Why Dr Shashi Tharoor Matters

Outside is inside when you look from outside! People call him an 'outsider'. It is a matter of perception. For a Keralite, some one born in London, educated in Mumbai, Kolkata and Delhi and US, worked at UN in the New York office until 2007 and wrote English books is a total outsider. But for me, who is born in a village in Kerala, educated in Kannur and Delhi, working in the US as an NRI, Shashi is an insider. That is because although he was born and lived outside, he went to his roots and embraced the place and people he consider his own after passing opportunities to become a citizen of the western world. My four year old son is born in the USA. Will he ever identify himself as an Indian and run for a public office in India to better the live's of Les Miserables? The depth of Tharoor's committment to India and Indian people lies in the answer.

Win or lose, Tharoor already made a difference. First, he put money where his mouth is by offering himself as a candidate for election. Second, his candidature has instantly raised the standard of conversation about the purpose of election in a chaotic democracy like ours. Third, he set an example for highly qualified and successful people who are sitting on the side lines hesitating to test the dirty waters of Indian Politics.

American people are better served because successful people from other walks of life enter politics and take public offices. A B Film actor, fighter pilot, a professor at University of Arkansas, part owner of a baseball franchise and a community organizer; all became presidents of USA. People who ran big corporations, those who went to Harvard and Yale, those who are Rhodes Scholar, bankers and accountants, surgeons and physicians, lawyers and engineers; all come to politics. Sure, there are people who enter politics because of pedigree but people with sheer merit walk straight into American politics and achieve great heights. Obama and Bobby Jindal are no accidents in American Politics. They are the products of American's willingness to invest in smarter people even when they disagree with them.

Unfortunately in India, it is easier if you come from the rough and tumble of local politics. It is easier if you speak local dialect but with fewer thoughts about how to solve local problems. It is easier if you dress up like a local but does not represent the struggle and aspiration of the locals. It is not easy for Dr Shashi Taroor. Having a PhD in law and diplomacy from Tufts University does not make it easier. Being a number 2 man at UN does not make it certain. Having written many books of international repute does not guarantee an election victory in the capital of India’s most literate state. He is accused of as ivory tower intellectual by men of fewer merit and accomplishments. Youth wing of his party of choosing has publicly protested against the ‘imported candidate’ only to be told to back off by Ms Sonia Gandhi.

I am afraid that this very writing will be ridiculed as an NRI love shown by a fellow NRI in the US to a man who spent most of his adult life in New York. It is not. I don’t know Shahi Tharoor personally. I didn’t even know that he had Kerala connections until he announced his candidature from Thiruvananthapuram. I didn’t even know he could speak fluent Malayalam. But I know this. Shashi is a once in a lifetime rarity that manifests in Indian political landscape. I am sure temptations of good life in New York and Dubai might have gave him countless sleepless nights before making a decision to enter into Indian Politics. I am sure he offered deaf ears to lucrative consulting jobs that were his taking. Instead he chose to sweat it out among the locals in the scorching April Sun in Kerala. He could have waited for an opportune moment to get nominated to Rajya Sabha and found his way to Union Cabinet. Instead he chose the path that is chosen by many great men in world’s largest democracy. And like those men, win or lose, he will be keep coming back to his people and constituents to make life better for everyone.

I have only one thing to say to voters of Thiruvanathapuram. If you worry that he does not understand common man’s problems and not vote for him, you are not doing justice to the historic opportunity that is presented to you. To elect a candidate who represents a new attitude in Indian politics. You have given chances to many men who did not change the landscape of your capital city in any big way. Give a chance to this honorable and able man!

United States of Anger - How to redeem the true United States of America?

President of United States of America said he is angry. An angry Congress passed a constitutionally questionable retroactive and punitive tax bill as a response to massive public anger over AIG bonuses paid out to same executives who brought AIG to ground. John Stewart is angry at CNBC and Jim Cramer, understandably so. Rush Limbaugh is angry at Obama and want him to fail.

Alan Greenspan's fall from grace has been painful to watch. Bill Clinton's push on Fannie and Freddie to underwrite subprime mortgages looks thoughtless at best. Phil Gramm's 1999 Gramm-Leach-Bliley bank deregulation bill is identified as ground zero of the financial implosion by Obama. Quantitative Analysts (once fondly called Quants) are blamed for fusing quantum mechanics and human behavioral dynamics to mystic levels while predicting the risk of subprime derivatives. People those who lost their jobs are angry. Those who lost their retiremnent savings are angry. I lost more than 50% of my 401K. I lost 150K of my home value. I am young and I have time to recover most of what I lost. Fortunately I still have a job. But I am also angry. Very angry.

Not at the wizards and Quants at AIG and Lehman any more. Not at Alan Greenspan. Not at Gramm-Clinton-Summers. Not at Jim Cramer and CNBC. I am angry at any one who is instigating anger and fear in American People. That includes media screaming 'worst since.......' fear mongering. I am angry at Congress for getting angry at their own omission and commission and for not being unable to contain and channel their anger into anything productive and constructive. I am angry at the president who keeps warning American people 'it will get a lot worse before getting better'. I am angry at American people for getting angry. Because every passing minute of anger is costing a job, retirement and a home some where in this great land.

Dont get me wrong. I am not writing this to defend legal but questionable operations pulled off by a select few in Wall Street that is now holding the entire world hostage. They deserve blame to the highest order but not anger. In America, people don't like anger. Or that is what was told as a reason why Obama professionally managed his anger during his campaign.

Coming from a country where credit was hard to come by, I saw with starry eyes how US created credit out of thin air. The prosperity of US, compared to any other developed world, is largely due to the so called 'greed' of bankers and investors and, to some extent, 'stupidity' of American people chasing American dream. You might be thinking how irresponsible is to say such a thing at a time bankers and investors are the most hated people in the world.

I dont have a PhD in economics but I will give it a try :)

US has seen many booms and busts. Each boom brings a level of prosperity that was not seen before. Each bust erodes some portion of the wealth that was created during the boom. But after every bust, we have more jobs, more homes, better cars, better infrastructure, longer life, better technology than what we had before the boom. We lost about 6 trillion in home values since its peak in 2006. But we added twice that much in the years leading upto 2006. So we still have a long way to go before we hit pre-bubble prices. Median net worth of American households is still higher than that in 2004 even after falling 13% in 2008.

What we as a society fail to see is the "macro economic tectonics" that happens during the 'irrational exuberance' years leading up to a crash. For economic activity to thrive, we need credit. And we need credit available to all classes of people including the so called "sub-prime" borrowers. This does not happen in many parts of the world. First, it is extremely difficult to get credit. Second, credits are the privilege of the few. But in the US, credit is freely available. It is available to all classes of people albeit with higher interests and fees to "sub-prime" borrowers. Sure some people will default and foreclose. Some will file for bankruptcy. But increased credit provides a mechanism of shifting massive amount of money from those who can invest to those who need money. In the process both the investor and invested prosper and living standard of the society improves dramatically. If you tell the rich to donate money for a housing project in inner city, they will do a little. But if you tell them to buy a sub prime mortgage security insured by AIG, they will invest a lot. It takes mass hysteria and hype to create capital flow. And almost always, the market over shoots. It comes up with mind bending complex derivatives in a frenzy to push more mortgages and securities only to realize that it made gigantic blunders.

Almost always it is impossible to see a bubble when we are in one except if you are Greenspan. Even he decided to let the market bubble over by itself than trying to pop it. Once the credit has flown so much so that it over shoots the capacity of people to borrow money, everything comes to a grinding halt and then follows a high speed retracting. The investors loose money in toxic securities. People loose their home values, retirements. Then market corrects. The correction also over shoots. It corrects more than necessary since we are in a reverse bubble. After a while a sense of normalcy prevails and market and asset values corrects to a normal valuation. Not so strangely, the valuation of assets are higher than what was before the hysteria started. After all, all the new homes built, new streets paved, new water and sewage lines laid, new cable and phone lines connected, new parks and play grounds built will continue to serve American people for decades with only periodic maintenance. These are hard assets and no one can take those away from America. Not even the foreign treasuries whom we owe trillions.

We built 73 million homes between 1950 and 1979 and only 45 million since then. We thought we had the biggest housing boom in the history between 2000-2005! Brace for the next housing boom in 10-15 years and a quadrillion dollars bust a few years after that!! So much for the recently acquired national resolution to end "boom and bust cycle".

Apologies if I sounded overly insensitive to people lost their jobs, homes and retirements. But US would not have had that many jobs, homes, retirement savings and net worth if we did not have the greed of the investors and stupidity of American people. Also having a money printing press at Federal Reserve helps too :)

This may give socially minded readers a reason to calm. Roughly 3 trillion dollar of sub prime mortgages were funded since 2000 to low income people. At least 8 in 10 of the sub prime borrowers are still living in their homes. Only 2 in 10 are foreclosed. Without the now hated subprime loans, 8 out of the 10 may never have owned homes. Rick Santelli can scream on live TV that those are losers but that is precisely what anger can do to a great country's psyche. They are American heroes working hard and paying off their mortgages and raising their family in a place they call home. Anger blinds the mind and it is the easiest route to destruction. And I think it is time for Americans to redeem their country devoid of anger but full of excitement and optimism that always defined and redefined America. So no more anger please.

ABC News: The Middle Class Is Doing Just Fine, Thank You

Slumdog – a plausible explanation of success!

Bollywood movies request a very high degree of suspended disbelief from its viewers. Details are not very important. People are allowed to fill the holes in the story using their own imagination and preferences. And that’s the point of Bollywood production. It leaves room for perfection. While great Hollywood movies leave you disarmed of criticism, Bollywood movies invite it. Hollywood makes sequel to tell a new story but Bollywood makes them to say the same story with new cast and new crew.

I thought Bollywood movies are not appreciated in the west because it defies logic and realism. It’s too cheesy. It is musical. It has lip-sync. It always has happily ever after ending. It has predictable story line with few twists and turns. No complex plots and subplots. It’s usually a story of young couple falling in love, not of ogre falling in love with a princess. A singer singing for the hero and heroine is common place, not a hero or heroine speaking for one eyed monsters and mammoths.

Slumdog has holes in it. A lot of them. The kind of gaps you usually expect from Bollywood flick, not from a western production. In Bollywood movies, long lost orphan twins grow up and recognize each other after decades by looking at birth marks. In Slumdog, small kids grow up into big boys in a train ride. Jamal and Latika recognize each other, both in their adulthood by then, just by staring at each other for a while. Jamal recognizes his brother Salim’s voice over the phone when they talk for the first time after they became adults! In true Bollywood tradition.

Slumdog require a high degree of suspended disbelief. Indian police can be brutal. But they will dare not touch a slumdog who just came out of a show in which he answered all but the last question on his way to win final price in front of millions watching on TV. It is cheesy. I have seen Amitabh and Sharukh hosting Indian version of ‘who wants to be a millionaire’. They usually take extra care to be friendly with contestants when millions are watching them on TV. Any perceived ill treatment or arrogance will damage their popularity and brand value and knock off millions from their endorsements. A non-Indian audience will conclude that calling someone on live TV ‘chai wala’ is an Indian way. It is not. We may call ‘chai wala’ when the camera is off and mikes are pulled off, but not before. India is a land of caste and class but cant be accused of a land of stupid people. Oh, I didn’t tell you this one. Amitabh gave autograph to a kid without even noticing that this kid is covered in feces. In fact, no one among the crowd seems to smell! But again, that’s Bollywood tradition.

So how is Slumdog different from a Bollywood production? Not much. Bollywood movies do not pretend that what they show on screen is nothing more than a fiction . It’s a means of illusory fulfillment for ordinary people to see miracle happening on screen while their day to day life is spent pulling rickshaws and serving tea in call centers. In this movie, like many bollywood classics, its characters fight poverty and refuse to play victims. This is what Bollywood has been teaching Indians for almost a century now. They show how to fight grinding poverty and grueling injustices albeit in their own filmy ways. They show the wealth and flamboyance of the rich to help poor folks dream of good life.

Sometimes the fights are won when a retired police inspector, whose hands were chopped off by a dacoit, takes revenge by crushing him to death with his feet (Sholay). Some other times the fights are won using cricket bat and ball (Lagaan). Wealth is made by the hero breaking rocks in a hot Indian summer day. Wealth is also made by the taxi wala when a rich business man forgets his suitcase full of cash. Every movie shows a way to happiness. Depressing ones usually don’t make much money. They can’t afford to depress already stressed Indian people. After a day of sweat, spit, and trash all around them, they want to go back to their 10’ x 8’ jannath (heaven) and turn on their TV and watch song scenes from a Bollywood movie and constantly remind them of life’s plausible surprises.

And that’s the Bollywood experience Slumdog offers to western audience. Indians who are seasoned by Bollywood movies may not find much new in this movie. But its a new experience for the west. The magic of believing in unbelievable things, the liberty to imagine what is missing, the idea of enthrallment to all senses and the healing power of watching young and beautiful falling in love!

At a time people saw collapsing home prices, plunging 401Ks, massive job losses, widespread breach of trust in business and government, story of underdog becoming a topdog offers poetic justice. After watching Mumbai under siege on CNN for 3 days, it is easy for the west to break into AR Rehman's music and Bollywood's dance and song number. Jai Ho....

Indeed, we live in times of HOPE. Oscar will want to recognize that.

Mumbai Under Attack - Pakistan's Failure and India's Misery

TIME magazine is probably going to press, as I write this, with a cover story 'India's Muslim's in Crisis'. TIME reports -

[The disembodied voice was chilling in its rage. A gunman, holed up in Mumbai's Oberoi Trident hotel where some 40 people had been taken hostage, told an Indian news channel that the attacks were revenge for the persecution of Muslims in India. "We love this as our country but when our mothers and sisters were being killed, where was everybody?" he asked via telephone. No answer came. But then he probably wasn't expecting one.]

Article continues - [The roots of Muslim rage run deep in India, nourished by a long-held sense of injustice over what many Indian Muslims believe is institutionalized discrimination against the country's largest minority group. The disparities between Muslims, which make up 13.4% of the population, and India's Hindu population, which hovers around 80%, are striking. There are exceptions, of course, but generally speaking Muslim Indians have shorter life spans, worse health, lower literacy levels, and lower-paying jobs.]

It is a huge mistake to call this an act perpetrated by Muslims in Crisis in India, to say the least. The facts are facts. If Muslims in India are unable to join the progress India made since Independence, it is a National Shame. But to suggest that Islamic Terrorism in India is the offshoot of economic underclass status of millions of Muslims in India is being dishonest to extremist's long harbored wounds from the decline of Islamic prominence since its golden years. To suggest that Islamic Terrorism in India is the child of perceived 'institutionalized discrimination' and persecution of Muslim minority in India is being ignorant of extremist Islamist's long harbored desire to return to golden age of Islam that ruled most of Indian Subcontinent, Middle East, Northern Africa and Persia.

[We (Muslims) were the legal rulers of India, and in 1857 the British took that away from us," says Tarik Jan, a gentle-mannered scholar at Islamabad's Institute of Policy Studies. "In 1947 they should have given that back to the Muslims."] - The Article narrates.

For extremists, the world history starts and ends with Islamic Golden Age. There were emperors and empires that ruled the world before and after Islamic supremacy. Asoka conquered and established Indian Subcontinent as we see today. Moguls conquered the subcontinent. Akbar took Mogul Empire to greater heights until subsequent rulers loosing to British. British lost the war of the subcontinent to Gandhi and his people. How far back one wants to look? For extremists, its as far back as it suits them. British lost its colonies where sun never set. But they don't harbor any desire to go back to their golden days. British fought,ungracefully, to keep their colonies. But once they lost it, they became graceful losers. Content with a Queen and a Common Wealth. The root cause of Islamic Terrorism in the world will take us to extremist's inability to loose gracefully.

The days of emperors and colonialists are over. The world will never go back to the days of Alexander, Asoka, Genghis Khan, Moguls and Emir of Timur. The world will not repeat British, Spanish and Portuguese colonies. After Afghanistan and Iraq, world may never see an American invasion of another country as seen in the past. So most moderate Muslims no longer harbor any thoughts of territorial supremacy on some other land. But extremists ability to steer young moderate Muslim men away from bright and promising future into sheer self destruction to achieve mass destruction of innocent people is helped largely by some of the most volatile unresolved issues of post colonial rule.

What seems to be burning the Muslim psyche all over the world is not only their lost supremacy of the bygone past but also a perceived denial of Islamic existence. In modern days, it starts with nonexistent Palestinian home land. It includes Kashmir's lack of independence. It includes Chechnya. It includes demolished Babri Masjid and thousands of their mothers and sisters lost in Gujarat. It includes Afghanistan where they once thought established the first true Islamic State in the modern era.

As I write this, the terrorists are beginning to be identified as Pakistani and Bangladeshi nationals came via sea from Karachi to Mumbai. If this is proved to be accurate, TIME's notion that these attacks are some how the result of India's Muslim's in Crisis doesn't hold much weight. If at all this has anything to do with Muslim, its failed Islamic Republic of Pakistan. When the subcontinent was divided to form Pakistan, the Muslims hoped to create a "modern, moderate and very enlightened Pakistan,". Indian Muslims, with all its perceived and real crisis of confidence in Indian State, have the opportunity to become APJ Abdul Kalam, Azim Premji, Khans of Bollywood and much more. But the Muslims in Pakistan continue to slide into hopelessness and despair that beget young men willing to give up their precious lives to kill hundreds of innocent people why were living a normal life. Unfortunately that is what Pakistan failed to provide Muslims in their country, a Normal Life!

It is easy for Indian's to direct outrage against its neighbor cousin. It is easy for the world to lament Pakistan for not being able to stop extremists operating in their country. But it is not productive. Pakistan doesn't need an earful. They need help. They need help in providing HOPE to its people. They need help in giving decent jobs and dream of living a normal life to its people. The kind of opportunity they see in an India that is increasingly going global. When people loose hope, their ability to think diminish. When they shut their doors to the world, they become disillusioned. They become impressionable to the point of destroying the gift of love :(

Behind the Mumbai Massacre: India's Muslims in Crisis

'Credit crunch, what credit crunch?'

Listening to the car dealer on TV reporting massive reduction in sales due to lack of credit and Arnold seeking 2 billion loan from Fed does not support this sentiment. But is it all that bad? Is the sky really going to fall lacking a 700 billion bonus from tax payer to the bankers? Probably not. What is the basis for me to say this? I am no expert in the complex matters of finance and do not have any credibility to question the financial acumen of the best and brightest like Paulson and Bernanke. But hey, this is a free country and every one can have their opinion. In my opinion, the present credit freeze is the result of bankers trying to over correct their excesses of last 5 years. It is like the cat refusing to drink cold milk after burned once while sipping it hot. For years, they lend to any warm body and now they don't want to lend to any one who is "sub prime". They are hoarding cash fearing that there are few safe hands these days they can trust. Aren't they lending to their "prime" customers? How are they able to do that if there is truly a cash shortage?

I wanted to test out my opinion with a real world credit exercise. I tried to get banks to lend to me in this "credit-freeze" environment. Like many of you, I still keep getting balance transfer or cash advance check in the mails from my credit card companies. I almost always shred them but decided to cash out some money before the cash completely "dried up". I decided to cash out a large sum from JP Morgan Chase. I got immediate approval and pulled money into my checking account with 0% APR for nine months. During the height of 700 billion bail out plan negotiation in the capitol hills, I pulled out another sum from BofA credit card with 0% APR for a year!!! Now that we established that banks still lend to credit worthy customers (I have a FICO score north of 700 but I am an average middle class person who is among 95% of Americans who will get tax cut under president Obama), let us explore what is happening at the home mortgage business which is the root cause of the current mess. My friend in LA just got funding for home purchase with less than 20% down payment and a 30-year fixed loan at 6.5%. Not bad in the days of credit freeze. He too probably has a good FICO score. What about small business owners? I know a gas station owner who got a large loan albeit large amount of paper work. But the point is that banks do have cash and they are still lending to credit worthy customers. They are not lending to each other probably because they are protecting their cash from one another just like the kids protecting their favorite toys from their friends afraid that they might break it! But when the price is right, they will lend again. How long they can hunker down with the cash without doing their primary business of lending?

Now that bailout plan got a second life in Congress, you would think Banks will start lending more freely? Absolutely not, at least for next few years. Once bitten, twice shy! They will hoard all that cash until next batch of whiz kids from HBS (Harward Business School) come up with innovative things they can trade. It will neither be dot com nor CDOs. But it will be some thing quite mind bending stuff. More complex and logic defying than CDOs and CDSs. According to some reports, the wealth of world's High Net Worth Individuals is in excess of 40 trillion dollars! They not only need a place to park their cash but investments that they can buy and sell for a profit. An American, even with a FICO score below 600, is a better borrower than any one else in the world. Because only in America, you will see a bailout package of this scope and ramification gets introduced to the law makers, gets debated, gets defeated after angry calls to Congressman's office and then finally getting passed after local business owners call and plead and president signs into law within hours of House adopting the motion. All in a matter of a fortnight! Americans have the audacity to do mind bending, logic defying stuff. Be it dot com or it Subprime or borrowing almost a trillion dollar more to pay off some bad loans. That too when the treasury is running half a trillion deficit already. And the world wonder in amazement in her triumphs and tribulations and buy her treasury bills like a clock work. I love this country :)

The Credit Cruch:Where Is It Happening? TIME article

My previous post on 'Defending Subprime lending - case for democratic economy'

What is common between Thai Yellow Curry and North Kerala Yellow Curry?

Or you could ask why the gorgeous looking air hostesses of Malaysian and Singapore airlines wear colorful Lungis. Ever since I ate Thai yellow curry from a neighborhood Thai house for the first time in 1999, I was perplexed by its likeness to North Kerala Thenga Curry and Thanjavur Kulambu (vegetables or sea foods cooked with coconut milk and spices to thick yellow or red gravy). I knew there was some material connection between the lungi clad waitress at the Thai house and the Lungi clad waitress at the local Tea shop in my home town in Northern Kerala, but couldn’t figure out what. After years of sitting on this, I finally decided to dig deep. The boring lessons from school on Chola, Chera and Pandya dynasties of ancient India started resurfacing.

Well, the answer to the mystery might be King Rajendra Chola of Chola dynasty who expanded the Chola kingdom’s influence to include most of South India, part of North India (Bihar and Bengal), Sri Lanka, Maldives, Malay Archipelago (Malay Archipelago constitutes the territories of Indonesia, the Philippines, Singapore, Brunei, Malaysia, East Timor, and most of Papua New Guinea) and part of Burma and Thailand. Around 1130 AD (or CE to be politically correct), all these geographic entities were ruled by or under the subordination of the great expansionist and navigator Rajendra Chola.

After this new found information, I stopped wondering why people in Bangladesh wear colorful Lungis just like south Indians. I don’t wonder how Kerala Porotta (bread made of flour and forms circular flakes) is almost the same as the Malaysian porotta stacked next to it in an Indian store. Who would have thought of putting fish in Sambar? Well, I had the opportunity of trying it out during a Malaysian stop over! It is hard to guess if Malay people decided to put fish in Sambar or south Indians decided to replace fish with Brinjal and Okra!

Rajendra Chola expanded the trade route between South India all the way to China. Iron utensils were imported from China almost 1000 years before Walmart did it! Cheena Chatti (deep skillet made of iron) was used by my mother till it was replaced by the non-stick craze of the last 15 years. Trust me; the cheena chatti was the best non-stick ever after it aged a little. Cheena vala (shore operated lift net used for fishing) is part and parcel of every day portraits of Kochi, Kerala. Cheena/Cheeni means China if you don’t know that already. World has always been flat I guess! But the modernity didn’t know until Friedman told it that way. Well, never too late.



















The map of Rajendra Chola ruled or subordinated territories. He had established active trade with Mainland China through Malay Archipelago.

Koshi and Katrina – The sorrow of Bihar and New Orleans

Two million people in New Orleans were displaced after strong surge from Hurricane Katrina stormed through the levees and drowned most of New Orleans. Exactly three years later, in another August catastrophe on the other side of the globe, another two million people are displaced after the monsoon flood broke the embankment (levee) for almost a mile! The river furiously broke the manmade shackles of embankment s, made to curtail her meandering tendencies, and started flowing in a new path which it abandoned 100 years prior.

Why do these things happen? Could these be prevented at all? Well, the answer lies in understanding how river systems work to create new landscape through which it flows and how we interfere with this natural process. Water flows from higher altitude points in the mountain to the lowest point in the sea. How does it get there is the story of how civilization is made and destroyed. As the river flows from the mountains to the valleys and eventually to the sea, it transports and deposits soil in the channel bottom and at bends. As the deposit at the bottom of the river piles up, the channel depth reduces and water starts overflowing the banks and creates new channels. As the deposit around the bend increases, the water starts shifting sideways to find new path. It is like when you squeeze a gel pack and you see gel finding it ways to go against the direction of your squeeze.

When a river makes a new path, the path abandoned by the river is so fertile that it attracts large immigration of farmers and associated civilization. They live there for generations oblivious of the fact that the river might come back to the path she abandoned decades or centuries ago. As her current path gets loaded with soil sedimentation under her belly and around the bends, the river gets lifted up so much so that the place around her is much lower than the river itself. It is like an overhead river! After a while, the river goes back to its first principle and flows to low again.

When she does this, millions of people who settled in the low lying land get in her way. Lives lost and property damaged and everything is under water. So what do we do to prevent this? Well, we use our engineering and technological knowledge and advancement and try to tame the Mighty Rivers. We tell the river not to flow freely. We tell her to stay her course regardless of what happens to her morphology. We build massive levee system around the banks to prevent the river from changing its course. We spent billions to create and maintain very complex levee/embankment system. As the river gets choked and can’t find a place to deposit the silt and soil it brings from upstream, the river level rises. When the river level rises, we increase the levee height by few meters. This catch-up game goes on for decades or even centuries before the river swells really big and devastate everything in her way to flow freely again. When that happens, we get Katrina and Koshi disasters and millions are left to suffer the fury of the Mother Nature.

So what is wrong with restraining a river that meander all the time? Can’t she make up her mind? Isn’t taming of natural forces that made humans what we are? Isn’t that fighting trait made civilization possible? Yes it is. But he is the difference. Good judgment is to know when to stop fighting. Good judgment is to know which fight to pick.

British knew when to stop fighting when they demolished the embankments around Damodar river (Sorrow of Bengal) in 1850s. Learning from Damodar experience, they refrained from building embankments for Koshi River (Sorrow of Bihar). But since independent, armed with the vision of engineering and technology serving to help eradicate poverty and human sufferings, the governments started building complex levee systems. This mirrored US’s initiative to build series of complex levee and pumping system in New Orleans since it bought Louisiana from the French. The government and people in both countries (India and US), doesn’t quite realize the futility of this fight. New Orleans is sinking every day and according to some predictions, it will become a sunken Atlantis by 2100.

Image from Wikipedia – Ever sinking New Orleans, Vertical cross-section of New Orleans, showing maximum levee height of 23 feet (7 m) at the Mississippi River on the left and 17.5 feet (5 m) at Lake Pontachartrain on the right.

According to the latest reports, government of India is working to repair the breached embankment and redirect the river into the confinement again. Koshi River is now flowing approximately 60 km (38 mile) east of its last path. Looking at the picture below and realizing the magnitude of the shift, it will be extremely difficult, if not impossible, to bring the river back again. Not to mention about the amount of money that will need to be pumped in to reconstruct the breached embankments.

Even if we assume that the government of India and its engineers will be able to redirect the river into confinement again, is this is a sustainable solution? Should we mess with Mother Nature once again only to be punished harshly yet gain in next 50 years! According to Hindu Legends, King Bhagiratha had to spend 1000 years praying in the wilderness to bring river Ganges from heaven to flow on earth. These girls are not easy to tame. Even when they are tamed, they are tamed to flow from heavens to earth not the other way around. That’s the lesson 101 for all the governments and their brilliant engineers. Water flows from high to low and the prudence is in letting her flow that way!

Satellite View of Koshi River in Bihar before the river changed course by approximately 60 km east during the August, 2008 flooding. See the barrage (looks like a bottleneck near the India-Nepal border) that diverts water from the river into two separate canals one to Nepal and other to India. The embankment leading upto the barrage is breached by almost a mile long and created a new flowpath cutting through the valley to join river Ganges at the bottom.

Living With Floods - Article by Naren Karunakaran

My previous blog - Owens river valley, Kaveri, Mullapperiyar - water disputes in the world and lessons learned

French Public Health Insurance System (PHIS) – An insider story of the reality.

According to World Health Organization’s ranking of health care systems in 191 countries, France came first. The ranking was based on things like the number of years people lived in good health and whether everyone had access to good health care. The United States ranked 37th. Also two researchers at the London School of Hygiene and Tropical Medicine measured something called the "amenable mortality”, a measure of deaths that could have been prevented with good health care. France came first among the 19 industrialized nations and United States was last.

So looks like French system is the best public health system in the world to me. But since I know of someone with firsthand experience of French Health System, I decided to hear from horse’s mouth. Christine is a French citizen, working in the US, and enjoys the benefits of French health care system. Although she is currently in the US, she is eligible for health care benefits under French System since she contributed to this system while she was working in France. I asked her which system she likes better, US or French system. She said, she likes the US system better. Her reason; she spends € 30 when she visits a primary doctor in France where as she pays $15 copayment in the US. It is cheaper for her to go to her primary doctor in the US.

Copayments:

It is no secret that copayments are high for many out-patient services in France. For example, patients must pay 30% of Social security's tariff for a physician's visit; moreover, roughly 40% of specialists and 15% of GPs are allowed to charge more than the tariff. Copayments are also high for dental prostheses and eye-ware.

So if Christine had visited a specialist, she would have paid a copayment of more than € 30 versus still $15 in the US. So I can understand why she wants to do her annual physical exams in the US before taking off for a vacation to join her mom in France.

What if she were working for an employer in France? The story would have been different. Half of her copayment of € 30 would have been picked up by a supplementary private insurance (employer pays for most of the private insurance premium) and would still have € 15 out of pocket expense. These numbers will be higher for specialists while in the US, it remains the same as long as it is an office visit.

Cost of Insurance:

So how much does it to cost this type of insurance? Since she is getting a lower benefit and higher out of pocket expense, you would think she would be paying a lower premium in France. About 21 percent of an employee’s income is deducted through payroll towards the national health care system. Employers pick up a little more than half of that. In addition to this, employees may be able to join group private insurance sponsored by employer to cover much of the gap between what is covered by the national plan and the actual medical expense. Or they can buy a private insurance at an additional 3-4% of their income. Between the employer and employee, the total health care cost in France per employee is around 25% of the individual income. In the US, according to Department of Labor March 2008 report, the health care cost to the employer stands around 7.2% of the total compensation. Assuming another 3-5% is passed onto employees, the health care premium in the US stands at around half of what French are paying in percentage terms. In absolute currency terms, US might be spending more on health care per person, and that’s because of the higher wage and cost structure in the US.

Universal Healthcare Insurance (CMU):

What if you are among the 10% unemployed in France? Since you don’t have a job, you don’t have a supplementary insurance and then you are stuck with high out of pocket expenses. Most of them stayed away from seeking care. In January 2000, public supplementary insurance program called CMU (Couverture maladie universelle) was implemented to ensure the poor access to health care. For those whose income is below a certain threshold, this insurance covers all public copayments and offers lumps-sum reimbursements for glasses and dental prostheses.

Does this sound too good to be true? According to published articles, in a city like Paris, only a 20% of specialists are willing to take CMU patients. This confirms what Christine told me, “The provider may not give an appointment when they know the patient is on CMU program. They may say we don’t have an appointment for next six months!” Essentially, CMU created a two tier class system of health care which it sought to alleviate in the first place. Have you heard of “HMO Bounce” lately?

There must be something right about French:

This is what is right about the French system. In France, for people with one of 30 long-term and expensive illnesses — such as diabetes, mental illness and cancer — the government picks up 100 percent of their health care costs, including surgeries, therapies and drugs. This is probably the most important lesson from French system. In the US, since the insurance is tied to employment, long term sickness can lead to job loss and subsequent loss of insurance.

Why shouldn’t we go down French Lane:

It is expensive and it has higher out of pocket expenses. Nobody in the US wants to see 25% of their income going into health care insurance. The cost doesn’t end there. To fund the new universal health care (CMU), French government is channeling funds from other welfare programs. France funds their welfare system by taxing the employer and employee to very high levels that is uncommon in the US. According to a CATO institute Article, “The top marginal income tax rate (in France) is 48 percent. When payroll taxes are included, the French can pay as much as 65 percent of their income in taxes. The top corporate tax rate is 34 percent. There is also a 19.6 percent value-added tax (VAT). Overall, taxes consume nearly 44 percent of France's GDP. And even this isn't enough to pay for the French welfare state. France's national debt tops 68 percent of GDP, quite aside from the unfunded liabilities of the French Social Security system -- a debt some estimate to exceed 200 percent of GDP.”

You think CATO is too much libertarian? You can believe Christine’s pay checks. For every 100 FRF paid to her, employer paid another 100 FRF to the government. From her share of FRF 100, government took away another FRF 50. So government kept roughly three times of what she got to keep!

Even after spending all these tax payers’ money, there is no guarantee of government efficiently running business. Think 10% unemployment. Think poor and shut away youths in their dismal neighborhood projects, rioting in the suburbs of France for weeks to protest the lack of educational and economic opportunity. Think Katrina. Think FEMA.

Governments give hopes to people. That’s all it can give and that’s all it should ever dare to give.

Here are some ideas that might work in the US:

1. Make it mandatory for everyone to carry health insurance. The logic of insurance is shared risk and when we have so many people outside of the pool, the risk is magnified. When more people join the insured pool, the cost of insurance comes down for everyone. Enforce this through payroll deduction or employer group insurance
2. If the employee cannot afford health insurance premium due to low wages (when cost of insurance eclipse the wage and employer does not want to pick up part of the insurance cost), the minimum wage should be adjusted upwards to cover cost of insurance (e.g. increase minimum wage by 7.2% to reflect the US Department of Labor average employer cost of health insurance)
3. Let employee buy their own insurance. Employees should be given an opt-out to skip employer sponsored group plan and buy insurance directly from insurance companies. The studies are already suggesting that the rate of private insurance premium is much lower than the employer sponsored group plan and it grows much slower than group plan. Employee should be able to keep this insurance indefinitely regardless of the employment status. The rate of increase in premium should be less than or equal to the rate change by the same insurance provider for an employer sponsored group plan for any given year. In the event of a company defaulting, due to insolvency, individual health insurance can be protected under an insurance guarantee like California Life & Health Insurance Guarantee Association.
4. Under COBRA, the employer is required to provide continued health care coverage for 18 months of termination. But if the employee could not take up a new job due to health reasons, he/she will lapse the coverage and mounting hospital bills will lead to bankruptcy. A possible solution might be to change the COBRA rules to allow employee to continue with health coverage and pay the group rate, regardless of his/her health condition, until the person takes up a new job. The coverage does not have to continue through the employer (due to administrative reasons) and can continue with the insurance company. If the person is unable to take up a full time job due to health reasons, the coverage shall continue indefinitely. During such period of extended coverage, the same out of pocket maximum limit would apply and will put a cap on medical expenses (couple of thousand dollars per year) especially when it is needed the most. Government can give tax credit to offset some of the medical premium paid during the illness period.
5. Just like in the Y2K days, bring lots of overseas programmers and IT Engineers into the US and build a national Electronic Medical Records system. This will be the best investment US can make since Y2K and Internet.
6. Allow Health Care providers to import drugs and medical supplies from less expensive countries. FDA can use some of the savings to beef up inspection of imported drugs and supplies.
7. Allow Health Care providers to bring in MD doctors from overseas and start practicing as Nurse Practitioners/Physician Assistant for a year and then allow them to practice as MD Doctors. It is absurd to make them go through a 3-5 year residency again. Doctors are not among the top 10 overpaid professionals in the US and hence I am not proposing to reduce their wages. But there is a severe shortage of qualified doctors which in turn manifest as shortage in qualified health care facility. With more doctors, there will be more health care facilities and there will be more competition among them. This will result in a tighter and efficient management of health care facilities and establish as a lean and business units. How about a Costco drive through clinic? How about buy one lipid profile test and get one free for the partner!

Health Care Lessons from France - NPR Article

The French Health Care System - Medical News Today Article

Employer Costs for Employee Compensation Summary - US Department of Labor

Universal Healthcare Insurance introduced - EIRO Article

Welfare Lessons from France - CATO Institute Article

Will he or Won’t he? Why Obama will not pick Hillary for Veep

Lincoln took all of his chief rivals into his Cabinet. Lyndon Johnson put this subject in less noble fashion, "better to have your enemies inside the tent pissing out than outside the tent pissing in."

Obama himself said, “And, you know, one of my, one of my heroes is Abraham Lincoln. And a while back there was a wonderful book written by Doris Kearns Goodwin called "Team of Rivals," in which she talked about how Lincoln basically pulled in all the people who had been running against him into his Cabinet because whatever, you know, personal feelings there were, the issue was how can we get this country through this time of crisis? And I think that has to be the approach that one takes”.

So why am I saying that he won’t pick her for the dream team? There are three reasons.

Reason # 1: Only a victor can be magnanimous not a warrior. The fight is not over yet. It is one thing to pick a cabinet after you win but totally another to pick a running mate. Obama is in the trenches, digging in, to take aim at McCain. He can’t afford the distraction of Hillary’s ice woman image; leave alone the 200 pound big Bill that comes with the package. One just can’t imagine Hillary next to Obama when standing under a larger than life banner that shouts “Change You Can Believe In”. Can you believe that Change?

Reason # 2: “Running Mate” word means a lot in presidential politics. One of the definitions of running mate, according to Webster, is “a horse entered in a race to set the pace for a horse of the same owner or stable”. Can you imagine Hillary setting the pace for Obama? If the elections were held before the invention of TV, people may not find much difference between the two. But in the days of presidential elections first won on the TV screens and ‘sound bites dominating the TV stories’, one can’t help notice Hillary’s inability to produce decent sound bites. One also can’t help notice the profound differences in their body language. Obama is like a kid in a candy store. Hillary is like a mom telling her child to behave. She is experienced to run the house but he is enthusiastic about changing the neighborhood. She is boring in her pant suits and he is crisp in Michelle picked attire. She is clean and he is smelly (by Michelle's own accounts). She is a predictable lanline and he is Voice Over IP (VOIP). She is still useful and dependable VHS and he is fancy but scratch able Blu-ray. She is old school and he is new age. She is we-tube generation and he is you-tube generation. She is the mom and he is the cool kid. Ask any kid if they wanted to be spotted with his mom outside of the soccer ground.

Reason # 3: Obama doesn’t fear losing this campaign. He is smart enough not to negotiate under fear. He will not fear to negotiate her out of the ticket. The presidency is his to take with or without Hillary. It is truer without Hillary on ticket than with her. He knows, in politics, that momentum is everything. Simple arithmetic of adding her voters to his side doesn’t work. He will get them; on his own. He won’t trade the opportunity to negotiate with the rust belt for anything in the world. He will not choose Hillary shortcut to get to them; being mindful of history is being made here. He will want to help shape the history. How a white collar black man won over the elderly blue collar white men and women to become the first black president of the most powerful country on earth. It will be a sensational but grainy and shaky you-tube story not a predictable but stable VHS story!

Kannur killings - modern day gladiators

Seven men killed in the First week of March, 2008 in Kannur, Kerala. It started off with a group of people chasing and killing a young man from an opposition political party with long Sickles and hammers made to order from broken truck suspension leaves and such. Then the dominos killing one after the other. Young men between the ages of 20-30 mostly from the lower caste 'Thiyya' (ezhava) and living in extreme poverty were slaughtered in broad day light on rural roads, leaving the surviving family to the mercy of compensations provided by the respective party. (I was told that even the compensation is not handed over to the surviving family in full but they get the interest on the fixed deposit made by the party with withdrawal restriction on the the principal amount.)

Political killings in Kannur is not new. According to a report:

'Kannur has been limping from murder to murder since the 1970s, when the RSS began to grow influential in the area. In 1981, RSS and CPM workers were locked in a two week-long bloodbath that claimed 24 lives. Since then the cycle of violence has continued unabated, despite innumerable peace initiatives. In the past five years, some 3,500 incidents of political violence and 36 killings have been officially recorded in Kannur'.

In a state that boasts 100% literacy and near first world human development indexes, what makes one region resort to these extreme medieval violence? Hasn't the civilization made inroads into this part of the world where first Malayalam-English dictionary was written in 1872? Believe it or not, this region had a well established administration as early as 14th century AD under 'Kolathiri' Kingdom. It's history is ornated by 'vadakkan pattukal' (gladiator stories of chekavar men dueling to death to resolve the quarrels of the local rulers) and 'kalari payatu' (an indigenious form of martial art dating back to 12th century AD).

Chekavar is a warrior section of the Thiyya (Ezhava) caste who formed the militia of the local chieftains and kings. These men were skilled assassins and skilled in the deadly art of killing. Women folks sang the glories of the historic chekavars while working in the paddy fields. They do that even today in the fields; whatever is left of it after the Persian gulf remittance fueled massive farm land filling for construction.

Well, that history continues even today. Young men with little means dying for the ruling class. The ruling class is no longer the kings. The kings and chieftains are replaced by politicians who are groomed in a culture of violence starting as early as high school leader elections. But the chekavar's remains the same. In a rural system, aligning with a political party is the easiest way for the poor and aspiring youth to glory and redemption. They don't have the means to go to Persian Gulf to make a living. They dont have the education to get a job in the largest employer in the state, the state itself. They don't have the entrepreneurial skills to do business. The state has the highest unemployment in the country (by some accounts as high as 20%). So most of them work hard in the labor market to make a decent living and mortgage their lives to political leadership who promises salvation through struggle. They have even coined a word 'varga shathru' (Archenemy) to refer to people belongs to a different political party. With Hindu right wing trying to lure the lower caste men into their fold away from class based polarization, there is plenty of fuel for the fire. But both factions exploit the poverty, aspiration and above all the legacy of the chekavars who died killing fellow men for the ruling elite, leaving their family in a cyclic pattern of poverty, helplessness and violence.

Kerala High Court remarked 'Manslaughter is a sport in Kannur. Lucky are the ones who die a natural death in Tellicherry'. The Romans could be forgiven for the blood sport. But should the kannur politicians forgiven for pushing modern day gladiators into this heinous blood sport?

Murder’s On The Manifesto Here - Tehelka artcle"

Benazir Bhutto - making of the assassins, the poor choice to die

1948—Jan. 30: Gandhi, 78, shot dead in New Delhi, by Nathuram Vinayak Godse
1959—Sept. 25: Prime Min. Solomon Bandaranaike of Sri Lanka, by Buddhist monk in Colombo
1984—Oct. 31: Prime Min. Indira Gandhi shot and killed in New Delhi, by her body guards
1991—May 21: Ex Prime Min. Rajiv Gandhi killed in election rally, by a female suicide bomber
1993—May 1: Ranasinghe Premadasa, pres. of Sri Lanka, killed in a bomb blast in Colombo
2007—December 27: Benazir Bhutto shot dead in election rally in Rawalpindi

South Asian history has many assassins. From Hindu extremist to Budhist monk. From own security guards to female suicide bomber. From cyanide tablet worshipers to Islamic extremists. What makes them an assassin? What makes them loose everything they have in life in return of precious blood? Loose their spouses, loose their children and loose their family time around the dinner table? The reasons are plenty. But the underlying thread is the same. The poor choice to die for a cause than to live for the loved ones. Both the assassins and the assassinated!

This happened during the 90s in a 100% literate state of Kerala in a country when half of the country did not read or write. We were playing marbles or some thing like that in our courtyard. We had loud cries and commotion from a farm land a shout away. We all ran towards the field and what we saw was beyond narration. We saw pools of blood spilled all over the field while attackers chased one of my very distant cousin to death. People who reached before us told that he was lying in the middle of a drainage trench, carved in the middle of the field, soaked in blood. They saw 10-15 people running away from the scene with blood dripping weapons in their hands. He had 30 or so deep cuts all over him from knives, axes and other rudimentary weapons. His limbs were hanging off his body while people scurried him away to the hospital. Doctors spent hours in the operation room but could not save his life. Soon after his death, he became a 'Martyr' to his party and thousands thronged at his funeral. He was killed for an angry exchange with his opponent party workers some time in the past, 'I don't fear death for speaking out against your tyranny'. He died at the hands of the tyrants.

The people who killed the man belonged to a different political party. Thats is right. No ethnic cleansing, no religious riot, no communal violence. Political killings! Some past accounts of frivolous rivalry turned into a brutal killing. Those who got sentencing spent years in Jail. But they get heroic welcome by the party men when they came out on parole. Very young men, with simple desires like any other young men in the rural life. Watch a movie from a local theater, play cards with friends, get drunk over the weekend and find ways to get laid, which is forbidden until one is married. But they lost every thing in a jiffy. They lost precious years of their prime life inside the walls of the central jail. And they thought they were destined to be the heroes of the party which they foolishly served like herds. Martyr lost his life for nothing. But the party gained a 'Martyr'. The story repeated many times over. With parties trading places, some times creating martyr and some other time gaining one.

Every society celebrated martyrs. Martyrs who gave up their life for a cause larger than their life. Larger than their love for their spouse. Larger than their desire to hold their children's hands. Larger than their desire to get back home and share a meal with family after a day of back breaking chores of the day. People were told that their life is worth sacrificing for their religion. It is better to die for their country than live for their kids. The martyr's life after death is more tantalizing than a living man's struggle to live.

Societies do this to recruit volunteers to advance their organizational goals. When you need volunteers to kill, the reward can not just be monetary. Because you cant put a price on a man's life which will be taken away from him after he kills. So the price has to be higher. Something that is abstract and intangible. Something that can not be quantified. So the martyrdom is born.

The killed also contributes to the sense of dying for the cause than living for survivors. Three attempts on Gandhi's life in 1946 and 1947 did not mean much to Bappu. Indira Gandhi famously said, 'If I die today, every drop of my blood will invigorate the nation'. Rajiv Gandhi ignored threats to his life when he desperately tried to get back to the rank and file of ordinary people after loosing touch with them after the Bofors scandal. Benazir Bhutto told reporters few months before her death that she does not fear death and no one kill any one until his or her time to die. She almost got killed on her day of return to Pakistan. But she considered her life worthless put against the larger scheme of things. She preferred to be killed than watching Pakistan election on a TV screen from exile.

It took 78 years to make a Gandhi. Bhutto is no Gandhi, but she represented the best of Pakistan. With all the corruption charges against her and her family, she represented the moderate liberal and peace loving Muslims in a country where extremists thrive to impose a Wahhabi version of Islam on to its people. 54 years made into the making of the promise of Pakistan's democratic aspirations. All that years of work is shattered with her desire to emerge through the sun roof of her Land Cruiser or so says Pakistani establishment. Is she better off dead than alive with all her flaws and missteps? Is PPP better off now than before? Is Pakistan better off now than before? No. But she didn't see it when she was alive. But the assassins could see it. The sad part is that assassins were just living the fake glory of martyrdom, created by the society so that it could dispense some cheap lives to take away some pricey ones. Alas, the assassins doesn't see that trap.

Has death ever been better than life? Is there any cause that is worth trading one's life. If you ask me, I will say NO. Not only that I hate to be survived by wife and son but I hate to be survived by the cause!

Musharaf and Sharif - You shall not become the Law;Law is Blind!

Dollar Vs Euro - Why Warren Buffet will be wrong on this or I wish he is...

Every time dollar hits a new low, I remember a discussion I had with my cousin brother, who works for Saudi govt, back in the winter of 2005. I argued that dollar will appreciate against Euro in 2006 due to the rate hikes by US Fed and expanding US economy. Indian Rupee will also weaken due to India's increasing energy bills to support expanding economy and maturing foreign investments in Indian stock market. In fact, both Euro and Rupee gained against dollar in most of 2006 (Dollar gained against rupee in the first half of 2006 but then started shedding value in the second half) . 2007 saw a steady erosion of Dollar against Rupee and most other currencies. So in the nutshell, if my cousin converted his US dollar pegged assets (Saudi Riyal is pegged to USD) into Euro in early 2006, he could have averted a 20% slide in value. If he had migrated to Euro in early 2003, he could have avoided a 30% slide. So clearly I was wrong and I feel partially guilty of directing him in a wrong direction.

Part of the reason for my lack of love for Euro was personal. We were in Europe for two weeks just before Europe adopted a single currency system. We were very excited to go to Europe and see first hand the mystery of Europe. The old port town and diamond capital of the world Antwerp, European Union's capital Brussels, The fun capital of the Europe Amsterdam and then of course the sophisticated Paris. We liked what we saw. High speed cross country train ride. Went to Louvre and saw Davinci Code! Had crape on the streets. Struggled to communicate to the French. Enjoyed the hospitality of the Brussels Business men at a very large brewery. Took a peek at the wax and sex museum in Amsterdam not to mention the lovely canal rides. Small cars and narrow cobble stone streets. Notre-Dame cathedral and Historic buildings. War memorials. Overall, a sense and sensibility of history guiding even a stroll to McDonalds. BTW, we were so homesick of US and ate McDonalds and Soda in Paris skipping famed Pinot Noir and breads!

Credit card rip off by a taxi driver in Antwerp who put an extra zero in the credit card slip, a scam artist at a Paris central station who buys non French speaking tourists one way train ticket saying that it is for a week unlimited travel, glass of water is billed the same as glass of soda, no free soda refill at restaurants, sleeping on small crammed beds, paying extra for having my wife as a guest in the room and paying lot more for everything else made us miss US so badly. It also taught us never to forget the boring common sense travel tips from grandma even if you are in Europe!

Putting it all together, we realized that Europe is no US in many good ways and many not so good ways. Just months before the Europe trip, we had a marathon tour in the US where we drove from Baltimore to DC to New York to Niagara. Got a free SUV upgrade from the rental counter (this is when the gasoline cost was $1.50 per gallon) from a compact car, Slept in oversize Eastern King beds, had free refills of extra large soda everywhere, almost always we could split a single meal into two, paid less than $50 per night at Sheraton through internet deal, over all we had a super sized experience. But the most historic places are not quite historic by European standards. Most historic down towns in US are as old or as recent, as a foreign tourist will say, as Route 66.

That is when the realization started sinking in. Europe represents the past and US the present and possibly the future. Europe is expensive and exclusive while US is efficient and inclusive. While America does not have the burden of history pulling it down, she also has no frame of reference about building great things. So she builds THE greatest! The greatest gold rush, greatest sub division madness in the west, greatest trading markets, greatest banks and investment companies, greatest technology companies, greatest movie industry, greatest universities and greatest junk food companies. On the flip side, even when they make blunders, that assume great proportions. Greatest market meltdowns, Greatest military blunders in Vietnam and now in Iraq, greatest corporate scandals, greatest automobile disaster brewing in Detroit, greatest sub prime credit crisis in modern day economics, greatest trade deficit by any country, the list goes on. When US makes a mistake, the world punish her very harshly. The Dollar hating going on in the world right now is no exception. It is a statement and warning by the world that they want US to make amends. Not an outright rejection, but because the world has higher standards for US.

It is no secret that us trade deficit with other countries would have an impact on the dollar value in the long run. The oracle of the US, Warren Buffet warned in 2003 of dire consequences if US did not act on reducing trade deficits in a war footing basis. (See the link below). But what is surprising is that Europe is not growing any faster than US and Europenas are not working any harder but still people have a new found love with euro. It is mostly sentimental and euro in the long run will not stand up to $. Not until the French unions stop acting like trade unions in Kerala (An India State where you pay workers to unload tiles for your kitchen or you pay them and do it your self if you are DoItYourself type). Europe's iconic Airbus engineers drew the wiring for A380 in 2-D and fell much short when they tried to wire the 3-D space. Engineering Drawing 101! (Read my previous post on Airbus A380's wiring problem)

Once the envy of the world, German cars are loosing market share to Lexus and Infinity. So from no angle, I see a resurgent Europe except in exchange rate graph. Euro is the new fashion statement to people who does not like US and Bush. But it will fade as new president takes charge in early 2009 and by that time US would have wiped out a lot of trade deficit simply by allowing dollar to sink. In fact that is a calculated move by the US to increase US exports and decrease imports and there by balancing decade long deficit spending. So this trend will continue for some more time until foreigners with excess forex like Chinese, Indians, Arabs and find US assets too cheap to resist and start buying them in bulk. Dubai poured in billions into Citi bank. Even Mahindra is buying a us auto plant. Believe it or not, I found a MADE IN USA TOY at target. Finally, manufacturing is making a come back to the US. US has the most advanced market in the world and as long as foreigners have a liking for us assets and properties, dollar will not melt down as many fear now. But another 20-25% slide in dollar will not be a surprise in the next couple of years. But that is my assessment and you know how I was wrong in the past and have no credentials on this subject :)

Dollar to rupee relation is much more complicated. If India continues to grow at the current rate (which might be difficult considering the impact of rising oil prices on india's growth) rupee has to appreciate to reflect the new wealth. But the reality is that rupee has gained unusual momentum in the last 6 months due to hedge fund and pension fund managers from the us pouring billions into Indian market riding BSE on steroids. With sub prime securities no longer an investment option, us investors are flocking into emerging market. The hedge funds are like herds. They go together and come back together. So there will be a coming back home time for all the us $ some time in the next two years and rupee will slide back to 45-47 range. Having said that, rupee will be around 25-30 in next 25 years because of the huge growth potential india has over US in the long run.

So brace for a stock market crash in India some time in 08-09 as the hedgies pull out with a huge sucking sound. It will give a temporary window of opportunity to transfer some $ denominated instruments to rupees similar to an opportunity when BJP govt fell and left backed govt came to power.

Long post. Let me stop by repeating the cliche, dont put all the eggs in one basket. You will never loose if you diversify. Have assets in many instruments. Some stocks, some forex, some dollar, some euro, some real estate, some cash, some gold. Even an emergency preparedness kit is million dollar worth when it matters the most.

Pardon my foolish audacity to write about something I can claim no authority. But one thing I can say with conviction is that a country which can produce Warren Buffet and Bill gates will not be an easy push over for centuries to come.

Warren Buffet's prediction: Growing Trade Deficit and Dollar Decline 2003 article

Dhoni’s Devils – Enjoy while it lasts!

Being an underdog is a good thing since it takes away the pressure of high expectations. Expectations can be a very bad thing for a team especially when you are not Aussies. Oops, you can’t say the same about even the Aussies after you see Dhoni’s devils steal the victory away from Aussies from the jaws of a certain defeat. ‘Chak De’ will play 24x7 on national TV with split screen images of Dhoni and Kapil lifting the world cups.

Enjoy while it lasts. Replay your recording many times over until you get bored of camera zoom to the ‘Chak De’ Khan. Because…. This may not happen again for a long time to come.

The newly found camaraderie and team work will slowly fade to individual records without team win. The ability to fight back will again be replaced by surrender of the herd. The courage to experiment will soon be replaced by reluctance to force follow-on. Last over thrillers will no longer be decided only in India’s favor. Another Miandad will send another Chetan Sharma for a last ball Sixer.

The young bloods like RP Sharma and Gautam Gambhir will start getting huge endorsements and become veterans and eventually loose form. The Captain will try to do a ‘Dravid on Virender’ on out of form player by saying ‘this chap made a triple century in the past’.

Having been such a cynic in this moment of joy, i must end this with a positive note. That is, Dhoni promises a lot of devilish acts in the years to come. Just like the original devil Kapil except that Dhoni became the devil little too early for any one to predict :)See my previous post on Cricket's dirty way of life

Musharaf and Sharif - You shall not become the Law;Law is Blind!

As I write this, reports of Nawaz Sharif being forcefully deported back to Saudi are flashing the TV Screen. Regardless of what happens to him in the days ahead in Saudi one wonder what made him return to the troubled country amid the prospect of him deported back to Saudi or arrested by Musharaf's police. Is it the love for the people of Pakistan or is it his commitment to a democratic Pakistan? Or the astute politician in him sensed the right opportunity to stake claim to the higher office of the land, which was taken away from him by Musharaf in a bloodless coup.

Whatever might be the answer, this poses a bigger question. Is a country better off with a corrupt politician returning back from royal and luxurious exile or with a Military dictator who ousted the corrupt leader and promised to clean up the dirt from the public life? Nawaz accepted a deal to flee the country when the public opinion was against him and when the life in jail was a certainty. He chose to trade his power for a princely life in Saudi. Majority of Pakistani people then considered Nawaz's exile a victory for democracy. Having celebrated a Military dictator taking over the country from a democratically elected premier, Pakistan demonstrated one of the nuances of budding democracy in the third world. Now it is time again to demonstrate yet another contradiction by sympathizing for Sharif, who amassed disproportionate wealth while being in power at the expense of the poor Pakistani common folks. General Musharaf's public support is wafer thin and it is now seen as the victory of human soul against the military might that leader of the 7th largest military in the world find himself in the middle of a quicksand of loosing power and place in public imagination. It is not enough to be right. One has to be right at the right time, which is always in a land of eternal conflicts, physical and idealogical.

The US demonstrated their idea of democracy when they supported an Army General, who threw out a democratically elected Prime minister, when he promised to help the US crack down on Taliban. But it is not unusual for US to support undemocratic leaders when it helps the US interest. So there is no surprise. Condy Rice is probably working over time now to formulate a policy when Musharaf will have to give up the power to another civilian leader. But her concern over the Nukes will be of utmost interest to her than her love for democracy, when formulating US policy.

There are no simple answers to these contradictions. Democracy in neighboring India is much stable and is the most populous democratic country in the world. But even after 60 years of democratic institutions and exercises, India still tolerate very corrupt career politicians. Politicians routinely escape corruption charges amounting millions of rupees. Seldom a politician spent time in Jail for corruption charges. Unlike Pakistan army, Indian army resisted the temptation of taking over the executive. They tolerated corrupt and inefficient leaders. In some instances they adopted the policy 'If you cant beat them, join them'. Expensive military gears bought for the army men's use in world's tallest battle field, Siachen, were found in the local bazar for public to buy.

That is the lesson for the world. A country gets its leader they deserve. They get corrupt leader when the corruption is rampant in the society. They get inefficient leader when the entire system is inefficient. They get monarchy when they are loyal to the royal blood. They get military dictator when the civilian leadership fails.

When some one else try to impose ethics and efficiency and democratic values from outside, it wont last long. The country will fall back to the mean eventually. It is just a matter of time. There is a saying in my language. 'If you beat the fruit to ripen, it will never be sweet'. Hope Condi and Bush can learn from this lesson. Never beat IRAQ to ripen to the democratic fruit of the middle east!

There is one more important lesson that shall not be forgotten. 'You shall not become the Law;Law is Blind'! Musharaf took the rule of the land in his hand when he ousted Sharif and took control of the country. Musharaf negotiated an unconstitutional deal with Nawaz to allow him escape from the law of the land. Sharif now questions the existence of the agreement which required him to stay in exile for 10 years. Musharaf forced the then president to retire and assumed the dual role of President and Army Chief. Musharaf threw out Supreme Court Chief justice only to be brought back under intense public anger. He now deported Nawaz Sharif back to Saudi against the Supreme Court order allowing Sharif brothers to come back to Pakistan. The official position is that technically they met Supreme court order 'allowing them to come back to Pakistan' citing that they allowed Sharif to land in Pakistani soil only to be deported in few hours of landing! What a silly argument to come from the head of a state. Musharaf is blind. He cant see what he has to be seeing now. His fall from grace to just another military dictator who lost love with the masses;albeit unfortunate. It does not matter if John Stewart would prefer to have High Tea with the General. He might just ask the staff not to sweeten it with the sugar from Sharif's questionable sugar mills.

Defending Subprime lending - case for democratic economy

There is not a single day goes by without the media do not report the subprime meltdown unfolding in the US credit market. As much as I admit my ignorance on the intricate details of how my mortgage is split into million little pieces and sold to million little investors around the globe, I want to share my own experience of subprime lending if I could call it that.

Years back, actually 15 years back, I was in charge of a rural financial investment and lending scheme that was setup for the mutual benefit of the rural labor class people who did not have enough means to do transaction with a commercial bank. Here is how it worked.

The setup is a small wooden bench, an accounting book and myself sitting at a public open place between 6:00 PM and 8:00 PM every Saturday. I was in college then and they thought that they could trust me with their hard earned money. The members brought a small share of their weekly earning and I made a proper record of the deposit. The amount varied between Rupees 2 (5 cents in today's rate) and Rupees 100 ($2.5 per week). You must be beginning to wonder what we did with the money. Well, we lend money to people who wont qualify for a loan from the traditional banks especially the then notoriously credit tight nationalized Banks. Remember, this is before Muhammad Yunus's Nobel win and days when many did not know much about the concept of micro credits.

The amount of loan varied too. We loaned as small as 5 cents and as high as few dollars. They come to loan to buy school supplies for their kids, to buy weekly ration or some times to pay for the doctor's fee which ran anywhere from 25 cents to a dollar. Doctors were very mean most of the time. They would prescribe the newest medicine concoction cooked up by the pharma companies and ask them to 'come back in a week after trying this medicine'. The poor men and women would go back next week after 'trying' the medicine for a week only to be given prescription for a new medicine. Medical issues apart, they would come for money to make donations to conduct a marriage in their neighborhood, to buy some glass bangles for their loved ones in the annual village festivals. And some other times to buy the coconut leaves to cover their leaking roofs.

Of course, there was credit risk. Some of the loans were never repaid. But we compensated it by charging higher interest rates to every one who borrowed. We did not know that it is called 'Sub prime' in the economic lexicon. But it was the wisdom prevailed among the villagers for decades if not centuries. Even those who made regular repayments knew about the defaulters name. But they did not mind since they knew about the circumstances that caused the person to default and hoped to hedge that risk with higher rate they charge for their lending. It was a social understanding. Some times, well to do families also put their money into the scheme. They would get higher return on their money through this scheme since we lend money at higher than normal interest rates. We charged higher interest rates than Yunus's Grameen Bank. But like grameen bank, the profits were shared by the members proportionately. The high interest rates went to finance the subprime credits.

So what is the difference between the subprime lending in my tiny village and the subprime lending that created unprecedented real estate wealth in the US in the last half decade? It is the scale and complexity of the enterprise. Apart from that, both represent the same intention. Finance credits that are not credit worthy by mainstream banking standards and potentially benefit from it. The investors benefit from it as well as the person took the loan. Sub prime loan enabled them to put a new thatch roof to their humble abode. It enabled people with less than 600 FICO score own a piece of the south land California who otherwise were told by the glass box bankers in the past that they were not worthy of credit. Credit was the privilege of the few but sub prime made it the passion of the many. Sub prime did what Internet did to information. Information is not the privilege of network TVs and syndicated journalists any more. It is the passion of Matt Drudge and Ariana Huffington and alike. Subprime allowed the free flow of capital and credit across the US landscape that created dreams, hopes and immense wealth. Sure few hiccups and defaults. The melt down may take Countrywide along with it plus many frothy real estate markets. After the bubble burst, a new sub prime lending will emerge. Quite like the Web 2.0, Sub prime 2.0! Never underestimate the power of YOULOAN.
TIME article - Real Estate's Fault Line