South Africa Economy - Its hot

- Shifted from blog 'Life Movie Fun'
I am currently living in south africa and so could not help myself getting involved with coutnries situation and its future in economic world. That's why I put a question to myself and you to think about this country (see post -http://lifemoviefun.blogspot.com/2008/08/some-provoking-thoughts-on-economics.html).

I did some reading which I have mentioned as reference at last of this post on this topic. Based on these I can word my own thinking of where this country might go and achieve in future. These all are just possibilities but thats what one need to start a venture :).

South africa as a country is rich in resources. Its geographical situation brings a good atmosphere, not too hot, not too cold.. a lot of sea shore which can help in trading, a big land area for ground development, not much large population to keep consumption low, mines of precious metals gold/platinum and other minerals to feed its economy with lot of money and raw material required for development, what not. Then why there is problem? May be it is not managed properly or it is just a phase in development of a nation.

Opportunity is aleready knocking in SA when it is giong to conduct 2010 FIFA world cup. It will have a huge chance to utilize its production which can be done totally using internal resources and manpower. It will boost industries, create employment, provide world wide exposure, open market for cheap import, open market for SA good in other countries and a lot.

SA seems to be good equiped to do all this if a good effort is put in all this as some of basic things need to be completed before it can encash this opportunity to its best. Infrastructure, literacy, skilled people are few points which need to be addressed before it happens. Time is less but it need to be done.

Industries are already seeing this and are ready to help SA in achieving this target. Even US and China are hungry for its natural resources and showing continuous interest in SA so that they are on boat when it sails in deep sea. SA need to keep a good eye on what exposure it gives and what it keeps to itself so that a nation grows and not the other countries by using its resources.Ref:

Few links which I read on above topics-

1. http://www.bilaterals.org/article.php3?id_article=5491
2. http://www.csmonitor.com/2007/0817/p09s03-coop.html
3. http://www.vdare.com/francis/south_africa2.htm

Latest in Indian IT, what next?

- moved from blog 'Life Movie Fun'

Inflation is everywhere, not only in India but in whole world. US is on verge of recession or some say that it has already started from last year end. Many other countries are also in similar financial condition. Anyway who cares about rest of world when problem is around us, so what actually going to happen to India?Will living cost keep on increasing and now a days high earning software people will actually look like same middle class of yesterday? Most of them have taken loans to fulfill their dreams - house loan, car loan, personal loan, education loan, credit cards, salary advance... long list? ha..So what would happen if recession is actually hit India as well.

Economic cycle says that a bad country recession occurs every 8-10 years. When is the last time it had happen in india.. 2001 or 2000.. that was a bad time.. and that too for IT industry. India is too much looking for these IT companies to bring money inside country. But has anyone thought that actually these companies are standing on a very ..very very risky concept of an industry?

How does an Industry work? It has resources and it has market. It utilizes resources and sell in market and whoa.. money is produced.. Lets see an IT company for it. It has resources.. (ya we have a big population). a lot of it. where is the market then.. In India? 'No'. In Asia? 'No' ..

It is Mostly US (which is already in recession) or Europe (which is also not in very good shape). So if both market are not at all in our control and in bad shape, why there will be a chance to India. Because India offer cheap solutions and that would help them reduce cost.. good point. but is recession cured by reducing cost?No.

Recession is reduced by controlling money flow within country and providing chance to internal industry to keep growing. Stopping outside hands to take away money from country. So what is going to happen? Will India stop getting more work from US/Europe till they recover? What will happen to Indian IT? Will they be able to survive till then? Where this man power will go if they are not needed for all this time?These are few questions which can bring slepless night to any of our IT guy.. so What next?

Future for Petrol Prices

- moved from blog 'Life Movie Fun'

I am late in doing research about my own posted questions, but the topic was so wast that it took time to find proper stuff on even one point. Here it is for Petrol -

Price for petrol is mainly a result of typical 'Supply and Demand' rule. Many factors are contributing in this demand which are -

1. World population is increasing faster than rise in oil production.

2. More countries are growing fast (mostly developing countries) and so for growth more energy requirement are increasing oil consumption.

3. Almost 1/4th of oil consumption is subsidised in world. Due to this even though price has increased, demand is not reducing.

4. Transportation is increasing day by day and it mainly is running on oil. It is very difficuly to cut down on this sector as it is main need of developing nations.

While above factors are increasing demand, there is another concept of future buying. In this countries/industry quote a future price of crude to reserve an amount of oil for them. This also gives a higher end indication of how much demand has increased and so hikes the price.

Supply is mainly from oil well in Saudi coutnries where reserves are being used more and more while new resources are not being found to provide enough oil to meet demand. It is also getting difficult to extract oil from current resources and that increases the cost of production. Result - an increase in price so that where it is not feasible to continue running the work with increased price, work will be stopped and so consumption will reduce. Pressure is more on developing nations to cut down subsidy (like India and China has agreed to increase price due to hike in crude price) so that consumption will reduce. These measure will help bring a stability in price and an equilibrium will be reached where market will continue its progress.

Major support in this will come from alternate resources, like in Canada - Tar Sand. These are big amount of oil reserves and very big in Canada. Till now it was not profitable to extract oil from these due to lower prices. As price has increased which makes if feasible to extract oild from these places, there would be additional production at price where stability would reach for oil production. On that price, for some more time, it would be better for market to utilize these extra inlet of oil in industry and grow at higher rate.

So, Price is surely going to increase in future for petrol, but what we can expect is that there would be better supply of oil at this price and one can think of utilizing it better way and balance the advantage such as to neutralize the loss due to increase in price. Way to go :)

Some Provoking thoughts on Economics :)

-Moved from blog 'Life Movie Fun'
Today is 1st August 2008. Just yesterday I attended a good session about economics of world. Though topic was not that but speaker drifted to that side and he shared quite a few thoughts on how the market is going and how it is going to hit India particularly. Interesting provoking thoughts.. :)

I am thinking of doing some research on those myself and then update this page later. Just so that I keep the interest, points were -
1. How petrol price are going up and down. what is the benifit and to whom.

2. How US is playing other world markets to keep its economy going. It lends money to other groups/currency and later gets it back when that currency is strong against US dollar, result, more US dollar and that also with interest. Wow thats double benifit.

3. Why SA is currently hot for all industries and why it is next center for economic revolution. A lot of natural resources are present in SA which industry need to utilize and current inside industry is not able to consume it, so money is going to pull in from various places in SA. Time to catch the boat when it is still onshore.

4. Recession is going to hit India hard and may be some other coutries as well. Recession cycle is 3 year long and it comes every 7 years in a contry. LAst time it was in 2001 for India and now 2008. But this one is going to be worse than before and for next 3 year it might be even problem to survive in a good manner with same growth.

Let me try what all I can find out on above points. Keep thinking and leave me comments if you have anything to share on above points :)