Mankind and the Universe

 

Screen Shot 2016-03-26 at 9.22.32 PMEarth was formed 5 billion years ago, it cooled down and life emerged on it 4 billion years ago. In a billion years’ blue – green algae proliferated. Due to photosynthesis a lot of oxygen was produced and nearly a billion years after the algae was formed oxygen became one of the dominant gases of our planet. Two billion years ago Eukaryotic cells came into existence and one billion years ago sponges, jellyfish and other simple organisms like flat worm inhabited earth. The Cambrian explosion or Cambrian radiation was the relatively short evolutionary event, beginning around 542 million years ago in the Cambrian period, during which most major animal phyla appeared, as indicated by the fossil record. 0.006 billion years ago the first human Lucy appeared on Earth and 0.0002 billion years ago the modern human appeared on Earth. Even after knowing this we humans call ourselves the owners of Earth. If I use the common WhatsApp language to convey my emotions to this extreme ridiculousness of humans I would just say LOL.

Geologic_Clock_with_events_and_periods.png

The equation of life is => water (solvent) + {carbon + mixture} + right temperature = possible life. An interesting fact is that C-H-N-O-P-S can make all the biological structures possible. Hence I believe this equation is more or less correct.

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Now enough of these stupid mortal talks! Let us think big. Before I tell you what the mediocrity principle is let us understand how big the observable universe is. Imagine yourself on Earth. You are nothing more than a dot when you are compared to the Earth. The Earth is nothing more than a dot when compared to the solar system. The solar system is nothing more than a dot when compared to the solar interstellar neighborhood. The solar interstellar neighborhood is nothing more than a dot when compared to the milky way galaxy. The milky way galaxy is nothing more than a dot when compared to the local galactic group. The local galactic group is nothing more than a dot when compared to the Virgo super cluster.  The Virgo super cluster is nothing more than a dot when compared to the local super cluster. The local super cluster is not even a dot when compared to the observable universe. So basically you are a dot within a dot within a dot within a dot within a dot within a dot within a dot within a dot within a dot. Wow I am a little woozy.

 

The mediocrity principle is the reason governments started investing money for space exploration. It says that if the universe is so vast that there are 100 octillion or 100,000,000,000,000,000,000,000,000,000 stars in the observable universe which is  1 followed by 29 zeroes, then why should we think that life is just on Earth. If life is on Earth, then it surely exists elsewhere. When Frank Drake was asked “ Sir, what is the chance we will meet ET?” He said, “ N = R*. fp. ne. fl. fi. fc. L ” Then he explained

frank-drake-formula.png

N = The number of civilizations present in our galaxy capable of using radio technology.

R*= Rate of star formation

fp = Stars with planets

ne = Number of planets capable of supporting life

fl = Planets with life

fi = Intelligent life

fc = Civilizations willing to communicate

L = For how long signals have been sent

Let that sink in. Those who understood this equation realize how valuable life is.

 

So what are we doing to find terrestrial life?

Well all intelligent organisms communicate in some way or other. These ways of communication are called languages. There are over 6512 languages on Earth so how can we say that the other intelligent beings communicate using English. So scientists thought about it and concluded that there is only one universal language and that is love. LOL, don’t take that seriously.

 

There is only one universal language and that is math. Only an intelligent being can make a series of prime numbers and send it out in space. Sequences like 31, 33, 37 can not be made by nature. So if any being has basic knowledge of math it can send out a radio signal of a prime number sequence. SETI has hundreds of telescopes across the planet which look for such signals. You can download a program from SETI’s website and your computer will become a part of the millions of SETI’s computers which are looking for patterns in the data.

 

But one day Enrico Ferni asked a very innocent question, “Where is everybody?” The answer is Fermi Paradox. It says intelligent ET life may self destroy itself just the way humans are going to by making nuclear weapons. The other reason may be that interstellar travel may be too long. If an object is faster than speed of light, then Einstein’s special theory of relativity dictates that you would become slower and things around you will move faster. This means that if some alien leaves for Earth today and reaches Earth in 20 seconds of his time, then the chances that it will meet humans is very small.

Here is a video explaining the Fermi Paradox (click Fermi Paradox for the video). BTW, it is the best animated video I have ever seen.

 

Here are the solutions for Fermi paradox – Fermi Paradox II

 

Some of you might wonder that why are we investing hundreds of billions in space exploration?

 

There are many diplomatic answers available out there on google but the reason I and many scientists believe space exploration is a necessity is due to what Stephen hawking said in 1995. According to him the human race is just a chemical scum on a small planet orbiting a small star in one of the billions of the galaxies and is most likely to kill itself and the other eight million seven hundred thousand species out there in the wild. The only way the human species will survive is by making colonies on various moons and planets in the milky way galaxy where it will be away from the dangers of not only nuclear weapons but nuclear men who can explode any time.

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There are many mysteries out there like can we bend space and time, what is dark energy, what is dark matter, the process of star formation, is our solar system the odd one out, etc. But science has given us answers and it will give us answers in the future. I just have one request from all those who are reading this blog today, no matter what your dream and goals are, no matter what your age is, do not let your curiosity for science go down. Science is the only thing which make sense in this universe if not the multiverse, amen!

Look at this picture carefully. It is the observable universe. Just stare at it for 15 seconds.observable universe.jpg

Now tell me what can money buy. Think about your goals, think about religion, think about what you want to do in life. Just think!

Entrepreneurship

Our prime minister started a very aggressive program called make in India. For the success of that program one thing is very important. Reforms, skill development, investments, etc. are required but there is something on which which this program truly depends on and that is entrepreneurship. There can be many kinds of entrepreneurships like social entrepreneurship, economic entrepreneurship, ancient entrepreneurship but it is very sad that when I ask you to name a few entrepreneurs you will name Steve Jobs, Bill gates, Larry Page, Warren Buffet, etc. but not Kailash Satyarthi who received a noble peace prize for protecting children rights. The reason he is not an entrepreneur for us is because we don’t understand what entrepreneurship is.

 

Professor Angus Maddison said an entrepreneur is a person who can put a thought into action. So any person who puts a thought into action is an entrepreneur. The famous word ThAct comes from here.

Unknown

Everyone can think. After 3 billion years of evolution the one thing we can do is think and it is truly funny that Indians feel extremely proud of themselves when they come up with an idea, but how many can think about the actions to place the thought in reality. Very very few can put a thought into action.

 

Take the example of Mu Sigma itself. The founder saw that India has tons of talent. We all know that India has a lot of talent, there is nothing new in this, but none of us made Mu Sigma. The founder saw that in America a lot of data was being formed and with the coming of smart phones the amount of data has proliferated. But the biggest thing he saw was that the companies did not know what to do with that data and that data was just sleeping in the servers. Then, he connected the dots. He thought about bringing the data to India and making the talented people here look for patterns in the data and make trend charts because ‘they’ do not know how to do it but we do. He connected everything, billion dollar company Mu Sigma was formed. This idea must have come to thousands of people but only one could give life to the idea. Such a person is an entrepreneur. The founder did not ask for funds from the government he said I will do it on my own. He brought the people and business together and started from level zero. Value creation or primary wealth creation is the second name for entrepreneurship.

mu-sigma

So entrepreneurship is all about identifying gaps or problems in existing system and offering effective and profitable solutions. Google is another great example. Larry Page and Sergey Brin saw a huge mass of data proliferating and people were trying to find something in it. His search engine was nothing more than a precise solution and AdWords and AdSense were nothing more than profitable solutions. So the definition of entrepreneurship is that it is the art of applying in which business and financial smartness is converted into a profitable solution.google

There are four factors of production, we all have learnt them in class 5. The first factor is land, the second is labor, the third is capital and the fourth which India desperately needs is entrepreneurs. It is very disturbing that in India people can not afford to fail. In countries like the U.S people wear the badge of failure with pride but in India the society despises failures. In the U.S if someone has failed in examinations all throughout his life but is talented or has done many projects but failed every time his chances of getting into a good college is equal to that of a person with good marks. While in Indian colleges the admission committee just looks at two things namely, SC/ST quota and marks.

 

This is the reason we have no choice but to disregard all things irrelevant to the exams because in the end if you want to live in India your life starts with an exam and your performance in that exam more or less determines your remaining life unless you are truly unique or your parents have good contacts. Anyway the reason I told you all this is that this race for getting good marks in higher classes does not allow a child to look beyond the main career fields and when a child works so hard for getting a good job he never thinks about being an entrepreneur. The people who end up being entrepreneurs are those who don’t get jobs. But it is nice that Mr. Modi realizes that entrepreneurs are essential for a countries development. Ah, enough sentimental and diplomatic talks.

 

So how do entrepreneurs make raise capital? The first person who invests a good amount in a startup is called an angel investor. Angel because they are actually like angels, before them you had nothing more than an unperfected product and before them you had no reputation. You say I am studying in Harvard; an investor will say so what 10,000 more are studying there. You say, sir I have an idea which has huge potential! Then he might say, “alright, here this is a cheque of ten thousand dollars.”  So now you reach the first phase. The process which keeps your company alive is called business incubation. Business incubation is a unique and highly flexible combination of business development processes, infrastructure and people designed to nurture new and small businesses by helping them to survive and grow through the difficult and vulnerable early stages of development. In other words, a hen sits on her egg 24/7 and takes care of it, this is incubation. Now, big investors get interested in your business, these investors are called venture capitalists or VCs. Your angel investor can also be a venture capitalist. They can make you an over night success. But it is funny, how many nights of hard work is required to become an overnight success. Anyway, when you survive the primary phase and become a successful business, large investors get attracted. Companies like Flip kart and Snap deal have single tickets worth over 500 crores in todays date because they don’t want any more dilution. 4 years ago their ticket size was only 20 crores. If they survive today, then they will not talk below 5000 crores a few years from now because that is the size amazon is. In the last stage you can list your company in the stock market, it is mostly up to the founders.

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I have been going on and on about online businesses. Let us talk about real world businesses. Raymond Croc used to sell mixers. He saw that outside McDonalds hundreds of people were standing in line to get lunch. He was shocked. He entered the restaurant and realized that the only thing sold there was burgers, French fries and shakes. He bought the entire chain, there were two or three restaurants. After buying the chain Raymond croc applied his systems and processes on the restaurant. Today there are 30,000 McDonald restaurants. This story can take up an entire blog and hence it is better to keep it aside for the while.

McDonalds

So if you think you are a problem solver and a person who can put a thought into action please do NOT become an employee become an employer. The country needs entrepreneurs.

Sovereign Debt and the European Crises

The USA sub prime mortgage crises was a set of events that created a financial crisis in the USA and by contagion lead to recession in the world. A rise in the defaults on sub prime mortgages created this crisis. The main reason was private competitive mortgage securitization.

When excessive lending to sub prime customers began a decline in housing prices was observed. This lead to rising delinquencies in payments by borrowers.  Parallel to this disaster sub prime mortgage backed securities.  These were sold to investors world wide. The problem began when people stopped paying. This caused the investors to lose confidence. Which further lead to the American recession. People pulled money out of the banks and stopped investing in them. The fuel which was required to give momentum to banks was dried up. It was then that the government thought of opting for the last resort of QE.

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America loves giving presents to the world. The recession was just the beginning.Screen Shot 2016-03-05 at 8.52.20 PM.png

 

 

Let b1, b2…… be banks. You can see the inter dependence on each other. Imagine if one of these banks undergo a run on the bank situation, what will happen to the other banks? They will be drastically affected. This is the gift USA gave to Europe.

 

To understand what happened in Europe we have to go in its past.

  1. 1942 – world war 2
  2. 1990 – cold war
  3. 1990- 92 – collapse of E. European communism
  4. 7th February 1992 – Maastricht treaty
  5. 1992 – Creation of Euro
  6. 1992 onwards – Monetary union EU
  7. 2000- My birth year
  8. 2000 onwards – Problems begin, period of high accumulation
  9. 2000 – 2008 – Securitization of future government revenues to reduce debt. Property bubble- Spain and Ireland, high social spending- Greece, Uncontrolled government expenditure- Portugal (PIGS- Portugal, Italy, Greece, Spain)
  10. 2000 – 2009 – Inter bank lending and banks holding govt. debt
  11. 2008 onwards – Global recession sub prime crises

Thunder falls on Euro- a. High debt levels in Portugal, poor demand in Greece, high bank exposure in Cyprus, property bubbles in Spain and Portugal

  1. All this lead to nations inability to service debt
  2. 2010 – 2012 – EFSM, EFSF
  3. 2012 – ESM 500 billion euros.
  4. 2012 – 2013 – Pressure on top performers
  5. 2016 – Political fall out in Germany and France.

 

 

The problems faced by EU were

  1. Many govt. kept spending heavily on social sector programs due to easy credit, example is Greece (LMP)
  2. In Spain and Portugal huge property bubbles were formed and they were financed by banks. Banks demanded bail out. Government had to recapitalize banks and had to go to ECB
  3. In Portugal decades of extravagant government spending had destroyed balance.
  4. Cyprus was favorite destination of Russians to invest in but unfortunately Cyprus banks funded Greece. Banks holding Greece debt were hit hard.
  5. The best part was that all of this happened when USA was facing sub prime mortgage crises.

 

Let me tell you a story of a son who was very sweet, sincere and extremely stupid. One day his father asked him to come home before 10 PM every day. He promised he would. The next day he came back at 7PM. After that 8, 9, 9:45, 8 and one day he came back at 12. His father said, “I asked you to come back before 12 why didn’t you.” The son said sorry. The next day the son came back at 12:30. His father was left with three options, he could beat his son and knock some sense of responsibility in him, kick him out of the house or forget what happened and let the child do whatever he wants.

 

These were the actual solutions by EU.

The could go bust and let the banks drown, severe austerity, nail out at tax payers expense, ECB + IMF bail out.

 

To measure health of an economy various ratios can be created. Here are two of those.

 

 

X axis: Deficit to GDP %

Y axis: Debt to GDP %

 

6.8, 177 – Greece

1.9, 21 – LuxembourgScreen Shot 2016-03-05 at 8.52.10 PM

See, taking debt is not bad. It is necessary for developing countries. After a while saving replace debt and are used to pay back net debt.

(Net debt = Sigma deficits)

 

Year Deficit Debt
2014 D1 ND2= ND1 + D1
2015 D2 ND3= ND2 + D2
2016 D3 ND4= ND3 + D3
. . .
. . .
20xy S1 NDm= NDm-i – S1

 

 

But Eu really messed up. I don’t see savings in the near future. So I would propose these solutions.

 

1)Creation of European fiscal union is a must if nations aberrations are not to affect the entire Eurozone.

2)Strict penalties for nations who breach the Maastricht criteria.

3)Strong austerity measures.

4)High GDP growth though increase in productivity per person.

5)Imposition of a one-time wealth tax to garner extra revenue

The rest is up to you EU.

 

 

 

Preparing for Tomorrow

The biggest problem today is preparing for tomorrow. Usually, students think that the future won’t be much different from the present. They think the only thing which is about to change is the amount of technology available to them and the phone they have in their hands. I can boldly predict the world which is coming will be so different from the world of today that if you use the methods going on for centauries now, you will only end up frustrated.

 

Why do I think that the worlds of tomorrow will be so different? The answer is kondratiev waves. Kondratiev was a very famous economist in his time. But everyone thought his theory would never become a reality. In economics, Kondratiev waves are supposed cycle-like phenomena in the modern world economy. Kondratiev predicted the massive tsunami’s which were about to change the world forever. According to him a wave is formed every fifty years. Only a fool would argue that these waves have not changed our lifestyles and hence the world.

 

Kondratieff_Wave

The first major wave was of steam engine and cotton industry. This wave was followed by railway and steel, electrical engineering and chemistry, petrochemicals and automobiles and finally information technology. These waves have not changed the rules of the game of careers but the game itself. Those who think that there are only four to five jobs available I must tell you, you can not be more wrong than you are today. I will tell you more about this later in the blog.

 

Earlier education was very similar to what it is today. What is different is that globalization is a reality now. If you ask your parents, they will tell you it was just a dream when they were growing up. They could have never guessed that it would happen so fast. Globalization has revolutionized the easiness to develop the knowledge you have gained from education. If you exploit the internet in a positive way you will stand out. Today parents prefer their children being away from the internet. I completely understand that internet can be unsafe but internet can make a child extraordinary. When exposed to the trillions of yotabytes of information available out there a child looks beyond engineering and discovers his or her true interest. It can help the child find the one skill he or she has in which he can actually start an enterprise of his or her own. Therefore, becoming an employer rather than an employee.

 

 

Today the problem with young generation is that they are unemployed. But the bigger problem is that they are unemployable. Out of 100 engineers only 10 are employable. You live in a country with a population of 1.3 billion. The country with the third highest population is roughly 0.3 billion.

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You are supposed to compete with people who have worked and learnt every chance they have got. You are supposed to compete with Olympiad toppers. Hence if one wants to become a doctor or engineer he should at least become employable.

 

 

Children get so scared of all this that they stop working on themselves. The best way to stop working on yourself is by listening to what your friends think. The better a person can convince you to waste time the better friends he or she is. This may not be the case every time. I have seen friends helping each other grow as individuals but it is generally true.

 

You can become an entrepreneur, petroleum engineer, sportsman, politician, painter, artist, actor, director, photographer, inventor, data analyzer, teacher, or any of the other 11,749 things. But you must have one quality. The quality of presentation. You must follow three R’s which are reading, writing and arithmetic. If you think data interpretation and basic math will not be important in your life you are wrong. Let me explain using an example. Imagine you become an employable doctor and are employed in a good hospital. Hospitals come out with papers which tell about the entire hospital chain and all the discoveries and groundbreaking research they have done. If you have mastered the three R’s you can be in charge of the entire paper. You will stand out!

 

There is no right or wrong way to be prepared for the future in this world. But there are people who hardly work, who are highly lethargic, who believe their parents contacts and money will make them successful. These are the people who will never achieve their goals if they keep going on the path they are standing on today. If you want to test if you are one of these people ask yourself if you are working hard enough. If you think you are then you are without doubt one of these people. On the other hand there are people who work hard, connect the dots, are energetic, who read everyday, who write what they read everyday, who learn every chance they get, who look at things differently and who are prepared for the future and I believe this path is the only path which will make sure they live their dreams and achieve there goals.

 

 

 

Union Budget 2016-17 part 1

 

Mr. Arun Jaitley has had six benefits this year while presenting the union budget 2016. The benefits collectively bless India with 40 to 50 thousand crore rupees. That is 4,00,00,00,00,000 rupees. Let’s look into these benefits. Despite of fall in the GDP growth rate of Brazil, Russia and South Africa, India has not fallen into the pit. But don’t worry, an Indian family, ‘The three Gupta brothers’ is the reason for destruction of South Africa. They solely control the regions leader and are the cause of widespread corruption. Hence the Indian dignity is preserved. China a member of BRICs has also declared softer growth targets due to slowing down of economy. China used to have GDP growth rates of 14% per annum, Indians have never seen such days, but fortunately it is now working in our favor.

 

As far as international commodities are concerned, their cost scene is truly benign. The Indian companies are doing very well in some sectors and the size of domestic market and its demand is so big that the global slowdown looks less threatening. But the major factor which has acted just like a miracle for Indians is the drop in crude oil prices due to emergence of new resources for making energy like shale gas.

 

We can conclude that global growth has fallen, our growth has increased and price of commodities has fallen down. India is therefore in a sweet spot.

 

Let us talk about statistics. They are actually not bad #shocking. The GDP growth rate is 7.6%. The monsoon deficit was 13% for two consecutive years YET good growth rates were achieved. Forex reserves cost $350 billion. Funds given to states have been increased by 55%. Even after this the plan expenditure 2015-16 revised estimate or RE went up. This is very rare. It is a clear proof that the fiscal management is excellent.

 

Now enough technicalities. My favorite part is the tight slap Modi Sarkar has given to Rahul Gandhi. He and his congress which means his mother, have constantly said,” Modi Sarkar suit boot ki Sarkar hein“  This means that NDA doesn’t care about the poor and is busy in crony capitalism. Rahul Gandhi could never have dreamt that Mr. Modi would actually listen to the criticism and actually do something for the poor. No one would have dreamt that politics would have driven this budget. In any other case this would have been truly disastrous but in this case I must say, well done. Modi Ji has taken the only criticism the opposition had. By establishing nine pillars Modi Sarkar has revolutionized the fate of India. Provided that people work honestly and respect his intentions. The nine pillars include (a)agriculture and farmer welfare, (b) rural sector,(c) social sector,(d) education, skill, job creation,(e) infrastructure, (f)financial sector reforms, (g)ease of doing business and better governance, (h)tax reforms, my favorite (g)fiscal discipline.

 

 It is very sad that people in India criticize without understanding the intentions behind actions.

 

Mr. Modi has allotted huge amount of money to make sure all houses have LPG. What normal people will think is that Modi is giving our money to the poor, our hard earned money. Let me tell you only 5% people in India pay income tax. So out of 100 people who say Mr. Modi is giving our money to the poor, assume only 10 of them actually pay any tax, rest are protesting to get on T.V. Now back to the LPG. The real reason for installing LPG in rural households is to get rid of the ancient chulah. The ancient chulah produces PM 2.5 which is one of the most dangerous substances for our lungs. These particles can’t be blocked by our nose and hence damage our lungs. The government pays hundreds and thousands of crores for healthcare of the poor. In the long run the installation of LPG can prevent lung damage and save crores of rupees which will cancel out the cost of installation of LPG. Other than that the huge forest degradation caused by the poor living in rural areas due to it being the major source of fuel for the ancient chullah causes a loss of thousands of crores to the forest department. This is the amount of thought put into each and every scheme of this year’s budget. This is the only budget ever made in India which will help the country in the long run and does not act like a bandage on a dinosaur. I will be talking about each of the nine pillars in the next blog post, discussing the thought and intention behind each one of them, the benefits we will receive in the future and finally predictions for next budget which is very exciting. (Hint: The next budget will be the budget before elections, so the big guns are still in Modi Ji’s pocket.)0.pngThis is the reason why I wrote about Union Budget.