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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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4 comments

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

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