Blauk.com - Comment on the strangers

You  were walking on the side-walk and you encounter a beautiful gal near a Pizza shop. Now, you have two options:

1. Just appraoch her and compliment her beauty (or)
2. Just walk away as you dont know the consequences when you approach her. Lets put this in simple words - 'you are scared!'

And as per the 'law of evolution', most of us fall under the second category!  Probably, Samson Manickaraj would have got very desperate on such situations and found the site 'Blauk.com'. 'Blauk' is a microsite which allows comments on the strangers you encounter. You leave a comment on the person by identifying the exact location/dress/car and possibly the starnger can reply you and from thereon..he/she is not a stranger anymore!

Below is one such example of a poor soul, where he got rejected as she has a boyfriend!

Like anyother microsites ( eg twitter..), it does have limitation on the number of characters you can post. You can describe a person in 64 Characters and leave a comment in 100 characters.

On the rear side, like any other service, there are people who can misuse such sites. Few that I can think of are:
1. Stalkers...
2. If the site grows rapidly, there could be 'Product placements' messages posted on the site. Some messages can read like this: ' Guy with colored hair, near the 'Newly opened 'Best fashions' in downtown'.

This is defintely an exciting concept and is in very early stages, which has room for loads of improvements. Probably, the founder may expand the site based on its popularity. However, one must-have feature is to find the strangers based on location, which otherwise could get lost in the flood of messages.

Hope the 'Single's get benefited by this service!

Its worth while to mention, omegle.com where you can only chat with Strangers.

Read rest of the entry...


Internet Explorer or PDF - Who is to blame?

In the whole of Google and China spat, there are two other players who took quiet a few blows. It's Microsoft and Adobe systems. when Google first reported about the Chinese intrusion into Google's servers, the blame was thrown on a vulnerable security hole in the PDF files. Researchers at VeriSign's iDefense hinted that
an infected PDF was sent over the mail and that was used as a route to hack the Google systems. However, Adobe insisted that the PDFs do not have any such vulnerability and it went on saying that Adobe is also a victim of the same attack. But, Security Analysts hit back saying that Chinese hackers attacked Adobe to understand more such loop-holes in the PDF and to exploit them in future attacks.

The blame on Adobe took a turn when McAfee released its investigative report which states that,the hackers used a vulnerability in Internet Explorer to intrude Google and other companies. The report also gave a clean chit to Adobe that PDFs were not used in the attack. On the other hand, Microsoft didn't deny the security hole and admitted that there is a weak link in IE. This admittance led Germany and France governments to warn their citizens on using internet Explorer. This came as a 'no-surprise' given the number of lawsuits that was ragged against Microsoft by the European Union.

Just when the blame lopsided on IE, India reported that it was also a victim of Chinese attack and it came in the form of a PDF attachment!

The takeaways are:

1. Malwares/Spywares comes as a document too and it need not be an .EXE file/links.
2. One more reason to use Firefox.

Read rest of the entry...


China - no more gimmicks!

When a Company grows very rapidly outpacing its competitors and produces a balance sheet which is less transparent, an obvious suspicion will revolve around the company. The doubt arises as there is very less data to support the growth of such company and all that you can see is glowing number in the quarterly/Annual reports. This was the exact case of Enron, the biggest bankruptcy in the history of US. Now, replicate the same analogy for a country in the current economic scenario, which grows very rapidly at a time when other countries even hesitates to say that they are out of recession. This is China for you.!

In the recent days, lot of voices are being heard warning about the Chinese Bubble. This all started with the Hedge fund Investor ‘James S. Chanos’ who predicts that the China is headed for a crash, contrary to the popular belief that the country is growing at a faster pace. He is the person who predicted the fall of Enron and similar other Bankruptcies. So, nobody is daring to ignore him. After all, that is his job and has an impressive track record for years. Chanos, a hedge fund Investor simply bets against a Company/Country, as he believes that it will go down in few months. If his prediction is right, it results in an insane amount of money. (Especially, when they bet against the popular opinion). Classic example is George Soros, whose betting against ‘Bank of England’ earned him $1b in a single night. This was in 1992.

Coming back to China, Chanos suspects that “Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent”. He is planning to give a detailed speech about this at the Oxford University by end of Jan’10.

Here are few reasons which raise questions about China:

The Chinese economy is largely based on Exports to US and European countries, which means the Chinese currency ‘Yuan’ has to appreciate less against the dollar or Euros to continue the impressive GDP growth. China being a growing economy leads to appreciation of their currency, but the Chinese central bank has prevented the appreciation and has kept the exchange rate between dollar and Yuan almost the same for past few years. This largely helped them to maintain low prices for their goods in the foreign market and thus accumulating billions of foreign reserves. Now, you may think that it’s plays to the advantage of Chinese economy. But, the economy at sucha a mass scale doesn’t work this way.

When a country has huge amount of money among its people (in a manipulated market, the chinese central bank prints loads of Yuans equivalent to the dollars), the value of the currency itself decreases. This triggers an increase in inflation, as the price of the domestic goods increases over the period of time. So, to prevent inflation the Chinese government should atleast stop the surplous flow of Yuan. This can be broadly achieved by two ways:

1. Increasing the interest of the money that is been lent by the Chinese Central bank
2. Preventing the Consumer banks from lending out more money. This can be achieved by instructing the banks to increase the limit of cash reserves.

However, during the time of recession, the Chinese government infused a stimulus package of around $600 billion dollars into the economy to prevent any huge recession impact. So, this stimulus money along with the existing flows triggered a real estate boom in China, where the prices of lands/home rapidly increased every month and thus creating a ‘Real estate Boom’. Now, the government is highly worried by this boom as they have just witnessed on how the US hosing market turned into bubble and got burst.
This is clearly evident from the fact that the government has just announced that they are backing off the stimulus package and have also announced few strict measures to bank on the lending policy.

Now, the Chinese has to control the interest rates, imports and exchange rate similar to adjusting the volume equalizer in a music player. They have keep adjusting the numbers as and when the other value changes.Since the market is in a bubble stage, a small miscalculation can result in disaster.

Moreover, there is more pressure on China from world countries to stop manipulating the Yuan against foreign currencies. Recently, when China surpassed Germany as the world’s second largest exporter, Germany had put lot of political pressure against China to stop the currency manipulation. Apart from Germany, other countries are applying similar pressure, as the cheaper Chinese goods are flooding their markets which eventually slows down the growth of in-house industrial houses. Also, there are also threats from other countries that they will stop buying Chinese goods.

All one can conclude is, China will not grow at the same rate as earlier. If it continues to do so, it will not last long for even few months before which the real-estate boom market will turn into a bubble. And for sure, China can expect heavy backlashes from world countries for its continued currency manipulation.

Read rest of the entry...


Financial rescue: Someone will win in the process

Once the Geithner plan was leaked in detail by the NYtimes, criticism started to pour in on negative aspects of the plan which heavily subsidizes the investors and the private parties. After reading the various articles attacking the plan, once thing seemed certain to me. You will always have some top economists (or) think tanks criticizing any plan that will be proposed for the rescue. There is no such thing called 'The Best Plan'. Any plan that will be proposed to get us out of this complex web, would definitely benefit a section of investor/private parties.Considering the enormity, complexity and urgency of the situation, you can't wait for a plan that is beneficial only to the tax payers and prevents even a penny to the private firms.

More the delay in rescue, will definitely worsen the economic situation and leads to more job losses. It is always better not to worry about the few hundred dollars of each tax payers money that goes to the private parties , rather than loosing out more jobs due to the delay in the rescue plan.

In the leaked out Geithner's plan, the proposed alternatives indicate that the Government is heavily dependent on the private parties to remove the toxic assets out of the banks. This clearly indicates that the government wanted to stop shelling out more tax payers money and involve private investors in the rescue plan. So, having realized this, private investors are going to exploit the situation and look out for some benefits. Since the govt has no better alternative, they are going to allow this. One of the first signs of the economic recovery is when you see the private investment firms starts showing interest in the bank's equity. On careful execution of this plan, it will win back the confidence that was lost by the investors on the banks.

If the private parties are not included, then the Govt. again has to infuse more money into these banks. It is already evident that, all the infused funds were not used for lending purposes, but were used by the banks to prevent itself from being insolvent. In order to start the lending process, banks definitely needs more money and is achievable only through the sale of these toxic assets. As per the proposed plan, it seems like Govt is taking all the risks involved in these assets, whereas the gains are shared by the private parties and the tax payers. Going by the plan, the govt. is going to auction these assets to the private parties and they will pay high prices as the downside risk will be handled by the govt. But the truth is undeniable that the private firms will handles these assets to profit than the government bodies. The risk of losing is less when it is in the hands of the private firms. But if the government dishes out the private parties in the rescue plan, it will be a highly risky bet for the govt alone to handle all these assets. It definitely need private firms' help in liquidating these assets as quickly as possible, so that the government can get back the tax payers money. But the govt should assure that, the private firms should not pool these assets and play around in packing and shipping them.

Read rest of the entry...


Nationalizing banks is a risky approach

The stocks of Bank of America and Citigroup were hammered today after the 'Bank nationalization' rumor started to gain strength. Moreover, editorials and various publications started to raise their voice in favor of nationalizing the failing banks. Though most of the economists are not openly admitting this option, they accept that the tax payers money infused into the big banks is not working.

Considering the banks' high level of dependence on the government funds, now these banks are almost under the orders of Washington. This was clearly evident in the Congress hearing that was held last week. The CEOs of the Eight big banks were literally grilled and pounded by the Congressman. At one point of time, a congressman was asking a CEO to reduce his bank's interest rates and an other congressman asked the CEOs to sell their private jets. It almost looked like hundreds of Board of Directors were questioning the CEOs. Virtually, the bank executives resembled like the government employees of a nationalized bank.

Since these banks are in need of federal funds, it makes sense to nationalize the banks and remove the existing top management which brought the crisis at the first place. This option would be a better one, if the economic crisis is not bad as it is now.

Nationalizing these banks will serve as an additional burden to the govt which is already hands full in executing the stimulus plan. Acquiring these banks and running them successfully along with streamlining the funds of the stimulus plan is an onerous task and there is no room for failure. Considering the size of these banks, it is not an easy task to replace a new management and expect it to run the bank successfully in this tough economic situation. Any error in the nationalized banks would seriously hamper the confidence on US by the world countries. This will also add up to the already huge deficit and would heavily hamper the valuation of US currency. Then, US as a country would like a big corporation at the verge of bankrupt. On the other hand, successful execution of Bank and the stimulus plan would be a dream run. But this is not the time to test the tough waters.

Now the government would like to play safe and not worsen the current situation. But at the same time, it should avoid banks going bankrupt. Debacle of a single major consumer bank is enough to bring down the confidence and which this will eventually prolong the economic recovery process. The only way to help the failing banks is to acquire the toxic assets held by those banks. The government can aggregate these toxic assets into one entity and could alienate the banks from these assets. At the same time, it should ensure that the infused funds are used for its intended purpose. Strict transparency should be enforced in regulating the injected money. Essentially, a new regulatory environment should be setup which should have a greater control over these banks and at the same time a super regulator should be setup to oversee the interconnection between Wall street and Main street. The government can hold up these toxic assets and can sell them to the private investors in a staggered basis, thereby the spent money can be gained back.

The whole nationalization idea is widely seen as an option as the Swedish government followed this approach to recover its economy decades ago. Some say we can follow the same approach and others are against it. But, every situation is different and should be handled with its own pros and cons. US should devise its own customized model to suit the current situation. Revival of a country's economy is not so easy as copy-pasting a model from the history. It all depends on the risk capability of the government in devising an innovative approach.

Read rest of the entry...


Don't criticize the stimulus package

There are several criticisms going rounds on the effectiveness of US stimulus package.The most prominent grumble about the amount being spent on industries which really don't need stimulus. There are also critics who are against the passage of such stimulus packages, as the amount is too big ajnd it will add more to the current US debt. But is there a better alternative than passing this stimulus bill? I don't think so.

Firstly, the president can't just allow the economy to drown without acting on it immediately. The most important thing at this juncture is to raise the confidence among the consumers and trigger the cash flow. Just proposing long-term policies would not create any impact. You have to do something which would create an immediate effect. This can be done only injecting money into the economy. Now, the next question is whether the package would help the industries to be back on track immediately? possibly not. Most of the companies don't need dollar bills, instead, they want the consumers to spend, which is directly related to the confidence. Only if the job layoffs reduce, consumers can gain some confidence. There are two ways in which the proposed developmental projects could create or save jobs. Firstly, these government projects directly create jobs for the people who were fired by the private companies. Employing them will reduce the unemployment rate. Though all of them cannot be employed, the number will reduce a bit in the initial stage. Secondly, these proposed projects requires equipments which can be purchased only from the private companies. These new orders could benefit the businesses. Though, we cannot see a dramatic increase in the job creation, it could save the existing jobs. These new orders in the private companies would also benefit other small businesses who are linked as sub-contractors.

By including every industry in the stimulus plan, you are literally bringing in some level of confidence and new jobs across every set of consumers. Increasing a little amount of share on the 'most affected' industry is less preferable than allocating the same amount to the small industries, particularly when the government wants to instill confidence across the board..

All the above activities would buy some time for the government to act on the toxic assets held by the banks. These assets serve as a great headache both to the Govt and the bank. Once some solution is found for those bad assets, the banks can see some stabilization and can start the lending process. Unless the consumers hear some good news from their banks, they would not do the spending. In the mean time, new regulations can be implemented in the markets, which would shun away the existing fears. One thing is sure;the recovery will definitely consume more time, but any hasty decision along the way could prolong the tough times.

On a final note, the passage of the stimulus package is certain and should be immediate. Considering the current stage, any further delay would worsen the economy. Best anyone can do is to avoid disparaging the current stimulus plan. Criticizing the plan will dampen the very purpose of instilling confidence among the consumers.

Tags: , ,

Read rest of the entry...


IBM's alternative to layoffs -

Initially IBM announced around 1200 layoffs citing the current economic crisis. The employees in the state of New york were also affected by this announcement, but IBM had earlier received around $140 million tax cuts in a pledge to create jobs in NY. This contrary move of receiving incentives and still firing employees created rage among the residents, which resulted in the reversal of the plan. But, there is a catch:

"The company has created a job-matching service it has dubbed "Project Match." Instead of firing employees, IBM is trying to sell them on the opportunity to move to exotic locales, experience new and different cultures, and participate in exciting IBM business ventures across the globe—all for just a fraction of what they'd earn back home."

The options which had more openings are: India, Brazil and China. This model of relocation from developed countries to developing countries was not expected to happen so quick. But, the current situation has brought in too many changes to Globalization. Things are happening too fast in IT industry, quicker than Friedman's prediction in his book 'The world is Flat'. But, there is also a good possibility that this model of relocation could have been brought in, considering the number of foreign employees working in IBM,USA. Some US citizens may consider this option temporarily and may move back to USA when the situation improves.

Read rest of the entry...


When the top economists brainstorm - WEF

The other day, WEF conducted a brainstorming session on the topic "What happened to the world economy?". This was attended by renowned economists from around the world and they brainstormed on various reasons and causes for this crisis. The economists were distributed into separate groups and finally, one from each table summarized their discussions.

As expected, the biggest wrong assumption the economists had was that, the markets would self-regulate. This was endorsed by many economists. Of course, there were few who declared that the basic structure of the economy is wrong. Their point is, if a failure of a single module in an industry brings down the whole economy, then the underlying model is wrong. The other valid point made in the discussion was, that the present risk model which is purely based on past data should not be believed completely, as it wont predict the future. Also, the available data is too small to rely upon.

Though most of the points discussed were quiet common, the one blame which always received the applause was 'the greediness of the bankers and the compensation' they received . The group criticized the compensation model for the bankers, which is purely based on the revenue they generate, it doesn't matter on how you do that. An other pundit suggested that, the executives whoever is responsible should be jailed and should be set as an example for all the wrong-doers. This was also well endorsed by a group of applause. Another table cited that the regulators always believed that China would do all the savings and the rest can just spend. Few think heads blamed that the banks depended too much on Mathematics model, instead of applying common sense. One economists just simply attributed to one word "Stupidity". Even though, regulators were blamed, one group of economists differed by targeting the 'interest groups" who had the control over the regulators.

Of course, lack of corporate governance and ethics were identified as a fundamental problem, which would have prevented this at the first place.

Finally, the economists were asked to vote on the assumptions and causes. In the below order, the first point got the highest vote and so on.

1. Assumption that markets would self-regulate
2. Cheap flow of money
3.Assumption that good times last forever. ie..house rates never fall
4.Putting regulation over ethics
5.High leverage
6. Assumption of economic literacy
7. China can do the saving.

The group also concluded that the regulation of the international framework as the top action item.

Watch the full video here:
( 90 mins) - Scroll to the last 20 mins for various voting results.

, , ,

Read rest of the entry...


Minister's support for outsourcing at the WEF

Among the several events hosted at the World Economic forum (Davos), a discussion was held on "Managing Global Risks", in which the Indian Union Minister Kamal Nath shared the stage with other global heads. The event host asked different questions to the participants, which revolved around the topic of various risks in the current environment. Mr.Kamal Nath was asked about the 'Protectionism' which is prevalent across the countries. Protectionism is "the policy of imposing duties or quotas on imports in order to protect home industries from overseas competition". Kamal Nath clearly spoke against protectionism followed by various countries at the time of this economic crisis. He added that, Protectionism is kind of a panic response whenever a crisis looms in a country. He cited an hypothetical example in Auto industry. If a country is adding import duties on the auto components, it would definitely increase the price of the vehicle for the consumer.

As he was talking about the perils, he moved his topic towards Outsourcing. He told the panel and the group that, if protectionism is carried out it outsourcing, the competitiveness will definitely decrease and will affect the growth of the company, as the cost is finally transferred to the consumers. He also added that, lack of skill and better cost is pushing the companies towards outsourcing. Kamal Nath's response at a cardinal stage like WEF, is kind of response to the Obama's proposal to cut taxes for the companies which outsource the jobs. Though, the new president is not very keen on this campaign proposal at this time of crisis, the recent letter from Senator Grassley to Microsoft has started the 'protectionism' issue once again. The senator urged Microsoft to give American workers priority in the layoffs. Infact, G
rassley, with Sen. Richard Durbin, D-Ill., is pushing for legislation to make employers recruit American workers first, along with other changes to the visa program.

But, Carl Guardino, the CEO of Silicon Valley's Leadership Council has a different view. Below is his response on CNBC:

He says in the tech industry today, 53 percent of the engineers are "foreign born" and half the CEOs and founders of tech companies are foreign born.

"If America ever goes against our strong roots of welcoming talents from around the world, wanting to work here, contribute here, be a part of America, that's the day that we are risking everything that this democracy is about," he says. "We cannot take an attitude in good or bad times that suddenly we should be throwing immigrants out."

The bottom line: As grim as the economy is today, and as much as we might want to protect our citizens from losing jobs to foreigners, giving US citizens the inside track because of their citizenship over their abilities is a short-term fix with long-term, negative implications. If a US worker's skills are equal to the skills of a non-US citizen's, then sure, the US worker should get the job. Go Team! If it's about salaries and money-saved, and how much more cost-effective a foreign-born worker might be over his US counterpart in a similar position, then legislators and companies need to re-work the H1B visa program.

But if it comes down to cutting your engineering team because they're all from India so you can keep your American born employees on the shipping dock, you shouldn't have to lay off your engineering team just because they're foreigners.The whole idea here should be about hiring the best and the brightest, no matter where they're from.

It's the only way US companies, or any company, can expect to compete in a global market. Period.

Easy to become xenophobic in an economic climate like this one, though we do so at the risk of not just dulling our competitive edge, but losing it completely.

Tags: , , , ,

Read rest of the entry...


What really is the Stimulus Plan?

In order to avoid the recession to linger for years, the US government has announced a stimulus plan (American Recovery and Reinvestment Plan) of $819 billion, that would be invested in diverse sectors. The idea is to create more jobs in these industries, thereby jump starting the confidence and trigger spending from the consumers. But, is economy so simple to just pump in money and avoid a recession. To understand this, lets look through a brief history of this stimulus plan.

Why Stimulus plan?

During the great depression in 1930s, then president Roosevelt introduced a series of spending initiatives named 'New Deal', aimed at creating more jobs and recover the economy. These initiatives helped to create more jobs at the time when the nation unemployment was at 25%. More than the actual benefits, it raised the confidence in the consumers mind. Some of the programs that were created through the 'New deal' is still existent. Social security system, Security Exchange commission and Fannie Mae were part of the initiative. Arguably, it is believed that these programs helped US to get out of the recession. So, following the same policy, the current government also introduced the same kind of stimulus plan to stage a recovery. This model is called 'Keynesian economics'- which is named after the economist John Maynard Keynes. Its an economic theory which advocates government intervention, or demand-side management of the economy, to achieve full employment and stable prices.

Unfortunately, the government is left with no other option than injecting money through these plans. The only other way which will encourage spending is to reduce the interest rates, but that is not possible now. In December 2008, the Fed reduced it rate to almost Zero and there was no positive effect.

What is the criticism about the plan?

When the stimulus plan was brought to congress for the approval, the Republicans voted against the bill. Some of the reasons were that, the plan has lot of investments which would not really create jobs. Eg: Investment in arts, Global climate studies etc. They propose to setup a new bill with better spending areas, even if takes more time to draft one. However, they support the tax cuts for the individuals proposed in the current bill. Nevertheless, the democrats has the house majority and the bill was passed.

Risks in the stimulus plans:

Though there is no better alternative to stimulus plan, there are risks involved in it. Since the US just needs more money for these plans, this huge amount adds to the already debt deficit US, which would come to 60% of its GDP by 2010. At the same time, it should pay off the interests to the foreigners who brought its treasury bonds. Remember, just printing more money would lead to inflation. Also, it will further reduce the value of the dollar in the global market. In order to avoid all these mishaps, the stimulus plan should work as expected and once the economy recovers, the government should align its economy more towards 'saving money' and produce more goods. Else, it wont be long enough before the dollar loses its sheen in the global market and the Euro could take over the position.

What if the Stimulus plan works too fast?

When the world economy started de-stabilizing in 2008, international investment poured into US treasuries and bonds. So if the stimulus works faster, then there will huge flow of money supply leading to inflation.

Indeed, its a tricky situation. All US needs is to boost the economy by bringing in confidence to the consumers. At the same time, the market should be regulated to avoid any unforeseen crisis that may occur due to any sporadic economic activity.


Read rest of the entry...



Add to Technorati Favorites

All the posts reflect my personal views . Copyright 2008 All Rights Reserved Revolution Two Church theme by Brian Gardner Converted into Blogger Template by Bloganol dot com