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SOLAR GOLD rush .vs. Saudi Arabia July 19, 2009

Posted by Bipin Agarwal in Future of transporation, Global Economy, Politics and economy, Real Estate Development in Global Economy, Recession.
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Decoupling of Oil from world economy article on my blog received overwhelming response from all over the world. Reactions were all over the map from denial to skepticism to curiosity. Mission accomplished, at least the conversation started.

One of interesting question came from a university in UK, inquiring about the impact of OIL decoupling on Saudi Arabia. As we all know there is no other country more synonymous with OIL than Saudi Arabia.

Saudi Arabia current reality
Saudi Arabia is in an interesting position in the context of money, world economy, and politics. US president recently said that middle east peace is the hardest problem to tackle. It is further complicated by the nature of the government and demographic of the country.

Relationship between developed countries and Saudi is based on mutual benefits; OIL is the backbone of developed countries domestic economy, and foreign policy. Saudi is a buyer of lot of defense equipments (defense industry is critical for developed countries) that are of no use for Saudi.  However it seems that US (largest developed country) has a little upper hand because OIL is priced in Dollar. We all know that pricing of the OILis dependent on the relationship between Middle East and US, not demand and supply as lot of economist or people would like to believe. Without the support of developed countries OIL will be trading at dollar twenty a barrel.

How Saudi Arabia can play the game
Saudi Arabia should continue to have strong relationship with developed countries, and generate as much reserve as possible using OIL export. Saudi Arabia needs to pursue aggressive SOLAR strategy as well. From a branding point of view it means, they need to position as an Energy supplier of the world, not an OIL supplier. Some of thoughts are outlined below:

  • It is very important that Saudi Arabia make huge investment in SOLAR energy plants and Technology Company all over the world.
  • They currently have lot of dollar reserve. I would argue that lot of reserve should be directed to building and owning SOLAR energy capacity all over the world. Dollar will eventually lose value and they should not wait.
  • Energy grids, the way electricity is transported, is a critical component of the infrastructure that requires massive investment. This is a huge investment opportunity for Saudi Arabia. Best thing is that this investment will have no resistance from the receiving country. Off course the country has to be friendly, otherwise they can seize the asset. It is a pure investment play.
  • Significant number of countries in the world will welcome Middle East investment if it is meant for SOLAR energy production.
  • Saudi Arabia will reduce it dependence on OIL as the only source of revenue. Remember there will be lot of opposition from the developed countries, because they will lose influence over Saudi Arabia,
  • I think Saudi Arabia should not encourage lot of real estate development in their country. Currently this is a big source wasteful expense.

Summary
Every country will have to adjust to this reality of SOLAR GOLD over time. Middle East countries with significant reserve can take advantage of the SOLAR GOLD opportunity by investing in SOLAR power generation, solar technology company, and infrastructure  for electricity grid.

It is not possible to discuss every country in detail in this article. If you would like to discuss a county of your choice, please send me a note @bagarwal.india@gmail.com

You have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask by sending email or writing a comment.

http://www.redhawkinvestments.com

Bipin Agarwal

bipin.agarwal@redhawkinvestments.com

https://twentyminutelifestyle.wordpress.com/abou

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De-coupling of OIL from world economy July 9, 2009

Posted by Bipin Agarwal in Future of transporation, Global Economy, IT Offshoring - Future Direction, IT offshoring and Real Estate development, Politics and economy, Quality of Living, Real Estate Development in Global Economy, Real Estate Development in India, Real Estate development in USA, Recession.
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OIL Power – OIL, the dominant source of energy has impacted the world economy and power struggle among countries for a long time.  The effect has been more visible for last twenty five years. Middle East, Russia, other Oil producing countries have enjoyed unprecedented boost to their economy and foreign reserve  because of high oil prices. We all know that it is not a pure supply and demand dynamics. This game has worked well because there was no other significant sources of energy that was easily and readily available.

Past Effort to Change – There have been lot of attempts to create new sources of energy including nuclear power, wind energy, bio-fuel, and clean coal. All of these efforts have been successful to some extent, but none of them significant enough to change the dynamic of world economy and power status. Lot of that has to be with the economics of the particular method (bio-fuel, clean coal), time it takes to set up the plan and disposal of waste (nuclear), predictability of the energy generation (wind). As a result, none of the method so far have emerged as a challenge to OIL energy.

Off-course like everything else, corporate interest and desire to maintain power status by countries has further compounded this challenge. Both OIL and defense industry (selling arms to protect the supply of OIL sources) has played a significant role in creating hurdles. Politics has played a big role as well. Keeping the OIL price high forces the poor country to spend their significant resources for buying oil, hence limits investment in other areas for productive growth. Further, the market for automobile has been too large for these corporate to let it go easily.

What Has Changed – It is fair question to ask. There is lot of new dynamic from developing countries to developed countries. Growth in the developing countries India and China have changed the market dynamics for Oil consumption. These countries cannot afford to import OIL they need to support the economic development.  Economic development is putting a lot of pressure on the politicians to find alternate source of energy. Developed countries, US and part of Europe have so much debt that they have to figure out a way to reduce OIL consumption. US is suffering the most from OIL dependence. There is lot of domestic pressure in US to end Oil dependence.

Solar, the GAME Changer – We all know that SUN is, as predictable a source of energy as far as humans are capable of visualizing. The capability to harvest this energy on a large scale in a economic way has been a major barrier to solar becoming a challenge to OIL.

Good news is that now we do have a scalable and reasonable economic solution to harvesting solar power.  Significant reason for this change is because we can cost effectively manufacture the devices capable of harvesting this energy as opposed to conventional means of either drilling (oil and gas), digging (coal), or changing the course of rivers (Hydro). Recent decision by US government to review sixty seven thousand acres of land for solar power generation is a further validation of the direction of solar based energy. Large corporation currently own large tract of land to participate in the opportunity, I call it SOLAR GOLD. Gold is not black any more.

Impact on World economy and Power – Every country will feel the impact of this change (SOLAR GOLD) differently. It is not possible to discuss every country in detail in this article, So I will talk about some regions, countries. If you would like to discuss a county of your choice, please send me a note @bagarwal.india@gmail.com

Middle East and Russia, there have been a lot of conversation that OIL at dollar eighty a barrel is what they need. It cost about couple of dollar to produce a barrel of oil. Why do you think world will come to the rescue of Middle east and Russia if Solar is available.  While Russia is better positioned then Middle east because of their defense capability, but that is not good enough.  President OBAMA is playing the card right by going to Russia, putting the arms control pact and engaging Russia for nuclear issues so that defense capability (industry) becomes a  non-issue. These are not well positioned for long term.

China & India – Both countries are heavily dependent on importing Oil and Gas currently. China has been pro-active in securing the oil supply like USA has done for decades. This does change the long term picture. Both countries will resort to using Solar in big way and this position them very well in the long term.  These two countries are currently not dependent on Oil Export for their economic prosperity and it will be huge advantage in the long term.

Other developing and emerging countries – This is a mixed bag. Some of the developing countries have OIL export in combination with other industries (Mexico – OIL and manufacturing). Other countries in this block have lot of domestic economy. It is unlikely that any of these countries will ever become a super power. There will be wide range from being no effect to significant impact for each of the country.

Europe – There is part of Europe that is well developed, West Germany, UK, France, Denmark, etc. then there is part of Europe that is still developing such as Eastern Europe. It is unlikely that any country in Europe will be a Super power in the long term, However Europe as a block (European block) has the potential to be a significant player, that is only if they can stay together which is very unlikely. It is human nature. US, China and for that matter some of the countries within Europe will do everything possible to make sure that Europe is divided and chances are that they will be successful.

USA -It is interesting. USA is a huge importer of OIL but also is superpower. How did that happen? Dollar as a world currency has helped USA more than anybody is willing to admit. Defense capability, other industries such as financial services, technology  helped USA to be the dominant world power. Immigration policy of USA to attract the brightest from all over world has played a key role. USA is also taking big steps to reduce dependence on the OIL. USA is pushing for electric car as a transport mechanism and pushing Solar to produce bulk of its electricity. Since all this is being done in the private sector with government incentives, USA is moving at a fast pace to maintain the Superpower status.

Summary

Every country will have to adjust to this reality of SOLAR GOLD over time. If you are a  country that is largely dependent on Oil export only, there is lot of work cut out for you.  Country currently importing huge amount  of Oil (USA, lot of European, developing countries), there is a significant opportunity for you to position yourself for success. It will require a focused effort, a combination of policy, investment, and incentives both in the area of energy production, education, and infrastructure.  A country with a population base (critical mass) will have an inherent advantage (USA, China, India) to play in the super power league.

You have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask.

http://www.redhawkinvestments.com

Bipin Agarwal

bipin.agarwal@redhawkinvestments.com

https://twentyminutelifestyle.wordpress.com/abou

Future economy .vs. Bill Gross, George Soros, and Nouriel Roubini June 22, 2009

Posted by Bipin Agarwal in Future of transporation, Global Economy, Politics and economy, Recession.
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3 comments

Everybody who has any interest in economy, market, recession, recovery from financial meltdown, probably have either heard or read about these three people;

  1. Bill Gross (Bond king, PIMCO)
  2. George Soros (philanthropist, and ex. Hedge fund trader)
  3. Nouriel Roubini (Dr. doom, NYU economic professor)

If you are thinking, that these three ultra smart people will have similar views and thinking about the current and  future state of economy, You are dead wrong. Alan Greenspan, ex. Fed chairman is also very influential, who can move the market but you cannot count on making your economic strategy dependent on him, because he is a paid consultant and he is paid by the likes of PIMCO, UK government, political think tanks, etc. Let me first give you a little background of the above three people, on their incentive, and interest which I believe have hugely effected their views.

Bill Gross: This Sunday June 21st there was front page write up on Bill Gross in New York Times. Article outlined clearly that his view are more reflective of how he is going to make big money based on his partnership and connection with US government.  If it is good for him, that is what counts.  He is a fund manager and trader. He is a strong supporter of PPIP (Public-private investment program), because that is how he and his funds will make billions in fees and his investors may do well.

George Soros: Last week George Soros wrote in Financial Times that worst of the recession is behind us. Government should continue to do more in the form of stimulus until credit market is liquid, after that, they need to figure out as how to get out of the market and work on reducing their debt. Market are not efficient, his theory of reflexivity (or his fixation with the theory) drives his views. He is a big supporter of OBAMA administration. His life experiences are definitely inspiring. He spends more of his personal time on Philanthropy, and world cause. His most recent gift to Eastern Europe of 100 million dollars  to deal with economy is most recent example of giving.

Nouriel Roubini: Dr. Doom as he is now known in the world is a economic professor.  He is famous, is making lot of money by consulting, publishing research paper, etc. In the current economic environment, where People are fearful, will pay you a lot of money if they think you have a solution. The fact is, he has no solution, He only has suggestion to government that will not listen to him any way. He is in a safe zone. He is covered. If economy turns out to be his way, he is covered. If economy gets better I do not think people will ask him question and in any case, he will take the credit.

Conclusion & summary: After reading the overview I provided above, and off-course you should read more about them, you cannot formulate any definite point of view of the future economy.  But unfortunately, these are the guys who make headlines on Financial Times, New York times, CNBC, Bloomberg, Yahoo news, etc.  It is possible that you can make money by investing with Bill Gross, and his funds, You certainly do not want to buy expensive research form Roubini, that will make you only poor and no better insight then you already may have. George Soros is interesting. He is optimistic and making some good obvious suggestion to government.

I personally think that lot of the pain about residential real estate we had to go through is behind us. We still need to realize the full extent of losses for commercial real estate, credit card portfolio loss.  It is possible that the loans sitting on the balance sheet of financial institutions are still overvalued, so what? these loans will be written down over time when they mature or people decide to sell their house or foreclose. There could be another couple of hundred billions in write-off by financial and non-financial institutions, however that will not impact the economy much. Biggest unknown right now is, the USA government deficit financing and how it will impact the USA domestic and worldwide economy. Unfortunately, you one can not predict the economic outlook for short or medium term (up to 10 years) based on economic fundamentals only, economy is hugely effected by the political events and strategy. In the long run,  it is more important to know, who will come out as a winner once the dust settles down.  USA, China, Mexico, Germany, India, Africa, and Brazil are well positioned for long term overall economy. However it will not be a smooth ride. Hold your rope tight.

You have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask.

http://www.redhawkinvestments.com

Bipin Agarwal

bipin.agarwal@redhawkinvestments.com

https://twentyminutelifestyle.wordpress.com/abou

CHINA Super Power – Do not move their Cheese June 18, 2009

Posted by Bipin Agarwal in Global Economy, Politics and economy, Real Estate Development in Global Economy, Recession.
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CHINA IS A SUPER POWER already.

  • China GDP will grow by seven percent or more next year.
  • China will mandate buy China for domestic usage
  • China will buy IMF bonds
  • China owns about 800 billion of US Treasury
  • China has two trillion dollars of foreign reserve. This will grow to three trillion in next five years.
  • China wants to have significant say at IMF
  • China does not want to called as part of BRIC, It should be renamed as BRIM (Brazil, Russia, India, and Mexico)

CHINA wants it bad, and they may be right. They have all the attributes it takes to be a super power. Financial times has a special addition called CHINA confidential to give outside world a good insight into CHINA. These are all facts, not fiction.

Why there is problem in accepting CHINA as a super power? It is time that G-7 or G-8 should be re-organized to represent the new world financial powers.  Current grouping based on the dollar value of GDP is misleading and does not take into account the realities of  the world economy.

If  other super power, IMF, or world economic forum or other developed countries have a problem in accepting CHINA as super power, I have another suggestion.

Let us have cheese and non-cheese economic blocks. All the countries that consume significant amount of cheese; USA, Italy, European countries,  should be grouped into one category.  Countries that do not consume a significant amount of cheese; CHINA, India, Indonesia should be grouped into a separate category. It will be then possible to look at GDP of cheese eating countries and non-cheese eating countries. This will stop the currency war among dollar, Euro, yen, pound, and Yuan.

What I have described above is not a joke. There are several benefit of doing it. You may have read the famous book; “Who Moved My Cheese”. Here is the link if you are interested.

http://www.whomovedmycheese.com/

Once you have above two categories defined, if any of the country in the non-cheese block does not succeed financially, they can not say; “Who Moved my cheese”, well you are in the non-cheese block, there is no cheese to be moved.

Reality is that America is well positioned to prevail economically for lot of reason. I do not think America need to worry about China in the short term or long term.

You have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask.

http://www.redhawkinvestments.com

Bipin Agarwal

bipin.agarwal@redhawkinvestments.com

https://twentyminutelifestyle.wordpress.com/about

Investment outlook for next twenty years May 22, 2009

Posted by Bipin Agarwal in Future of transporation, Global Economy, Politics and economy, Quality of Living, Real Estate Development in Global Economy, Real Estate Development in India, Real Estate development in USA, Recession.
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Where to invest? This is an age old question, answer to the question changes with time depending on the political environment, social and economic environment, and individual circumstance. Current political, economic  environment and social value system (individaul .vs. family) could not give more confusing, and conflicting messages.

Economic and Political Environment – Debt rating of so called rich countries are on credit watch with negative outlook. Recently UK was put on negative watch by S&P, US is next an dso are so many other countries.  China is focused on domestic spending, export monopoly, political turmoil, and desire to be on the top in next twenty years. Record number of war conflicts, from Iraq, Africa, to Asia, along with growing number of business bankruptcies, government sponsored stimulus adds further complexity to the decision of future of investments.

Investment Environment – There is lot of confusion about the area of investment. Everybody I talk to seems to be confused where to invest. Gold, real estate, retail, commodity, transporation, stock, bond, fixed deposit, or just cash?. Future economic environment will  be inflation, or deflation, or stagflation? There is no one answer that applies to every investment decision. It depends on your particular situation, net worth, objectives, lifestyle, risk appetite?.

This write-up is not a wealth management planning guide. Primary focus of this article is to outline the macro level investment opportunity for people who can take long term view of their investment and are looking for investment return much higher then, offered by fixed deposit and have the risk appetite. Again specific decision will have to take into account the political and financial system of the country.  Best way to decide about the macro ares of investments is to somewhat ignore all this confusion, and focus on fundamental needs of life. People need a place to live, they need to eat and also they need to move.  Somebody asked me, what about clothes, well this is not a future growth industry because of level of automation and consolidation that has happened in this industry. The three macro area of investing are:

  1. Real Estate
  2. Food
  3. Transportation

Real Estate – Real estate investing is not about just building the house and offices and expecting them to sell. After all, real estate valution is the cause of  the current economic issues. This has been the case across all the countries including developed, developing, and poor.  Key driver for real estate moving forward will be affordability.  Population is growing and will cross 7 billion by 2013. From cost and maintenance point of view it is impossible to build single family home (large or small) spread over large land.  Recent effort by TATA in India to build a small home for bottom 30% of the population for a cost of 10,000 dollars is a good step in the direction. However, key failure in this scheme is that every house is sitting on a land and there is no vertical construction. Another encouraging trend across the world is about apartment/condo living. This makes effective use of land and also offers lower maintenance cost. There are other effort such as what China is doing in building concentrated community (business and residents together), Eco-friendly community effort at different places, and ‘Twenty-Minute Lifestyle’ effort by REDHAWK investments.

Food – This is a tricky one. You may be thinking, what is wrong with me? Everybody needs  food, this is a obvious opportunity, what is so tricky about it. Well, size of this opportunity is dependent on the eating habits of the people. Most logical one, veg .vs. non-veg. We all know it takes five to six times of more raw food and water to feed a non-veg eater.  There is one exception when people eat fish. They are naturally grown and lot of people in Europe will not consider them non-veg.  In spite of the above debate, this opportunity is going to grow. Agriculture will be a large part of opportunity. We should expect that per capita spending on food will go up because of the limited fertile land that is available.  What Korea, and some other countries are trying to do by leasing large part of fertile land is because of two reason, 1) fear, to make sure food is available for their population. 2) future business opportunity.

Transportation – It is a human nature to move around.  People move  in search of better life, opportunity, curisity, and pleasure. Globalization, and disaprity in the wealth of rich and poor has further intensidied the desire to move. Migration from village to city, from city to bigger city, across the country, movement withing the city and across city, all requires some form of transportation, personal or public. Infratructure spending for transportation will surpass any other organized spending by government and people.  Given that government have limited resources, we will see increasing investment opportunity in the area of transportaion infrastructre by building road, rail link, airport and trasnporation serives.

Summary – Investment opportunity for future should not be confused with the wealth management.  There are lot of corporations that can give you wealth mangement advise based on your personal situation. This write-up is fcoused on business making investment decision and people investing in these business to create wealth. By definition, Investment should not be short term focused. Ability or need to create liquidity is a key data point while making investment decision.

You have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask.

http://www.redhawkinvestments.com

Bipin Agarwal

bipin.agarwal@redhawkinvestments.com

https://twentyminutelifestyle.wordpress.com/about

Government should buy struggling financial institutions April 20, 2009

Posted by Bipin Agarwal in Global Economy, Politics and economy, Recession.
4 comments

April 24, 2009

Stress test framework has been issued. It seems like a reasonable framework.

This is what a risk management part of organization of these financial institutions was supposed to do, what happened? What were CEO, CFO, high paid management, and Board doing? CEO of Bank of America has demonstrated that CEO can not be trusted to take care of shareholders.  Board members are typically recruited by the CEO, you can not expect them to behave any different.

Come May 4th, final report will be out.  At this time, government,  not the financial institutions should decide the capital raising approach if these financial institutions do not have adequate at risk capital. Why would private investors invest in the common equity of failing financial institutions? As I have suggested earlier, get rid of the dead wood and move on. Press, politician will make lot of noise to protect their owners.

US government, please focus on the real banks, and not your vote bank.

God bless America

Bipin Agarwal

April 20, 2009

First quarter 2009  results for all major US financial institutions are out.  As a follow up to my blog on March 4, 2009 I wanted to reiterate my conclusion.

I had suggested earlier that Government should acquire these major financial institutions at the market value and get over this market gyrations every day based on the prediction of the analyst or economist who in any case have no clue of what is going to happen.

From market point of view, CITI and BOA are the two wild cards related to so called stress test. Government is not helping by not being upfront. It seems like there is a fight going on between industry, government and some vested interest. Some would like CITI to be nationalized, CITI may be saying if you do that to us, we will take BOA down with us.  Please get over it. Take care of the country first. This is not the time for personal agenda.

The latest estimate from IMF is that there will be total loss of 4.1 trillion as a result of the credit crisis, few weeks back IMF estimated that US financial institution will loose $2.7 trillion from the credit crisis. This estimate for the United States was nearly double the IMF’s projection from just six months ago. I would make a humble request that entire IMF management should resign for their incompetence.

I read yesterday that Dr. Doom (NYU prof. Nouriel Roubini) is predicting another 400 billion in losses for US. I have to be honest and respectful, Dr. Doom has no clue. He is always shifting the goal post.

I saw another comment from the  Nobel Prize winner, that makes lot of sense and is consistent with my view. “We have little to lose, and much to gain, by breaking up these behemoths, which are not just too big to fail, but also too big to save and too big to manage,” said 2001 Nobel Prize recipient and Columbia University professor Joseph Stiglitz, one of the witnesses testifying before the Joint Economic Committee of the U.S. Congress Tuesday morning.

Simple proposal for Banking industry – Solution I have proposed is not complicated. US government, please acquire BOA, CITI, WFC and several other regional banks. clean up the balance sheet. create a regulated banking utility (regional) to handle basic banking function. Take all the loan portfolio, create six businesses out of it, that will be initially majority owned by government and can be then sold off over time.  Politicians (both party) will create lot of noise, who cares? Trust me, they will be relived at the end and can go back to their voters saying the Problem Fixed.

Stay tuned.

March 4, 2009

Everyday sames news get repeated on the TV about economy, recession, CDO, credit loss, and market keeps swinging.  Now that government is conducting the stress test, they will know the real health of the big 19 financial institutions.  The institutions that do not pass the test, government should acquire them (buy them at the market value) or let them fail right away without any further support.

In addition to cleaning up the US financial institution, US need to put pressure on other countries not to be the safe haven. This will help world economy.

Acquire the banks not nationalize them

Shareholders have paid dearly for the mistakes made by the corporate executives, consumer, and government. it is time to bring some sanity to this mess and move on.

US can acquire some of the large financial institutions like CITI, and Bank of America at the current market value. It will create lot of confidence in the market and get rid of everyday bad news. US should buy rest of the AIG as well and be done.

Put pressure to eliminate Safe haven

Another area where US can force and help clean up the financial world is to force the disclosure in offshore tax haven world. Why it is legal to move your money (legal or illegal source) into a different county? Switzerland, Panama, lot of other countries are involved. Rather then focusing on Iran nuclear ambition,  US along with UN should focus on this issue.

There are significant benefit to both US and developing countries if black money can be reduced. It is possible to introduce legislation in all the countries to give people one time opportunity to declare all illegal asset, pay 50% tax and they become legal. After a cooling period of one year, any illegal money will be subjected to full seizure and jail term.  We will see right away that money will flow back to the countries from safe haven countries and US will benefit a lot because of the perceived transparency of the market and fundamentals of the country.

Conclusion

It is time for all the political parties to come together and focus on the country for a change. You all will get the credit for making it happen. Democrat and Republic alike are doing more damage to the confidence of the people then any other known issue.

Alan Greenspan, Bill Gross, Warren Buffet are all stock picker or losers. Alan Greenspan could not figure out how to run FED, when he was in-charge (I do not know what music was he listening). Warren Buffet got lucky with two stocks (McDonald and Coke), Bill Gross has lost more money for the investors then he will admit.  Economic policy of country should not be decided based on what these people are saying. FED, Treasury, and Economic council has the people to make it happen.

God bless America.

If you have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask

http://www.redhawkinvestments.com

Bipin Agarwal

bipin.agarwal@redhawkinvestments.com

https://twentyminutelifestyle.wordpress.com/about

Florida does not get it – Real estate development April 12, 2009

Posted by Bipin Agarwal in Global Economy, Politics and economy, Quality of Living, Recession.
3 comments

Coming soon to the Sunshine state: the sunshine city.

There was a big announcement from sunshine state about a major real estate development. This will be an eighteen thousand (18000) acres development for eight thousand homes along with retail, work space and other amenities. Trying to put lipstick on this pig by announcing a 75 MW solar energy plan by the  Florida Power and light, utility industry for 400 million dollars. You can read more by following the link below.


http://news.yahoo.com/s/time/20090409/us_time/08599189030800

Real estate development claims that everything will be in walking distance including work, retail, and play. This will be model environment friendly city. A former sports player is involved in this development.

Florida does not seem to get it. Let us see, 18000 acres is about 100 plus sq miles. You can walk to every facility under a hot sun riding a fast horse. How else will you walk 10 miles and feel good about it? Even if you are ready to believe that they will keep half open space, there is probably 4000 acres of golf and park. How much water they will use for rich 8000 families?  They call it socially responsible and sustainable? Let us go ahead and put state of the art electric train system funded by government to make their life comfortable at the expense of Tax dollars. I sure hope they are not using any of the  energy independence dollars to turn their dream into reality. It seems like a scam not a sustainable real estate project.

The history of Florida is littered with spectacular, landscape-changing proposals that never made it past the drawing board. Real estate industry is flooded with so called old business, politicians, and sports star (including gambling). We all know if the project is not feasible on the economic basis, political connections are always there to help.

What they do not understand that world is changing. People are looking for great living experience, affordable, and environment friendly.

Real estate industry has to wake up and change for the new reality of the world.

Bipin Agarwal

Incredible Colorado – Destination for Twenty Minute Lifestyle(TM) March 17, 2009

Posted by Bipin Agarwal in Global Economy, IT offshoring and Real Estate development, Politics and economy, Quality of Living, Real Estate Development in Global Economy, Real Estate Development in India, Recession.
6 comments

Incredible Colorado – We have a time of great crisis. Individual states are competing to sustain and improve their share of GDP and population. At a time like this, political and business leaders have a great opportunity to provide a compelling story for businesses and people across America to stay in or move to Colorado and make it a destination state. Twenty Minute Lifestyle (TM), is that compelling vision. This vision supports the creation of communities where people can work, live, play, and have access to all the amenities for quality life within the community and cuts down the wasted effort expended in commuting. Thank you President Obama to come to Colorado to sign the bill and recognize Colorado as a Energy economy state.

America is going through a transformation. Every transformation in the history has resulted into dis-location of economic activity. Colorado has gone through oil bust, mining bust, and telecommunication bust. These experiences along with focus on infrastructure and education have created an opportunity such that next twenty years belong to Colorado as far as economic development and quality of living is concerned.

Colorado is uniquely positioned to participate in Energy economy, tourism, and technology innovation. That happens to be the focus of Obama administration as well. Great landscape, educated workforce, beautiful mountains, and a diversified population. Colorado has little bit of everything from telecommunication, mining, tourism, defense and now a big force in alternative energy.

There have been several attempts to create a distinct local identity and community experience in Boulder, Greenwood Village, Highlands Ranch, Stapleton, and others. Most of these communities have been designed around a commute based lifestyle and lack the inclusiveness needed to create a fully vibrant, stable, and viable community. The lack of a strategic vision in planning shows up in very fundamental ways – , Boulder (no planned affordable housing for young families), Highlands Ranch (more of residential commute based community only), Greenwood Village (only for upper middle class and rich). They all lacked strategic vision, planning and local government support to build an ecosystem and community that can withstand economic ups and downs and combine a earnings from and global economy with a fully integrated local spending economy.

A Twenty Minute Lifestyle community should comprehend that a vibrant community is created when a diverse community is created that can address the lifestyle requirements of young and old, single and married, rich, middle-class, and younger earners just starting out, and ensures that people will have ample outlets for spending their income in the local community. In order to support the income needs of this diverse, vibrant community the local government should attract big and small businesses which focus on the new economic paradigms of biotechnology, alternate energy as well as the tried and true staple businesses. Local government should ensure that retail areas are integrated into the communities (and not set up as strip malls) with access to pedestrians and cyclists, an ambience that encourages people to get out of their cars and walk and mingle with their neighbors, and creates foot traffic for retailers. In the end Americans will not give up their car based lifestyle unless the alternate is a more attractive and rich lifestyle.

Riverwalk development project near Fort Collins, a brainchild of STONERCO, and Turnky developments is a perfect model project. This 900 acres development will provide an environment for companies to have a walk to work environment, affordable housing for families, access to education, retail, health care, and sustainable living with a focus on environment. Earlier attempts by Stapleton, and Highlands Ranch while successful as real estate development are not in-line with the energy economy, and future reality of sustainability requirements, affordability, quality of living. Riverwalk will be the benchmark; defining how future real estate development (Twenty minute lifestyle micro-cities) will happen in Colorado, and across the world. Riverwalk will be the first model micro-city in Colorado.

Wish you all the best, Riverwalk, and Incredible Colorado!

if you have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask

http://www.redhawkinvestments.com

Bipin Agarwal

bipin.agarwal@redhawkinvestments.com

https://twentyminutelifestyle.wordpress.com/about

Will Glocalization kill Globalization? March 10, 2009

Posted by Bipin Agarwal in Global Economy, IT Offshoring - Future Direction, IT offshoring and Real Estate development, Politics and economy, Quality of Living, Recession.
1 comment so far

April 30, 2009 update

Today Chrysler announced bankruptcy. I think this is a good news for America. Rather then going through the pain every day, this will help the employees and company. Shareholders and debt holders will not get much.

Is GM next? This could a warning to bond holders of GM. Unlike Chrysler, until now no body has been lined up for GM. Nissan had expressed interest.

You should expect that there will more local manufacturing of car, irrespective of the owner. This is a great day for Glocalization.

As I had predicted, Glocalization will accelerate US economic recovery.

Bipin Agarwal

March 10, 2009  update

Discussion about Glocalization is over. It is going to happen. In fact, USA will be the biggest beneficiary of this trend in the short and medium term.Long term picture is not great.

Recent article in Financial Times by Krishna Guha and others called this trend as de-globalization.Thank you for endorsing it, even though they are late in expressing opinion.

Talk is cheap, while everybody including G-20 will talk about the open trade, free trade, etc. The fact that Bank of America (so called global bank) has to withdraw the offer letter from the MBA student studying in US is the real begining of what is coming.

Currently, US will benefit if any manufacturing, or service activity shifts to US.  With government involved in financial services, health care and manufacturing, it is given that activity has to happen in US.  Risk is that US will go too far into it. Recent action by Bank of America to withdraw the job offer to MBA student studying in US, who are not citizen, is alarming. Are we going to destroy our education industry?

Long term implication of  glocalization for US are not great. At the end of the day our behavior will encourage the other countries to follow the same policy. Demographic of the  population is in the favor of China, India, and other countries.

Glocalization will accelerate the decoupling of the rest of the world economy from west.  It will be good for our economic and political leaders to discuss this topic in detail and put the right policies in place as opposed to have the policy of the day with an eye on the next election.

Feb 2009 update

Debate about the Glocalization is over. Now it is a matter of execution. How long will it take for all the countries to put the regulation to make it happen.

It is true that some industry will feel the impact more then the others. International shipping, heavy manufacturing, energy, financial services will be more local. Technology industry will continue to be more global and will not be hit as hard from glocalization.

New budget proposal from the US administration has set the foundation for glocalization war around the world.

  • Government will start taxing the earning of foreign operation of the companies. This will have far reaching effect on the corporate structure and investors sentiment.
  • We should expect that there will be lot of pressure for creating local jobs across the world, meaning more protection centric policies.
  • GM will separate the Europe operation and SABB subsidiary, eventually leading to local government bailing them out. They are going to do this just to benefit US? Not really. There will be increase in import duty for luxury items such as cars, etc.
  • All the emerging countries, African nation, Eastern Europe will start shutting out China for production outsourcing in the future.
  • Banking industry will be much government owned – net result will be local financial services industry. US will create lot of noise, but no body will care.
  • UBS is the wild card. If this financial institution is shut, there will be lot of money that will go back to poor countries. Majority of illegal money belongs to politician and business people of poor or emerging countries.
  • US dollar will de-value significantly over next decade, making much of the out-sourcing irrelevant. US and Europe will continue to prosper because the quality of life is much better there.

Jan 2009 – I had written this before Obama budget was proposed.

World Economic Forum at Davos is in full swing. Politician, executives, policy makers, bankers are busy at Davos worrying about the impact of financial meltdown and how it may change the behavior of the countries to introduce protection, regulation mostly under pressure from the population, politician worried about getting re-elected, and domestic industry.

If governments are being expected to inject substantial amount of resources (tax dollars) to resurrect their economy, their new shareholders (the taxpayers) will demand that the resources are used to create local jobs.

Glocalization will be driven by people

There has been demand in US to force the companies to use local labor and products on stimulus related projects, There are protest across UK by energy workers against TOTAL bringing the foreign labor to build and operate plan in UK, Indonesia is taking the position that if pharma companies want to sell their drugs, they have to make them locally.  China, Russia mostly do not have to worry about this, because not only nobody is allowed to migrate there, but also because of the nature of their government. In any case mostly immigration is more prominent by the people in search of better  life style. Some countries will do more explicitly, some will do it softly and still preach the others that they should not do it depending on the local economic, and political environment.

Glocalization will accelerate the maturity of decoupling

One big lesson for the countries that have benefited in the last few years from the export economy, or commodity boom have learned that while you can generate surplus by sending your stuff to west, the IOU you get in return may not worth it.  Countries need to learn that they need to balance the export and import. Economic growth is not sustainable unless there is domestic consumption.

We all know that basic necessity of life can not be centralized. Is it possible to put all the clothes in a warehouse in China and every body in the world will feel dressed? Can you put all the food in storage in US and there will be no hunger anywhere in the world? Can you put all the cellphone in Nokia headquarter and everybody will be connected? Life demands Glocalization. Does it mean the era of globalization is over and the new era of Glocalization is about to start in a big way. Question is not if it will happen, it is just how long will it take for it to happen.

I sure hope big shots spend considerable time in Davos to discuss this issue rather then just rub shoulders.

if you have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask

http://www.redhawkinvestments.com

Bipin Agarwal

bipin.agarwal@redhawkinvestments.com

How will America create 3M job in four years? March 5, 2009

Posted by Bipin Agarwal in Global Economy, IT Offshoring - Future Direction, IT offshoring and Real Estate development, Politics and economy, Quality of Living, Recession.
8 comments

Why Did America lost jobs and how the new jobs can be created. Everybody is asking.

America has lost more then  three million jobs in last two years. Everybody is worried about how many more jobs will be lost? What kind of jobs will be created by the Obama administration? Future economy will be energy economy, digital economy, or agriculture economy? Will job be created at all or it will be just political positioning? What effect the glocalization (not globalization) will have on US? Given that about fifty million jobs have been lost in the world and growing young population, is there a possibility of social unrest that will change the landscape of how world will look like in next few years?

Let us first look at  why and what kinds of jobs are being lost in America.

  1. Manufacturing Job Losses
  2. Service Job Losses
  3. Real estate construction
  4. Productivity Improvement
  5. Currency Arbitrage

Manufacturing Job Losses – Seems obivious to everybody. Low tech manufacturing jobs related to clothing, items of daily usage, applicance, what we use in kitchen, all these jobs are gone. Most of them moved to countries that have abundant labor and reasonable or good infrastructure. About a decade ago we started using high tech manufacturing, some of the R&D, etc to emerrging countries because of availability of talent in thouse countries, low cost primarily due to currency arbitrage, our concern for environment.

Service Job Losses – We started loosing service jobs about a decade ago.  It started with talent hortage such as Y2K and then expanded to broder area of Information Technology services, Call Center outsourcing, Business Process outsourcing. Key drivers for these job loss werer the availability of talent at much lower cost (currency arbitrage),  focus by business on bottom line, competition from global companies.

Real Estate Construction – Cheap credit combined with greed by business, home owners, failed regulation caused the real estate boom of unprecendent magnitude in America. Joe the Plumber, could make as much money as a college  graduate. Now that the construction has stopped, real estate (both commercial and residential)  is available for less then the cost of construction. Huge number of jobs have been lost. It will take at least five years to re-start the new construction activity at significant level unless there is dramatic change in the population, living style or some external unknown factures.

Productivity Improvement – There has been a great amount of productivity improvement as a result of technology changes that have occurred in last decade. Automation of supply chain, cell phone, IT applications have automated lot of task that were manual.  It had a big effect on corporate productivity and quality of life improved. Down side is that lot of job became redundant. Financial services company, health care company, retailer eliminated lot of jobs as a result of productivity improvement.

Currency Arbitrage – We in America enjoy the benefit of dollar as a world currency. We are able to afford more toys, electronics, cloths because they are made in the countries where currency is not strong compared to dollars. Corporation had no choice but to move these jobs offshore (read job loss) to give us the luxury.

What kind of Job American Can create? I have identified several different areas that will create the proclaimed 3M jobs in four years.

  1. Changing Family Structure
  2. Alternative Energy – production and maintenance
  3. Housing renovation – Energy efficiency
  4. Manufacturing – Next generation automobile
  5. Small business focus
  6. Real Estate & Infrastructure Development
  7. Information Highway
  8. Rural development – Agriculture economy

Changing Family structure – West pride itself into being a productive society with equal rights. What about responsibility, and duties. Is the purpose of life is just to get a job? what about family. West lot of unemployment is because both parents want a job. We all want to have a house and not home. A  family centric society will make our life experience more full filling, more time for kids, friend, and community. We will need less job.

Alternative Energy (production and maintenance) – renewable energy production based on solar and wind will not only reduce our dependence on imported oil but also create local jobs for creation and maintenance of these facilities.  This coupled with investment in energy infrastructure (smart-grid) will create significant jobs.

Housing renovation – Energy efficiency – Improvement in technology for solar energy combined with government incentives is making it feasible to install solar panel in houses and commercial buildings.  Retrofitting of existing real estate with solar panel and on-going maintenance will create jobs.

Manufacturing – Next generation automobile – Our Automobile industry that has been captive to oil industry and union is going through a much needed transformation. Since the government is investing significant money (tax dollars), we can expect that next generation automobile and associated will be produced in the country. Foreign company also realize this that is why they are setting up plants in America. After the restructuring, it should lead to new job creation.

Small Business Focus – Our capital market structure encourages big business at any cost. recent merger of Pfizer, wall mart, three big banks, are just few example.  We need to create more focus on small and medium business with local ownership. One Wall mart mega store can pretty much give you most of daily needs, is run by twenty to fifty employees earning low wages and busy making money for jet flying executives.  If each of the store is split into different departments and was locally owned with wall mart was just being the back end, that will keep more of the money at local level and create more jobs. What Wallmart has done to local store, Starbuck has done to local coffee shops, Inbev has done to local brewing, Best Buy to local electronic shops. Let America create more small and medium business that creates more local jobs and prosperity.

Real Estate & Infrastructure Development – Obama administration is allocating lot of money for highways and public transportation. People have learned that living in house where you have to pay big maintenance cost irrespective to your income, is not a great idea. We should see lot of interest in community living based on condos and apartment. This will be the next real estate boom. This will create jobs in construction industry.

Information Highway -We all appreciate the impact of highways that connected the different part of the country. People could see each other and caused a boom in travel, tourism, and movement of good. Same is true for information highway. Impact of information highway on our economy is not well understood yet. Productivity improvement, ability of people to think different is huge. Look at what Akamai and iPhone did to entertainment and publishing.  Look at what Ebay did to auction and Amazon did to books. Potential to create lot of new jobs.

Rural development – Agriculture economy – This is one of the area that has received the least attention in the 20th century.  Over crowded cities as a result of pursuing a dream of quick richness and fast lifestyle.  If you have a tractor, solar energy, access to information highway, few acres of land, few cows, opportunity to interact with friends and community. This is how large part of unemployed should be made productive. In the dream of Mahatma Gandhi, this was called village. American need to make rural area attractive and respectful. Creating a rich life using a Rural economy will be key to creating employment.

Conclusion – We need change at individual, community, business, and government level. We can create more jobs and at the same time, change our thinking and family structure so we do not  need so many jobs.  One of the significant reason that both member of the family have to work is because without that you can not pay your house mortgage, car mortgage, insurance (house, car, health care). If we align our needs based on family centric society, we will be much more happy family, community, and country. Sustainable community, sustainable business will create a lasting happiness.

If you have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask

http://www.redhawkinvestments.com

Bipin Agarwal

bipin.agarwal@redhawkinvestments.com

https://twentyminutelifestyle.wordpress.com/about