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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

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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

Walk Score and Twenty Minute Lifestyle April 27, 2009

Posted by Bipin Agarwal in Global Economy, Quality of Living, Real Estate Development in Global Economy, Real Estate Development in India, Real Estate development in USA.
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April 26, 2009

Today there was a front page article in Denver Post on Walk Score, a Colorado based company. The site give you a walk score based on different facilities from your address. you can check out more at www.walkscore.com

This is a good start but only a small step based on the Twenty Minute Lifestyle (tm) concept promoted by Redhawk Investments Group.  All of the development based on Twenty Minute Lifestyle will have a top walk Score of 100.

Walk Score alone is not enough for quality living. Quality of  living for a family is based on distance, facilities, and factors such as:

  • Place of work
  • Long term viability of business and quality of job opportunities
  • Environment
  • School for kids
  • Health care facilities
  • Recreation
  • Retail
  • Affordability
  • Quality of infrastructure to support walk or bicyle
  • Quality of transportation infrastructure to City or other important
  • Quality of neighborhood (income profile and education profile)
  • Connectivity to Airport, Highway, Railway station, etc.

I want to thank Walk Score team for validating the concept we have been promoting world wide for almost three years.  True quality of living that is vibrant, sustainable, and environment friendly, will require top down approach to future of real estate. Walk score is only a bottom up approach, more useful for real estate brokers then business, families, and environment.

We all know that if you live in down town and you work there, you can walk to lot of facilities, however there are lot of reason that families will not live there or should not live there;  including affordability, quality of neighborhood, safety, lack of family interactions, etc. You may have a perfect walk score but totally unsuitable environment to live. There are lot of neighborhood, where Walk Score will be 100, but weather you should live there is a decision you need to make based on factors outside the scope of walk score.  In short, Walk Score, good as a selling point for your real estate broker, not good for family. It is these factors, that makes Walk Score a bottom up effort as opposed to Top Down approach of  Twenty Minute Lifestyle micro city.

River Walk, a development planned in Fort Collins at I-25 and Harmony, is a good example of Twenty-Minute Lifestyle.  Development is planning a suitable mix of commercial, residential, health care, recreation, retail, community supported agriculture (CSA), and other amenities.  There be a hub for connecting to public transport infrastructure. When you are living in a Twenty Minute Lifestyle, Walk Score will always be 100 plus so many others things that can not be measured using Walk Score. There are several other such micro city around the world.

Future of real estate in the world will be a cluster of Twenty-Minute Lifestyle micro cities built around the efficient public infrastructure.  President Obama announced a high speed train infrastructure for US. This is what China is doing, This is what other developing countries are also planning. To read more about US infrastructure follow the link.

https://twentyminutelifestyle.wordpress.com/2009/04/18/obama-master-stroke-high-speed-train-infrastructure/

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

Obama Master Stroke – High speed Train infrastructure April 18, 2009

Posted by Bipin Agarwal in Global Economy, Politics and economy, Quality of Living, Real Estate Development in Global Economy, Real Estate development in USA.
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Updated April 29, 2009

Financial Times today carried an article, Bill Ford chairman of Ford is advocating the gas price of $3.50 to change the auto buying pattern of consumer. Thank you chairman for endorsing my position in the article I published on April 18th below.

In fact I had suggested, tax of $2 per gallon is more appropriate.  This will change the buying pattern, tax dollars help create the high speed train infrastructure, lead people to innovate to create personal urban transportation (Smart car, Nano, improved bicycle,  other less or non polluting transportation mechanism.

Thank you Chairman Bill Ford. Bipin Agarwal

April 18, 2009

Few days back President Obama announced the massive investments for building high speed train infrastructure for USA. I call it a Master Stroke. I have been advocating such an initiative for almost a year. This initiative will go a long way in making US energy independent and also reduce carbon foot print. This effort is also consistent with my forecast of accelerating glocalization. Biggest challenge for the government is, not try to do everything right but is to make sure that there is clear agenda (no right wing or left wing) and there is transparency.

I am no Dr.  Nouriel Roubini (famous and accidentally right) who has been branded as Dr. Doom. I would rather be focused on providing solution for USA  and be identified as Dr. Boom (does not matter that I do not have a formal Dr. designation).

Industry to loose – You should expect Oil, aircraft, and Auto industry to call it a wasteful spending with no ROI. This is expected, most of the industry is having a difficult time adjusting to new reality of USA. Easy way to stop all the pain of oil industry is to impose a energy Tax (two dollar per gallon). People will pay the same price they were paying a year back. However this money can be used to build the mass transit infrastructure. This money will also reduce the Fed deficit, in addition Fed will be able to raise the interest rate to avoid inflation as well.

Industry to win – Industrial Company, financial company, construction, real estate development, environment, alternative energy, and average worker will win big. Most important, USA will be the big winner. There will be lot of real estate development opportunities. GE, Hitachi will benefit a lot. New real estate development around the concept of Twenty-Minute Lifestyle will gain significant mind share.

Industry in the middle – There will be some industries that will not see any significant upside or downside.  Expect them to declare that economy is on a stand still or government stimulus plan is not enough. It happened today with CAT declaring that China is doing a better job on infrastructure then USA. That is great. US government need to spend the money based on the priority for the country not based on the need of specific company.

Great opportunity for Colorado – Colorado is the state for next twenty to fifty years. Several mid tier cities in Colorado are ready to grow but do not have the connectivity to each other. Colorado has a unique opportunity to grab this opportunity and layout a blue print for high speed train connectivity from Colorado spring, Denver, Fort Collins, Bolder, Grand Junction, etc. I undestand that these are long term plans, but we have to start now. Phase one could be the Fast train from Fort Collins (I-25/ Harmony junction ) to Denver to Colorado Spring. Colorado. Political leadership, wake up and  make it happen. All the best, Incredible Colorado!

https://twentyminutelifestyle.wordpress.com/2009/03/17/colorado-destination-for-twenty-minute-lifestyletm/

Reason Glocalization will happen is not because government or large corporation want it, it is because people will demand it.

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