Nabeel Siddiqi

After coming to India I realized how obsessed Indian women (and, unexpectedly, men as well) are about having fair skin. If you watch any TV channel you will sooner or later come across an ad for skin care with fairness cream.

But why is this obsession so prevalent in India? Of course, women are only interested in having fair skin because they know that men like fair women, therefore I would guess that there may be some evolutionary reason behind this.

From the perspective of the climate and weather in India, it makes more sense to be darker skinned, because the sun is bright and hot. Similar places around the world tend to naturally have people who are darker. So, obviously that cannot be the reason. It could be a manifestation of the evolutionary theory that we are attracted to people who are unlike us because mating with them would create more resistant to disease offspring that have a diverse gene pool to get their chromosomes from. However, that seems unlikely because that would mean Indian men would also be attracted to African women, which as far as I have seen they are not.

One thing about fairer skin that struck me was that skin problems (which can be presumed to be symptomatic of other problems) are more visible on fair skin. This means, that a woman who has fair skin, can be assessed by a guy as a potential mate in a glance. So, a woman with darker skin may have some underlying problems that cannot be seen and hence there is a evolutionary sense that she is a potential unknown, but with a fair, clear skinned woman a guy knows that there is less chance of any underlying problems.

Nonetheless, I may be completely wrong, and it could just be brainwashing done by the British when they ruled India.

All over the news is the latest statement by Bush saying that India is partially responsible for the rise in food prices. Well, this has caused all sorts of angry responses from Indian politicians. Personally, I think its funny they actually listen to the guy, but whatever.So, what is the real reason that food prices are going up? Does Bush’s statement actually have any credibility? Well, its really not a simple as Bush likes to think it is, but then again he is not an economist. There are actually three reasons why food prices are going up: oil, rising incomes, and biodiesel.

Food prices tend to be closely correlated with the price of oil. This is because of a couple of factors. The most obvious and probably the one with the most effect is transportation. The transportation costs of moving the food from one place to the other requires oil in some form or the other. This can also partially explain the general increases of inflation around the world (the major reason being low interest rates in many large economies, i.e. Japan and America). Another reason is that oil is traded on the same commodity exchanges as food stuff like wheat, barely, soybeans, calves, pot bellies, etc. are as well. As any price action trader will tell you, there is usually a overflow effect when one security starts to rise the others tend to move in the same direction to a certain extent.

Rising incomes in India and China have also had an effect on food prices around the world. In this regard, Bush was actually correct. Of course, he doesn’t have any right to tell anyone else not to eat, afterall Texans are massively unhealthy meat eaters. The rising incomes in the third world have given people the option to afford meat. The processing of meat takes up inputs in grains and water. This can also be linked to the water shortages that are starting to occur in many places around the world. Anyway, this increased demand has led to a rise in prices of grains.

Any rise in price of any crop, tends to cause the prices of other crops to increase as well.
When the prices of one crop go up, farmers start to switch from others crops. This causes the supply of the other crops to decrease causing their price to rise as well. So, what ends up happening is a rise in one crop yields a rise in price of other crops as well.

Actually this is the effect that comes into play due to the rich world’s subsidizing of biodiesel crops. Biodiesel is an alternative fuel technology which uses certain bio-products and converts them into fuel. The idea is that the bio-products are renewable and oil, natural gas, etc. are not. However, the problem is that the governments, in their zest to get new technology, have subsidized the growing of crops that are used as raw material in biodiesel technologies, mostly corn. This has caused farmers who were previously growing other crops to switch to corn. Normally, this would cause the prices of other other crops to rise and the price of corn to fall. However, since there is another source of demand, the alternative fuel industry, the price of corn has not fallen.

Anyway, so there you have it, some various factors that are effecting the price of food. Unfortunately, Bush was correct that part of the reason that food is getting more expensive is due to the increased demand from India and China, nonetheless, he was not right in saying they should curb it. Instead, he should be writing a bill to help educate the average American to the costs of meat and how it hurts the environment. But that won’t happen, the meat lobby is very strong…

Definitions for this post:

• Conservative: Someone who likes to maintain the status quo, is resistant to change
• Traditionalist: A person who believes in tradition and culture. With tradition defined as: “an inherited pattern of thought or action” (Wordnet.Princeton.edu).

Conservatives, traditionalists… confuse me. I did my education from 5th grade to 9th grade in one of the most conservative and traditional countries in the world, Saudi Arabia. From the outset, let me make one clear: I have no problem with freedom of belief, you can believe whatever you want to believe, just don’t infringe on anyone else’s rights in the process.

Saudi, is an anomaly, and I won’t discuss that here because it really doesn’t apply. What I would like to explore though is the people who live in general society, yet cling to ideas, beliefs, and values that are from a generation or two ago. What exactly are they thinking? What are they seeing? Do they see the world differently than the rest of the world? Or do they see it the same way, but refuse to acknowledge it?

These questions have started to bother me more after I moved to India. Indian culture is a conservative and traditional culture. However, at the same time it is considered to be fashionable to be “modern”. So, overall it just comes across as a bit confused and trying to appease everyone. I’m not knocking Indian culture, I really don’t judge, just my observations which may change in the future.

Unlike the conservatives and traditionalists of Saudi or America, the right wingers of India tend be be more accepting of diverse thought. Whereas, the conservatives of America will ex-communicate you and the traditionalists of Saudi (given the chance) will chop your head off, Indians with similar beliefs will talk to you, nod their heads, smile, and be your friend while believing whatever it is they believe.

Personally, I have little respect of archaic ideas. This is not to say that we should throw everything old out (like American’s like to do, encouraged by advertisers) but that every tradition, ritual, belief, etc should be viewed under a harsh light. Does it bring me closer to the goal or further? Does is hamper my thought? Does it help be see reality with greater clarity? This process is not as easy as the questions I throw out. A good exercise is to sit down and really put some thought into finding all the negative points for a tradition. Naturally we are predisposed to follow the herd, if you don’t want to be a sheep it takes effort.

Once it is decided whether or not it is a good idea to follow a tradition, then the social aspect should be taken into consideration. In India this holds an (unfortunately) large weightge. In this case the “social damage” of not following a belief, tradition, ritual, etc that is not of personal benefit needs to be looked at. If the damage is not great, and the cost of following is not high, it may make sense to go ahead and follow the herd. Otherwise, discard it…

That seems to be the question on everyone’s mind: when is America coming back? When are we going to see the booming times again? When is the American consumer going to fuel the growth of cheap, plastic toy makers of China?

Though I try not to make predictions, because in this world, and especially relating to economics, you never know what the future holds. My previous predictions were mostly correct in substance, but incorrect in timing. I said the Fed would start cutting rates, which it did, however my timing was off by a couple of months. I also predicted a large decline in the economies of China and India, of course, this may still come to pass.

Anyway, I guess practice makes perfect, so here is another shot at some predictions:

First, I think it will not be before 2010 when America will start to look similar to its former self with the gluttonous consumer and all. I think this because with any shift in power, there is a certain adjustment time that the markets go through while they feel out the new ruler. Of course, who ends up being the next president will also affect the economy.

If McCain wins, though he is a Republican, he is an independent thinker. If a Republican wins, usually you buy oil companies, defense companies, and construction companies, however that would be assuming he actually pushes the Iraq war further along. At this time it looks like he will try to make it larger scale. This will dampen the general economy and raise up some of the mentioned stocks mostly. Though I think McCain is a far more competent leader than Bush (though that isn’t saying much), he may still make the mess in Iraq worse, which doesn’t bode well for the economy.

If Hilary wins I think the economy will probably fare the best out of these three. This is assuming that she has actually come back to the ground somewhat from her earlier days (which it looks like she has). At the beginning of Bill Clinton’s presidency, Hilary led a failed campaign to nationalize healthcare in America. As long as she doesn’t try to do anything that insane, the economy will be fine under her leadership.

Personally, I’d like to see healthcare partially nationalized, but that will cause a certain dampening of the economy as taxes will be raised and the private healthcare industry will suffer greatly. That is assuming that it is possible to nationalize healthcare at all, since the American Medical Association is a very strong lobby in Congress. But this is a topic for another post, I digress.

Obama is really a wildcard. If he manages to pull out of the war without creating too much more damage and if he steers America at least until 2010 without any terrorist attacks on American soil then there is a very good chance the economy does very well. On the other hand, if he doesn’t do a good withdrawal and piles on socialistic programs onto the American tax payer then the economy is gone.

If we set aside political factors, the time it would take for the economy to recover with a apathetic leader should be by around 2011, but I am estimated 2010 because a new leader always wants to show some change quickly so there will probably be some stimulus packages coming out probably within the first 100 days of the new presidency.

I remember when a newspaper, the Houston Chronicle, predicted the end of the landline because, shockingly, some people did not see a reason to get a landline and were making due with just a cell phone. The newspaper went on to say that more and more were going to go this route.

More than five years later, and after having lived with just a cell phone in my college days, this all seems rather commonplace. I literally lose my life if I lose my cell phone. It seems in the near future with the roll out of faster and more robust cell phone networks the cell will become dearer as it takes on more tasks.

Blackberry already made the concept of checking your email in the bathroom a cliché. There have been attempts to make a phone that takes on more tasks or has a different feel, but most have not come into widespread use (the SideKick for example). The latest incarnation of a “revolutionary” phone is the iPhone by Apple.

But what does all this mean for our lives? For the workaholics it means that work is just a button-press away. Plus, with the plethora of social networking sites and the soon to come other social features (like location-based social connectivity through your phone’s GPS system), we are in touch with friends and family all the more.

There are some people who feel that all this will mean that in the places where we would normally interact with strangers we will instead be on the phone talking to some friend. Essentially the fear is that we will increasingly have very strong bonds with a smaller number of people and not be exposed to other ideas through interactions with strangers and acquaintances.

The Economist has some articles about this subject in this week’s issue.

However, as likely as this seems I don’t think it will happen. Let’s take the example of night clubs and bars. They have essentially become places to meet strangers, usually of the opposite sex. Places such as these are a very new phenomenon which came into being after the norm became to work for some company all day being exposed to the same small number of people. So, people, in an effort to meet new people started to frequent night clubs and bars.

I think this is exactly what will happen in response to isolation due to mobile technologies. People will start going out to places, either physically or virtually, to meet new people. This in turn will cause a rise in demand for technologies and systems that help people meet others. Say for example, a location based social networking system which sees the profiles of the people in your vicinity, assuming they are open to meeting new people, and matches your interests to theirs – essentially a system to facilitate conversations between two strangers.

The future of communications looks interesting, can’t wait to see how it unfolds.

I was up late one night discussing religion with a cousin of mine who is about 10 years older than me and religious. After explaining my perspective he said that my thinking was rather immature because I was intellectually curious and that this was a phase. Essentially what I got out of it was that he felt that being curious about religion and, I’m assuming, other things as well, is a sign of immaturity.

At the time I didn’t say anything, but it got me thinking. Now this cousin of mine is quite a smart guy and is also a scientist. I’ve always assumed that all the really successful people in the world have had a certain childlike curiosity about them. I imagine that the motivation for people like Einstein, Newton, and even people like Napoleon and Hitler had a tinge of curiosity to it.

On the other hand it can be argued that to be successful you have to be single minded and focused while putting all your energy behind one thing. As Baltasar Gracian said:

Perfection resides in quality, not quantity. Extent alone never rises above mediocrity, and it is the misfortune of men with wide general interests that while they would like to have their finger in every pie, they have one in none. Intensity gives eminence, and rises to the heroic in matters sublime.

So to have a dogged determination and focus it would be necessary not to be widely curious about everything that passes because you would not be able to stick to one thing.

However, you can be curious only about a certain subject, the subject that you are intensive about, your specialty. Though I have seen successful people who are really not that curious about their subject, in other words they are not that interested in the subject but at the same time they are successful in it. Its like having a top notch physicist who doesn’t really care much about physics. Though that may seem like an anomaly to some, it is also a rather drab existence because this person has to go to work everyday not caring about (and possibly hating) the work they do.

Personally, I don’t see that as being the optimal way to live. Do something, do it right, and love it. If being infinitely curious is immature then I’m immature and proud of it.

The title is a joke, I’m no director. But I did help my friend Carl Zetterlund shoot an audition video for the Top Affiliate Challenge competition. See see it here.

Vote 10!

I do not know how much this blog’s readership knows about the Israeli-Palestinian conflict, but after learning about it you can see the ripple effects of this conflict around the world (especially in America and Europe). In India I have found many Indians with some interesting views of Israel (the BJP hawks love them, Congress guys don’t) and with the increasing friendship between the countries I believe Israel and India will be affecting each a lot more in the future. Anyway, if you want to know about the whole thing, there is a great series of articles by the Economist. Here they are:

The Next Generation - The introduction, it gives a brief overview of the current situation a short history lesson of how we got to the current place.

Fenced In -  The title refers to the massive security barrier that Israel is erecting; the article talks about the security problems and the politics that affect the decisions.

To Fight, Perchance to Die -  Discusses the Israeli armed forces and how they are changing.

Miracles and Mirages -  About the economic miracle of Israel and the possible problems they will face in the future.

A House of Many Mansions -  What the Israelis believe and the religious distribution.

Hanging On -  About the Israeli settlements in the occupied territories.

How the Other Fifth Lives - On the treatment of Arab-Israelis in Israel.

A Systemic Problem - About the Israeli political machine.

The Next Zionist Revolution -  The changing face of Zionism and seperating religion and nationalism.

Read them when you get the chance, they are definitely worth your time. The perspective in the Economist is rather unbiased compared to many other publications so if you want a truer picture this is it.

The esteemed and honorable Finance Minister of India, P. Chidambaram. Has in his infinite wisdom created a Short Term Capital Gains Tax (STGC Tax) of 15% on any security held for less than a year. In other words, if you buy a stock and hold it for less than a year then you will be charged a tax of 15% on your profit.

I believe the intention of the Finance Minister is to reduce volatility in the markets. He is doing this by reducing the incentive of being a short term trader who gets into the market for a quick buck. The profits of short term traders are being taxed so the traders have to work harder to maintain their current income, the ones at the bottom that were barely making enough money to make short term trading a worthy pursuit will drop out. He may be well-intentioned, however the reality is that this will actually increase volatility. Let me explain…

The way a stock exchange works is by matching buyers and sellers. This means that if you are interested in buying InfoSys at Rs. 100 there must be someone willing to sell it at Rs. 100 to complete the transaction. There are people known as market-makers who’s job is to match counter parties to trades (i.e. find buyers for sellers and sellers for buyers). It is the market makers that your broker calls up when you put in an order to buy or sell.

The Finance Minister wants to reduce the number of people who get into the market and buy and sell for the short term. Since, the price of a stock is determined by supply and demand if a short term trader comes in and buys up all the stock at a certain price, the price will be forced to rise. Once it rises if this same trader dumps the stock it will cause the price to fall, hence causing volatility.

Now in theory this is all great and dandy, but the thing is that these short term traders also provide something known as liquidity. Liquidity is formally defined as how quickly you can convert an asset into cash. For instance, a house in the middle of nowhere is less liquid than a popular cell phone because the house in the middle of nowhere will take some time to sell (as there are less willing buyers) and the popular cell phone will sell in a minute or two (assuming someone doesn’t steal it first).

Let’s imagine a short term panic in which many long term traders see the market going to hell and decide that they want to sell their stocks. If all of them start to sell what will happen is that the market-makers will not be able to find as many sellers, hence, as with the house in the middle of nowhere, the price will become lower and lower until a seller is found.

Now in a normal market (in which short term traders are not unfairly taxed), the short term traders may buy up these shares that the long term traders are selling because they may see a reversal which will then fall afterwards, but will afford a quick profit. However, with a STGC Tax these short term traders are reduced causing even more volatility during market panics…

I’ve been in India now for some time and despite the fact that I have tried to manage my time and try to be as productive as possible, due to the requirements of the education system in this country I have been far less productive than I was in America. The education system here is truly bunk.

Fortunately I did not spend my early years here, but talking to the people it seems they spent all their time memorizing facts and figures, which are useless in the real world. I have come to really appreciate the American education system because it teaches in a way that most students learn without realizing they are learning. The American system does have its drawbacks, which are readily apparent when it comes to math and science performance of graduates and the fact that you can get straight A’s and not have to learn anything (which many Indians do when they go there).

However, it is the free time, the American education system affords to the students, that allows the people who want to move forward to shine. The athletes can practice their game, the musicians their music, the artists their art, and intellectuals can learn about the world. This free time is where the student picks up what he wants to do with his life. The Indian perspective seems to be that students should not have any free time because they may “go off track.” Inherent in this perspective is a great hubris that these adults and authority figures hold. An arrogance that believes that the world does not change, that it makes sense to go through a completely impractical education system.

For example, currently I am going to various business schools for a selection process known as GD/PI (Group Discussion / Personal Interview). Which is, to put it bluntly, a rather pathetic way of determining the eligibility of a student. The GD part consists of a group of prospective students (usually 10-15) who are supposed to hold a discussion. It seems to be a test of balancing one’s selfishness with communal welfare. The topics of the discussions are taken from current events and general knowledge.

Now my problem is that to know the topics of discussion I have to sit and and read the paper and keep track of the various political crap that is going on all the time (like some guy in Bombay kicking out all north Indians). On the whole, this wastes my time. Time which could be spent making another algorithmic trading system or doing some other productive business. But, I am forced to spend time reading the paper, which will teach me absolutely nothing other than how badly journalists pose to know about technical things like trading and technology. I am forced to become a jack of all trades and master of none. No wonder India has practically no research and development, all the scientists waste their time reading the paper and talking politics.