Mumbai Carnage

As I was flipping through the channels I saw CNN streaming about terrorist attack in Mumbai. It took me time to figure out how bad it really was. I do not think Mumbai really recovered from the blasts of 2006. This time however, their audacity seems to have gone up. Instead of planting bombs, these guys actually went on a rampage, shooting indiscriminately and mowed 125 ppl. The terrorists have become more ambitious. They are not happy just killing India's common man, they want international recognition. And boy, did they get it? CNN in US is streaming nothing else but terror in Mumbai for the last 30 hours.

I think the entire intelligence system in India is rotten. Terrorists have been able to strike at will and at any location of their choice, without our intelligence ever knowing anything about it. Be it Jaipur or Bangalore or Delhi or Surat or Ahemedabad. We haven't really been able to crack these cases even afters months of investigation. Something is seriously broken somewhere. The terrorists are ahead of us and they know how to leverage technology better than us.

Its a problem cutting across party lines and administration. We need to make the right investments in upgrading our forces and making our nation more secure.

I wish I could help, if only I knew how.

Will Obama Succeed?

There are so many expectations around the world from President Elect Obama that he may look like the messiah in a 100 years from now. This article in Nytimes collates the hope of the world. It would be a tall order to live upto the hope or hype as you may see it.

I personally think that Obama has just too many Challenges to overcome. Good thing is he is focusing on the economy first. That itself would take most of his initial months, if not years. As for foreign policies, the middle east would give him a fair chance to come through. It all depends on how he balances Isreal and the Arab world.

I think he will not be able to live up to the hype. When McCain talked about lack of track record, he was right. We do not know which way Obama is going to lean. But this certainly is America's best chance to make up to the world. Somehow I don't feel reassured. I want to be wrong on this one. I want him to be the Glue that holds the world together and yet, I'm not so sure.

Real Danger of Deflation

We have been worried sick by rising prices of commodities. It was largely due to movement of money from stock markets to the commodities market. The issue with commodities is that for most things (such as oil and food) the demand is price inelastic. That is world has to live with whatever the Oil costs. The decrease in consumption due to price shock is not very high. Same with food. In the past year a lot of liquidity left stock markets and fled to commodities. All of that is now changing with tightening liquidity. Punters are unwinding their positions and so size of the futures market is shrinking. I've not seen the numbers but I can promise you that the capital in futures mkt has shrunk more than the equities mkt.

This is also causing the prices of underlying commodity itself to crash. Oil has already come down from 147 to 64 in 3 months despite OPEC cutting production. Same will happen to food and other commodities and by this time next year a large part of the world will see deflation. It would be largely on account of high base in 2008, but I do expect prices to go down.

Same will happen to interest rates in India. By end of next year housing demand will pick up due to softening of interest rates.

Rupee is going to Appreciate

Now that the Credit Freeze in US is thawing, tide of Dollars is also going to reverse. I think the reason Dollar went up against all the currencies(except yen for the same reason though) is that US money was invested in all corners of the world. When the Credit Crisis happened, the US investors bolted from these market, dumped everything they had in local investments to convert to Dollars and brought that money over to US.

With the Credit Crisis blowing over, some of this money will find its back to these markets. In January, with the start of new financial year, US investors will start putting their money in various countries including India. Also, the price of Oil is now more reasonable and therefore I would think that the rupee now should appreciate to 45 like levels by Jan-09

Impact of Global Meltdown on China

This could be the biggest challenge for the most populous country in the world. For decades China has been growing by being the world's manufacturing base. Prosperity had kept the dissenters from voicing their thoughts against the communist regime.

All that is now set to change. With the slowdown, will come slower growth(the GDP growth in China for 3rd Quarter is already come down to 9%) and joblessness and with it will come mass unrest putting great strain on the country's political system.

Unless China can generate internal consumption to keep its people engaged and prosperous the political scene could change there in the next 3-4 years. There will be a meltdown in coming years. How long can the govt differ it is to be seen.

What could help is large scale govt spending on Infrastructure projects and welfare schemes. Good news is that with 2 Trillion dollars they have the deep pockets to make it happen. How well they manage it still needs to be seen. One thing is for sure, in this Global Financial Crises, the stakes for China are as high as for US.

HDFC Bank Market Cap Overtakes ICICI Bank

This is incredible. Just goes on to show that Banking is fundamentally a conservative business. If you do not run it that way, you are likely get into trouble sooner or later. Being bigger, more aggressive etc. has come to naught as HDFC bank whizzes by. FYI, I checked these numbers based on closing price of stocks on 22-Oct-08.

I have known a few ex ICICI guys and they pride themselves in being aggressive and mkt share. Thats what has driven them. Mkt share. That obviously has led to placing bad bets. All of these problems with indiscriminate lending and poor credit control is coming back to haunt them now. I think they got lucky last year when they raised money from the market at around Rs. 980. Now the share price is trading less than Rs. 400.

A good lesson on Banking. Be Conservative.

VP Ansari's Speech at AMU

I read this article in Indian Express and was much moved. At a time of partisan and communal politics, this kind of speech is like a breath of fresh air. I completely agree to this thoughts. Education and Equity. Muslim integration with the main stream will hinge on how the new generation embraces education and if requires asserts itself for equitable treatment.

Housing Market Rebound

Housing market is nowhere near its bottom, per this report. The 1 year rent to price ratio(A surrogate for knowing whether mkt is over or under valued) currently stands at 1:22. For last 20 years its been 1:15. Implying if the credit gets as stringent as it was 10 years ago and if there is no oversupply, then perhaps house prices would have to come down by another 25% before we hit the bottom. Given the oversupply and fears of recession, it might go even lower before it stabilizes.

Am I a pessimist, soothsayer or what?

Greenspan is Culpable for this mess

I've been reading about the housing bubble since 2004 on fool.com. They knew it was coming but no one knew when. Greenspan knew about it but dismissed it as mere froth 2005.

I think the reason he chose to overlook it instead of dealing with it was because he wanted US to come out of the recession that started in 2000-2001. People were afraid that like Japan, US will also face a long recession. Housing bubble delivered US out of the recession in a much shorter time.

This time however, even that hope is gone. There is no froth left anywhere in any sector. The winter is going to be long and harsh. Remember, the US "lost decade" started in 2007...

A Whacko Idea on building employable skills.

I think, we should conduct IQ tests for ppl, mostly for illiterates and uneducated. If someone scores above the baseline, govt trains them in manufacturing or some other useful skill and also educates them for free. Mostly in basic reading and writing so that these ppl can carry out their work and life responsibilities better.

Create an institution. That will go around, conduct tests and recruit these people. It will train them and keep them on their payrolls while lending them out to industry. It will also pay part of the money they get as unemployment insurance while allowing industry to hire and fire at will. Or there could be two such agencies. One for training and other for employment. It would need initial funding but in the long run, we have to find a way make it sustainable.

I think its a whacko idea, none the less, it might get us better trained for the future and give the young but illiterate people hope.

Secular India?

This is bad enough to catch the fancy of the west, including the pope. Hindus and Christians. The only way mass hatred / hysteria is channeled is through religious bigotism, regionalism (Maharashtrians vs the North) and Castism(Rajasthan). With growing economy, extremism is also on the rise.

Is it a way the have nots are venting their anger? Is it coming from those who feel untouched by economic boom?

Whats the solution? We know we have to have inclusive growth. We understand that better than most other nations. I feel there are enough opportunities around us, but only for the educated and well trained. Is there a way to train ppl to be economically useful?

World is going to be poorer

I was reading this post from Ny times. Experts may say that the world will be fine once the money starts flowing again. I am not convinced. I think at the end of it all, world will be a poorer place than it was till lets say mid 2007, for a long time. For how long? At least 5 years. It could be more.

Yes, wealth or at least illusion of it can be created by borrowing and overextending oneself. But without creating underlying wealth to support it it can't go on for ever. When eventually the bubble bursts, a lot of this wealth will disappear. This will show up in reduced prices for houses and reduced values of 401K for all Americans.

This will impact rest of the world too. If US can't afford the accesses any more, all the asian economies that make a living out of selling to the Americans will also be poorer.

The good thing about this crises or the bad thing, depending on how you see it, is that it will bring down the wealth of the over leveraged part of the world (that is most of US and first world). But there is an irony there. Wealth is always relative. This means that everyone is poorer, people may not be as poor as they think they might be. Let me explain, when all people earn less, the house rents and mortgages will also be smaller. Its not to say that their disposable income in terms of its buying power will remain the same. It will not. It will diminish. But it might not be as bad people think when compared to current price levels.

The asians that did not invest in this crises will be relatively richer.

I think, India will turn out on the winning side of this. Its exposure to sub-prime crisis is minimal and its not a export driven economy. All that will help. Though India is also facing liquidity crisis, I think its temporary. Its caused by outflow of hot capital as FIIs needed to cover their positions in their county or origin. It can be addressed by relaxing CRR and reducing rate. What will also help is that given all this slowdown, oil may remain subdued for a few years to come. If India does not get drunk on low oil prices, it would not have to spend all foreign money to buy it. Over all, its good for India's standing in the world. This event will narrow the gap between the rich and the poor.

GM and Ford in Dire straits

Read this article and then this one.

The US Flagship Auto Makers are on their death beds. A company like GM and Ford were the pride of US for decades till Japanese started making inroads in the 80's and irrespective of what Lee Iaccoca might have said in his book about Ford and then Chrysler its now evident that the slide that started then is now reaching its culmination. US Auto companies face annihilation. All 3 of them GM, Ford and Chrysler and even though there might be talks of merger between GM and Chrysler, I feel their time has run out.

Unless the US govt bails them out they are going to go under by this time next year.

Unconscious Discrimination

A Good article in NY Times on Unconscious Discrimination made me think about the discrimination against Muslims in India. During my short stay here in US I've come to believe that the Muslims in India have the same status as Blacks in the US.

However open minded we call ourselves, we are in some way uneasy in our dealings with our Muslim countrymen. When Shabana Azmi expressed her views on moderate muslims, a lot of people came up with examples with how our president was a Muslim and so on and so forth, but the truth is that since 1992, we are living in an increasingly polarized society.

1992 brought the Hindu-Muslim divide to even the most moderate citizens. That singular event has created a mistrust that has only grown with time. In many cities, Educated muslims have sold their properties in otherwise Hindu dominated areas and have moved to predominantly Muslim areas. Ghettos have come up in all major cities.

A relative of mine has done PHD on the biases against muslim traders and she gives examples of how the municipal corp of Mumbai neglects Muslim areas. The basic cleanliness and hygiene is missing.

Its true that given everything else is identical, if we were to choose between a Muslim and a non Muslim candidate we would lean towards non-muslim. Its a fact of life and we are all guilty of it.

That the builders discriminate against muslims is a known fact. There are Muslim only buildings and then there are non-muslim buildings. Any other religion is fine, christians, parsi, sikh all are welcome. North Indians and south indians and jains and bengalis are welcome. Muslims are not.

My theory is that the spate of violence recently is in news is an aftermath of 1992 and Godhara. Unless we make attempts to address the deep psychological divide between Muslims and the rest, there will be no peace in India.

Crisis in the US, Impact on the world financial systems

As US Congress debates over $700 billion bailout and citizens cry foul over what they see as govt sponsored robbery, the world is grappling with the ripple effects of the liquidity crisis.



Trading in Russia got suspended for 2 days until govt pumped in $120 billion into the system. RBI in India is pumping Rs 84,000 Crore(~ $20 billion) into financial system.



US is a special country. When they screw up its not just them who gets impacted. It impacts the entire world. Till about last month RBI was trying to suck liquidity out of the system to contain inflation, now its pumping in money to ease lack of liquidity issues. Nothing has changed with Indian financial system or economy except that investors from US have exited. RBI had to sell them dollars and so in turn it has collected thousands of crore of Rupees (which have been sucked out of the system). In fact inadvertantly RBI may have made some cool profit in the process. It must have accumulated these dollars earlier this year by paying @Rs40 and are now selling these dollars to perhaps the same investors @Rs45. In coming days they might even reduce the CRR to inject more liquidity in the system.



It just goes on to show how US impacts the world. I just hope US congress sorts it out quickly without getting sentimental about morals and conscience. Let history and coming generations debate this in their economics masters curriculum.

House Hunting in DC

The matter apparently resolved itself on Sat. I've been given go ahead to join work. Indian s/w services companies perhaps have one of the worst employee policies in US. I wish there was some bench mark available that would bring out the contrast between a US based company's HR policies and compare them with India based companies operating in US.

Coming to the topic. Went house hunting today. DC area is about as expensive as Bay area when it comes to rentals. Choose a house. Looked like a steal. Closed the deal. Came back to check what its residents say about it on the net. Got the gory details of the catch(gotcha). Trying to wriggle out of the deal. Lets wait and see the damages.

Holed up in DC

Its been a week and we are holed up in DC without the knowledge of what future may bring. Paid a visit to White House with my family. Finally rented a car so that I could be mobile. Planning to visit a ranch today. I'm told there would be pony rides et all. My daughter has not ridden a horse before. I hope she likes it. Weather is a hide and seek. Its been wet and darb through the week. Friday was a better.

Perspective

We were sitting at Golden Bierch sipping beer when we were informed about the loss. One of our collegue's father had passed away in his sleep. Needless to say we rushed to his place. About half a dozen guys frantically placed calls to find the fastest route to B'lore. Alas, there is no way he can reach home before 9-May. We finally took him to airport and put him on Cathey Pac flight.

In all of this somewhere, I find myself shaken up. Sitting so far away from my parents there is absolutely nothing that I can do should they face any emergency. Makes me feel helpless and vulnarable and guilty of Green Greed.

God vs Religion

I was travelling to work on a crowded Subway. It was an unusual day. Trains from my residence to my workplace were cancelled and I had to take a detour. On the way there are few churches and I was looking over the holy cross with a pigeon perched on it, when it occurred to me.

Everyone needs God. But only the unenlightened need religion.

To me, God represents our inner self. Our faith, our hope and aspirations, our guilt and pride, our fears and convictions.

Religion is oversimplification of God to make him more comprehendible to the masses. The Dos, don'ts and the rituals are an over simplified rule book with broad black and white strokes.

Couple of years back when I was visiting China I asked a friend how did they decide what was right, how did they console themselves when everything seems to be going wrong. Being a communist country there is no concept of God there. He said they look upon their elders for comfort and are largely governed by social norms and conscience.

It seems its possible to survive without religion, perhaps even preferable if you can handle ambiguity in life. But for me its impossible to imagine a world without God.

In the Valley of Elah

I've seen a few movies around army life and I must admit I like the genre. Be it A few Good Men where I loved Jack, or Courage under fire, or Saving Private Ryan. In my book, this movie ranks up there with the best.
Another pleasant surprise was its creator, Paul Haggis. I had loved Crash, Million Dollar Baby(Script), Casino Royale(Script). In general I like this guy. This is his second movie and its brilliant.
Its about post traumatic stress thats impacting American troops in Iraq and how the war there is changing things in the mainland. Its one of the best antiwar movies, especially so as its so subtle(its disguised as a crime thriller). Tommy Lee Jones is outstanding. He carries the movie with a stoic restraint. Charlize Theron is equally good in her role.
Especially noteworthy scenes are.
- Tommy Bracing himself for the bad news(about his son) while tending to the cut he got while shaving.
- Tommy sharing the news with his wife.
- Tommy telling David and Goliath story to Charlize's son.

Another cool thing was the way he used his son's phone recordings as flashback, in insight into his son's life and persona.

How can you tell a gut wrenching story, without really having any villains. Then again its about parents having to face the loss of their children. (a theme that I've always found myself sensitive to, it brought back memories of In the Bedroom)

Somehow Paul Haggis movies do not go down well with the critics. For me, though, he is one of the best story tellers out there.

Adam Gilchrist Vs Kumar Sangakkara

World has hailed Adam Gilchrist as the greatest Wicketkeeper batsman of the world after he decided to hang his gloves this season. I too am his fan, especially in ODIs. In fact he is still playing ODIs. He has only retired from Test Cricket.

His is an illustrious career. I think he has most dismissals against his name for a wicket keeper. And to top it he is a great batsman, coming in late in the innings he has been the rock of Gibraltar for Aussies. No team has ever breathed easy when he is on the crease.

Thats clearly awesome. But calling him the best ever is taking it too far when we have a worthy contender in our neighborhood. The great Lankan Kumar Sangakkara.

Lets compare them side by side in test cricket

Adam Gilchrist
Test matches played 96 (1999-2008)
Test Runs scored 5570
Ave -47.6
100- 17
Dismissals 416 (Ct-379 St 37)

Kumar Sangakkara
Test Matches played 71 (2000-)
Test Runs 6032
Ave - 56.37
100 - 16
Dismissals - 170(Ct- 149 st -20)

Kumar is clearly blocks ahead in Batting Dept. He has scored more runs in less tests and at a phenomenal rate of 56.37. For comparisons, thats better than Tendulkar's 55.5 or so.

Coming to Wicket Keeping. I believe that its a combination on how good you are, and also, how good are your bowlers. Australia being the leading world side has a clear advantage there. They have the best bowling attack in the world. McGrath and Warne were awesome bowlers. No wonder the batsmen kept nicking the ball or misreading the ball and stepping out of the crease and to that extent any Australian Wicket Keeper is likely to have good statistics there. Though Lanka also has Murali and Vaas, they do not seem to generate as many behind the wicket dismissals as Australians. Or maybe Kumar Sangakkara is a terrible wicketkeeper... How is one to judge?

Another thing is age, Kumar is 30 and is likely to be around for another 4-6 years. That would mean he has a fair chance of reaching 9000-10,000 runs in test cricket and may have chance to better Gilchrist's record in dismissals.

Lets wait a few more years and see where Kumar Sangakkara performs. Right now he seems to be doing better than Tendulkars and Pointings of the world. Don't forget he is a wicketkeeper too.

All said and done, Adam Gilchrist is a legend and will an inspiring player...

Amores perros

The first movie of the director Alejandro González Iñárritu I watched was 21 grams. I think it was a good story, but the best part of the movie was the narration. The non-linear narration made it an interesting watch. I later followed it with Babel. I loved its music but the story telling style was the same.

Today I watched Amores perros, the movie they say launched the director. Its 2000 movie, way before Babel was made. Its in Spanish. During all these movies, there are multiple threads, the stories have remained dark with an element of redemption, the movies show some gruesome shots, may be for the effects, and all these threads then converge through a singular incident, here shown as the opening shot.

The dog fights are gruesome, and convey the gritty nature of the movie. The homeless hitman is perhaps the master stroke. An ex militia who does not think twice before killing a human gets a dose of his own medicine when a fighter dog he saves from a road accident kills all his other pets as soon as he recovers from its injuries. And yet the hitman can't bring himself to kill it for he was the one who saved that dog in the first place.

To me that was the master stroke of the film. Later when he leaves two brothers in a duel like situation is genius.

A lengthy, gruesome, yet great movie. Enjoyed the last 20 minutes of the movie.

Thats where the twist is.

Once

One of the best things about US is Netflix (Another is its libraries). Movies that I'd never have had a chance to watch in India are available here.

Watched an Irish movie called Once. Its about a street singer and part time mechanic coming to know a Czech street hawker (sells roses and magazines) and together they composing some touching music. Writer, Director John Carney creates magic on the streets of Dublin. 80 minutes of movie flows gently deriving its sentiments from mellow romantic songs. Guy, a street musician sings popular songs during the day. At night however, when no one is listening, he sings his heart out through self composed songs. One such night, Marketa Irglova , an immigrant street hawker, notices his songs and tips him 10 cents.

From there the story takes off as the couple works together to compose songs. She herself is a piano player and plays at a music shop as she can't afford a piano herself. Any regular Hollywood movie, the leads would fall in love. For "Once" this movie is refreshingly different. Here, finding strength from each other and their music the protagonists find their lost loves. The subtle romance and their passion for music anchors the movie. Together, and with help from other street musicians they piece together an album. The transformation of the indifferent recording technician to an admirer (almost a band member over just 2 days of recording) captures the fact that ordinary ppl can create extra-ordinary things.

Its a short, simple and yet a memorable movie. I'm editing my favorite movies list to add this one.

Tendulkar's word saved Harbhajan

Is this a PJ? Is this a Jaspal Bhatti sit com? This can't be true. This is as cheeky as it can get at international level. You call a guy Monkey and invite 3 test match ban for racial abuse, but if you actually abuse him using loathsome slang "Maan Kee" you get away with it, losing only 50% of the match fee. Check it out... This is the cricket at it kinkiest best...

Accenture's next champion of waffle words

Accenture's next champion of waffle words

Had fits of laughter reading this. I'll not comment on why should they single out Accenture for this treatment. She is right in deriding ppl who belt out jargons at the drop of a hat. Its true, Mr Foster could have summarized that memo in a sentence but for the embellishments that are implicit in any MBA curriculum.

A must read for all high flying execs who have traded the art of simple and direct communication for worthless euphemisms

Housing Bubble in India

Read this article in ET on Home Loan market in India. Things are pretty bad. Home loans dropped by 30% over a year. Interest rates soared by about 300 basis points. Thats catastrophic. But we aren't calling this a crises yet. Quite ?Unlike US. Why? I think the reasons are as follows.
- Prices have help up offsetting any panic situation.
- The maximum tenure in India for a housing loan is 20 years which got adjusted upwards upto 25 years easing Increase in EMI due to interest rate increase
- There are no teaser rates in India like in US that reset from 4% to 8% after couple of years. Combined with growing salaries, that ensures that every passing year ppl are financially better protected against EMI/interest rate hikes
- The down-payments are higher in India than in US. This gets higher commitment from the buyer
- Salaries in India are still growing by 15% or so every year, allowing ppl to adjust to higher EMI better than US where incomes are more or less static.
- Indians lead a less leveraged lives than US allowing them a better chance to adjust to vagaries of life.

In the end, its the conservatism of Banks when lending and growing economy that have ensured the situation has not gotten out of hand.

Did I miss anything?

Nano Blitz

Read the following article in Rediff about Nano.
Was stunned that Analysts expect Tata to sell just 60,000 cars in 2008. and max of 180,000 cars next year. Avg of 15,000 cars per month. Can this be called revolution???? I don't get it.

India, A Presidential System??

Was browsing TOI site and chanced upon this column by Sashi Tharoor about Parliamentary vs Presidential form of democracy. It brought back memories of class IX civics lessons.


In fact during the last few weeks as I watched the Democratic and republican debates, I had wondered if US style democracy is more suitable for Indian diversity. Above article echos similar sentiments. Lets face it, India is a fractured, hetrogenous, region centric polity. We are more like confederation than a nation. This reflects in our government's composition. Our govt is fragile as it has to rely on support of regional parties and be subject to their whims and fancies. It has neither the will, nor the mandate to take bold decisions. Though I give Manmohan Singh due credit for swallowing his pride and strangling his conscience by suspending the nuclear deal in favor of political stability.

Having a president directly elected by the people might be a better bet than having a nominated PM. But if that was to happen and if Mayawati was to be the president, I shudder at the thought of it. I understand and appreciate the fact that its our current political system that has given us Manmohan Singh. It may have been impossible to have him as president in presidential system.

I just hope our political masters don't come in the way of our economic renaissance. We have progressed inspite of our political system and not because of it.

May be as Sashi said its time for a change...

Traffic Curse of LA

Started off early 7:30 on a long weekend vacation to LA. Was hoping to get there by 1:30 pm and spend the evening touring Kodak studio and Sunset Blvd Strip. Did pretty well till about 30 min to LA. And suddenly the flood gates opened. Cars of all shapes and sizes spilled over the road and covered every square inch of it. It was irritating and exasperating. It took us 2 hrs to wade through the traffic to reach our hotel.

After cleaning up, armed with GPS and traffic meter, we went back out to fight the zombies on the road. Trust me, in a place like LA there are no empty roads any time of the day. Traffic sensors, forecasters etc. are all worthless when the Zombies are flying in all directions. In the end we could see just 2 spots. The Hollywood sign and Kodak Theater. We'll try and cover other places on Sunday.

Sometimes it feels like a cluster of mosquitoes hovering over your head on a warm summer evening. They follow you whereever you go and they find you however hard you try to dodge them. LA traffic knew all about our plans and whichever route we took, they got there before us.

With a population of just 4 million(Mumbai is 5 times more populated) LA has managed to choke itself. Its convinced me of need for mass transport system for every city thats more than a million people. It just does not make sense to broaden the roads. I was driving on 10 lane highways( 5 lanes each side) and yet they were all chock-a-block.

Tata Nano

There is a lot of hype around Tata's new car Nano. Its expected to revolutionize the world of cars as we know today. There is a lot of positive press surrounding its launch, including in Newyork Times. A couple of pages were dedicated to how this engineering marvel is going to change the world.

I'm not so convinced. Sorry about raining on your parade. But Mr. Tata I'm not sold to your concept. I'm listing my reasons. Please convince me otherwise.

I'm comparing Nano to Maruti 800, a car my parents and I have driven for years. We bought it new it for Rs.100,000 in 1989 when I was in my teens. Same price, just about 20 years ago. And remember today its not the largest selling car in India. I think its being phased out by Maruti.

EMI vs Price Tag
In the world of financing ppl have stopped looking at the price tag. They rather look at monthly outgo. The way I look at it, financing a maruti 800 over 7 years makes my monthly outgo around Rs. 3473 assuming @15% interest and price of Rs. 200,000 loan. Downpayment requirements on maruti 800 are are also fairly relaxed. Maybe 10% should be enough.

Same can't be said of Nano. I'd be surprised if any Bank is going to allow more than 5 years of financing on Nano. Considering the same variables except Rs. 100,000 loan for 5 years instead of 7 the monthly outflow comes to Rs. 2379.

So for an incremental Rs.1,100 monthly I can upgrade to Maruti 800.

Resale Value
We solf our Maruti 800 @Rs. 30,000 after 17 years of service in 2006. It lost 70% value over 17 years. For cars, buying decisions are greatly influenced by resale value. Maruti 800 offers industry's best resale value. Can the same be said of Nano? I doubt. A car that can't go more than 70kmph, can't be driven on the highways, I do not think it can retain its value over lets say 7 years in same ratio as a maruti 800. While I can sell a maruti -800 for Rs 100,000 after 7 years, I may not get more than 25,000 for a Nano(I know I'm guessing here, hopefully I'm not sounding unreasonable).

Given I'm loosing only Rs. 25,000(100,000 for maruti and 75,000 for Nano) more over 7 years, to me, tilts the balance in favor of Maruti

Limited Use
Maybe I'm repeating myself here. I have driven Maruti 800 from MP to Mumbai. I have driven it @100kmph without breaking sweat. It held up pretty nicely. Can Nano achieve this feat? I t can't go beyond 70kmph without wearing out its bearings. It does not have the power needed to overtake on a highway without which its actually hazardous to drive on a highway. To me Nano is for city use. Driving to office and back home.

Nano is a cheap second car rather than worthy first car. The first time car owners are unlikely to buy it for above limitations.

My verdict, Nano is unlikely to be a success. But then its important to define success before measuring it. I would define success as doubling the car market (volume) and taking 50% of it.

So Nano has to sell about a million cars a year in India to be successful.

Am I being unreasonable? I do not think so. I'm pegging 2007 mkt at around 1.4 million conservatively. Nano, should be able to create a market for itself. Adding another 1 million to 1.5 million other cars that would be sold in 2008. A million in 2009 would also be fine.

Will it make it? I vote a big NO!

Rejuvenating my computer

I bought my current laptop more than 3 years ago. At that time, the configuration seemed reasonably high end with windows XP prefessional with 512 MB RAM and I felt smug in believing I had future proofed my self. I ignored Moore's law at my own peril (computing power doubles every 18 months).

Over the next 3 years my laptop served me fairly well. I installed a bunch of useful and not so useful programs. As time went by I started finding the performance deteriorating. The boot up times starting crawling upto a point where it became excruciatingly long. The time to load any application started stretching to minutes. My hard disk kept working harder and harder but to no avail. Tethering at the brink of my patience, I decided to take my chances. I was not ready to accept that the same programs, IE6, MS excel etc. should take longer on the same machine where it took just seconds to open.

The results were surprisingly pleasing. Here is what I did and its relative success.
- Defragment the disk. Marginal success. I gained just a few seconds improvement over my boot up and application load times but nothing worth elaborating.
- Uninstall some applications I did not need. That improved the bootup time a bit.

Then I realized, if I needed to improve my bootup timings, I need to manage start up programs. The way to do it is
- Press Windows+R and key in "msconfig, and hit enter. System Configuration Utility will open up.
- Go straight to Start Up Tab and you will find a list of all the programs that kick start every time you bootup your system.
- Google each name you think is critical to booting and proper running of computer. I searched and disable a bunch of stuff such as Yahoo Messenger, Google tool bar and so on.
- AFter I had saved the changes I was asked to restart the computer and Viola! My startup time reduced from about 4 minutes to less than 3 minutes

Enthused with my success I went a step further and clicked on services tab. just next to Startup and unchecked every service that I did not need. I realized that MY-SQL db, Apache Server etc. a lot of applications were being started as service and I really did not need them now.

Unchecking them and restarting the server did the trick. The start up times got down to less than a 60 sec from 3 min. Wow! I said This is cool. One added benefit was my start up memory also reduced and that allowed me to load applications faster. Earlier I used to run out of 512 MB in just 1 browser session. Now, I could open multiple sessions together.

Now what ever I dish out, my laptop handles with ease. I think I just added a couple of years of life to my computer without spending any moolah!

Retirement Planning (Corollary)

Starting where I left off. What do I do, I had 2 more days to kill.

Well I started with a little introspection. What are the odds that I'd not live to see the next millennium. Pretty much 100% I guess. Living to be 80 is perhaps closer to reality, though still pretty far from where I am.

Obvious part of perpetual cashflow is that it requires higher initial base. When I plan for a more realistic life expectancy, anything less than infinite, one new variable springs up. Time.

Adding time to the equation made it a little more challenging. I had to brush up my class XI maths. Sum of Geometric Progression and Finding nth term of a series was something I had not done for a long time. After a rusty start and scribbling on sheets of paper for some time here is what I got

i = Rate of return on your investment (post tax)
i_f = Inflation
P₀ = Initial Savings
B = Annual expenses (burn rate)
R = (1 + i_f )/(1+ i)
n = Time in years

Money remaining at the end of n^th year

P_n = P₀ X (1+i)ⁿ – B X (1+i)^n-1 X (Rⁿ-1)/(R-1)

That’s kind of lengthy equation. To solve this I needed excel. I’ll see if I can upload the excel so that anyone can try this out.

If I wanted to know how much do I need to last 50 years I could use above equation.

Lets complete the example. Please notice that all the values are the same as previous example except a new variable “n”

i = 8%
i_f = 3%
B = $30,000
n = 50 years

I’m now solving for P₅₀ = 0 (as I plan to spend my booty in 50 years)

P₀ X (1+i)ⁿ = B X (1+i)^n-1 X (Rⁿ-1)/(R-1)

Solving for P₀ we get

P₀ = $543,918

This is interesting. Comparing between perpetual cashflow (P₀ = $600,000) and one lasting just 50 years I find the "Initial Savings" differ by just about $56,000. Less than 10% of perpetual cashflow requirements.

Given this, I’d rather work another couple of years to save an additional $56K than run the risk of running out of money just in case… What do you prefer?

Retirement Planning

Being lazy is my way of life. The idea of getting up every day, shaving, bathing, dressing in formals and showing up for work is not my favorite fantasy of how life should be. If I could, I'd love to retire today and spend my life in creative pursuits such as blogging, bidding for junk on ebay, updating my queue on Netflix, ripping CDs in lossless format and having orgasms listening to them on my Harman Kardon. No, Gaming and cybersex do not interest me yet.

So here I was, Friday night, fretting over my retirement and planning my life beyond, tinkering with excel, projecting my future finances blah, blah.

As I did "What If" toying with the spreadsheet, I observed something amusing. It was a simple equation. When put on paper it looked something like this.

i = Rate of return on your investment (post tax)

i_f = Inflation

p = Savings

b = Annual expenses (burn rate)

∆ = Difference in invest rate and Inflation (i - i_f)

Money you need to support yourself for ever without running out of it ever

p = b / ∆

For example

i = 0.08 (8% returns on your investment)

i_f = 0.03 (3% based on last 20 years)

b = $ 30,000 (excluding house, all other expenses or $2,500 monthly)

∆ = 0.05 (i - i_f)

Then

p = $600,000 ($30,000 / 0.05)

The secret here is to keep beating the inflation by 5 points, year on year. I'd bet that shouldn't be any tougher than breaking 128 bit encryption or hacking into NASA on your dell laptop. Hollywood does it every other Friday.

If I had $600,000 invested @ 5% better than inflation, I will never ever run out of money, no matter how long I live. I could be the longest living blogger @1000 years and like "Baba Moze" (In Hindi version of Phantom, he used to tell stories of 5th to 15th generation Phantom. He was only 400 yrs old though) read out this blog to my Android Generation-X.

If anything, the thought of never running out of money did make me feel lighter. Needless to say, I slept better that night.

The next to-do items are to get $600,000 and to find an investment opportunity that gives a stable 8% return.

You can try this out to your hearts content. Let me figure out if I can upload the excel so that all you lazy bums out there can retire tomorrow betting on my path breaking discovery to bring home the bacon. I'm sure when I'm 547 years old they will offer me a Nobel for my contribution to the lazy planet in 2008.

If you figure out that this theorm was proved 1300 years ago by Aryabhatta in his crib, pls keep it to yourself. I live in my cacoon and light of wisdom can't penetrate it.

Aaaaahhh!! This is the same as Annuities with growing cash flow. How Dumb of me!

Draping my world with Music

I can hardly be called a music buff. I do not understand the intricacies of Jazz, do not hold fanatical view on punk or metal. But I like the feeling of notes gently dissolving into the daily drudgery of life, easing its monotony, making it more palatable.

To that end I got myself an amp and two decent speakers and hooked them to my DVD /music player. Once I had the basic set up I started looking at building a collection. There was a great deal on Yahoo Music and I ended up subscribing to it. The music was good and in a matter of hours I got hooked. I heard all the songs I grew up with and then I heard them again. Over a period of time I got introduced to new ones and got to like them.

It was all great but I was constrained by the fact that I could listen to my (Yahoo Music) songs only on my laptop. If I connected the laptop to my amp I could not work on the laptop as the Y connector required that I keep the laptop close to the system. And so I started looking around for alternatives.

I was looking for following
- To be able to store all my songs in one place instead of managing the CDs. Being lazy I did not want to go and change the CD every time I wanted to listen to something
- I wanted to be able to play Yahoo Music on my Amp without having to give up my laptop in the bargain

After some researching I figured these devices called Network Music/Media players that offer that freedom. There are several such boxes available D-Link has a few, Slim devices has one. For Apple worshippers there is Airport Express. I personally bought Roku. It allowed me to play DRM protected WMA songs which Airport Express does not. But then Airport Express is cheaper by $50 too.

Roku M1001 came with a display and a remote that allowed me to browse the song collection on my Laptop through the remote. I placed it right over my Amp and connected it to Amps input. I then configured Roku to talk to my Wireless network and I was good to go.

Last week I bought an external drive to store my personal CDs and connected it to my laptop. I ripped my CDs in WMA lossless format and created a 10 GB repository of songs. I arranged them and created playlists and now I'm able to browse, search and play songs from my Laptop wirelessly on my Amp through Roku and feeling ecstatic about it.

Another great feature Roku has is Internet Radio. It has thousands of preconfigured stations that I can browse and play. Great thing is I do not need to keep my laptop on. Roku connects directly to the Internet and plays stations. I can browse through the stations with my remote and play them just I would for any FM Tuner. Great thing is I can tune in to all the Bollywood stations just as I would in India :)

I'm also loving Winamp 5.5 It allows me to browse and play my songs on the web. Its like having my music library available to me anywhere anytime. I can also share my songs with others. My friends can stream music from my PC without owning my mp3. I hope thats legal though :) as they do not have a copy of the song, its just a stream.

Anyhow, I'm amazed how things have changed over the years. I still remember playing tapes, recording and re-recording them. Having boxes of Tapes and CDs under my bed and almost no radio as FM wasn't available at that time(Only Vividh Bharathi ). Its cool how tech has shaped our lives and enriched it.

There was a post I wrote on how Internet Music will replace satellite radio about 2 years ago. How prophetic ;)