Wednesday, 21 May 2014

Spiralling climate insurance claims

May 22, 2014

There has been a spate of low frequency high impact flood impacts over the past decade or so in US, Europe and Asia. Unfortunately there has been a high degree of bunching of these events which have made a mockery of all historical trends.

The past decade has seen an exponential growth in national flood insurance claims in US. Katrina, Rita, Wilma and Superstorm Sandy have pushed the debt of the insurance companies by $24 bn since 2005. Earlier the claims which were minuscule compared to these we're funded by premiums and federal subsides. There are increasing cases of double and multi claims.

With steadily rising seas, more super storms, tornadoes and twisters, etc it is going to be difficult to meet the catapulting insurance claims. The position in Europe and elsewhere is worse. Steep premiums beyond affordability are a possible solution. But how many can afford the new premiums? It's really a Hobson choice. Climate is truly a frightening game changer. Mankind is a helpless spectator.

Coming Armageddon

March 18, 2013

The bailout of Cyprus has been like nightmare unfolding before the world. The consequences are numbing. The is a crippling overhang of unserviceable debt of $ 21 trillion in the western developed nations. Cyprus's $ 13 billion is chicken feed, a mere 0.062% of the entire debt abyss facing Europe and US.

There is a possibility that about 29% of the financial wealth of the citizens would be taxed one time to square off this gigantic debt in order to avoid hurtling over the fiscal cliff. This would cascade into a whorl of spending contraction which will lead successive rounds of shrinking GDP, which in turn will hike up unemployment to unsustainable levels, leading to widespread civil unrest.

One of the major precipitating factors has been the quantitative easing which US has been doing over past few years. The US has pumped $ 4 trillion into its economy by printing dollars, which effectively has devalued the dollar by 25%. Meanwhile most of the economies which have size able foreign exchange reserves are moving away from dollars to each others currencies and gold.

China has probably increased it's old reserves to about 3000 tons. They plan to hold 2% of their 3.3 trillion dollar forex reserves in gold. In that case they may be targeting to reach about 5000 tons of gold in a few years. They would also like the dollar exchange rate be closer to its intrinsic value. This will a fairer valuation of their mega forex reserves. Plus the price of gold could go up appreciably.

With this an imminent devaluation of the US dollar could be an outcome and with the large trade deficits of US, there will limits to further quantitative easing in order to kick start economic growth which will only intensify the debt crises. Hence both Europe and US will have to bite the bullet and adopt harsher monetary options to tackle the mounting debt overhang.

All this will impact overall global trade as the western  world slashes its imports which will put brakes on the growth momentum of the developing countries. The later in order to overcome this have increased trade in between themselves and are also increasing domestic demand.

The second act of the Greek drama unfolds before us.

Tuesday, 20 May 2014

Population at risk due to climate change

April 19, 2013: Climate change

Past mid April. Severe thunderstorms, tornados, snow still swamping most of US - unprecedented. Four inches of rain. US is facing the brunt of the climate change. Like the frogs in water heating gradually, where they meet their end. Frightening scenario.

India reeling under heat wave. China where pollution has already claimed 7 lakh lives. Earthquakes frequency and intensity increasing. Iran two massive quakes in past two weeks or so.

Sometimes I think that at the rate climate change is intensifying and compounding, the next ten fifteen years are going to be crucial with 20% of the global population at high risk of annihilation.

Monday, 19 May 2014

digital sea of madness

Sept 26, 2013

Are we are hurtling towards a digital sea of madness a la Truman Show style...with the gigatons of multi megapixel instant pics we are all taking continuously, billions of emails, messages, articles, etc. Stored in the giant servers. Big brother slicing dicing all the pics words..forever being analyzed..they are watching..we are not alone...

Gradually we are being inexorably sucked into the age of singularity which Kurzweil has written about. Robotics is also advancing fast. Scary that a time will come when may be difficult to distinguish between robots and humanoids. A technologically superior race will evolve which have access to all the technology and also have a lot of chips embedded in themselves. They will become the nextgen aryans like the superior race hitler advocated. The have nots then will be those with low and no tech.

Sunday, 18 May 2014

Daily Notes as the Hurtle towards......intensifies -21-10-2014

October 21, 14


  • less than 2.5 months left of 2014. an eventful year..with trends accentuating on economic front both for the developed and emerging markets ( marked by rise of middle class in later at the expense of middle class in developed and the rise of the uber class), climate front with higher frequency of  extreme climate events and relentless march of global warming setting new records, war and violence in Ukraine and middle east, rise of islamic fundamentalism which promises to catapult world into the mother of all battles, and finally the scare of ebola spinning out of control. With all these dark marks, technology has continuously made giant strides towards the age of singularity. indeed an year of the best and the worst of times. 


September 30, 14


  • Sad news that since 1970, more than 50% of earth's non human species have been wiped out. Man with his deep seated anthropocene traits has systematically annihilated most of the species either by driving them away from their habitats, or killed them. Even climate change has claimed a lot of species especially at the two poles. Still man is not at all penitent for what he has perpetuated. On the other hand he is with renewed vengeance equipping himself with more powerful SUVs and like so he can enjoy his jungle forays and domination. An avalanche of humans from rural areas are deforesting and build new urban settlements which in due course evolve into metropolises. At this rate, there will be a assault on the remaining fish and mammal species. Even the birds are dwindling. No one is safe from the marauding Homo sapiens. Everything seems to be building up to an extreme climate crises. 




September 27, 14

  • Important week for Climate change. Report submitted to UN. On Sunday 400k took part in NYC rally. Time concerted initiatives were implemented as time  is running out. Somehow that sense of urgency is lacking. in some sense its like x-files where the truth is being hidden from the public at large. Sweet homilies are pouted in order to prolong the false sense of well being and that its business as usual and maybe something drastic may happen in 2100 which is safely in the distant future and lull everyone into a sense of complacency. yesterday 9 cm of rain in Bangalore within two hours accompanied by raw lightening and thunder. one of the coldest summers in USA. unprecedented flood in Pakistan and Kashmir. Ebola threatening to spin out of control. all emerging markets wanting to increase manufacturing of cars, consumer durables multi fold so a greater part of population can enjoy the fruit of technological progress. Eager mouths to feed. Carbon emissions set the increase geometrically. Stray dogs multiplying in our residential complex Shanti Park. More and more trees being decimated to make way for urbanisation. Ranting away my dirges which are falling on deaf ears. The future shock telescoping of change continues across on all facets of human and planet existence. The anthropocene era is on trajectory towards a climax.
     

June 29, 14


  • The current wars and conflicts around the globe have displaced over fifty million people. This is the population which larger than most countries. The conflict hotspots are are spread all over the world. These conflict refugees have become a major humanitarian concern. One of the biggest displacements of hapless humans took place during Bangladesh war in 1971. They were initially put up in many camps in West Bengal. Later many migrated to nearby state Orissa. The pathetic way they lived was very disturbing . ,



June 5, 14


  • US Fed is now worried about the calm financial markets with very low volatility. Interest rates in the debt markets at all time lows. Stock markets at historic highs. Large European banks imposed huge penalties. Discovery of dark pools of trading where Goldman Sachs and Credit Suisse among other very active. Euro zone inflation low. Leveraged loans rising sharply. The apparent calm seems ominous. Is this the eerie still before another financial storm appears. Will it be another tsunami?



  • There is so much motivated research especially on food. Sometimes there is a report saying tomatoes are good, then couple of months later another article stating tomatoes are bad. It goes on and on with most food items. But the biggest hoax was in the 50s there was a huge movement against saturated fat from meat, eggs, butter and cheese. Hence the rise of new cooking oils polyunsaturated oils from nuts, etc. this became a fad for next 50 years. But in due course research showed that heart diseases and attacks had increased heavily among people who had polyunsaturated fats. Then it was revealed that the earlier research by Ancel Keys in the early 50s was based upon samples which were not random or unbiased. New research also showed that in early 20th century people who had lard, ghee had fewer heart attacks. Now the truth is emerging that stress is the biggest killer and responsible for more heart attacks, diabetes, blood pressure, etc. Hence modern life with its attendant stress is the biggest root cause of  most diseases. 


June 2, 14

The contradictions of human existence are exploding. This is not the kind of peaceful coexisting ying-yang complementary opposites. These are inherently imploding forces and attractions which tearing asunder the human race and along with it mother planet earth. Last year or so Mindfulness is on the increase especially in US the most developed nation on earth as per most commonly accepted norms. At the same time digital devices like iPods, iPhones, other smart phones like Samsung's Galaxy series, iPads and all other tablets, smart TVs, Bluetooth and wifi devices are proliferating exponentially.

This is spawning a generation of ADHD (attention deficit hyperactivity disorder) persons spanning all age groups. Everyone is yearning for digital nirvana. Netflix is the king of the internet consuming about 32% of the digital highways. Netflix is sheer instant karma. Cinema was a magical experience where people used to congregate in the theatres soda and pop in hand, waited for lights to dim and the hall's music to silence, the curtains part and the projectors to illuminate the screen with celluloid dreams. For couple of hours all the souls in the hall were entranced by the 24 frames per second experience. When the curtains came down, the people streamed out of the theatres with vivid images of the two hour experience of their favourite stars on the screen.

Today thanks to internet, computers, TVs, multi channels, surround systems cinema has come into our homes. It's anytime anywhere any cinema. Instant gratification compounded. One can view multiple movies, pausing them at will. The same for music and books through a plethora of web providers like Pandora, Jango, Amazon, Google, etc. In a sense this the great democratisation of the arts where the common man could enjoy the best of music, cinema, books at the touch of a button or soon wave of a hand. Life is in the cloud.

All this I fear has come at a great cost to humanity. Today these digital lives with energy intensive living are getting inexorable sucked into perpetual ecstasy existences. Attention spans are diminishing into nano times. Ironically lot of people are turning to yoga (Mindfulness is essentially yoga). So the general approach is spend about four hours or so a week on some type of yoga and continue the hyper digital lives as usual. At least something is better than nothing. But like a Juggernaut the wheels of ever developing technology move on at accelerating speed transporting humanity to the age of Singularity. As it is gradually more people want to stay single with all digital devices as their constant companions like in the movie Her. Indeed the age of Singularity is at hand and now like climate change also is no longer in the future and is very much Now.




May 28, 14

  • Top ten fund managers had managed to reach the top by holding more than 20% of their portfolios in junk bonds. This indicates the intense desperation of these fund managers in resorting to higher risk holdings in order to show higher returns in order to  attract more investors. The average percentage of junk bonds in their portfolios was almost 9%. This intense demand for returns has been mounting since 2008. Hence once again the financial markets are treading on the thin ice of higher systemic risk which might adversely affect the broader financial markets  at some point. 
  • Cost of cancer treatments have spiralled. Insurers want to rein in the costs of cancer treatment. Last year US spent $ 37 bn on cancer drugs, an increase of 19% in five years. Overall costs are over $ 100 bn. At this rate the entire healthcare costs will soon reach extremely prohibitive proportions. 

May 27, 14

  • First few days of Modi seem to be moving in the right direction. There is so much to do within a finite period with so many constraints, legacy controls, corruption, stilted babudom, old minsters, hardened attitudes, etc. yet unless he dismantles the trappings of the past 60 years it will be difficult to put in place a new order. His approach in direct communication with citizens is a huge step in the right path bypassing the morass of red tapism. He need a vibrant think tank to help him put in place a strategic blueprint for inclusive growth, fiscal and economic stability, priorities, etc. he should have it in lace in first two months. The new order should be based on a strong IT platform integrating the entire economy, all segments of people, businesses. A clear cut strategic plan with vision, goals, policies and action plans should be laid out first. An honest SWOT should be the starting point of this exercise. 





May 25, 14

  • Modi inauguration tomorrow. May it usher a new dawn of development in India and it's able to take its rightful place in the comity of nations. Hopes of over one billion people on the shoulder 's of Modi. 
  • In Washington, D.C. Majestic monuments and memorials to the great Lincoln and Jefferson and other. Some of the noblest minds on earth. Upholding the rights of the free world. US has fought so many wars in pursuit of peace and freedom. Saw the holocaust museum yesterday. So uplifting and yet confusing. The human race is truly a bundle of contradictions, double think and speak. Conditioning and apartheid still rule supreme. 


May 22, 14

  • Godzilla released. Metaphoric movie on indignities heaped upon Mother Earth by humanoids and the terrifying consequences thereupon. These films are made by directors born in the 70s or so. Day after tomorrow was released about ten years ago. These films are called now cli-fi. 

May 21, 14

  • The debt bubble is mounting. The PE leveraged debt buyouts at multiples of 6 to 7.5 of EBITDA is on the high side. The Wall Street banks are financing these PE deals by exceeding the acceptable upper safe limits prescribed by the regulators. Over 40% of the deals this year have exceeded the 6 multiple level. Before the financial meltdown of 2008, it had reached a dangerous 52% of deals above the limit. The bubble keeps growing. Recently Credit Suisse admitted to financial irregularities of aiding tax evasion of its clients and agreed to pay hefty fine of $ 1.5 bn. Few other banks have also paid steep penalties recently. The financial shenanigans are again rising with impunity. China too is experiencing overheating of its financial markets, over leveraging and rising bad loans. Europe already is in many parts sinking under unmanageable fiscal deficits, rising unemployment. Global economic woes are mounting. The hurtle is intensifying. Ironically rise in cities and high energy living are on the increase. And climate is groaning under the atrocities being heaped on Mother Earth by anthropocene era modern mankind. 


May 20, 2014
  • Debate on corporate short-termism has been revived. Stock traders and hedge funds have been exerting strong pressure on companies to keep on performing endlessly quarter upon quarter. In this age of hyper competition companies are forced to show better financial results in order to placate ever greedy shareholders and investors. Lot of corporates resort to all sorts of malpractices in order to move share prices higher. Maybe a system of moving quarterly results would be better. There is too much of day and short term trading and very few long term investors like Buffet based upon value and fundamentals. 
  • China to allow its top provinces and cities to raise debt for government spending on infrastructure and expenses. Gradually all governments are increasing their debt ratios. This has already pushed half of Europe into bankruptcy. The ballooning deficits are crippling governments across the globe. Defence spending is also contributing. Also larger size of governments, civic budgets and demands of citizens. Everyone is living beyond their means be it individuals, corporates or governments.

May 19th, 2014
  • US corporate sector's lack lustre earnings leave stock market on thin ice. Bond yields too are at lows. Gradually reality of US economy entering tunnel of stagflation is at hand.
  • Internet at crossroads with debate over net neutrality. Future of cloud computing is restricted by bandwidth issues. Possible solution through fog or edge computing. The race towards our robotic future intensifies. 
  • Botox goes beyond mere beauty application, goes deeper into treatment of depression, etc proving beauty is only skin deep. 

May 16th, 2014

  • More dying cities like Detroit living dangerously on high octane deficits. Spiralling liabilities. pensions uncovered over 60% including police, fire dept, etc.  
  • Organic farming not sustainable.
  • World growth prospects grim especially Europe and US. China growth cooling.  

Post Covid World

Covid has suddenly thrust the planet to the inflexion point. It is a final wake up call for humanity. Civilisation has been on a suicidal ...