Upstaged

For many years have I had the greatest party line when people in Bombay ask what I do (as they always do) "I make boats".

Now I have a friend who can with a straight face say "I make planes".

Bah, humbug.

It’s the numbers, stupid

The climate change debate over most of the world has been hijacked by those who want to continue business as usual. They have done this by relentlessly focussing on the claimed enormous costs of mitigating what they say may not happen. On the other hand, those who want to change the world have allowed a bunch of ex hippies and daft economists to try and reinvent the world as one where the rich give to the poor, we chuck away our cars and powerboats for bicycles and sailboats, and move from 5,000 square foot McMansions to Manhattan studios. We are debating dollars and cents versus Net Happiness Indexes.

The status quo has won; the world’s press is colluding by not pointing out that the ‘costs’ that are being debated are not costs, in the sense of an ice cream bought on the street - a few licks and only the memory and a few extra fat cells remain. The money that has to be spent is all capital, and given the longevity of energy assets, it is 20 and 30 year capital.

There is a return to this capital and that return in many cases is very high. The easy stuff, especially where it is a new build in a country like India, can have an incremental return of over 30%. That’s quite good, and it is easy enough for governments to mandate by imposing and policing efficiency and building standards.

Assume I have to air condition a factory or an office building. The most common compressors used in India use 1.5 units of electricity per tonne; the most efficient use .5 units per tonne. The difference in cost between the 1.5 unit system and the .5 unit system pays for itself in about 3 years. Most Indian businesses do not choose the efficient system because capital is scarce and the incremental capital can be used to expand the business instead; an entrepreneur cannot lose a march to his rivals. This dilemma is not confined to air conditioning; it affects virtually every capital goods choice a business or a household makes. The short term financial rewards of the efficient system are greater than can be achieved in most businesses in India but in a capital constrained society they clash with the market imperative or the household budget.

A Mercedes C220 CDI is much more powerful and safer than a Maruti Dzire, and it is a little more efficient as well; but the Dzire is miles ahead of an Ambassador, which is the analogue for the state of most Indian industry. Let’s dump our Ambassadors and develop the equivalent of our competitive car industry for industrial machinery, appliances and building products. If we succeed in this there is huge gain to be had for India. We are becoming the small car manufacturing capital of the world. Why not add machines, windows, heaters et al to that industrial base?

And any financing we may get from the developed world is also easy to target to efficiency, easy to monitor and easy to leverage because it has a high commercial return so the borrower will repay the money. The incremental cost of a highly efficient appliance should be refinanced at 3% over its life by the government using its own or, preferably, developed country dough, with repayment enforced by the tax man.

As for the nonsense amongst our chattering classes about how Jairam Ramesh has given away the goods before arriving in Copenhagen, it is just that, nonsense and nonsense that is giving the game to the Americans and the Chinese, who are coming out smelling like roses, despite being the two polluters par excellence.

The Chinese have walked away with the PR debate. They are being lauded for the fact that they will cut the carbon intensity of their economy by 40% to 45%. Lost in all this nonsense is the fact that their emissions will rise from the current 5.5 MT per capita to some as yet unspecified number which I suspect will be around 8MT per person.

The current 5.5MT per capita is about what France emits per person, so the world is praising the Chinese for promising to pollute more than the French, who are signing up for a 20% to 30% reduction from their already low levels.

India, meanwhile appears to be signing up to a 20%+ reduction in carbon intensity, which means that its per capita levels will rise from about 2MT per person to between 3.5MT and 4MT per person. The calculation is simple: assume our GDP today is 100 and energy usage is X then in 2010 (at 9% growth – optimistic) our GDP will be 237 and energy use will be .75X*2.37; substitute the current estimate for per capita emissions of 2MT and you get about 3.5MT per person. This ignores population growth, fuel mix and so on but it is close enough for government work.

If one makes the simplistic assumption that all our power growth will be in electricity one has to realise that we will easily beat this goal, if only because the electricity supply will not increase 80% in 10 years, which is what the above calculation implies. It never has, no matter what the planners say and our useless electricity boards will not change their tardy habits in the next 5 years, which is when the die will be cast for what India will look like in 2020.

Instead of making the most of our inefficiency, India continues to make a fool of itself, with its own negotiators turning on the government in yet another instructive lesson on the dead weight of the bureaucracy. We must! we must! tie pollution to per capita numbers chant our 'experienced' negotiators. Take one look at their resumes and you see that they have been at this since Kyoto, in which they felt they got a great deal. They did, but a most unrealistic one. They will stick to their old position because it was such a triumph. They do not see it as empty even though the US, who along with China holds the key to reducing GHG's, walked away from Kyoto.

Both China and India also have another dodge at hand; the measurement is to be in GDP per capita in purchasing power parity terms while carbon is carbon, in this case immutable. If the exchange rate rises we will automatically make the grade because we will be using less carbon per unit of GDP. Tra la lala la.

Therefore, the goals to 2020 are a joke for both India and for China but they are real for the US in particular because of entrenched habits and the energy industry, and for many parts of Europe that are already very efficient.

The key to our future lies in using the 10 year free ride that Mr. Ramesh appears to be negotiating to get ourselves into a position where we can make a real dent in emissions beginning in 2020. Because that is the tough stuff; that is when we will be staring down the barrel of a gun like the US and Europe are doing now.

And that is the reason they are buying this eyewash from us, and even more from China. Our agreeing allows them, especially the Americans, political room to try. And, if they can do it we can follow along and copy from them. We may have to pay a bit for the privilege, but we pay for German cars and Swiss machines today based on what they do for us. We will pay then because we will know the stuff will work, we will be richer, we will know the cost benefit, so we will be able to finance the next step.

Should we do it for us? I look outside my window and see the pall of pollution that requires daytime foghorn use by ships in the harbour in a tropical country.

Carbon Baloney 2

April 2009 3D electricity .08 units per piece.
November 2009 3D electricity .06 units per piece.

Carbon intensity (assuming no change in fuel mix over this period) down 25% in 8 months.

Perhaps our bloody pols and academics ought to get into the real world and see how easy this stuff really is, and how cheap if done at the right time.

Carbon Baloney

The crap targets being adopted by various countries amongst their wailing and gnashing that this will be so hard and cost so much are evidence of how easy the task really is.

India will cut carbon intensity (though as a major agricultural state they should have gone for GHG as the measure) by 20%-25%.

A joke. Some posts back I showed how our household cut energy intensity by 65% (no matter the change in the source of electricity that beats 25% hands down). The whole energy thing cost less than 10% extra of the overall redecoration budget; done by itself it would have been 50% of the redecoration budget.

Sometime this week I put on this blog how much per unit the business has cut energy intensity. I suspect that the number will be around 50% from 6 years ago, but perhaps as much as 20% just this year; and it may well be another 20% next year.

Again, their is only a minor extra cost to go energy efficient as this is being done as part of an expansion. We are buying better and faster machines anyway; the only extra cost is making the new aircon system more efficient, and making it bigger to subsume the old, shitty one. Extra cost - about 1% of the total capital budget for the next 1 year.

What both of these examples show is the following:

1) The places to make the changes are in the developing world because we do not have much infrastructure in place.
2) The easy way to do it is to have high standards and codes for buildings. This will also build an industry for building materials that can be sold worldwide. No technology is needed - all this stuff exists.
3) Growth will take care of the rest as new stuff comes up and old stuff is replaced.

Our legacy of a low component of manufacturing will help as we do not have many legacy assets to protect. The right rules (if enforced) on energy standards and pollution controls, will ensure better development.

The most heretical way to keep industrial energy efficiency high is not to dismantle our labour rules as many suggest, but to enforce them absolutely. This will mean even more capital intensity to Indian business, but it is a fact that the more labour efficient a machine, the more expensive, the more expensive the more powerful, the more powerful the more productive.....

Hussain's Genius

For years have I said that anyone can paint like Husain - I saw him cobble together a canvas in about 10 minutes at some social do years ago.

Today I saw a socialite's paintings in the style of Husain.

I have been wrong for all these years.

Sailing and Management Metaphors

Bombay harbour generally has fantastic sailing conditions; force 3 to 5 winds; 25 degree ambient temperature with points of interest generally conspiring to have punters sail on a beam reach.

After a few lessons anyone can be star helmsman, and we have many such that we have trained over the years.

Its a bit like being a manager in the Indian economy. Any old duffer can be a hero passagemaker so long as he can press on all available canvas.

The other day we were sailing in the harbour but in very light airs, against the tide and on a run.

Less experienced helmsmen were floundering, unable to stick to the mantra of keeping the boat moving at all costs because loss of momentum can stop you dead in the water.

They did not have the experience of these conditions for sure, but what they lacked more was the training to process a dozen points of information. They grew up looking at the jib telltales, more than enough to keep you cracking in our normal winds. They have not yet learned to read the sail shape, the wind on the water, the shroud telltales, the feel of a dead tiller.

I think that is why so many overseas purchases by Indian companies fail. The new masters know how to drive a boat in fair weather, and can manage a storm quite well, because we have those in our economy. How to drive a boat to a goal when you have little wind is a different art and one that relies on huge knowledge systems and not gut instinct.

That is a transition we will all make as our economy slows, but those who perfect the art now will be in a position to grab leadership in emerging areas of our economy, because, at the start, these can seem pretty anaemic.

You gonna believe Moody's? or Kroll?

Moody's have been whining about India's potential banking problems and how the possibility of higher losses may impede the growth of public sector banks which may need many billions of dollars to grow.

While I agree with the sentiment, the way the press release is drafted suggests that the recommended strategy is to allow more foreign banking. The strategy of the RBI has been to allow private Indian banks to grow into the space by raising foreign money.

That strategy was derailed by ICICI bank's dumb assed forays into - you guessed it - Moodyland. Otherwise we would have seen a continued growth in Indian private sector banking.

While I would like to see a more competitive banking scenario I do not think that competitiveness will be fostered by more foreign banking - please cast an eye on East Europe and Latvia. Better to allow all the public banks to raise lots more money and essentially convert them to private banks as was done with ICICI, IDBI and Axis rather than to try and consolidate them into bigger public banks.

Whatever the solution (and the one that will come about will be uniquely Indian) I would never have thought of Moody's being a shill for, as we say in India, vested interests, before they were shown to by lying liars by the sub prime debacle.

Time for them to shuffle off the stage and make way for a new model.

I hope Kroll succeeds in his new venture.

Killer Control

A method to provide unique codes for products so that authenticity can be easily checked by purchasers, so that the locations of stores selling counterfeit products can be recorded, the control of these unique codes is resistant to fraudulent use and can be traced to a batch number, line number and manufacturing location, and so that consumer usage patterns can be discerned by manufacturers of products.

The system consists of the following:

1) Variable data printers with unique id’s attached to packaging lines which print on the package or directly on high value items
2) Design of packaging so that opening the package destroys the data where needed (eg industrial products such as low cost ball bearings)
3) Special purpose machines to print data directly on high value items (high cost ball bearings, watches)
4) Computers to control the output of variable data printers which will erase the unique codes from memory when they have been printed
5) Access protocols for these computers so that only authorised persons can download codes and only for the products to be packed or filled on those lines
6) Nested access protocols for assigning product codes and assigning the manufacture of those to named lines
7) A server and software to assign the unique codes to products and download them to the designated printers
8) A database to store the unique codes so assigned
9) A server to access the data so stored
10) Access points such as the internet and mobile phones
11) Customers can sms the unique code to the designated access point which can be a general one for some customers and a specific one for those who so choose
12) The sms can be called party pays if they choose; can be add driven or can be consumer paid
13) Internet checks are generally expected to be free
14) Failed products will be messaged to the customer by sms and the location of the failure cell site will be stored indefinitely
15) Failed messages can also give the sender the option to choose from a list of known store locations to give the location or allow the sender to fill in the data, perhaps for a token payment
16) Successful products will be messaged to the customer along with a message chosen by the brand owner
a. Successful checks can then have the code cancelled so that any subsequent check of the product results in a failure
i. Useful only for high value products and drugs and certain brands where customer access to the brands is controlled
1. Under this system mistaken cancellation can happen in two ways
a. The item is checked and not bought for the reasons
i. Malice
ii. Stupidity
b. The confirmation sms does not reach the buyer who then takes a different piece
2. Authorized dealers of high value items can be given a method to restore the number within a customer defined period from a designated cell phone
a. These restoration requests will be tracked
b. Successful checks can be stored in a database which will be queried on subsequent checks and a double check will have the location stored and
i. The sender can get a message that the product has been checked before or get a message listing the sellers within the range of the cell tower etc
ii. Or double checks can ignored but location data stored for later investigation
iii. Or the customer can be asked to pick a seller from a list so that the location can be fraud checked

Why this will work

1) It gives virtually every citizen a low cost tool to check what he buys instead of relying on the police and the bureaucracy
a. It will make little difference to products where people want to buy a pirated product such as cd’s, dvd’s and watches and bags known to be fakes
i. Although one could have clever marketing of unique tags by people like LV that say – mine is not a fake – check it out
1. Could become the Kelly Tag
b. It will kill dead fakes of those things where the buyer wants the genuine article (medicine, cosmetics) where he is risking his well being or he is being charged full price and the value created in fraud is accruing to the seller and not to the buyer

This will work because minimal investment is needed in the lines and per unit costs are negligible. It will have a disproportionate impact on fraud because bad sellers will be virally blacklisted and because sellers will work to reduce the chance of being caught.

Once the system is ready it should be pushed onto pharma by the government who can add the cost to the DPC regime – it will cut spurious medicine use to 0 in a few months of implementation. Costs of sms can be allocated based on type of medicine, selling price etc.

Almost every strip of medicine will be checked if the sms can be held to 25p because that is zilch even when compared to a strip of Crocin and nothing when compared to the risk of death.

Revenue model

1) Patent the protocol
2) License the protocol to third party manufacturers of variable printing devices
a. Sales of printing devices to pay selling and admin costs
3) Annual per printer fee
4) Minimal per code fee (5 paisa in India)
5) Fees for nice sellercodes – Sun for sunsilk as opposed to xmsidh
6) Share of the sms revenue/bulk buy and resell
7) Sale of aggregate data
a. Because the purchase of medicine will drive a lot of the use we can identify a large set of phone numbers that we will know a lot about, including how rich they are etc
b. Can use for locational promos, including by mom and pop shops

Stopping Counterfeiting

I have always been unhappy with counterfeiting and piracy for several reasons:

1) Much of my success has been due to the exploitation of intellectual property and therefore anything that illegally cuts into that revenue stream in wrong in my view
2) Counterfeiting of drugs can kill; even counterfeit cosmetics can harm.

Many people think that the two are different crimes; copying a dvd is not as harmful as counterfeiting drugs. That is so, but only to a point, because the general disdain for the real thing allows many people who might not otherwise be crooks to become crooks.

People of our social standing often think that we are protected from the depredations of false drugs because we have shopped in the same places for 26 years and that those shopkeepers will not deal in counterfeits.

So I thought, till a friend of mine discovered his heart medicine, bought at the 'family' chemist in Friend's Colony was doctored.

Go to Crawford market and you will find a ton of shops selling what appear to be very fake cosmetics. The people buying there are not you and me; they are shopkeepers who will then onsell to you and me.

Our legal system, police system and, frankly, even our manufacturers who are being ripped off appear not to care too much.

I did, however, conduct one experiment at a shop in Mumbai. I asked the owner why he was selling fake products; all the clients in his shop jumped him. If he was certain of being jumped 5 times a day (changing the behaviour of Indians takes that many boots per day, at least at the start) he would probably stop stocking fakes. And any shop verified to be selling only legal things would find its business booming. At least for those things that we as a society want to be original; dvd's will have to wait a long time for this protection.

What if there was a way to name and shame crooked shopkeepers and wholesalers?

There is, and it is outlined in the next blog.

I thought about trying to patent this idea, and start a company to exploit it. It is a very simple idea, but because of modern technology it will work. Instead, because it cost me only a few hours of jet lagged time to think it up it makes more sense to dump it on the next and essentially 'open source' it so lots of people can set services with different features.

And it will make every one of us a policeman with the power to change behaviour.

When knowing English hurts

I popped in to Nature's Basket around the corner having heard from a bunch of people how it was stocked with 'gourmet' food. I rubbed my hands together and toddled in expecting a small version of Bon Marche. What I got was a New York bodega filled with packaged and salted and preserved foods. The non American contingent of food was mostly Aussie and UK stuff.

Are we getting this rubbish because this is what we like, or because it is in a language we understand? What He giveth He taketh away; this is payback for using English skills to take away US, UK and OZ Cyber Coolie jobs.

Whack the poor and financing the global warming fight

The FT headlines scream "Public backing for deep China emission cuts". Only they did not ask the Chinese, just the citizen's of the countries most responsible for our present problems. Said citizen's also said that money should not be handed over to China, India and the rest of poor suckers who did not spew enough coal and oil dust into the air over the last 100 years.

Unfortunately, given that these are democracies, the citizen's will get what they want - no dough to us poor boys. Our asinine governments should factor that in to their silly calculations.

Although, there is a way that could be supported by most non US governments and that will give us the 'technology' that we crave, though not financing. So it is a good way to flush out what it is we want - dough or stuff.

Abrogate patents on the technologies that we need. A small class of companies will be hit, though if their governments are serious about mitigating warming they should be able to make money from patent protected markets. And we get to combat global warming and build a nice new industry, just as we did the our generic drug industry.

Getting the tech should be dead easy - there is not a damn environmental technology company not riddled with Desi's. If they ain't the boss, there is no criminality and they can make a buck - Bengaluru Zindabad.

From the FT:

Public backing for deep China emission cuts

By Fiona Harvey in London

Published: October 18 2009 22:26 | Last updated: October 18 2009 22:26

Public opinion on both sides of the Atlantic is firmly in favour of China taking on the lion’s share of cuts in greenhouse gas emissions and lukewarm on providing funds to the developing world to adapt to climate change.

Glad they got him

Raj Rajaratnam has been caught insider dealing. No surprise. When I spoke to him, and to a great number of other investors when I used to live in the States, they took me to be a fellow potential scamster, or at least fellow Indian who ought to be taught the ropes.

They revealed to me a way to make money, that was not technically illegal at the time, but sure was if one looked at the spirit of securities laws.

I did not enter the charmed circle - I was brought up by old fashioned parents, grandparents and Jesuits. I also put an embargo on any companies of which I was on the board doing business with the charmed circle. More fool me, or perhaps I too would have been worth a large fortune, as opposed to a small fortune.

But, I am glad they got him. And I hope they get the rest, Indian, American, White, Yellow or Black. It is bad enough that financiers rob us blind; worse that all who should know condone illegality. Because they all do know. Mr. Geithner, given his years sucking up to the street does know.

Dragonomics 1

1) There is a, perhaps apocryphal, story of an old time HSBC (then BBME - British Bank of the Middle East) manager at a branch somewhere in Araby who was faced with a rumour inspired run on his bank. He quickly threw all the papers from all desks behind the counters and piled upon these all the currency that he could lay his hands on, opened up the vault, at the mouth of which he piled further dough, and announced that everyone could have their money back if merely they waited in turn. Confidence restored, run dissipated, mentioned in despatches.
2) What if the obscene reserves accumulated by China are the same thing? The cash pile that obscures the trash pile. What if all the dough is kited off the backs of foolish gweilo's (an oxymoron to any red blooded Chinese)? After all, none of us can explain the US economy, let alone the Chinese one.

Ponder.

War and pestilence

The current state of Maharashtra politics should give you some idea of what will happen when, courtesy global warming, drought stalks the BIMARU states. The overuse of groundwater and the disappearance of glaciers, which will cause flooding as well as drought, will make our brethren continue to migrate within the country.

Where will they go? The coastal states which have rather more rainfall, and are anyway economically more developed.

What will happen? Look at the extreme actions of the Shiv Sena and the MNS when all that is at stake is the 'appropriate' distribution of the spoils of development and wealth creation and project that onto a day when it is a matter of who starves and who lives.

Sheer laziness and intellectual dishonesty is holding back the world

I was once an American. Yes, dear reader, I can state that as a fact. Reason:

1) I looked at my household energy bill for 2004 and ran it through the US energy department calculator at http://www.epa.gov/climatechange/emissions/ind_calculator2.html#c=homeEnergy&p=reduceOnTheRoad&m=calc_currentEmissions. I shoved in 4000 units (that is what it was) and Lo! it was 44,267 pounds (they still use them, therefore so will we). That is horrendously more than the 28,750 that is the average for the US. But we have to make a correction - in the US electricity is not the only source of energy - direct heat from oil or gas is used to heat water and the house. In India, by contrast, a/c's are run from electricity.
2) I added fuel oil as the source of heat to the calculator taking the average American five person home to 50,750 pounds of carbon.
3) To be fair I added the gas used for cooking, 1,460 pounds to my total. I will add this to the US total because their gas numbers are confusing as it is used both for cooking and heating, so it is fairer to use my number.

Total me: 45,727.00 lbs
Total average joe: 52,210 lbs

No real difference.

The new me (see earlier blog), who lives just as well as before, uses just 1500 units = 16,600 lbs of carbon.

That's the laziness - its just too much work to make people change.

And the dishonesty? For amusement I switched in the same calculator to using money as the unit, and not units of electricity. 1500*8.33 (our avg rate in Mumbai)/48=260.31 as the monthly bill. That produces a reading of 27,170 lbs of carbon.

16,600/27,170*8.33=5.09 is the average price of US electricity.

Were they paying 8.33 the cost per month per family would rise from US 175 (average)to 8.33/5.09*175=286 USD per month or 1,332 per year. That is 2.66% of median US pretax household income. Would a change in electricity price change behaviour?

Yes it would, and drastically, when one takes as a proxy the change to driving and car buying habits that took place when petrol went from 2.00 to 4.00. Assuming 20 miles to gallon as an average the hit to a two car household putting 25K miles on the clock was about 2,500 per year.

Conclusion: Electricity induced carbon is seriously mispriced in the US versus Mumbai. Wildly mispriced if one takes into account purchasing power parity.

Of course it is even more mispriced in Mumbai versus the free power that farmers get in the Punjab.

That is just household use; in car use I remain firmly American when in India because of the lack of public transport and the lack of pavements on which to walk.

The load matters - but not in the way you think

Some recent reports of studies (sorry the real thing is locked away by academic publishers and I do not have access) estimate that up to 3% of assets vanish every year into the pockets of the brokers and bankers who make up the financial services industry.

At the same time, until last year, a great many countries and industries were posting record growth.

Either that growth was not real, though it is hard to miscount aeroplanes, or the economy needs a lot less capital that it is raising.

Toss the bankers for sure. But give a thought to whether economic productivity has really risen wildly (as it should have given all the new stuff that has been invented and reduced in cost over the last 20 years) and we have not seen the results because the dough was stolen by the banks.

Guardian 10:10, the ease of cutting carbon and why standards matter

The Guardian is signing people up to cut their energy use by 10% in 2010. Sounds like a lot? Its dead easy for most people; we have managed to cut our household energy usage by about 50% in one year and cut our otherwise large travel footprint by taking longer trips and using trains to cut flights. (Checked old bills and we are now using about 1,500 units per month, down from 3,500 units before the changes were made - at an average price of 8.33 per unit, up from about 4.20 in 2004).

Our cost of cutting household energy use was high - with paybacks in the many years if one looks at the full cost of each item. However, all this was done as part of a renovation and the marginal costs of double versus single glazing, direct drive versus standard a/c's are paid back very fast. There is virtually no wait for payback on roof insulation and cfl's.

Even so, the main items we changed were a/c's and bulbs. We changed all the a/c's though many are used only a few times a year. Had we changed only the ones used every day, and the bulbs, and double glazed the windows only in those rooms the TOTAL cost of those would be recovered every two years, based on the figures above.

The business I run has chopped energy usage per unit by around 50% as well in the last few years; we will make another big cut later this year when we replace an inefficient a/c system.

The point is that for established countries to make swingeing cuts is not hard and does not take much money at all; our problem in India and China is that we are adding people.

Not all the cuts above cost money. The per unit reduction in the business was a consequence of more modern machines that produce more while they save, and the energy efficiency aspect is a free ride.

In the business, though, it is about lack of money - should I put money into growth or into energy efficiency. For years the answer was growth; now that the system is old enough to cost production downtime when it fails the answer changes. I could replace the old system with a similar one and it would cost less than an energy efficient system, and that is what a lot of people will do.

The quickest way to meet all our goals is to implement really high energy standards for everything in every country. Why phase in the end of the incandescent bulb? Do it now. Why allow inefficient compressors to be sold? Why allow single glazed windows to be installed?

All this inefficiency is defended in the name of choice. It is a false choice that forces consumers to buy what is against their long term interests to safeguard the short term profits of business.

Fat and climate change - one and the same

O!bama announced yesterday that the Climate Summit in Copenhagen is not a venue for a deal - it is the beginning of a long process. Why do I think nothing will come of various efforts to reduce global warming? For the following reasons:

1) There are parts of the US that believe they will gain from global warming, so no real need to do anything. Think a warm and sunny Minnesota. Since they may well be right in their analysis their reps in Congress ain't gonna toe no hairshirt line.
2) Americans are fat and happy in general, and not renowned for thinking in generations. Plus, they move a lot and do not see themselves as rooted in any one geographical spot, so there is no reason to defend any one part of the US over any other. The seaboards are ravaged by storms? Move to Minneapolis - it was good enought for Mary Tyler Moore. It may make sense to invest in Midwestern real estate.
3) The matter of fat. For years we saw the US mass(es) struggle to ditch their excess weight. Sadly the latest diet shake cannot make up for driving everywhere and scarfing Big Mac's. When that realization dawned there was much looking for a pill to cut fat, because, hey, the American way of life is sacrosanct. Quite a bit like looking for ways to sequester carbon from coal plants. When that did not work did the change of lifestyle that is required to boot fat come back into vogue?
4) The utterly pragmatic fat American (and they are now the majority) decided that the right way to deal with the problem is to vilify the thin minority (genetically programmed to bust fat, shallow and concerned only with looks) and to worship at the altar of chunk. So we have plus size models, a new TV show that embraces a fat lawyer etc.
5) Getting thin is a personal goal where success can be felt and measured minute by minute by every one who manages some change. Lifestyle changes could not be managed by the US mass for something so tangible. What makes you think the same changes (and they are the same changes - walk more, change the temperature settings in your house, eat less meat and junk food) will be implemented to help someone you do not know in a plague ridden country far far away, where people anyway croak at 40, in a time when you will be dead and gone.

Fatties in frocks are here to stay. Given the likely rise in global temperatures the frocks will be minimal. I am not sure I want to stick around to see massive mama's in mini skirts.

They really are different

Although she claimed to love her diesel-engine car, she always complained about it (which should have given me a clue about marriage). The Mercedes was smelly, hard to start — when the engine was cold, you had to wait for the glow plugs to heat the combustion chamber — and it chug-chug-chugged. This was not the car to bring to a bank robbery.

The above is from an NYT review of new diesel cars which, the car reviewer (I kid you not) quoted above happily says is now an obsolete view.

And we are waiting for these antediluvians to take the lead on global warming.

The Monsoon Withdraws from Mumbai

The Great Indian Middle Class

It really does exist and, even when blessed with modest means, is successful and entrepreneurial.

I recently received a poison pen letter from an ex-employee who quit and wanted to come back. Rather than asking for his job back, which we would have been delighted to give him, he decided to write us a poison pen letter damning all his former compatriots and praising to skies his now absent self.

Among the charges that he levelled at people were the sizes of their brokerage accounts. I was amazed, though not shocked, as none of them was 'disproportionate to their known sources of income'.

The well employed are obviously saving away, and in financial assets to boot.

This bodes well for growth.

The world's shithouses

Indians shit in the great outdoors because they have no sanitation. While not excusable it is at least understandable.

In the US, meanwhile, the government condones the spraying of shit on fields as a means of reducing the cost of various already subsidized meats - subsidized not by minimum prices but back lack of EPA controls, lack of slaughterhouse laws, lack of feed laws. This practice makes their citizens sick, though not on the scale that our lack of sanitation makes our citizens sick.

Of course, the shit could be composted and used in an environmentally friendly manner but hey, that would be organic farming. Uncle Normie (Normal Borlaug, father of the green revolution, RIP) says that does not work. It certainly goes against the agrochemical industry's interests, so there.

Don't believe me? Take a look at the NYT article below.

http://www.nytimes.com/2009/09/18/us/18dairy.html?_r=1&hpw

In a sense we in India are lucky that we have not built our sanitation systems yet. It is possible to have paying shithouses, as opposed to paying for them (see our Sulabh Shauchalayas) though sadly not in cities.

Take a look at the following link, and if that is no longer available, google 'separating toilets'. While you are at it take a look at 'compost'.

http://www.abc.net.au/rn/science/earth/stories/s17821.htm

Crap and Trade - China and India warned over emissions

http://www.ft.com/cms/s/0/f67dd2d4-a22a-11de-9caa-00144feabdc0,dwp_uuid=a6dfcf08-9c79-11da-8762-0000779e2340.html

The above link refers to the bad things that will happen to trade with India and China if they do not knuckle under to the Great Polluter. In the same article a representative of the Great Polluter also says that it will not matter even if the US does not make any progress in its pork laden Great Emission in the Sky legislation, or whatever they call it.

Maybe infrastructure is not always good

We all know about the ghost fleet but the story below is wonderful in its tabloid style.

http://www.dailymail.co.uk/home/moslive/article-1212013/Revealed-The-ghost-fleet-recession.html

What is more interesting is the following:

World trade wills shrink, because a lot of it was driven by non economic reasons. Its a bet I am willing to make; a lot of the establishment will not agree but most will agree that trade is not going to recover forever to the levels of the past.

That makes a great hole in the infrastructure to facilitate trade that has been, and continues to be, a hallmark of much far eastern investment. Not just the ports, but also all those 40 lane highways in China will likely go to waste....

Luckily we in India did not listen excessively to the pundits and have continued to build infrastructure to demand rather than to spec.

The Worli sealink is a good case in point. It is only half finished, with its second set of lanes still being built. Even so, it does not seem very full even at rush hour - nothing like the GW Bridge in New York.

In many ways the choices we make in India are the sum of thousands of private sector bets; and very few private sector bets, except in low value added sectors, have been made for exports. The average Indian businessman does not believe in the power of exports except as a necessary evil; very little fixed investment caters to exports. Perhaps we should listen to them and can the pundits?

Which means a very different set of policies will be shortly required for our external sector - oil being the major determinant and the rupee rate the outcome.

O! perfidious Cathay

1) The Chinese are getting frisky on our borders.
2) The Chinese leadership is accusing we Indians of being jealous of China. Of Dim Sum definitely, but one reason for 'annexing' bits of 'China' was to get our own supply of Chinese cooks, socialize them in our curry environment and create Chindese cooking, and we have done that. So there.

O! perfidious Cathay 2

1) The Great Chinese Leadership has recently announced all sorts of concessions for the Chinese IT services industry and has begun discussion with major multinationals for them to take take advantage of these.
4) These MNC's are US companies, so take advantage they will:
A) It will be cheaper and
B) US company bosses like to deal with like. Dictators with dictators. Why should they put up with the whining of a Premji moaning that his employees insist on being paid more because of rising productivity when they can have their partners shoot a few cybercoolies to keep the wage rate in place in China?

Time for the Indian IT industry to retool, or retooling will be forced upon it. And not before time as we need to release our cybermundu's to more productive work.

Time in fact for us to improvise and invent the IT equivalent of Chindese cooking (see previous post)

Hot Air Predicts Hot Times

Mr. Ramesh showed a steady hand on the tiller when he released India’s emissions forecasts for 2030. Only one of the five studies showed India’s per capita emissions for 2030 to be close to China in 2008, and none came close to even the best of the developed world. One was in fact modestly below the global 3MT per person that is supposed to halt climate change; the highest barely scratched 5MT, a level below today’s China. In the meantime China has insisted that its already high total and per capita emissions levels will grow till 2050, so the role of villain is cast for the climate change yakfest in Copenhagen.

Even the highest of the five studies gets to about 5MT per person is well below the best that the Americans are offering for their economy in 2030, which currently runs at 20MT per person. And the second highest estimate is by McKinsey and Co., so the uber capitalist US cannot object to shoddy, government led work. Jairam, well done on the PR wars which we have until recently been losing.

This is not about PR, but about the sad reality that climate change is here and is it here with a vengeance. It will not go away because there is no way that emissions will be cut quickly enough to make it go away. They cannot be cut because the economic, physical and political structures of the largest polluters are dysfunctional. It will not go away because there is already evidence of feedback events such as methane release from permafrost which will only make things much worse.

Let’s calculate. At the moment total GHG’s are about 30 Bn MT per year (back of the envelope). We get to 6, the Chinese get to 12, total 18. But the world needs to get to 15 to keep climate change below 2 degrees. So we and the Chinese still have to cut, and by the way the rest of the world, including the US, Europe, and Japan has to cease to exist because there is no room for them.

Climate change there will be; the problem is that we do not know how severe. What we do know is that India will be hit hard, and we had therefore better have a plan in place to mitigate what we know will be a slowly unfolding disaster. As with all long running disasters there will be blips of hope. Sell into these but do not be fooled into thinking the disaster has passed, unless we can find a way to make our society sustainable with huge changes to our climate, most notably a serious drop in annual rainfall and a depletion of ground water; plus the Chinese may cut off our rivers….

Mr. Ramesh and his crew, and the PM, have said that these peer reviewed studies do not reflect a business as usual view, and that sophisticated models have been used and have incorporated the effects of new technologies, paradigm shifts such as forest management and a load of other pap.

On the surface that looks correct. Today’s Indian per capita emissions are about 1.5 MT per person (there is even dispute around that number). Assume growth of 8% per year for 21 years to 2030, in line with GDP forecasts and we get 1.5*1.08^21 or 7.55 MT per person, except that population in 2030 is supposed to go from 1.15 Bn to 1.53 Bn, so on that calculation per capita emissions should be 33% higher i.e. 7.55*1.33 = 10.05MT. Against that ‘business as usual’ expectation of 10.05MT per head, forecasted emissions of between 3.0MT and 5.0MT look heroic.

But wait a minute, recalculate at a start point of 1.2MT and the 10.05MT becomes 8.04MT. Ah, the magic of compounding. There is plenty of other conjuring in these studies as well, mostly of the voodoonomics variety.

Digging around briefly in the methodology and the econometrics, dauntingly full of equations and correlations and other economic mumbo jumbo, I found the following nuggets.

1) Three of the five models that produced the lowest results did the following: 1) started with a lower base than 1.5, and 2) introduced economy-wide productivity improvements of 3%. Recalculate my back of the envelope model using base 1.2 and adjusting for productivity, and we get (1.2*(1.08-1.03)^21)*1.33 = 4.45 MT per person, right in the middle the 5 high-priced, high-work, forecasts.
2) The two higher output models, including one by McKinsey, did not use a productivity factor but were instead ‘ground up expert based’ where they used their knowledge of current industry trends in power hogging sectors to project efficiency. Hold left ear with right hand after passing behind back of head. Because they are based on the current knowledge of consultants in the here and now, they provide for lower productivity growth. It’s a bit like sitting in 1980 and predicting the future of IT based on the idea that minicomputers rule. I opt for the PC revolution and think that 3% productivity growth is a no brainer; actual per capita Indian emissions will be closer to the lower studies because recent Indian productivity growth has been at or better than 3%.
3) All the models use various assumptions for oil and gas prices and for the INR/USD exchange rate. Do you know anyone who has ever got those two elements right for 21 years on the trot? George Soros will give him a job.

Sadly, therefore, while they predict a reasonable trend, they do not do very much better than my little model above. But they are peer reviewed, as were the papers and models used as the backbone of the securitization spree that has left the world a bit poorer than it could have been.

We can safely assume that these models do indeed embed business as usual, just a more efficient business as usual which is something that one would rather expect at the beginning of the 21st century, when all eyes are on energy efficiency. For a ‘proof’ check QED on http://meanperson.blogspot.com/.

All that this hoopla predicts is merely the energy efficiency of India, assuming that we will take our place as a consuming nation, consuming more and more as we grow richer, with the objects of that consumption being the same as currently consumed in richer countries, just made better, faster and cheaper.

How 19th century. It is as if India decided in an age of Microsoft to be not Google, but US Steel. China has done the US Steel bit already, and has locked itself into an infrastructure heavy and low value added externally driven high pollution growth model from which it cannot escape because of institutional and monetary reasons. We know how US Steel ended.

This lock in is the same thing that has happened to the US and to the rest of the developed world, though some countries, mostly densely populated and rail friendly (Japan, Korea and Europe) generally have infrastructure and monetary systems that could adapt quickly and relatively cheaply to a low carbon imperative. That is why these countries accept high reduction targets and sit on the sidelines waiting to see what the big polluters will do.

They will do nothing much for years, so India has to take unilateral steps to protect itself. Paradoxically, these very steps will give even more room for the dysfunctional to spew. It doesn’t matter – where would you rather work? Google or USS?

India therefore has to do a mix of things, some proactive and most for danger avoidance. The former are acts that will make things better, and the latter as those which we have to avoid, so as to not lock ourselves into structures that cannot become GHG efficient. We must avoid building the wrong infrastructure now, as we really begin our development, because that infrastructure will still be there and spewing gases 50 years from now. To replace it with better product will never make sense economically or politically. Coal power, cars and suburban living are the long term killers and ought to carry health warnings.

Herewith my two pice worth or what should work:

1) Agriculture needs to be rescued by doing four things:
a. Move to (at least semi) organic farming as soon as possible, including multi-cropping and lots of local water storage. This will:
i. increase incomes of farmers even if the terms of trade between town and country do not change.
ii. increase employment in farming because organic farming substitutes labour for pesticides; this reduces our need to create entry level jobs by doing low value added manufacturing for Walmart.
iii. reduce water use, waste and pollution and also once again make our land fair.
iv. increase forest cover.
1. Driving through most of India in May is to recall the US dustbowl of the depression. 45 years ago parts of North India looked like Switzerland.
v. We can also use organic agriculture standards to lock out imports without busting through WTO rules so long we tax our own pesticide and fertilizer laden produce equally.
b. Get road connectivity, power and the internet to our villages in order for those economies to grow in situ around a cluster of large towns and cities. Connect those large towns by rail. This will also stop the overcrowding of our old cities of Mumbai and Delhi.
i. The old argument for cities as a place for the clever to gather is kind of old given connective technologies like the mobile and the internet.
c. Blow away the traders and middlemen and agricultural transportation rules that impoverish farmers, gouge city people and make 30% of our crop go waste. We can decide who gets the bounty, town or country.
2) Use all the local gas we have to produce power; not fertilizer. The latter is robbing our tax revenues and laying waste to our land. We can buy plastic and other shippable stuff that is made with gas from the Arabs. This way we do not lock ourselves into long lived coal fired plants that are really bad for us (GHG’s, particulates, ash and radiation are just some of the problems).
3) Set petrol and diesel prices and city car access charges at nose bleed levels. This is not anti poor as the rich will use enough for us to collect a lot of tax which can be used to better highways and public transportation. The trucking industry can afford a tripling of diesel price if we go inter-modal and increase truck size and speed up journeys by cutting all the useless border checks and corruption that slow our transport sector to a crawl.
4) Go for solar thermal and forget other alternative energy technologies, especially wind, because India is a pretty wind free country.
a. The whining about needing technology to go green applies mostly to cars which are devilishly difficult to turn green.
b. Solar thermal made by Indians using only public domain material will at most be 5% less efficient than the state of the art stuff being used in the US.
i. Indian prices, if one compares boilers (the active ingredient in solar, so to speak), are 40% of US prices; we should be able to do solar at an efficiency adjusted 50% of US cost.
ii. Order BHEL to make off the shelf 5MW solar thermal power plants available and ship them off to villages where there is not enough industrial night demand to matter that Solar without storage works only till about 9 pm on a sunny day. Lights and fans can be made very energy efficient and run off inverters, a commonplace in rural India already. No one in rural India will complain about guaranteed 12 hour power.
iii. When storage to run solar 24 hours (expensive stuff) becomes reality we can buy the technology, or maybe we won’t need to because we will have enough gas power to get us through the night.
5) Mass transit, mass transit and mass transit. Rail, rail, rail. And give a thought to pavements which are eco friendly diabetes reducers as they promote exercise and use no energy.
6) Do not change our labour laws to make them excessively employment friendly, because there is nothing that destroys the environment faster than labour intensive modern industry. We are not talking of M Gandhi’s charkhas when we extol the virtues of T shirt manufacture. We are talking of water intensive cotton, power intensive spinning, pollution intensive dyeing. The energy used to make a square metre of cloth is about the same as in four litres of petrol; that is without the stitching, distressing, washing, containerising, shipping to store etc. Put cheap labour into the fields instead.
7) Many of these steps will cut our usage of imported oil hugely helping to repair our balance of payments and increasing the value of the rupee, which will not need to be low because we will not need to peddle T shirts.
a. World trade will wither in terms of value, but not its efficacy, if anything at all like the true price of transport GHG’s is charged to shipping. Anyway much of the current reason for excessively high world trade has to do as much with outsourcing pollution and reducing the share of labour in Western industry’s cost structure (behave, or you’re Bangalored) as with relative cost. Higher costs and a rebalancing of capitalism with work together to cut trade.
b. The only things worth shipping will be expensive things, which is as it should be. We should therefore concentrate on making expensive things for export.

Follow this list and everyone in the world will want to invest in India. The evidence is conclusive that what is required for growth is investment, labour and a (historically domestic) market – trade has not been shown to matter one whit to economic growth.

Let them come, but allow only equity, or rupee debt, not debt in foreign currencies. There will be no Dutch disease here because even a doubled currency cannot make this country uncompetitive, so long as we start the rise now, so that entrepreneurs create businesses that will thrive with a strong currency. And every time there is a run on the currency outside investors will pay, making them very, very careful about what they do. Just look at China, afraid to beat up the dollar too much lest they lose their bundle.

We will get to a very European standard of living on quite low power, but we will do so with the dough in our pockets to buy our way out of some of the problems that are inevitable with climate change.

Independence Day or Kewalramani's Screed

This blog will be added to over the next few weeks as it sets out what I believe is a coherent world view. Sadly I have to work and also to party but I felt that with climate change talks 'hotting' up I should at least make a start and post the already coherent bits of what I am thinking.

Independence Day

I am all for globalization and I am all for private enterprise – I run a private company that sells all over the world. But it is necessary that we in India interpret ‘globalisation’ in the spirit in which the rest of its practitioners interpret the word, and not some fooling university definition that is becoming the vogue amongst our chattering classes. That spirit is mercantilist and so India must become mercantilist.

India must also plan to use its own capital for growth, to structure a sustainable economy and to adjust to climate change. We ought not to count on manna from heaven – remember Hinduism permits atheism.

In private business when times are hard we try and change the way we work to squeeze more out of the same men and machines. India has more opportunity than most countries to do the same because 1) we are a developing economy but are hugely diversified and 2) we do a lot of really dumb things that could easily be changed for the better.

A Chiamese world, not Amchi world

We must stop our politician’s from attempting to be honest in various international fora; there is no need for them to practice abroad what they merely preach at home.

Stop laying out good reasons for why India will not do this or that on WTO or climate change. By doing so we take the fall and give a free pass to the two countries that have no intention of signing anything binding.

From the WSJ of Aug 5:

“In the upper reaches of India's ruling Congress party there already is a feeling that in the last big global summit in search of an agreement -- the Doha talks on a new world trade agreement -- India got too far out in front of where the government wanted to be when it became the leading anti-deal voice, allowing China and Brazil to hide in its shadow as the prospects of a deal sank.”

This being the WSJ, the US was not mentioned as a hider…

Play footsie but keep your trews on

Remember, whatever you say pre deal is expunged by the deal. All US contracts explicitly repudiate all prior discussions and insist that the written terms of the contract are all that one can rely on, and are final no matter the context in which they were signed.

Buy some time by sending only Hindi speaking politicians and take time to interpret (or be like the Chinese and Japanese and pretend you do not speak English). Say nothing as far as possible, merely keep asking for clarification.

Otherwise this is what the world will say:

From a 17 July 2009 NY Times editorial:

“[India] needs to do more to revive the world trade talks it helped torpedo last year and — as a major contributor to global warming — to join the developed countries in cutting greenhouse gas emissions.”

They do not bother to point out that the US eats 20MT of carbon for each of its mostly obese citizens, while India uses 1.3MT per person and the Chinese 3MT. The totals are even more damning – US 6Bn MT, China about 6Bn MT and India <2Bn MT.

Oh, yes, India must be grateful because:

“The Bush administration and Congress rewrote American and international rules to allow India — a longtime nuclear scofflaw — to buy fuel and technology for its civilian nuclear program.”

(To be fair to the yanks I looked up scofflaw in the Merriam Webster dictionary where it is defined as 'a contemptuous law violator'). As always, what is written in the US papers violates ‘fairness’ and imposes their law on those not of their country. One cannot, except to an American, be a scofflaw of a law one has not signed. One may have contempt for such an extension of US domestic law but that is how the world works - for now.

With delicious wit the Russians are in the lead to provide us with reactors.

2C maximum rise in temperature my ass.

From the FT's Gideon Rachman on 28 July 2009:

“But, on a per capita basis, emissions in China are still well below western levels. Why, ask the Indians and Chinese, should Americans and Europeans assume the right to continue using energy at levels that they seek to deny to poorer countries? It is a fair question.”

Our politician’s and pundits take heart from such statements. Do not. I challenge you to find the above sentiment in the editorial pages of a leading US newspaper. The prior clip from the NYT is the best that you will see. Let not the Europeans lull us into a false sense of humanity. They could not stop the invasion of Iraq, let alone something so much more essential to the ‘wellbeing’ of the US as not cutting carbon.

We cannot puff that global warming is the fault of the West who must pay for us to adjust. That kind of thing may wash with conscience ridden Europeans but you can forget about any kind of deal from the US. That country cannot bring itself to pass a health care law that will take care of its own poor and downtrodden. I would not bet on its citizenry agreeing to pay money to us who are located halfway around the world, and are famous for pinching their high end jobs.

And polluter number 2 (or is it number 1 now?) has made its stand clear.

From the FT of Saturday, 15 August 2009

“Mr Su restated Beijing’s view that as China still needs to grow its economy to help its people escape poverty, it is too early to discuss emissions caps.” Su Wei is director-general of the climate change department at China’s planning body. “The UK’s Tyndall Centre for Climate Change Research recently said China’s energy-related CO2 output would peak in 2030 at 57 per cent above current levels.” My back of the envelope suggest that is 6.3MT per capita, rather higher than the implicit 3MT per capita that India has signed on to by its foolish acceptance of a 2C rise in global temperature.
“The Chinese Academy of Sciences has said that with major technological support from developed nations, China could see its emissions peak between 2030 and 2040. Other Chinese experts say carbon output will keep rising until 2050 unless radical controls are adopted.”
Let me remind you of the prevailing US view, succinctly put by GHW Bush (though often attributed to Dick Cheney) and not repudiated by O!bama: “The American Way of Life in non negotiable”. That’s 20MT of carbon per year per Yankee; if we all burned that forever we will end up 10C higher pretty quickly.

Remember that the yanks are believers in rapture and rupture, in God and hell and going to heaven (the Rapture), technology (disruptive), frankenfoods and the improbable (abstinence as sex education). I would not put it past large numbers of Californians to expect to become the Borg and so deal with a changed climate.

Add to all of the above the intransigence of the Australians, the inability of the Brits to control new coal investment, myriad other country specific problems, and do not forget all the gas generated by talking shops and the likelihood is that GHG’s will not be reduced much, if at all.

Plan for this, because we are the ones who will suffer, and we will suffer whether we increase our GHG’s or not, whether we burn coal or not, whether we grow or not. Because we produce very little of the world’s GHG’s, nothing that we do to mitigate our use of carbon will have any effect on the change in temperature which will devastate our country.

Paradoxically everything that we need to do to mitigate the effects of rising temperature will allow us to easily meet the 3MT per person goal that the world needs; and it will allow us to give our people a first world standard of life and reduce pollution. Maybe our in a few generations our kids will again be able to swim in the Ganges.

Schweinflu

Ah, for the old days of a Commando comic full of "Schweinhund's" - the bad guys. I will leave it as an exercise for the reader to figure out the bad guys who have caused me to somewhat rename the dread disease.

The lunacy and Xenophobia of our Babu's continues with Kanpur now checking those entering its hallowed precincts, especially foreigners visiting for the leather trade and IIT students because of their frequent contacts with, you guessed it, foreigners. All Hotels are to immediately shop any sick guest and turn them over to the local government hospital. I was born and brought up in Kanpur and I would run a fucking marathon with 104F fever to keep away from a government hospital in that there city.

Alone in the world will our Babu's triumph in keeping at bay a Level 6 Pandemic. They are, after all, the steel frame of this country, albeit a bit rusted in their brains.

I assume these are same people who have advised our (un)Health Minister, His Nabiness, to tell the world that we are the best because no matter what has happened, we in India have managed to keep the numbers of cases to about 800 - and not one has shown up outside the big cities. Our villages continue to be bastions of Indian purity no matter the numbers they kill with dysentery, malaria etc.

Link below.

http://www.livemint.com/2009/08/10161008/Kanpur-on-lookout-for-H1N1-vir.html?h=B

The Indian Government and Swine Flu - Time to Get Mad.

Our daughter was admitted to the Kasturba Hospital in Mumbai, suspected of Swine Flu. The experience has been Kafkaesque and Shambolic.

I specifically exempt from these criticisms those knowledgeable and dedicated pprofessionals who smilingly work in our hospitals, private and government, mostly at low pay, and often in hazardous conditions. They try and take care of their patients as best they can, given the tools at hand, while having to kowtow to our political classes and bureaucrats.

Worried by continued high fever, and mindful of the fact that we had recently returned from Europe, we took the kid to see her pediatrician. It was clearly the flu, but the government does not allow the private sector to test for the swine flu virus (I will go into why later). Our doctor advised that we take a test that at least lets you know whether the virus is type A, of which swine flu is a subset, or type B. The hope is that it would be type B, as it had been for her other patients to date, so we could all relax.

Unfortunately it was type A, and the advice from the doctor, and the requirement from the testing hospital, was that we go to Kastuba Hospital, the sole provider of swine flu testing in the city. Our GP called the head of the Swine Flu cell, I suppose you would call it, and he said we had to hurry as everything closed at 5. Hurry we did, and given the publicity of the day before, were surprised to see just a few people waiting. Perhaps people knew of the 5 pm deadline and knew that it would be observed, hospital or not, people in need or not.

After a difficult form filling procedure (one cannot fill the forms oneself, one has to dictate to someone who was clearly barely literate) we were admitted to the sanctum, where tables of doctors sat around, with three apparently required to examine one patient, and with half the doctors, including the senior doctor, tied up in showing around some visiting troupe of government or political officials.

After a cursory examination of her history and reports, the doctor decided that she had to be admitted because she looked weak. So one would be, if one had been forced to walk one kilometre with a 103 fever because of road blocks courtesy the Kasab trial (Kasturba is opposite the Arthur Road Jail) and because guards do not allow any but government cars in through the gate.

The doctor said that the Swine Flu test would be done but that the results would not be available for two days. Why two days? Babudom had decided that for ‘quality control’ (sic) all tests will be done only in Pune, where they have been testing, they say, several hundred per day. There samples wait in line for a test that apparently takes 6 hours and costs INR 10,000. Our (AB) test at Bhatia took 15 minutes and cost 900, so I am sure there is a modern method somewhere. See more on this below.

And the doctor said that Tamiflu treatment would start after the test results were received. Our system decreed the wait, not caring that Tamiflu (the only thing that works to shorten the effect of the flu and so reduce its nastier effects) is best given within 48 hours of the onset of symptoms; in fact he seemed clueless about the disease, his role, and supposed government directives on being allowed to send patients home with Tamiflu etc. I managed to persuade him to start the treatment asap as a condition of putting the kid in hospital. But, incredibly, apparently there are people in the hospital who are awaiting tests and not getting Tamiflu, but who are sharing rooms with infected patients.

This cluelessness extends to every level of government (but not to the senior healthcare establishment), and given the prominence that the disease has garnered, and the warning we have had, the ludicrous outcome ought really to be laid at the feet of the PM.

The Babu’s are now talking of enlarging the reach of the effort to the private sector, but being Babus’s are only going to do this through ‘authorized’ hospitals and agencies. Given the speed and the ability to stay ahead of the curve that they have shown so far I would not bet on much progress, so I am doing an exercise to which they can refer as a starting point. It is very close to what their own health advisors are seeking the recommendations freedoms are at such odds with the emergency health code Babudom has slapped on us that they cannot move.

The medical professionals who report to the Babu’s have meanwhile worked out what needs to be done in great detail and have started outreach with civil society to move into high gear when permission is granted. In the meantime we continue to overload our already weak government healthcare system which should be working on the everyday and far more serious concerns of the poor.

All one needs is simple mathematics to analyse the flu biz and apply the results to the population, extrapolate and compare the result with the infrastructure that has been set up. Nor do Babus have a sense of time, suspended as they are in the 19th century. All information is from recent reports and anyone with an internet connection who follows the same method will arrive at the same result. Try it.

WHO has declared this a level 6 pandemic. This means the spread cannot be stopped and the consequence must instead be to minimize damage. The Babu’s have instead tried to enforce old communicable disease laws drafted for the age when TB was called consumption, in an effort to stop what cannot be stopped, and what for all practical purposes need not be stopped because it is for the most part no more virulent or serious than normal flu. Some dummy has even publicly opined on testing intercity travelers and quarantining all foreign arrivals.

The WHO expects total cases to be between 30% and 40% of the world population. If we take our population share, it means that India could have 400MM cases, and Greater Mumbai around 6MM. Infection rates for Swine Flu have been up to 3% per week in Europe (a new 3% of the population gets the infection every seven days); for normal seasonal flu the rate can be as high as 12%. In Mumbai that means anywhere from 450,000 to 1.8MM cases per week. Total hospital beds? Around 40,000 in Mumbai. We just cannot quarantine 10% of the cases even if we kick every sick person out of hospitals and replace them with people with the flu. Sounds silly when put like that, doesn’t it?

The numbers above suggest that the only thing that can work is home and community based treatment, which is what has been adopted the world over. And the quicker the government figures out how to prescribe Tamiflu quickly and securely over the phone the better. We may not have computers everywhere but a secure call and response mobile phone application could be knocked together in less than a week; our BPO industry could put together a check script in less time than that and we could be moving.

These numbers of expected infected have been known for months, and the WHO advises that governments should stockpile enough Tamiflu to cover 30% of their population. A great many European countries go above that, and Japan is above 100% coverage.

The goal of the Tamiflu coverage is to reduce the severity of symptoms and so reduce the number of patients who develop complications. The doctors, hospital beds and ventilators should be saved for the few patients who develop Acute Respiratory Disease, which is what kills the less than 1% of patients who die of the disease. Even there, it is mostly viral pneumonia, not bacterial that kills, though most ARD is caused by bacterial pneumonia, which our country is wonderfully equipped to tackle given that we are the capital of the world for cheap, high quality, antibiotics.

India claims it has 10MM doses, and has ordered 6MM more, which is a bit under the mark of the required 300MM+ courses. And that is if the 10MM and 6MM are indeed 16MM courses, for the government always refers to doses of Tamiflu, never to courses of Tamiflu. A course for someone who is infected is 10 doses, and a prophylactic course is 20 doses. So, are we covering 16MM people or about 1MM? Or is it threading the eye of the needle to quibble whether the government is covering a mere .1% of the population, or going all the way up to 1.6%?

Perhaps the lack of medicine is the reason we have the crazy rationing of the testing procedure and the arrogation by the government of the right to prescribe the medicine. The reason that the government gives is that we are preventing the useless prescription of the drug in order to stop the virus from developing immunity to the drug.

In that case our government, relying on the high principles that have so often been used to betray its people, is again selling them out to the Europeans and Americans. Are our minds so colonized? The UK is handing out prescriptions on the phone. Call, describe symptoms, get code, buy drug and get reimbursement if it’s covered by insurance. That is a sure way to create immunity to the drug in the long term, which is when we in India will get Tamiflu, but a good way to help your citizens in the short term.

The other high minded principle being sounded is that all our citizens should be equal so that Tamiflu cannot be bought by the rich, or the middle class, or the insured, or the employed (most companies would pay up the 1,000 rupee price to keep the workforce coming through the gate). This is not the time to equalize the treatment of rich and poor because the objective should be to safeguard the maximum number of the citizens of the country by all legal means.

Nevertheless, perhaps as a salutary example in (e)quality, the powers that be have decided to quarantine everyone suspected so far (bureaucrats exempt – they can take their dose at home as did a customs and excise commissioner) at a government hospital. It is a chance to show the travelling classes (most of the consignees so far are foreign travellers) how the other 80% live. Or is it because they are using that damn 19th century epidemic act that they are forced to mandate only government hospitals? If so, it is another indictment, and one that will cause deaths, of the laziness of our government in updating laws.

Instead to promote equity and reduce deaths the government should buy Tamiflu at government price and resell at market to subsidize the poor. Allowing private resale would save available medicines for the poor; anyone who has a choice will probably avoid a government hospital or testing service. And the sales would add a boost to the pharmaceutical industry which is providing the drug to every country in the world in multiples of the amounts sold to India.

In the meantime my daughter is trying to keep herself cheerful in a super crowded room full of people suspected of Swine Flu, where the worry shifts from Swine Flu to secondary infections of all sorts. That is a unique way to run an isolation ward and one that none but a bureaucrat, short on time, budget and imagination could design

At least the poor nurses and doctors are giving their all. But the ones working are far outnumbered by the ones loafing at the diagnosis tables (the strength apparently dictated by the cumbersome procedures required at government hospitals). The ones on duty have no way to actually do the work assigned to them at a normal hospital frequency. Overloading them like this will cause a huge breakdown. One doctor and two nurses cannot manage a 12 hour night shift for close on 100 patients.

If we are lucky, we will be told that the plucky child does not have the Swine Flu and can go home. The question is will the Hon. Kafka’s protocol allow the release of Tamiflu to 1) cover the kid for the remaining of the 10 days prophylactic course and 2) cover the rest of the inmates of our house? Never mind – I am sure that we can set up a much nicer isolation room at home!

Postscript - Kid is back at hope and healthy and happy and complaining. The great thing is that she did not complain once while she was in the hospital.

Making Money Off Bankers

There is a way and I shall give it to you for no charge.

I have made more money for myself (starting in 1989) and the family trading bank stocks than in anything else, for what makes the bastards so venal also gives one odds on chances to make money.

1) You can be guaranteed that they will find some way to truly screw up every 7 years or so. The reasons are now well known so repeating them is a bore.
2) You can count on governments to bail them out.
3) You can count on index tracking funds to sell the shit out of the stocks.
4) You can buy a basket secure in the knowledge that some of them will come out of the hole and make a packet for investors.

The fact that the Fed is not doing that (and the Brits are) really does suggest that perhaps the US government is rather beholden to bankers.

The only thing to remember is never to be a Sheikh. There is no such thing as a long term investment in a bank.

Low breakevens have a lot to answer for

When I was investing I was always stricken by the number of companies who showed us what a low break even point they had; some were even in the low 30's. Naively, we put that down to low SG and A (it was low, but in retrospect largely because it was not needed).

Instead, it now seems to me that the break even points were low because of industry structure - the one or two fellows who came to us were in industries that for the most part had many subscale competitor's or maybe it was just that the ones who came to us had begun to redefine scale.

This sort of company has potential to generate great returns, but not by the method generally chosen by entrepreneurs which is to create more of the same by replicating plants. At some point their competitor's catch up with them and the break even for everyone rises, driven by lower margins brought on by competition.

Instead, the correct path appears to be to cut prices to the levels they would reach at a later date, and invest heavily in high productivity machines which increases barriers to entry greatly. One must withdraw from the industry the profits needed for the whole industry to grow together.

The only thing needed is to have a market big enough to allow the use of the high productivity machines, which provides a real reason to export from India.

Banking Formulae in India

Yesterday I met the head of banking placements for a leading bank.

For some time have I been chasing banks to get dough to fund the rising sales of the company. Alas our business model does not fit the bank formulae set out by various committees in days of yore.

For many years did I, as a venture capitalist, bemoan the lack of modern banking analysis, a la the US;). For years did we mutter about a lack of understanding of business etc.

The banking wallah yesterday was apologetic because he did not think he could get us money because the business fell out of the banking box for the following reasons:

1) No net profit (but as defined by the payment of income taxes). The reason? Indian banks are correctly scared that reported income is fiddled. Unfortunately an insistence on paid taxes merely means that not only will the books be fiddled more, but also that money not already stolen by the entrepreneur will go to the government. Poetic justice since the government owns most of the banks.
2) A low sales to asset ratio. For a manufacturing business growing organically at 35% to 40% that is a given because one is always adding stuff, but the plant is always unbalanced. The only way to get around that is to 1)flog the plant for all its worth to show numbers; 2) borrow like hell for a 3:1 expansion; 3) suck pond water while you absorb that sort of growth and bury all start up problems in working capital and fixed assets; 4) restructure debt and 5) back to 1 again.

Ah, if I had only known all this when I was investing.

I Love China - and cheap Indian buyers

No, really.

For years I have run a small manufacturing business that is reasonably protected from Chinese imports. Competing with us means shipping a lot of air, which can be expensive, and long lead times which are anathema to our Indian customers. Our European customers are wary of Chinese production for various reasons including the fire and forget nature of trade with China (LC's only please).

That has not prevented our wonderful Indian customers from threatening us with the China price.

At first we could not understand how the Chinese did it because we know their plant configurations, labour use etc. In order to be comfortable investing further we (and the rest of the Indian industry) had to beat the price.

We used:

1) More productive machines
2) Better trained workers
3) Large capacity tooling
4) Reduction of processes

At Indian selling prices (40% to 60% of European) we have the same labour to value added ratio as the most efficient European manufacturer.

The China price is no longer threatening. Now if only I could afford the freight to China.

Capitalism and Pakistan Landlords

http://www.nytimes.com/2009/07/28/world/asia/28swat.html?_r=1&hp

The NYT approvingly looks for displaced militia organizing landlords to return to Swat, otherwise it will amount to redistribution which will create a vested interest for the Taliban. Meanwhile, said landlords are refusing to let tenants plant crops on the vacant lands.

An aside asks what this portends for Punjab with its mega landlords and where sympathy for the Taliban is growing?

Look across the border, gents, where, also in Punjab, (much smaller) Punjabi landlords are using force to cut the wages of their immigrant labourers.

The motto of the story: you can't change Punjabi landlords but you can change their circumstances with a dose of representative government - not merely 'democracy' as practised by the Bhutto's and the army.

Election Fever

So, is India the newest entrant to the club of boring democracy?

We had an election where there was not a whole of visible campaigning and no one really took sides. The max fireworks were an old lady slagging off an old man and vice versa, and a lone nutter (of the name Gandhi) who was promptly jugged. The voters voted, a surprise government entered a few hours after counting started and that was that.

Iran is going through an election. Rallies in the streets. Lots of liar talk on the TV and the press. The whole thing is seen as a revolution.

The US went through an election. Rallies in the streets. Lots of liar talk on the TV and in the press and on the radio. The whole thing was seen as a revolution.

Does this say a lot about the countries or just that to ensure a boring election one the preceding government must have a boring and competent leader?

Manmohan Singh Zindabad, and I hope they next fellow the Congress chooses is just as dull.

Crooked Legislators - and its not the usual Bihari suspects

http://www.nytimes.com/2009/06/11/opinion/11collins.html

Fuck Off Darkies

Umm, we can't say that anymore in Oz, can we? Not when 95K darkies pay around US 2.85Bn (my estimate) to the economy every year. How much change the pocket book will ring in is still to be seen, but change will come.

I forecast that India and Indians will have more of an impact than many another large developing country on the rest of the world as our economy matures, because our money is spent as we will it, and not as our government may.

So, Indian managers (Bharti excepted) will buy companies is the smaller developed countries of Europe where they are in a close time zone and where they are culturally comfortable, unlike the Chinese who will buy into far flung dictatorships. And, as savers of jobs, will gain disproportionately in political clout at the local level, which in a democracy is the right level.

Except for England. The Brits, where the government believes that politicians are paid to cozy up to the square mile, and to pay no heed to blue collar workers, are playing hardball at Jaguar.

The correct thing for the Tata's to do would be take out all the designers and engineers (the value of the company) and employ them at Tata Motors and sink the blue collar assemblers. Sometimes, the colonial master must be kicked in the balls; that is best done by the electorate. Nothing says that the Tata's cannot help the electorate to make a fine choice.

Where cricket led the way, so shall other fields follow.

Abandon all hope for sustainable agriculture - Jeffrey Sachs has arrived

The master of shock therapy who handed Russia to the oligarchs is at it again. He has (correctly) identified agricultural productivity and water supply as two areas that need to be fixed to give poor people a chance to succeed in life.

True to his fixation with dough, though, he advocates:

1) Better seeds and fertilizer, both of which play into the hands of MNC's and Big Oil and
2) Piping water from river, across national boundaries etc (citing the wonderful help of a US pipemaker Eagle something or the other for one of his pet projects)

The great man makes no mention of a) organic farming and b) water management and storage on site, probably because those are low cost and their ain't no money to me made by no MNC's.

The many studies and pilot projects (a love of the man) done in India show that organic farming is feasible, is cheaper, and helps with water - remember in this country we get 1 cubic meter per square meter of rain - that is a lot - about 2.5x what it takes to grow wheat.

More on all this in a later, comprehensive, post that is being worked on.

Feedback loops don't always do what you expect

I am chuffed. I have checked the carbon footprint of my house and it is very very low for the square feet - about equal to a highly efficient UK house that is half the size. All those CFL's and LED's have lowered the electricity bill over the last decade, and that in Mumbai is a feat.

We will not talk about the travel footprint, though cutting up the frequent flyer cards and moving to coolie class is on the cards.

Trying to keep going on the energy reduction front we replaced our old and worn a/c's with new direct drive jobs, and insulated the roof and double glazed the windows, all of which are supposed to increase efficiency - sure enough the bill dropped further but there was a horrific consequence. The temperature in the room was becoming unbearably hot though the new a/c was the same power as the old, which had worked fine in uninsulated conditions (no waste except capital because direct drive a/c's adjust to the workload within a very high band, and one wanted to keep the domestic peace - the wife believes in polar bear conditions in the bedroom).

The hotter it got the more we jacked up the fan settings and the dropped the set temperature. And it got even hotter. I borrowed a laser temperature meter from the a/c wallah and spent a night poking about to check temperature differentials. At the start all was well; at 6 a.m. the foot of the bed was at the set 19 degrees and the head was at 24. How could this be? Efficiency - the low set temperature and the huge blast of the air from the machine allowed the direct drive to hold the temperature at the measure point at 19 while allowing it to rise everywhere else. Spot cooling.

A change to the a/c fan and circulation settings has allowed us to drop the set temperature and maintain it in the necessary zone.

This is a small and foolish example of what we do not know. So, climate change will have feedback effects but we do not know which way they will go - the weather is a bit more complex than a single room a/c.

Definitions of Terror

It is never more clear than now how the dominant culture of the US gets to tell everyone how they are doing.

India, we are told, is the country most affected by terrorism after Iraq, and its judicial systems get in the way of an effective response.

The first conclusion is drawn from the number of deaths which are a result of 'terrorist' action. The latter - I suppose they would like us to use waterboarding?

Redefine terror to include, as suicide attacks, all the school shootings that take place in the US, not to mention workplace shootings and other gun related crimes and I would be willing to bet that the US is number 2; I do not follow Iraq but it could even be number 1.

Total terrorist deaths in India last year were around 3,000; the US had around 30,000 gun deaths.

I submit that it is not the US judiciary that is broken, but the US polity, given that they are about to allow general carrying of concealed weapons all over the US. For sure they would not like that to be the case in Iraq or Pakistan, but then there is the old saw about he US - to emulate us, do not as we say but as we do.

Come to think of it, I would prefer India to do as they say; I do not really want our politics captured by a bunch of plutocrats (viva Mayawati) or a gunmongers.

On another note, were Al Qaeda really media savvy they would find a way to take credit for gun deaths in the US (Al Gore and the internet anyone?).

Democracy and the mall

Mumbai may be the financial capital of India but, because it does not have too many top pols hanging around it is usually the first city to give a preview of what a real, middle class, democratic India is all about.

First Mumbai airport banned private planes from taking off or landing during peak traffic hours so that commercial flights could try and remain on time. This forced the plane owning classes to take off before dawn and return late at night, both of which timings are a real drag on ones social life. But having bought a plane one could hardly turn it in, could one - especially now when the mildest late payment, let alone the 'repo' of a plane, gives rise to rumours of bankruptcy.

Now, Mumbai airport has gone one better - it is booting the planes out as their hangar leases expire and replacing them with hotels, shops, malls and whatever else will drag a coin from the travelling classes.

Mr. Reddy will have a few tough cocktail parties in the near future but this is a clear pointer to the rich and powerful; you may have the dough and the power but we want our share.

I would watch this space carefully were I a politician.

The Worth of an Indian or the PPP of Life

I have for years said that life in India was valued cheaply. Now we have a way to put a number on how cheap.

The UK has a population of 60MM and keeps 30MM doses of Tamiflu on hand for a flu outbreak where they expect a max 2.5% fatality rate. India has a population of 1,100MM and 2.0MM doses of Tamiflu on hand; max fatality expected is 5.0%.

Step 1:

60UKR = 30Tami
1UKC = .5Tami

1,100IR = 2.0Tami
1R = 2/1,100Tami or .0018

By substitition:

.5 = .0018
Or every UK citizen (or more properly resident) = 277.8 Indian residents

If one corrects for expected mortality then every UK resident is equal to 555.6 Indian residents.

If one corrects for venality, (while the State has arrogated all supplies of Tamiflu to itself you can bet they will not not dole out prophylactic doses on a first come first served basis - our jailbird politicians will be first in line) the worth of a poor person will be sub 2,000.

Perhaps this exercise will take some of the India shining shit off our politician's and businessmen's faces. A life that is valued at 600x+ the one that one leaves behind is reason enough to emigrate and explains why boat people exist.

Postscript - even if the government increases the doses at hand to 10MM as announced this still leaves the numbers at over 100x.

The calculation of similar ratios for other countries is left as an exercise for the reader. In general socialist Europe puts a higher value on its residents' lives than the uber capitalist US; HK is the outlier with 3.0x coverage for each citizen, making each HK resident and visitor 6.0x as valuable as a resident Briton. Could have have to do with the preponderance of money merchants in the city?

I believe in American Justice

Which is why the US should cancel the bonuses of every man jack they feel ought not to be paid and go to court where a JURY will try the case. Can you imagine the fun trying to seat an unbiased jury? Sir, goes a question, have you ever read that pap Atlas Shrugged from the economically illiterate author Ayn Rand?

Even if the government loses it will take years and they can then pay in the debased dollars they are creating with such gusto.

NREGS and the World Bank and how NREGS has helped my company and its suppliers

Trust the phony capitalists at the World Bank to come up with ever more rubbish. The latest is how the NREG payment is keeping people on the land and therefore delaying the formation of more cities with their higher pay, better standard of living etc.

First, I would like the concerned economist to come and work at my factory where I will pay him minimum wage and find him a suitable hovel in which to live. I will also arrange for him to go live on NREG dough in a suitable village close by. He can then decide which is better.

Second, many have decided that the latter is better, so much so that the year NREG began payouts, it caused a great labour shortage in the area of our factory. Minimum wages, fixed by the government at low rates to satisfy the whiners at our chambers of commerce, were breached and this side effect of NREGS has lifted the income of many a labourer.

Third, because these fellows (and because of our sexist labour laws most are fellows) are utterly unskilled and unreliable, the boost in their pay gave us an incentive to replace them with fabulously skilled Indo-Austrian and Indo-Japanese workers.

We commissioned a local machine manufacturer to make us automatic machines where the duty cycle components are imported from the best European and Japanese makers. These have turned out really well - for the first time making high tech stuff in India has really worked for us - and we have been trying for 5 years.

Fourth, the machines are such path breakers in price and performance that our supplier has found takers for the same machine as an OEM from all four of the European machine makers they visited last week, and all at prices that make all parties only modestly unhappy.

Fifth, today there was more rubbish from the IMF on how we must spend buckets more on infrastructure - more roads they say. Gents, there are two things:

a) The machine referred to above will travel six to a container and each container will have the value added of 36 containers of clothes and shoes, the manufacturing the buggers at the WB would like us to do. This may well also have probably the value added of 36 containers of Chinese flat screen TV's.
b) That kind of reduces the roads needed.
c) How come the IMF does not point out that removing the zillion checkpoints on Indian roads will approximately double road capacity without doing anything but cutting corruption?

Could it be that the IMF likes big spending projects because they and their consultants are part of the gravy train?

I wonder what poppycock these institutions can come up with to explain all of the above?

Their mythology starts with the false premise that these are irreplaceable geniuses,” says Cuomo.

Last week, after many many years, I flew BA first class. Before you ask where I got the dough, I will tell you that I used up JP Morgan paid miles that I had been forced to hoard for years because BA never had seats. I bet on the economy returning to normal, or the rats cutting flights, and opted to use up all the miles at once before they expired or became again unuseable.

Tip: this is the time to use those miles because you will get the seats and dates you wnat.

On the way to Europe I fell into a chat with a Sindhi businessman who was going back to whichever out of the way place he made his living. He was delighted to be back in the saddle (first class) from which he had been excluded for the last many years because the banker bums were hogging the seats and paying prices that no one using their own money would ever pay. Look around, he told me contentedly, 70% of the people in first are Sindhi's. We all spend our own money and its cash so we have a budget: when we can, we go first; for a while we were afraid the bankers would so raise the prices of business that we would be in cattle for the rest of our lives.

While in Europe I met with numbers of mid sized business owners, with many friends and even cab drivers.

There is a reason that most Europeans do not want to boost demand. They think the Americans eat too much of the world already and do not want to help that balance (sic) return. Their politicians do not want to repeat Iraq, and not with money, which counts for everyone and not just a few soldiers. So, resist they will.

The American public is just as fed up with greedy bankers continuing to be paid tons. Frankly, I am with them. I was one, I know exactly how much I was worth and how much I was paid, and I know many of the senior ones getting paid even bigger buckets, and I know precisely how much they are worth. This last is a calculation anyone can do as it does not involve too many zeros.

While I sat with my suppliers in Europe we spoke only briefly about the current crisis. It is bad for business and we will all have to do what we can to survive in the short term. Most of the meeting was about what we were all going to have to do to boost labour productivity and cut the cost of capital by making things cheaper. Even the smallest company had a detailed two year product plan; the biggest had five or more years blocked out.

Nowhere did the US fit in any marketing or product (as opposed to sales) plan for any of these companies because they found it too hard to build for a mentality that may sell the company tomorrow, or where decisions are made on a personal level, or where the mix of machines is so vast in time (30 year old working alongside this year's model) that no one can actually measure productivity.

The flight back was instructive. Only three seats were taken in 1st class so the recession remains with us; the stewardess giggled a bit when I said that I really ought to check out business before I was forced to head there in time. Ha ha - we are off on vacation in two weeks. One friend who is on the same flight, but whose husband works in a normal job said we would be on the same flight but that she was in coolie. Well darling, quoth I, so are we. Later the same week, the wife of an Investment Banker informed me that she simply could not abide travelling coolie.

To complete my joy, a Master of the Universe was sitting behind me. We had a bit of a chat before take off where he promptly attacked India's profligacy in writing off farmers' loans. It was not the amount that mattered, but the fact that it set a precedent. He delicately skirted around the accepted economic wording.

Oh, I said, do you mean moral hazard of the sort that your government is so happily promoting amongst the banker classes?

Without a trace of embarrassment, but with a smirk, he said 'well, that had to be done'.

I fancy he did feel a bit of embarrassment when I bashed him with the bolshie line 'so, what's good for the filthy rich is not for the ragged poor'. But will he change? Will they change.

The fellow spent every hour of the flight calling his office and asking his myrmidons this or that trivial question about this or that trivial development at this or that trivial (given recent stock prices) company and then asking what they thought the effect would be on this or that country, or class of assets. In my minds eye I could see that between the calls his myrmidons were calling some other MoU's myrmidons with the same questions, so that by the end of the flight all M's and their m's would have the same groupthink.

The fellow concluded the last call that I overheard with the line: 'so we do not have to decide anything for the next hour or so'.

One hour at a time or five years at a time? You take your choice; I have taken mine - I will rot in hell before I allow people who decide one hour at a time to interfere with what I have built over years and where real people work making real things.