairnesss is the increase in the rates. A year ago, apartments were available for Rs. 3,200-3,500 per sq ft in a then newly developing locality west of Ghodbunder Road. At that time, people wisely shook their heads and said that the rates were too high and hence the time was ripe for a "correction".  Now the rates ranged from Rs.4,900 to Rs.5,900 in the same locality, an increase of 53 to 84% in just about a year. What is this because of? There is no word I know which describes the opposite of "correction", except "correction" itself. Be that as it may. Let me now list the "unfairnesses" that the typical home buyer labours under.
  1. Most of these rates apply to buildings that have just been "launched" -- which means that not even a hole has been dug. In some cases, even the permission to start construction work (which comes after several clearances) may not have been received. Deliveries are rarely promised before June, 2013 for such apartments. This means that any money paid by a buyer to the developer represents risk capital. If for some reason, the builder does not deliver the apartment, the investor will be left holding the can; and civil rights are notoriously difficult to assert and execute in Indian courts in anything less than a whole generation. 
  2. The buyer is "allotted" a cube of space in the air called a proposed flat. He cannot transfer that right to the apartment without  the developer's consent. The typical developer will not allow the transfer, and if he deigns to allow it, he will charge a hefty sum, enough to make the sale much less worthwhile to the hapless buyer.  Or, he will offer to repay the sum paid less a small percentage. If the buyer accepts it, the builder will line up another such buyer at a rate much higher than the "booking rate" paid by the earlier buyer, justified by market conditions and the fact that the building construction has progressed considerably. Push a builder on why he does not allow such transfers before possession, and he will say that he cannot allow them to "spoil the market" thereby giving away that the market is nothing but a cozy cartel or oligopoly.
  3. Instalments have to be paid as and when slabs are cast, and with 30 and 40-floor apartment blocks coming up nowadays, 2% to 3% of the agreed total consideration comes up for payment every month or two months, reaching 80% of agreed consideration when all the slabs are cast. This stage is reached faster if the building is not so tall. Non-payment or slightly delayed payment would visit the buyer with an interest burden. Consider this: a typical buyer who funds 20% of the consideration on his own and 80% through a home loan has to pay up 20% immediately (i.e., 100% of his own contribution before initial excavation) as this is a normal rule with lending institutions and another 60% using loan disbursements, whereas the builder has incurred only 20% to 30% of the total cost of construction. While one may make an allowance for some reputed builders, there is nothing to stop builders from diverting the resultant temporary cash surplus into other projects, or land acquisitions. The temptation is very high -- after all, he will be using zero-cost funds and the risk will substantially be borne by the buyers who have no alternatives. 
  4. Now look at the builder's position. He has collected 80% of his money but has yet to spend 70% to 80% of the cost of construction. He has already used up the cash -- and will have to generate liquidity to finish the remaining work. What is his incentive to do the remaining work and deliver on the promised date, when it means that he now has to cough up more than he has collectible?  Every delay works to his advantage. Small wonder that most builders fail to deliver as per first promised schedule. 
  5. Now look at our typical buyer's position. He is living in a rented house. As soon as loan disbursements begin, he is keen on reducing overall interest costs, so he agrees to start paying his EMI (or pre-EMI) to mitigate borrowing costs. He then (let us say) gets married to a working girl whose earnings also come in handy. The marriage took away whatever financial cushion he still had remaining. And he (and his newly wed wife, too) have to pay (for 18 months to 36 months) a loan instalment in addition to the rent -- which, if they can afford it, leaves them with even less money in hand. Despite education, and despite well-paying stressful jobs, they are living from hand-to-mouth, with too much of month left at the end of their money. And then, after paying all his life's savings and incurring a huge debt burden, when the slabs are fully cast, they both are in the weakest bargaining or negotiating position that they will ever be in -- much worse than at the start. What's more, he does not even know the other people who share his plight, because only the builder knows who else has bought apartments. Add to this mix an implacable builder who does not recognize the concept of fairness, and you have a buyer who is extremely angry, but totally vulnerable and soft-as-putty. He does not have any money left to launch a legal fight, and the agreements are worded totally in favor of the developer, he discovers too late. At this point, it only needs an event like a job loss (which would not have been very stressful if he still had his savings, and was not servicing a home loan) to push him beyond the brink.
  6. If property prices are under downward pressure while construction is in progress, the builder is cool: his costs are already covered; and the  buyers are already locked in at the old price. He will have a few flats unsold, but if he does not need the money, he won't sell in a depressed market. His locked in buyers too, cannot sell without his okay. So the market price never really falls, and buyers at lower levels will not find builders willing to sell very easily. 
  7. If property prices rise, it is even better. Delaying delivery will make existing buyers desperate. Some will have reached the end of their financial tether, and become willing to sell out at much less than current market prices. The builder only switches the old buyer with a new one, who is willing to pay a much higher price. 
How can the situation be remedied?  There is a crying need for One Simple Reform: Ban builders/ developers from selling apartments or shops till they are ready to be occupied, and till an occupation certificate certifying that the entire building is fit and ready for occupation, has been received from the Municipal Corporation.  Indeed, they should not be allowed to even issue allotment letters or collecting advances linked to blocking of a specific apartment, shop or office. No document should be recognized as a sale agreement unless it is stamped and registered, and this cannot be back-dated. How will this help?
  • Builders/ developers will be keen on completing construction and making the property ready for possession because their own money is locked in till that happens.
  • Their traditional source of funding, prospective buyers, will dry up. So will "investors" who get in with the builder and get out with the builder, because they cannot get anything but a stated rate of return, and will be much more uncomfortable without a valid letter of allotment.
  • If the project gets "stuck", then the risk is entirely on the builder because he has his own and borrowed money invested, and the longer it takes, the higher the cost of funds.Also, the builder will be under much greater pressure from lending institutions who have (hopefully taken) collateral securities and who have the financial muscle to take control of the project, if needed, and sell the unfinished project to another bidder. Individual flat buyers will never be able to do that.
  • Prospective buyers will not become lightning rods for risks of this business because they cannot invest early. They can only buy ready flats, so they won't get "stuck".
  • The negotiation balance will be much less lop-sided, because prospective buyers can dangle full immediate payment as a carrot, and can demand better rates because the average builder is under much higher pressure to sell. 
  • Builders will be unable to overextend themselves to buy land because cost-free and risk-free funds to create land banks will disappear.
  • If property prices fall, some builders who have unsold, ready flats will be unable to bear the financial burden of waiting through the downward cycle of prices, and will be forced to sell at lower prices.
Along with this simple reform, there should be stringent punishment and fines (collected on behalf of those who have funded him) for those breaking this rule, and provisions for handling the interests of buyers who are already stuck" with a particular builder. A real estate regulator should be set up (could be additional powers to SEBI itself).
I know that there will be enough naysayers who will object to this simple reform and dub it simplistic and unrealistic, but in my view, problems resulting from this would be manageable.

Wednesday, May 05, 2010

Not a good time for any stock market

Airline and automobile industry have always been GDP multipliers. That is because of the huge direct and indirect employment they generate, both upstream (component and ancillaries manufacture, assembly, services) and downstream (sales, service/ maintenance, spares, travel and tourism) besides the airline manufacturers and operators themselves. When any of these industries get hit, the economy gets multiple hits.

Of the two, the airline industry is more vulnerable to random hits, because of the global nature of their operations. Not only are they buffeted by almost every risk there is, including terrorism, hijacking, fuel price and availability risk, currency fluctuation/market volatility risks, political and taxation-related risks, etc., but they are also vulnerable to Mother Nature – sudden “clear air turbulence”, volcanic ash, storms, lightning and bird strikes, storms, besides risks arising out of mechanical, electrical, hydraulic and electronic failures, Air Traffic Controllers' errors, pilot error, irate governments who impound planes to score political points, militant cabin crew and pilot unions, irate customers demanding refunds and free accommodation, careless loaders, .... the list is endless. There is no other industry I can think of, that has such a profusion of risks to contend with every single day. Of course, the insurance industry is a close second.

The automobile industry is already doing very badly in all countries save China and India, thanks to the 2008-9 meltdown and recession, and these two markets are becoming hyper-competitive, thinning the margins and making the business environment even more difficult for all players.

When both these industries are doing badly, it is well nigh impossible for any economy to grow, especially in developed countries where markets are already very developed, saturated and competitive. Add to this fiscal profligacy of successive governments and you have a great recipe for financial disaster. This is what Europe and the Euro area is facing today.

With growth rates of all these economies being in the low single digits where positive, and negative in most places, it does not take much to knock an economy, and by extension, due to globalization, an entire region, off-balance. The recent volcanic ash episodes have paralyzed much of Europe, especially the UK for upto a week. Given that a week is almost 2% of a year, loss of such a level of business more than once in a year is a luxury that any European country can ill-afford. We are already into the second bout of airport and airspace closures, and Katla, the bigger next-door volcano, has yet to erupt! Add to it the cost and turmoil of elections (in the UK), fiscal profligacy (Greece, Spain and Portugal) and strikes and unrest (Greece) and it would be a very credulous person who would bet on the European economy growing over the next two years.

Because of the very interconnected nature of markets, it takes seconds, not years, for any contagion, whether of optimism or pessimism, to travel across the globe. So brace yourself for stock market failures. This contagion will definitely travel to India, for no mistake of it own, except Indian markets' connectedness with world markets and contagiousness of investor sentiment. 

Thursday, April 29, 2010

The Cost of Higher Education

In the last 4 years, the tuition fees and other costs associated with institutions of higher learning have started shooting through the roof. For example, fees at IIM-Ahmedabad are now reportedly Rs.13.5 Lakhs for two years. I am not commenting about whether the fees charged today by IIM-A reflect the worth of the education or not (that is a separate point for another day). My intent here is to create consciousness of  the indirect, secondary impact of the fee-rise. The primary effect is on the students hoping to get or getting admission at IIM-A. The secondary effect affects the entire sector it operates in.

Fees charged by such iconic institutions are a little like the "Bank Rate" announced by the RBI: while nobody uses that as a benchmark, generally, fees charged by other institutions with lesser reputations tend to cluster around this figure, and use it as a justification. Some charge more (like the ISB) and most charge less, but not much less. Since the IIM-A has raised fees roughly three-fold (I stand to be corrected) in less than 5 years, institutions of much, much lesser repute (ranging from good, low profile institutions to fly-by-night operators with monstrous advertising budgets) have, in the same period, at least doubled their fees without in any way delivering anything substantially better to the student body. It would be fine if the earlier fees were so low that profitability was an issue. They never were. Higher education has become a business in which politicians have dabbled and entered in a big way. This itself is a sure sign  of how lucrative the business was. Now, they are rubbing their hands in glee: Along with a huge increase in the fees, there has most likely been a significant fall experienced in the cost of "managing the environment", what with the regulatore, the AICTE standing totally discredited today.

What's more, the other forces that could have drummed sense into this sector, like the raters, have themselves over the years, opened themselves to charges of being very pliable, though some of them are in all probability pillars of rectitude. Besides, in any case, rating methodology is itself open to question, with its predominant reliance on physical indicators like infrastructure, which is very easy to create and set up in sectors like Management Education -- no equipment, hospitals or labs are needed. Also,.many institutions have learnt many tricks to "game" these ratings. As a result, there is no way for the lay person to figure out which rater is the most honest, or which institution is the best value for money, or even which institution is exceptionally good. B-Schools, especially, have become marketing institutions at two ends -- to attract applicants and students at one end, and to attract employers and push their students into lucrative jobs at the other (which is already becoming too difficult for most institutions to guarantee, so they talk of maximum and average packages, while downplaying the percentage of placement.

Every student must today conduct a RoI exercise for whether it is worth doing an MBA or not. An important element in this RoI calculation has to be opportunity cost -- what you would earn if you were not to do your MBA. The purpose of this exercise is to recognize clearly that for the below-average or average student, today, even doing an MBA from a 50th or 100th rank B-School in most ranking lists, or worse, an unranked B-School, it will never be worthwhile in financial terms. Once this clarity is achieved, one can take a decision about whether it is worth ding an MBA for all the non-financial reasons, like status, prestige, etc.

Wednesday, April 28, 2010

Portfolio Living: A Personal Experience

This is my first "autobiographical" blog entry. So, Dear Reader, you are forewarned!

About a year ago, I gave up what was my fourth job in 7 years, to resume my life as an independent professional.  Each job was radically different from the other. First, I was Director of a KPO/ BPO company with responsibilities mainly restricted to the D in R&D. I dumbed down processes so that both, scale and quality could be managed with lesser experienced or skilled people. I could almost call myself a software professional then. The next job was that of a full-time Professor in a B-School in Mumbai. The third was with the training unit of a large conglomerate, organising and delivering high quality, expensive training programmes in Finance for all levels of finance managers upto the CFO level. The last was as Dean of a B-School, with the job consisting mainly of mentoring and lecturing. My first job came at the end of a long 16-year innings as a practising Chartered Accountant. Here too, I did several things besides the bread-and-butter work of tax advisory and filings. I was, at various times, author, visiting faculty at B-Schools, editor, banker, software product developer, and (on rare occasions) public speaker. 

When I started my second innings as an independent professional, I have not kept myself bound by the shackles of a Certificate of Practice as a Chartered Accountant, as I don't audit, attest or represent anybody before any authority. I landed a near-full-time assignment with an old mentor, and decided to pursue studies in the field of Intellectual Property Rights. I also organised my life such that I spent almost no time on commuting. I therefore get 4 hours extra everyday compare to people who commute to the other end of Mumbai city, all the better to pursue varied interests outside of work, and more intellectual stimulation too.

In scarcely a year, I found myself getting involved in several small as well as long-range assignments or projects, all using spare time outside of a normal working day. Many of these projects have little earning or financial potential, like making mind-maps of various theoretical topics in the CA syllabus for aiding my son's learning, building a family tree, helping create and raise funds for a school alumni network, etc.. They were satisfying, nevertheless. I also did (and still do, whenever I get an opportunity) several small "promotional" or "concept-selling" appearances at various fora, selling the concept of greater awareness of IPR among the community of corporate managers. I am also working simultaneously on two distinct research projects in the field of IPR. As a result, my work content on any day is refreshingly varied though all the variation is during the "after-hours".

Recently, I met a dear friend (and former colleague) who has equally eclectic interests as mine, but has scholastic credentials much better than mine, (Fulbright scholar and all that). In fact, I have such a high opinion of his capabilities that I once told him in all seriousness that he could be the next Vir Sanghvi or Karan Thapar in the world of television news, if only he allowed himself the luxury of a career change. When he asked what I was upto, and I told him all the small and big things that I am engaging in nowadays, he remarked that I had transitioned to a portfolio life. I asked him what he meant by it, and then he told me about a book called The Elephant and the Flea by Charles Handy. The next day, I googled "Portfolio Living Handy" and got this and this. And discovered that my new way of life indeed had a name: Portfolio Living. Apparently, there are many, many people living this way (I am not a freak!) and their tribe is increasing everyday. Have been sleeping well since.:-)

Friday, April 23, 2010

More on ULIPs - esp NAV Guarantee

In this entry, I had done a round-up on the ULIP SBI vs IRDA controversy, quoting a few experts. One of those experts, Jayant Thakur, commented on one aspect of my entry on which entity takes up the downside of the NAV guarantee, and what is its capital adequacy. He pointed out this article to me.  Inter alia, this article points out that the way the guarantee is managed is that if the NAV spikes on any day, enough of the portfolio is transferred to debt to cover the guaranteed NAV on maturity. This struck me as very unfair to the investor.
 Most ULIP brochures (here is an example) include words to this effect:

There will be an additional charge for the cost of investment guarantee of 0.10% per annum. These will be made by adjustment to the NAV.
This actually is the opposite of what advertisements make out implicitly -- that the risk and cost of the guarantee is being borne by the insurance company, whereas they are charging the investor every year. This sentence was what made me think in the first place that perhaps there would be a third party backing up or taking the downside for the guarantee, in return for a fixed charge, similar to bond insurance premia charged by monoline insurers in the US. Till I saw this sentence in the above-referred example ULIP brochure:

If the NAV of Pinnacle Fund falls below allowable limits, assets will be completely reallocated to debt.
If the guarantee is to be implemented by shifting from equity to debt as the article suggests, (and also what the above example brochure suggests) then it is insult added to injury added to dishonesty. Why so?
(a) It means they are charging the investor for what the fund managers already have the right to do, viz. invest any part of the portfolio in debt. That is Insult.
(b) It means that when the going gets tough, switching to debt to contain the fallout of the guarantee is a "poison pill" that the fund manager forcibly makes the investor swallow, because it lowers the expected rate of return dramatically and reduces NAV fluctuation dramatically too. It also means that the fund managers have virtually abdicated their fund management function. That is Injury.
(c) Switching to debt predominantly to de-risk and cap NAV guarantee liability means hardly any equity exposure left.
Why should the investor pay a higher fund management charge on the now specious argument that investing in equity being riskier justifies a higher risk management charge? Worse, the fund reserves the right to increase the fund management charge to 2.5% per annum [being almost double of what they are charging today (1.35% in the example)]. All this when the investment risk is borne by the investor! That is Dishonesty. It is also Unfairness.
If, on the other hand, the guarantee is being implemented by passing on most or all of the guarantee cost to a third party, then the questions raised in my earlier blog entry remain relevant.


Monday, April 19, 2010

More on the Iceland Volcano

This updates my blog entry on Saturday, 17 April.

From the initial announcement of airport closures for 2 days, now the closure has been extended to 21 April -- a full 7 days after the volcano erupted for the second time since March. The real point no one dare ask aloud is, how do they know? The last time the volcano erupted, it continuously erupted for 14 months.  Besides, the neighbouring Katla volcano, being bigger, remains a big threat. It has erupted shortly after the current volcano in both its earlier eruptions in the past 1100 years. The odds are, that it could explode too. Understandably, nobody wants to talk much about this possibility, because the impact is too mind-boggling to consider seriously.

Now, after 5 days of ash spewing, the New York Times is tentatively speculating about how the economic fallout could hurt Greece really bad if the disruption extends into the holiday season, which could affect tourism there. A full three days after I said something similar on my blog, and four days after I actually acted on by apprehensions.

Now people have begun talking about other secondary effects -- on airline profitability, on overnight parcel delivery firms, on floriculture and horticulture product exporters to Europe, on overall productivity because people cannot get to work, and on overall health because of possible rise in respiratory illnesses. People profiting are rail, road, taxi businesses, and the hotel and hospitality industry. However, this is still being seen as a regional issue (Euro region) but it will not be long before analysts and journalists start considering it a global issue, not just because of the global warming potential with so much more CO2 in the atmosphere, but also because of the secondary and tertiary economic fallout that can be felt all over the globe, and in unlikely places. Like the fallout of 9/11 on someone living peacefully in Kirkuk in Northern Iraq.

In one of my earlier posts, I had said that I am an incorrigible optimist, but talking like this could make me sound like a perennial pessimist. This is a risk I am glad to run, for taking a long hard look at what could happen, and taking the only fail-safe option open today to a small investor with limited risk appetite.


Saturday, April 17, 2010

The Icelandic Volcano and its possible fallout

The unpronounceable and unspellable volcano in Iceland has been spewing ash for 3 days, from 5 different plumes, straight into the stratosphere.  The wind is blowing the ash, containing microscopic shards of glass, into the cruising height of all jetliners -- upto 30,000 feet. The airline schedules all over the world have been disrupted already. What are the likely secondary effects?

The closure of airports for 4 days post 9/11 offers a precedent. It created a downward spiral, catalysed US's entry into two wars in two faraway countries, knocking the economy on steroids that the US was, and still is, into a recession that lasted 2 years, and is arguably still in it.

While there are no more wars likely in a world already tired of wars, there are dangers, real ones, for economies on the brink of bankruptcy. Economies like Greece, Spain, the UK -- they are all very fragile today. The UK is going into an election with uncertainty about political outcomes.

If the airline industry reel for over 2 weeks, we might just see a couple of economies in Europe slipping back into a recession that will probably last quite a bit longer than the ash plume from the volcano.  If that happens, count on Europe as a whole being dragged into a recession, with knock-on effects on the currency rates, that will filter across all stock markets in the world.

I am very worried -- if the perception as above is shared by enough persons operating in capital markets worldwide, rcession and stock market crashes will become a self-fulfilling prophecy. I have covered myself -- yesterday I sold all the shares I held. Will wait for a month for the downward spiral to happen -- if it does not, I will re-enter the markets.