Sunday, April 30, 2006

R.I.P. John Kenneth Galbraith 

There are some incidents from when you're very young that stick with you the rest of your life. When I was in school in Cochin, I had this one memorable encounter with an extremely tall man who, we were told, used to be the U.S. ambassador to India. Obviously I had no clue who this man was and the only thing that struck me was how tall he was; he was quite easily the tallest person I had ever seen in person. But then he started speaking and his warmth for India and his ability to convey complicated ideas in simple terms began to really shine through. It was one of the first times I had heard what could be described an economics/history oriented lecture. Since that day, I've been hooked to John Kenneth Galbraith, reading with great amusement episodes from his life, like the time the Kerala government guest house in Cochin had to order a special bed for the man to sleep in, given his height.

And the more I read of his work, the more I was hooked, despite the occasional disagreement with his points of view, especially when it made the government the solution to a range of problems. I disagreed because I could see the reality in India did not correspond with Galbraith's hypothesis about government spending etc. Nonetheless, I could not ask for a better introduction to liberal economics (in the American sense). This great man, and a tremendous friend of India, died on Saturday in Cambridge, MA, making him the second intellectual giant (after Jane Jacobs) the world has lost in the space of a week. The New York Times and the Washington Post are carrying excellent profiles of the very tall man I remember so well from my school days.

Saturday, April 29, 2006

Soft Power and Bollywood 

In recent times, two major Hollywood movies I watched, V for Vendetta and Inside Man both ended to Bollywood music. With the Wachowski Brothers, it comes as no surprise since Part 3 of the Matrix series ended to the chant of Asatoma Sadgamaya, but a Spike Lee joint beginning and ending with "Chaiyya, Chaiyya" came as a real surprise. At the same time, some friends of mine in the Philippines tell me the islands are being swept up by all things Indian, especially the culture. Bollywood movies play to packed halls in places as far apart as Israel and Japan.

Many of us get too carried away with elements of hard power (economics, military etc) that we completely forget about how successful the cultural domination of the United States has been in the past century, and therein lies a lesson for India. After all, India and Bollywood (used loosely here to denote the entire movie industry) possesses the only real threat to the cultural supremacy of the Hollywood machine, especially as the country becomes more relevant on the global stage. Andy Mukherjee picks up on a similar theme in a piece he wrote for Bloomberg a couple of weeks back.
The increasing acceptance of Bollywood -- shorthand for India's burgeoning film industry -- in the mainstream of international entertainment is a telling commentary on India's reintegration with the world after more than five decades of self-imposed isolation. Just last week, Sheldon Adelson, the billionaire chairman of Las Vegas Sands Corp., told Bloomberg News he would bring Bollywood entertainment to the $3.6 billion casino-resort he plans to build in Singapore if he wins the bidding for the project. It isn't a coincidence that the forces propelling the globalization of Indian popular culture are gaining momentum just as the economic potential of the nation and its market of 1 billion people is capturing the imagination of overseas investors.

As Hong Kong was emerging as an Asian Tiger in the 1970s, kung fu fighter Bruce Lee was becoming an icon of global youth. In 1980, when the Japanese economy seemed unstoppable, audiences in the West were getting better acquainted with the land of samurais through ``Shogun,'' the hit television series. In 2001, the year China joined the World Trade Organization, the film ``Crouching Tiger, Hidden Dragon'' picked up four Oscars. Bollywood movies, especially their catchy song-and-dance sequences, are the new flavor, making their presence felt at the World Economic Forum this year in Davos, Switzerland. The changing global image of India is, in turn, shaping how Indians assess their chances of success in an interdependent world.

The 2006 Comitment to Development Award 

The Center for Global Development and Foreign Policy magazine are holding their annual commitment to development awards, which includes a "people's choice" category which anyone can vote for. The nominees include Bill and Melinda Gates, Bono, Jeff Sachs, Bill Clinton, Jimmy Carter etc. My vote, however, goes to Bill Easterly, author of The Elusive Quest for Growth and The White Man's Burden, for providing a reality check for development practitioners. Yes, I will agree that Easterly has been pretty polemical, but even so, he has restored some sense of balance to the debate and not let the advocates of increased aid run away with it, as has been the case in the past. Anyways, you can go through the list if you're interested and vote here.

There's Piracy and then there's China! 

(Via Bernhard) This story is so outrageous it's really funny. Of course, by now we all know that China is ground zero for pirating/faking everything from the newest Hollywood movies to Coach handbags. Now comes this wonderful story from the Intl Herald Tribune about pirates who have managed to scale their operations to an entirely different level by faking an entire company, in this case NEC, the Japanese electronics major.
Evidence seized in raids on 18 factories and warehouses in China and Taiwan over the past year showed that the counterfeiters had set up what amounted to a parallel NEC brand with links to a network of more than 50 electronics factories in China, Hong Kong and Taiwan. In the name of NEC, the pirates copied NEC products, and went as far as developing their own range of consumer electronic products - everything from home entertainment centers to MP3 players. They also coordinated manufacturing and distribution, collecting all the proceeds. The Japanese company even received complaints about products - which were of generally good quality - that they did not make or provide with warranties.
Steve Vickers, president of International Risk, a Hong Kong-based company that NEC hired to investigate the piracy, said documents and computer records seized by the police during the factory and warehouse raids had revealed the scope of the piracy.
These records showed that the counterfeiters carried NEC business cards, commissioned product research and development in the company's name and signed production and supply orders. He said they also required factories to pay royalties for "licensed" products and issued official-looking warranty and service documents.
NEC said about 50 products were counterfeited, including home entertainment systems, MP3 players, batteries, microphones and DVD players. Many of these pirated items were not part of the genuine NEC product range.

Wednesday, April 26, 2006

R.I.P. Jane Jacobs 

No single human being influenced urban planning and, more generally, understood and defined cities more than Jane Jacobs did. A towering influence on the way people thought about and understood urban life, Jacobs was not your typical academic. In fact, she did not even have a university degree, never having completed her Columbia University education. Jane Jacobs died last night in Toronto at the age of 89. As the New York Times obituary put it, Jacobs will always be remembered as one of the legendary figures of the 60s who completely transformed the way we think, right up there with Ralph Nader, Rachel Carson etc. The NYT piece provides a great overview of Jane Jacobs' contributions to urban life, but if you want to read some more, I would strongly recommend The Economy of Cities and The Death and Life of Great American Cities.

Tuesday, April 25, 2006

The Indian Electricity Sector -- An Update 

I was invited to a luncheon yesterday with union power minister, Sushil Kumar Shinde, hosted by the Indian Consulate General in New York. Interestingly, Atanu, Rajesh and I had met Mr. Shinde back when he was chief minister of Maharashtra and we were working on the RISC project. So, it was quite a pleasant change to meet the man without the hangers-on, as was the case the last time we met him. He comes across as a decent man, and perhaps even a candidate for president given his unswerving loyalty to the dynasty. But, that's not the point of this post. Mr Shinde was basically doing a roadshow inviting U.S. investors to invest in India's power sector (100% FDI in generation, T&D and trading). I took some notes about some key issues/facts about India's power sector, which I figured many of you would be interested in as well.

Only 56% of the Indian population has access to regular power. That's about 500 million people without access.

Per-capita consumption of power in India is 606 KWH, 20% of the world average.

India needs another 100,000 MW to come online by 2012 to keep growth going (too low, in my opinion). 100,000 MW implies an additional investment of $100 billion in generation alone, and therefor the 100% FDI, you see.

The breakdown of India's power generation looks like this:
Hydropower -- 32,335 MW (26% of total)
Thermal -- 82,500 MW (66% of total)
Nuclear -- 3,310 MW (3% of total) [to go upto 25% if we get access to nuclear fuel]
Renewables/Alternative -- 6,158 (6% of total)
That's about 125,000 MW in current production, with another 41,500 MW in execution currently.

Total commercial losses of state utilities as a percentage of turnover dropped from 40% in 1999 to 14% in 2005, though the situation remains abysmal in the BIMARU states.

There seems to be a great opportunity in rural electrification, which because of its importance to the current government, gets you a 90% grant from the central kitty, combined with a 10% loan.

Hidden in the midst of all of this was the opportunity to produce decentralized power in the 5-10 MW range, which apparently companies like GE are looking at very seriously. Personally, I am gung-ho about decentralized, off-grid power.
The real coup that Mr Shinde and his bureaucrats have pulled off though seems to be the idea of the shell companies/SPVs in the power sector. Yesterday's FT special section on infrastructure touched upon this as well.
Unlike most off-the-shelf entities, however, these "fab five" are packed with assets, such as statutory land clearance licences, water agreements, fuel links and coal blocks, assurances on power purchase agreements and even a preliminary credit rating from an Indian agency. The aim is to create and sell "running companies" with locked-in approvals - the bane of foreign investors in Indian power - to investors in India, the US, Europe and even China. Experts describe the "shell companies" as the ace cards in India's new mega-power policy, which, according to Mr Shinde, is designed to achieve "economies of scale in the delivery of power at a comparatively cheap price".
Unveiled in January, the five entities contain enough ticked and crossed regulatory clearances to lift the spirits of those foreign investors who over the past decade had all but written off India's power generating sector as a no-go area. The projects will be sited at coastal locations and at pit-heads - India has the world's second largest reserves of coal but only a fraction ends up going to domestic coal-based power plants. Each scheme will have generating capacity of 4,000mw, require investment of Rs150bn and will be commissioned within five years.

The only thing that worried me in all of this was the emphasis on large, coal-fired (dirty coal, for the most part) plants and big hydro electric projects. India seems to be determined to follow in the foot-steps of the United States in this regard, which can only lead to an ecological disaster as hundreds of millions of people demand electricity. If I were making decisions, I would certainly be looking more carefully at renewables, especially since the cost of fossil fuels is bound to increase dramatically as demand soars in India and China.

I would love to hear from the energy enthusiasts among you what you think of all of this.

Random Trivia du Jour 

As y'all know already, Dick Cheney shot his buddy Harry Whittington while on a quail hunt back in February. Cheney buddy Katherine Armstrong's 49,300 acre ranch in Texas was home to the most notorious hunting trip in recent times. Now, Katherine Armstrong is the great grand-daughter of famed Texas Ranger, John Barclay Armstrong. And John Barclay Armstrong's claim to fame is that he captured the "meanest man alive," John Wesley Hardin. Yes, the same John Wesley Harding immortalized by Bob Dylan, albeit with an extra G. In fact, the ranch where Cheney shot Whittington was bought with the $4,000 John Barclay Armstrong got as bounty for capturing John Wesley Hardin.

Monday, April 24, 2006

FT Special Report on India Infrastructure 

Today's Financial Times is carrying a full supplement called Indian Infrastructure 2006. I read the whole thing and I assure you, it's well worth it. The online version is behind a subscription wall, but I'd strongly recommend that you buy the print version or subscribe to the 15-day free trial of the newspaper. Alternatively, if you have access to Lexis-Nexis or Factiva, you know what to do. Just make sure you read it.

Sunday, April 23, 2006

The Economics of Rock Music 

Last year, I spent quite a bit of money watching U2 live in concert. Lots of people complain about how expensive U2 tickets are, when in fact U2 are probably the most reasonably priced rock n'roll artists out there today, besides the jam bands. What's more, U2's cheapest tickets are also the best seats in the house (inside the heart, ellipse etc). I skipped the Stones last year because tickets were outrageously priced and there was no point paying $100 bucks to get altitude sickness watching the Strolling Bones. The same story holds true for Madonna's recently announced concert tour. Part of this is merely the economics of demand and supply (U2 also does many more shows than the Stones), but there is another point to be noted, namely that the big ticket artists (Madonna, U2, Stones, McCartney, Elton John etc) actually make more money today from live concerts than they do from CD sales. This effectively means they're making tons more money than the chart-toppers. [It also helps that the big-league artists are also able to negotiate much better royalty terms on the CD sales and publishing] Robert Plummer has more on the economics of it all, quoting extensively from the work done by Princeton economist, Alan Krueger.
Since the start of the 1980s, the superstar effect has become more pronounced in rock and pop, with a small number of performers taking an ever larger share of the spoils. Research into the market in the US, where the trend started, has found that in 1982, the top 1% of artists received 26% of concert revenue. By 2003, that figure had gone up to 56%. Over the same period of time, the cost of US concert tickets has been outpacing the country's inflation rate. From 1981 to 1996, gig-goers found prices going up by 4.6% a year, while the consumer price index increased by 3.7% annually. Since then, ticket prices have soared. From 1996 to 2003, they rose by 8.9% a year, as against inflation of just 2.3%. Similar sharp increases have been noted in Europe, including the UK.

These insights come from the work of an economist at Princeton University in the US, Alan Krueger, who has been described as "the world's first and foremost professor of rockonomics". He based his conclusions on an analysis of information provided by US trade publication Pollstar, which has collected data from venue managers since 1981. In a paper he wrote with Princeton graduate student Marie Connolly, he says concerts are now a much bigger source of income for major-league stars than CD sales. "Only four of the top 35 income-earners made more money from recordings than live concerts," the paper says. "For the top 35 artists as a whole, income from touring exceeded income from record sales by a ratio of 7.5 to one in 2002."
But why has the rise in ticket prices been so sudden? Professor Krueger says there is no simple answer - but one explanation could be what he calls "Bowie Theory". He points out that sales of recorded music fell from 1999 to 2002, causing artists' income to decline. He believes record sales are down because many potential customers frequently download music free from the Web or copy CDs, either legally or illegally.
Before the advent of illegal downloads, artists had an incentive to underprice their concerts, because bigger audiences translated into higher record sales, Professor Krueger argues. But now, he says, the link between the two products has been severed, meaning that artists and their managers need to make more money from concerts and feel less constrained in setting ticket prices. Professor Krueger says this tendency was spotted by David Bowie, who told the New York Times in 2002 that "music itself is going to become like running water or electricity".

Sunday Quotes du Jour 

"If there were no God, there would be no Atheists."

G. K. Chesterton

"People who get nostalgic about childhood were obviously never children."

Bill Watterson

Friday, April 21, 2006

The Cooliris Plugin for Firefox 

(Via Nik Rao) Here's a Firefox plugin -- Cooliris -- that lets you preview links on Google, EBay and Craiglist. You do a mouseover and the underlying image and/or content is pulled up on your screen without your having to click through. I've only just started using it, but so far, so good, and very useful as far as I can tell. If you read the comments on this post, you'll see a bunch of reasons listed by a Cooliris staffer as to why this plugin is better than Browster.

The Chindia Debate at the PSD Forum 

The World Bank recently hosted the Private Sector Development Forum in Washington D.C. with the broad theme, "Markets and Growth: What, Where, When, and How?" Given the flavour of the year, the PSDForum also hosted a panel on China and India. Pablo Halkyard at the PSD Blog links to the presentations made by Prof Yasheng Huang on what China can learn from India, Sridhar Ramasubbu of Wipro on what India can learn from the Chinese experience while Joerg Wuttle of BASF provides the outsider's take on the Chindia debate. Some of the macro-economic numbers are dated, but other than that it's worth a look, especially Prof Huang's work.

Pablo also has an excellent round-up of articles written on the occasion of the World Bank/IMF meetings, especially about the soul searching on the future role of the IMF, even as it reports it's first ever loss, a direct consequence of the stabilizing global economy. Of the stuff I've read thus far, I'd recommend Raghuram Rajan, Anne Krueger and Jeff Sachs.

The Insanity of Indian Roads 

Boing Boing points to a hypnotic video of an Indian road crossing, shot from above. In the midst of all that chaos, the underlying order that seems to exist is somewhat mind-boggling. I don't think we get quite a sense of the madness at ground level as we do in this video. Or maybe I have spent too much time away from India now :)

The Truth About Economics 

Arnold Kling points to a fantastic line from a review of Richard Parker's biography of John Kenneth Galbraith.
LBJ threw away one of his drafts for a speech with the remark: ‘Did y’ever think, Ken, that making a speech on economics is a lot like pissing down your leg? It seems hot to you, but it never does to anyone else.’
LBJ clearly had a way words. This line ranks right up there with Truman's famous comment about one-handed economists.

PS: In other news, Ramachandra Guha suggests that the noted economist, Amartya Sen, be nominated for the post of President of India. Like Amit Varma, I too second this idea strongly, never mind LBJ.

The Firefox Bus 

(Via Zem) Sometimes, you come across stuff from India that totally cracks you up, and no, this stuff simply cannot be made up either. Irrespective of whether this is the work of an outstanding artist who has seen the FF logo someplace, or a full-frontal attack on Internet Explorer, the Firefox Bus that plies the Mangalore-Bellary route is a riot. And as Zem said in an e-mail, this is citizen journalism at its very best :)

Monday, April 17, 2006

More on Raju Narisetti's Move from the WSJ to India 

A couple of days back, I had made a post about Raju Narisetti's departure from the Wall Street Journal to do a start-up in India. A couple of you had written hinting that Narisetti may be moving to head up the Hindustan Times' long-rumoured business newspaper. Turns out you guys were spot on.
Hindustan Times Media Ltd, the publishers of leading daily Hindustan Times, will launch an English business daily soon for which the company has appointed Raju Narisetti as Head of Editorial. HT Media plans to launch an English language business daily newspaper and website in the next few months. Raju Narisetti will report to Rajiv Verma, CEO, HT Media. Announcing the appointment, Verma said, "In order to create a world-class, respected and successful business newspaper we need the best global talent available and Raju is a perfect fit. With the changing economic landscape in India, there is an obvious place for a high-quality business daily. Raju has the right experience, exposure and respect to launch an unrivalled Indian business newspaper that will gain international recognition over time."
While I am a bit dissapointed that Narisetti is not doing a full-fledged start-up, I guess HT's paper could potentially be a great alternative to the existing business newspapers with him at the helm. Nonetheless, I can't help the feeling that the HT is a step down from the WSJ for Narisetti. Maybe it's just me. We'll see.

Wednesday, April 12, 2006

More Blogs from Washington 

Following up on the excellent Private Sector Development blog, the Washington "consensus" have added two new blogs. The World Bank Institute, who I worked for, have put up the Poverty and Growth blog, while the IFC has debuted the Innovation in Emerging Markets blog. Head on over and spend some time at these excellent new online resources.

Amazing Ads from Grey India 

I suppose many of you have seen this series of ads on Boing Boing and elsewhere. The ad was developed by Grey for Childcare India to highlight the problems of street children in India.

Full series here.

Tuesday, April 11, 2006

The Mother of all Buses! 

I am making this post on a bus traveling up to Cornell University from New York city right now. And it's not just any bus. The seats are genuine leather with a foot rest and lots of leg room, XM Satellite Radio, excellent air-conditioning, a snack bar, on-board wi-fi access (satellite access, i am sure) and AC/DC power sockets on every seat to plug your laptops into. The trip itself ought to take about 4 hours. I don't know because this is the first time I have used the bus. Until now, I've been flying or driving up to Cornell. How much does all of this cost? $150 for the round trip. What is the point I am driving at though?

Well, before you scoff at the 4 hours it takes, let's see what the air travel situation between NYC and Ithaca looks like. The flight itself takes about an hour. The trip from Manhattan to the airport is about an hour. You have to get to the airport at least an hour early to deal with security issues. It takes about 15-30 mins to get from Ithaca airport to the hotel on campus. So, effectively, the gain is about 30-40 mins for traveling by air. And for this small gain, you pay $520 or $370 extra over the bus trip. That's without considering transactions cost issues of worrying about security clearances (no minor nightmare), finding a cab etc.

Most importantly though, the onboard wifi lets you be productive right through the trip, though the cynics among you (fie on you!) will no doubt crib that blogging is not exactly being productive. But I guess you see my point. Now imagine a similar bus service between Bombay-Pune, Bangalore-Madras etc with similar accoutrements, charging a reasonable premium, whatever that may be. I suspect you would do great business with the business crowd by segmenting the market with a premium product like a luxury bus. For that matter, even a train service with excellent on-board facilities, especially productivity enhancers like wi-fi, would do fabulously well, methinks. As for the nausea that visits some of us while doing too many things on a bus, there's always the excellent Dramamine.

Interesting Development for Indian Media 

Raju Narisetti was quite easily the most successful Indian newspaperman abroad. A graduate of the Times School, Narisetti went on to become editor of the Wall Street Journal Europe. Today, the WSJ announced Narisetti's departure from the paper to start a new English language business newspaper and website in India. Narisetti is quoted by Dow Jones thusly:
India is at a tremendous inflexion point, and this new venture will aim to meet the growing demand in that region for accurate and insightful business journalism - both in terms of covering Indian business as well connecting the dots between India and the rest of the business world.
Without question, this is fantastic news for the Indian media. The Indian business news space is beginning to look very interesting indeed. One can safely assume that the Business Standard is the entry vehicle for the Financial Times, given its current stake in the paper. The Wall Street Journal is rumoured to be looking for an entry vehicle as well, so they can take advantage of liberalization as and when it happens. Then there is Raju Narisetti's new venture and of course, the TOI's pink rag. Now, if only we could see the same kind of activity in plain news instead of adding more TOI clones to the mix.

Monday, April 10, 2006

2006 The Year of Bio-Fuels? 

First of all, I want to apologize to everyone for not having posted anything real in eons. I have just been bandwidth constrained and getting used to the new job (which i will post about soon) is taking a while. Hopefully, I will be able to get back to a reasonable posting schedule in a little while.

I have, however, been paying a lot of attention to the bio-fuels market, both as part of the new job and from my personal interest in alternative fuels. By the end of this year, for instance, Brazil will become energy self-sufficient with minimum fuss. Driving Brazil's move away from fossil fuels is its sugarcane-based ethanol industry, nurtured carefully over the last 30 years, which allows ethanol to be sold for considerably less than gasoline. The New York Times had the details.
The use of ethanol in Brazil was greatly accelerated in the last three years with the introduction of "flex fuel" engines, designed to run on ethanol, gasoline or any mixture of the two. (The gasoline sold in Brazil contains about 25 percent alcohol, a practice that has accelerated Brazil's shift from imported oil.) But Brazilian officials and business executives say the ethanol industry would develop even faster if the United States did not levy a tax of 54 cents a gallon on all imports of Brazilian cane-based ethanol.

With demand for ethanol soaring in Brazil, sugar producers recognize that it is unrealistic to think of exports to the United States now. But Brazilian leaders complain that Washington's restrictions have inhibited foreign investment, particularly by Americans. As a result, ethanol development has been led by Brazilian companies with limited capital. But with oil prices soaring, the four international giants that control much of the world's agribusiness — Archer Daniels Midland, Bunge and Born, Cargill and Louis Dreyfuss — have recently begun showing interest.

Brazil says those and other outsiders are welcome. Aware that the United States and other industrialized countries are reluctant to trade their longstanding dependence on oil for a new dependence on renewable fuels, government and industry officials say they are willing to share technology with those interested in following Brazil's example. "We are not interested in becoming the Saudi Arabia of ethanol," said Eduardo Carvalho, director of the National Sugarcane Agro-Industry Union, a producer's group. "It's not our strategy because it doesn't produce results. As a large producer and user, I need to have other big buyers and sellers in the international market if ethanol is to become a commodity, which is our real goal."

The ethanol boom in Brazil, which took off at the start of the decade after a long slump, is not the first. The government introduced its original "Pro-Alcohol" program in 1975, after the first global energy crisis, and by the mid-1980's, more than three quarters of the 800,000 cars made in Brazil each year could run on cane-based ethanol. But when sugar prices rose sharply in 1989, mill owners stopped making cane available for processing into alcohol, preferring to profit from the hard currency that premium international markets were paying. Brazilian motorists were left in the lurch, as were the automakers who had retooled their production lines to make alcohol-powered cars. Ethanol fell into discredit, for economic rather than technical reasons. Consumers' suspicions remained high through the 1990's and were overcome only in 2003, when automakers, beginning with Volkswagen, introduced the "flex fuel" motor in Brazil. Those engines gave consumers the autonomy to buy the cheapest fuel, freeing them from any potential shortages in ethanol's supply. Also, ethanol-only engines can be slower to start when cold, a problem the flex fuel owners can bypass.
Brazilian producers estimate that they have an edge over gasoline as long as oil prices do not drop below $30 a barrel. But they have already embarked on technical improvements that promise to lift yields and cut costs even more.
This brings me to an Economist profile of Vinod Khosla a couple of issues back which explained at some length Khosla's interest in bio-fuels, especially ethanol. Most importantly, it also explained pithily the single biggest problem I've seen with ethanol, namely that the economics seem to work only when the price of oil is sky high, which is not something we can take for granted, knowing what we know about OPEC's control over oil prices.
Mr Khosla concedes that after he made his ethanol pitch at this year's Davos meeting, a senior Saudi oil official sweetly reminded him that it costs less than a dollar to lift a barrel of Saudi oil out of the ground, adding: “If biofuels start to take off we will drop the price of oil.” Anticipating this problem, Mr Khosla is lobbying politicians in Washington, DC, to impose a tax on crude oil if the price falls below $40 a barrel to safeguard investments in ethanol.
Nonetheless, Khosla remains undeterred by possible OPEC machinations, and he's just picked up equity in Praj, an Indian company that I've been following for the last couple of months. I think he's got himself a really sweet sub-$5 million deal by getting a slice of a company whose technologies are being picked up in other emerging markets including South Africa.

So, what is the downside to the bio-fuels story? Well, there is a real possibility of loss of forest cover as people fell trees to grow more sugarcane, soyabean etc (which makes wasteland-based crops like Jatropha very interesting). The New Scientist has more on the possible price being paid by forests as green fuels gain in popularity.
The main alternative to palm oil is soybean oil. But soya is the largest single cause of rainforest destruction in the Brazilian Amazon. Supporters of biofuels argue that they can be "carbon neutral" because the CO2 released from burning them is taken up again by the next crop. Interest is greatest for diesel engines, which can run unmodified on vegetable oil, and in Germany bio-diesel production has doubled since 2003. There are also plans for burning palm oil in power stations.

Until recently, Europe's small market in biofuels was dominated by home-grown rapeseed (canola) oil. But surging demand from the food market has raised the price of rapeseed oil too. This has led fuel manufacturers to opt for palm and soya oil instead. Palm oil prices jumped 10 per cent in September alone, and are predicted to rise 20 per cent next year, while global demand for biofuels is now rising at 25 per cent a year. Roger Higman, of Friends of the Earth UK, which backs biofuels, says: "We need to ensure that the crops used to make the fuel have been grown in a sustainable way or we will have rainforests cleared for palm oil plantations to make bio-diesel."

Thursday, April 06, 2006

Homer Does Bangalore! 

You know Bangalore has arrived in the popular imagination when Homer Simpson decides to pay a visit. The episode is titled "Kiss, Kiss, Bang, Bangalore" and will air this Sunday, April 9th, on Fox at 9 pm. Apparently, the nuclear plant is shut down and outsourced to India, and Homer goes to Bangalore to train new employees. Mark your calendars and/or tune your TIVOs.

Saturday, April 01, 2006

Romance as a Search Problem 

Google is right. When you think about it at some length, romance is really a search problem with potentially high transaction costs. Yet again, Google has a solution via the amazing Google Romance. Read the press release, take the tour, check the FAQ if you have any lingering doubts. You can then sign on for the service here. Enjoy the rest of the day!