*michael parekh on IT*

ON GOOD AND BAD FINANCE

PERSPECTIVE

The Economist makes an excellent point before starting out on a review of a new book on global finance:

"FINANCIAL history has been sliced in two: there is BC and AD—Before Crisis and After Disaster."

An excellent point indeed to keep in mind, especially as we contemplate the world past November of 2008.  The Economist goes on with it's review*:

"Any financial book conceived in far-off BC times would seem unlikely to be relevant in the AD era. But Martin Wolf’s “Fixing Global Finance” is an exception.
If Mr Wolf were to rewrite his book—a new edition is promised at some point—he would no doubt shift his emphasis. But his first run at the subject, which grew out of a series of lectures delivered in early 2006 and comes out in Britain later this month after being published in America last September, holds up remarkably well despite all that has happened.

Mr Wolf, chief economics commentator for the Financial Times, begins with a truth that is easy to forget: sophisticated finance does bring benefits. Finance allows the creation of vast enterprises out of the combined capital, supplied at modest cost, of millions of people.

It permits upstarts to launch companies, challenging the power of incumbents. It allows people to smooth their spending over a lifetime. It facilitates risk sharing and insurance. Empirical studies confirm that these advantages are real. Countries that had large financial sectors in 1960 grew faster over the next three decades than those that did not.

A doubling in the size of private credit in a developing country has been shown to boost the growth rate by an average of 2 percentage points a year. Developing countries that open their stock markets to foreign investors reap big benefits: output per worker grows by 2.3 percentage points faster than it would have done otherwise.

So financial sophistication is a boon. But it is also dangerous."

We now all to well how dangerous, and that story has not yet fully unfolded unfortunately.  But it is precisely at this time A.D. (after disaster), we need to keep in mind the benefits of "sophisticated finance".  May we see those benefits again some day, with of course the necessary precautions and oversights.

* Image source.

ON THE FUTURE OF MAGAZINES

NOT DONE YET

The head of Time magazine has some thoughts on the future of magazines in the digital age, as this MediaMemo piece describes:

"Ann Moore, who runs Time Warner’s (TWX) Time Inc. spent last fall overseeing a lengthy series of reorgs and layoffs. But she’s starting off this year on a better note: Yesterday she received a lifetime achievement award from the magazine industry’s trade group. Here’s an excerpt from the acceptance speech she delivered at the Magazine Publishers of America luncheon..."

"I’m grateful that the basic need for fact-based information will not go away. Good editors will be needed more–not less– in an age of too much information. The public will increasingly understand the need for fact-based reporting…because sketchy information can lead to trouble.

The fastest way to turn a college classroom on the subject is to remind them of the price they paid for the rumor of weapons of mass destruction. We have somehow failed to teach the millenials that trustworthy information is essential for the free markets to thrive…

This is not a new problem for society, by the way. Mark Twain complained, ‘a lie can travel half way around the world while the truth is putting on its shoes. ‘ Wouldn’t Twain be amazed that it can now travel almost at the speed of light?"

The whole interview is worth reading, if only for a good, contrarian view on today's conventional wisdom.

ON THE DISCOVERER OF ANTIMATTER

PURE GENIUS

This review of a new biography of theoretical physicist Paul Dirac by the Economist caught my attention, primarily by this line:

"He was quite probably the best British theoretical physicist since Isaac Newton."

And it gets better from there*:

"GENIUS is said to have two forms. There are ordinary geniuses, whose achievements one can imagine others might have emulated, so long as they worked extremely hard and had a dollop of luck.

Then there are extraordinary geniuses (Mark Kac, a mathematician, called them “magicians”) whose insights are so astonishing and run so counter to received wisdom that it is hard to imagine anyone else devising them.

Einstein was one such genius. Paul Dirac, whose equations predicted the existence of antimatter and who died in 1984, was another."

Paul Dirac won the Physics Nobel prize in 1933 for discovering antimatter. 

Which of course gave us the warp drive in Star Trek in 1966.  This biography goes on my reading list for February.

* Image source.

ON OFFLINE GMAIL

FINALLY
As a long time user of Google's Gmail, I was glad to see the company rolling out "Offline Gmail", even in a 0.1 beta stage.  This VentureBeat post gives some more background:

"In a huge move, Google is rolling out offline support for Gmail users, which means you’ll finally be able to read and write email even when you’re not connected to the web.

Jeez, I’ve been waiting a while for this one. And so have many others.

Even though Gmail adoption has been strong to date, it’s had to play catch up to other popular online-only email services like Hotmail and AOL. In part, it’s growth has been hampered by its inability to work offline.

This move essentially takes the shackles off Gmail, giving it the flexibility to match Microsoft’s flagship email service, Outlook — which lets millions of office workers and consumers check their email both online and offline. The big difference: Gmail is free. This is actually a major attack on Microsoft, because it wipes away one of the biggest technical deficiencies remaining in Gmail.

Yahoo Mail, meanwhile, is the world’s leading online email service. Gmail is just a fraction the size of Yahoo Mail, but this move could give people more incentive to switch.

A company spokesperson says users of Google’s business software package Google Apps will also be able to view their Calendar offline sometime in “the next couple of weeks.”

Google also has a short video clip how Offline Gmail should work:

Kudos to Google for finally rolling this out.  Looking forward to trying out Offline Gmail/Calendar and seeing them both mature.  Also hope Google gets around to adding this feature to Google Docs as well.

ON A TIMELY APPOINTMENT

NEW NY FED HEAD

Was encouraged to see this bit of news on the economic front, which is more than one can say on most days these days.  As the New York Times explains:

"Within the byzantine corridors of the Federal Reserve Bank of New York, William C. Dudley is a consummate insider. From his small office near rows of flickering trading screens, he has quietly orchestrated the central bank’s response to the crisis in the financial markets.

Now Mr. Dudley, an economist with a knack for reading the markets, is stepping into the spotlight as the Fed’s senior statesman on Wall Street. On Tuesday, Mr. Dudley, 56, was appointed to succeed Timothy L. Geithner, the new Treasury secretary, as president of the New York Fed.

Running the New York Fed, the most powerful of the 12 regional Fed banks, is a complex job in the best of times. But Mr. Dudley, 56, confronts challenges few of his predecessors faced. He must navigate a painful recession while leading the Fed’s sweeping efforts to stabilize the nation’s troubled financial industry.
Analysts said Mr. Dudley, a former chief economist at Goldman Sachs, is up to the task. At Goldman and at the Fed, he has forged strong relationships within the financial community and in Washington. Many praise his pragmatism."

As someone who's had an opportunity to work with Bill for a number of years at Goldman Sachs, I'll join in the praise.  It's good to see someone of his caliber appointed to this post in particular at this critical times.  Good luck, Bill.

ON INFOMERCIAL HEAVEN

HARD SALE

Thought it was my imagination, but this New York Times article confirms that there are more infomercials popping up on TV, more than ever before.  It's true especially in prime-time, on the major networks:

"It is a sign of just how bad the advertising market is: infomercials are running during network prime time, filling slots that automobiles and banks once owned..."

“The economy is the No. 1 focus for everyone, and it affects the advertisers and the rates,” said Pat Boos, the senior vice president for broadcast, acquisition and marketing at Direct Holdings Americas, which licenses the Time Life brand.

“When someone pulls off the air, like a pharmaceutical or medical company or a sports company, the networks sometimes find themselves with last-minute dead space,” she said. “We can come in and say, we’ve got a tape ready, we’ve got the product ready.”

But wait, there's more:

"Ms. Boos said that Time Life was running double the number of prime-time spots that it did a year ago. Networks try to avoid infomercial advertisers, because they pay “a fraction of what general advertising costs,” said Nancy Duitch, the chief executive of Vertical Branding, which runs infomercials for its products like the Steam Buddy and the Nicer Dicer. Although her rates vary, she said she often paid as little as 5 percent of what a general advertiser would.

Infomercials, or direct-response ads, promote a product that can be bought through a Web site or a phone number, often accompanied with blandishments like “but wait, there’s more!”

For networks, the challenge with infomercials is not their quality, but their price: infomercials qualify for much cheaper rates than regular commercials do.

In exchange for the lower prices, infomercial producers are given no guarantees about when their ads will run. The networks give priority of time to the full-price ads, which usually take up the slots during prime time and other popular times. When the networks cannot find advertisers to pay the premium time slots, they will use direct-response ads instead."

Guess this means we'd all better get used to seeing far fewer ads of shiny cars driving into the sunset, and far more of Billy Mays and his peers.

ON SULLY'S PERFORMANCE

BEFORE AND AFTER

That US Airways Captain Chesley "Sully" Sullenberger III and his crew turned in a heroic performance a few  days ago and saved over 150 souls is something we can all agree on. 

What's almost as incredible in the eyes of this observer is his humility after the heroic act. 

It's amazing that at least until now, Captain Sullenberger has not attempted to cash in on his very deserved 15 minutes of fame and tried to capitalize on it in some manner or another with the media.  It's certainly not been due to lack of opportunity. 

Everyone from President Obama to the mayor from his hometown has called and celebrated Sully's actions.  But it's been refreshing to see the low-key manner in which Captain Sullenberger has responded, as this brief speech at his homecoming in Danville, California illustrates:

"When it came time to speak, the tall, thin, gray-haired Sullenberger was a man of few words. He said it was "great to be here in Danville" and expressed his family's gratitude for the celebration. He made only a brief mention of the event that has won him worldwide fame.

"I know I speak for the entire crew when I tell you we were simply doing the jobs we were trained to do," Sullenberger said in a strong, clear voice. "Thank you."
With that, he sat down, and the crowd again erupted."

Bravo, Captain Sullenberger, bravo.  For both amazing performances.

ON PAKISTAN AND MEXICO

GROWING FROM WITHIN

The New York Times has an eye-opening article outlining how the Taliban is making substantial inroads into mainstream Pakistan, specifically in the region of Swat, a region the size of Delaware.  Here's an excerpt:

"International attention remains fixed on the Taliban’s hold on Pakistan’s semiautonomous tribal areas, from where they launch attacks on American forces in Afghanistan. But for Pakistan, the loss of the Swat Valley could prove just as devastating.

Unlike the fringe tribal areas, Swat, a Delaware-size chunk of territory with 1.3 million residents and a rich cultural history, is part of Pakistan proper, within reach of Peshawar, Rawalpindi and Islamabad, the capital.

After more than a year of fighting, virtually all of it is now under Taliban control, marking the militants’ farthest advance eastward into Pakistan’s so-called settled areas, residents and government officials from the region say.

With the increasing consolidation of their power, the Taliban have taken a sizable bite out of the nation. And they are enforcing a strict interpretation of Islam with cruelty, bringing public beheadings, assassinations, social and cultural repression and persecution of women to what was once an independent, relatively secular region, dotted with ski resorts and fruit orchards and known for its dancing girls."

The piece goes on to add:

"Last year, 70 police officers were beheaded, shot or otherwise slain in Swat, and 150 wounded, said Malik Naveed Khan, the police inspector general for the North-West Frontier Province.

The police have become so afraid that many officers have put advertisements in newspapers renouncing their jobs so the Taliban will not kill them.

One who stayed on the job was Farooq Khan, a midlevel officer in Mingora, the valley’s largest city, where decapitated bodies of policemen and other victims routinely surface. Last month, he was shopping there when two men on a motorcycle sprayed him with gunfire, killing him in broad daylight.

“He always said, ‘I have to stay here and defend our home,’ ” recalled his brother, Wajid Ali Khan, a Swat native and the province’s minister for environment, as he passed around a cellphone with Farooq’s picture.

In the view of analysts, the growing nightmare in Swat is a capsule of the country’s problems: an ineffectual and unresponsive civilian government, coupled with military and security forces that, in the view of furious residents, have willingly allowed the militants to spread terror deep into Pakistan.

The crisis has become a critical test for the government of the civilian president, Asif Ali Zardari, and for a security apparatus whose loyalties, many Pakistanis say, remain in question."

The whole situation is eerily similar to what's going on in Mexico, where drug cartels have effectively terrorized and as a practical matter, taken over several mainstream regions of Mexico, with the loyalties of many in the central government in question.
Both countries were recently highlighted by the Pentagon has being critical countries to watch in 2009, as this report outlines:

"Mexico and Pakistan are at risk of a "rapid and sudden collapse," according to a recent report from the U.S. Joint Forces Command..."

"In terms of worst-case scenarios for the Joint Force and indeed the world, two large and important states bear consideration for a rapid and sudden collapse: Pakistan and Mexico," the report says.

A spokeswoman for the U.S. Joint Forces Command said the latest assessment was likely written before the Mumbai attacks which further inflamed tensions in South Asia.

The Joint Operating Environment report, meant to examine worldwide security trends, says Pakistan, in the event of such a rapid collapse, would be susceptible to a "violent and bloody civil and sectarian war" made more dangerous by concerns over the country's nuclear arsenal.

The report says that "perfect storm of uncertainty" by itself might require U.S. engagement."

In both cases, it's unclear what the U.S. can effectively do without exacerbating the situation.  But in both cases it's clear that what happens in these countries matters to both the U.S. and the rest of the world.

ON INDIA WITHIN AND WITHOUT

GLOBAL CATALYSTS

The UK's Guardian addresses the debate that's been developing around the movie "Slumdog Millionaire", and discussed in my post a few days ago:

"After its rapturous reception in Britain and America, knives are being sharpened for Slumdog Millionaire. "Vile," is how Alice Miles described the movie in The Times. "Slumdog Millionaire is poverty porn" that invites the viewer to enjoy the miseries it depicts, she adds.

Even that old iconic Bollywood blusterer, Amitabh Bachchan, has thrown his empty-headed two rupees' worth into the mix. "If Slumdog Millionaire projects India as a third-world, dirty, underbelly developing nation and causes pain and disgust among nationalists and patriots, let it be known that a murky underbelly exists and thrives even in the most developed nations," he bellowed. "It's just that the Slumdog Millionaire idea, authored by an Indian and conceived and cinematically put together by a westerner, gets creative global recognition," he added.

Bachchan is no doubt riled, as many other Bollywood no-talents will be, about the fact that the best film to be made about India in recent times has been made by a white man, Danny Boyle. Just as Spike Lee got hissy with Quentin Tarantino after he proved he could make hipper films about black people than Lee could (Lee ostentatiously criticised Tarantino's use of the word "nigger" while littering his own films with the same language), so many Indians will be upset about a westerner having a better understanding of their country than they do."

The piece goes on to give a rationale for why this state of affairs may have come to pass:

"The bitter truth is, Slumdog Millionaire could only have been made by westerners. The talent exists in India for such movies: much of it, like the brilliant actor Irrfan Khan, contributed to this film. But Bollywood producers, fixated with making flimsy films about the lives of the middle class, will never throw their weight behind such projects. Like Bachchan, they are too blind to what India really is to deal with it. Poor Indians, like those in Slumdog, do not constitute India's "murky underbelly" as Bachchan moronically describes them. They, in fact, are the nation. Over 80% of Indians live on less than $2.50 (£1.70) a day; 40% on less than $1.25. A third of the world's poorest people are Indian, as are 40% of all malnourished children. In Mumbai alone, 2.6 million children live on the street or in slums, and 400,000 work in prostitution. But these people are absent from mainstream Bollywood cinema.

Bachchan's blinkered comments prove how hopelessly blind he and most of Bollywood are to the reality of India and how wholly incapable they are of making films that can address it. Instead, they produce worthless trash like Jaane Tu, Rock On!! and Love Story 2050, full of affluent young Indians desperately, and mostly idiotically, trying to look cool and modern.

Slumdog Millionaire is based on the novel, Q&A, by Vikas Swarup. I know Vikas – an Indian diplomat, he loves his country as much as anyone and did it the service of telling its truth with great warmth and humanity. And Danny Boyle's film continues in precisely the same vein. His innovative brilliance, fresh perspective and foreign money was vital. As an outsider, he saw the truth that middle-class Indians are too often inured to: that countless people exist in conditions close to hell yet maintain a breath-taking exuberance, dignity and decency."

It's an important point to keep in mind about India in matters far beyond movies made about India by Indians or foreigners.
India is still a developing country, with only a 2 to 300 million of it's 1.1 billion souls living a middle-class or better life.  Most people in India do not yet have access to clean water.
A couple of days ago my friend Rajesh Jain had a post on his blog wondering when India would be able to get it's own Obama and a government that would pro-actively address the many issues and opportunities ahead for the country.  A comment by one of his readers, Antariksh Patel, hit home:

"Indians who watched the swearing in of Obama or who use technology consist only a fraction of the population. ultimately, its the rural India that's going to decide who’s gonna rule for next 5 yrs, just like last time. and while voting, rural India considers Bijli, Paani, Sadak and also cast and creed. educating them is the only solution to allow them to think beyond petty politics."

Antariskh is referring to electricity, water and roads with his comment on "bijli, paani and sadak", and it'd be a great start to addres those infrastructure issues head-on for India to go the next level.  China has long started to do this and is accelerating efforts with it's recent commitment to infrastructure spending to address the global downturn.
India's politicians, be they Obamaesque or not, have an opportunity to really step up to the plate as well. 
But in the meantime, Indians will do what they did with the India outsourcing miracle (Satyam notwithstanding).  They created global opportunities for themselves not because of their government, but despite them. 
Coming back to Indian movies, "Slumdog Millionaire" is just an example of a movie about India getting global recognition not just because of the Bollywood establishment, but despite them. 

ON SOME GOOD NEWS FOR MICROSOFT

COMING SOON...

Now that Windows 7, Microsoft's follow-on to Vista has been available in beta form for a short while, the technical reviews are coming in, including this one by the WSJ's Walter Mossberg.  His title says it all:

"Even in Test form, Windows 7 leaves Vista in the dust."

He goes on to elaborate:

"This will be a big year for new operating systems. Apple plans a new version of its Macintosh operating system, to be called Snow Leopard. Palm plans an all-new smart phone operating system called Palm WebOS. But the new release that will affect more users than any other will be Windows 7, the latest major edition of Microsoft's dominant platform.

Microsoft hasn't announced an official release date for Windows 7, but I would be surprised if it wasn't available to consumers by this fall..."
"...Still, even in its preliminary form, Windows 7 looks very promising, and could well help expunge the bad reputation of Vista."

The review provides lot of detailed comparisons between the two operating systems, and is worth a full read.  A more technical comparison of not just Windows 7 and Vista, but also Windows XP, can be found in Infoworld's review, which summarizes the whole thing well in this excerpt:

"Windows 7 seems to be many things to many different people. To the enthusiast crowd, it's the cool new OS of the moment, the one that will fix all of Vista's ills and make the world right again. To desperate IT planners, it's a potential "third way" out of their current XP-versus-Vista predicament. But for the rest of us (that is, veteran Windows users who can see through the hype), Windows 7 is really just Windows Vista with some performance tweaks and an updated Explorer shell. It's a modest update that may or may not swing the public-perception pendulum back in Microsoft's favor."

And that should be good news for Windows users, starting this fall.