14.11.2008

Finance & Economy

• Inflation dives by 18 year lows
• Inflation has dropped to 8.98% by almost 4% from its August peak. This is stated to be the biggest drop in 18 years.
• What contributed to this steep fall?
  
• Decline in global commodity prices
  
• Robust domestic agricultural output
  
• Shrinking demand in slowing economy
• Fuels & power index, which has a weightage of 14.23% in the WPI saw a drop of 3.4%. You might recall that jet fuel prices have fallen by about 42% in the last three months.
  
• What does this portend?
  
• Inflation likely to ease to 4.5% by March 2009
  
• Gives RBI room to cut reverse repo and repo rates
  
• Big relief for government, sweating over voter backlash
• Pressures on supply, demand seen easing
• India's richest
• With the benchmark Sensex falling 48% in the past one year and the rupee depreciating 24% against the dollar, the collective fortunes of India’s wealthiest have fallen $212 billion. The 40 richest are now worth $139 billion.
• Mukesh Ambani heads the list with a net worth of $20.8 bn. He displaces Laxmi Mittal of Arcelor Mittal as the richest Indian.
• An example of business-friendly environment from today's ET editorial:
  
• It took barely 72 hours for Lehman Brothers to be acquired after it declared its bankruptcy in the United States.
  
• In India, a bankrupt company would have had to go to a court, which in turn, would have taken its own time to appoint a liquidator for the sale of assets.
  
• Why can’t we execute the sale of companies declared bankrupt within 72 hours? This is the crux of the issue.
• What shifts will the current global recession foster?
• In a very good article Manoj Pant, while giving some excellent inputs, raises some questions. A mix of excerpts, notes and comments:
  
• The global recession is mainly due to a failure of expectations (as Keynes told us) which can be expected but never predicted. The US simply happens to be the country where this failure of expectations manifested itself at the earliest. However, pessimistic expectations are contagious and spread rapidly. But, was this pessimistic outlook shared by the entire world?
  
• At the end of 2007, the stock of net foreign investment in the US was about $2.5 trillion and the surplus in yearly trade in services like royalties, education, etc., was about $130 billion. Obviously, the rest of the world did not share the same pessimism about the US economy. What seems clear is that the US economy (surprisingly like India in Asia) is a net importer of commodities but a net exporter of services. Given the globalised nature of today's world, only multilateralism can reverse pessimistic expectations which also tend to be self-fulfilling.
• Then how did the recession come about? A recession is always demand led. As the table indicates, the US has remained dominant, accounting for about 30% of world demand in 2007. It then stands to reason that the easiest recovery from recession will come about through demand recovery in the US. It is also important to realise that, in this Keynesian world, mere increase in liquidity will not solve the problem of expectations.
  
• Governments will have to play an active role in stimulating demand through direct expenditure. It is not then surprising that the first attempts in the US to stimulate demand by refund checks to individuals failed: given adverse expectations the refunds only found their way to new savings.
  
• From the accompanying table it is also clear that both China and India still constitute a very small part of world demand. Hence it is unlikely that normal demand expansion in these countries alone would lift world demand. However, developing countries also hold about 75% of world foreign exchange reserves of about $6 trillion. In addition, the population demographics disfavour demand expansion in the developed world. Hence, in innovative allocation of these reserves in developing countries lies a possible solution to the recession. The Great Depression shifted focus from the Commonwealth countries to the US. Will the next shift be to Asia? Is India ready? Only time will tell.
• Remember the size of the hedge fund industry in the world?
• $1.7 trillion. It suffered about a $100 bn loss in the month of October alone.
• Crude tests new lows
• Amid predictions by the International Energy Agency that demand would next year expand by only 350,000 barrels per day (bpd) — down 340,000 bpd from its forecast in last month's report, crude prices touched new lows. All the varieties of crude are hovering between $50 to $55 per barrel range.
• Know what is a 'transaction loss'?
• Look at this graphic. You will understand.
• Simply stated, it is the loss on converting forex receipts into your company's accounting currency.
  

Language politics

• We know that the central government has recently accorded classical language status to Kannada and Telugu.
  
• All of us knew that this confirment of status was a political decision. We recognize some instances or happenings as right or wrong immediately. This is one decision which somehow did not give many of us the feeling of it being correct. Somehow it made us feel that there is an element of opportunism hidden somewhere. But because we are not linquists, our reactions were muted and we were content to learn that two more languages have suddenly become 'classical.'
  
• But look at the issue critically from a linquist's point of view and we will see that our discomfiture finds support. Take a look at today's comment by K. Satchidanandan, a Malayalam poet here. Some excerpts I found worthy of our note:
• This status has been bestowed upon languages by generations of readers, writers, linguists and scholars; it is not for governments to declare any language, classical.
• Many of the Indian languages with only a few speakers, quite a few of them tribal ones, are already extinct and many are on the verge of extinction for various reasons including the new monolingual culture promoted by globalisation as well as by our educational system with little emphasis on mother tongues and other Indian languages. The task of any democratic government in such a conjuncture is to support all the Indian languages, with special schemes for the weaker languages if need be, and not to create a new hierarchy, a virtual caste system, among the existing languages on the basis of classical grandeur in order to promote the savarna languages.
• I think this is one issue that many of you will be quizzed on in interviews.
  

Computing & IT

• White space to revolutionize the way Internet is delivered

• While one sort of revolution was in progress on November 4 in the election of Barack Obama to the office of the President of the US, another one that went quite unnoticed by many of us was unfolding in the US FCC -- the Federal Communications Commission. It was the unanimous 5-0 vote for making white spaces available for use by a new generation of wireless devices to access the internet.
• White space refers to unused frequencies in the radio waves portion of the electromagnetic spectrum. National and international bodies assign differing frequencies for specific uses, and in some cases license the rights to these. This frequency allocation process creates a bandplan which in some cases for technical reasons assigns white space between used bands to avoid interference. The decision related to the areas between television’s channels 2 to 51 (i.e., 54MHz and 698MHz) that are becoming free due to the mandated switchover to digital broadcasting of TV from February 2009.
• The FCC could have auctioned off those frequencies—it raised $19.6 billion in March 2008 by auctioning blocks of frequencies above 700 megahertz that will be vacated when television switches from analog to digital broadcasting—but to its credit it opted to make them freely available as it hopes to replicate the wave of innovation that swept the wireless world a decade ago with the introduction of unlicensed WiFi devices using frequencies in the public 2.4-gigahertz band.
• These frequencies involved were chosen for television back in the 1950s for good reason: they travel long distances, are hardly affected by the weather, carry lots of data, and penetrate deep into the nooks and crannies of buildings.
• The FCC has made it clear that white-space devices—whether mobile phones, laptops, game consoles, music players or other appliances with internet connections—will be required to operate on no more than four watts of broadcasting power. They will also be restricted to channels 21 to 51, where there are fewer television stations.
• Further, the geolocation circuitry built into a white-space device will determine precisely where it is, and then interrogate a database containing the locations of all the television transmitters in the area. The device will be prevented from transmitting until given an “all clear” by the database.
• White Spaces Coalition is a group of companies that fought for the use of white spaces for internet use. It consists of Microsoft, Google, Dell, HP, Intel, Philips, Samsung and Earthlink.

Science & Technology: Medicine

• Nanotechnology in treating cancer
  
• Where does or how does nanotechnology help in treating cancer? At present, it is being used in packaging the medicines meant to cure the cancer tissues. The packaging itself aids the delivery of the medicine to the affected part. But now further refinements in the packaging and delivery have reportedly progressed quite well.
  
• Photothermal ablation: This is one method of treating cancer. What happens in this is that nanoshells that either absorb light or scatter it are built on a core of silica. This silica core is painted with 15 to 20 nm (nanometers) thick layer of gold. When these nanoshells are made to absorb infrared light, they heat up. When they are so heated, they will cauterise any nearby cancer cells. But the challenge is to get them to cauterise only cancer cells and not others. How this is achieved is interesting. You whip up a batch of 80 trillion of these shells and inject them into the patient's bloodstream. The particles end up in the tumour, rather than in healthy tissue, because tumours have abnormal blood capillaries. The pores in these vessels are larger than those in healthy tissues. If the nanoshells are made to the right size, they can pass through the capillary pore and lodge in a tumour, but not in a normal organ. Some 12 to 36 hours later, when enough shells are accumulated, an optical fibre is inserted into the tumour to deliver an appropriate blast of infra-red light. That heats the particles and cooks the tumour. This 'cooking' is what is called the photothermal ablation.
  
• When this procedure was done on mice and dogs it was observed that the tumours disappeared in 10-14 days and the animals remained cancer-free thereafter.