Grok Your World

Indian Navy & Somali Pirates: The Nation-State Remains Central

The engagement by the Indian Navy of the Somali-based / sea-borne pirates who have been seizing vessels with regularity over the past several weeks indicates the continuing importance of the nation-state,

especially in the post-crash world in which we're living, where, simultaneously, co-ordinated multi-lateral action is ALSO going to be more significant than it has been since the disastrous epoch of Bush / Cheney ...

"High Value Outsourcing": Income Re-Distribution in Global Media Society

Very interesting NYTimes piece about how "out-sourcing" is now seriously re-distributing income at the six-figure level ...

An intriguing aspect is how this dynamic is now being focused on India,

largely because of its head-start on China with a highly-skilled work force conversant in English ...

Something for the Indians to consider is what is going to happen anywhere from 20 to 25 years from now,

when the English language level of China will effectively -- albeit not historically -- rival India's, a prospect to which the article briefly alludes towards the end ...

After outsourcing much of their back-office work to India, banks are now exporting data-intensive jobs from higher up the food chain to cities that cost less than New York, London and Hong Kong, either at their own offices or to third parties.

Bank executives call this shift “knowledge process outsourcing,” “off-shoring” or “high-value outsourcing.”

It is affecting just about everyone, including Goldman Sachs, Morgan Stanley, JPMorgan, Credit Suisse and Citibank — to name a few. ...

Proponents of the change say Wall Street’s wary embrace of the activity may signal the beginning of a profound shift in the way investment banks are structured,

with everyone but the top deal makers, client representatives and the bank management permanently relocated to cheaper locales like India, the Philippines and Eastern Europe. ...

The jobs most affected so far are those with grueling hours, traditionally done by fresh-faced business school graduates — research associates and junior bankers on deal-making teams — paid in the low to mid six figures.

Cost-cutting in New York and London has already been brutal thus far this year, and there is more to come in the next few months.

New York City financial firms expect to hand out some $18 billion less in pay and benefits this year than 2007, the largest one-year drop ever.

Over all, United States banks will cut 200,000 employees by 2009, the banking consultancy Celent said in April.

The work these bankers were doing is not necessarily going away, though.

Instead, jobs are popping up in places like India and Eastern Europe, often where healthier local markets exist. ...

Owing in part to credit weaknesses and billion-dollar charges from the subprime crisis, “people who were off-shoring high value jobs are increasing the intensity of that, and people who were not are now in the planning stage,” said Andrew Power, a financial services partner at Deloitte Consulting.

Wall Street banks started cautiously sending research jobs to India a few years ago, hiring employees by the handful and running pilot programs with firms like Copal, Office Tiger, Pipal Research and Tata Consultancy Services.

In 2003, JPMorgan and Morgan Stanley said they planned to move a few dozen research jobs to Mumbai, Lehman Brothers was working on a pilot program to create research presentations in India and both Merrill Lynch and Goldman Sachs said they had not moved any research to the country.

Five years later, the trickle is a flood.

Third-party firms say they are seeing a 20 to 40 percent upswing in business this year alone.

Morgan Stanley has about 500 people employed in India doing research and statistical analysis. About 100 of Goldman Sachs’ 3,000 employees in Bangalore are working on investment research.

JPMorgan has 200 analysts in Mumbai working for its investment banking operations around the world, doing industry analysis, and compiling data and charts for marketing materials. It has an additional 125 analysts in Mumbai supporting the bank’s global research division.

Citigroup employs about 22,000 people in India, several hundred of whom work in investment research.

Deutsche Bank has 6,000 employees in India, according to the bank’s Web site. Deutsche started a pilot program to outsource some research in 2003, and would not provide any update.

Theoretically, as much as 40 percent of the research-related jobs on Wall Street, tens of thousands of jobs, could be sent off-shore, said Deloitte’s Mr. Power, though the reality will be less than that. ...

Permanently moving banking jobs out of New York or London is a touchy subject on Wall Street.

Many investment banks, including Morgan Stanley, Goldman Sachs, Merrill Lynch and Citigroup, would not make executives available to discuss the topic.

Press officers for most banks asked not to be quoted or argued over semantics.

For example, one spokesman said his bank’s fast-growing India support operations are not an outsourcing facility, but a “center of excellence”;

another argued that large cost cuts at his bank’s New York and London headquarters were really “re-engineering” so the bank should not be included in such an article.

“Some of that is self-serving,” Octavio Marenzi, chief executive of Celent, said of the impulse to keep quiet. “If I admit that research analysts can be off-shored to India, that means that I could too.”

He said the “more advanced firms” will be able to use the cost differences and talent pools in India, and in the future in China, to their advantage.

A few banks have openly embraced off-shoring. Credit Suisse has 6,500 employees around the world working in lower-cost locations in India, Poland and Singapore. Of these about 500 are doing high-value jobs.

“We have people helping the execution of deals, data gathering, helping to build financial models, writing research, and doing scenario analysis,” said Vineet Nagrani, head of knowledge process outsourcing at the bank.

The bank has small teams working on fixed-income research, credit research and foreign exchange research, “all of which are going to grow” Mr. Nagrani said. Credit Suisse is also doubling the number of investment bankers and private bankers in India who deal with local clients in the next 12 months.

The bank’s clients, so far, seem happy.

“As long as clients get a good quality product and can talk to their favorite research analyst” they do not care if the grunt work is done in New York or India, Mr. Power said.

Third-party outsourcing firms face two hurdles when winning this business, N. Chandrasekaran, chief operating officer of Tata Consultancy Services, said.

First, banks need to be confident that third parties are capable of doing the work. Second, they need to decide whether they want to move the work out of the bank at all.

To address the first issue, Tata sets up pilot programs with clients. A new Tata office in Cincinnati, which will employ 1,000 people in three years, is intended to give the company a United States presence. ...

The jobs off-shore are more likely to come from the investment bank and trading divisions of Wall Street firms, rather than the sales side, which produces analyst reports about companies and industries, said Andy Kessler, a former analyst who has written several books about Wall Street.

“There’s a huge amount of grunt work that has been done by $250,000-a-year Wharton M.B.A.’s,” Mr. Kessler said. “Some of that stuff, it’s natural to outsource it.”

He added, “These are middle of the office jobs, not back office, but they’re not the people on the front line.”

After research, the next wave may include more sophisticated jobs like the creation of derivative products, quantitative trading models and even sales jobs from the trading floors. ...

In addition to growth outside India, these outsourcing experts are bringing in Chinese nationals, Arabic speakers and even the very people they are replacing: business school graduates from America.

Daniel Peng, who will be a senior at Dartmouth next year, is working in the equity research department of Copal Partners as a summer intern. “I thought it would be a good emerging markets experience,” he said.

Tellingly, Mr. Peng still hopes for an old-fashioned Wall Street job when he graduates. New York would be “ideal,” he said.

Russian Invasion of Georgia Shows Once Again Neo-Con Sleaze re Iraq

The most important substantive point about the current -- really de-stabilizing and aggressive -- Russian invasion of Georgia is that,

as with the Arab / Israeli conflict, there are no good guys and bad guys here ...

everyone involved is screwed up and responsible for LOTS of outrages against the other side ...

The significant analytic point is the absolute irrelevance of the United States ...

first, in not being able to deter this disaster, which is only beginning, and is bound to get bloodier and uglier for a while to come ...

and, then, as this conflict does grind on in its predictably destructive way, in not being able to do much of anything positive about it ...

As with the whole mess in the Caucasus, there are many reasons for American impotence --

which, it should be noted, has been the characteristic posture of the allegedly "tough guy" Bush regime, and not the allegedly "feel your pain" Clinton administration --

but the key is the self-imposed and -created catastrophe of Iraq,

which has not just destroyed that country, and de-stabilized the entire Middle East from Turkey to Lebanon to Oman to Iran,

but has weakened both the image of US deterrence and reality of its power around the world, not just in the present, but for the foreseeable future ...

So it is particularly enraging to read the screed of effete impudent snobs like Bill Kristol and the rest of the neo-con gang --

people who so vigorously promoted Iraq in the first place, and defend it to this day --

get all sniffy and morally condescending about the US responsibility to go in and help the Georgians militarily ...

Just as in the Cold War, when the US -- for sad but correct big power "sphere of influence" reasons -- sat by while the Soviet Union crushed rebellions in East Germany [ 1953 ] / Hungary [ 1956 ] / Czechoslovakia [ 1968 ] / Poland [ 1981 ]

until Mikhail Gorbachev won the Cold War for the entire world by refusing to do the same repressive thing when East Germans starting leaving for West Germany via Hungary,

thereby creating the conditions for the PEACEFUL breaching of the Berlin Wall on November 9, 1989 --

the US is not / can not / and will not intervene militarily in this situation ...

unless, of course the whole Bush / Cheney / Rove / Haliburton / Blackwater gang can figure out a way to make money off the deal ...

in which case, of course, all bets are off ... ;-) ...

In the interim, it would be better for blowhards like Kristol and his pals to keep their big traps shut about the "necessity" of helping since the Georgians, since any hope of doing that was lost in March 2003,

when the US invaded Iraq for reasons having to do only with the desire of Bush and Cheney to help their once and future employers take with no-bid contracts the hard earned money of US taxpayers shocked and cowed by 9/11 ...

US Economy Officially A Disaster: NYTimes

Of course, in its usual somewhat gutless fashion, the Times waited to release its truly shocking -- albeit hardly surprising -- round-up until the "dead news zone" of Friday night / Saturday morning, the LEAST - read / viewed portions of the week ...

But the article is there, and it IS disturbing in its fairly comprehensive tour d'horizon of what has gone wrong in the US economy over the past, oh, 8 years or so --

a period corresponding exactly to the time in power of the Bush / Cheney / Rove / Haliburton / Blackwater gang ...

Imagine that ...

That said, there are two disturbing aspects to the way the article itself analyzes the situation:

1) In typically ignorant -- i.e., non-Schumpeterian / non - sectoral -- fashion, the piece says that the "way out" is going to come from the "American consumer" ...

The fate of the economy now rests on the shoulders of the American consumer, whose spending amounts to 70 percent of all economic activity.

When people go to the mall and buy televisions and eat out, their money circulates through the economy. When they tighten their belts, austerity ripples out and chokes growth.

all of which is fine ... EXCEPT for the fact that, in typical neo-classical / Keynesian fashion, it ignores the MINOR question of,

WHERE ARE THE CONSUMERS THEMSELVES GOING TO GET THE MONEY TO SPEND IF THEY DON'T HAVE JOBS ANYMORE ???

2) Even more disturbing, in its "who's to blame" section, it takes the convenient way out of blaming the Federal Reserve for "allowing" all the insane self- / destructive economic practices that Wall Street has engaged in, with the constant encouragement of the BCRHB clique ...

... the Fed sat back and watched as Wall Street’s financial wizards engineered diabolically complicated investments linked to mortgages, generating huge amounts of speculative capital that turned real estate into a conflagration.

Gee, it couldn't have anything to do with those financial wizards, could it ???

Or the government -- NOT the Federal Reserve -- that is supposed to actually WATCH what's going on,

and make sure that nothing really destructive and dangerous happens in the economy ???

Guess not ...

In one fell swoop, then, the article simultaneously lays out the staggering problems of the US economy

AND itself displays a lot of the low level of "thinking" that has created in the first place the very difficulties it is attempting to explain ...

Read it and weep ...

And Turkey's Not In Such Great Shape Either ;-)

... as it reels between slowly tightening political Islam on the one hand,

and, on the other, coup-minded right-wing military nationalists who, like the Islamists,

have little interest in the kind of genuine democracy that would aid Turkey's much-needed entry into the European Union,

which the worst of the Europeans are likewise doing THEIR best to undermine ...

What a mess ...

Eighty-six people, including writers, members of civil organizations and former military officers, were charged Monday with membership in an illegal ultranationalist organization and of plotting to overthrow the Turkish government. ...

The 2,455-page indictment is widely perceived in Turkey as being part of a power struggle between the secular establishment, including parts of the military, and the democratically elected and religiously conservative government.

In another case currently before Turkey’s highest court, AKP [ the governing Islamist party ] and its leadership are charged with introducing religion into government and violating the secular principles on which the Turkish state was founded. Prosecutors seek to disband the party. ...

... several police investigations have provided information that the Ergenekon group — the name is a reference to a central Asian Turkic legend with strong nationalist overtones — had also been involved in an armed attack on a senior state court in 2006,

as well as the 2007 bombing of Cumhuriyet, a left-wing newspaper in Istanbul. Both attacks were included in the charges announced Monday. ...

The timing of the coup indictments, as well as the harshness with which some suspects were forced from their beds after midnight for interrogation, was seen by some Turks as an effort by pro-government prosecutors to intimidate secularists. ...

Some on the left see the cases as reflecting Turkey’s struggle toward democracy.

“Circles that do not trust their political power to fight against the threat of fundamentalism on a democratic platform look up to the military, as antidemocratic as their ways are,” said Mithat Sancar, a law professor at Ankara University.

“Therefore both the closure case and the Ergenekon indictment are not about whether you support AKP or elitist military, but about whether you support a law state and better democracy in Turkey,” he said.

Subtleties of German / Turkish Relations Highlighted by Euro Cup Match

Lovely piece in the NYTimes about the rather sophisticated way that both "native" and Turkish Germans are dealing with the Euro Cup Group Final between Turkey and Germany ...

Yet another example of how well Germany has come to terms with the horrific legacy of the Nazi period -- and, indeed, everything that led up to it -- by developing a new identity based on a conscious rejection of the self-acknowledged sickness of much of its past ...

Again, the contrast with the US -- which, despite its enduring history as a nation of immigrants -- has been stuck in a paralyzing muck for, by now, the past 30 years, since the turning point year of 1979,

and the ushering in of the Reaganist legacy, which has done so much to kill what was once a forward- and outward-looking society that has now stagnated into the mess it's in today ...

And it's THAT which provides the real contrast with the evident progress made in Germany during those precise same 30 years ...

Backlash vs. Political Islam in Algerian Schools

Very interesting article in New York Times about the on-going mess in Algeria, where things have been a mess since the early 1990s,

altho this talks about the anti-Islamist changes in the education system there, which, while positive, are nevertheless provoking a lot of disorientation among the young ...

Iraq No-Bid Contract Scandals Past - KBR / Food

The amazing thing is that -- between the crass and corrupt ass-licking of the mainstream media ... and the oil-obsessed doufs of the politically correct -- people keep missing the REAL horror and cynicism of Iraq:

that it is now / always has been / will continue to be about the sleaziest regime in American history,

whose guiding aim even before 9/11 was to oversee and legitimize the biggest transfer of wealth from the poor and middle-class to the already excessively wealthy through the tax and spend policy of the US government ...

Baruch Should Stop Talking About the Middle East

Honestly, you can just see Billary and their inner circle rolling their eyes and saying, "see, that's just what we told you was going to happen ..."

Referring, of course, to Baruch's IDIOT remarks in front of AIPAC ...

First of all, this was an appointment he should NEVER have agreed to, especially in the immediate aftermath of having clinched the Democratic nomination,

until he had worked out with his staff EXACTLY what his -- necessarily nuanced and delicate -- position on the endlessly annoying and stupid Israel / Palestine situation was going to be ...

Instead, looking like the amateur the Clintonistas & McCain claim he is, he starts yammering on about Jersualem remaining undivided, and how the US will support Israel from any threat ... blah blah blah ...

Then, of course, he realized how foolish he sounded and started backtracking, which predictably made the Jews feel he had lied to their faces,

and the Arabs -- equally predictably -- furious, feeling that, once again, they were being taken advantage of by American politicians, and all because of the "money and influence" of the nefarious Jews ...

So by stupidly accepting an invitation he never should have --

and if he felt he HAD to appear before AIPAC, which he could easily have put off, then he should have had the brains to keep it mealy-mouthed and innocuous --

instead the first thing he does as the Democrats' anointed standard-bearer is not just step, but jump into, the pile of shit that is American / Middle East / world discourse about this stupid imbroglio,

and, in the process, not only alienating EVERYONE involved, but also putting himself behind the 8-ball when it comes to foreign policy in general for the first  stage of the "real" campaign ...

Honestly, Baruch, I hope this causes you to reflect upon why the Democrats have done so poorly in Presidential politics for the last several decades, and start THINKING before you open your mouth ...

Jesus, dude ... smarten up ...

You went to Columbia and Harvard Law School, for chrissakes ... have been through one of the longest and most acrimonious Democratic primary campaigns in modern history ...

and then go and do something as unnecessary and avoidable as this ???

Where are your advisers ??? What are they telling you ???

Pathetic ... please don't do it again ... I mean, the Middle East, of all things ... seriously, dude ...

OECD Utterly Confused About Economic Situation / Policy

Not that it should be a surprise given the evident disarray among top economic policymakers in all the advanced industrialized countries about a) what is going on and b) how to deal with it,

but the latest report from the OECD -- the so-called "rich man's club", altho that name is rapidly becoming obsolete, since, for example,  it doesn't include countries such as Abu Dhabi / Dubai / Singapore / and South Korea, not to mention the explosively-growing China and India --

is so incoherent that it would be funny ... if the situation weren't so grave ... ;-) ...

The combination of financial market turmoil, sharply higher oil and commodity prices and cooling housing markets has made it more difficult for policy makers to gauge the correct response, the Paris-based think tank said.

Economic growth in the OECD's 30 members will slow to 1.8 percent this year and 1.7 percent next year, it said in its twice-yearly outlook.

That compares with its previous forecast of 2.3 percent in 2008 and 2.4 percent in 2009.

Ooops ... oh well ... nobody ever said economists knew what they were talking about -- except, of course, economists themselves ... ;-) ...

... the impact of the oil price shock combined with the market turmoil is "difficult to estimate."

This, combined with weakening growth and inflation concerns, compounds "the risk of policy errors."

Central banks could err "in both directions," the OECD said.

By which they mean -- when confronted by the theoretically impossible yet factual reality of simultaneous slow growth [ stagnation ] and rising prices [ inflation ] --

if they try to combat one with their usual policy means -- interest rates -- they are likely to aggravate the other ... a condition known as "stag-flation" ...

Policy makers should be mindful of the stagflation seen in the 1970s and 1980s, when loosening interest rates fueled inflation.

At the same time, overly tight monetary conditions could hurt major economies at a time when they need support.

Pick your cliche / metaphor:

Damned if you do, damned if you don't ... navigating between Scylla and Charybdis ... stealing from Peter to pay Paul ... whatever ... ;-) ...

The fact of the matter is they have NO idea what they should do to deal with the combination of

a) ever-widening crises in American and European financial institutions, which are slowing / stopping growth, and

b) rising commodity prices -- including, but not limited to, oil -- as a result of the growth of China and India ...

And yet somehow all the US Presidential candidates can talk about is racism / sexism / and stupid nationalism masquerading as "patriotism" ...