Sunday, February 23, 2014

Sochi Winter Olympics

These Olympics finished without any violent incidence is a big relief to everyone. Danger of a terror attack was real and howsoever oppressive and heavy handed Russian Security Apparatus is; it avoided any such unpleasant disruptions. In general Russian President Putin got what he wanted - glory to the mother land by conducting a successful Olympics. So what if it has been expensive? This is Russia, Oil money is plenty and the Czarist mentality does not go away where rulers are less answerable to people's money.

Russian athletes delivered great performance. As usual, in last days of the game Russians won large number of medals to come on the top. President Putin would be delighted by this icing on the cake. Of these medals it included a coveted medal of Women's Figure Skating, though controversial in some quarters. (As many knowledgeable commentators are saying, that sport might face some tough times as atheletes are reluctant to join considering manipulations which go on in awarding points and results become more and more influenced by external factors rather than pure performance. It is such a subjective sport.) Of course Russia had their share of disappointments too - chiefly loss to American team in Men's Ice Hockey.

Sadly USA Team could not build on that victory over Russia. Once they lost to Canada it went all down hill there after in the loss to Finland by 5-0 margin. Couple of Summer Olympics back (I think in 2004 Athens game); USA Basketball Team had very poor performance. Kobe Bryant took it to himself and then USA ensured that it would win Gold medal in 2008 and retain that in 2012. I am not sure whether that is something likely to happen for USA Ice Hockey Team; but USOC needs to think seriously here; it has been a poor performance.

USA's poor performance is not restricted to Mens's Ice Hockey only (Women's Team also lost to Canada in the final to settle on silver medal). The most disastrous results were in Speed Skating. USA speed skaters not only could win a single medal in 10 events, in most cases they came 7th and 8th! USA speed skaters seriously undermined dominance of Dutch. Talking of Netherlands, they won total of 24 medals at Sochi - all but except 1 in Speed Skating. Of 31 medals of that games, Dutch alone won 23; talk about some sporting dominance at the top levels of Olympics!

The sport where USA Team did well is Freeskiing when it was introduced for the first time in Winter Olympics. Without those 7 medals, USA essentially got only 21 medals in all other traditional sports; not a very good performance. It is true that overall every game is getting more competitive with each passing Olympics. So it will not be any easy for USA to continue to pull good performance Olympics and after Olympics. (USA won 37 medals in Vancouver Canada in 2010 and 25 in Torino, Italy 2006.) But then so much advertising is dependent on USA Olympic Team Performance. The amount of money poured and athletes at work, this is a serious commercial enterprise for American Capitalism and American Corporations; so return on money invested matters. What is true is USA contingent competed in practically all sports as President Putin gushingly remarked. Sure, part of it is a politics to praise your adversary in sports and President Putin did all that good. But as Putin changes his focus from Sochi to what is happening in his backyard - Ukraine - he is unlikely to have any kind words to USA and EU. That is where his 'real games' would start. 

Saturday, February 22, 2014

WhatsApp? Some Random Thoughts

- Market basically liked this $19 Billion purchase of 'WhatsApp' by Facebook (FB). Market thinks that spending around 10% market cap (Facebook is around $170+ Billion in Market Cap) to acquire 400+ Million is a fair game. Zuckerberg is right, WhatsApp is going to have Billion adapters soon and that is valuable given that those audiences spend more time on WhatsApp and they are younger. Media and Market already know how 'desperate' Facebook is to get 'fleeting teens' as its users. Even if FB makes per user of WhatApp $20, FB would get back its money in a year. 

- "Zuckerberg's one year whatsapp subscription expired, so he bought whatsapp instead of subscription." 
Friends's friend on Facebook commented.

- Distortion of VC money flow to Instant Messaging or Social Media start-ups would continue; probably in accelerated manner. To that extent we are likely to see wastage of some Capital, reminiscent of Dot Com Boom. But then that boom happened all across multiple Tech Sectors - Internet, Hardware Maker, Network Gear Makers and traditional pre-Internet industries tying to switch to Internet era. Right now that does not seem to be case. Google is not that desperate to buy 'eyeballs' as like FB is (though Nest was an expensive acquisition it was more of money going from one pocket - Google - to another one - Google VC Arm). And Apple generally buys only technologies, by nature at lower price tag; since it does not care for any additional user base as it has it's own. All this means we are talking exorbitant valuations for companies which can be potentially acquired by FB since FB is in a desperate race to hold on it's place in social media. Start-ups which fail to get acquired by FB are likely to face hard fall to earth whereas industries which are outside of Social Media will continue to face saner valuations, saner business models and relatively lesser 'rags-to-riches' stories. 

 - "We are in the wrong business." 
Like most Valley Engineers, an executive at my work place (I work in Silicon Valley with a tech start-up) had this exasperated first reaction. There are so many capable engineers and employees at so many different Valley companies undertaking some breath taking technology work; but they are unlikely to see the kind of wind-fall which came on those 50+ lucky employees at WhatsApp. But in general, Valley and the fine executive I quoted above - learn to live by these out-sized gains to some minority. Only 'ting of envy' for a while but not much, not for long for sure. 

- FB has Billion plus users now. With WhatsApp and other potential acquisitions, it might even reach 2 Billion Mark of distinct users in next 2 to 4 years. Beyond that what? The barrier of language? Or barrier of lack of basic telecommunication in different parts of the globe? Or final barrier of political stability (though FB is actively and extensively used in unstable Middle Eastern Countries like Egypt, Iran and so on)? When would Wild West chase of FB like Social Media companies would mature - when it reaches 50% population of globe's 7.1 Billion or 80% of it? Expectation is once Emerging countries to like India are fully connected (China could be already considered as 'wired'); we might hit a plateau in terms of how fast 'user base' of these Social Media platforms would expand. Essentially there will not be any virgin markets left for these Internet based Social Media enterprises. Every one knows Social Media will mature, question is when? After the end of 'wild fire rate' (some predicting to end by 2014), even if you give a reasonable growth rate for few more years; we are talking possibly by 2020 all these Market Valuation calculations based on 'user adoption count' to end. 

- "The WhatsApp Guy Applied to Work at Facebook in 2009. They Rejected Him." 

- You are talking each employee of WhatsApp getting the windfall of $300+ Million. What Tax Policy would avoid such a skewed distribution of 'wealth' in Capitalism? I believe none. Except for ensuring that substantial compensation is linked to future stock value, not much seems feasible and reasonable. That is some humbling to 'warriors of inequality' in USA.

Tuesday, February 18, 2014

Are Democrats Doomed?

Jennifer Rubin undertakes a scathing criticism in pointing the doomed future of Democrats. She unfairly lays blame for 'under whelming' economic growth to President Obama while ignoring how GOP managed to bring 'uncertainty' in economic recovery by playing 'Debt Ceiling' hostage game. That President Obama finally brought it to the end should be at least one reason to cheer this President on the occasion of President's day. Further, Rubin and critics like her would conveniently ignore how the original stimulus helped to stem devastating blows of 2008 recession. (White House did not do politically smart in touting its own report instead of referring to an external, credible report.)

The problem for Democrats have been:
- they could never expose successfully the GOP game of willfully bringing economic misery to Americans whether it is via political games on Debt Ceiling, or government shutdown or by not extending unemployment (and now GOP has become wiser here);
- Democrats could never highlight how GOP has been reluctant to improve upon ObamaCare but hell bend in bringing it down (registration by more Americans in ObamaCare for 2014 coverage will go a long way in blunting this handicap).

Truth is Tea Party propaganda, misinformation and active deception all have captivated sizable population of this country. Failure of Democrats to lay stark these games of Tea Party; that is the real nemesis of Democrats in coming days. President Obama, with all his vaunted communication abilities, essentially could not go over the partisan Congress to tell Americans convincingly what has been happening and how his course has been at least in the right direction compared to GOP.

As many have noted, whatever President Obama has achieved in these 5 years - tepid economic recovery while increasing federal tax collection, auto-bailout, stimulus and ObamaCare - all these are fragile achievements in some sense. As Rubin rightly points, Democrats do not have any leader apart from Hillary to protect and build on these achievements. If for whatever reasons Hillary Clinton cannot be the president in 2016; all these fragile achievements will be essentially destroyed by a Republican President. That is given. So apart from failing to decisively win the argument of Government Intervention (that lousy ObamaCare roll out, Dems will continue to pay for generations....); the second problem for Dems on hand is near lack of a visible leadership apart from Hillary Clinton on the national stage. If no Hillary, Democrats essentially concede the White House to Republicans - Rubin is right to contend that and at that point Obama's meager domestic achievements wash out.

The reason 'inequality' would not help Democrats is because Democrats do not have 'politically salable' answers to address this inequality. That GOP with its Tax Cuts for everything, protect rich guys at all costs and punish poor as much as possible; is no solution to the problem of 'inequality' is unlikely to bring votes to Democrats because they are yet to convince most Americans that 'inequality' is the true elephant in the room to address. Why would GOP talk about 'inequality' when they can get away with not bothering it? 

When President Obama's reaction to GOP opposition to unionization in Volkswagen plant in Chattanooga is "they are more worried about German Shareholders than America Workers"; it seems that Democrats still have not found a winning formula here. Why is that President did not say - "if protecting interests of German Shareholders is priority, then how about making American Workers as shareholders as well?". Sane minds in Democratic camp have been arguing for such inclusive policies as the remedy; but President Obama is not showing any intellectual dexterity in formulating the whole 'inequality' argument in this new and innovative framework so as his successors would get a winning hand to run with it.

Someone in Democratic circles need to do this job on a campaign trail. Just Paul Krugman Op-Eds with no support on 'hustings' will essentially mean Republicans win here. And that someone in Democratic circles need not to be only Hillary Clinton. Sensing the loop sided nature of Democratic aspirants in 2016; Congressional Democratic Leadership has an important responsibility to:
- keep highlighting more national level Democrats and
- speak in united manner to articulate a cogent, practical and effective policy framework to address the scrooge of 'inequality' brought on this society.

Meanwhile critics like Rubin would conveniently like to forget that Demographics are still the in the favor of Democrats and will be so for some time to come. Immigration is one issue where Democrats are on the right side of the History and they will forget to wage that political battle at their own peril.

Update - Actually Paul Krugman delivered most devastating Liberal Criticism of President Obama; basically saying that President Obama failed to realize the historical damage of 'half-hearted' policies. Now, that is some scathing criticism, much more naked but truthful criticism of President Obama than Jennifer Rubin. Yeah, this is all tragic. 

Sunday, February 16, 2014

Indian Democracy and AAP

AAP declared the first potion of their Lok Sabha list - Medha Patkar from North East Mumbai competing against her nemesis Sharad Pawar's candidate. Her colleague from Narmada Bachao Andolan (NBA) Alok Agarwal contesting from Khandwa in MP....Holly Cow! 

Way back in my student days I kept asking NBA folks why not contest elections? I suppose I was too impolite to ask those questions then....did not get any satisfactory answer. What left an impression though in my mind then is NBA folks (kind of adherents of some kind of Neo-Socialism, equivalent of German Greens in Indian Polity) did not trust the 'political process' and unfortunately Medha was caught up in 'jal samarpan' and all that. The thing is NBA as an insurgent / resistance movement was trying to find an appropriate political instrumentality to make the change. NBA was struggling to find and fuse a political mechanism from array of choices like Che Guevara's call to arms to Gandhi's non-violence movement and satyagraha. Let me be clear - at no point NBA gave any inkling of any violent mechanism to achieve the change. To their credit that was never on the table. However, NBA still did not find 'electoral political process' as any useful and it kept undertaking its resistance through different means and legal actions (which I support since that implicitly trust our constitution)

Lot of water has flown in Narmada since then. Probably Medha Patkar is much 'fuller leader' capable of pulling some significant changes. If AAP is that single reason to bring folks like Patkar, Agarwal and many other marquee candidates (like scientists, engineers, etc.) to the political process and establish their trust and participation in India's electoral process; that will be a colossal contribution from Arvind Kejriwal and AAP.

I did not find much merit in the way Arvind Kejriwal resigned as CM of Delhi. The same streak of ultra-high righteous tone, willingness to 'trash' governance apparatus, 'my way or high-way' approach to politics and overall loss of understanding what is significant immediately to solve common people's problems here and now (how in the world Jan Lokpal going to solve issues when administrative transparency and enforcement of existing laws are primary requirements to root out corruption?); all those are glaring faults in my books which Kejriwal and AAP are displaying. Resigning from Dehli CM post on the first opportunity could be a good politics, but enough people are concerned here. Still if AAP is able to bring this capable, honest and deserving lot of Indians to Loksabha; it will be a sea change. Will it stop 'pepper spray' in Loksabha as we saw recently? I don't know, but having good MPs is far better for Indians. It will be a lifetime's worth to see Medha Patkar as a shadow Environment Minister grilling PM Narendra Modi - her old time original political opponent; all in the sovereign India's ultimate political body representing mandate of a Billion Plus humanity on this Earth; oh my God, that will be a scene to watch. I would say at that point Indian Democracy would have prevailed - bringing most natural and potent forces of change in the society coming face to face via constitutional and legitimate electoral process. Looks like some 'golden days' are possibly ahead of Indian Democracy.

Saturday, February 15, 2014

Johnson - Test Cricket's New Star

"...Johnson had become the seventh Australian to claim 250 Test wickets and not surprisingly picked up his fourth Man of the Match award from the past six Tests."

-- Johnson's 12 wickets destroy's South Africa, ESPN Cricinfo

Wow, 4th Man of the Match in 6 Tests! The guy is in 'zone'. This is some legendary performance from ace Australian fast bowler. He is now worthy to sit with greats of this game like Dennis Lillee, Glenn McGrath, Curtly Ambrose, Malcom Marshall and others.

May be such a sterling performance and complete domination by bowlers in the long form of cricket would give some respite to otherwise invariable trend of 'miniaturization' of cricket where runs flow freely and the only thing a bowler is reduced to do is 'safety first'. No umbrella fielding, no aggressive setups. Penchant of Indian audience for hitting runs all the time, IPL and endemic culture of 'flat wickets' in South Asian Sub-continent all have contributed to making the game of cricket tilted against bowlers. That is why one savors the 'art of bowling' when one sees it. Even Indians are enjoying fast bowling by Indian bowlers like Shami, Ishant Sharma and others in Down Under stadiums. This is some scintillating Test Cricket. Worry is with the world of cricket firmly titled towards it's pay master - Indian audience; how to protect Test Cricket which is producing some amazing matches lately. I guess as more Indian bowlers bring victories and great games, like what Indian Team is currently doing in New Zealand; Indian audience will start appreciating the art of bowling. Ever since masters of spin bowling retired from Indian Cricket Team, Indians have not had taste of fine bowling. Hopefully Johnson's performance and bowling by Indian players will make Indians to appreciate a true contest between Ball and Bat.

Thursday, February 13, 2014

Two in Row

With Republicans folding like a 'cheap suit' on Debt Ceiling Increase (of course good for America) and ObamaCare showing some life after all; may be this president is for 'two in row' victories. This is rare and for sure it will not reflect quickly in President's miserable approval rating. It will take sustained 'below radar politics' for months to come before the needle moves. 

Keystone pipeline decision will have to wait till mid-term elections. Same with Free Trade Agreements, all that Obama Administration would do is keep both these legislative acts in 'pocket' to pass as and when GOP wins both chambers of Congress in 2014 to survive politically. Meanwhile it is good politics to go out of the comfort zone to shore up your 'own guys' on hustings. May be, just may be; finally this presidency is adjusting to utterly polarized politics of American - in Congress and on Main Street at large. 

Immigration is the potent weapon this President and Democrats have which they can lit at any time when they want to make the 'killing' on GOP politically. Inequality business, it will have to wait till last two years (to be achieved via tax reforms) or it will be a problem for Hillary to fight her election in 2016.

Tuesday, February 11, 2014

Corruption and Sports

There is a controversy still raging about the price tag of Sochi Olympics and associated corruption (hopefully America avoids all these mega events on its soil due to these stratospheric prices). With India and its sporting organization, it is nothing new. IOC might have redeemed Indian Olympic Association and would help erase some humiliation at the end of Sochi Olympics by allowing Indian athletes to march under their national flag, but stink continues to come from other parts of Indian Sports. (Sure, IOC would not like to leave aside tomorrow's growth market of India, after all you are talking a market of more than billion people.)

In India the biggest money and consequently corrupt practices are in Cricket and IPL. As a new judicial committee reports, what most expected is out:

" they should look at this and terminate CSK. If you can't, then just do away with anti-corruption and all those rules....

The BCCI don't have gumption. We're dull to the fact that they find a way around stuff like this. It really depends on the court because BCCI don't have it in them to look at itself and call for a change. This is upon themselves — upon their president."

And who is this all powerful president of BCCI? None other than the new all powerful boss of World Cricket - president of ICC in the new dispensation! Globally, since 80% of the money in Cricket comes from Indian Market, ICC just formalized this domination. In a way, we have legitimization of corrupt ways of BCCI formalized at the global level. That is why it is unlikely that BCCI or any other Cricketing Organization on its own will clean this mess in Indian Cricket.

It will be left to Indian Courts to take all these investigations and committee reports to their logical ends and help cleanse the act of Indian Cricket. Legislatively nothing is forthcoming because these Indian politicians themselves are waging a thick battle with each other about corruption (good thing though).

Thursday, February 06, 2014

GOP Excuse - Blame Obama

There was some positive news in the air when some news outlets reported that Democrats in Congress may accept the compromise of 'just legalization of illegal immigrants' rather than a 'special path to naturalization' in return to GOP backing such a proposal.

That seems to have washed now and GOP is back to its familiar complain - blame Obama for everything. In this case Speaker Boehner is complaining that GOP does not believe that Obama Administration would faithfully implement laws passed by this Congress. Why so? Because GOP thinks:
- President is embarking upon an imperial rule when he says he wants to govern by Executive fiats; and
- Obama Administration relaxed certain provisions of ObamaCare.

This is laughable because for any non-constitutional act by a President, Congress can go to the court and very easily try to overturn president's executive actions. GOP tried mighty for ObamaCare, that did not fly much. For any other Admin act, they can still go the court. GOP knows that is not happening and then as such 'lawless rule' just becomes a talking point. 

Few speculate that Speaker is joining Paul Ryan because he needs to get the 'debt ceiling' passed from crazies in the House and hence he needs to cover his 'right flank' by ditching Immigration. Others question no matter what, what is the upside for GOP in Immigration Reform? Any such reform has to pass with the help of Democrats and these strategists argue that it means in the end political windfall will be still gained by Democrats reducing GOP again to pay the price. (Of course doing something in national interest, that does not count neither with these strategists nor with GOP. Or alternatively if either ways Dems are going to get credit for standing for Hispanic Community, why not try to share that bounty?) Meanwhile few others are wondering whether President Obama can 'push the envelop' here with his Executive Orders. President Obama is unlikely to undertake any such gimmicks and he would be wise in the case of Immigration. In the end President Obama and Democrats have to win this issue politically - keep forcing GOP pay heavy price in election after election. There, right there is Obama's and Democrats election fight of 2014 - Immigration. What just Speaker Boehner indicated is his party still has not learnt anything here and ready to take another pounding. Job for Democrats - deliver that blow in 2014 to GOP on Immigration Policy.

Sunday, February 02, 2014

48th Super Bowl

As like millions of Americans, I lived through our national party time - the super bowl night. But the actual match has been very disappointing even though Paul Allen's investment paid off. Anyways, these Microsoft guys are known for the long-game: this is Seattle's first Lombardy Trophy.

The core issue in this one sided match (it was not a complete shutout or exceeding Joe Montena's victory over same Brancos by 55-10 is a saving grace for Peyton Manning) is how did NFL got conferences drawn seemingly wrong. Seems like AFC teams are weak on Defense. Watching this match, clearly San Francisco 49ers felt much better than Branco's.

Anyways Super Bowl Ticket Sale was down, possibly by weather. NFL's possible bias in favor of Peyton Manning did not work out and of course concussion court cases keep lingering. Though Red Chili Hot Pepper half time show and salute to armed forces were all nice and good, the news about prostitution associated with Super Bowl is no good. Clearly, NFL has some work cut out for itself.

Update - There is a valid critical take on Peyton Manning. Is he Sachin Tendulkar of Football - more on numbers than when it critically matters? Seems so.

Saturday, February 01, 2014

Random Walk in Political Economy

- America's Atlantic and Pacific Trade deals are under pressure. Not necessarily the last fight as few likes to contend, but Obama Administration must pursue these trade pacts vigorously. Noise by Democrats in Senate - well, it could be all noise after all; which the Administration must ignore. It is a good politics for Congressional Democrats that after some let downs for organized labor (Administration is not necessarily wrong since the case of organized Labor is weak in this dispute between Organized Labor versus ObamaCare); they pretend to put up a fight. Best course for Obama Administration and America is to ignore all this 'mirror and smoke' game between organized Labor and Democratic Party.

- Is Dani Rodrik saying that Aam Adami Party of India is right in opposing Foreign Capital and entry of Foreign firms in Indian Retail Sector? At least that is what his column sounds. Otherwise an erudite column, it is probably undermining the familiar damage done by politics of these emerging economics: failure of politicians to quench doubts in minds of common people that 'rich and powerful' are going ahead by 'rigging the game'. As long as strong smell of such 'rigged games' remain among these populations because of insufficient transparency and wrong headed policies; we are going to see repeat of what is happening either in Turkey or Argentina. AAP in India gets it, but they get unnecessarily embroiled in naming opposition politicians as 'corrupt' without putting any evidence or without bothering why AAP exists in the first place: to institutionalize system of transparency and appropriate enforcement of laws i.e. to improve prosecution. Only by successfully prosecuting 'corrupt politicians', India can hope to address the cancer of corruption. Otherwise, no matter how high and mighty economists like Dani Rodrik imply inherent plausibility of AAP economic policies; AAP is doomed to fail because of such cheap and detrimental politics. AAP must be able to differentiate itself from Shiv Sena; today it looks more like goons of Shiv Sena.

- Clive Crook worries about how Ben Bernanke, otherwise the most competent and accomplished Fed Banker in his eyes, tended to overstep the implicit political mandate of Fed as accorded by Congress. I do not think so. On the other hand Bernanke's dogged pursuit of policies not liked by today's Republicans is a solid proof of Bernanke being faithful to the charter of Fed - be orthogonal to political influences. I am not denying the tension Crook rightly points between Congress with voter's mandate and Fed with the onerous duty of maintaining Economic calm. But in the end Ben Bernanke exactly realized when to call it quits and he did set in motion the unwinding of his policies, QE in specific. It would need more time than what Bernanke though would be a rightful occupancy at Fed; that must be considered beyond Bernanke's control. In the end, the guy had the perfect sense of when to quit the 'battle of nerves' he wedged with his own party. Kudos to Bernanke and to the extent History redeems Paul Volcker; Ben Bernanke will be regarded as one of the most 'the towering and consequential personalities' of early 21st Century. The guy has achieved what we cannot fathom yet.

It is great to see that President Obama was able to get equally competent Janet Yellen and Bernanke's 'guru' - the gold standard Stanley Fischer - on Fed board. All said and done, that may be one of the most significant legacies of this Presidency after all.