Thomas Friedman & Nandan Nilekani

This week, Nandan Nilekani visited New York as a part of his book tour. In his book, Imaging India, the Indian entrepreneur tries to trace the central ideas that shaped India's past and present and asks the key question of the future of India and its role as a global citizen and emerging economic giant: How will India as a global power avoid the mistakes of earlier development models?

One of my friends had extra tickets to see Thomas Friedman interview Nanadan on his new book, and I immediately jumped at the offer. The interview took place at the New York public library and I must say it was certainly a very interesting conversation. They spoke on a wide variety of topics including corruption, politics, economy, caste, Infosys (Of course!!!) and the next generation Indians making their mark around the world. Thomas Friedman has a very good sense of humor and it felt good being Indian and to see Nandan not only answering all the questions with the same humor but also bringing out the truth in each of his answers as to the true state of affairs in India. He really gave a good insight into India (without any of the hype and BS) and had the whole audience engrossed from start to finish. The most interesting conversation (I thought) was about global warming and how India and China are being blamed.

Good to see we have a new Global Ambassador to India who is making the rounds.

Interesting - Market Stats!!

There has been a lot of talk regarding the performance of the Dow Jones (DJIA) so far during Obama's term. Many said that his election would bring about a new sense of hope in the American psyche...I guess the markets disagreed.

Through yesterday's close, the DJIA's performance during President Obama's first 41 days in office is the worst of any President since at least 1900.

Where Will It End?

I got an interesting email from my sister this morning and she could not have summed up the pain and frustration everyone is feeling any better. So with her permission, I am putting up her email on my blog. So here goes.....

Are'nt we all getting tired of this recession? Yeah yeah there are a bunch of you out there who are still in denial about the country being in recession, but whatever you'd like to call it, are'nt we just beat, bored, broken down, burned out, distressed, drained, exhausted, fed up, pooped, worn out and just dog-tired of what’s going on? Yes the down turn is in its peak, yes the government has no money, yes people are losing their jobs and yes we're scared to spend in the fear of losing our jobs. 2008 saw the fall of the bank and 2009 is going to see how this translates into core industry. A couple of weeks back there was a surge of hope when the American folk went and voted for the the golden boy .... but the stock market has accomplished stripping us of all traces of elevated spirits after that.

The DOW closed under 8000 yesterday and while it sounds about right, there’s a part of me that wants the DOW to plummet to its lowest ....TODAY! At least we can move on after that. But the other part of me knows that we can’t drop too fast either. We need to feel every pang of misery, slowly and painfully, so that we rid ourselves of all our sins and make for a fresh start.

The dot com bust and the govt surplus during the Clinton administration was reason enough for the recession to set in (its a zero sum game people - surplus with the govt means no money circulating amongst the public - well more or less), but that recession was one that should have been worse than it was. The super hero of the moment was Alan - Visionary - Greenspan. When Clinton shouted 'Affordable Homes for all Americans' Greenspan should have stepped down and let the monkey run the Fed in the hope of a random lucky move that monkey might have made. Instead he sealed the fate of the economy with his monetary policies. Affordable homes indeed.... all for about 2 seconds.. then they became unaffordable again when the 'visionary' raised interest rates and forced the American to default. Lets not forget the banks.. now now how could we forget the greed that this industry so beautifully camouflages into helpful stances for all common man! You're worried about Wall Street - HA! Main Street feeds Wall Street's avarice!!

So where are we now? The American man cant pay back his home loan - so banks don’t have any money - so corporations cant borrow money - so corporations cant start new projects - so corporations have to let go of workers - so workers cant pay their mortgages... what a cycle!.. and once started we cant stop the downward spiral. And not to forget the derivative markets that have exploited every single portion of this cycle. Now with everything failing, is there a floor? We thought banks might see their write-off floors when the government proposed the buying of troubled assets. Banks could sell their troubled assets for eg. 40 cents on the dollar (whatever the amount - we don’t know) and they would not have to write off more than the left over 60 cents. Banks would rake in the 40 cents as capital and life was supposed to move forward. The $700B bill struggled initially but finally went through both the Senate and the House and Henry Paulson took possession of the first $350B to start his clean up work... We've seen the stock markets rally and spiral a few times since then and we've also seen the new president-elect create waves.. but we haven’t seen the buying of troubled assets. From his statements, it seems like Hank's changed his mind. Bank stocks are plunging again and we have no idea what the floor is. Whatever it turns out to be, lets hope we don’t see it higher or sooner than it should be. From the policies during the last recession, Greenspan created a huger monster that is the down turn now.. With all the bailouts and the bandaging and caretaking the Feds are doing, lets hope we're not creating an even bigger mess.

Oil - Up, Up and Away

The price for a gallon of gas has been setting new record highs averaging around $3.7. Well, if you are in California, there is a good chance that you are paying more than $4 already. If all else is not enough, Goldman Sachs predicted on Tuesday that oil could soar towards $150-$200 a barrel because of a lack of adequate supply growth. Supply is up, demand is down, yet the price is soaring. So what is the deal with oil??

Crude prices have more than doubled in the last one year causing pain to millions around the world. Many analysts believe the dollar’s protracted decline over the past year has much to do with the doubling in oil prices since May of last year. Another school of thought thinks growing demand in rapidly developing countries such as China, Brazil and India, is the primary factor driving oil higher. Others have also attributed speculation in oil and a wave of fund money pouring into commodities, given the weaknesses in other financial markets.

What effect does the falling dollar have on the price of crude? Most oil price contracts are denominated in dollars. The dollar has fallen in value by more than 30 percent against a Federal Reserve index of major currencies since 2002. This means that the price of imports, including oil, have gone up. That brings us to speculation. Since September 2003, the total number of open crude oil futures and options contracts rose by 364 percent. Meanwhile the global demand for petroleum rose by just 8.2 percent. So the futures and options market has become more important than the physical supplies in driving the price. We are seeing investment flows into the oil market that don't have anything to do with the demand and supply of oil. Investors are treating oil as a hedge against inflation and a falling dollar. Oil markets are part of a negative positive feedback loop in which higher oil prices contribute to higher inflation, which in turn lowers the value of the dollar, which boosts oil prices, and so forth. In other words, the oil market is coming to resemble the gold market (which has also been soaring).

Economists also note that in the short run oil prices are very inelastic: A large change in price produces only a small change in demand. If the price of gas goes up a dollar per gallon overnight, you still have to fill your tank to get to work. However, over the long run, consumers and producers respond to higher oil prices. For example, Americans are driving less and have switched to buying more fuel efficient cars. Higher prices are no doubt encouraging innovation.
Oil companies have a two-pronged approach when it comes to innovation: seek alternative sources of energy that will both (1) reduce dependency on trouble-some, oil-rich nations and (2) utilize this energy in a manner that will still reap windfall profits. Although ideal in theory, it’s much tougher to implement in practice since renewable energies are just that - renewable. When products are renewable, profits go down since consumers purchase less. There is no doubt that several companies have already innovated alternative fuels, however these will take years before reaching a scale of production where profits can be made from them.

So what will happen to oil prices over the next few years? No one is predicting $10 per barrel oil. However, it sure seems to be the right time to give up that Hummer and switch to hybrids as this problem is not going away anytime soon!!

H1-B (2009) - And the Rush starts now!!!

Last year, the visa cap for H1B petitions was filled on Day 1. Though no numbers were released officially, it is estimated that USCIS had in fact received about 150,000 applications and thus resorted to ‘lottery’ (Random Selection) to pick up eligible applications. Many applicants had to wait longer just to know if their application was selected. Also, due to sudden rush, many had to wait for months to receive a status on their accepted application as well.

Now with just 2 more weeks left to go before USCIS accepts applications for 2009 H1B Quota, it looks like last years rush is about to repeat this year as well. Here are few things that may affect the drama this year and may change the stats a little bit.


Recession, Slowdown and Layoffs
It has already been widely acknowledged that the US economy is not in its brightest spot and we are already in a recession. Though some optimists are declaring just a slowdown, rest assured with recent announcements of another full percentage point rate cut looming and stagflation fears, the economy is in trouble. This puts direct pressure on all IT consultants and prospective H1B consultants for year 2008. Some may be reminded of the "dotcom" bust in 2001, where 1000s of IT consultants lost their jobs and had to leave for India after spending months searching for their next gig. For H1B consultants, this is a lot more serious issue, as if they loose their job or their project ends, they almost immediately have to leave US or be 'on bench' with no pay. Question is how long can people survive with either of those scenarios?

A Game of Chance...
Just like last year, it is almost certain that visa cap will be reached on day 1 and USCIS may again resort to ‘random selection’. That would mean, there is no guarantee and chances are completely based on luck rather than a consultant’s qualifications and specialization. Given here is a link with statistics released by USCIS as to the number of H1-B approvals for last year.
http://www.businessweek.com/table/08/0305_h1b.htm

New Competition for H1B Holders
July 2007 was a historic period of the year in the sense that in a sudden and surprise move, all visa status became current for green card applicants from India and almost all submitted their I-485 applications. All such applicants received EADs for themselves and their spouses. Spouses of many of these applicants who were on dependent visas like H4 became suddenly eligible to work without any restrictions. That brought in a totally new breed of workforce to the already downsized market for 2008. This additional supply of workforce surely puts more pressure in the job market especially when there are fewer jobs out there and now H1's are competing with EAD's.

Numbers this year...
The official H1B quota still stands at 65,000. There is no news about any possible increase and increases in caps looks unlikely with recession. The actual number of visas available is infact about 58,000 once you subtract the visas reserved for Singapore/Chile. For those who received or receiving Graduate Degree or any other Advanced Degree from US Universities, there is an additional quota of 20,000.

H1B Abuse - Yes it happens every year.
If you look at the statistics link above, it gives you an insight as to who is getting the most H1's. There is no doubt that the outsourcers are abusing the H1B visa program. Companies such as Infosys and Wipro are undermining the American economy by wiping out jobs. The companies bring low-cost workers to the U.S., train them in the offices of U.S. clients, and then rotate them back home after a year or two so they can provide tech support and other services from abroad. At the end of the day, an employee of Infosys or Wipro who manages to get a H1 stays in the country for maybe 2 years or so on an average of 6 years thereby denying the visa to someone graduating from an American university who truly needs the visa. The numbers released by USICS clearly shows the visa is not being used for what it was intended for. The outsourcing companies also prefer H1’s to L1’s or B1’s as once an H1 is stamped for an employee they can fly out overnight (whenever the client wants them onsite) and also there is less legal costs involved. Since their tactics have now been noted by USICS, it will be interesting to see if the outsourcing companies get the same number of approvals like last year.

Whatever the case may be, as the filing date approaches, the H1 B visa rush starts NOW!!!

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.

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.

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