*michael parekh on IT*

ON A WHOLE NEW TYPE OF LAPTOP

DOUBLING UP

Listphobia has brought together 10 futuristic concept laptop designs in one place.  The one that most catches my attention is the first one, a design for a dual-screen laptop of sorts, by Canova.  Here's how they describe it:

Canova Dual Screen Laptop possesses two screens, a multi sensitive touch screen and is very easy to use.

Not only can it be used to handle your daily computing tasks but it also lets you read articles on your laptop in the old-school newspaper fashion.

Who knows, something like this, hopefully a bit thinner, and presumably at affordable mainstream prices, with inexpensive and ubiquitous wireless broadband, might even give the newspaper, book, magazine, and TV businesses a fighting chance in the future.

ON INDIA AFTER 26/11

NEXT PHASE

As one might expect, now that the immediate crisis in Mumbai is over, and authorities try and figure out who did what, why and how, the battle now shifts to the political front in India.  This Newsweek piece explains:

As India's security and intelligence forces work in the coming days to find the identity of the terrorists who attacked the country's financial capital, Indians in several states across the country will head for the polls to choose members of their state assemblies.

The states of Delhi and Mizoram hold elections on Saturday, Rajasthan in the northwest will vote on Dec. 4, and Jammu and Kashmir is holding an ongoing election through Dec. 24th.

These states, together with Chhattisgarh and Madhya Pradesh, which also polled this month, account for over 180 million of the country's 1.1 billion population.

Because the latest assault on Mumbai may have heightened fears among voters over their own safety, the politics of a considerable swath of the country could lurch rapidly to the right—with big implications for the growing tensions between Hindus and Muslims. These local elections could set the stage for a similar shift in national elections to be held sometime before May 2009.

The recent violence is a boon to the right-wing Hindu dominated Bharatiya Janata Party (BJP). Even before the latest violence, a series of blasts across the country claiming at least 200 lives this year had already helped the BJP, which has flagged terrorism as an issue in the campaign.

Even as the security forces battled the terrorists holed in Mumbai, the BJP had begun to use the opportunity to point to a weak government "soft" on terrorism. Frontpage newspaper adverts in Delhi on Friday, the day before the city goes to the polls, said the incident shows that the ruling Congress-led government is "unwilling and incapable" of dealing with terrorism. BJP leaders on the stump seized the opportunity. "There's an immediate reaction from people on the Mumbai siege, and the feedback has been very positive for the party," said a senior BJP member in Delhi to the Times of India. "Our challenge will be to convert this outrage into votes for the BJP."

Politics is the same everywhere, and what's occurring could have been anticipated, perhaps even by those who planned the assault.  By all indications, the attack which has been called India's 9/11, also seems to have a bit of India's Oklahoma, and a dramatically expanded and remorselessly executed India's Columbine.

Now, with the politics taking center stage, both domestic and international, this event could well pre-sage India's own endless, politically driven "War on Terror" fueled by the next phase of it's citizens, unbridled media-fueled anger.

ON AN UNUSUAL LONDON PROPERTY

SPRAWLING FIXER-UPPER

One of my favorite questions to ask real estate agents when visiting a new area is if there's an unusual property that's for sale that doesn't fit what most folks are in the market for.  Several times that question has resulted in my purchasing properties that were unexpected in scope and timing.

The same question could get an interesting answer in London currently.  This New York Times article explains:

"LONDON — For sale: a vast tunnel complex in central London. Former tenants include Britain’s secret service, the famous hot line between America and the Soviet Union during the cold war and 400 tons of government documents.

The asking price is $7.4 million.  After years of lying unused beneath the traffic-jammed streets of the city, the tunnel complex — one mile of underground corridors and adjacent rooms — is now for sale by the BT Group, Britain’s largest phone company.

BT hopes the site’s special features will attract buyers even as the property market above ground is going through its biggest downturn in decades."

The property does have water and electricity, along with a few rooms around the tunnels.  And there have been some inquiries:

An eclectic range of would-be buyers has asked about the space, including an overseas billionaire seeking a spot to hold his board meetings. Others who have expressed interest include those looking for a location for a wine collection, London’s police and local electricity companies, said Niall Gallagher, the realty agent at Farebrother Chartered Surveyors in charge of finding a suitable buyer."

It's not Mayfair or Knightbridge, but over time who knows...it may be.

ON DISAPPOINTING THE CRIMINALS IN MUMBAI

REACT DIFFERENT

The only thing to be thankful about almost 24 hours after the various attacks around Mumbai, India that the immediate crisis is about to be over. 
Most of the hostages seem to have been released from the Taj Hotel pictured here, although it's not entirely clear that the same can be said at the Oberoi hotel across town.  Here's where we stand for now, as outlined by the New York Times:

"Coordinated terrorist attacks struck the heart of Mumbai, India’s commercial capital, on Wednesday night, killing dozens in machine-gun and grenade assaults on at least two five-star hotels, the city’s largest train station, a Jewish center, a movie theater and a hospital.

Even by the standards of terrorism in India, which has suffered a rising number of attacks this year, the assaults were particularly brazen in scale and execution. The attackers used boats to reach the urban peninsula where they hit, and their targets were sites popular with tourists.

The Mumbai police said Thursday that the attacks killed at least 101 people and wounded at least 250. Guests who had escaped the hotels told television stations that the attackers were taking hostages, singling out Americans and Britons.

A previously unknown group claimed responsibility, though that claim could not be confirmed. It remained unclear whether there was any link to outside terrorist groups."

At some point, the immediate crisis will be over.  The dead and wounded will have been counted, and we will likely know a lot more of what happened and how it went down.
As someone who's spent a fair bit of time at most of the major venues that were hit, and who has family visiting Mumbai only a few miles away from them, I've spent a fair bit of time trying to as up to date on all the details (family and friends safe for now).
What's not entirely clear are the near and long-term implications of these events, both for India and the rest of the world.  We can do a little bit of guessing though.

1.  India will have a choice of whether to point the blame for the attacks to forces within or outside the country.  If it's the latter, it'll likely implicate it's long-term nemesis Pakistan, either overtly or covertly.  Geo-political tensions as a result may rise a bit as India and Pakistan engage in a bit more sabre-rattling, as they've done in the past.
2.  With over 150 million Muslims in India, one of the largest concentrations anywhere in the world, it'll be a challenge for the government to keep both Hindus and Muslims calm and cooperating in the coming months.  If the past is any guide, we'll likely witness some scattered ugly instances of Hindu/Muslim violence in other parts of the country.
3.  Various politicians in and outside India will also have a choice on whether to succumb to the relatively attractive merits of milking this event for it's obvious political benefits.  Again, if the past is any guide, most will go the route of grabbing the low-hanging political fruit for now.
4.  Travel by visitors to India will likely take a hit, as will some business and economic activity.  How much and how long this takes will of course depend on the decisive actions of authorities in India and abroad.
5.  Many sources of news and information, from CNN to Wikipedia to Twitter to IBN TV in India, will have their time in the sun.  Ratings, viewer-ship and audiences will expand in the short-term.
6.  Armchair digerati will again ooh and ahh over how the latest internet services were so ground-breaking again in changing the mainstream media landscape.  There'll be heated debates and discussions on this issue, with a number of folks getting all steamed up on either side of the issue.
These stories will be picked up by the afore-mentioned mainstream media and they'll continue to ooh and ahh over the emergence of "citizen journalism", and discuss the "implications" ad nauseum with various talking heads.

All of these and more possibilities can be expected in the coming days and weeks.  I for one will be thankful if we had a little bit less of item 6, and a lot more out-of-the-box positive efforts on items 1 through 5. 

We need to stop being amazed every time services like Twitter, Friendfeed, Tumblr or some other cool technology-driven service is useful in getting fresh and raw information to the most people in a crisis.   We just need to recognize that these are tools that do change the way things were done, and keep trying to figure out new ways to use them better. 

On a far more serious note, I'll also be thankful if the following also happened:

1.  That the Indian people don't allow their government to over-react to these reprehensible crimes designed to provoke anger and over-reaction amongst mainstream Indians, pitting Muslims against Hindus and Indians against Pakistanis.

2.  That Hindu and Muslim authorities come together in the wake of these tragic attacks and don't allow those who committed these crimes to drive a wedge between their communities, thus giving them exactly what they want.

3.  That the media in India maintains balance in it's coverage and doesn't allow the authorities to under-play the war on the underlying crimes here, and over-play the inevitable "war on terror" that'll become their rallying cry.

4.  That the media abroad focuses less on the crimes committed here against their citizens in Mumbai and focus more on the crimes committed against hundreds of civilians regardless of their nationality.  The crimes against specific nationals and religion seem to be more crimes of opportunity than pre-meditated attacks against foreign nationals.

5.  That businesses around the world keep these attacks in long-term perspective and don't over-react by diminishing their business travel and more important, their investments in India, thus playing directly into the designs of the perpetrators.

6.  That tourists don't allow these events to markedly color their perceptions of visiting India in the long-term.

7.  That we stop calling these crimes "terrorism", and focus on addressing the root causes that allows these criminals to continue to recruit members to their "cause".

All this is a lot to wish for I know, but hopefully some of it will come to pass, this time.

We need to start to learn from these reprehensible crimes when they occur anywhere in the world, and really try not to make the same mistakes again and again. 

The bad guys are counting on us to get angry and over-react. 

They're counting on us to help pit our communities against each other. 

They're counting on our over-reactions to create collateral damage that'll turn moderates into angry extremists that they can then recruit for future crimes, thus keeping the cycle going.

But most of all, they're counting on us to keep writing blank checks to our governments to protect us at any cost, especially our open societies and liberties.

Let's not do this again, this time.

Let's  break the chain of over-reaction, for all time.

Happy Thanksgiving Day all.

ON SALES TO BE THANKFUL FOR

WHAT A DEAL?

The Wall Street Journal has the right idea trying to come up with a list of gifts that don't cost that much but have a big impact.  Number 12 in the list of a dozen ideas is certainly a timely one this holiday season*:

"...Give actual shares of stock. You know how department stores sometimes have those neat "gifts under $10" sections?

The stock exchange has one too – and right now it's piled to the ceiling with famous brand-name equities. Citigroup, Time Warner, News Corp. (publisher of the Wall Street Journal), Macy's, Goodyear, CBS, Sun Microsystems, Starbucks, Nordstorm, Whole Foods, Royal Caribbean. They're all less than $10 a share."

At a time when almost one in five stocks in the S&P 500 are under $10, there are a lot more names to choose from...as CNBC reminded us a few days ago,

"Ten dollars is more than just a psychological barrier. Some institutional investors cannot invest in shares below $10 and some bond contracts require companies above that level.

Some other gloomy facts: only five S&P 500 companies had share prices of more than $100 on Wednesday.

So far this year, the S&P 500 has plunged 45 percent. It is now worth just over $7 trillion, the index's lowest collective market value in 11 years."

Talk about a Black Friday special to take advantage of on Thanksgiving week.

*Image Source.

ON A MUSICAL MILESTONE

STORM CLOUDS AHEAD

As someone who's followed the commercialization of the Internet for 15 years, it was good to finally see this milestone on a long road, well-described in this New York Times piece:

"Atlantic, a unit of Warner Music Group, says it has reached a milestone that no other major record label has hit: more than half of its music sales in the United States are now from digital products, like downloads on iTunes and ring tones for cellphones..."

It's bitter-sweet news for the industry with many clouds on the horizon*, as the article goes on to explain:

"With the milestone comes a sobering reality already familiar to newspapers and television producers. While digital delivery is becoming a bigger slice of the pie, the overall pie is shrinking fast. Analysts at Forrester Research estimate that music sales in the United States will decline to $9.2 billion in 2013, from $10.1 billion this year. That compares with $14.6 billion in 1999, according to the Recording Industry Association of America.

As a result, the hope that digital revenue will eventually compensate for declining sales of CDs — and usher in overall growth — have largely been dashed..."
"...In virtually all these corners of the media world, executives are fighting to hold onto as much of their old business as possible while transitioning to digital — a difficult process that NBC Universal’s chief executive, Jeff Zucker, has described as “trading analog dollars for digital pennies.”

A long way to go for many industries, with far less reward...but the benefits for consumers surpass the old way of doing things by a wide margin.  So in the larger scheme of things, it's generally a good thing.
*Image source.

ON A WHOLE NEW WAY TO LEND

EXTRA HELPINGS

The big headline today of course was the global market knee-jerk positive reaction to the Government's unprecedented $300 plus billion package to act as lender of last resort to Citigroup.  But perhaps another headline almost as important was this one from the Wall Street Journal, along with an excerpt of the story:

"Goldman's Massive Bond Sale goes well

Banks, brokers and other financial firms are poised to issue tens and possibly hundreds of billions of dollars in debt backed by the U.S. government, following the lead of Goldman Sachs Group Inc., which received strong interest from investors Monday for $2 billion to $3 billion in bonds it is issuing under a government program.

The Goldman bond offering is expected to be completed Tuesday and is the first major sale in the plan, which was designed to bolster financial firms by letting them borrow easily and cheaply by giving their debt a U.S. guarantee.

Citigroup Inc., General Electric Co. and other companies have signed up to sell bonds under the plan, which could help them resume lending to consumers and businesses and allow them to rebuild capital."

If this does come to pass, it'll go a long way to providing successful CPR* to a global economy seemingly on it's last breaths.  The advantage for the buyers of course is obvious:

"For investors, the bonds offer a free lunch -- they are backed by the government, just like Treasurys, but pay higher interest rates. The Goldman bonds, which mature in three years, are likely to yield about two percentage points more than three-year Treasury bonds, or around 3.5%. Goldman's outstanding debt trades at yields of 7% or higher."

It's as close to a free lunch many investors large or small are going to get this year.

*Image source.

ON THE PARADOX OF THRIFT

PARCHED LANDS

The cover story of the Economist has a story titled "All you need is Cash", and eloquently discusses how the modus operandi of efficient businesses around the world has turned so upside down so quickly of late:

"Barely a year ago, cash was a dangerous thing to accumulate: activist investors stalked companies, urging boards to return it to investors, to pay special dividends or to buy back shares.

Ever since the 1980s the fashion had been to make companies as lean as possible, outsourcing all but your core competencies, expanding your just-in-time supplier system around the globe, loading up with debt to “leverage” your balance-sheet.

Old-style defensive conglomerates, such as Arnold Weinstock’s General Electric Company, were dismantled. Companies that hoarded cash—even ones as good as Toyota and Microsoft—were viewed with suspicion.

No longer. For many big American companies, the day of reckoning came two months ago when the deepening financial crisis brought about the abrupt closure of the overnight commercial-paper market.

This briefly sent even the most solid companies into a desperate scramble to find money to meet such basic obligations as paying their staff. Since then, the guiding principle for managers everywhere has been to gather up whatever cash they can find, and then do their damnedest to keep as much of it as possible for as long as possible."

Very high commissions are paid to those who can secure cash, especially for financial institutions so desperately trying to raise some in the toughest of times.  Case in point is the hundreds of billions of Euros paid to several middlemen (and a middle-woman, Amanda Staveley), to secure billions of Euros for Britain's Barclays bank a few days ago:

"...Staveley’s PCP Capital Partners, a boutique advisory firm, acted for Sheikh Mansour Bin Zayed Al Nahyan, a member of the Abu Dhabi royal family. He is investing £3.5 billion and will control 16% of the bank.

For Staveley, 35, it marks the second big deal she has brokered in recent weeks. She also masterminded the takeover of Manchester City football club by the same sheikh. Her firm is thought to have banked £10m in commission for that deal.

PCP’s total commission will be £110m, but after paying other advisers it will make a £40m profit on the Barclays deal.

Staveley has put years into building the trust of Middle Eastern investors. It dates back to when she ran a restaurant in Newmarket and earned the respect of high-rolling racehorse owners, many of whom came from the Gulf states.

PCP is not the only adviser to have benefited from commissions. The other main investor, the Qatar Investment Authority, received a payment of some £120m, much of which will be shared among QIA officials. Barclays’ total fees will be £300m.

The scale of the payouts by Barclays is expected to further ignite tension with its investors since the terms of the £7 billion capital raising was announced on Friday."

The broader problem is well-summarized by the Economist in the following excerpt:

"This cash squeeze is a huge problem for the world economy, because as firms cut discretionary spending wherever they can, the result is likely to be a corporate version of what John Maynard Keynes called the “paradox of thrift”.

Every firm does what is prudent for itself, but by cutting its spending it slows down the economy still further and thus hurts everybody, including itself. This will only reinforce the need for expansionary monetary and fiscal policy (see article) to boost demand.."

There's no easy solution to this downward spiral, recognition of the problem at the mainstream level is probably the first step to the beginning of ending it.

ON SNAP-SHOTS, SNAP-DOWNS AND SNAP-BACKS

THE WAY WE ARE

Barron's is a must-read proposition for any financial industry professional every Saturday, and has been for a very long time. 

But given the global market and financial events in recent weeks, it may be need to be a must-read for more mainstream readers every now and then. 
This weekend's Barron's may be a good place to start, if one's looking for a snap-shot of where we are in the markets and the global economy and where we may yet have to go. 
Word of warning, most of the paper is doom-and-gloom. 

And while that may be good news for most wanna-be contrarians like yours truly, there are more than enough disparate data points to give pause to even the most sanguine of long-term optimists.
So in no particular order or priority, here's a sampling of some pieces, complete with their headlines and choice excerpts:

• "Rockier than 1929: 
  

  "Today's stock market is poised to surpass 1929's as the most volatile ever.

  Goldman Sachs derivatives strategists told clients on Friday that Standard & Poor's 500 three-month realized volatility is now 66%, surpassing levels of the 1987 crash and the economic malaise of the 1930s. Volatility now rests within striking distance of a moment in stock-market history that has defined financial crisis for almost 100 years."

• Does Extreme Stress signal an Economic snapback?: "...Another encouraging sign is the shrinking value of U.S. stocks relative to nominal U.S. gross domestic product. At the market peak in 2000, stocks were valued at twice the size of the economy, but the relationship has adjusted this year to an estimated 59%, well below the long-term average of 79%. To get back to 79%, the S&P 500 would have to rise 36%, to 1,090. The relationship got as low as 40% in the late 1940s, when investors feared another depression, and in the inflationary 1970s."
• Looking for the last refuge:  "
  

  "The new asset bubble is Treasury Bonds and T-Bills...

  All the world, however, is still eager to lend to one impecunious borrower: The U.S. Treasury has to beat away would-be lenders at every auction of U.S. debt.

  There are so many eager investors that last week the Treasury could pay less than a tenth of a percent per annum to borrow money for terms of one month and two months. The rate was a hair above 2% for five years' borrowing and a hair under 4% for 30 years'.

  We -- the world's investors and speculators -- are the clowns who create bubbles, and we are at it again. This time, cheap money is both the cause and the effect.

  If Treasury securities are assets at all, then Treasury bills and Treasury bonds are the new asset bubble. The U.S. Treasury is selling security -- return of capital -- and the world is as hungry for that product as it was hungry for energy a few months ago."

• Has the Fed Mortgaged it's own future?:
  

  "IF THE FEDERAL RESERVE BANK WERE A COMMERCIAL LENDER, it would be a candidate for receivership, based on its capital ratios. Bank examiners generally view any lender with a ratio below 2% to be dangerously undercapitalized. The Fed's current capital ratio, or capital as a percentage of assets, is 1.9%.

  The Fed has provided so many loans and emergency credits -- to banks, brokers, money funds and foreign countries -- that its balance sheet, viewed one way, is as leveraged as any hedge fund's: Its consolidated assets amount to 53 times capital. Only 11 months ago, its leverage on this basis was a more modest 25 times, and its capital ratio 4%. A caveat: Many of the loans are self-liquidating facilities that will disappear in a few months if the financial crisis eases.

  Although the Fed's role as a central bank is much different from the role of a private-sector operation, the drastic changes in the size and shape of its balance sheet worry even some long-time Fed officials. Its consolidated assets have swelled to $2.2 trillion from $915 billion in about 11 months, and contain at least a half-dozen items that weren't there before. Some, like a loan to backstop the purchase of a brokerage, Bear Stearns, are unprecedented. (See table for highlights.)"

• A Credit Default Solution: "Banks are very weak today mostly because they can't measure with any confidence the value of their assets and the extent of their liabilities associated with credit-default swaps, or CDS. Earlier this year, the total notional value of such unregulated derivatives exceeded $50 trillion, far more than even the central banks could guarantee. Until clarity emerges with regard to the value of banks' CDS holdings, the Fed's fix is unlikely to work, and lending won't resume."
• China makes a mark in trade: "Chinese President Hu Jintao. One can only hope the Democrats in Congress and President-elect Barack Obama understand the significance of his trip, which served to remind his hosts that the U.S. isn't the only trading partner in town. It might well become a lesser partner if it insists on forcing U.S. labor and environmental standards on other countries as part of any trade deals."

  "Hu initially touched down in San José, Costa Rica, on Nov. 16 for talks on free trade with President Oscar Arias Sanchez. Consider the contrasts: China has 1.3 billion citizens and gross domestic output of $7 trillion. Costa Rica has 4.2 million citizens and GDP of $46 billion. This was a meeting of Goliath and Tom Thumb, with Goliath making every effort to look Tom in the eye. In part, the gesture was Hu's way of thanking Costa Rica for establishing diplomatic ties with China in 2007, a blow to Taiwan. Mostly, it was salesmanship. Hu wants a larger share of trade with Costa Rica, whose No. 1 trading partner is the U.S."

These are just a handful of the pieces that gave me food for thought.

Being a long-term optimist at heart, I would like to point out a relevant post by my friend Paul Kedrosky, whose blog Infectious Greed, should be also be on one's regular reading list:

"Negative News Flow Peaks Late

Paul Kedrosky | Discuss (5)  

As the cascade of devastatingly awful economic news grows in volume, it’s worth reminding yourself that negative news flow is a lagging indicator. We are hearing about what has happened, in other words, not what will happen in the coming weeks and months -- and that has been awful (to the tenth or so power)..."

"...Now, does that mean that the market has discounted all the badness out there? Of course not. But things will improve on the economic ground, or least stabilize, long before it shows up in the headlines..."

Back to the subject at hand, the whole edition of Barron's this weekend is worth reading cover to cover.  Not for any one specific piece necessarily, but to get a broad snap-shot on where we are and how far we have to go...in both directions.

ON MAGRITTE REMEMBERED

NOW YOU SEE IT...

Trust Google to celebrate the birthday of Rene Magritte, one the iconic surrealist painters of the 20th century, and a personal favorite, with the stylized Google logo on the left.
The logo of course refers to Magritte's famous Son of Man (1964) painting, which is described in Wikipedia as:

"The Son of Man (French: Le fils de l'homme) is a 1964 painting by the Belgian surrealist painter René Magritte.

Magritte painted it as a self-portrait.

The painting consists of a man in a suit and a bowler hatsea and a cloudy sky. The man's face is largely obscured by a hovering green apple.

However, the man's left eye can be seen peeking over the edge of the apple. Another subtle feature is that the man's left arm appears to bend backwards at the elbow.

About the painting Magritte said,

"At least it hides the face partly. Well, so you have the apparent face, the apple, hiding the visible but hidden, the face of the person. It's something that happens constantly.

Everything we see hides another thing, we always want to see what is hidden by what we see. There is an interest in that which is hidden and which the visible does not show us.

This interest can take the form of a quite intense feeling, a sort of conflict, one might say, between the visible that is hidden and the visible that is present.^[1]"

One of my favorite twists on the Son of Man painting was in the classic 1999 remake of the Thomas Crown Affair starring Pierce Brosnan and Rene Russo. 
Thanks to YouTube, here's a clip of the roughly 7 minute heist at the movie's end, complete with great music by Nina Simone (spoiler alert of course if you haven't seen the movie, or plan to some time soon).
Great movie, and I'd also recommend the 1968 original with Steve McQueen and Faye Dunaway, another classic. 
Thanks Google for wishing a great painter a Happy Birthday.