Two Views on the Cause of the Global Crisis – Part II

Lax regulation may have been the lever that pushed the world into the present financial crisis, but the fulcrum was the twin excesses of over-financialization and over-globalization, according to UC Berkeley economist Ashok Bardhan. In the case of over-financialization, financial asset bubbles rose to several times the global GDP, leading to an overheating of the economy. Meanwhile, over-globalization through global trade imbalances and risky cross-border lending created the pathway for the financial virus to spread. But there is also a self-correcting mechanism to these excesses. Global trade is receding and capital flows are falling thanks to the economic crisis. And government stimulus packages tend to squeeze out foreign investment through their focus on domestic growth. But despite this trend, there are larger issues with which to contend: the conflict between globalization, free-market principles, democracy, and national policy independence. All four cannot share center stage, so something will have to give to return to equilibrium. What that will be remains an open question for the moment. – YaleGlobal

Two Views on the Cause of the Global Crisis – Part II

The twin excesses – financialization and globalization – caused the crash

Ashok Bardhan

YaleGlobal, 6 May 2009

	Export overload: China's growing dependence on exports introduced an element of instability in global economy

BERKELEY: In their effort to explain the global crisis analysts have identified lax regulation and other attributes of the financial system as the principal culprits. To grasp fully the reason it also needs to be recognized that this is the first crisis of the modern era of globalization. If the proximate cause is the “laissez faire” to “laissez financer” progression in free-market idolatry, leading to bubbles in asset prices and the subsequent crash, then the facilitating condition was yet another quasi-bubble – a bubble in globalization. It may be easier to appreciate the virulence and speed with which the crisis has spread if we recognize that in addition to over-financialization domestically, there was perhaps over-globalization internationally.

While over-globalization was evident in ever-faster trade and capital flows and increasing off-shoring of production, over-financialization could be seen in rise in the size of financial assets relative to the real economy as indicated by gross domestic product. Globally, the holdings of financial assets, comprising equities, government and private bonds and bank deposits ballooned way out of proportion to global GDP, the primary underlying measure of real economic activity (see Figure 1). Similarly, the gross market value of outstanding derivative contracts more than doubled between mid-2006 and mid-2008. The share of financial services in GDP has increased dramatically in the US and UK in recent years; in the latter it has doubled in the last decade alone. In many countries, the financial sector grew to a size disproportionate to its primary raison d'etre - to efficiently bring savers and borrowers together, allocate savings to viable investments, and manage diversification of risk. Liquid and deep financial markets are necessary; indeed, they are the lifeblood of economic activity, but to extend the analogy, not if they cause high blood pressure to the economy!

	Figure 1. Global Financial Assets to Global GDP Ratio Enlarge image

Globalization too has played its role. A large part of the new trade volumes generated were a result of diversion from potential consumption by domestic consumers to consumption by consumers half-way across the world. There is an ongoing debate in China, for example, whether the economic wisdom of having nearly a 40 percent share of exports in GDP has served the developmental goals of the country well. At least some of the blame for income inequality, lopsided development and consumption stagnation in the country can be laid at the feet of the overgrown external sector.

Global imbalances, on which reams have been written, provided the financing for the insatiable appetite of US and other consumers, met by the unbounded capacity of China’s manufacturing machine. Footloose capital ran hither and thither for better returns and ended up in high risk investments. The US-China globalization axis may have been critical but by no means was it the only game in town. Reckless lending by western banks to East European clients drove much of the importing frenzy in those countries. It was finance that drove and propelled international trade, in addition to that generated by underlying patterns of global specialization and competitiveness.

Together with the financial sector, globalization, as we know it –global trade in goods and services, capital flows and off-shoring of production – seems destined to decline in the short term. The total market value of financial assets held worldwide has declined by about a third, or more than $50 trillion, in 2008 according to a report by the Asian Development Bank. Container traffic in the world’s busiest ports is down by more than 20 percent. While trade volumes show greater volatility than GDP, the figures for the former show a near precipitous decline relative to the former. The IMF expects global GDP to decrease by 1.3 percent in 2009, while economists from the World Trade Organization forecast a 9 percent decline for global trade in the same year, both the largest drops on record since World War II. Export volumes are expected to decrease in every major region of the world. Indeed, double-digit declines in real national variables are so rare that declines in export volumes of over 30 percent, such as in the case of Japan, make one wonder about the “bubble-like” nature of the underlying demand. On the other hand, while Euro area GDP and US GDP are both expected to contract in 2009, emerging economies are the one bright spot with a GDP growth forecast of 1.6 percent.

In addition to trade, global financial flows and cross-border investments are also expected to be adversely affected. The most dynamic economic region of the world, Emerging Asia, is expected to attract 40 percent less net private capital flows (which include portfolio and direct investments) in 2009. It is as if both ships and funds in search of a safe harbor are docked at home ports.

The prospect of offshoring, that recent offspring of globalization, presents a mixed picture. While any downturn can only serve to further intensify the ever-present cost-cutting impulse on the part of management, the fundamental nature of downsizing and restructuring underway in the US in key sectors, and the sharp cutbacks in many parent operations in the financial services sector suggest that even the seemingly unstoppable phenomenon of offshoring may slow down. Already, there have been some cutbacks in the number of employees of offshore call centers.

Increasing interventions by national governments in the economic management of individual nation-states also tend to slow down the globalization process. National stimulus packages have a domestic stance and are inward-oriented, regardless of whether there is an explicit “buy domestic” provision, since greater reliance on government spending inevitably leads to less “leakage” internationally. The mounting job losses, complexity of the financial crisis, increasing range of conflicting interests, issues of inequality and fairness, and last, but not least, compulsions of electoral politics in an increasingly democratic world will all lead to greater state intervention, curbing the power of the market.

Far too rapid and distorted growth in global economic linkages and the financial services sector, as well as their mutual feeding off each other, have brought into sharper focus contradictions facing the future evolution of the global economy, the resolution of which is bound to affect globalization. While the future shape of regulatory reform is being vigorously debated, it is not clear how continued globalization will be affected in the medium-term by the crisis.

All of this leads us to the following question: can we eat our cake, have it too, and trade it in on the global markets? Dani Rodrik has long pointed out the “inescapable trilemma of the world economy,” that “democracy, national sovereignty and global economic integration are mutually incompatible.” The present crisis shows that it is actually a quadrilemma. The international policy establishment must manage and reconcile the simultaneously conflicting pulls and pushes of, first, universal free market economic principles, operating; secondly, in individual nation-states, the primary arena of economic policy, which are largely shaped by, thirdly, a democratic polity that is in turn apprehensive and insecure about, fourthly, increasing free trade and international economic integration. It is difficult to see how the tenuous co-habitation of these four – globalization, free-market principles, democracy, and national policy independence – can survive in the present circumstances. Something may have to give way, if just a little...

Ashok Bardhan is an economist at UC Berkeley.

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ht 2009 Yale Center for the Study of Globalization

Premonition and Time Travel

Premonition and Time Travel

According to its definition, a premonition is a foretelling of the future. Dreams are often premonitions of the subconscious. But what is the scientific basis of premonition? Seeing the future before it happens in your own current reality is time travel. Einstein's well accepted relativity physics states that time travel is possible, when one object is traveling faster than another object, especially as one object approaches the speed of light, relative to the other.

The earth and all of its inhabitants are traveling near the speed of light relative to a number of other objects in the universe. So let's explore the Twin Paradox theory of Time Travel and its relationship to dreams and premonitions. Einstein concluded that if there were two twins born on earth, and one of them boarded a space craft, traveled a round trip near the speed of light relative to his twin and returned to earth, his twin would be long dead. Scientists that examine sub-atomic particles confirm the factual nature of the Twin Paradox over and over again as they accelerate particles in large accelerators such as the CERN laboratory.

So based on this assumption, it is not a stretch to conclude that the twin that returns to earth after his travels, could examine the history books or a diary of his dead twin and see the entire life in a moment, relative to a short year or two that had passed on his own journey.

If you understand the nature of vibration in the body, especially relative to eastern chakras, you will begin to understand the nature of time travel in your own body. When your spirit resonates with your 7th and 8th chakras, you are removed from the limitations of your own earthly vessel and can travel near the speed of light, relative to your partner that is lying in bed next to you. This is what allows you, in a state of dreams or meditation, to witness the future before it happens.

Consider for a moment that you are a photon of light, traveling from the sun. According to Einstein's equations, you are traveling at the speed of light, so that you see the complete history of the universe, from beginning to end, in a single moment. This means that the time experienced in the universe from the moment of the big bang to now, around 14 billion years, can be viewed by the light, from beginning to end, in a moment. Cosmic Background Radiation can be thought of as a premonition of the future of the universe.

Because of the unique characteristics of relativity physics, it does not take a leap of understanding to conclude that although the twin that traveled away from the earth is only one or two years older, a much longer time has passed for his long dead twin, and he arrives back to earth to witness "the future" of his twin.

Everything in the universe is traveling near the speed of light, relative to something else in the universe. So it is easy to conclude that our future has already happened, relative to some other observer in the universe, and our dreams and premonitions are simply the electromagnetic signature of that observable future.

When we dream, meditate or otherwise become free from the bondage of our physical vessel, we time travel. We then have the ability to witness the past and the future, all in a moment. We become like God, which is the light of the universe. In the same fashion, we can consciously shape our futures because there are an infinite number of futures for all of us. Knowing what we want in our lives, especially relative to contributing to the higher vibration of humanity, allows us to shape and mold our future, just as an artist would shape a piece of art.

---http://bryanbrandenburg.blog.com/

Cyclists killed in Britain up by 11% in three years

• David Hencke, Westminster correspondent
• The Guardian, Friday 8 May 2009

A Ghost Bike sits at Sussex Downs near Devils Dyke. The plaque reads 'Cyclist Killed Here'. Photograph: Katherine Rose

The number of cyclists killed and seriously injured on Britain's roads rose by 11% between 2004 and 2007 despite no significant increase in cycling, a report by the National Audit Office has disclosed.

It says despite an overall fall in the number of road deaths, the UK is behind other advanced industrial nations in terms of the number of cyclists and pedestrians who are injured and killed on the roads.

The report says that after falling throughout the 1990s the number of cyclists seriously injured or killed increased by 11% from 2004 to 2007. In 2007 alone 646 pedestrians and 136 cyclists were killed and 30,000 pedestrians and 16,000 cyclists injured.

The auditors found that a high profile advertising campaign to cut road deaths called Think! appeared to have little measurable effect on road casualties.

The report says the most dangerous place for cyclists and pedestrians is London. Seventeen pedestrians per 100,000 people are killed in the capital, compared with a national average of 11.

Tory MP Edward Leigh said: "In terms of the number of child pedestrians killed as a proportion of the population, we are way down the league. Our poor performance should be a matter of national debate."

Separate research published by the Cyclists Touring Club (CTC) found that where there are more riders on the roads there is generally a lower accident rate, contradicting a notion that a mass of inexperienced riders taking to the streets brings a spike in injuries and death.

• guardian.co.uk © Guardian News and Media Limited 2009

Eckumsetzer

Mit einem Eckumsetzer werden in Anlagen und Fördersystemen Paletten (Stückgut) 90° zur Förderrichtung umgesetzt.

Abb.: Skizze

DER ECKUMSETZER BESTEHT IM PRINZIP AUS ZWEI KOMPONENTEN:

• der Unterkonstruktion mit Hubsystem und integriertem Hubantrieb.
• dem aufgebautem Förderelement z.B. Rollenförderer, Kettenförderer, usw.

Die jeweiligen Förderelemente werden je nach Anforderung ausgewählt und aufgebaut. Sehen Sie dazu die verschiedenen Produktblätter „Rollenförderer“, „Kettenförderer“ usw.

Der Eckumsetzer besteht aus einer Unterkonstruktion, die mit dem Boden verschraubt wird. Darauf wird das Hubsystem aufgebaut. Am Hubsystem wird das entsprechende Förderelement aufgebaut. Der Hubantrieb kann auf verschiedene Art und Weise erfolgen. Abhängig von der erforderlichen Hubkraft, Hubhöhe und der zur Verfügung stehenden Bauhöhe kommen Pneumatikzylinder, Getriebemotore oder elektrische Linearantriebe zum Einsatz. Der Hubantrieb ist standardmäßig unter dem Förderelement, positioniert. Durch die verschiedenen konstruktiven Lösungen können die Elemente optimal für Ihren Einsatz abgestimmt werden.

SENSORIK:
Die Übergabeposition wird mittels einem induktiven Sensor definiert. Bei frequenzgeregeltem Hubantrieb werden an der Übergabeposition 2 Sensoren verwendet. Der erste Sensor dient als Bremssensor, der zweite als Stopsensor.

SICHERHEIT:
Auf die Vermeidung von Scher- und Quetschstellen wurde bei der Entwicklung der Komponenten besonderes Augenmerk gelegt.

ABMESSUNGEN:
Bauhöhe	ca. 450 mm
Leistung Hubantrieb z.B. für Paletten mit 3,5 t	ca. 1,10 kW

Abb.: 90° Eckumsetzer unter Rollenförderer mit heb- und absenkbarem Kettenförderer

AUSFÜHRUNGEN:

• Stahl lackiert oder pulverbeschichtet
• Stahl verzinkt
• Edelstahl

Eine Ausführung des Eckumsetzers die zum Einsatz in der Ex-Atmosphäre (Zone 1 bzw. 2 für Gas und Zone 21 bzw. 22 für Staub) geeignet ist, kann ebenfalls geliefert werden.

VORTEILE:

• extrem niedrige Bauhöhe bei großer Hubkraft
• kompakte Bauweise
• flexibel in der Hubhöhe
• genaue und spielarme Positionierung in den Endlagen

Fördermittel

Automatische Hochregallageranbindung mit Palettenrollenbahnen, Kettenförderer, Eckumsetzer, Verfahrwagen mit Kettenförderer, Verfahrwagen mit Rollenbahnen und Ausrichtstation. Automatische Hochregallageranbindung mit Verfahrwagen mit zwei Teleskopgabeln, Stirnregal mit Übergaberegalplätzen für die Regalbediengeräte. Senkrechtförderer für bahngebundene Förderanlagen, Fahrkorbausführung mit Rollenbahnen oder Kettenförderern, ausgelegt für eine oder zwei Paletten, mit Brandschutztor für bahngebundene Förderanlagen, ausgebildet für Euro-, Industrie-, Chemie- oder Sonderpaletten oder Gitterboxen, optional mit Stahlbaubühne. Verfahrwagen mit Teleskopgabel übernimmt Paletten aus dem Stirnregal eines Hochregallagers und übergibt diese an Gefällerollenbahnen zur Versandbereitstellung für den LKW. Beispiel 2 zeigt eine Palettenausrichtstation für Europaletten. Automatisches Fließlager Bestückung automatisch über einen verfahrbaren Senkrechtförderer, optimale Ausnutzung der Lagerhalle, einfache und sichere Palettenentnahme in der untersten Ebene mit Gabelhubwagen möglich, optimale Bereitstellung für LKW-Touren, automatische Gassenzuordnung durch Scannen der Paletten. Verfahrbarer Senkrechtförderer vollautomatische Bestückung des Fließlagers, kostengünstige und leistungsstarke Alternative zum Regalbediengerät, Konstruktion in solider Stahlausführung. Wareneingang I-Punkt Aufgabeplatz mit Zentriereinrichtung und Anfahrschutz, Palettenkonturenkontrolle nach Länge, Breite und Höhe, Palettenkufenfreiraumkontrolle, Gewichtskontrolle, Ausschleusestrecke mit Anzeige des Palettenfehlers, Identifikation der Palette über Scanner, automatisches Erzeugen eines Transportetikettes, vollautomatischer Weitertransport in ein Hochregallager, Brandschutztor für bahngebundene Förderanlagen mit Notstromversorgung. Bespiel 2: Leerpalettenmagazin zur automatischen Zuführung von Leerpaletten in die Produktion, wahlweise für Euro-, Industrie-, Chemie- oder Sonderpaletten. Gabelhubwagenauf- und -entnahmestation für Förderhöhen von 75 mm auf beliebige Transporthöhe, in solider Ausführung , mit stabilen Anfahrschutz. Kettenförderer Sonderausführung als dreistrangiger Kettenförderer mit Ausrichtstation, Eckumsetzer und Rollenbahn. Beispiel 2: Kistenentstapler dient zum Entstapeln von zwei Kisten übereinander auf eine Transporteinheit. Palettierroboter vollautomatische Palettierzelle mit Palettenzuführung und Ausrichtstation. Palettenkonturenkontrolle Überprüfung von Länge, Breite und Höhe, Kufenfreiraumkontrolle, optische Anzeige des Palettenfehlers. Beispiel 2 zeigt einen Verschiebewagen mit Rollenbahn.

Fördergüter

Karton	Kleinladungsträger	Reifen	Felgen
Europaletten	Industrie/Chemiepaletten	Kunststoffpaletten	IBC - Intermediate Bulk Container
Gitterboxen	Stahlbehälter	Automotiveboxen (kleine Auflagefläche /Füsse)
Fässer	Stahl-Coils	Wellpappenstapel	Spahnplattenstapel

Two Views on the Cause of the Global Crisis – Part I

The global financial crisis that has devastated the world economy has spawned a growing literature on its causes. In part one of our two-part series, World Bank economist and Carnegie Endowment scholar Branko Milanovic argues that while analysts can quibble over the contributing factors to the financial meltdown, a deeper, more fundamental problem was the real cause: income inequality. Growing income inequality led to an abundance of investable funds searching for superior returns, which ultimately could only be achieved through riskier investments. But this only tells part of the story. That real income of the middle class has not risen over the past twenty years created a massive political problem: wealth redistribution. The solution came in the form of easier credit, which allowed the middle class, if not to save like the wealthy, at least to spend like them. But had there been less inequality would the outcome have been any different? As Milanovic notes, the middle class have higher priorities than excess investment returns, so there would have been less money chasing riskier assets. This would ultimately have led to more stable development. – YaleGlobal

Two Views on the Cause of the Global Crisis – Part I

Income inequality and speculative investment by the rich and poor in America led to the financial meltdown

Branko Milanovic

YaleGlobal, 4 May 2009

	Grounded: American middle class, with stagnating income, now has to bear the debt burden brought about by the income gap

WASHINGTON: The current financial crisis is generally blamed on feckless bankers, financial deregulation, crony capitalism and the like. While all of these elements may be true, this purely financial explanation of the crisis overlooks its fundamental reasons. They lie in the real sector, and more exactly in the distribution of income across individuals and social classes. Deregulation, by helping irresponsible behavior, just exacerbated the crisis; it did not create it.

To go to the origins of the crisis, one needs to go to rising income inequality within practically all countries in the world, and the United States in particular, over the last thirty years. In the United States, the top 1 percent of the population doubled its share in national income from around 8 percent in the mid-1970s to almost 16 percent in the early 2000s. That eerily replicated the situation that existed just prior to the crash of 1929, when the top 1 percent share reached its previous high watermark American income inequality over the last hundred years thus basically charted a gigantic U, going down from its 1929 peak all the way to the late 1970s, and then rising again for thirty years.

What did the increase mean? Such enormous wealth could not be used for consumption only. There is a limit to the number of Dom Pérignons and Armani suits one can drink or wear. And, of course, it was not reasonable either to “invest” solely in conspicuous consumption when wealth could be further increased by judicious investment. So, a huge pool of available financial capital—the product of increased income inequality—went in search of profitable opportunities into which to invest.

But the richest people and the hundreds of thousands somewhat less rich, could not invest the money themselves. They needed intermediaries, the financial sector. Overwhelmed with such an amount of funds, and short of good opportunities to invest the capital as well as enticed by large fees attending each transaction, the financial sector became more and more reckless, basically throwing money at anyone who would take it. While one cannot prove that investible resources eventually exceeded the number of safe and profitable investment opportunities (since nobody knows a priori how many and where there are good investment opportunities), this is strongly suggested by the increasing riskiness of investments that the financiers had to undertake.

But this is only one part of the equation: how and why large amounts of investable money went in a search of a return on that money. The second part of the equation explains who borrowed that money. There again we go back to the rising inequality. The increased wealth at the top was combined with an absence of real economic growth in the middle. Real median wage in the United States has been stagnant for twenty five years, despite an almost doubling of GDP per capita. About one-half of all real income gains between 1976 and 2006 accrued to the richest 5 percent of households. The new “gilded age” was understandably not very popular among the middle classes that saw their purchasing power not budge for years. Middle class income stagnation became a recurrent theme in the American political life, and an insoluble political problem for both Democrats and Republicans. Politicians obviously had an interest to make their constituents happy for otherwise they may not vote for them. Yet they could not just raise their wages. A way to make it seem that the middle class was earning more than it did was to increase its purchasing power through broader and more accessible credit. People began to live by accumulating ever rising debts on their credit cards, taking on more car debts or higher mortgages. President George W. Bush famously promised that every American family, implicitly regardless of its income, will be able to own a home. Thus was born the great American consumption binge which saw the household debt increase from 48 percent of GDP in the early 1980s to 100 percent of GDP before the crisis.

The interests of several large groups of people became closely aligned. High net-worth individuals and the financial sector were, as we have seen, keen to find new lending opportunities. Politicians were eager to “solve” the irritable problem of middle class income stagnation. The middle class and those poorer than them were happy to see their tight budget constraint removed as if by magic wand, consume all the fine things purchased by the rich, and partake in the longest US post World War II economic expansion. Suddenly, the middle class too felt like the winners.

This is what more than two centuries ago, the great French philosopher Montesquieu mocked when he described the mechanism used by the creators of paper money in France (an experiment that eventually crumbled with a thud): ‘People of Baetica”, wrote Montesquieu, “do you want to be rich? Imagine that I am very much so, and that you are very rich also; every morning tell yourself that your fortune has doubled during the night; and if you have creditors, go pay them with what you have imagined, and tell them to imagine it in their turn”.

The credit-fueled system was further helped by the ability of the US to run large current account deficits; that is, to have several percentage points of its consumption financed by foreigners. The consumption binge also took the edge off class conflict and maintained the American dream of a rising tide that lifts all the boats. But it was not sustainable. Once the middle class began defaulting on its debts, it collapsed.

We should not focus on the superficial aspects of the crisis, on the arcane of how “derivatives” work. If “derivatives” they were, they were the “derivatives” of the model of growth pursued over the last quarter a century. The root cause of the crisis is not to be found in hedge funds and bankers who simply behaved with the greed to which they are accustomed (and for which economists used to praise them). The real cause of the crisis lies in huge inequalities in income distribution which generated much larger investable funds than could be profitably employed. The political problem of insufficient economic growth of the middle class was then “solved” by opening the floodgates of the cheap credit. And the opening of the credit floodgates, to placate the middle class, was needed because in a democratic system, an excessively unequal model of development cannot coexist with political stability.

Could it have worked out differently? Yes, without thirty years of rising inequality, and with the same overall national income, income of the middle class would have been greater. People with middling incomes have many more priority needs to satisfy before they become preoccupied with the best investment opportunities for their excess money. Thus, the structure of consumption would have been different: probably more money would have been spent on home-cooked meals than on restaurants, on near-home vacations than on exotic destinations, on kids’ clothes than on designer apparel. More equitable development would have removed the need for the politicians to look around in order to find palliatives with which to assuage the anger of the middle-class constituents. In other words, there would have been more equitable and stable development which would have spared the United States, and increasingly the world, an unnecessary crisis.

Branko Milanovic is an associate scholar with the Carnegie Endowment for International Peace and a lead economist in the World Bank's research department, where he has been working on the topics of income inequality and globalization.

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© Copyright 2009 Yale Center for the Study of Globalization

May 5, 2009

India, Suddenly Starved for Investment

By VIKAS BAJAJ and SOMINI SENGUPTA

GURGAON, India — Sumit Sapra is a member of that ambitious, impatient generation of young Indians who rode the crest of the global economy. In five years, he changed jobs three times, quadrupling his salary along the way. Even when satisfied with his position, he kept his résumé posted on job sites, in case better offers came along. And he splurged. In three years, he bought three cars, moving up a notch in luxury each time. For weekend jaunts, he bought a motorcycle.

Mr. Sapra’s last and best-paying job was at the Indian headquarters of the financial services arm of General Electric, investing western money in Indian energy projects. But last December, foreign money dried up and Mr. Sapra, with a prestigious degree, was laid off.

“Earlier it was money chasing a few projects,” Mr. Sapra, 30, said of the change that seemed to come virtually overnight. “Now it’s the other way around.”

Not long ago, Indian leaders confidently predicted this country would emerge largely unscathed from the global economic crisis. It is now becoming clear that that view was too optimistic, nowhere more so than in this city south of New Delhi that was once the symbol of India’s economic boom.

A few short years ago, construction sites here buzzed 24 hours a day, crews working through the night, cramming down food from onsite trucks during breaks in the twilight. Now real estate sites lie fallow. The once-booming art market has slowed to a crawl. And charmed professionals with coveted degrees, like Sumit Sapra, are unemployed or taking pay cuts to hold on to their jobs.

India’s phenomenal growth of the last five years was powered in large part by huge injections of cash and investment. Investment accounted for about 39 percent of the country’s gross domestic product in fiscal year 2008, up from 25 percent five years ago. At its peak, more than a third of investment came from abroad, according to Credit Suisse. But in the last three months of last year, foreign loans and direct investment fell by nearly a third, to their lowest level in more than two years.

In a recent report, the International Monetary Fund said Indian companies were among the world’s most vulnerable, after American firms, because they borrowed aggressively during the boom. Using data from Moody’s, the credit rating firm, the I.M.F. estimated in a recent report that defaults among nonfinancial South Asian firms could climb to 20 percent in the coming year, up from an expectation of 4.2 percent a year earlier. (American firms are expected to default on loans at a rate of 23 percent.)

The decline in foreign investment has taken a big toll on sectors like real estate, manufacturing, infrastructure and even art, which was bolstered by demand from globalization’s nouveau riche here and abroad. In the last quarter of 2008, the economy’s growth rate plummeted to about 5.3 percent, the lowest in five years. While consumer demand, particularly in the countryside, has kept the economy growing, the sudden slowing in the flow of foreign funds will make it harder for the country to grow fast enough to pull hundreds of millions of people out of stifling poverty.

“If India wants to go back to the 8 to 9 percent growth rate, private investment and low cost of capital is essential,” said Jahangir Aziz, the chief economist for India at JPMorgan Chase.

Indian policy makers say they believe the country will grow at 6 percent in the coming year, but the I.M.F. forecasts growth of 4.5 percent.

To help fill the gap left by foreign investment, the government is spending more on infrastructure and social programs. The Reserve Bank of India, India’s central bank, has slashed its benchmark interest rates, but the cost of private loans has not fallen by as much.

After a wrenching 58 percent drop in the Indian stock market last year, the market is up 42 percent since its March low and some foreign money has started to flow into equities. But economists like Mr. Aziz say the government needs to do a lot more, though few expect bigger interventions until the current elections end and a new government takes power in late May or early June.

In the meantime, activity here in Gurgaon has slowed radically. Just off the highway from New Delhi, a giant hole in the ground sits where the country’s largest developer, DLF, had planned to build the nation’s biggest mall, aptly named the Mall of India.

DLF officials say that they may reduce the size of the mall and add office space to replace planned retail space.

In the boom, DLF built many of the earliest projects that transformed Gurgaon from a sleepy village into an expansive city that has become home to companies like Ericsson and I.B.M.

DLF turned to foreign lenders and investors like D. E. Shaw, the New York-based investment firm, because they provided money “at lower rates of interest and in larger amounts,” said Rajeev Talwar, an executive director at New Delhi-based DLF. “Today, you have no choice but to go to the Indian banks.”

But domestic lenders have become more reluctant to extend credit, and the interest rates they offer have made projects unfeasible. Last week, DLF reported that its profits fell 92 percent in the first three months of the year.

A subcontractor, Sunil Kumar Verma, who lays marble floors for builders in Gurgaon, said that business was so bad that half of his 40 workers had returned to their homes in Bihar, a poor eastern state where there was also little work for them.

“All they can do is sit, eat and sleep,” Mr. Verma said.

The art market reflects the collapse of the investment boom at the other end of the wealth spectrum.

Over the last years, gallery owners had no need to cultivate buyers. Money was no object. Many artists cranked out works at a furious pace. Not only did veteran collectors snap up the big-ticket items (a painting by M. F. Husain, for instance, or V. S. Gaitonde) but midlevel works in the range of $100,000 drew plenty of buyers, as well.

“There were queues. Shows were sold out prior to opening. We were all on a high,” said Arun Vadehra, who owns two galleries devoted to modern and contemporary art in Delhi and a third in London.

In industry, export companies have been hit hard — diamond polishing units and knitwear factories, for instance, are running at a fraction of their capacity.

The job market is another casualty. Not so long ago, as a lot of money chased a small pool of skilled professionals, salaries skyrocketed. Now, it’s the other way around, as Mr. Sapra, the former G.E. employee, said.

He has looked for work for several months and only last month heard back from a few potential employers. Like many of his peers, he says he will most likely have to settle for less money than he was making earlier — despite his master’s degree from the prestigious Indian Institute of Management.

In the good old days, he invested some of his money in property. Now, he would rather not look at how his assets are doing. He said it would just depress him.

Mr. Sapra is not the only one casting his gaze elsewhere. With the exception of a handful of issues, like food prices, politicians have not spent much time talking about the economy this election season.

Ajay Shah, an economist and columnist, said the next government’s challenge would be to reawaken the “animal spirits” of the private sector by removing restrictions on investment, loosening financial regulations and putting money into infrastructure.

But in India’s chaotic coalition politics, it is hard enough to predict who will come to power, let alone what they will do once they are there.

Tuesday, May 05, 2009

Wolfram Alpha and Google Face Off

Our exclusive test shows how the two Web engines compare when given the same queries.

By David Talbot

Last week, as physicist Stephen Wolfram was demonstrating his new Web-based "computation engine"--Wolfram Alpha--to the public, Google announced a data-centric service of its own. Alpha accesses databases that are maintained by Wolfram Research, or licensed from others, and deploys formulas and algorithms to compute answers for searchers.

Computation engine: The new Wolfram Alpha engine computes answers based on search terms. In this case, entering “Sydney New York” produced a flight path and comparative data on the two cities, much of which can be easily found via Google too.
Credit: Wolfram Research

Using some prelaunch log-in credentials provided by the Wolfram team, I decided to run my own Wolfram Alpha versus Google test. I used a handful of search terms that could produce data-centric answers and tried variations in a few cases to see what might happen.

This was an effort to get beyond the characterizations and produce some real data. I also wanted to explore the claims made during my visit to Wolfram Research last week: that Alpha can add unique value in computing answers based on your search queries.

Here's what I entered, and what I found.

SEARCH TERM: Microsoft Apple

WOLFRAM ALPHA: I got side-by-side tables and graphics on the stock prices and data on the two companies, plus a chart plotting the price of both stocks over time.

GOOGLE: The top hits were mostly news stories, from major and minor publications, containing both words.

VARIATION: When I changed the Google search term to just "Microsoft" or just "Apple," I got a chart with today's stock price up top; when I clicked that link, I received tons of information--comparable to what Alpha provides--but only on the single company.

SEARCH TERM: Sydney New York

WOLFRAM ALPHA: I got tables showing the distance between the two cities in miles, kilometers, meters, even nautical miles; a map of the world with the optimal flight path; and the fact that the trip spans 0.4 of the earth's circumference. I learned how long it would take to make the trip: 18.1 hours flying; 13 hours for a sound wave, 74 milliseconds for a light beam in fiber, and 53 milliseconds for a light beam traveling in a vacuum. I also got comparative populations, elevation in meters, and current local times.

GOOGLE: I got a mix of things: a form for finding flights between Sydney and New York; a Google Maps-plotted list of businesses in New York City that contain the word "Sydney"; and links to the municipal government of Sidney, a small town in upstate New York.

VARIATION: When I tried "Sydney New York distance" (adding the word "distance"), Wolfram gave me only the distance information mentioned above while Google gave me links to distance-finding websites. I opened the first one, was able to enter "New York" and "Sydney" in some forms, and wound up with much the same information provided by Wolfram (but without the light-beam and sound-wave details).

SEARCH TERM: 10 pounds kilograms

WOLFRAM ALPHA: The site informed me that it interpreted my search term as an effort to multiply "10 pounds" by "1 kilogram" and gave me this result: 4.536 kg2 (kilograms squared) or 22.05 lb2 (pounds squared).

GOOGLE: Google gave me links to various metric conversion sites.

Market watch: Entering “GM Ford” into the Wolfram Alpha engine produced tables comparing company data and stock prices, including charts plotting the price history.
Credit: Wolfram Research

VARIATIONS: Adding the word "in" changed everything. When I tweaked the search query to say "10 pounds in kilograms," the Wolfram site gave me the correct conversion: 10 pounds equals 4.536 kilograms. It also gave me the volumes (in various units) of 10 pounds of water. In a final, somewhat cheesy touch, it also told me that 10 pounds was 1.8 times the weight of Wolfram's book, A New Kind of Science. In Google's case, this revised search term produced the helpful calculated result up top: 10 pounds = 4.5359237 kilograms.

When I put in "10 lbs kgs," Alpha gave me the calculated result (the assumption was that I wanted multiplication), as it had with the full words. Google gave me metric conversion sites--the top one was a "Russian Brides Cyber Guide." (It offers both brides and metric conversions.)

When I tried "10 pds kgs," Alpha choked and didn't understand. Google helpfully asked if I meant "pounds" and gave me metric conversion sites, but not the calculated result.

SEARCH TERM: light bulb

WOLFRAM ALPHA: I was expecting some facts and figures on this ubiquitous technology but got a message saying that Wolfram Alpha "isn't sure what to do with your input."

GOOGLE: I got several links--starting with a Wikipedia entry--explaining what a light bulb is and providing some history.

VARIATIONS: When I tried "light bulb inventor," I got similar results: Alpha drew a blank, but Google gave useful links. When I tried "first light bulb," Alpha provided a table explaining that the light bulb was patented in 1878; under "people involved," it cited Thomas Edison.

SEARCH TERM: Aspirin Tylenol

WOLFRAM ALPHA: Alpha gave me molecular diagrams for aspirin and acetaminophen and lots of scientific information comparing their molecular weights, boiling points, vapor pressure, and so forth.

GOOGLE: Usefully (to nonchemists suffering from headaches), the top link was to a Wiki-answers page telling people whether they can take aspirin and Tylenol together. Other links gave information about toxicity, danger to kidneys, and the like.

SEARCH TERM: Stanford Harvard

WOLFRAM ALPHA: I got tables comparing data from the two schools: size of student bodies--broken down by full-time, part-time, undergraduate, and graduate--plus the number of undergraduate, master's, and doctoral degrees awarded, and similar data. Alpha listed Stanford's tuition as $25,000, which is incorrect, and no tuition for Harvard. As with all of Alpha's results, it gave me sources against which to check the information.

GOOGLE: Google gave me a collection of links (starting with a discussion board for students trying to make a college decision) and various news stories containing the two terms.

SEARCH TERM: Cancer New York

WOLFRAM ALPHA: I was expecting statistics on cancer rates in New York. Instead, the Wolfram site assumed I meant the constellation. It showed me where Cancer could be found in the night sky viewed from New York, told me when it would next rise and set, and included a map of the night sky.

GOOGLE: The first link was to Memorial Sloan-Kettering Cancer Center in New York. The second was to the New York State Department of Health's cancer page. The third was to the New York State Cancer Registry. Not bad.

VARIATIONS: Adding a second state (Cancer New York Nevada) confused Wolfram--it didn't know what I wanted. With Google, all the top results were Nevada-centric: a mix of news stories, lawyers' websites, and medical centers relating to cancer (the disease) in Nevada. No comparisons, no data, and not as helpful as it was when I just put "Cancer New York."

SEARCH TERM: Utah Florida population

WOLFRAM ALPHA: Alpha gave me tables containing the two states' populations from 2006, the population growth rate from 2000 to 2006 (including a chart that I could download), and the number of annual births and deaths in 2004.

GOOGLE: Even though Google just launched a new data-presentation service with access to public census and labor data, this search term did not bring me to the new data service. The first hit was to a U.S. census press release that itself contained links to population tables.

VARIATIONS: When I tried "Utah population," Google did give me a view of its new service: a simple chart of Utah's population from 1980 to the present.

When I changed the search term to "Utah Florida," Wolfram threw the almanac at me, giving side-by-side tables on population data plus high and low elevations of the two states, the dates that the states joined the union, the area of farmland, the household income and poverty rates, and so on. Google gave me random sites that contained the two words, starting with a mapped location of a business in Lake Mary, Florida, that contains the word "Utah."

Generally, I did not use search terms that clearly had no computable answer (and therefore would have stumped Wolfram). But I also didn't throw any softballs in areas close to the heart of its makers: physics, chemistry, engineering, and genomics. On hard-core scientific questions, it gives you tons of symbols and graphics and other information that would be useful to a researcher but obscure to most people. But on many common questions for which there is no obvious data element, you will not get much help. In any event, if its plans hold, you should be able to test it out yourself in two or three weeks.

Tuesday, May 05, 2009

Detecting Dirty Bombs from a Safe Distance

A modified NASA telescope could detect dangerous radioactive materials.

By Brittany Sauser

Tracking and locating hazardous radioactive materials has become an immense concern for the United States Department of Homeland Security. In the wrong hands, materials snatched from a hospital or a nuclear plant could be used to build a "dirty bomb" that might cause major harm to human health and the environment.

Researchers at the University of New Hampshire (UNH) have now built a highly sensitive device for detecting radioactive materials remotely, using spare detectors from NASA's Compton Gamma-Ray Observatory. The detectors were originally intended to measure gamma rays in space. "It is a very robust, reliable, and precise piece of instrumentation that has already been proven to work in space," says James Ryan, the lead researcher for the telescope and a professor of physics at UNH. "If it works in space, you bet it will work on the ground."

Security personnel currently use handheld detectors to locate radioactive materials, but these instruments are often affected by background radiation and cannot always pinpoint the source of radiation accurately. "This is an important area that needs new detectors," says Neil Gehrels, chief of the astroparticle physics laboratory at NASA's Goddard Space Flight Center, in Greenbelt, MD. "The challenge is to build a system that is sensitive and detects the kinds of gamma rays that would be of security concern, and two, to build a robust system that can be used in the field."

The new telescope, called Gamma-Ray Experimental Telescope Assembly (GRETA), can fit into the back of a truck, allowing security personnel to spot high-energy gamma rays simply by scanning an area. "Our instrument can detect different radioactive isotopes in different places with one exposure," says Ryan. The researchers also developed software to operate the telescope and analyze data in real time.

"Ryan's work is really outstanding, and he has one of the best systems for sensitive, wide-field gamma-ray detection," says NASA's Gehrels. "The detectors can sense sources from afar and use a technique that allows them to see exactly where the source is located." While there are other groups working on similar systems, Gehrels says that the UNH group is leading the field.

User interface: The researchers developed software to operate the telescope and analyze data in real time.
Credit: University of New Hampshire

The telescope comprises two different cylinder-shaped "scintillation" detectors that work in tandem, surrounded by large glass photomultiplier tubes. When a gamma ray hits the front detector, the energy is scattered and absorbed by the rear detector. The energy is then converted into visible light and detected by the highly sensitive photomultiplier tubes. The specific color and intensity of the light can identify the radioactive material involved, says Gerald Share, a visiting senior research scientist in the department of astronomy at the University of Maryland, who was not involved in the work.

"The instrument measures how much energy is deposited in each detector to calculate the total energy of the gamma ray," says Ryan. "This tells you what the radioactive isotope is." The researchers have hooked up the telescope to a laptop and developed software that is easy to control.

The researchers will present their work at the 2009 IEEE International Conference on Technologies for Homeland Security. "Since the 9/11 terrorist attacks, we realize we are in a dangerous world, and it is essential to put money into technologies like this," says Share. "We have no other choice."

Ryan says that the telescope could be used in a variety of national-security settings, such as for cargo inspections and to search for rogue nuclear weapons.

Tuesday, May 05, 2009

Moving Data around the Clouds

A startup hopes to make it easier to hop between cloud-computing services.

By Kate Greene

In recent years, companies led by Amazon, Microsoft, and Google have helped usher in the era of cloud computing, in which businesses and individuals lease access to computing on demand, paying only for as much processing power as they need. And as often happens when a new industry emerges, there's been a flurry of startup activity in the cloud-computing industry over the past year or so.

One startup, called Cloudkick, hopes to provide a simpler way to manage data stored across several different cloud-computing services. Cloudkick provides a unified, Web-based interface for monitoring data regardless of the cloud provider hosting it.

Another feature launched recently by Cloudkick, called Cloudshift, lets customers transfer data between different cloud-computing providers with just a few clicks. It makes it possible to shift an application from Amazon's servers to those of competitors, such as Rackspace, with surprising ease. This means that businesses using Cloudkick can avoid being locked into one provider--a feature that could help save money if a different provider suddenly offers a cheaper service.

"A lot of companies are afraid to move into the cloud because they don't want one company to have all their data," says Dan Di Spaltro, cofounder of the startup. These companies worry that it will take significant time and resources to move data between providers because, as yet, there is no cloud-computing standard. Moving from one provider to another requires technical tricks, including converting data between file types used by different providers. "We tackle that interoperability problem," says Di Spaltro.

Cloudkick presented its product last month at the Under the Radar conference in Mountain View, CA, where it won a best-in-show award and best in category, by audience vote. The startup, founded by the venture firm Y Combinator, came out of stealth mode in March, has 1,600 customers, and manages about 12,500 servers. The company's management service and its new migration service--currently only available to a small number of customers--are both free, although it intends to launch payment plans in the future.

After signing in to the Cloudkick website, a user can add different cloud-computing accounts by entering the necessary log-in information. A dashboard then shows each of these services and the status of the servers being used. A person can set up e-mail alerts to warn if traffic dips below a certain level or if it spikes, for example. The company also provides graphs to visualize the average load on a machine--an indicator of the overall health of the system.

Cloud control: This graph shows load averages for several machines. It can alert a user if the system is nearing failure or if an application is behaving poorly.
Credit: Cloudkick

Moving data from one vendor to another is as simple as dragging and dropping an on-screen icon. But behind the scenes, there's much more going on. When data is stored on Amazon's servers using its Simple Storage Service (S3), for instance, it is saved in a proprietary format that keeps it from simply being moved to another service. To solve this problem, Cloudkick has written software that automatically unbundles the data from the S3 file system. This involves removing a layer of encryption that surrounds the data, explains Alex Polvi, cofounder of Cloudkick. The data can then be uploaded to another provider--the whole process takes about five minutes. "It's like ripping a CD," says Polvi.

Cloudkick isn't the only company offering novel ways to manage cloud-computing services. Companies including CloudStatus and RightScale also provide a way to monitor cloud servers via the Web. Cloudkick's advantage, according to Polvi, is that it keeps things as simple as possible and now gives users the ability to switch servers so easily.

Di Spaltro adds that eventually Cloudkick would like to let customers transfer between cloud providers based on preset pricing options, or based on the geographic location in which the heaviest load occurs. For instance, if one provider offers a deal below a certain price, Cloudkick could automatically transfer data over to that service. Or if a customer's servers experience a heavy load in one part of the world during a certain time of day, he or she could automatically transfer the load to servers in that location at that time, reducing lag and improving performance.

"The value proposition to moving workloads around is great," says Frank Gillett, an analyst at Forrester Research. He says that the portability Cloudkick offers will appeal especially to startups, "who are shopping around for the lowest price or want to move quickly."

However, Gillett adds that there's still a lot of uncertainty about cloud computing and the types of services that will be the most useful. "The concepts are getting ahead of the market need," he says. "It's cool to see these startups springing up as experiments, but let's remember: we're at the very beginning."