1. As it hosts the CoP summit, the environmental costs of Dubai's desalination of sea water are worth remembering,
Experts say Dubai’s reliance on desalination is damaging the Persian Gulf, producing a brackish waste known as brine which, along with chemicals used during desalination processing, increases salinity in the Gulf. It also raises coastal water temperatures and harms biodiversity, fisheries and coastal communities... If no immediate action is taken to counter the harm, desalination, in combination with climate change, will increase the Gulf’s coastal waters temperature by at least five degrees Fahrenheit across more than 50 percent of the area by 2050, according to a 2021 study published in the Marine Pollution Bulletin on ScienceDirect, a site for peer-reviewed papers... The construction of Dubai’s artificial islands also strains the Gulf’s water resources. One study found that the average water temperature around Palm Jumeirah island, designed by HHCP Architects, increased by roughly 13 degrees over 19 years. Another study cited land reclamation, along with brine and industrial waste, as a cause of the excessive growth of microscopic algae in the Persian Gulf, known as algae blooms or red tides. Some of these harmful blooms have forced desalination plants to reduce or shut down operations...The Dubai Electricity and Water Authority supplies water to more than 3.6 million residents along with the city’s active daytime population of more than 4.7 million visitors, according to a 2022 sustainability report... The city desalinated approximately 163.6 billion gallons of water last year, according to the sustainability report. For each gallon of desalinated water produced in the Gulf, an average of a gallon and a half of brine is released into the ocean... In Dubai, the Jebel Ali Power and Desalination Complex — the largest facility of its kind in the world — pipes water from the sea, sending it through a series of treatment phases, then to the city as drinkable water. But Jebel Ali’s 43 desalination plants are powered by fossil fuels. The U.A.E. produced more than 200 million tons of carbon in 2022, among the highest emissions per capita worldwide.
2. The Turkish Central Bank raises interest rates by 5 percentage points to 40% to combat inflation which is running at 61.36%.
An interesting observation here. Unlike any other developing country India has never had an episode of such runaway inflation nor a sovereign default. Among all developing country, its track record of maintaining macroeconomic stability should count as exemplary, comparable with those of developed countries. But for the rating agencies, it's bracketed with the likes of Turkey and Brazil, neither of whom can claim anywhere close to such macroeconomic stability.
3. Simon Schama has a long read on Napoleon. His failings
The liquidation of a free press; the emasculation of any meaningful representative institutions; contempt for intellectuals; the ego-fetish of the will in action; the presumption that national glory must necessarily be forged in the carnage of war, and its logical corollary, an insatiable lust for military expansionism; the habit of treating humans instrumentally as grist to his glory mill; the chilly indifference to the loss of millions of lives, especially those of his own troops; an invariable tendency to blame everyone other than himself when things went awry.
He's one of the most widely chronicled people in history
Napoleon ranks third behind Jesus and Hitler in the number of books written about him but outdoes them both in the number of films — about 1,000 — made for cinema and television. No sooner had the Lumière brothers invented the motion picture than in 1897 they gave the world Napoleon Meets the Pope. By 1914, there were already 180 films devoted to Bonaparte.
4. Bloomberg points to the promise of infrastructure and industrial stocks in India over the coming decade.
Andy Mukherjee points to the frothy equity market valuations in India with the example of Relaxo Footwear.
India now accounts for more than 15% of the MSCI Emerging Market Index, up from 10% two-and-half years back.
5. Bloomberg highlights five countries that have benefited from the reshuffling of supply chain in response to the US-China tensions - Vietnam, Mexico, Poland, Morocco, and Indonesia.
It says that these countries have emerged as important connectors in the global economy
As a group, these countries logged $4 trillion in economic output in 2022... their geographic location and ability to grease trade has set them up as crucial middle grounds. These guys punch above their weight: They represent 4% of global gross domestic product, yet they’ve attracted slightly over 10%, or $550 billion, of all so-called greenfield investment since 2017. (The term describes outlays for new plants, offices and other facilities by a foreign company establishing or expanding operations in another country.) All have seen their trade with the world accelerate above trend in the past five years, according to an analysis by Bloomberg Economics.
Morocco has taken a leaf out of Indonesia's Nickel-industrial policy to leverage its phosphate deposits and the importance of the mineral in Lithium-iron-phosphate (LFP) battery, a growing variety of recharageable batteries used in EVs. Poland has leveraged its traditionally strong automobile manufacturing base to become the preferred destination for EV battery manufacturing in Europe, and the second largest battery manufacturer outside of China.
While India's manufacturing exports have grown by 16% relative to global trend since 2017, its share of global greenfield investment has reduced by 1% in 2013-22 over the 2003-12 period. The corresponding figures for Vietnam, Mexico, and Indonesia were 60% and 29%, 11% and 58%, 32% and 10% respectively.
One of the important insights from an examination of global value chains is the slow nature of the re-alignment and the positioning of countries like Vietnam and Mexico as intermediaries in the US-China trade.
This year, Mexico eclipsed China as the biggest exporter of goods to the US. But that doesn’t tell the whole story of how its economic relationship with the colossus next door—and the rest of the world—is changing. Since 2017, the value of Mexico’s imports from China has been growing faster in nominal terms than that of its exports to the US. That’s because many of the manufacturers opening plants in Mexico’s border states these days are Chinese companies, selling everything from car parts to furniture, with a focus on the US market. The Mexican Association of Private Industrial Parks surveyed its members earlier this year and learned that they expect that over the next two years, one in five of the new businesses setting up shop will be Chinese.
6. On a related note, the BIS used global firm level data on suppliers and customers to map the global value chains (GVCs). The maps illustrate cross-country linkages, network distances between firms, and density metrics such as the average number of supplier and customer linkages at the firm level. They compared the maps between December 2021 and September 2023 to see how the GVCs have realigned. Their findings,
First, the reliance on cross-border suppliers has fallen markedly between the two snapshots. When set against the backdrop of the intricate web of relationships in GVCs, a corollary of declining direct cross-country links is an increase in the indirect cross-country links, as new firm nodes interpose themselves into existing supply chains. The upshot is that distance between firms in the network (as explained below) has risen since December 2021... Lengthening of supply chains is especially significant for supplier-customer linkages from China to the United States, where firms from other jurisdictions, notably in Asia, have interposed themselves in the supply chain... This increase in distance has not been accompanied by a rise in network density – an attribute that arguably indicates greater diversification of supplier relationships. The latest changes are taking place in the context of the long running trend toward greater regional integration of supply chains, especially in Asia. So far, there is no evidence that this trend has reversed itself, but the issue merits close attention.
7. There are reasons to temper making policy on EV to suit Tesla, as this Business Standard editorial suggests. For one, Elon Musk is unlikely to invest anything meaningful in India without significant fiscal concessions, beyond the tariff reductions. That's the way he works and his track record consistently proves the point. Second, Musk cannot be trusted to keep any promise of investment after concessions are given. Three, Tesla's high-end vehicles will serve a tiny sliver of the market, and are not likely to be what will drive EV penetration in the country.
8. Goldman Sachs research finds that Indian equities, closely followed by Indonesia, are the Asian economies least impacted by developments in China.
9. Tamal Bandopadhyay has a very good oped on the market for long-term bonds. India last week issued its first 50 year bond, with the Rs 10000 Cr 2073 bond being priced at 7.46% in the auction.
Some long-term papers carry call and put options — after a certain period, the issuer can call back the paper, paying off the investors. The investors, too, can get out of it. For instance, the 100-year corporate bond issued by Walt Disney Company in 1993 will mature in 2093, but the company can redeem the bonds any time after 30 years (2023). Coca-Cola, too, has issued a 100-year bond. Even 1,000-year bonds exist. The Canadian Pacific Corporation has issued such a bond. There are also bonds with no maturity date. These are called perpetuities. In such papers, the issuer continues to pay coupon payments forever. The UK government has issued such bonds, called “consols”.
10. Ola Electric is only the latest example highlighting the perils of growing too fast
Ola Electric is zipping towards a stock-market listing after going from zero to 338,000 e-scooter sales in about two years... the company, already valued at $5.4 billion, would quadruple its annual production capacity to 2 million e-scooters by early new year. Yet Ola's rapid ride faces a few potholes.
Parts of the company's nationwide network of over 400 service hubs which maintain and repair its EVs are showing signs of strain after the surge in sales, according to Reuters visits to 35 centres in 10 states between July and October, plus interviews with 36 Ola service staff and 40 customers. Staff at more than half of those centres, mainly sites in the big metropolitan areas of Mumbai, Chennai and Bengaluru, said they had significant backlogs, with demand outstripping their workforce or their supply of spare parts, and repair waiting times ranging from three days to two weeks. At an Ola workshop in Thane, among the biggest of the 14 centres in the Mumbai region, more than 100 e-scooters awaiting repairs were visible outside in a clearing, many parked in a muddy clearing gathering dust and littered with bird droppings.
11. Corruption and thuggery are a feature of mining and many infrastructure sectors globally, both in developing and developed countries. Besides, in these sectors, local businessmen and companies will always exercise dominance and do everything underhand to thwart foreigners. FT points to the examples of Gina Reinhart's Hancock Mining and Chris Ellison's Mineral Resources who both have recently thwarted foreign efforts to take stakes in Lithium mines in Australia. Both US Albemarle and Chile's SQM had to retreat from efforts to buy Lithium mines in Australia, both being nixed by Reinhart who took blocking stakes in the respective mines.
In the meantime, Australia is also exploring investments to process Lithium ore and make Lithium Hydroxide which is used in EV batteries. Australia currently makes up half the global raw Lithium. Incidentally Lithium prices have collapsed 70% since beginning of the year.
12. China has already slipped from being the US's largest trade partner to being only the third largest.
13. FT points to a new paper by two US Treasury economists Gerald Auten and David Splinter that finds that US inequality at the top did not worsen as much as is widely believed.
The upshot is that they find before-tax income inequality did rise, with the top 1 per cent share rising from 9.8 per cent to 12 per cent between 1960 and 2019. This was, however, offset by a more progressive transfer system, particularly in health benefits for US households, with the top 1 per cent’s share of after-tax income pretty stable over 60 years.
14. Underlining the challenges associated with energy transition, an FT report has this graphic that captures the contrasting fortunes of renewable and conventional energy stocks this year.
The S&P Global Clean Energy index, which includes the 100 largest clean energy-related businesses, is down 31 per cent since the start of this year, compared to a less than 1 per cent decline for the fossil-heavy S&P 500 Energy index.
15. Important trends from Thanksgiving weekend retail sales in the US
US online shoppers have busted through forecasts, shelling out a record $38bn for the post-Thanksgiving period. The $12.4bn spent on what is known as Cyber Monday made it the biggest US digital shopping day of all time, according to Adobe, which tracks online spending. This spree — up nearly 8 per cent on last year — has raised hopes of a bumper festive season... Some of the jump is due to the rapid spread of shopping apps and websites optimised for mobile use. Customers who once had to go to a store or fire up a desktop can now shop while watching TV. Mobile devices accounted for more than half of November sales for the first time this year. Another boost stems from the rapid growth of buy now, pay later programmes that let shoppers defer their payments across several months. BNPL spending was up 17 per cent year on year to $8.3bn for November to the end of Monday.
16. Interesting international sovereign bond market trend
Back in 2016, international investors owned an average of around 21 per cent of local-currency bonds in emerging markets. Now that figure is just 13 per cent.
17. Times has a portrait of Henry Kissinger
When China’s leaders wanted to send a message to the Biden administration last summer, they did what came naturally. They called Henry A. Kissinger... for as long as anyone could remember, the Chinese had venerated him as the secretary of state who forged the landmark diplomatic opening to Beijing. They had used him as a channel to Washington ever since. Knowing him as they did, the Chinese played to his sense of self regard during his visit in July. They feted and flattered him. They put him up in the same guest quarters he had occupied during his historic visits in the 1970s. They hosted meetings in the same building where he had met their predecessors. And President Xi Jinping told Mr. Kissinger that his initial visits had led to 50 years of mostly stable relations and that he hoped this trip would usher in another 50 years.That last part was the point. After months of friction over a spy balloon and other provocative actions, Mr. Xi was trying to make clear to President Biden’s administration that he wanted to put the tension behind them and repair ties with the United States. Mr. Kissinger returned home and dutifully filled in Secretary of State Antony J. Blinken by phone; met with William J. Burns, the C.I.A. director; and passed along his impressions to Jake Sullivan, the national security adviser... When Donald J. Trump came to power, Mr. Kissinger advised nervous German officials seeking reassurance about the new president to meet with Jared Kushner, his son-in-law and senior adviser. But unknown to the Germans, Mr. Kissinger had told Mr. Kushner that the allies were nervous about Mr. Trump and that he should use that to his own advantage. Don’t reassure them, he advised — keep them on edge... his continuing prominence and access was helpful to his geopolitical consulting business.
Vijay Gokhale has an excellent oped about Kissinger's unscrupulous actions during the 1971 conflict with Pakistan.
In July 1971, during his visit to India on the eve of his secret visit to China, he told P N Haksar, Principal Secretary to the Prime Minister, that the US would “under any conceivable circumstances” back India against Chinese pressure. He never disclosed that he intended to visit China only days later to normalise relations. He also told External Affairs Minister Swaran Singh that the US had only “disinterested concern in the balance of national or political forces within South Asia”. In reality, he was doing everything possible to sustain the Pakistani genocide in future Bangladesh and assist Pakistan in dealing with India... When the war began, Kissinger, on the one hand, routed military equipment to Pakistan through its middle-eastern allies and on the other, suspended all economic assistance to India. His instructions were specific — a case was to be made, technically and legally, to differentiate between the aid given to India from the aid given to Pakistan.His most perfidious actions were his efforts to put pressure on India through the Chinese. Even before the conflict started, Kissinger met the Chinese Ambassador to the United Nations, Huang Hua, on November 23, 1971, to propose that they coordinate action in the UN Security Council on the India-Pakistan issue so that the US “not move too far away from you (China) on this issue”. It was also at this meeting that Kissinger (and George H W Bush, later the President of the United States) shared the specific location of Indian military units deployed along the frontier with East Pakistan, as well as crucial information that India had diverted two mountain divisions from the China front to East Pakistan. He even offered to send further specific information “in a sealed envelope to the hotel if you want us to”. This was but a prelude to Kissinger’s subsequent actions during the Bangladesh war... In his meeting with the Chinese on December 10, 1971... Kissinger conveyed that “if the People’s Republic of China were to consider the situation on the Indian subcontinent a threat to its security, and if it took measures to protect its security, the US would oppose efforts of others (Soviet Union) to interfere with the People’s Republic.” It was as direct a suggestion as could possibly be made by a high-ranking political figure to the Chinese to open a third front when India was already fighting Pakistan on two fronts.
This about his role in mainstreaming China is apt,
In a sense, Kissinger was harnessed by Mao Zedong and his successors to pull the Chinese cart into the 21st century and has contributed, perhaps more than any other single individual, to helping China emerge as a true challenger to American power.
One gets the impression of an unscrupulous, perfidious, racist and immoral networker with a hollow moral core and an insatiable vanity to occupy the top table. Realpolitik gone rogue!
Pratap Bhanu Mehta describes him as a confidence trick pony -
Pakistani writer and activist Eqbal Ahmad argued, Kissinger was a... confidence man... He has the ability to size up a situation, is hard to resist, even if you have the nagging feeling that he has a hollow moral core. The confidence man makes himself appear utterly indispensable. Kissinger made himself utterly indispensable to the power structure of the world for a career spanning close to 80 years... After retirement, he went into consulting for almost 50 years, again pulling off a confidence trick of presenting the selling of services as statesmanship in disguise... Kissengerian diplomacy works by ruthlessly sacrificing the most expendable... The list of crimes he explicitly or tacitly condoned is long: He was instrumental in delaying the Peace Agreement in Vietnam to help the Nixon campaign and the brutal bombing of Cambodia that continued till 1973 and paved the way for genocide. Against the judgement of diplomats on the ground, he ignored the impending genocide in East Pakistan. He gave the go-ahead for the brutal invasion of East Timor, the horrific repression by the Argentine junta, and the overthrow of Salvador Allende. The list could go on. The historian Greg Grandin estimates roughly four million deaths to these decisions.
He was also a Board member of the now infamous Theranos.
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