Development Marketplace 2007 open for entries – World Bank Group
Have a good idea for a development project? Need $50,000 to $200,000 in funding?
The World Bank’s Development Marketplace is offering $4 million in awards for innovative projects to improve health, nutrition and population outcomes (read: high fertility) of poor people in developing countries. Submit an application online by November 17.
The cat is finally starting to peek out of the bag. Today morning the commerce department reported that the annualized GDP growth for the third quarter is just 1.6%, much lower than the consensus Wall Street estimates of 2.2%. The markets seemed to take the hint and went somewhat lower, though the full extent of the impact on markets will be apparent only in the coming weeks. There could even be a minor rally in the year-end before we start to see whether the economy is really in a recession.
I don’t see any real economic engine driving the economy and financial markets in the coming months. A minority of economists and commentators are already forecasting the upcoming recession. The fourth quarter GDP growth could be either 0% or even negative. Prof. Nouriel Roubini is among the leading bears forecasting this trend. The Economist, in its most recent issue is predicting that the GDP growth in America for the next few years will be the lowest in almost a century! Ouch….that hurts!
This will have a ripple effect on the broader social landscape in America. If the housing burst proves to be worse in 2007-08 than what the average Joe Sixpack expects, then we will see a resurgence of trade unions (memberhsip of which has been decreasing for the past quarter of a century) and a potential Democratic president in 2008. Growth will be restricted mainly to innovative industries and excess flab across the economic landscape will need to be shed.
Lots of people have lost their shirt betting against the American consumer in recent decades. But as Adam Smith and Ludwig Von Mises will tell you, business and economic cycles are a way of life in a capitalistic society.
The key question is whether the Asian economies will ‘de-couple’ from the upcoming American slowdown (which increasingly looks like a possible recession). Watch out for forecasts from the Economic Cycle Research Institute, which has successfully forecasted all recessions in the last two decades.
I will have more insights on these and other issues over the weekend. I’m also changing the blog posts format into just one single post everyday, along with a collection of links to interesting articles that I read in the media.
Have a happy weekend and don’t forget to set your clocks back on Saturday night! Remember, fall back and spring forward 
Most wealth is now represented as bits on spinning hard drives.
What this demonstrates is that our store of value is really only one thing: confidence. Zimbabwe’s government does not inspire confidence. Neither did Argentina a few years ago. So the relative value of their currency dropped like a rock.
What goldbugs seem to ignore is that the gold standard was built on the same confidence: on the belief that bits of shiny metal could be traded for food, shelter, etc.
If you are so disillusioned with your ‘paper fiat money’, I’d be happy to take it off your hands.
I will be attending the Diwali Damaka 2006 on Nov 4th, organized by the Pan IIT Alumni Association of Bay Area
WALL STREET IS PUMPED ABOUT WATER, and for good reason. Globally, the $365 billion business is burgeoning as countries spend billions to repair and build infrastructure to funnel clean water to people and industry. Some experts think $1.5 trillion in capital spending could flow into the sector in the next five years, promising a steady stream of business for a host of companies, from pump makers to water utilities. The market, which encompasses residential and industrial water and wastewater treatment and services, is growing by 4% to 6% a year in developed countries, and as much as 15% in emerging markets, estimates Goldman Sachs.
Less than 1% of the planet’s water is drinkable. Yet, demand has been rising steadily. A Unesco study estimates world consumption could reach 2,764 billion cubic kilometers by 2025, up from 2,182 billion in 2000.
Google’s YouTube buy is the new boom’s answer to Yahoo’s 2000 purchase of Broadcast.com for $5.7 billion. Remember when Internet radio was the future (even though TV had made radio the past, half a century ago)? Paying $1.65 billion for a company that loses over $2 million a month is just a more sensible manifestation of the bubble-acquisition archetype.
Sitcoms and sports (entertainment) along with news and weather (perishable information) draws in viewers, in whose face you jam branded advertising until they can’t see straight, so they go forth and buy lots of Bud Light, Gillette Fusion razors, Avodart and Mazda zoom-zooms.
Ad sales are based on the concept of scarcity. Sellers want to reach a large and perhaps targeted audience of buyers. If they are in the spell of your pipe, you can charge a premium. The TV network conduct an “upfront” auction each year, hoping to sellout the ad slots forcing costs per impression higher. Weird business. The incentive is to limit the number of pipes.
And its not just ads. Own a solid enough pipe and eventually you can control distribution of movies (HBO) and NFL games and charge subscription fees (Disney gets $2.50 a month for ESPN whether you watch it or not). Control the pipe and charge whatever you like.
The Truth About the “Robber Barons” – Mises Institute
...the distinction between what might be called a market entrepreneur and a political entrepreneur. A pure market entrepreneur, or capitalist, succeeds financially by selling a newer, better, or less expensive product on the free market without any government subsidies, direct or indirect. The key to his success as a capitalist is his ability to please the consumer, for in a capitalist society the consumer ultimately calls the economic shots. By contrast, a political entrepreneur succeeds primarily by influencing government to subsidize his business or industry, or to enact legislation or regulation that harms his competitors.
I had always admired this guy. Too sad to hear that he passed away in an accident.
Steve Irwin, the Australian television personality and environmentalist known as the “Crocodile Hunter,” was killed Monday by a stingray during a diving expedition, Australian media said. He was 44. Irwin was filming an underwater documentary on the Great Barrier Reef in northeastern Queensland state when the accident occurred.
The Australian Broadcasting Corp. said Irwin was diving near Low Isles near the resort town of Port Douglas, about 1,260 miles north of Brisbane. A helicopter carrying paramedics flew to the island, but he died from a stingray barb to the heart.Irwin is famous for his enthusiasm for wildlife and his catchcry “Crikey!” in his television program “Crocodile Hunter,” which was first broadcast in Australia in 1992 and has aired around the world on the Discovery channel. He rode his image into a feature film, and developed the Australia Zoo as a tourist attraction.
Blog postings will be few and far between (if at all) in the next few weeks. I will be on vacation for the better part of next month in India. In addition, professional commitments imply much less time to blog. If you are a regular reader, check back by Oct 5th 2006.
Via The Business Innovation Insider:
Starbucks continues to blur the line between product innovation and business model innovation. Recognizing that it’s not enough simply to roll out new coffee products every six months, the company is searching for new ways to build out its entertainment offerings… As Springwise points out, Starbucks is now looking to extend its brand experience with the opening of a temporary arts and performance coffee house in New York City this fall.
Blog posts will be few and far between in the coming weeks. Professional and personal life is getting just too busy in Aug/Sep.
Suppressing a market is a bit like squeezing a balloon—the trade will usually pop up somewhere else. The Soviet Union was full of markets. The factory in north Vladivostok would be allocated too much sheet metal but not enough coal. The factory in south Vladivostok had the reverse problem. Both factory managers would ask for extra resources, but in the command-and-control system the incentive was to ask for more of everything, with little hope of success. So, the managers would quietly, and illegally, do a deal with each other. Professional expediters would be sent out to barter for scarce inputs, and the informal market reached a high level of sophistication.
According to the iconoclastic economist Mancur Olson, there were seven levels of Soviet disapproval of these markets, from black through gray to off-white. In China in the early 1980s, the government officially sanctioned this sort of side trade as part of the process of moving from a planned economy to a market one. Nowadays we realize it is insanity to suppress markets for coal and steel, but we are still tempted to try the trick on the markets for sex, drugs, rhino horn, soccer tickets and, apparently, Mars bars.
These efforts usually fail. Tickets for big sporting events such as the World Cup or the Super Bowl are a bit like Soviet coal. They are supplied in a non-market system or sold at below-market value for political or ideological reasons. Although scalpers perform a social service by getting tickets to those who value them most, nobody likes them because they are bearers of bad news: These events are popular, supply is limited, and consequently the price is high. Markets are good at telling us this sort of truth, and the ticket agency Ticketmaster is starting to use online auctions to beat the scalpers at their own game.
What Netflix Could Teach Hollywood – New York Times
Its return from oblivion is a nice illustration of a brainteaser I have been giving my friends since I visited Netflix in Silicon Valley last month. Out of the 60,000 titles in Netflix’s inventory, I ask, how many do you think are rented at least once on a typical day?
The most common answers have been around 1,000, which sounds reasonable enough. Americans tend to flock to the same small group of movies, just as they flock to the same candy bars and cars, right? Well, the actual answer is 35,000 to 40,000. That’s right: every day, almost two of every three movies ever put onto DVD are rented by a Netflix customer.
Via Boing and Boing:
Princeton University has posted the 56 works they’ve selected for their 2006 Art of Science exhibition. These are pieces “produced in the course of research or incorporating tools and concepts from science.”
See the full gallery here.
Via Tom Evslin:
You have some key assumptions about your market, your technology, the state of the world, what’s likely to happen next – especially what’s likely to happen next. And you and your team build a strategy based on those assumptions. You can’t wait until you have all the relevant facts; that’ll never happen (except possibly in business school). Some of the facts are unknowable because they haven’t happened yet. You still need to have a strategy and you need to bet the company on it.Why? Why not bet half your company as Steve suggests? Because somewhere there’s a competitor who’ll bet all of her company. She’ll take you out because you’re only half committed and she’s willing to go all in.
But what if your company is much bigger than hers? Ten times as big? Then you can bet less than all your company and still have more resources in play and at stake than she does. Right? No. Sounds right but it’s wrong. This is the BIG COMPANY FALLACY. This where the poker analogy breaks down.
Via
John Battelle:
Lala.com, which allows fans to trade music discs for just $1, plus shipping, pledges to give a fifth of its sales to all the musicians, including lesser known session studio players, involved in the making of CDs exchanged on its site.The site works something like an eBay auction exchange as it encourages consumers who sign up for the service to list all the CDs they may want to exchange as well as ones they would be interested in receiving.
Via:
John Battelle:
The basic premise is neat – Farecast pays attention to the market price of all airline fares out of particular cities (it only does Boston and Seattle for now) at all times (it uses an industry data feed that, unfortunately, does not include Southwest). It then uses this data to help forecast when the right time might be for you to buy your ticket (and get the best price). In short, it’s a rip off detector for flights. Farecast leverages the power of data to put you back in charge, or at least more in charge.
Deloitte and Touche’s new report on China and India is interesting. I will need to read it in detail later this week. Get it here. Personally, I am more bullish on India over the long term. (and I am not biased just because I am an Indian.) Much of China’s growth is driven by government stimulus. On the extreme, I would say it is 21st century version of Stalinistic planned communism on steroids. There is an inherent undercurrent of societal discomfort. The recent PBS documentary Tankman explains this more. You can watch it online in the PBS website.
Sooner or later, China’s economic growth will ‘regress to the mean’. Indian growth is happening from the bottom, through the entrepreneurship of people with much less government intervention. I believe this is more sustainable over the long term. I read Economist’s survey of China in their March issue. And I have firsthand experience of the Indian growth.
India has its own set of problems, not least of which is religious and class tensions. Infrastructure is a big bottleneck, and trade unions and fringe political parties scuttle development. It will take a generation of time and effort for true visible transformation in people’s quality of life.
As an investor, one should of course invest in both the growth economies, however, as they always say, ‘On the keyboard of life, keep one finger on the escape key’. Be ready to liquidate your positions in a short notice. I would invest primarily on those companies who have a huge internal market. For example, the retail outlet Pantaloons in India is a big bet. They have a captive internal market, local knowledge and can leverage issues that traditional MNCs cannot. Case in point is the recent withdrawal of Walmart from South Korea after losing ground to local competitors.
