Is The United States Going To Have Another Golden Age ?

During the last fifty years or so, there have been at least  three periods when the world's crystal ball gazers ( including some of the Americans themselves ) have been writing about the decline about the United States.This time after visiting New York after almost two years since  my last visit in October 2011, I am even more convinced that these naysayers are wrong.  United States is going to have another golden period similar to the fifties and sixties, driven by its shale oil and gas and its new manufacturing techniques. 

The first time every one was talking about America's decline was in the early seventies when oil prices shot up from about three dollars to twelve dollars.This combined with President Jimmy Carter's fiasco in Tehran convinced everyone that it was the beginning of the end of America not just as economic power but as a super power. That was not the case. It restructured and bounced back.

Then in the late eighties the world started speculating that Japan was going to take over as the world largest economy. The Japanese banks and companies market values shot through the roof . The far sighted Americans insisted  their children study Japanese. The world oohed and aah-ed about Japanese manufacturing technique and its just in time logistics. Looking back you would think how could the world have believed that this tiny nation without any natural resources, which had lost a war a few decades earlier could be the cock of the hill, but it was the general feeling. However that feel good feeling for the Japanese lasted about a decade.

The new century saw the emergence of another burgeoning world economic power,China. This was a more plausible candidate considering a couple of century ago they were the world's largest economy. While it is too early too start speculating that it too will follow the Japanese path, what is interesting to see that towards the end of the first decade of the new century, the Chinese state owned companies were among the world's largest . Now five years later, nine out of the top ten world companies are again  American. Among the fifty largest companies in the world more than fifty percent are American.As has been written often enough the Chinese , in spite of its large population will have the same greying population. The leaders have been aware of this for some time , but appear to be unwilling to change their one child population. If this continues they will face the same issues as the Japanese where there will be a  relatively smaller percentage of the population supporting the older generation.The difference is the Japanese will be wealthier on a individual basis than the Chinese even if the Chinese economies overtakes the United States.

Over the last five years the dynamics of the American economy seem to be undergoing  a once in a lifetime change. After almost sixty years it has become energy independent. While New York might not be truly reflective of mainstream America, during my recent visit to New York it seemed that more than fifty  percent of the vehicles on the road were either SUV's, vans or large limousines. Apparently some of the trucking companies have started switching to gas to fuel their fleets. I would assume that it is a matter of time before the car manufacturers start churning out cars running on natural gas as well.

 At the risk of repeating what I had said two years ago, the cheap energy is pulling back  not just some of the energy intensive industries such as fertilizers, steel, but according to the  Boston Consulting Group, other basic industries such as toys,automobile parts, bags and utensils. The increase in Chinese labor cost is pushing the re-shoring of the manufacturing back to America.

In addition with the economic situation stabilizing in Mexico, it together with the United States and Canada will be the largest free trade zone in the world. With Mexico providing the cheap labor,Canada and the US cheap energy, its  market for the products will once again provide  the economic engine for the rest of the world.The latest immigration statistics from Mexico shows that the immigration from and to the United States is balanced.

The above  together with its academic infrastructure and its  impending immigration policies welcoming students with background in Science, Technology, Engineering, and Mathematics, will add to the further inflows of the best and the  brightest from around the world.

Finally the  catalyst to the growth is the availability of capital like no other in the world. The capital markets in the United States has deep pockets catering to different types of risks, funding social ventures.While the Wikipedia still ranks London as the top financial center, the Huffington Post quotes a study commissioned by the City of London and carried out by A/Yen Group,which ranks  New York as  number one.In my personal opinion, it  will be some time before London regains its top spot,if ever. 

In the meantime while the Republicans and the Democrats continue  their  one up-man ship, guised under political ideology, it is still the world's premier safe haven.United States Treasury securities continue to be the largest holdings of almost all  the reserves of sovereign nations.

With this capital flow combined with the change in reduction of oil imports and  manufactured goods,together with increased exports, and inflow of money finding a safe home,  I would be betting on the American economy and the dollar in the long term.


New York Random Observations - September 2013


This time again I spent about two weeks in New York, of which I spent almost five days in bed due to an infection. However during  the remaining period I walked the streets, read the newspapers, and generally observed New York, New York !!  While I have always been a huge fan of London, I am in the process of switching my loyalties to New York.Perhaps this subliminally switching is happening  because my daughter lives there and  I have not been to London for a few years, but I think it is more than that.

New York is booming . The streets, the restaurants, the stores, the museums, the supermarkets were all as crowded as last time.Tickets to the Broadway shows were almost impossible to get unless you had booked weeks in advance. The Apple store was as full as last time. I do not think there is any city in the world has as many eating places or the variety of cuisines as New York. Hong Kong might match in restaurants per capita but not in terms of variety. As an example one evening some friends decided to get some take away from a Pakistani restaurant. Since my friend was raving about the food, I decided to go along. Putting my hand on my heart, I could say that if you moved that entire place, including the clientele,  to a trucking stop in Punjab, India, it would fit right in. You would not have to make any change.  The only thing which would stand out would be one of  the Hispanic "chef", but even he could be mistaken for a north east Indian. In my personal opinion London falls behind.

On the real estate front having lagged behind other international cities such as London, Hong Kong, Singapore etc, on a relative basis , New York ( particularly Manhattan, and neighboring Brooklyn) is making up for lost time. Apartments put up for sale , particularly condominiums receive bids substantially more the asking price. Bidders are ready to pay cash rather than it be subject to availability of mortgage for fear of getting gazumped.In some parts of the city , prices appear to  have gone up almost twenty-thirty percent  in the last twelve to eighteen months. Put your money in New York !!



The above is based on my observations as a lay man without any serious research expect for reading newspapers and an occasional stab at Wikipedia. I last visited New York almost two years ago in October 2011.After my visits I wrote two blogs based on my observations.( See (1)  http://avib-randomthoughts.blogspot.in/2011/12/rumors-about-slow-death-of-united.html (2) http://avib-randomthoughts.blogspot.in/2011/11/new-york-random-observations.html )

You Dont Always Get What You Want !!!

In my blog of September 15th,2011, I had said "Be careful what you wished for " about the Middle- East.(http://avib-randomthoughts.blogspot.in/2011/09/be-careful-what-you-wish-for.html).

The West had always wanted change in that region. Now that change has come, perhaps this is not what they had anticipated. Unfortunately the real world rarely  works according to the plans laid out by America's political strategists.While some of the countries have been able to remove their dictators, they have been left  with anarchy and chaos.

Iraq has an elected government, but continues to be riven by sectarian violence, between  different religious groups and other vested interests. Libya is in a state of confusion. In Syria you have  had civil war for over  a year. Dislodging Assad has not been as simple a task as expected. There is no unified opposition. Assad is supported by his tribe members, the Hizbollah and  Iran, not to mention political support from Russia ( with arms ) and China. At of now, Assad seems far from ready to throw in the towel. If he survives, he is going to remember who his friends and foes were and could  retaliate.

Egypt might have gotten rid of Hosni Mubarak, but the elected government headed by the Muslim Brotherhood tried to enforce their grip too soon, and scared off the more secular sections of the populace, providing an opportunity for the Army to step in once again "in order to provide stability ". Daily killings  of hundreds of people are being reported, but the Muslim Brotherhood supporters are not backing off . How long this stalemate is going to last is unknown. In the meantime the West is wringing its hands, not knowing what to do. They wanted democracy. The country had free elections, however the party which came into power was not to their liking. Now they are back to square one again with the army in control. Do you get a feeling of  déjà vu ?


While most of the royal states have wisely kept their heads down, there are a few wealthy ones taking sides. They seem to  be treading on dangerous grounds. In the medium and long term, depending on how the cards stack up,there  could be  a back lash and you could have a situation when the Islamist's turn on them. The US has in the last few years become  less dependent on oil imports ( see my blog of September 2011 http://avib-randomthoughts.blogspot.in/2011/09/back-to-future.html ), and will have to decide which allies it is going to support with boots on the ground. The rest will have to fend for themselves. Do not be surprised if you see  more democratic countries emerging over the next couple of decades, after an initial period of turmoil. There is also the likelihood of further  sectarian violence as  the dominant sects  in some of these countries  play a repressive role  supported by their counterparts in Saudi Arabia, Turkey, Egypt, Iran and Iraq.

Over the next decade or so you will have countries in the  Middle East in a state of turmoil. Will it impact the oil prices ? Much  less than it would have a few years ago. Keep watching this space. 

America vs. India

I was just viewing the latest issue of the Economist ( August 10th)on my I phone, and looked at the section on The United States. Of the seven headers, except for one, I was amazed about how both countries were dealing with similar issues.

The first  "No  speaks", had a sub-heading of " Barrack Obama's patience runs short " and continued to talk about whether America can do business with Vladimir Putin ? Sounds like India's relationship with Pakistan , particularly with the recent killing by the Pakistan soldiers.Every time the Pakistan politicians make noises about wanting to mend fences, the Army puts a spanner in the works to make sure it does not happen.

The second "Just a little local difficulty " talks about the sexual misbehavior and the questionable business transactions by the Mayor of San Diego. You could pick many our local Municipal Corporation Heads or even the Chief Ministers and you probably would be able to levy the same charges.

"Gifts galore", the third one talks about the Governor of Virginia accepting gifts from some questionable corporate head and that it was small beer compared to the corruption of  the governors of Illinois and Louisiana, who were serving jail time. The only difference in India is that none of the Chief Ministers would  be charged, leave alone serve time.

"No play , no pay", talks about the financial mess  the state of  Illinois is, with large unfunded pension liabilities among other things. In India present liabilities ( budget deficits ) does not prevent the Chief Ministers from handing out free electricity to farmers , free lap tops to students,subsidies for gas used for home cooking which is used primarily in the urban areas.

"We will get them next year" is about the rampant drug use in baseball. While there have been no incidents of drug use among Indian cricketers, the match fixing and misuse of the sporting bodies, continues to be a problem.

"Keeping the mighty honest" writes about how the concern that " the new wave of press barons should not allow newspapers to become niche products". India is one of the few countries where newspaper circulation continues to increase. However a few years ago, taped telephone conversations revealed the close nexus between prominent journalists and the politicians, and how mutual back scratching helped each other out.


 Is it any wonder that Indian do well in the United States ?
 

The Supreme Court Broom Cleans Up The Legislature

On July 3rd a bench of The Supreme Court of India decided that it was unconstitutional for  Members of Parliament and Members of Legislative Assembly at the state level to continue as lawmakers, and that they should be immediately barred from attending the House.

You would have thought that this was a oxymoron that a law breaker would be setting in the Assembly making laws, when he or she is convicted.However  in 1951, when Jawahar Lal Nehru was the first Prime Minister,  the lawmakers decided to include a clause,Section 8 (4) of the Representation of the People Act that allowed convicted lawmakers to continue  attending,  provided they filed an appeal  to the higher court within three months to get a stay of the conviction. As a result you had a situation where according to the Financial Times, you had 162 out of the 543 elected Members of Parliament had criminal cases against them. Similarly according to the Press Trust of India at the state legislative level you had 1,258 out of 4,032 sitting lawmaker facing criminal cases, roughly about 30 percent.

 According to the Economic Times of July 14-20,2013details of the cases against our so called "leaders" are as follows:

1460 MPs & MlAs who have declared criminal cases against themselves in their affidavits submitted against themselves.

688 MPs & MLAs who have declared serious criminal cases against themselves

162 Lok Sabha MPs who face criminal cases

1,258 MLAs from all states assemblies who face criminal cases

74% share of MLAs of 2009 Jharkhand Assembly who face criminal cases , the highest in the country

31% share of MPs & MlAs or the Bharatia Janata Party who face criminal cases

 21%share of Congress MPs &  MLAs who face criminal cases

A concern is now being raised by the politicians that frivolous cases may be filed against them in friendly courts which would lead to their disbarment. Perhaps the lawmakers will now  better appreciate how the common public feels when they are faced by intimidation by the bureaucrats and  cases linger on for decades.

Hopefully the Supreme Court broom will continue on its mission to clean up the politics of the  country.

Does Urbanisation End Discrimination ?

Two recent reads made me think again how the United States and India are similar. " The Warmth of Other Suns" by Isabel Wilkerson which won the numerous awards ,is a fascinating book which tracks a few African Americans  who migrated from America's deep south to New York, Chicago and Los Angeles. Most of them were bright and educated but had to flee because of a lack of opportunities and constantly fearing fearing for their lives from the whites.  The other read was a  news item in the Hindu newspaper of June 24th, which mentioned about a boy from a lower caste who had passed the entrance examination for the Indian Institute of Technology- which has a lower acceptance rate than MIT or Harvard. The article quoted him as saying  “I am the only one in my neighborhood to study this far, but no one knows that I have cleared the IIT entrance. I have not made it known in my village, as life would be made difficult for me and my family by persons from the dominant caste " In both cases the superior " caste" wanted to ensure its economic status was not threatened even if it meant resorting to life threatening violence.

The race discrimination in America did not end with the Civil War when the slaves were emancipated. It took another century for it to formally end through legislation and through non-violent means. However prior to that with the growing urban developments of manufacturing and business hubs on the Northeast, West Coast and the Midwest, the smart , talented, educated and gifted blacks were provided an opportunity  to move to the cities where they were able to live free from fear. From the early 1900's to the 1970's approximately seven million blacks moved out of the South. While not totally free from discrimination, they were able to pursue jobs and careers which helped them climb the economic ladder. The case studies from the book track the life of a doctor, a train conductor and factory worker, and how they ended up with a better life than if they had stayed on in Mississippi or Florida or in other Southern States.

If Hitler had won the war we would have witnessed a global race/caste system in place with the "Aryans" at the top.In India, centuries ago some one with a similar mind set set up a caste system which still exists today.
There is a pyramid of castes with the Brahmins ( or the priestly caste) right at the top, followed by the Kshatriyas ( rulers/warriors), Vaisyas ( traders/merchants),Sudras (unskilled worker) and the Pariah/Dalits/Harijans ( untouchables) being at the bottom of the heap. According to a National Geographic article there were about 160 million " untouchables" in India. The discrimination they faced was no less  than that of the blacks in America. They lived and to some extent still do, " in constant fear of being publicly humiliated, paraded naked, beaten, and raped with impunity by upper-caste Hindus seeking to keep them in their place. Merely walking through an upper-caste neighborhood is a life-threatening offense". This occurs despite  the fact that untouchability is banned in India's constitution.

In a pattern similar to that of the United States, partly with the equivalent of the affirmative actions implemented by the government,  the smarter of the untouchables  like the successful IIT entrant , are using education to move out of the villages  to cities.With the growing urbanization , which has picked up pace over the last two decades and is likely to accelerate, there is starting to be a gradual shift of the "untouchables" to the urban areas where  discrimination is less of an issue. This in turn is leading to a shortage of cheap labor in the rural areas, where the upper caste is now forced to work in the fields, or pay the lower caste a higher salary and treat them with respect.

In America it took another fifty years after the legislation was passed  for an African American to be elected President, although some would argue that discrimination is not totally dead. In India even though  we have had a President K R Narayanan , a Dalit from Kerala , who served in the Indian Foreign Service,  discrimination  is still a problem, particularly in the rural areas. This after almost 50 years of  independence. Hopefully now as the country goes through rapid urbanization, we will see the decline of caste discrimination.

The Armidillo Indian

Indians are universally known  to be argumentative. Amartya Sen the Noble Prize winner has written a book called The Argumentative Indian.Since Independence we seem to have gone through a evolutionary process through which we have physically developed a thick skin where all criticism, insults , ridicule just bounce off . As a result , it would perhaps be appropriate to classify such Indians as the Armadillo Indian.

Leading the pack are the politicians. Over the last five years, almost every week, the print media and the twenty four television new channels  have been full of the scandal of the week. They are  about politicians caught womanising ( a mid- eighties figure with three women in bed),politicians  caught on tape having sexual relations, politicians and bureaucrats flashed across screens accepting money or  inciting riots. Yet when confronted, they  blandly deny that it was them, that the tapes have been doctored or they have been mis-quoted. The media plays it up for a few days and then drops it . The politicians continue as if nothing has happened.

Unfortunately it is not just limited to the politicians. Of late sport administrators ( who probably have never played any sport in their lives ,but now control all sporting associations ) in addition to politicians ,including  former bureaucrats, influential business men, all seem to have developed a armadillo type leathery armor shell. The Commonwealth Games threw up its fair share of administrators ,who in spite of intense coverage and actually spending time in jail, refused to resign .

The latest is  the head of the cricket administration  for India , which has a strong influence on cricket world wide, now refusing to resign. This in spite of the intense coverage in print and television and people from all walks of life asking him to go. The executive committee members which include prominent politicians who do not hesitate to cast personal insults and demand the resignation of the Prime Minister, kept quiet. They then say that the best solution was to  gently nudge the individual concerned to temporarily step aside for a short period. The interim administrator who  has been brought back in to manage the shop was apparently  previously expelled from the cricket board for embezzlement.

This reminds me of a scandal from the sixties in the United Kingdom. The then British Secretary of  State for War, John Profumo  was named in a sex scandal.. While he initially tried to brazen it out, he ultimately resigned. According to Wikipedia , he then spent the next few decades cleaning toilets at Tonybee Hall , a charity in East End of London He was ultimately rehabilitated and recognized.

I wonder how many of our politicians, bureaucrats, business men would voluntarily suffer such a penance ?
Probably none,because their armadillo shell ensures that all criticism just bounces off and nothing affects them.  

Will The Elephant Dance With The Dragon And The Lion (Tiger) In The Year Of The Snake ?

April was a good month for India from a neighborly relationship point of view. Its two difficult neighbors both went through a change of governments.  In China  after a  decade, a change of leaders happened in late 2012. Xi Jinping was elected as President and Li Keqiang  as Prime Minister. In Pakistan for the first time in its history, a duly elected government served its full term and a new Prime Minister Nawaz Sharif was elected. Will this mean that India's relationship with China and Pakistan turn over a new leaf ? The initial signs seem encouraging.

Li Keqiqng  made India his  first overseas stop. Apparently this is to stress the importance which China lays on its relationship with its giant neighbor. Li had previously been to India as part of a youth delegation and had pleasant memories. Unlike other Chinese leaders ( and our own Prime Minister ) Prime Minister Li  came across as approachable, and made an effort to cultivate the Indians and the media. He said all the right things, about wanting to expand the relationships between the two ancient civilizations. At the same time he acknowledged that history had left behind certain issues which had to be dealt with.

On the other side of the border, the newly elected Nawaz Sharif during his election campaign and after, spoke repeatedly about his desire to improve Pakistan's relationship with India. The Indian Prime Minister Manmmohan Singh suitably  blew him  kisses across the border. Ironically, Nawaz Sharif family was from the Amritsar district and went across the border. Manmohan Singh's family on the other hand came across from Pakistan and settled in Amritsar.

While friendly comments are made by all parties, there are skeptics in India with long memories  who would advise Manmohan Singh to tread with caution. Just about a month before Li's visit, a contingent of the  Peoples Liberation Army  crossed  eighteen kilometers  into Indian territory, pitched their tents and refused to go back. They finally did  just a few days before the Prime Minister's visit and after India apparently  dismantled " a few tin sheds". Inexplicably the Indian External Affairs Minister Salman Khurshid made some comments comparing India to Muhamad Ali - I assume  in its ability to " float like a butterfly and sting like a bee." Will the lumbering elephant be able to float like a butterfly ?However in  the sixties, while the Indian Prime Minister was chanting Hindi-Chini bhai bhai, it was the dragon who flew across and landed  a knock out  punch to the elephant.

Similarly Prime Minister Vajpayee visited Pakistan and had a love fest with  Prime Minister Nawaz Sharif. In the mean time unbeknownst to Sharif, the Pakistan Army Chief then decided to launch a military expedition against India which almost brought both countries to war.

Will all these positive noises now being  made by India's neighbor lead to better relationships ? Tongue in cheek, and perhaps stretching an analogy, I would say it might be possible.India's birth as a Republic was on the Twenty Sixth of January which was the Year of the Ox.. According to the Chinese Zodiac signs those born under the OX sign will have a good year in the Year of the Snake. So perhaps this will be the year where India's neighbors will make more of an effort to develop a broader relationship with us.Certainly based on previous responses there will be no hesitation on Prime Minister Manmohan Singh's part .This is the only remaining chance for him to leave behind a positive legacy and at least be remembered as the person who made peace with Pakistan and China. That itself would be quite an achievement and who knows might yet win him a Noble Peace Prize nomination !!!