American Gangster

This past weekend, I watched American Gangster. Though I had seen the previews earlier, I had no expectations going in, and I must say I was pleasantly surprised. It was a gripping movie and it certainly had my attention for over two and a half hours.

The biopic movie, about the real life gangster Frank Lucas and Detective Richie Roberts, is definitely worth a watch. It is set in the 1970’s New York underworld. The film explores the rise and fall of Lucas who also happens to be the guy who was above the Italian mafia at that time. Meanwhile, throughout Lucas’s rise, an outcast cop named Richie Roberts begins to put the pieces together and discovers that Lucas is the next big crime boss and at all costs wants to and manages to bring him down. A great gangster film ensues!

I am sure all of you can read the reviews of the movies online, but what intrigued me about the movie was the irony of both characters. Their professional and personal lives are flipped. Frank does dishonest things for a living at every turn, but in his personal life lives by a strict moral code of humility, honesty, church and family. Richie is a painfully honest cop, but his personal life is a garbage dump of lies, failed relationships, prostitutes and insecurities.

The movie did get me curious and I did do some looking around to see the kind of life the real Frank Lucas and Richie Roberts are leading today… and believe it or not, they are good friends today. It was one of those movies that I was thinking about the next day (rarely does that happen :)

Anyways, for those interested in looking/reading about the real American Gangster, here are some interesting links

http://nymag.com/nymetro/news/people/features/3649/

http://www.cnn.com/2007/SHOWBIZ/Movies/11/09/film.real.americangangster.ap/index.html
http://www.daylife.com/topic/Frank_Lucas

And watch this video

http://www.charlierose.com/guests/richie-roberts

The Shrinking Economy

The U.S. economic data seems to be coming in much stronger than expected. Real GDP rose 3.9% in the second quarter and payrolls jumped 166,000 in October. Does this mean the economy is ignoring the housing problems and energy prices, or does it just mean that the eventual decline will be even worse?

The Federal Reserve's quarter-point interest rate cut on Oct. 31 suggests that they believe the worst is yet to come. Whether the economy is moving towards a slowdown or turns into a recession depends on three factors:

• Can consumers continue to ignore energy and home prices?
• Will the current problems in financial markets extend the downturn beyond housing into other sectors, especially commercial construction?
• Will overseas economies continue to grow and buy more U.S. goods?

The higher oil price does raise the probability of recession. Three consecutive quarters of growth near or less than 1.5% mean that a negative quarter is very likely but lets hope with luck there won't be two in a row.

SPENDING SPREE

The ability of the American consumer to keep on spending continues to surprise pretty much one and all. Consumer spending again rose at a 3.0% annual rate in the third quarter, rebounding from a slow 1.4% in the second quarter. The saving rate rose to 0.9% in September. So far, however, it is clear that consumers have no doubt been living up to—if not beyond—their incomes.

Even more important is the rise in oil prices, which is squeezing consumer buying power. Oil hit $97/barrel on Nov. 6. It is widely being forecasted that the price will retreat to $85/barrel over the next few months. Although the underlying supply and demand conditions suggest that prices should be lower, worries about the middle east, problems between Turkey and the Iraqi Kurds, with President Musharraf in Pakistan, and with Iran all add to fears of supply disruption
The risk of further price hikes is clearly very real, and these could further squeeze consumers.
It is expected to slow, but not stop consumer spending.

GLOBAL EFFECT

The major area of strength for the U.S. economy is foreign trade. The widening trade gap had been a drag on GDP over the last several years, but it has been improving since last January. U.S. growth has slowed, slowing imports, while growth overseas has remained stronger. The falling dollar has also helped boost exports. Over the last four quarters, the improvement in the real trade deficit has added 0.75% to real GDP, accounting for 30% of the 2.6% real GDP growth.
Asian growth appears solid. Chinese GDP is set to climb 11.5% this year, with Indian real GDP set to touch 9.5%. Some slowdown in both is likely next year, but China's should remain in the double digits. The developed countries are doing less well. Europe is slowing, in part because the strength of the euro hurts exports and U.S. growth is slower. Japan's real GDP fell in the second quarter but should rebound in the third. One advantage for the rest of the world is that the U.S. slowdown has been concentrated in residential construction. Because residential construction has a relatively small import component, the effect on exports from Asia and other markets has been much less than if it had been concentrated elsewhere.

There has been a lot of talk about the decoupling of the world economy. That metaphor is incorrect. The world is more tightly coupled than it has ever been by financial and trade flows. The difference is not that the train has come uncoupled but that the train has more engines pulling it. A decade ago, the U.S. was 23% of world GDP in terms of purchasing power and accounted for about the same percentage of world growth. Today, the U.S.'s share of world GDP has shrunk to 20%, and it accounted for only 12% of 2006 growth. China, in contrast, has risen to 15% of world GDP and 30% of world growth.

Oil prices are a problem for other countries besides the U.S., but there is a critical difference between a rise in oil prices caused by stronger demand and higher oil prices caused by supply disruption. When demand pulls oil prices, the higher costs to the oil importers are balanced by higher income for oil exporters, who either spend the money or invest it. This recycling of petroleum revenues helps keep the world economy going despite higher costs. It is not a perfect balance, and it has contributed to the problems of excess liquidity that has inflated bubbles around the world, but it is better than the alternative.

The dollar is of course going to continue to fall. The current account deficit, although it has shrunk, remains very wide at 5.5% of GDP in the third quarter. In the last two years, the inflow of capital seeking higher yields in the U.S. offset this. But a year ago, U.S. Treasuries were trading a percentage point higher than equivalent European government bonds. Today, that spread has shrunk to only 15 basis points (bps). In addition, foreign investors are worried about the dollar decline, making European investments look like a better bet. August was the first significant outflow from the U.S. financial markets in over five years; it will continue.

Fed’s work is cut out

The Federal Reserve has cut interest rates twice already, by a total of 75 bps. The Fed statement was tough, but no one is denying the weakness in the economy and it is likely to force another rate cut, most likely early next year. The Fed is right to be concerned about inflation, especially given the falling dollar and its impact on consumer prices. But in the short run, recession is the bigger risk. Even if there were no election in 2008, the Fed would have to focus on real growth—at least for a few quarters.

The Magic of Math

Check this out......
1 x 8 + 1 = 9
12 x 8 + 2 = 98
123 x 8 + 3 = 987
1234 x 8 + 4 = 9876
12345 x 8 + 5 = 98765
123456 x 8 + 6 = 987654
1234567 x 8 + 7 = 9876543
12345678 x 8 + 8 = 98765432
123456789 x 8 + 9 = 987654321

Now Look at this ......
1 x 9 + 2 = 11
12 x 9 + 3 = 111
123 x 9 + 4 = 1111
1234 x 9 + 5 = 11111
12345 x 9 + 6 = 111111
123456 x 9 + 7 = 1111111
1234567 x 9 + 8 = 11111111
12345678 x 9 + 9 = 111111111
123456789 x 9 +10= 1111111111

What do you think now ......
9 x 9 + 7 = 88
98 x 9 + 6 = 888
987 x 9 + 5 = 8888
9876 x 9 + 4 = 88888
98765 x 9 + 3 = 888888
987654 x 9 + 2 = 8888888
9876543 x 9 + 1 = 88888888
98765432 x 9 + 0 = 888888888

And Finally.....
1 x 1 = 1
11 x 11 = 121
111 x 111 = 12321
1111 x 1111 = 1234321
11111 x 11111 = 123454321
111111 x 111111 = 12345654321
1111111 x 1111111 = 1234567654321
11111111 x 11111111 = 123456787654321
111111111 x 111111111 = 12345678987654321

Rise of the Oil Barrel

The price of crude oil has been on a roller-coaster ride, hitting a record $89 per barrel in October before drifting back a little as I write this. And, in the past year, oil has been as low as $50 per barrel. One could argue that the economics of supply and demand would imply a drop in prices as the global economy becomes more energy-efficient and economic growth slows in much of the industrial West. But demand elsewhere and the politics of the Middle East and other oil-producing regions suggest that prices could just as well rise sharply. When Goldman came out with a report last year that oil prices will touch $120 per barrel, Wall Street seemed to laugh it off. Now…not so anymore. With Turkey voting for military incursions into Iraq and the continuing dollar slide with no recovery in sight, well, it might just happen.

The one certainty is continuing uncertainty. Oil prices will probably remain volatile, creating problems not only for the global economy but also for the industrial sectors that are heavy users of crude and refined products, especially airlines, chemicals, electrical utilities, and freight transportation. The worldwide demand for oil will no doubt increase rapidly over the long term because of the strength of the Asian economies. Chinese energy use continues to grow at a double-digit annual pace, and China is rapidly catching up with the U.S. in total energy consumption. India is smaller in terms of total GDP and energy usage, but its appetite for oil is growing nearly as rapidly. So, even with a weaker U.S. economy and sluggish growth in Japan and Europe, energy demand should eventually rise. Although the developed countries can probably hold energy use constant, rolling it back is difficult. The lack of compliance with the carbon emissions goals set forth in the Kyoto accords proves that it is not easy to walk the walk.

The demand side is only half of the equation, however. The other is supply. Oil's role as a financially traded instrument may have exploded in the past few years, but ultimately, it's still a physical commodity. Finding oil and natural gas is becoming more and more difficult. Exploration companies have already looked in the easy places. Now they're eyeing sites that are more difficult to operate in, either politically or geographically. Deep-sea deposits can be tapped, but at a high price. How far and fast energy prices will rise is uncertain, but the direction seems all too clear.

Memories...

Dear Tech Support

Email to Tech Support

Dear Tech Support,
Last year I upgraded from Boyfriend 5.0 to Husband 1.0 and noticed a distinct slow down in the overall performance, particularly in the Flower and Jewellery applications, which operated flawlessly under Boyfriend 5.0.

In addition, Husband 1.0 un-installed many other valuable programs, such as Romance 9.5 and Personal Attention 6.5 and then installed undesirable programs such as: Football 5.0, Rugby 4.3 and Cricket 3.0. Conversation 8.0 no longer runs; it simply crashes the system. I've tried running Nagging 5.3 to fix these problems, to no avail.

What can I do?

Signed,
Desperate

Reply from Tech Support

Dear Desperate,
First keep in mind, Boyfriend 5.0 is an Entertainment Package, while Husband 1.0 is an Operating System.Try entering the command: C:/I-THOUGHT-YOU-LOVED-ME to download Tears 6.2, which should automatically install Guilt 3.0. If that application works as designed, Husband 1.0 should then automatically run the applications Jewellery 2.0 and Flowers 3.5. But remember, overuse of the above application can cause Husband 1.0 to default to Grumpy Silence 2.5, Happy Hour 7.0, or Beer 6.1. WARNING: Beer 6.1 is a very nasty program that will create Snoring Loudly.

CAUTION: Whatever you do, DO NOT install Mother-in-law. This is not a supported application and will crash Husband 1.0.In summary, Husband 1.0 is a great program, but it does have limited memory and cannot learn new applications quickly. You might consider buying additional software to improve memory and performance. I personally would recommend Hot Food 3.0 and Lingerie 7.7.

Good Luck,
Tech Support

Ram Sethu – The bridge under shallow waters

Adam's Bridge a.k.a Ram Setu both meaning "Rama’s Bridge" in India, is a chain of limestone shoals between the islands of Mannar and Ramesharam. There is enough geological evidence to indicate that this bridge acted as former land connection between India and Srilanka. The bridge consists of a series of parallel ledges of sandstone and conglomeration, that is hard at the surface and grows coarse and soft as it descends to sandy banks. In the 19th century, there were two prevalent theories explaining the structure. One considered it to be formed by a process of accretion and rising of the land, while the other surmised that it was formed by the breaking away of Sri Lanka from the Indian subcontinent.

The Project
First conceptualized in 1860 and finally after fourteen proposals and 144 years, the Indian govt. approved a multi-million dollar project which is called the ‘Sethusamudram Shipping Canal Project’. The purpose of the project is to create a shipping channel across the straight. The plan is to dredge the shallow ocean floor to create enough leeway allowing ships to pass through the channel instead of having to go around Sri Lanka.

What is the Issue?
Though there are arguments for and against the project – which have their own merits, there are various fundamental issues which are not yet addressed by the government.

Arguments for the project include boosting international trade by saving nearly 30 hours' shipping time by cutting over 400 km off the shipping voyage (as the ships don’t have to go around Sri Lanka anymore). Since the government is unable to prove any real benefits, its argument primarily centers on just a single point – a perceived future economic boost and strengthening the Indian Navy. Considering the cost of the project, which is a whooping 2600 crores, it seems a bit premature with to go ahead with so many unknowns.

Arguments against the project also give us some real issues to think about. The opposition against the project voices concerns related to its impact on the environment and damage that will be caused by dredging the area. Also, potential loss of Thorium deposits and increased risk of damage due to future Tsunamis is something that cannot be overlooked. The opponents, of which, there are many also claim that it will cause tremendous damage to the local ecology, marine wealth and affect the livelihoods of the fishing communities along the coasts of southern India and Sri Lanka. Besides, they say, no one is quite sure where the Indian government will put all that sand and silt it digs up.

The Religious Angle
There are millions who believe that the Ram Setu was actually the bridge built by Lord Ram with the help of Hanuman and his friends using floating stones and Rama’s army marched over this bridge to destroy the evil regime of Ravana. Apart from the Ramayana, the Mahabharata also refers to the continued protection of Nala Setu following Lord Rama's command. Kalidasa's Raghuvamsham also refers to the Setu. So does the Skanda Purana (III 1.2.1-114), the Vishnu Purana (IV 4.40-49), the Agni Purana (V-XI), the Brahma Purana (138.1-40). No one can doubt the religious significance that Ram Setu has in Hinduism.

Picture Taken by NASA

The Political Angle
The Centre has told the Supreme Court that while filing an affidavit, that there is no evidence to prove the existence of characters or events in the Ramayana and the Ram Sethu is not a man-made structure. The govt took a stand that since it is only a natural formation, it could be demolished and the canal can be built. This sparked off a controversy of mammoth proportions as the Center was seen questioning the existence of Lord Ram. DMK’s chiefs comments that Ram did/never existed made this worse embarrassing the government and pitted the rest of the country against TN.

The UPA been unable to convince the anti-Sethusamudram groups on any count. Its assurances and denials and justifications have only made matters worse. At the same time, since it needs the support of the DMK, it is trying to pacify one and all. In the recent days, the matter took an uglier turn when DMK activists attacked the TN BJP headquarters and injured BJP party men. The Congress for its part is trying to distance itself from the DMK and its statements.

Whether it was a natural formation or really built by Lord Ram one will never know and one can never prove otherwise, but either ways the Ram Setu is undoubtedly considered by millions to be a part of Indian heritage and preserving it should be on the mind of every Indian. While even the Christians and Muslims in India have never questioned it, it is sad to see our politicians making a mockery out of it.

Given below are statements made by our politicians.

Karunanidhi: "Some say there was a person over 17 lakh years ago. His name was Ram. Do not touch the bridge (Ram Sethu) constructed by him... From which engineering college did he graduate? Is there any proof of this?"

Vilas Vedanti: “Fatwa against Karunanidhi”

Rajnath Singh: ``Given the manner in which the relationship between the Congress and the Left Front is increasingly getting strained, it clearly indicates that Lok Sabha elections are no longer far away,’’

Jayanti Natarajan: "The BJP is in the midst of an existential crisis. The lotus is wilting. They are not just downwardly mobile, they are in an irreversible decline”

One thing is clear, the common man is not being heard.

123...Go!!!

Congress: We need this deal for India. We figured after 60 years of sitting around, its time to finally do something for India.
BJP: We will oppose the deal..Till we come back to power
Left: We want India to be left behind
Kalam: Can I still be president..Please??
Chinese: Wow, these Indians have negotiated a better deal than us, lets oppose them and create some confusion. Call our friends at the CPI.

As opposition to the Indo-US nuclear agreement grows, one wonders if we are our own worst enemy. The problem is the Communist parties in India are fundamentally against any business with the US/West and its got to a point where they are making India look ridiculous. Sure India is a democracy while gives all parties a voice, but the left has successfully turned the proceedings into a circus by threatening the Congress every other day. BJP, for its part is playing the perfect opposition by opposing the deal simply becuase they have to (and asking the govt to re-negotiate) and brainstorming any way in which they can take some credit as well.

The snap polls conducted all over the country clearly proved that the people of India have endorsed this deal and that the vast majority of both the Indian elite and middle class are very much in favor of not just a normalization of ties with America but also favor a much more comprehensive strategic partnership. From the American side, both the Democratic and Republican parties see a partnership with India as one of the priorities of US foreign policy no matter which president is sworn in.

While Abdul Kalam has reviewed and blessed the deal as a step forward for India, I fail to understand why the left is continuing to make noise which can only lead to further isolation. In today’s ever changing global dynamics, every political party must, in the national interest, ensure that we are ready to meet the emerging global challenges consistent with our national self-interest. India needs to establish friendly relations with key global players: the USA, Russia, China, Japan, Germany, France, UK, Brazil etc. Sure we are growing at a double digit pace and every country is looking to India to grow and expand. But are we a true global player yet?? The answer would be a resounding ‘NO’. We do have the potential to become one, but it is indeed sad to see that just when we have gotten our foot in the door, the rug is being pulled once again by our politicians.

Anyone who has carefully read the entire deal will know that the deal is tipped in India’s favor and the fact is the US has indeed given a lot of concessions to bring India on board (esp. for a country which has not signed the CTBT).

Although uranium is the only naturally occurring fissile element directly usable in a nuclear reactor, India has only 0.8% of the world’s uranium reserves and may have to depend on imports in the future. Sure this is a genuine concern which can be addressed, but India is investing and building a prototype thorium reactor so it does not have depend on imports in the future (India has 32% of world’s thorium reserves). I also fail to understand why is it one or the other. The fact is currently our nuclear reactors are running at below 60 per cent capacity due to the shortage of nuclear fuel and this deal is critical for India's energy sector. It could be decades before we even come close to indigenously developing reactors to harness energy contained in non-fissile thorium.

We simply cannot afford to miss the bus on this deal and risk getting isolated or worse lag behind in comparison to other developing countries becuase all our politicians are interested is in getting one up on each other. While Japan, UK, Russia and France have recognized the importance of this deal and have already shown confidence in India, it is strange to see our left parties shouting ‘Down with US-Imperialism’ and opposing the deal for no rhyme or reason. (While most of their children are in the US)

Let there be no doubt that the 123 agreement with the US will allow India to become a global player in a competitive world and will no way impact its sovereignty in any way. The deal sure has had some bumps along the road, but its success is inevitable given the strength of momentum with US-India relations which is at an all time high.

The Politics of Economic Policies

India has had an unprecedented stretch of growth over the last four years, averaging over 8% per year. Inflation was relatively low in the early part of this period but has picked up recently, thanks to demand-side pressures. RBI began a monetary tightening cycle in late 2004 and has maintained this stance in its quarterly announcements. However since 2006 — along with increases in its benchmark rates, the bank has been using the cash reserve ratio as an additional instrument to control surging liquidity. This liquidity can be mainly attributed to high capital inflows, which have risen significantly over the past few quarters and are flowing into equity, corporate debt, and remittances from NRI’s (which seem quite unstoppable now).

By 2007, RBI has abandoned its currency management regime, which had resisted appreciation. The bank is now allowing the Indian rupee (INR) to more accurately reflect the balance of payments surplus. The currency has responded sharply to this tactic, appreciating by almost 10% over the last three months.

Growth, Despite Rising Interest Rates
As the Chart indicates below, the economy grew at 9.4% in fiscal 2006-2007 (April-March), spurred by a steady acceleration in the manufacturing sector. Industrial production grew at a double-digit pace over the last few quarters, a pattern that is inconsistent with the steady increase in benchmark interest rates over the same period. In fact, much of the growth momentum was provided by sectors such as construction and automobiles, which are recognized to be relatively sensitive to interest rates. This indicates the ineffectiveness of tightening monetary policy, which depended entirely on hiking interest rates. The banking system was able to offset the central bank's rate increases with the huge increases in liquidity from high capital inflows. Only when the bank implemented direct measures—the cash reserve ratio—to rein in liquidity in late 2006 did lending rates begin to increase.

The impact of these recent moves is only just beginning to become visible. Industrial production numbers for the initial months of the current fiscal year (April 2007-March 2008), while still showing high growth in the aggregate, clearly point to a slowdown in some critical sectors—automobiles and metal products, in particular. It also reflects long-term optimism about business conditions, even as the immediate future looks a little less bright than in 2006-2007. Meanwhile, the services sector, the largest and fastest growing segment of GDP, shows every sign of maintaining its momentum.

Yes - Export Growth is Slowing

The Chart below displays the rather dramatic impact on export growth (in rupee terms) as a result of the rupee's sharp appreciation over the past few months. This rate of growth is relevant in measuring the top-line impact of appreciation on exporters. Of course, businesses dependent upon imported material clearly benefit from this development, but the combined impact on exporters and domestic producers of importable goods is likely to significantly reduce aggregate demand, thereby contributing to the soft landing.

The reason the central bank abandoned its protection of an undervalued exchange rate was that it was becoming impossible to offset the expansion of money supply that resulted from foreign exchange reserve accumulation. The RBI realized that it cannot buy $$ at the same pace that $$ was flowing into the country. The impact of an appreciated rupee will no doubt linger for some time to come, while exporting and import-substituting businesses are forced to take immediate actions to improve productivity. Short of a massive crash in the equity markets that provokes a sustained exit of foreign investors, the rupee is unlikely to depreciate from current levels. The only question is whether it will have an unrestricted rise or if RBI will step in to attempt a more gradual and stable appreciation.

Time to Relax??

Based on the current dynamics of the Indian economy, GDP growth during 2007-2008 will drop from last year's 9.4% to around 8.5%. Given the likelihood of a neutral monetary stance over the next few quarters, growth during fiscal 2008-2009 should accelerate somewhat to the 8.5%-9% range. There is always a risk in the form of market turbulence and rising oil prices, both of which could prove to be destabilizing. At this point, however, their significance is not great enough to offset the strong fundamentals underlying the recent surge in growth.

There should be no surprises in inflation and it is also likely to hover around 5% during 2007-2008. Pressure on the rupee to appreciate continues under this scenario, as capital inflows more than offset a potential current account deficit. The risk here is from global market turbulence, which if severe enough, could even reverse the trend in the rupee. If this risk does not materialize, the rupee will appreciate in a managed way and everyone should be prepared for the Rupee to stay at the 39-40/1 mark with the $$ for a long time to come

Fed: To-Do or Not-To-Do

The US Economy has a Cold...So What???

So the million $$ question is ‘What is the Fed going to do?’ Are they going to lower interest rates or keep them steady?? Are they going to sit back and let billions be shaved off or are they going to try and control the financial markets. Anyone who has been watching their investments, the stock market and major indexes must be having a panic attack right about now. As the weather has heated up in the summer, the economy seems to have cooled.

Problems in the credit markets are translating into fears for consumer spending as well as increased worries about housing. All headlines keep talking about subprime and credit fears. So the bigger question is ‘Is there a real reason to be worried??’ If so, when should we start to worry or has that train already passed. Lets see, the 3% growth rate of the past four years has slowed to 1.9% over the last four quarters.

The economic weakness also changes the outlook for interest rates. Both the European Central Bank (ECB) and the Federal Reserve (Fed) have added reserves last week, with the ECB doing most of the work.

So, What’s up with the Housing Market?

Continued declines in home sales show that the housing market is under severe pressure. However, this remains only a mild housing recession by historical standards. It is the first major housing downturn in the U.S. since 1991-1992, so it seems more severe than it is and everyone is pushing the panic button, but one has to remember that real housing recession cycles tend to be dramatic, as major recessions have shown declines of more than 50%. It is indeed interesting that in the 2001 recession, the Federal Reserve's sharp interest rate cuts kept the housing market strong and this time around they are playing the waiting and watching game.

Also, remember that the sharp rise in home prices is a worldwide phenomenon, spurred by low interest rates. As I write this India has started to build million dollar homes in various cities and they are sold out even before a single brick has been laid. To most buyers, the price of a home is essentially the monthly payment, and with U.S. mortgage rates at so low in 2002-2003, Americans could buy a lot of home for only a small monthly payment. But as interest rates rose with the Fed tightening, the monthly payments increased, and homeowners who were selling found that prospective new buyers couldn't pay as much. Some homebuyers dropped out as a result and the homeowners who wanted to sell had to reduce the home prices in order to sell.

Trade Deficit is Shrinking

On the trade front, the deficit has been shrinking slowly since its October 2005 peak of $67.1 billion, to $60.0 billion in May and an average of $59.1 billion for the first five months of 2007. The trade deficit has narrowed in response to three major changes: the fall in the dollar, the weaker U.S. economy, and stronger overseas growth.

The weaker dollar is clearly part of the reason for the improvement. The first impact of a weaker dollar on the deficit comes from higher import and lower export prices, which tend to worsen the deficit in the short term. Only in the longer run do higher export and lower import volumes offset this price effect. The second major change contributing to a smaller trade gap has been the softening of the U.S. economy. As growth slowed to 2% from 3%, demand for imports cooled as well. The third factor is the continued improvement in the world economy, particularly in Asia, Japan and Europe. In 2005, the Eurozone's GDP rose a meager 1.6%; this year, its going to be almost 3%. Similarly, Japanese growth was 1.9% in 2005, and it is 2.3% this year and Asia’s well, I don’t have have to say (considering China and India have been continually posting double digit growth numbers). These figures are especially important because the U.S. exports mostly to the industrial countries, while it imports from non-Japan Asia and the Americas.

Federal Deficit has Fallen

The decline in the federal deficit has been a major surprise to one and all. The gap is expected to be $179 billion in fiscal 2007 (down from $428 billion in fiscal 2002), which is only 1.6% of the U.S. GDP. Strong revenues—not less spending—have narrowed the deficit because government spending rose faster than GDP over the past four years. Spending may slow if there is a decline is military spending (The generals are planning a troop reduction in Iraq as I write this). However, the budget deficit should remain near its current level for the next few years.

State and local governments are healthy, again largely because of strong revenue growth. The aggregate of all state and local budgets have moved back into surplus on an operating basis.

Economy and Inflation

The inflation rate is running at a relatively moderate level. The Fed's preferred measure—the consumer expenditures price index excluding food and energy items—was up only 1.9% from a year earlier in June, which is definitely within the Fed's comfort zone. The Fed remains nervous about inflation (well, they better be as I don’t want to pay 10 bucks for a gallon of milk). One worry, however, is that the downward revision to real GDP growth in the most recent data implies that productivity growth has been running about 0.25 percentage points lower than previous projections, which would reduce the estimated trend growth for the economy to about 3% from the 3.25%. This would also unfortunately revise costs higher, suggesting more inflationary pressure.

The spread between U.S. and European bond yields has narrowed too much and seems too low to attract the funds needed to finance the U.S. trade gap. So I think we can safely say that our German and British friends are not going to be buying US bonds anytime soon. The 10-year U.S. Treasury note is yielding only 0.46 percentage points more than the equivalent Euro bonds, which is less than half of last year's spread. U.S. yields are likely to rise in response to the higher European yields, even if the Fed begins to cut short-term rates early next year.

The economic expansion has slowed, which should not be a surprise after 17 consecutive Fed rate hikes. The growth remains solidly positive, resembling the 1995-1996 period, when real GDP fell back to 2% for a year and then reaccelerated. So far, the slowdown is mostly confined to the housing market, with the consumer continuing to spend confidently. However, the risk remains that higher oil prices or a sharper rise in bond yields, which could in turn further damage the housing market, might still turn lower growth into a recession.

The Stock Market

So the global markets have been falling for the last one week (falling steeply at that). So what is happening to the stock markets?? Is there reason to panic? Well, in 2 simple words: ‘Market Correction’. So much EZ credit was created that people invested like there was no tomorrow and drove up the stock prices to insane levels and

market correct had to happen at some point. Thanks to private equity, billions have been poured into the markets artificially inflating securities. And now with the credit cycle tightening and hedge funds reporting losses, people are starting to pull back. One must remember that all this selling is purely driven by technical factors at this point, because the fundamentals of the market are good. Once a person panics, I doubt if he will be think about the beta of the stock or the EPS or growth potential. But in a way, it’s a good thing that the markets are correcting as it brings back a lot of sanity without the Fed getting involved.

However, global economic fundamentals are strong with real growth happening in Europe and Asia and they continue/will continue to provide a solid base for financial markets to adjust. The overall US economy and the markets are strong enough to absorb this correction.

Verdict: So What Should The Fed Do?

The considerations for the Fed are changing by the day. The disorder in financial markets has caused both the Fed and the ECB to inject liquidity into the system. Regardless of issues of the economy and inflation, the first priority of a central bank is to maintain orderly financial markets. Without orderly markets, the central bank has no direct or indirect control over the economy in any event.

Except for housing, the economy is still expanding by more than 3% annually. But over the last four quarters, there has no doubt been a drop in construction activity which could be the reason GDP has lowered. In all probability, housing will continue to depress growth into early 2008 (especially as the ARM’s reset going in the 2H 07 and 2008). However, the longer term outlook remains solid, with GDP growth likely to return to near its 3% trend by the second half of next year. The economic data continue to show slower U.S. GDP growth. However, the weakness remains isolated in the housing market.

But with the continuing housing problems and sluggish economic growth, the fed is unlikely to tighten this year. On one hand, inflation is still a concern, and on the other hand, labor markets are still tight. In all probability, the Fed is likely to do nothing in the near term with regards to interest rates; Remember that a rate cut will further weaken the dollar and make the treasuries less attractive to foreign buyers. (I doubt if the US can afford to do that at this point). I do, however, anticipate a cut early next year once all the credit and Subprime issues are out on the table and the picture gets a lot clearer. As of now, no one knows how much exposure the various financial institutions have with regards to Subprime (also esp. since it is believed there is a lot of exposure to hedge funds, which are not required to report anything) and additionally the methods to value these securities have come into question (No one is sure what the exact ‘Mark to Market’ values of these securities actually are).

Once the rates are cut, people will start to get more credit and housing will improve, everyone will start buying stocks; people will forget their worries and a whole new economic cycle will begin.

What is Islamic Finance?

After more than three decades of modern Islamic finance and banking , the world is seeing double-digit growth rates for Sharia-compliant assets. Islamic finance and Banking is currently being expanded beyond its historical borders of the Gulf region, where it began to emerge domestically in the 1970s as a result of the oil boom. This has driven Islamic financiers to look beyond historical boundaries to explore new territories, both within and outside the Arab world. It has finally emerged in many parts of the world as an alternative financing concept to the conventional orthodoxy of paying interest on borrowings and deposits.

An investing approach based on "Sharia" or Islamic law, Islamic finance has begun to spread all over the world. Modern Islamic financing techniques were developed in Muslim parts of Asia, notably Malaysia, but the boom since the mid-1990s has come from the large oil revenues flowing into the Gulf region. Now, the ideas and concepts of Islamic finance are attracting conventional issuers and investors seeking to tap into new investment opportunities.

What are the key principles of Islamic finance?
To be considered Sharia-compliant, a financial institution or transaction needs to meet the Koran's strict tenets against usury and uncertainty. The most important principle of Islamic finance is "riba," the ban on charging or paying interest. Sharia (set of guidelines as per the Quaran) doesn't consider money as an asset class because it is not tangible; therefore, it may not earn a return. Instead, Islamic law calls for a means of sharing the profits from a transaction or institution among participants - here, the client and financial institution or instrument. Secondly, Islamic law prohibits uncertainty of payout or gambling, but not risk as long as it is shared among all parties. No one participant should shoulder an unequal degree of risk. Thirdly, any Sharia-compliant transaction must be backed by a tangible and identifiable asset. Lastly, Islamic finance forbids investment in or dealings with those industries banned under the Koran: notably alcohol and brewing, tobacco, weapons and armaments, or pork-based products.

How are Islamic banks different from conventional banks?
The biggest difference between Islamic and conventional banks is that Sharia-compliant institutions do not pay interest on deposit accounts. The attraction for clients, however, is that Islamic banks usually also offer profit-sharing investment accounts (PSIAs) that are bound by a "mudaraba" contract. These PSIAs are a major source of funding for Islamic banks.

The Rising Rupee: Boon or Bane?

Rising Rupee

The rupee has been rising against the dollar for the last couple of months. But what has sent the alarm bells ringing is the speed with which the currency has risen (nearly 10% against the $$ in the last 6 months). Though everyone keeps talking only about the dollar, it is interesting to note that the Rupee has, in fact, also steadily risen against other currencies in the last 5-6 months (8% against the pound, 7% against the Euro and 11% against the yen).

Is this a problem or is this really good for the Indian economy?? One thing is for sure. This is a drastic departure from past policies and a strong rupee will have a really big impact on the Indian economy. The main reason for rupee's appreciation in the last 6 months has been the flood of foreign investments and remittances into India (esp. US$). These $ inflows are coming in the form of foreign direct investment (FDI) to remittances sent home by Indian expatriates. In each case, the flow seems unlikely to slow down anytime soon. That coupled with the Indian stock market's stellar performance has the foreign portfolio inflows booming. The large and steadily increasing net inflow of foreign exchange into India has translated into an excess demand for rupees. Like any other good or service, the excess demand for rupees has resulted in an increase in the price of the rupee.

The rupee's appreciation is alarming exporters, as it makes their products more expensive in overseas markets and erodes their international competitiveness. The software exporters for one are already starting to miss their earnings. The last month has seen all major software exporters taking a hit and there is already evidence in India of an export downturn in a number of other sub-sectors as well (Textiles and Commodities). This is mainly because Indian exporters earn their revenues in foreign exchange. So the more and more the rupee appreciates, the less and less they earn. The current situation has all the exporters screaming as the profit margins are being squeezed out. In a way this is like the shortest growth story as just when the Indian export industry is being talked about as a great economic engine, it looks like the exporters are already being forced to shut shop as they are unable to compete and losing out to their biggest rival, China.

An important factor in the central bank's policy change in allowing a stronger rupee is the rising inflation. The RBI typically controls the appreciation by manipulating demand-supply dynamics of currency market. In order to prevent the rupee’s rise, RBI bought close to $20 billion in the last four months to curb the rupee’s rise (Incidentally, India's foreign exchange reserves have now crossed the $200-billion mark). But as RBI purchased dollars (creating more demand for dollar) and sold rupees (increasing supply of INR, thereby decreasing its value), the money supply increased - which meant too much money chasing the same (or less) number of goods – and this led to increased inflation in the country. The increased liquidity therefore fuelled inflation and of course as we all know this comes with a 'Political Cost' attached to it. So the RBI backed off and let the rupee appreciate again. When RBI was buying billions of $$, inflation shot up in excess of 6%, but when they stopped buying $$$, the resulting large drop in money and credit growth lowered inflation significantly - The govt. has targeted a 5% inflation for 2007.

Of course on the flip side, all the importers are extremely happy as imports have become much more affordable. An appreciation of the rupee has made the import of foreign goods (such as crude oil and petroleum products) cheaper (in rupees) in India. The rupee appreciation should exert a downward pressure on the inflation rate. A strong rupee in nearly a decade may be good news for importers and those who see the currency as a symbol of economic prowess. However this does little to prevent the dilution of our country's competitiveness because a cheaper dollar makes imports easier and exports tougher. The profitability of exports is already being affected, and if the appreciation in the rupee continues unabated, they will feel the pinch and exports will suffer.

So is a strong rupee really curbing inflation?? Should RBI buy more $$ to curb the Rupee?? RBI has a difficult policy choice at hand. In which direction it will move will depend on which objective is given more important i.e inflation control, maintaining export growth or capital account convertibility. The government and RBI are keeping their fingers crossed and hoping that there will be no need for a major intervention. However, given the amount of $$ flowing into India the problem is unlikely to disappear soon.

Death Bonds: Praying for people to Die

Move over Hedge Funds...Here comes the Death Bond!!!

Just when you thought you had seen the most analytical, complex, high-risk alternative investment vehicles from Wall Street, they have yet again come up with a new way to make money. Its called the 'Death Bond' and believe it or not, it involves making money when people die. Mmmm.. I thought something was fishy when I heard that Germany unveiled a 24 hour death channel.

How does a Death Bond work?

Death Bonds (or life settlement-backed security) is created in the following way:

1. A person who wants to cash out of a life insurance policy hires a "life settlement" broker to find prospective buyers to sell his insurance policy.
2. The broker seeks bids from specialty finance firms called life settlement providers, which are often financed by hedge funds and investment banks.
3. The life settlement provider resells the insurance policy to a hedge fund or investment bank, which warehouses it in order to build a big pool of policies.
4. After an investment bank/hedge fund collects a sufficient number of policies (around 200-250), it turns them into asset-backed securities called death bonds to sells them to investors.
5. The The buyers keep paying the premiums until the seller dies, and then they collect. The up-front payout to the seller varies widely, from 20% of the death benefit to 40%.

The mechanics in theory seem quite straightforward: Asset Classes are pooled together and then sold off in the form of bonds or pieces of bonds. When people die, the banks collect. When people die quicker, investors get richer. It is estimated that there are 90 million people in the US with Insurance and this is certainly a temptation for Wall Street. Another big attraction for these types of "Asset Classes" are that they are uncorrelated assets (i.e. they aren't correlated with stocks, bonds, commodities, or other investments) and they are also immune to market risks (interest rates, currency risks etc.) which make the portfolios less volatile.

Well the truth is, at this early stage, there's no way of knowing how popular death bonds might become. I for one do not want anyone profiting from my death. But hey, that does not stop me from watching EoS TV.

Wonders Of The World - The New 7

The New7Wonders recently announced the 7 wonders of the world. The following wonders have been elected to represent global heritage throughout history. While a lot of people think that one wonder is better than the other, the listing was issued in random order. All the New 7 Wonders are equal and are presented as a group without any ranking. An honarary award was presented to another wonder for being the only original ancient 7 wonders of the world to be still standing.

The Taj Mahal, India

The Roman Colloseum, Italy

Petra, Jordan

Machu Picchu, Peru

The Great Wall, China

Christ Redeemer, Brazil

Chichén Itzá, Mexico

And the honarary award goes to.........

Pyramids of Giza, Egypt

Infosys: Ready To Play With The Big Boys

Infosys is ready to shop and the markets are ripe with rumors that they want Capgemini. Really? Agreed, Infosys has accumulated billions over the years, but can it afford to buy a company which is 3 times bigger…mmmm....

Lets look at some hard facts:

1. For 2007-08 Infosys has projected a 28-30% revenue growth and Capgemini has projected around 8%


2. Capgemini has a market value of 7.86 billion euros or $10.6 billion. Infosys has a market value of about 1.1 trillion rupees, or $27 billion


3. Capgemini has about 68,000 employees worldwide, including 12,000 in India, Most of Infosys's 72000 employees are in India, where wages are as low as one-eighth that of U.S. salaries


4. Infosys reported revenue of $3.1 billion for the fiscal year ended March 31 this year, and has forecast revenue of about $4 billion in its current fiscal year ending March 31 next year. Capgemini is 3 times bigger with revenue of $10 billion for its fiscal year ended December 31


5. Infosys’ operating margin stood at approximately 31% in the end of 2007, Capgemini's was 5.8%

"Lets take 'em boyz, there's only 70,000 of them and each one is paid more cheaply than the other"

In my opinion, this deal is highly unlikely to go through. With the weakening of the dollar, granted that all the big Indian players have to do something and take the next step, but let’s be realistic. Other than Capgemini's consulting arm (which is obviously stronger), they both seem to share the same strengths...So the question is what "real" value will buying Capgemini bring to Infosys? Infosys may be looking for access to the European markets, where it doesn't have a strong presence, but the cultural incompatibilities between the two companies are very high, and I for one don’t believe Infosys will be successful in bringing 70,000 employees under their wing who are culturally on the opposite end of the spectrum.

One thing is for sure. This rumor has certainly generated enough buzz to move the stocks (Capgemini is up 4.5%) and Indian outsourcing companies have shown they are “coming of age” and catching up with their European counterparts. But the question is will Infosys go above and beyond its reach at any cost. My answer again will be no as Infosys does not have such an aggressive mentality. They have downplayed the news not wanting to shoot themselves in the foot that one wonders why they are being so defensive. The CEO of Infosys himself came out and said he has not ruled out an acquisition in Europe, but said any target would have to meet Infosys' criteria (which no one knows incidentally!!!). Consider this approach to the one Rupert Murdoch took to acquire Dow Jones. Coming back to the point, another complication is the lack of M&A expertise for a deal of such a magnitude in India. Even if it goes through, can they truly integrate as one firm? Maybe I am being skeptical, but again, I highly doubt it.

Finally, Infosys is/has always been a debt-free company and a deal of this size will for the first time put them in a position where they will acquire a lot of debt and move away from organic growth. Though raising capital won’t be difficult, the real question is "Is Infosys ready to play like the big boys?"

Who are you???

WHO ARE YOU???

1. You work very odd hours.
2. You are paid a lot of money to keep your client happy.
3. You are paid well, but your pimp gets most of the money.
4. You spend a majority of your time in an air-conditioned room.
5. You charge by the hour but your time can be extended for the right price.
6. You are not proud of what you do.
7. Creating fantasies for your clients is rewarded.
8. It's difficult to have a family.
9. You have no job satisfaction.
10. You are embarrassed to tell people what you do for a living.
11. People ask you, "What do you do?" and you can't explain it.
12. Your family hardly recognizes you at reunions (at least the reunions you attend.)
13. Your friends have distanced themselves from you and you're left hanging with other "professionals."
14. Your client pays for your hotel room plus your hourly rate.
15. Your client always wants to know how much you charge and what they get for the money.
16. When you leave to go see a client, you look great, but return looking like hell (compare your appearance on Monday AM to Friday PM)
17. You are rated on your "performance" in an excruciating ordeal.
18. Even though you get paid the big bucks, it's the client who walks away smiling.
19. The client always thinks your "cut" of your billing rate is higher than it actually is, and in turn, expects miracles from you.
20. When you deduct your "take" from your billing rate, you constantly wonder if you could get a better deal with another pimp.
21. Everyday you wake up and tell yourself, "I'm not going to be doing this stuff the rest of my life."

Oh Wait, You are a Software Programmer. OK. (Now, Now, What were you thinking??)

Big Trouble in Little China

China is booming. Every investment turns to gold. The country seems to have unlimited cheap labor at its disposal. GDP growth seems to be 10+% year after year. Chinese stocks trade at insane multiples and a record number of investors seem to get into the market every passing day. Beijing and Shanghai seem to be building more skyscrapers than New York. Lo and Behold,
China has started shaking the world with its prowess in manufacturing, On paper, everything looks great and it looks like China is all set to take over the world.

Not so soon my friend. China's problems are just beginning. It has certainly made the world take notice, no doubt. But just as people are starting to look at China, they are realizing the enormous problems that come in dealing with a country whose government is as mysterious as its culture. Not all is rosy. China has serious problems with its environmental resources, severe pollution, and institutionalized corruption within the government, the legal system, the police force, and the media.

The Chinese culture maybe 3000 years old, but the Country has opened up only in the last 30 years. China has gone on a mass industrialization rampage and the unfortunate side effect has been the startling revelations of the food scandals (among others) and how China cuts all corners with obvious disregard to quality and human life.

Shoddy products being manufactured in china has emerged as a global concern, with many countries increasingly worried by the dangers of importing products from China. As more and more embarrassing stories come out, the country is scrambling to (or at least claiming) show the world that it was serious about improving the safety of Chinese products and is a responsible player. So they did something interesting this week.

China executed its former top food and drug regulator on Tuesday for taking bribes.

It is a bit extreme, or is it??? China carries out more court-ordered executions than the rest of the world combined, according to human rights groups.

However, what has come as a bigger shock is, while the country is answering its buyers, news that their own high-speed maglev train, running between Wuhan and Guangzhou ...well, seems to have a few problems has sent the bells ringing. So relax, they are screwing themselves too.

And me worry?? Nah, we have just seen the tip of the iceberg. There is still a long way to go!!!

Indian Presidential Race

The Left's are Wimps, The Right's are Crazy

Left: Shivraj Patil??
Kalam: I will continue….I will continue….
Right: Sherkhawat??
Kalam: Can I continue for god’s sake??
Left: Laloooo??
Kalam: I will continue The presidents office needs a good statesman
Right: What about Amitabh or Rajini??
Kalam: Ok, I am quitting the race now
Left: Ah, Pratibha Patil then?
Right: Perfect choice. She is old, cluesless, talks to spirits and is totally under the control of “The Madam”.

It is interesting to see that the one person who cannot be at the helm of the country (henceforth "The Madam"), still undoubtedly wields the power that no Indian has. I am actually not surprised that the presidential candidate is someone whom the madam has personally recommended and there is just really one reason she has been picked - She is a staunch Gandhi/Nehru family loyalist and thereby has proved her worth to the highest office of the nation. WHAT!!!!!!

As sad as it may sound, all the numbers look good for Pratibha Patil and she is well on her way to create history (on paper) to become the first woman to hold the country's highest office (does not matter she will do nothing while in office).

Neither is she a political heavyweight nor have Indians heard of her before her name started doing the rounds. Sure, her credentials include her brother being accused of murder, she has defaulted more than 17 crores loan out of a bank, she is a defendant is a class action lawsuit and has swindled 5 crores from a trust she was responsible for. But come on, what are her real qualifications? What has she accomplished in Indian politics? Has she shaped or framed any policies which have been implemented? What has she done for Indian politics apart from being a do nothing cabinet minister?? Does she have any influence over other political heavyweights? Has she driven economic or other development in her state?? Can she accomplish anything at all in the 5 years she willl be in office?

Sadly, the answers seems to elude everyone and I for one am shocked how all the parties are engaging in dirty politics to ensure their candidate wins at any cost. Considering the fact that it is Abdul Kalam's shoes that she is going to fill, it almost makes me cringe that while Kalam has openly said he is ready to take on another term, he surprisingly has won very few friends supporting him (Go Jayalalitha!!). While the people of the country overwhelmingly want him to continue (polls indicate he has 80+% support of the country), it means nothing.

Here is a fact which is known to very few people. The President of India is elected by the ruling party. Not the people of india, not the educated man, not the masses, not the people who help elect the government. Just a few people in the ruling party, in this case the madam, single-handedly, has the power to select the president of the country to represent more than a billion people. Ridiculous huh??

Just when India is entering the most important economic phase in history, just when the entire world is turning its eyes towards India, it is indeed sad to see the so called largest democracy showing the world how the political games are played and in a strange way proving that the people's opinion (actually a billion opinions) dont really count. This presidential election will no doubt go down as one of the murkiest in history and very few indians are genuinely going to be able to respect their president for the next 5 years.

Heck, it is public knowledge that Pratibha Patil was not even Congress' first choice as a candidate, but I guess the only qualification that one requires in order to rise to political prominence in India is keep sucking up to the Ghandhi family all your life and maybe, just maybe when you are turn 70+, you can become the President or even the Prime Minister of India.

Chumma Adiruthuilla!!!!

"Coooooooool"

How was the movie???

How many hours did you wait in line to get tickets??

Did you see the first day first show??

Does the movie have subtitles??

Were the tickets sold out??

Can we book tickets online??

Why is it playing so far away??

Whoa..... I have never been asked so many questions after I watched a movie. And then it sunk in slowly. Damn!! The Sivaji craze has definitely swept New York too. I am not getting into the story, but the million dollar question is, does the movie deliver and live up to all its hype?? Well, Yes and No.

As a Rajini Fan, Absolutely Yes. I whistled and threw popcorn every time Rajini flipped the coin or made a gimmick on screen. I was laughing my ass off when Vivek was delivering the punch dialogues. Watching the movie with a packed audience was truly electrifying and an experience I will cherish for a long time to come. Heck, where else can I see a 70 year old patti in front of me saying "Superrrrrrrr Superrrrr" encouraging all of us youngsters to cheer louder. I had to remind myself every now and then not to trash the cinema hall too much as I still in New York. When the movie was over, a bunch of non-desis (just trying to be politically correct) came in to clean with a dazed look on their faces unable to understand why the craze and curious as to what kind of movie was playing. Then on an impulse some of my friends wanted to watch the next show again. What wait, am I going to watch the same movie back to back??? To my relief (not that I told anyone publicly), the next show was sold out. Phew!!! Close call.

No doubt, there were parts which I loved and other parts were Yaaaaaawwnnn. The songs are great and ARR has certainly delivered on the background score (it woke me up several times actually) and the superstar certainly carries the movie and does what he is supposed to do. Rajini has proved that at 60 he can still act(Look out for the MGR Sivaji) and carry an entire movie with no help.

But I went home and thought about the movie and thats when the critic in me came out. I heard Shankar was trying to keep the story under wraps. Wow!! What story my friend? To put it mildly, Sivaji has no story. The entire hype has been built on Rajini who single handedly cleanses the society (don’t all Shankars hero's do that??). I wonder what the hell was in that movie that Shankar spent 80 crores on it. He should have spent some money to hire someone to write a good story instead. Agreed, the sets are lavish and Rajini has been made to look like a rap star, but come on, we need a script for sitting through a movie which is 3+ hours. One would also think that Rajini and Shankar/ARR would bring something new to the table, but clearly they did not want to be too bold or experiment.

Sivaji has certainly achieved what no other Tamil movie has (it was in the UK top 10 for a week), and it has opened up the market for regional movies globally. (Move over SRK and Amitabh, here come the real superstars of Indian cinema). Frankly, the movie runs in patches, there are no doubt, some really good, brilliant, funny scenarios woven together with weak moments (I am leaving out the unbelievable, as after all, this is a Rajini movie and asking for logic would be too much). The fights are great with special effects and watching Rajini bash up 25 people in slow motions is simply superb (with the FX of course). AVM, Shankar and Rajini should thank their lucky stars as everyone has given Sivaji the benefit of the doubt and embraced it wholeheartedly (only for Rajinis sake) making it a runaway success.

My $0.02 to Rajini: The movie entertains to a large extent. But please remember from now on that you have a global audience. The sets and heroines are not important in your movies. The story, script and your style (strictly in that order) are the only things that matter.

My $0.02 to Shankar: Be bold and experiment. Don’t get scared that you have to protect the star’s image. Alternatively, don’t direct movies with bigger than life stars. I would have been very happy if you had the guts to show Rajini flipping a cigarette in style rather than wanting to show it, but getting scared, and eventually settling to showing him flip a chili. That’s not style, it’s ridiculous. And next time, before you spend someone else’s crores, write a story!!!!!

And finally to all Indian film makers, next time you decide to show Wall Street in your movies, talk to me. I will tell you how business is done on the street. Don’t freaking show 25 people in suits and try to pass them off as wall street businessmen.

But anyways, I do have a confession to make and this is the fan in me talking. I will be watching Sivaji for the second time this weekend, with a bunch of people from work (who don’t understand a word in tamil btw). But, I am certainly not spending money on popcorn this time around.

VERDICT: Entertainment Guaranteed, even if you don’t know Tamil!!

PS: The movie, declared India's most expensive, has been made at a cost of Rs.80 crores and it has been projected to do a business of Rs.150-160 crores.

Go Ahead, Jump the Fence!!!

Did we just give the green light to keep jumping the fence. Apparently we just did...

So here we go again. Like many of you, I picked up the newspaper and was really disappointed to see that the immigration bill died in the senate and will not be debated anymore. What is everyone thinking?? I don’t agree with anything the Bush administration has done so far, but after 7 years he finally comes up with one good plan and it gets killed!!!!!!!!!!!

Booooooooooooo to all of you guys who are against CIR (Comprehensive Immigration Reforms). The congress is only 6 months old and its already become a "Do Nothing" congress.

Fact: There are close to 13 Million illegal residents within the country.

Fact: As per the law of the land, it is not illegal to be here illegally (funny huh?? Well, it is considered only a civil crime)

Fact: There is no way to trace where these millions of illegal people are and there is nothing to stop more people from coming in the future.

Fact: Say what you want, but at least 70% of these people are latino’s

So we can all either accept the fact that these people are not leaving (come on guys, do you seriously think you can trace and deport or convince 13 million people to leave) or wait till the day 13 million becomes say 20-25 million (you know its going to happen with each passing day you refuse to address the issue) and then it becomes much much more difficult to tackle.

I am not getting into the details of the bill (and the 100’s of amendments everybody wants), but some of the important points for everybody to consider before they oppose is:

• The 12 Million undocumented workers can come forward immediately and receive probationary legal status (What is there to oppose in that??? Hey, if I had 12 million people in my backyard, and I don’t even know where they, you bet I want to know who/where they are)
• Bill creates a four-year, renewable "Z" visa for those present within the U.S. unlawfully before Jan. 1, 2007
• Undocumented immigrants may adjust status to lawful permanent residence once they pay $5,000 in fees and fines and their head of household returns to their home country.
• No green cards for "Z" visa holders will be processed until "triggers" for border security and workplace enforcement have been met, estimated to take 18 months.
• Processing of green cards for holders of "Z" visas would begin after clearing an existing backlog, which is expected to take eight years. (which means, it will be at least 15 years before these people get green cards and 20 years before they can become American’s). Heck, many of them won’t even be alive in 20 years.

And before any of these people can apply to become Green Card holders, the border security must be enforced (This part is especially for people who oppose, so take your heads out of your A$$ and listen):

• 20,000 new border patrol agents will be hired and 300 miles of vehicle barriers and 370 miles of fencing along the U.S.-Mexico border will have to be completed.
• All that ground-based radar, camera towers, unmanned aerial vehicles and supporting systems etc. will be funded and implemented.

So in essence, border security will be enforced before any of the undocumented (ok, illegal) people can be granted permanent residence.

Once border security has been enforced, a guest worker program will be established (“Y” Visa), under which people can come in LEGALLY to work in the United States.

Still opposing the bill????

The fact is these people contribute to our economy (or its probably a wash, depending on how you look at it), but if we legalize them, it certainly gives hope to millions. And come on, the US has its lowest level of unemployment (hovering around 4%), and we have managed to absorb 12 million workers into the country. All senators talk about strengthening border security and building a fence and then legalizing, but what I don’t get is, that’s what this bill states, then why are you opposing? Do you think that by putting if off, you have solved the issue??

Fact: 13 million people will actually contribute to the economy (TAXES!!!! I am sure the IRS is a strong supporter of the Bill)
Fact: All of these people (X or Y Visas), will have to undergo background checks and criminal checks, so we can actually catch the guys who are committing crime
Fact: You can actually control crime, including stopping drug smuggling (Hey, you at least know where they are, so go and catch them)
Fact: If people have hope and they will try and come here legally, (ming chu will not be coming in a container and Immanuel will not jump the fence risking their lives as a first resort), and we might actually be able to control the flow of people we cannot trace.
Fact: You have just messed up a CIR amendment on stopping the H1-B and L1 visa abuse (Too big a topic for discussion on this one)
Fact: The heavily Latino underclass of unskilled, poorly-paid U.S. workers will be free from the shackles of unequal treatment as a human beings. (You can deny it, but it is happening!!)
Fact: There will be millions more coming in illegally before you address this issue again.

American’s get so emotional when it comes to this issue that they fail to see rational benefits if the bill is passed. I am not blindly defending the bill, of course its perfect by no means, but it’s the most realistic bill I have seen in recent years, which can actually work. Right now, the system is broken and beyond repair (trust me, we are coming back to this issue when the 13 mil becomes 25 mil) and at the very least, this bill creates a system where we can control the flow and reduce crime.

All the conservatives are bloating that they have a victory in defeating the bill. But my friends, trust me, by killing the bill (thereby the debate to see if it’s good or bad), do you know you have just told all the people looking to come here for a better life .“You want to come to the USA, great, but wait, we have just made it complicated to come into the US the right way if you are not educated, so go ahead Pablo, just come here illegally, its much easier”

Myth: Illegal aliens cost the American taxpayers tens of billions of dollars in social services, primarily in the areas of healthcare and education. No they do not. Go back again and check your facts.

Final Fact: These people are going nowheres Jose.

So you can either let them pay taxes and live here legally in peace, or encourage them to jump the fence.

But wait, Oh Ok…Apparently we just told them to jump (sigh!!)

(When) Did the Mahabharata Happen?

I came across a very cleverly written piece a few months back but all my efforts to trace the writer has been unsuccessful. The article has since then been taken down (I wouldn’t be surprised if the psycho Shiv Sena’s had a hand with it), but luckily I had a saved copy of the article.

I think its pretty funny, so here goes…

This is one question that has been bothering me for a while. Like most of you, I too have learned history in school, but never found an answer because like most of you I too slept in the history class. But after doing some research I have found out exactly when the Mahabharata war happened.If this is not Kali Yug, then what is it?

Kali Yug is one of the Yugas as per the Puranic timeframe. First there was Satya Yuga, then Treta Yuga, then Dwapara Yuga, and now, Kali Yuga. Even though the Puranas stop at this point, this was followed by various minor Yugas that went undocumented. These include India-Got-Independence Yuga, Secularists-wrote-history Yuga, and Secularist-lies-got-exposed Yuga.

One of the dates mentioned for Mahabharata is 3130-3140 BC. This date is based on the work of Aryabhata (with one t), who lived from 476-550 AD. Aryabhata held that the earth rotates on its axis, and gave the correct explanation of eclipses of the sun and the moon. In mathematics he solved the quadratic equation. In his spare time he also found an easy way to compute the tip mentally after seeing a restaurant bill. But he could not figure out how to fill Form 1040 without using Tax Cut.

Aryabhata stated that Kali Yug started 3600 years before, when he was 23 years old, making the start year as 3102 BC. To this if you add the age of Krishna, subtract the year when he was born and do a cube root with the number of years the Pandavas ruled, it will be found that the Mahabharata war happened in 3130-3140 BC. Looking at this information we can infer one thing for sure: When you are a 20-year-old something in 500 AD, there is very little for entertainment. Another way to verify the dates of historical events is Archeology.

But more than Archeology, Philology has been used to write ancient Indian history. Philology, started by a guy named Phil, is a discipline devoted to the reconstruction of history and culture based on the comparative study of ancient languages such as Sanskrit, Greek, Latin and others. If the researcher does not come up with a conclusion involving all those languages, then he may not get a grant to continue research. Philology grabbed Indian history in the year 1785 when Sir William Jones started studying Sanskrit. He found many similarities between German and Celtic languages and postulated that all of these must have originated from the same source. Shared language means shared heritage, was the conclusion. The idea of one civilization spreading from Europe to India looked impressive. But there was one problem. How did the language spread from Europe to India?

So we got the Aryans, a group of horse-riding, fair-skinned, tuxedo-wearing people who invaded India and taught the dumb Dravidians everything from Vedas to Internet. There was one more problem -- they had to find one Aryan Homeland, somewhere in Europe. The main contenders were the south Eastern Europe and Frankfurt International Airport. Finally it was decided that the Aryans came from south Eastern Europe, which was finalized by throwing darts on a National Geographic Map of the world. The other day I was in K-Mart, looking to buy a bottle of Tang. I picked up the orange flavored one and it was written in Spanish that the flavor was 'Naranja'. Now in my home state of Kerala, a lemon is called 'Naranja' in Malayalam. So as per philology, Mexico, where Tang was made, and Kerala have a shared heritage. Now all I had to do was find a common homeland. For this I threw the dart at the National Geographic Map in my cubicle. But it hit my cubicle neighbor in the head. Anyways, she talks too loud.

Since I don't have a Sir before my name, the theory, 'Malayalees are from Mexico' is not popular. But it is important that we do some archeology to verify these philological theories. So an archeologist takes a shovel, goes to a spot where the earth has not been disturbed in recent times. Digging down, he finds various strata of earth clearly separated from each other. Motivated by the fact that he might find some bones, pottery, or tools that can tell a great deal about the history of early humans, he keeps digging. Finally he hits on an earthworm family, which was having a quiet earthworm lunch, and looks up and gives the choicest abuses in earthworm language.

Even though Archeology can open a can of worms sometimes, archeologists who conducted excavations in various places mentioned in Mahabharata found iron objects which included arrow and spearheads, shafts, tongs, hooks, axes and knives that indicate the existence of a vigorous industry. An analysis done based on these excavations points to the date of Mahabharata as 1000-900 BC, about 500 years before Buddha From what I have been reading these days, archeology is also not very popular with a certain section of people, like for example: historians. This is because Hindu Fundamentalists have been using Archeology to push back the antiquity of Indian civilization, according to Dr. D. N. Jha who told this in an article which appeared in the New York Times, and the reason for that is Saraswati. Through satellite photography, scientists have mapped the course of an enormous river that once flowed through the north western region of India. Dr J. R.Sharma who heads the Remote Sensing Services Centre in Jodhpur and his team believe they have found Saraswati, of the Ganga, Jamuna, and Saraswati (1988) fame starring Amitabh, Mithun and Jayaprada.

Saraswati, the river mentioned in the Vedas, is believed to have disappeared thousands of years ago. On this discovery, the Government decided to send archaeologists and geologists to explore sites along the river's course. We cannot predict what these archeological excavations will reveal. Maybe it will bring out more evidence of a civilization that pre-dated the Aryan Invasion, proving that when the Aryans came into India and tried to teach the locals how to use dial-up connection, the locals taught them how to use Wi-Fi networks.

The losers would be the people who championed the Aryan Invasion Theory and are not willing to change it in the face of new evidence. Archeological excavations in the Saraswati region would be a real historian's dream. But unfortunately this project was started by the democratically elected BJP Govt, which makes it illegitimate and motivated by religion according to the logic beamed into the critic's head by the aliens that appear in The Simpsons. That is the topic for another article.

But, anyway, we have an approximate idea on when Mahabharata happened. It happened in 1988 on Doordarshan.