Thursday, February 23, 2012

Robert Halfon: LTTE flags on his blog, Wined and Dined by the British Tamil Conservative Party

Robert Halfon you know the guy who has been asking for the Sri Lankan govt to "Stop persecuting Tamils and acting like a rogue nation". Guess what

a) He has on his blog groups of people with LTTE flags (Lets see how fast he will remove them).
b) Has been wined and dined by the British Tamil Conservatives (Thanks Arujuna Sivanathan to directing me to this site). The same photo on his blog is accompanied with photos of crowds with LTTE flags.



Way to go Halfon



Reply to Jack Point:: Economic Collapse

Jack Point said,
Some differences with the UK & US and Sri Lanka
1. The public debt in those countries has shot up recently because of the bailouts. UK debt was around 40% prior to the crisis.
2. They have already achieved a high standard of living. Even if they stagnate or decline, it is from a high base. We are still poor.
3. The public debt, apart from the bailouts has funded for the most part infrastructure and services of value. In SL it is being used to fund interest repayments, pay salaries (for which very little is delivered). What infrastructure has built gone to the pockets of cronies in building white elephants.
JackPoint,
Will try to address your concerns by three sections,
a) the state of US economy,
b) impact of an economic crisis on US compared to Sri Lanka
c) White Elephants, Cronyism in the US.

State of the US/UK Economy
Jack Point, contrary to your thinking the large public debt In US has been in the making since the late 70's. During the last century the US (UK and west in general) have been by far the largest consumers of resources in the world. In the case of the UK, they were funded by their colonial enterprises; think shipping Indian cotton to Lancashire, manufacturing cloth in the UK and selling it back to India while making it a criminal offense for the Indians to spin cloth from their own cotton. For the US the funding for resources was economic colonialism in South America and also being the only major manufacturing economy in the world after World War II.

By the late 60's cracks in the funding for the world resources to maintain the US/UK standard of living had started to emerge. For the UK it was earlier with loss of the colonies and the aftermath of World War II. In the US the 60's was the heyday of its economy, regardless of the Vietnam and Korean wars. The height of Flower Power and bright future assured for the young adults at that time even if they took many years of time out from career paths to "find themselves" either by traveling or living in an Ashram in India or both.

Japan and Germany had regained manufacturing power (with the help of the US) and were making inroads into market share of US products, even though ideologically it appeared that the Old Soviet Union was the greatest threat. The net national income started to decrease and defecit borrowing was needed to purchase the resources to maintain the lifestyle and living conditions of the 60's. That was the time of the famous Reagans "Deficits don't matter". In the eight years between 1981 and 1988 the United States moved from being the world's largest international creditor to the largest debtor nation.

Then there was real reprieve and resurgence in the US economy starting from the mid to late 80's to the late 90's with advent of the PC Technology. Completely US innovation and of worldwide use. However, free market ideology and the pursuit of profits by multi nationals ensured that the technology was shipped offshore and and end products shipped back to the US.

In the US, the country's decline in National Income lead to deficits and increasing Public Debt. Similarly for US citizen the real incomes started decline, exacerbated by increasing oil prices. This necessitated the US public having to take on increased debt in the form of credit cards, mortgages and student loans to keep their current life style. Easy lending standards, low mortgage rates all fueled the public's debt spree. Some of the practices were illegal, but with rising asset prices not a Bank cared. The writing was on the wall, by 2005 there were quite a few who were warning of impending collapse of the Securitization market (Assets created from Mortgages, Credit card debt etc). Read Tanta's Let Loose the Dogs of Hell (and comments) for an idea what was foreseen for the Mortgage market. Read More than you ever want to know of Mortgage Securitization at Tanta's Uber Nerd collection.

Anyway it all came to head in 2008, with the collapse of Lehman brothers and AIG. If it wasnt for the Govt bailouts, it would have been total collapse of all the large Investment banks. Unhappily, the underlying problems have not gone away. Its still there allowed to be hidden away with repeal of certain accounting rules (FASB MTM). The comment in 2007 from Scratch and Dent Loans " that does imply's JPMorgan also implies that the Big Dogs have more cooties on the balance sheet than they're prepared to tolerate. Looks like total war to me" still applies. More on this in the Cronyism section.

Impact of an economic crisis on US compared to Sri Lanka
I have been thinking and reading about of the consequences of economic collapse in different societies for a few yeas now, 2005 to be exact when it was apparent the US housing market was going to collapse. Societal issues such as not having or just a skeleton police force is too long to be discussed in a single blog post. I'll just address loss of or expensive fossil fuel energy caused by economic collapse.

The Modern world (for humans) runs on fossil fuel energy on scale never before seen in history. One of famous examples is that "a planeload of tourists flying from Los Angeles to Cairo to see the Great Pyramid use more energy in that one flight than it took to build the Great Pyramid in the first place". So, economic crisis are also energy crisis (for the most part) and examining the role of cheap fossil fuel energy in the functioning of a society provides a measure of that societies vulnerability to an economic crisis.

The population in Sri Lanka is mainly rural (80%) and the only really large city is Colombo with little over a million residents if Dehiwala/Mt. Lavinia and other suburbs are included. Imagine a situation where the complete supply of oil to Sri Lanka was cut off. Life will be difficult, but will not result in death amongst a large section of the population. The worst affected will be the urban, specially those living in apartments. Think, carrying water for daily use up many flights of stairs. Water even in urban area is readily available, even if it means walking about half a mile. House dont need to be heated. One literally light a fire on the floor for cooking purposes as all houses are made of cement (wooden shacks are in rural areas). Coconut oil lamps are not that much of a fire hazard like in the west with carpeting and wooden house. Financially the Sri Lankan population does not have much debt either.

Life in the west is almost completely fossil fuel energy dependent. Think Urban areas, high rise apartments, heating during the cold season and the necessity for cars in suburbia. The US is the second largest user, consuming about 19% of the worlds energy (China is the biggest with about 20.3% consumption of worlds energy). Note: energy usage of the US does not take into account, energy used to manufacture goods imported into the country. The US is about 80% self sufficient. In comparison China is almost 100% dependent on external souces for fossil fuels.

On the economic front in the US there are 13 million unemployed, 46 million people on food stamps and approximately 29% of the country's homeowners mortgages are under water (mortgage amount is greater than house value). Total mortgage debt of the US is 14 trillion and most of are booked on the Asset side of the large banks as mortgage backed securities (MBS). I am not even going into derivative of MBS (CDS and CDO' etc) and Asset Backed Securites (Credit Card Debt, Auto Loans and Home Equity Loans). US debt is 15 Trillion, a little over 100% GDP and growing very fast, with the deficits being about 1.3 Trillion since 2008. (And people think Sri Lanka has it bad)

I really cannot see any way out of the dilemma of the US economy. The only reason they have been able to avoid economic collapse is because foreign countries still think the dollar is a safe haven and proceed to fund the US deficits. Its much like an extremely rich person, who has become extremely indebted, but banks and people will still lend money thinking it will be paid back. Some extremely austere measures might work in bringing the deficit down, like one proposed in cutting the Federal Work force by 15% which would save 15 Trillion in 10 years. However, even if the political will was there (which is unlikely; see cronyism section), there would be negative feed backs that could lead to greater economic fallout. One such direct result would be that the laid off workers could no longer pay back mortgages decreasing the value of the MBS Assets held by the Too Big To Fail (TBTF) banks.

From the perspective of energy, the US is fairly self sufficient. However, when economic collapse occurs (notice when, not if), there should be mechanisms to provide the population locally produced fossil fuel at cost or moderate profit. I do not think this will occur, simply because
a) this would be against the ideology of free market
b) the energy company lobby (lobby is another word for bribery and corruption) is too strongly entrenched in US politics.
Providing energy at cost as against free market prices would probably enable wages to be reduced while maintaining same standard of living and while making US manufactured goods competitive because of reduced labor cost and energy cost. But then unhappily there is the free market ideology and energy lobby standing in the way of that idea.

So what was it again, wasnt this discussion about the disaster Sri Lanka was heading toward. So I'll end this section with an excerpt of a comment I made about Arujuna Sivanathan's "analysis" of Sri Lanka's economy.
As they say talk is cheap, and show me the money. So what is the money, (i.e people who stand to loose or gain based on Sri Lanka's economy) doing. Sovereign Yield spreads and CDS spreads on Sri Lanka indicate medium risk, and definitely nowhere near the Greece's CDS spreads. Another indicator that even the man on the street understands are foreign exchange black market rates and property prices. The difference between the Official exchange rate and the Black market is a about two rupees. Property prices are rising even in Jaffna. If the economy (and human rights) were so bad you would expect property prices to decrease and the black market exchange rate to increase. i.e. People desperately want to sell their property and move it out of the country by buying foreign currency in the Black Market.
You can also read about Life in Argentina after it defaulted and Life in Russia after the economic collapse. You can also read a tongue in the cheek article (initially emailed around 2008) on Mortgage debt (MBS) and the dynamics of the US-China economic relations Fannie Freddie and the Chinese: The IOU Laws

White Elephants, Cronyism and Corruption in the US
The World Trade Center and the JFK program to send a Man to the Moon were considered white elephants for many years. The World Trade Center property, home to hundreds of commercial and industrial tenants, property owners and small businesses were taken over by Eminent Domain. Large sections of the WTC could not be rented and was considered an eye sore in NYC.

The cronyism and corruption that has occurred in the US (I have not really followed the UK) is on a scale unparallelled in history. Read the article Why isnt Wall Street in Jail from the Rolling Stone magazine for a good overview.

Another couple of examples not in the Rolling Stone article.

a) The Too Big To Fail (TBTF) banks, by excess and at times illegal risk taking almost caused the US economy to explode and had to be bailed by tax payer money. For all that hard work, the US government allowed the CEO and Senior executives to continue collecting billions as bonuses since 2008.

b) Treasury Secretary Henry Paulson told his pals from Goldman Sachs and some other Hedge fund managers the rescue of Fannie Mae/Freddie Mac would entail wiping out common stock. Now that is golden information, with a couple of thousand dollars in put options you could make about a million when the Fannie Mae/Freddie Mac stock price nose dived. Oh wait, isn't that what is called Insider Trading, that little thing for which Raj Rajaratnam went to jail. Not quite, apparently no such rules for Govt officials.

c) George Bush purchased in 1989 for $600,000 a 2% share of the Texas Ranger team. The land for the stadium was seized by eminent domain and the stadium built with tax payer funds. Then in 1998 the Rangers were sold and Bush got 14.9 million for his share. There were issues of insider trading as well, you can read them up in wiki link.

c) MF Global used customer account money to pay of its Trading debts. John Corzine who was the CEO authorized use of this money. Think Golden Key and Kotelawela. So do you think John Corzine, ex CEO of Goldman Sachs, ex Governor of New Jersey and ex US Senator is going to be prosecuted. I think not, because that might set a bad precedent of sending highly connected people to jail.


d) Hiding of financial information. After 2008 Financial Accounting Standards Board (FASB) has allowed Level III assets to be valued at cost or purchase price, and not current market prices. So what are Level III assets; they are mostly MBS and ABS. If you recall those pesky assets made up of home mortgages and credit card debt etc on the TBTF Bank balance sheets. So you may well ask whats the issue with carrying at cost. When you think of a MBS made of five 200,000 mortgages then original cost for simplicity is 1 million. So one of the mortgages has defaulted and there is zero recovery. That means the MBS asset is now really 800,000 but under FASB rules you allowed to book the MBS at 1 million till all the mortgages have paid up or the MBS is sold. Now is that hiding or what. You may well ask who cares. It probably means that these banks will require further bailouts down the line, while the CEO etc continue to collect billions in Bonuses and compensation. I have just skimmed the surface.
It just becomes worse, with all eyes on Level III assets, some of those assets have been moved to level II where indirect methods/models are used for valuation.
Then it becomes a little harder to do back of the envelope like I did in 2008 for Goldman Sachs
Assets 1,081,773.00
Liabilities 1,036,174.00
Equity 45,599.00

# of shares 395.44
i.e. Book value /per share = 45,999/395.0 = 115.00
Thats the price Warren Buffet bought at.

We know that level 3 assets are 70 billion
i.e. 7% of assets (70,000/1,081,773)

Does not sound a big deal, right ?

Say now your Level 3 assets are over valued.
Value needs to be reduced by 30%, i.e approx 20 billion (30% =20 billion/70 billion).
30% haircut on Level 3 assets is very optimistic, more likely 80% right now.

You equity is now 45,599.00 - 20,000 = 25,599
i.e. Book value /per share = 25,999/395.0 = 65.00

And thats still optimistic. If its 80% GS is insolvent. !!

e) Finally, you can read about fraud or gross negligence in paperwork ((equivalent to Sri Lanka transfer of deed and recording in Land Registry) when mortgage loans were transferred. US: Cautionary Tale of deregulated Banking

Regards "Even if they stagnate or decline, it is from a high base. We are still poor." then reading The Collapse of Complex Societies: by Joseph Tainter (or even the Amazon reviews) coupled with reading of the the blogs on life in Russia and Argentina might be enlightening and probably make your outlook of Sri Lanka more optimistic.

He then lays out his theory of decline: as societies become more complex, the costs of meeting new challenges increase, until there comes a point where extra resources devoted to meeting new challenges produce diminishing and then negative returns. At this point, societies become less complex (they collapse into smaller societies). For Tainter, social problems are always (ultimately) a problem of recruiting enough energy to “fuel” the increasing social complexity which is necessary to solve ever-newer problems.
Cruel Windfall: Hows wars plagues, and urban disease propelled Europe’s rise to riches can also be quite enlightening

Sunday, February 19, 2012

Does Arujuna Sivananthan have a Axe to Grind by commenting on Sri Lankas economy

Of late there have been many articles that have been lamenting on the dire state of Sri Lanka's finances. One such author is Arjunan Sivanathan who has written a couple of article on DBS Jeyarajs blog and websites. The articles are Downgrade and Foreign Exchange Controls in Sri Lanka : A Probability or an Inevitable Certainty?, Sri Lanka Engaged in High Stakes Game of Poker with Their Largest Trading Partners and IMF tranches for Sri Lanka: Costly money or costly political choices?

Arjunan Sivanathan says that
• “Sri Lanka's external indebtedness is approximately 40 percent of GDP; also well above its single-B and double-B rated peers.”
• “Any reduction in both will be difficult to achieve while defence spending continues to account for 20 percent of government disbursements and post record highs each year”.
• Its Current account deficit will be 20 percent of GDP in 2011 and will increase in 2012. Geopolitical developments in the Middle-East have already taken their toll on its balance of payments and will continue to do so.
I would agree Sri Lanka's external indebtedness sounds rather bad. But then compared to a few other A rated countries its does not appear too bad. So for comparison, I have presented below GDP, External debt and Balance of Payments of a few first world countries.

Country GDP
(Billions USD)
External Debt (Billions USD) External Debt Per capita External Debt as % of GDP Balance of Payments (Billions USD) Balance of Payments as % of GDP
Ireland
207
2,378.00
519,070
1,165
-3.2
-2%
United Kingdom
2,250
8,981.00
144,338
400
-66.6
-3%
France
2,563
4,698.00
74,619
182
-77.9
-3%
Greece
305
532.9
47,636
174
-19.9
-7%
Germany
3,286
4,713.00
57,755
142
149.3
5%
New Zealand
141
0.2
52,300
134
-4.5
-3%
United States
14,527
14,825.20
47,568
99
-599.9
-4%
Australia
1,237
1,169.00
52,596
95
-30.4
-2%
Canada
1,577
1,009.00
29,625
64
-52.6
-3%
Argentina
370
160.9
3,971
43
7
2%
Sri Lanka
50
18
881
36
-1.8
-4%
As one can see from the Table the West is having a financial crisis. The populace in UK owes about USD 144,000 or roughly Rupees 150 lakhs per man woman and child to external countries. In the US each man woman and child owe about USD 50,000. Given such large debt levels for the UK and US the only way out is to either default i.e. stop paying debts or devalue the currency. Luckily for the US and UK most of their debt is sovereign debt, i.e the debt is in their own currency and so it is likely the debt will be reduced by currency devaluation.

Compared to the US and UK every man woman and child in Sri Lanka only owes about USD 900 or roughly a One lakh of Rupees. When viewed in this context, Sri Lankas finances do not appear to be all that dire.

Another is the lesson to be learned is that of Argentina. A few years back, Argentina was staggering with a huge debt load and was been advised by the IMF to implement austerity measures much the same way as for Greece. However, Argentina gave the finger to the IMF and defaulted on their debt. Argentina now has a small external debt and positive balance of payments. Iceland too reneged on their debt and and maybe Ireland is now regretting that it did not do the same.

The 20% of GDP spent on Defense appears to be high, given that the war is over. Disbanding large segments may seem like a option. However having unemployed soldiers running amok makes disbanding the army a not very viable option. That said it appears the Government has been moving the Defense sector toward commercial ventures. The Thalsevana Resort in Jaffna, The Jetliner Cruises and the boat trips to Adams Bridge are few that I know of firsthand.

So why is it that Dr. Arujuna Sivanathan makes dire predictions for Sri Lankas economy without comparing say to at least the UK where he is domiciled. Yes, the numbers are correct and a comparison with the state of economies of the first world countries would have been fair reporting.

So who is Arujuna Sivanathan. DBS Jeyarajs blog and transcurrents.com website introduce him as a former Director at Barclays Capital, the UKs largest investment bank and French bank Societe Generale and that he has extensive experience trading corporate and sovereign bonds and credit derivatives. He also holds a PhD and Masters in economics from the University of Glasgow. However it appears Arujuna Sivanathan is now working for Old Age homes such as Goodcare Ltd.

However, what is not mentioned is that Arujuna Sivananthan is an Executive member of both Conservative Way Forward and British Tamil Conservatives, and a party activist in Greenwich. He has also written articles such as "Arujuna Sivananthan: Sri Lanka must be subject to an independent war crimes inquiry" with statements like
The most heinous atrocity of the 21st Century was committed on the shores of an obscure lagoon eighteen months ago and six thousand miles away. The world was in the dark about it and if not for a few brave British journalists, and thanks to our free press, it would have gone altogether unnoticed.
Sri Lanka must be subject to a regime of punitive economic sanctions if it fails to heed our calls for an independent international inquiry into war crimes. Every bully and despot must understand that there are consequences for those who disregard our call not to crush democracy and human rights under foot. Otherwise, we risk being taken for lightweights and our words will count for nought.
On a BBC website he comments
The comments posted by the editor are unrepresentative as Sinhalese outnumber Tamil comments by a ratio of 5:1. Yet the 500,000 British Tamils outnumber Sinhalese by a similar ratio. The key issues which unite all Tamils behind a candidate is their stance on the suspension of the GSP+ trade concession, and, the prosecution of war crimes against elements in the Sri Lankan military establishment. Candidates who support both will get the Tamil vote in their seat en-masse.
Arjuna Sivananthan, London, UK
So it appears Arujuna Sivanathan is trying to skin the cat by other means. Given that his organizations have not made headway on Independent War Crime Inquiries, maybe he is trying to drum up public opinion on false perceptions of the dire state of Sri Lanka's economy.

Bottom Line: I would read Arujuna Sivanathan's pronouncements on Sri Lanka's economy with a pinch of salt. He has an agenda and an axe to grind and he is using seemingly unbiased articles to achieve his goals.

Addendum
My comments on an article A Disorderly Depreciation Of The Rupee
Arjuna Sivanathan closes another one of his “scholarly” articles with concern that “The only question which needs to be answered is whether Sri Lanka’s policy makers will remain sufficiently disciplined and ensure that there is no policy slippage under duress from their overwhelming political compulsions”. Really, that much concern for Sri Lanka when in an another life he had an article titled “Sri Lanka must be subject to an independent war crimes inquiry” Arujuna Sivanathan says that “Sri Lanka must be subject to a regime of punitive economic sanctions.

You see, AS portrays himself as unbiased author writing scholarly academic analysis of Sri Lanka. I think the issue of unbiased authorship is self evident from the previous paragraph. Anyway whats a little bias among friends so long as the writing is a scholarly academic analysis. So lets have a look at his scholarly analysis.

AS article about currency devaluation, of which Sri Lanka has expereience about 10% with respect to the US dollar. Maybe I am wrong, would not comparison of Sri Lankan currency devalualtion to a another couple of currencies have made sense. In this day and age these are not too hard to do. Below is a link to a chart/graph Indian Rupee (INR), Euro (EUR) and Sri Lanka Rupee (SLR) with respect to the USD. You know this took me just 5 minutes to create. http://www.google.com/finance?chdnp=0&chdd=0&chds=0&chdv=1&chvs=Linear&chdeh=1&chfdeh=0&chdet=1330956590611&chddm=179530&cmpto=CURRENCY:USDINR;CURRENCY:USDEUR&cmptdms=0;0&q=CURRENCY:USDLKR&ntsp=0

Lordy, Lord looks like INR, EUR and SLR have all been been depreciating against the USD. So what could be happening. Maybe Investors having to fill dollar obligations. i.e pay up in USD, margin calls and anticipated CDS (you know the area AS used to work in) payouts. So institutional investors are liquidating their foreign investments and converting to dollars. So they will for example sell their stock in the Indian Stock Exchange (that has been down) and with the INR buy dollars making the INR depreciate.

When I see, Foreign Investors selling all thier property in an disorderly exit from Sri Lanka, that will be day, and I personally will be dancing a little jig.

Anyways whats a little chart/graph or two standing in the way of scholarly analysis among friends. Maybe forgeting to mention that the Fed Reserve article that forms the basis of AS’s analysis was written in 2005. You know the time Roubini (and Raghuram G. Rajan among others) were predicting increase of financial risk with the creation of Credit Derivatives and depreciation of Mortgage Backed Securities. Maybe AS could really have been analytic and used the model described in the Fed Reserve Paper with data on Sri Lanka and compared the results with the 25 odd countries analyzed in the paper.

So may be these articles of AS have not achieved unscaled and unparalleled heights in scholarly analysis. Anway, what matters is that they have been written as AS volunteers by one whose “academic credentials you may at any point contact my PhD supervisor Professor Vito Antonio “Anton” Muscatelli FRSA FRSE AcSS who is the Principal of the University of Glasgow”. Really Arjuna, “ask my Professor”, isnt that a little puerile. Dont you think citing a peer reviwed article of which you may have even been the tenth co-author might have been better. Your Peer reviewed article does not have to be in The Economist or the Quarterly Journal of Economics, even the Bulletin of Indonesian Economic studies would suffice.

It suddenly struck me, maybe AS is not really writing for us donkeys who look at these articles a little critically. AS is writing for like minded people who have his same agenda. This way when goes for those “voluntary political activist” meetings he can raise up his hand and like any armchair warrior proudly roar, I too have worked for the CAUSE …of a “regime of punitive economic sanctions” against Sri Lanka.

Ta, Ta, Arjuna, please keep up the good work. Dont forget to let your PhD supervisor Professor Vito Antonio “Anton” Muscatelli FRSA FRSE AcSS who is the Principal of the University of Glasgow know of the your excellent articles of scholarly anaysis. I am sure he will be delighted to know that he has taught you well.

Friday, February 17, 2012

NY Times: How Statistics help Companies Learn Your Secrets (and also how to break habits)

The NY Times has an article out called How Companies Learn Your Secrets. I found this an interesting article in many ways.
a) It could provide career guidance to young students (more math and statistics cant hurt).
b) How global info glut is making statistics more relevant
b) Show how habits are formed and how habits can be broken

Anyway here are the excerpts:
Almost every major retailer, from grocery chains to investment banks to the U.S. Postal Service, has a “predictive analytics” department devoted to understanding not just consumers’ shopping habits but also their personal habits, so as to more efficiently market to them. “But Target has always been one of the smartest at this,” says Eric Siegel, a consultant and the chairman of a conference called Predictive Analytics World.

As the ability to analyze data has grown more and more fine-grained, the push to understand how daily habits influence our decisions has become one of the most exciting topics in clinical research, even though most of us are hardly aware those patterns exist. One study from Duke University estimated that habits, rather than conscious decision-making, shape 45 percent of the choices we make every day, and recent discoveries have begun to change everything from the way we think about dieting to how doctors conceive treatments for anxiety, depression and addictions.

The process within our brains that creates habits is a three-step loop. First, there is a cue, a trigger that tells your brain to go into automatic mode and which habit to use. Then there is the routine, which can be physical or mental or emotional. Finally, there is a reward, which helps your brain figure out if this particular loop is worth remembering for the future. Over time, this loop — cue, routine, reward; cue, routine, reward — becomes more and more automatic. The cue and reward become neurologically intertwined until a sense of craving emerges.

Habits aren’t destiny — they can be ignored, changed or replaced. But it’s also true that once the loop is established and a habit emerges, your brain stops fully participating in decision-making. So unless you deliberately fight a habit — unless you find new cues and rewards — the old pattern will unfold automatically.

But when some customers were going through a major life event, like graduating from college or getting a new job or moving to a new town, their shopping habits became flexible in ways that were both predictable and potential gold mines for retailers. The study found that when someone marries, he or she is more likely to start buying a new type of coffee. When a couple move into a new house, they’re more apt to purchase a different kind of cereal. When they divorce, there’s an increased chance they’ll start buying different brands of beer.

Consumers going through major life events often don’t notice, or care, that their shopping habits have shifted, but retailers notice, and they care quite a bit. At those unique moments, Andreasen wrote, customers are “vulnerable to intervention by marketers.” In other words, a precisely timed advertisement, sent to a recent divorcee or new homebuyer, can change someone’s shopping patterns for years.
And among life events, none are more important than the arrival of a baby. At that moment, new parents’ habits are more flexible than at almost any other time in their adult lives. If companies can identify pregnant shoppers, they can earn millions.
As Pole’s computers crawled through the data, he was able to identify about 25 products that, when analyzed together, allowed him to assign each shopper a “pregnancy prediction” score. More important, he could also estimate her due date to within a small window, so Target could send coupons timed to very specific stages of her pregnancy. One Target employee I spoke to provided a hypothetical example. Take a fictional Target shopper named Jenny Ward, who is 23, lives in Atlanta and in March bought cocoa-butter lotion, a purse large enough to double as a diaper bag, zinc and magnesium supplements and a bright blue rug. There’s, say, an 87 percent chance that she’s pregnant and that her delivery date is sometime in late August.
I had got into a bad habit of going to the cafeteria every afternoon and eating a chocolate-chip cookie, which contributed to my gaining a few pounds. Eight, to be precise.
The first step, they said, was to figure out my habit loop. The routine was simple: every afternoon, I walked to the cafeteria, bought a cookie and ate it while chatting with friends.
Next came some less obvious questions: What was the cue? Hunger? Boredom? Low blood sugar? And what was the reward? The taste of the cookie itself? The temporary distraction from my work? The chance to socialize with colleagues?
Rewards are powerful because they satisfy cravings, but we’re often not conscious of the urges driving our habits in the first place. So one day, when I felt a cookie impulse, I went outside and took a walk instead. The next day, I went to the cafeteria and bought a coffee. The next, I bought an apple and ate it while chatting with friends. You get the idea. I wanted to test different theories regarding what reward I was really craving. Was it hunger? (In which case the apple should have worked.) Was it the desire for a quick burst of energy? (If so, the coffee should suffice.) Or, as turned out to be the answer, was it that after several hours spent focused on work, I wanted to socialize, to make sure I was up to speed on office gossip, and the cookie was just a convenient excuse? When I walked to a colleague’s desk and chatted for a few minutes, it turned out, my cookie urge was gone.



Zola Rajapakse: World’s Toughest Trucker on Discovery

Zola Rajapakse has been selected to be one of the competitors in the World’s Toughest Trucker competition, which will be shown on the Discovery Channel.
Zola, is an Old Royalist, one of the brothers in Eric Rajapakse Opticians family. Zola currently lives and runs a Trucking company in Arizona . More bio details available here.

Airplay times and clips from the series

Monday, February 13, 2012

Privatization of Water

This is in a sense a follow up to the
Dabur Lanka to export 3.36 million litres of Lankan water to India every month
and the
Climate Change, Food Security & Virtual Water an Asymmetric Threat to Sri Lanka
posts.

This post contains excerpts from a article in Truth-Out titled Public Utility, Private Profit: Privatization of Water Is as Benign as Lucifer
Beginning about 20 years ago, it dawned on the bankers and some major corporations that if oil was a lucrative commodity water would be even more so. Everyone had to have water, even if they rode bicycles to work or took public transit. The trick was how to take it away from the people and sell it back to them.

The first water privatization story I ever heard was out of Bolivia. Cochabamba, Bolivia, is a semi-desert region. Water is a scarce precious resource. In 1999, the World Bank told Bolivia that in order to obtain a much-needed $600 million in international debt relief, it would have to privatize Cochabamba’s public water system, giving the concession to a Bechtel subsidiary, International Water.
The Bolivian Congress caved in, passing the ‘Drinking Water and Sanitation Law’ in October of 1999, ending government subsidies to municipal utilities and authorizing privatization. International Water took over in Cochabamba. The minimum wage is less than $100 a month, but IW raised the price of water to an average of $20 per household.

One classic example would be in the Plachimada community in the state of Kerala. Coke opened a bottling plant there in 2000; the community immediately suffered from chronic drought and polluted water. The reasons are hardly in dispute.
Three years ago, the little patch of land in the green, picturesque rolling hills of Palakkad yielded 50 sacks of rice and 1,500 coconuts a year. It provided work for dozens of labourers. Then Coke arrived and built a 4-acre bottling plant nearby. In his last harvest, Shahul Hameed, owner of the small holding, could manage only five sacks of rice and just 200 coconuts. His irrigation wells have run dry because Coke draws up to 1.5 million litres of water daily through its deep wells... To make matters worse, the bottling plant was producing thousands of gallons of toxic sludge and, as the BBC reported, disposed of it by selling the carcinogenic material to local farmers as "fertilizer."

Coca-Cola is big in Mexico, very big. At the same time, and not coincidentally, 12 million people have no access to piped water and 32 million have no access to proper sewage. Coca-Cola’s resource monopoly simultaneously creates a scarce water supply and an abundant supply of Coke. The country is also the second largest consumer of bottled water, much of it sold by guess who. The process of making Coke requires at least two liters of water for each liter of the finished product; some estimates are as high as five-to-one. The business end is covered by dozens of water concessions from the Mexican government which handed the company the legal right to take water from, as of 2008, 19 aquifers and 15 rivers, many of these in indigenous territories. They have also picked up the right to dump toxic waste in at least eight different public water sources.

The process of privatization has nearly swallowed the entirety of the country’s water. Yet the country hasn’t received much in return from Coca-Cola. In 2003, the company paid $29,000 for water concessions in the entire nation; in 2004, their profits from the bottling plant in San Cristobal de las Casas, the largest in the country and second largest in the world, alone reached $40 million.

Please read the whole article at Public Utility, Private Profit: Privatization of Water Is as Benign as Lucifer

Other related articles
FrontLine: Kerala's plight

Saturday, February 4, 2012

MIA with Maddona at Superbowl

MIA is to sing with Maddona at the 2012 Superbowl. MIA (Maya Arulpragasm) has come a long way since her days at Summerstage NYC and the Mermaid Festival.
MIA at Mermaid Siren Festival Brooklyn
It looks like has MIA has quietly dropped her misplaced political activism and has become more and more part of the establishment. Even though her music is good and hits the right note for the now generation (in my opinion) her politics has always seemed fake and just a vehicle for popularity. A quote from a previous blog of mine seems truer than ever
contrasted to Sinéad O'Connor's heartfelt songs about the the oppression of the Irish by the English, M.I.A seems sadly lacking. To the contrary of what little political message she sings, she has sold out and joined the establishment. i.e. she

"speaks about terrorism and Sri Lankan politics and all the while lives in a fancy house in a tony neighborhood with her billionaire husband

Bottom line, M.I.A. cant articulate what if any oppression the Tamils have had, just a lot of "Agitprop Pop" music. The music is good, but M.I.A. is probably a milquetoast messenger advocating war for moral fags.
Below is a preview of the Maddona MIA song to be sung at the Superbowl 2012