The making of Middle-East Proxy War

US and Iran have been going through a long process of negotiations of a nuclear agreement by which US was going to lift sanctions and develop peacefully free of advent of nuclear programs and enrichment.

In the last two years, the trump admin imposed primary and secondary sanctions to cripple and have an no last resort negotiation tactics with Iran. The nail on the coffin has been the authorized drone killing of Qassim Soleimani, the Iranian major general in the Islamic Revolutionary Guard Corps (IRGC), has the potentiality of starting a war. This operation was not a covert or a secret mission and has been very open invitation to Iran for a challenge. This action can be deemed clear to have taken a different path than the dialogue and has taken the challenge to Ayatollah Khamenei, the supreme leader for Iran. 

Iran has avoided the Al Kurds force, which is responsible for the Iran’s overseas clandestine operations, for the last 4 decades, there has been no direct confrontation with Iran and Israel for that time. The strike also killed the Iraqi miltia commander, Abu Mahdi al-Muhandis, who was the deputy leader of the Al-Hashd Al-Shaabi which will leave a vacuum in the organizational hierarchy of the militia.

The direct confrontation of Iran in the Middle east with Saudi Arabia or US and its allies is totally out of question as it has avoided so for the last 4 decades. Interestingly, this will lead to a birth of an intensified proxy war being fought in the realms of Iraq, Syria, Yemen, Libya and Lebanon to a certain extent.

The possible options of eventuality are expected to revolve around below areas in the coming decade.

1. Trump’s plan is concrete to bring back the troops home as it has happened in Syria and complete the peace process handover to Afghanistan, while recalling the troops is a sure shot speculation which might materialize within a quarter. The response to this action and the discussion with Taliban and Afghanistan triangle will have a possibility of an unhappy “divorce settlement”, it will also lead to the spill-over effect of the regional unrest. Make no mistake there will be an increased unrest and possibly a regime change in the region. Trump’s re-election campaign could also be around the ‘Deal of the century’ for a peace breaking treaty in the region for Israel and Palestine. This will surely result in some serious escalation resulting in unrest in the Gaza strip. It will be interesting to note the policy of the countries influencing the geopolitical mood of the region. A lot will also be revolving around the re-election campaign of Trump in the upcoming US November 2020.

2. The US administration will have to prepare for a scenario of increased cold war in the Middle East, which it has be a strong part of considering the geopolitical influence of Middle east in the global politics of energy. Its external political strategy around the Saudis will be tested in the wake of increased risk of military deployment of US forces in the coming years.

3. Covert operations. An increase in covert operations will be seen from both the blocks fueling the cold war, which will require increasing funding to be deployed in the area. It is to be seen how the US would want to balance the attention of resources and political maneuvering between Middle East and rising African countries in the coming decade. The increasing focus of the Chinese into Africa and its operations would become geopolitical issue for US and its allies to manage the rising Africa, its aspirational growth and the opportunity to be an ally and access to the markets of Africa and be part of the largest growing population for the next decade.

4. Systematic planned long process of assassination against US and its allies by cuts by thousand slices strategy. We will be seeing an increased aggression in the militia activities in the lands of Syria, Iraq, Yemen, Jordan and Lebanon. We also might see resurgence of attacks in other Islamic countries such as Afghanistan and North West frontier Pakistan more so following the Sunni-Shiite century old rivalries. The militant groups such as Taliban, Daesh, Hamas, Hezebollah, Al-Qaeda will see a renewed activity and funding to disrupt the region’s peace in the coming decade.

Opinion : The Hoo-Aww-Wei War in the arena of 5G runway

The next decade will see a fervent of activities of gulf escalation, risking international peace and security situation in the region. It will also demand more funding for the humanitarian groups such as UN Programmes and Red Cross and others for field budgets for the times to come. As global economies, we should always remember that such humongous budgets also play a pivotal role in diverting focus from health and education focused developments in the region hampering global growth and well-being for decades. 

While these possibilities play out in reality, It is also important to keep an eye on the developments around the Iran nuclear deal, US decision to pull out of the deal and its ramifications in the Europe. Each of these topics are a strong backdrop and forms a story of its own but the puzzle completes when as an economist/ geopolitical observer you tie them together in the perspective of global power hegemony for decades to come.

Readers please let me know what you would want me to write on. Sometimes with so much going on, I lose focus on the relevance of what readers are interested to read about.

Hoo-Aw-Why (Huawei) war to be fought at 5G runway ?

The recent visit by Mike Pompeo to Britain has one of the critical discussion agenda to completely ban Huawei, the Chinese tech giant, one of the leading telecom technology companies for the 5G technology. His visit is to highlight concerns and to egg Britain to rethink its decision of allowing Huawei a limited role in implement the 5G technology.

The ban is a continued effort to ban US in terms of lobbying its allies to ban Huawei, which it alleges that the Chinese government is using Huawei for spying on citizens. Pompeo is of the view that Chinese govt has a legal mandate to obtain the information of the citizens transiting in the Huawei network. It was also mentioned that Britain new proposal to allow Huawei to build the non-core parts of the 5G infrastructure jeopardizes the intelligence sharing between the 5 EYES security alliance.

Boris Johnson, UK prime minister is of the view that it will work towards providing access to the best of the technology to its citizens, He also added that he doesn’t want to impair Britain relation with US and to compromise its national security infrastructure or imperil the Five Eyes securities cooperation.

The Five Eyes is formed of US, UK, Australia, New Zealand and Canada.

US has imposed trade restrictions on Huawei. It has further blocked  American companies from dealing with it and has asked for a complete  ban on Huawei in 5G networks.

Australia and New Zealand have followed suit and have banned Huawei,  while Canada is still sitting on the fence on the issue.

Interestingly, EU also has security concerns, although it hasn’t banned  Huawei but it has issues guidelines to its members to restrict 5G technology  from its “high risk suppliers”.

Let’s look at makes Huawei so enigmatic in the world of telecom.

There is an increasingly global alarm being sounded about domination of China in the 5G technology network. Huawei, in the last 15 years, has seen a stupendous rise, which is alluded to the close links to the Chinese govt, the subsidies received from the Chinese government and other assistance offered.

Critics also raise concerns that Huawei has appropriated some western competitive technology which has allowed to take a notch up in the growth curve evolution.

Interestingly, the state of alternative suppliers in the global markets is also a concern. The weakening state of competitors in the global market including the competition from China has weakened them immensely. This can allow Huawei to come with a very low offering price to ride on a monopoly state and wipe out competition to later dominate the market and its pricing.

Huawei had started out focused on the Chinese domestic market which allowed it a perfect petridish of consumer and  business playground to be accentuated on economies of scale and size of the Chinese domestic market.

Huawei has also been a pioneer in the 3G and the 4G technologies. Its commitment to innovation and research is clear from the fact that in 2015, Huawei remained the top patent applicant for the second year, with 3,898 applications.

Huawei invested over US$15 billion in 2018. In the next five years, the invest is planned at US$100 billion. Huawei is one of the world’s largest patent holders. We have been granted 87,805 patents and 11,152 core technology patents were granted by the United States.

5G : Are you being watched or is it the New World Order ? 

This issue has also to be evaluated at a perspective of political and power play of technological control. The 5G technologies limits are still being evaluated as the scope of the connectivity are still being assessed as this could be the blood of the next generation technology superhighway which would be holding very sensitive information. It’s being dubbed as dual use technology which will have commercial and security applications.

The whole issue started in October 2012, when Mike Rogers, Chairman of the Permanent Select Committee on Intelligence presented a report to the congress about the “Investigative Report on the U.S. National Security Issues Posed by Chinese Telecommunications Companies Huawei and ZTE” which led to questions around the Chinese mobile phones being used by US defense contractors.
The ownership structure of Huawei also did not help the cause as it being an employee-owned company also raised red flags on questions of its relations to the Chinese government.

Beijing passed laws on counter espionage (2014) and a National Intelligence (2017) respectively. This legislation allows the Communist Party to compel Chinese companies to turn over information and open their systems to the country’s intelligence and security apparatus.

It would be interesting to watch out the new political alignment which emerges post Brexit with the Chinese govt. It could also test the UK-US relations in that scenario and can might have a bearing too post US presidential elections this year.

The countries who are going to appoint companies of non-state origin need to work on establishing control points in software and hardware setup and make a clear demarcation in role identifying of the companies the core or the non-core parts setup of the 5G technology.

The risks cannot be eliminated in today scenario and we need to think of mitigation and process control measures from the perspective of hardware and software connect points.
The third-party audit supervision proposal of Huawei brings strong line of transparency and such a thing should be relevantly made the industry standard in terms of transparency.

America's wireless companies are investing an estimated $275 billion into building 5G networks. This will create three million new jobs and  add $500 billion to the economy. In fact, it’s estimated that one out of every 100 Americans will benefit from a new 5G job. The world is looking towards the likes of Ericsson and Nokia to present a competitive front to Huawei, but companies are finding it difficult to match the continuous focus on R&D investment by the Chinese tech giant.

I leave the readers to decide and evaluate if we are witnessing a matter of security concerns or are we witnessing a regional polarization, or the case of commercial interests mixed with political influencing at play or are we seeing a rise of a IOT enabled surveillance system which could be the ‘eye’ of Earth.

Sources and Bibliography

Investigative Report on the U.S. National Security Issues :

https://intelligence.house.gov/news/documentsingle.aspx?DocumentID=96

https://www.economist.com/briefing/2017/05/06/data-is-giving-rise-to-a-new-economy

https://www.wipo.int/edocs/infogdocs/en/ipfactsandfigures2018/

https://www.qualcomm.com/invention/5g/what-is-5g

https://www.reuters.com/article/us-china-lawmaking-spy-idUSKBN0IL2N520141101

Trade Wars leading to demise of post WWII global trade structure ...

Global geopolitics and policy making are playing their hand through the consumption of soyabeans, washing machines and PIGS.

Yes, you heard it right.

The story began with the Trade with Trump strategy and has seen US at loggerheads with most of its EXIM trade partners threating NAFTA and incapacity of WTO to resolve global egos marred with Trump-o-nomics and Xinomics.

In July 2018, US slapped tariffs in Chinese goods ranging from consumer goods and food products including tobacco, chemicals, and metals, citing reasons for unfair market practices. The situation has seen escalation since the discussions of product dumping and undercutting. 

Currently, US is looking at impacting $1 - 3 Trillion of imports and in a wake to try and promote the local production and growth. Let’s look at the some of the interesting commodities which might have an economical global impact in terms of growth, innovation and food!

A steep 30% tariff on Solar panels is going to impact the already regressive agenda of renewable energy globally. China is the largest manufacturer of solar panels and with the current 30% tariffs to be reduced to 15% after 4 years might impact the uptick in renewable energy coming in from solar power.

Almost 75% of the solar panel installation in the US comes from Asian countries and the tariffs are going to impact the innovation investment proposals for the solar industry in the US and the world.

Washing machines has seen tariff pegged at 20- 50%, which has a market of $5.1 Billion in US. Non US companies are holding a more than 50% of the market share because of cheaper and affordable competition. Interestingly, the tariffs on steel and aluminium will be a double whammy for the segment as the pressure of cost is going to mount.

Reports highlight that China exported more than 22 million washing machine units to the US in tune of $3 Billion in 2017.

The companies have been warned earlier too and have started taking action to avoid the situation. LG is already building its first US facility in Tennessee which would be operational by 2019. Samsung’s South Carolina facility is already producing 1 Mn units starting this year. Eventually, the impact is expected pare down with US sales being bolstered up but the wound would sustain for the years to come.

Soyabeans make up to $14.2 Billion of the agri-exports to China from the US. It’s the largest US goods exported to China. Interestingly, this gap is made up by strong supply, as Brazil has harvested a bumper crop this year. The soyabean futures prices have dropped by more than 18% and continues to be a concern in wake of strong supply. China makes up for 1/3 of the global demand for soyabeans as it uses the oilseed for its animal feed, more specifically PIGS !

According to FAO, China produces 60% of the total pork production of the world and 3/4 of the total meat consumption in China and by 2022, these numbers are going to rise by a minimum 50% upside. China imported 93.5 million tonnes of soybeans in 2016/17.

This calls for another stellar story another time but in wake of the tariffs, it’s interesting to see how commodity markets and pricing respond the alternate animal feeds such as canola and sunflower.

Policy makers hopefully keep this in mind, that, these alternatives have a shelf life and an 

traditional history of standard production mean. This means that sudden overconsumption will lead to higher livestock input cost than sustainable pushing inflationary trends in the wind. 

Alternatively, this will spur research and innovation in animal fodder industry involving duckweed and algae, which will spill into newer foodstock manufacturing in world of gastronomy too (humans included).

Coming back to the trade war, Malaysia, Vietnam, Indonesia and too a certain extent India is turning out to be major location benefactors of the situation, as lot of manufacturing companies are now moving production out of China and Hong Kong.

Tariffs on Steel and Aluminum are going to be a salvo not directed at cheaper steel but at the trading partners of US. US is the highest importer of steel, almost at 9% of global steel figures and top three steel partners are Canada, Brazil and S. Korea. 

The alleged ‘overcapacity’ stated by Trump is an accusation for China, which it is trying to mitigate by making it difficult for its steel trading allies. 

Statistically speaking, the world has an excess steel production and is going to increase its capacity ferociously in a market which is going to experience marginal demand growth for the next 10 years. The only anomaly could be huge infra investment driving consumption in developing countries or crippling down of supply chain systems by invoking geopolitical manipulation of EXIM market.  

Trump intention to protect American companies run a huge chance of impacting the American production and margins, which were a result of cheaper input cost from cheaper steel. This might end up impacting jobs to the tune of more than a lakh workers across automobile manufacturing and construction.

I feel that there is going to be inevitable impact from the trade war but the damage from it is more in thought process and policy making rather than $ values. 

The major blow would be to the belief systems which helped setup institutions such as WTO and other world bodies and the many regional international free trade pacts and agreements spawned after the WWII. 

The irreparable damage of germination of doubt and toeing the international trade system has served the global trade for more than 7 decades, the shakeup of the belief systems would be a shattering thought.

Opinion : Thermal Power Energy Storage and Future Energy Series

In right earnest, hypothetically, if the trade war escalates and goes to a full blown global fallout, we would see the emergence of more bilateral and group trade agreements, moving away from pacts resulting from regional proximity to more common goal trade agreements between nations. Very interesting coalition would be in order. Here is me coming back to the fabric of reality now. :)

There might be some noticeable impact to the global GDP growth, resulting from the fall in investment except the rearrangement and shuffling of the tariffed goods from US to other countries. The commodity prices will take a strong correction but eventually the demand-supply scenarios will pan out. The impact on global commodity prices might be to the tune of a 20% on a YoY scale at best. 

The major blow would be the resultant of this war which might be a spiral down in terms of investment and innovation in new risky ventures in energy products and smart planet and innovation around the efficiency of current products. This is destined to push the global economy and the larger corporations behind by 10-15 years.

Evolving Environment and the World

On World Environment Day, 5^th June, it is more so poignant that I am scribbling these notes on world sustainability and its possible mitigating strategies. 

The increasing spewing of greenhouse gases by progress of civilization will eventually alter the planet. 

Period.

The first step to fix a problem is to acknowledge it. The world needs to action upon strategies which can delay the inevitability or give a chance to self-healing abilities of the planet to reverse it.

In the last few score years of growth, the world has seen extraordinary erosion of the climate situation and studies conducted by GISS shows how the CO2 emitted has a direct correlation to the global temperature anomaly.

Figure Alongside: Greenhouse gas forcing and global temperature anomaly. Image courtesy : GISS.

The other huge problem is a more political play for countries and increasing geo-political power play for regional blocks.

The humongous subsidies provided for the usage of fossil fuels which is a major impediment in the change towards renewable energy. Such subsidies are channelized by giving up productive investments in public welfare and by incurring public debt, which discourage the investment scenarios by technocrats and corporate. Subsidies alter the behavior of the market participants, consumers, producers and mediators alike playing havoc with the market pricing forces and its evolution.

This indeed deters investors as it pressure down the potential return scenario by investors or companies, who would be pioneers or early adopters in the scenario to explore the renewable energy market.

In a study by the fiscal affairs department of the IMF, the global subsidies accounted for more than 6% of the world GDP and to the tune of more than USD 5,000 Bn annually. The need of the hour is to rise above the strategical and geo-political fossil fuel power play.

The world is now trying to tackle the situation by coming together on reduction of the Co2 emissions. With inconclusive results from Copenhagen climate conference, a few major economies reluctance and US withdrawal from Accord de Paris doesn’t show a very strong promise for a coordinated action movement.

Positively, there are pockets of change underway, majorly being, the consumer moving from energy agnostic to energy literate.

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Few economics such as China, India and the Middle East are gung-ho on the solar PV market and its ever-increasing scope, rightly so. Estimations by various studies pegs Solar Photovoltaic installed capacity to be generating 1,764 GW and 1,840 GW respectively by Greenpeace and Bloomberg by 2030.

Saudi Arabia’s ACWA Power record for the 300 MW, Skaka IPP PV solar project is a landmark on its own.

The innovations and disruptive technological advancement do not stop just right here, emerging areas such as electricity generation, smart grid and storage are seeing a whirlwind of changes and ideas which challenge our existing paradigm of thought processes.

Thanks to corporates, research universities, PE investors and Asset Management firms who have seen the opportunity to encourage or be an early mover to patent and promote such initiatives. It is very critical for large energy firms to look at these opportunities and turn these innovations into viable and commercial realities from prototypes.

The next wave of competition will undoubtedly be fought in this battleground of innovative patents and scaling up the discoveries to the consumers at the most affordable price.

The technologies of methane dissolution and retreating of GHG gases is going to be another frontier. Till now the cost of implementation economically and socially was very low but in the coming years, we will see companies pushing these research as the cost of GHG emission increases and starts heavily impacting the shareholders.

Well I couldn’t just help by ending the thoughts without delving to the use of distributed ledger technology (DLT) and how it would benchmark data, records and its source bringing in transparency, parallelly creating new social and economic systems for companies to adapt and adopt.

The DLT calls for another story of its own right as the technology has the potential to manage/ streamline the carbon currency. It has its own deterrents as corporations wouldn't want a open auditable accounting system for such reporting, but the society would make a run for this tech in about a decade.

 

I intend to continue with the strain of thoughts …

Do comment below on what you want to hear more about.

European Union (EU) disintegration : Challenges and perspectives.

The recent spike in the Rupee and the nonchalant behavior of Indians and specially the incumbent government and the RBI sent me thinking about the other currencies which would have gone the same way down…

In general, the last year has seen the dollar rise in comparison to almost all the currencies.
This presents us with two simple alternatives:
1. The US economy is on a recovery path with a faster growth than 3-5%, which given the size of US is impossible.
2. The Global economies are losing investor confidence in all economies and are looking at securing the most stable and strongest currency in wake of an economic aftermath, the US $.

Since the first option is out of question. Let’s look at the second one.

Trying to look each of these currencies will take me down the path of yet another enormous article. So let me look at them in a regional bloc manner and categorically reach to the smaller ones, starting with the Euro, Ruble, and then Rupee.

Euro will have to be looked as a variable directly proportional to European Union (EU). Currently, EU is mired with problems starting from fiscal to ideological to diplomatic perspectives. The tensions of 2012 summer of Euro disintegration has been recently brought to fore by the Dutch finance minister. What brings us to the brink of such a situation ?

The decision drivers which are gunning for the disintegration are multifarious. The reasons and the triggers for the Euro weakening have many theories to be earmarked with. It all started around the 2008 financial turmoil with the fall of Lehman Brothers and since then the EU and euro has been in crisis. The crisis exposed each of the member countries financial stability and thus weaker countries were left to fend for themselves. The stronger member economies such as Germany, France, UK were scared to bail out the weaker economies as they risked being dragged down financially. This brought down the level of confidence in the union.

The EU could never unify all its member states and bind them to a common agenda of fiscal and monetary prudence. The member countries are always scattered and differentiated with the union policies. This never aided the EU to come to terms hindering their diplomatic and economic trade stance with other regional blocks.

Read Opinion : Future of Energy Storage Series 1

The euro member countries have been also been dealing with a lot of internal political instability. Italy’s democracy has been challenged by Beppe Grillo “Movimento 5 stelle” and its wave of populism. His “La Repubblica” advertisement in 2005 called for the resignation of the then Italian Bank governor over the banking scandal. Later, he rocked the Italian political scenario with his “Operation Clean Parliament”. His “vaffanculo” rally was attended by 2 million Italians in 2007. Greek has seen its own share from Alexis Tsipras of SYRIZA, revolting against the austerity agenda. Viktor Orban’s landslide win in recent Hungarian elections bring a more pragmatic thought to the way the populism is molding the societal core. France’s National Front and Hungary’s Jobbik present perspectives which should not be overlooked by EU.

What may come out of these movements could be either good or bad for the Euro/ Europe/ the member countries in that matter. That's something which time shall scribe.
I am right now being unbiased and trying to list what could affect the European Union (Euro).

The EU has two options:
i.                    They should let loose some of the weaker laggards, lose its initial agenda of European unification and continue as a closed stronger and focused.
ii.                  Nibble on time and hope that the EU members come together under a covenant and do away with all the fiscal and economic ideological disparities in the region.

While EU looks at the first option, it risks losing its character and essence. The choice is fraught with the making more enemies and seclusion of trade with the smaller and weaker economies and inviting distrust and enmity with the neighbors.

The second option is more to do with buying time and sticking together hoping that one day all the nuts and bolts (members) of the EU region start functioning in a more coherent manner… One day…

To be continued in the next blog with the core performance reasons for the Euro fall …

Power should not be subsidized

I would like to Thank the readers of the blog and specially people from my workplace. Your encouragement means a lot to me.

An artista always needs patrons of his art, a writer needs its readers, a performer its admirers, and an extortionate economic policy its subsidies.

A half page ad in Deccan Chronicle about the recent govt scheme jointly floated by ESSL (Energy Efficiency Services Ltd.) and local Discoms caught my eye in a train journey returning from home.

Since you do not have much to do in a train journey, I floated the idea for discussion to my co-travelers including a govt. employee, techie, businessman, and two MBA lads and a cynic (me).

The Issue: In order to fuel government's plan to boost energy efficiency, ESSL (Energy Efficiency Services Ltd.) and local Discoms are going to offer LED bulbs which cost Rs. 400 as an exchange for 2 incandescent bulbs costing Rs. 10 each to every household under the DELP scheme.

More than the policy what shocked me is the ill-informed and whimsical nature of opinions which we have as citizens to the state of affairs around us. Interestingly, these opinions differ so vastly when you change the strata of their economic and social exposure. That makes for another story some other time.

I am totally supportive of the intent of the policy but am in ardent opposition with the implementation vision of the policy. Let me explain why.

The govt decides to subsidize Rs. 400 per bulb in order to increase the efficiency of energy used per capita by promoting the usage of the LED bulbs, which is by far not a commodity which can be clubbed as a public utility good. So the government is spending the taxpayer’s money to allot a commodity which can be termed as a good of private choice.

This policy is similar to an instance where the government plans to spend money to subsidize the sale of 5 star rated air conditioners and offer it at 90% discount for the public.

I do not doubt the intent and but the benefit transfer to the people who would be the benefactors of this scheme. The policy flaw is in the implementation that should fail as the benefit of the subsidy would be transferred to the wrong class of people.

The question we should be asking is who would be the direct benefactors of the scheme and by subsidizing a public good, is the government not meddling with the market forces which are at play?

Through some statistics of the Discoms, it was estimated that 4 lakhs LED bulbs working at a 100% uptime could transfer a benefit of 191 million units in a year, i.e., roughly translated to a cost benefit of 275 million (as per current Andhra Pradesh rate of 1.45/ unit).

From economic and moralistic standpoint energy efficiency is one golden deer which we must pursue but importantly we should not lose the sight of implications and aftermaths the chase could lead to.

Better energy efficiency is a need of the hour for power undermined country like ours.

We must not forget that whole pandemonium of the show depends upon the uptime usage of the LED and the quantum of discount rate viz-a-viz the market price. The uptime of bulbs in India are hardly more than 6-8 hours which makes the time period for an 100% uptime extend by 3x.

India should be focusing on understanding the interplay of power pricing and the way it impacts its consumers. As long as the consumer feels that power is cheap and doesn’t take real chunk of consumer’s earning. It will be frittered away. This anomaly can be balanced by inducing carbon pricing in energy subsectors of consumption and energy usage, both in commercial as well as residential. Globally, we are slowly approaching the age of annulling all the externalities involved in the energy sector. Its time India should take this up seriously. The moment these factors start kicking in the prices of energy consumption will go up, leading up to the purchases of energy efficient equipment.

Opinion : Soyabeans, Washing machines and Pigs was a key reason for US China Trade War

Interestingly, we are only looking for a solution at the user end of the problem. Indian government should start addressing issues at the power generation, transportation and transfer level. We need to invest in upgrading our infrastructure by notches to match the international standards. India’s transmission facilities infrastructures are eons behind in terms of zero loss energy transmission capabilities and the new state of the art smart grid concepts. The 11^th 5 year plan intended to 62,000 MW capacity generation plan, but ended up 34,500 MW now put this in perspective of Duke Energy of US, which alone generates 58,000 MW or an EDF of France, ranked 4^th in utility companies of the world, whose 95.9 percent of the electricity output is CO2-free.

The economy and more importantly, the people should come forward and agree to take the issue head on. They should not be incentivized to use or replace bulbs and feel good about saving power. They should understand that the things in the world which are taken for granted are not meant to be.

The government should realize that the greatest cash cow of reforms is not always with the consumers but also at the generation and transmission level. And O’ boy, I haven’t started to talk about the dismal and appalling natural liquefied gas infrastructure. In the interest of reader’s attention, let’s make it another story. :)

The government should look at a level of parity to understand that the rates of return on its investment on the household sector of incentivizing the bulbs is so stark than the ROI it can experience in overhauling its dilapidated infrastructure. We have aging countries such as Japan who are ready to give out loans at throwaway rates, which can overhaul our infrastructure in 5-7 years. Given the interest which the world is showing in India, we should scoop the advantage of resorting to an FDI policy with a price control mechanisms in the power sector and cap the amount of revenues or investment a company could take out of the country for a period of 20 or 25 years.

A humble request to the government, Please do not give easy (cheap) power to people who do not understand the inherent value of it.

However, I would not like to end the piece without adding some positive facts about LED bulbs, to induce the corporates and the residential users to shift to LED.... So watch out for my next piece.

The manipulation of "The Dollar". A lesson for superpower administration.

One of the well known writers in the world of finance, argued that the recent outbreak of currency wars are the fault of the US. Now in this piece, I will put my best foot forward and try and analyse the situation. I am not brandishing my knife at anyone but am just putting down my 10 years of Global Markets understanding.

Lets talk about the most talked country's one of the most untalked topics.

Financially, the usage of Dollar has been executed with such perfection, so as to create a web where none of the economies can actually be detached from the green currency. Recently, it used one of its old tricks, Fed’s Quantitative Easing and other monetary growth programs create huge amounts of Dollars, and the majority of itto be exported to emerging market countries, like India in the form of loans and investments for development. The excess inflow puts upward pressure on their currencies, and the foreign speculators made speculative profit at the expense of domestic exporters. Obama's India visit would see some more of such plans being announced. Keep Watching...

The majority of newly printed money has indeed been shifted to emerging markets, where it enjoys one of the best returns and the highest potential for appreciation. The current economic and investing climate in the US is not as strong as in India. Indeed, this is why the (first) Quantitative Easing program was not very successful, and why the Fed has proposed a second round. While there is a bit of a chicken-and-egg story in the unvieling (does economic growth drive investing, or do investors drive economic growth?). US is harping these measures to propel growth in US,but if you watch minutely, the current capital flow trends suggest that any additional quantitative easing will also be felt primarily in emerging markets, rather than in the US.

While the ineffective of this measure is well-understood for the US investing community, a strong case is made for investing in emerging markets. Emerging market economies like (BRIC) are individually and collectively more robust, with faster growth and lower-debt than their industrialized counterparts in Europe and America.

The lucrativeness of these countries is driving speculative capital into emerging markets even though a critical currency appreciation of about 30% has already taken place and the asset bubbles that may be forming in their financial markets suggests that their assets and currencies are still undervalued. Please hold your horses, that does not mean the markets are perfect, but instead the speculators think that there is still money to be made in the situation. On the supply side, exchanges for the emerging market currency for Dollars (and Euros and Pounds and Yen) must necessarily accept the exchange rate they are offered. The rationale of the exchange rate is not decided from the fact that it is agreeable to all parties but because of the equilibrium it maintains in the demand and supply equation of world currency exchange.

Opinion : Thermal Power Energy Storage and Future Series 3

This occurrence unfairly penalizes the state of countries like India, whose economy is dependent on the export sector to drive growth. The situation actually proves that economies of the third world have no comparative advantage in the exports, they happen to produce and export. Low costs and loose laws are the only competitive advantage on which the third world countries should be dependent upon to grow their export sectors in spite of the currency appreciation phenomenon. Japan and Germany are an perfect example. They have recorded trade surpluses continuously for decades, in spite of the rising Euro and Yen for decades. But again you would ask me to explain India's Indian Rupee, and the answer is dead political will to deregulate laws and export shackles and too an extent sub-standard image in terms of product quality and marketing. I should do justice and give this subject its due space in form of another post.

The problem is that everyone benefits (in the short term) from the fundamental misalignment's in currency markets. Traders like to mock purchasing power parity, but over the long-term, this is what drives exchange rates. Adjusting for taxes, laws, and other peculiarities which distinguish one economy from another, prices in countries at comparable stages of development should converge over the long-term. You can see from The Economist’s Big Mac Index that this is largely the case. As emerging market economies develop, their prices will gradually rise both absolutely (due to inflation) and relatively (when measured against other currencies).

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