Tuesday, August 11, 2015

Currency Manipulation subsidy!

Chinese foreign exchange reserves stand at $3.65 trillion. US foreign exchange reserves stand at $113 bn!
Chinese debt stands at ~$5.2 trillion. US debt is ~$18.3 trillion!
Yet, China choses to devalue its currency by more than 2% w.r.t USD!
The devaluation raises some questions.
The WTO norms seek for gradual removal of subsidies and also the other economic barriers surrounding any trade between nations. But isn’t the currency devaluation a form of subsidy being extended by the Chinese Govt. to its industries. Subsidies are generally extended in the form of tax exemptions, lower credit or moratorium periods or relaxed accounting guidelines. But an exchange based subsidy (Currency manipulation subsidy) is something that the Chinese Govt. is exploring, if not the first time, to its full potential.
Why Can’t other countries chose to do so. Because most of the other countries have a mix of imports and exports and by de-valuating their currencies they are risking the increase in imports and hence inflation. China has lot more exports than imports and hence can afford to do so. Chinese in a single shot have gone ahead of their competitors by more than 2%!!
Now, what does it mean for markets around the world. For sure, all the goods from China would become sweeter and more companies would vie for that. Increased discounts in USA and other countries as they have a bigger leverage now.
Countries like India which are trying to compete by establishing their manufacturing basis will find it increasingly tough to do so. Already the devaluation alone is expected to increase the imports of Steel to India from China by ~17%. At best countries can aspire to become assembly stations of the manufactured goods from China.
Even for countries like USA, you’d hardly find the possibility of any rise in local manufacturing thwarted by this.
Is it any good for other nations at all?
For any country which is planning to import, this is probably the best thing. And all other exporting nations which are trying to compete with China, this is a big big news!!
What about China? Is it good for them?
Yes and No. Yes because the export oriented industries will continue to benefit. No, because suddenly credit in USD becomes costlier and increased cost of commodities will have its impact on inflation and costs of goods. One would have to wait and watch, if the increased revenue from exports will outweigh the rise in costs. Credit and loans for companies will not be a real issue as China will ensure that most of the industries that are significant to its economy continue to receive credit at lower rates thereby taking away that risk.
What does it mean for Energy and other industries?
Since most of the commodities are traded in USD, it may not really impact a lot to commodities. More so, Chinese will continue to tap more into their own local resources and so it may be at best a good news for local mining and other companies in China. For sure, the supply chain and logistics industries will probably see a major shuffle in the short term to medium term range.
What about USA?
Many listed companies in US will continue to produce more goods from China as this will show a positive increase in their bottom lines. But any revival in local manufacturing industry will take a big hit. Expect to see big discussions/debates about this subsidy in the upcoming US presidential elections, since a weaker Chinese currency would mean lesser jobs within US in the conventional industries.
Looks like, overall its a smart move to alleviate any immediate fears about its economy. It’d be interesting to see how other countries will respond.

Thursday, July 16, 2015

Technical parameters at the mercy of commercials ..err Politics

Any one who has basic understanding of power plants would know that every equipment and the power plant as a total requires how much power to run.

For example: a standard 270 MW plant would require so much, a super critical 800 MW boiler would burn so much coal etc.

One wonders though why would the total consumption for a power plant change so much.

As usual, the ambiguities come from one of Reliance for one of the largest power plants in the world (Sasan UMPP)

Here is a brief history of the estimates given by Reliance on its expected coal consumption:


  1. In 2007, when Sasan was awarded to Reliance it initially quoted that it would require 16 mtpa (million tonnes per annum) to run its plant
  2. In 2007, Reliance quoted that it can mine 25 mtpa of coal from the mines it was awarded. This was 9 mtpa more than the requirement.
  3. As per the approved mine plant, Reliance was allowed to use 4 mtpa beyond the requirement of the plant
  4. In 2014, NDA government cancelled the coal license to the tune of 5 mtpa from Reliance. Remember this should still allow 20 mtpa to be mined and that should be more than sufficient for the 16 mtpa requirement
  5. In 2015, Reliance states that it underestimated the coal requirement, which now stands at 19 mtpa. And since it was allowed an additional 4 mtpa as per the mining plant, it now claims that the new coal block be allotted.
I wonder if there is any plant whose coal consumption increased by 25% than previous estimates. And that too for one of the most efficient plants!!



Prize deserved .. or not?

When Obama was given Nobel peace prize in 2008, there were lot of critics who questioned it, for Obama has hardly done anything at that time.

he was awarded the peace prize for his campaign and the quote of "We need change!". 

That was 2008. Here comes 2015. Has there been a change.

On the contrary, republicans continue to run the show in senate and continue to stop any bill that Obama is trying to pitch. And it has been doom for quite some time now.

That said, here are a few deals that might tilt many  people towards Obama deserving the Nobel peace.

One is the cuba deal.. by extending the lifeline and ending the embargo Obama has shown that if 60 years of embargo could change nothing, there is a need for change. 

The second is the Iran deal.. In spite of Iran not bowing down a huge, Obama went ahead and has completed a deal (may be due to geo-political reasons), but the attempt to negate war with negotiations has been done with greater push.

And of course there was the Iraq troops pull out and the Afghanistan troop down.

One chink though remains in his armour - The Guantanamo bay. I hope he even completes this and then he can certainly claim his award.

But everything at one side and now the threat of ISIS on the other hand. ISIS is the biggest terrorist threat to the world now. Had the Iraqi pull-out been partial and gradual, the progress of ISIS would have been very limited. Did Obama bite the bullet in that context? Only time will tell.

Monday, May 11, 2015

"OMG" says the bear

When Saudi Arabia decided to not decrease the production levels, the bears were really happy. Things became bearish.
You must have understood whom am I referring to.
Of course, the bears in stock market! If that is what you thought, sorry brother, the world is much bigger than just the bears in stock market.
I am referring to the actual bears, the wildly beasty bears.
Why would bears have fun when Saudi doesn't reduce its production.
And, I meant not even the normal bears... the bigger and beastier Polar bears!!
Bears were really happy that the oil prices reduced, thereby the production in Arctic circles would have not happened at the same pace. Hence the ecological balance would not have been disturbed beyond the already created ruffles.
While the bears slept through the winters happily and were ready to come out and enjoy the spring, so did the oil prices. And suddenly the biggest predator of all time became active in the polar regions.
Who can be bigger than Polar bears in the polar regions. Who else.. Humans!!
We've started digging the arctic circle again. One of the largest companies got the approval to start its exploration in arctic circle.
With this, comes the inevitable! The increased possibilities of destruction in the fragile ecology.
I wonder. How can a US court give approval to drill oil & gas in Arctic circle. Don't the primary occupants have a say on what should be done under their feet. For example, wouldn't it be fair for a human to go to arctic circle and seek the permission of say the penguins/polar bears or other primary inhabitants of the region.
Sorry, I forgot that .. I am on top of the food chain and hence have every rights to veto the requests of those animals.
After, all this .. I think the Polar bears will continue to laugh. Just that, their feet would be under water instead of "on ice".
They'd be laughing to the human's incessant desire to damage their own well being, and in the process affect every other entity on earth. They'd pray ... "OMG please spare these humans, as they are consumed by their own desires" .. please my god!"

Acquittal

An enticing article written by Arundhati Roy in Outlook on Prof. Saibaba


Isn't it ironical that it's been an year that the person mentioned above has been in prison without bail and no charge sheet, whereas our beloved Salman Khan and of course the goddess of many, Ms. jayalalita are acquitted .. (Yeah, I got it .. Salman Khan isn't acquitted, but do you think he won't be!!)

Oh, I forgot! Mr. Ramalingaraju is released on bail.

ok, I will stop. I will not go down that route.

I have no idea about Prof. Sai baba, but the way he is kept under prison is something that questions our ethos. But I also felt sad that I cannot stand up to him.

I am also one amongst the millions, living and eventually dying in vain.

I shouldn't be acquitted on my unbecoming attitude!!

PS: Yes, I have started becoming conscious about my web foot print and hence the diplomatic undertone.

Monday, May 04, 2015

6 years after MBA

I am married, but am still a consultant :)


Most of my friends have achieved greater heights and I do aspire to excel further. The zeal and enthusiasm haven't died, but yes age is catching up!!



When I was diving into my MBA and even while doing the course, I'd think that it is so important to study, learn and contribute. (Not that I have done any of this .. but at-least that was the thought).



Coming from a shy background, where lot of focus is on getting job (It sounds like getting laid ..rt ;) )

and very minimal on social skills, you shouldn't be surprised at my thoughts.


Social skills are an anathema for all of us engineers and continued to remain so, in-spite of the MBA. People, who could communicate and reach out to others, were not considered among the most talented. And, may be it is so, in case of the roles where much of the activity continues to remain stuck to the screen of laptop.



But, with decent number of years in consulting and aspiring farther, I realize how mistaken I was. While I am yet to emulate it effectively I realized that doing financial models or analysing a complex solution isn't the best of the things. There are multitude of people, who can do that much better than myself.

The emphasis on communication, change management, networking is so high in work space that most of the others take a back seat.  Vision, Communication take such precedence over others, atleast in this field. 


I am more fascinated by these, because I may not be the best person in this. I was once told that my both written and verbal communications aren't the best. Not that I am taken aback by that, I know that there is certainly a scope for improvement. 



When life outside the work seem to lie between the facebook posts or tweets or linked-in updates, it is important for every one of us to understand the importance of reaching out.



I'd thank my school for allowing an opportunity to reach out as many departments and students and also to a friend of mine, who helped me in doing so. 



All said, I am still a consultant and grooming myself to be a better one, inspite of .. 6 years after MBA!!

Screwed you ... Sorry .. Not me and not mine

All of us had a merry time. Enjoyed what all we got, as if there is no need to survive till tomorrow.
And, now, when things are evolving and indicating that surviving tomorrow would in fact be a big thing, we are shrugging our shoulders and saying that it ain't us who has caused it.

I am speaking about the Emissions and the recent senate vote within US, which rejected the resolution that humans are causing global warming (51-49 against the resolution!!).

Is it funny or irony that we feel that the climate change is actually happening, but yet are not willing to accept it. 

It is like the girl, who got gang raped, and yet in the court all the accused are vindicated. It is because the semen present inside the girl's vagina may be of the people who gang raped her, but the guilty cannot be charged for the presence of the semen. May be the girl herself willingly did it.

We want all, but we don't want to own any. Even I am like this.

I wonder, what proof is required to prove our absurdities and our retribution towards earth for no sin of her.

Source: http://data.giss.nasa.gov/gistemp/graphs_v3/Fig.A.gif

Every one of have seen multiple graphs like above. Yet, we undermine the obvious and believe that we are not causing this.

For once, may we live like Men and not like Ostrich!