Never have I been so emotional while writing a post as I am today because I have witnessed something today which could melt any stone heart. Today, as I rushed to get ready for the Friday prayers, my younger brother raced across the house carrying a weird looking gadget. I would not have given it a second thought-or look for that matter (I have grown up with my brother's idiosyncrasies) but when my brother screamed at the top of his voice that it was a miniature motor boat that his newly made friend had made. Expecting the typical childish hodgepodge, I asked him to show me the boat. When I saw the boat, to say that I was amazed would be an understatement. I was stunned. The boat was a perfect miniaturization of its normal counterpart-everything from the realistic wood-like paint-job to the intricately designed mast, was immaculately done. However, my amazement on seeing the boat was not solely due to its aesthetics. The simple yet elegant engineering involved was even more brilliant-from aerodynamically cut propeller to carefully hoisted battery,everything looked perfect.
And the surprises did not stop here. I asked my brother to introduce me to such a genius friend of his (I has yet to meet this new friend of his), he told me the most amazing thing of all. His friend was only five years ols and was studying in 1st grade. His family is extremely poor-so much that his family has to skip lunch because they simply can not afford it. He reminded me that once my mother made lunch for both of them and his friend was overjoyed because he got to ate three meals in a day after such a long time. His friend had actually sold that boat to me so
What I felt after that can hardly ever be described in words. The magnitude of the grief that I felt for the abject conditions of this wunderkid is just beyond words. Tears actually welled up in my eyes when I thought about how this genius might be wasted because of poverty. I always thought that I was considerably disadvantaged (I can not say that I had to skip lunches but yes, I can talk about many other things which would definitely be classified as financial hardship) but my problems seem trivial when compared to this kid. I have been thinking about this kid thw whole day.
This event is not something strange. Our country is brimming with talent but the many problems we face have hindered our intellectual and personal growth. It is high time for us to realize that we have to solve our problems not only for our own sake but more importantly, for gems like my brother's friend who, if nurtured and mentored, could be a valuable asset for Pakistan.

India announces its budget

Amidst dying hopes of tensions curbing through the talks between her and Pakistan, India has decided to announce her proposed budget for the next fiscal year and I could not resist myself from posting about it.Here, I would like to remind the readers of the prevalent poverty in India even though it is said to be the emerging economic superpower in the world (India has the 4th biggest GDP in the world but ranks a meager 128 in GDP per capita- a mere 4 positions higher than Pakistan). The point here is that due to it being the second most populous country in the world, it faces major poverty problems. Now, the government of India is extremely aware of the perennial thorn in the flesh and thus, this budget seems to be dedicated to curb the problems of the poor majority of the populace of India. The government has made it their first priority to combat the spiraling food prices and a tight monetary policy is what seems imminent in the review in April. However in the budget itself, the government seems pretty lax. a major boost to disposable income of the middle class has been given by decreasing the income tax rate of the taxable income between 300,000 and 500,000 from 20% to 10%. This reform, apart from strengthening the voter base for Mr. Purnab Mukerji, will also stimulate growth in the economy. However, it may also have the effect of causing demand pull inflation. Corporate tax has also been reduced serving further to stimulate growth. Speaking of corporate, the IT industry seems all too happy with the budget because it is so supportive of SEZs. Even though, they are not too happy with the extension of tax breaks under the Software Technology Parks of India (STPI) scheme, the big of the IT industry feel that they are not being made to compromise much.
As if giving a thumbs up to the Mr. Mukerji, the stock market jumped 391 points and it seems that the market will certainly continue its roll on the budget. Pakistan is going to be majorly affected by the decision to increase the money spent on defen. The Indian government increased its defence budget to 1.47 lac crores. Hardly a thing for Pakistanis to laugh at. Rs.24000 crores has been allotted to micro, small and medium industries (something Pakistan needs to desperately learn from).
Now, here comes the views on the budget part. Manmohan Singh has remarked on a budget that it would increase growth and it is an exceedingly well done. Mr. Bajaj of Bajaj industries said on a BBC interview that some have said that it could have been done a little better but he would like to see anybody do it in a better way than present. So, overall, it seems that people are pretty happy about the budget. Even though, relations between India and Pakistan remain constricted. I pray that this budget does manage the difficult balance allowing growth while controlling price level gracefully.
(Image from Panasianbiz.com)

Micro or Macro?

Micro or Macro? It is not as if I am given a choice to chose between the two but my mind has been arguing over which of these super-general classification of economics I like better. Although, I hardly do think that this needs to be written but Microecon deals with individuals while macroecon, as the name suggests, deals with bigger agents such as the governments banks etc. I think that my mind has made a pretty tentative decision that I like micro better. Now why is that the case? Well, even I dont believe that the answer is much discernible but I do feel that it is much easier for me to analyze and predict situations in micro. This is definitely due to the reason that I can put myself in different scenarios and decide what I would do (and hope that I am as sane as the ubiquitous 'rational consumer'). It is easier to think of indifference curve in terms of my indifference to either Coke or Pepsi than it is to think about loanable funds and interest rates. However, it is not that I hate macro. It is just that I like micro more. But this is very tentative and I know that tomorrow, I may change my choice.

US governors assert that worst is yet to come in recession

Even though Washington and other private surveys report some growth in these past months, Governors of the different states of the US said at the National Governors Associations meeting this Saturday that the worst has still not come and they had to brace themselves for it. The representative stated that there is rowing unemployment and price level is rising. The governors also said that states face a budget deficit totaling $134 billion.
The governors agreed that the solution to this problem is only job creation. They said that Obama had helped them out at the edge of a major economic abyss but much more needs to be done to help bring things back to normal. The governors agreed that that'much more' means creating more jobs to counter the growing rate of unemployment. They looked forward to the still-being-debated $25 billion infusion of cash that the Congress is considering to give to states. Even though January has marked a slight fall in the unemployment rate, states are still facing double-digits unempolyment rates ans the governors seemed pretty anxious to do something about it. With President Obama busy in convincing the senate about the benefits of his health care program, it would be interesting to see what exactly states do to help that growing unemployment.
Attached is a graph of unemployment rates and FedFunds Rate by MarketOracle.co.uk

Pirated or special price books?

Even taking into account the fact that I am a student, I am proud of the fact that I buy more books than what is usually expected from a teenage boy like me in Pakistan. Therefore, I have become accustomed to facing the perennial problem of developing countries like ours face:rampant piracy. I thoroughly detest piracy for the obvious fact that it is extremely unfair for the actual author of the book (which is the same line of reasoning for plagiarism which I also thoroughly detest; I am very careful to cite the sources in my blog but you people are more than welcome to point out any place where I might not have cited the source due to my negligence). Ok, so we were on piracy of books. Well, it is pretty rampant in Pakistan to be honest and the worst part is almost everyone is ignorant about it. Almost everyone thinks that it is just as legitimate to buy the five hundred percent reduced-price books but hardly anybody realizes that it is not because that is piracy. The money does not go to the author. This is a disincentive for authors and we might end up with no books at all.
However, the other side is just as convincing. I know that I talk more about the importance of education in my life than I talk about myself but in Pakistan, where the median wage per day falls far below the price of the original books, things are not that simple. People in Pakistan are almost justified to say that pirated books provide them with reading at an affordable price.
However, I feel that there is only one solution to this dilemma. Many publishers now also have special low-price editions specifically aimed at people of developing countries. These editions not only provide the books at an affordable price but also help fight the problem of piracy. I feel that our only way forward is that more of these books are published. I believe that the publishing of these books will help both authors and the readers because authors would be able to gain from reaching out to the untapped markets of developing countries.

President's education

I have been thinking for some time that its been long since I have not written anything related with education. And Whoala! I just read an article today that I knew I had to write about. The article was about the education of US Presidents. This article here describes the various degrees that the US presidents up til now have achieved. Almost everyone know that Obama has achieved a JD from Harvard but so have other 44 presidents also. In fact, 2 of the US presidents have been engineers and basically you can go ahead and read the rest of the article. What instantly hit me was the relative education of our own presidents. The education of our presidents pales in comparison with that of the US presidents. The Wikipedia page of our incumbent president says that he 'claims' to have a degree from London, nut this degree has not been proven. I guess few of us have forgotten the attempt the of an MNA who was a "Haji" making his nephew give his bachelor exam but getting caught in the act. I realize that I am not here to enumerate the wrong things that people who run our country have done but this can give us a clue as to why our educational system lags far behind that of other comparable nations. If faking degrees and illegally trying to pass bachelors examination (which incidentally was the minimum eligibility criteria for an MNA not long ago) seems to be the favorite pastime of those in charge, we can hardly expect to see major strides in our educational system. We should take a page out of Bangladesh's book where the British A level system was the option for the elite while the rest mere mortals were forced to study under the outdated local system. However, they brought major reforms in their own system, bringing it at par with the British system. The result is that much of the students returned back to their local system and the relatively stronger economic progress could be attributed to partially to this sudden change.
Another problem that this revolution brought was that it made the Balance of Payments better off for Bangladesh. Britain earns huge amounts for itself by selling its top notch services but since Bangladesh has steered away from the need to import the pricey British education, it has also helped its B.O.P.
I look forward to the impending changes that our educational system has been crying out for so long. It is only with these changes that we can truly make ourselves better off.

Tarain says his has not thought of his resignation

Today after such a long time (nine days can never seem any longer), I actually went through the newspaper to catch up on what is happening in the world. The news item that caught my eye was Tarain's vehement denial that he had any plans to resign. Sensing that I am reading the middle of the story, I started looking for more information on why he was to resign. The story was this: Tarain was not very happy with the government's "reckless" spending on rental power plants and therefore, did not feel that he was really a part of he government. Rumor has it that even went ahead with handing in his resignation to Mr. Zardari which Mr. Zardari allegedly refused to accept. However, Mr. Tarain has come up with a statement vehemently denying any plans to resign and has been reported to have said that he wonders where do these rumors originate from and that he has not hitherto thought of leaving the ministry but he can not predict the future. This statement of his could be interpretted by political analysts as a confirmation of an imminent resignation but what is interesting is the supposed point of argument between Tarain and the rest of the goverment- rental power plants. I strongly feel that I should side with Mr. Tarain on this issue as I feel that he is right in his stance against the power plants because their incredulously hefty price tags DO impose a burden on our trade balance. With our economyu on ventilator support, I believe that these resources would be much better spent on finding other sustainable sources of electricity instead of spending these on earning short-lived political motives. We could do without electricity with another day or two but we could scarcely make it with a filing economy.

Apologies and Thankyous

I know that I have been very irregular in my postings. While many of the readers who happen to know me personally might know the reason but I guess there are as many of you who might know the reason. My father has been ill on and off these past couple of months but his health got from bad to serious these past two weeks. However, he made it through by, as he puts it, a miracle. I do know who to thank for making this miracle happen but I know it was the prayers that so many nice people did that caused this miracle to happen. I know that some of those who prayed for my father will read this, so, I want to say a heart-felt thank you to all of you without whom I shudder to think what might have happened. Thank you all for being so supportive and my apologies to those who expected my post but did not get those because there are somethings even more importent than blog writing (that is not to say blog writing is not important to me) but I will try to be as regular as I can be as my father is a whole lot better.

Apologies and Thankyous

Where is your bill?

Today, while going through the internet, I found this really cool site called Wheresgeorge. If you happen to carry out your daily transactions in dollars or just possess the 1 dollar bill, look up the serial number on the bill and enter it in the site. It would tell the places where the bill has been before coming in your hands. Now isn't that cool?

Countries' GDPs

One of the most important factors in determining the affluence in a country is undoubtedly its GDP. It is the measure of total output by a country and can be used to measure the income of a country. However, this figure alone is in itself pretty misleading as a country may have a GDP double than another country but this may be just because the latter's population is double. What is more important is the GDP per capita of countries. No example other than Falkland Island can illustrate the difference between the two terms. GDP wise, Falkland Island is at a position of 192 in the world but when it comes to GDP per capita, Falkland Island joins the elite (it is 23rd). Anyways, here I post the links to both pages of GDP and GDP per capitas of all countries.
GDPs
GDP per capita

Shaukat Tareen

It is good for us to know more about people who run the country in which we live. Shaukat Tareen, our finance minister, has quite some honors attached to his name to boast about. He has served as the country head of citibank in Thailand and has been twice elected the president of Karachi Stock Exchange. This sort of reminds me of Shamshad Akhtar and her extra-ordinary achievements apart from her being the only woman to rise to one of the most prestigious positions in the country. Anyway, if somebody wants to learn more about Mr. Shaukat Tareen, I have attached the Wikipedia link to his page.
Shaukat Tareen

Allocative efficiency means P=MC

One of the basic conditions of economic efficiency is allocative efficiency. The oft cited condition for this is P=MC. While it is hardly difficult to understand the condition behind productive efficiency (P= min. AC), it is a little more perplexing to think how allocative efficiency can be achieved at P=MC. Interestingly, my teacher actually told me to just learn the condition without going into a lot of details but what I could surmise with my limited knowledge was that since the price we attach with a good is a measure of value we put on a good, if a consumer does not want more of a certain good, it means he puts more value to the good. Thus, if P=MC, we are just paying the price we attach to the good and firms extra cost of producing that goods equals the valu consumers attach to it. Maybe anybody could elaborate on this topic?

Dartmouth's Financial Aid questions answered

Go to this site. It answers many questions regarding Financial Aid. I was sent this link a couple of weeks back but did not watch it until today. Even if you did not apply to Dartmouth as a financial aid recipient, it is a good way to know more about how financial aid works.
Financial Aid Questions Answered

Sony Ericsson loses another 167M euro

It seems that woes continue for the merger between Sony and Ericsson. Despite selling half a million handsets more than they did in the Q4 of last year they still registered a loss of 167 million euro. The company's tedious restructuring has continued and has consumed 150 million euros. This move is supposed to save about 800 million euros in the end as for now, is hurting the balance sheet.The full 2009 financial report of Sony Ericsson shows that the company managed to ship 57.1 million handsets (41 decrease compared to 2008) for an average price of 119 euro (2.5% increase). The net loss for the period totals 836 million euro. Since, the net cash position of the company stands at 620 million euro, the company can not afford to have another year like this one; so, lets hope that the company makes a miraculous comeback.

Game Theory

One of the most interesting topics in Economics has to be the Game Theory. It allows us to see how people's choices are dependent on choices other people make and how people can benefit from cheating in collusions . Today, a story I read in a children magazine as a seven-year-old boy, which incidentally showed people cheating in a collective order(?) suddenly came back to my mind. I would like to narrate it to you all. There was a Raja who was on a trip throughout his kingdom. Midway in the trip, he came across a village whose residents complained that the appointed tax collector was very cruel. The Raja was very wise; he replied that he will look into the matter but would first like the villagers to do a favor for him. He had always wanted to create a pond of milk. Since the village was known for healthy cattle, the Raja said that he wants everyone in the village to put one cup of milk in the dried pond of the village overnight, so that the next day, the dried pond be changed into a milk pond. The villagers went back into their home. Each villager independently hatched a plan that since every other villager is going to put in milk, he could put in a cup of water and nobody would know. So, each villager, thinking that he is cleverer than others and can get away with this cheating, pours a cup of water in the pond at night. The next day, the Raja summons everyone at the pond and the villagers are horror-struck to find a pool of water. The Raja remarks that since all of the villagers are such cheaters, it is only appropriate that the tax-collector is so harsh.
This story shows that it is important to thoroughly analyze the pay-offs of other people before making any decision and that the Game Theory does not account for such clever a people as the Raja.

Apple just continues to earn incredulously large profits

The boys at cupertino have reported a net revenue of 15.68 billion US dollars and a net quarterly profit of 3.38 billion US dollars, which compare really favorably to the numbers from the last three months of 2008 (11.88 billion and 2.26 billion respectively).
The Iphones' sales, almost double than that in the previous quarter, has been the main contributory factor behind the amazing financial report.
Here's the link to the full report if anybody wants to read.
Apple Q4 report

Nokia is back on the profit-making list after a long time

After a year of struggle with falling sales and scary losses, Nokia has just reported a profitable Q4 report. The new touchscreen phones which the company introduced some time back, seem to have been a hit big enough to give the company a net profit of 882 million Euros. The largest phone manufacturer in the world has managed to ship 126.9 million devices in Q4 2009, which is 12% better than Q4 of 2008 and 17% better than Q3 of 2009.Those have generated a revenue of nearly 12 billion euro (which is a 5.3% decrease Year-on-Year and 22.2% increase Quarter-on-Quarter).
Full Q4 Financial report of Nokia

Want To study Economics in Graduate School

People like me who are actually pretty sure that they want to pursue a degree in economics later in their life should be overjoyed to read these tips about applying to graduate school. Even though, this advice is not very significant for me because I am still in high school but it can still provide people like me a rough idea of what to do right while applying to the grad school for an econ degree.
This piece of advice comes straight from the Harvard department of economics.
Econ in Grad school

s-cool

S-cool is an excellent site for anyone who wants a quickie revise for their A level syllabus. Be sure to check this site out.
S-cool

$$$ for Financial Aid

The college admissions process is pretty hectic-this is a no brainer. But what most people fail to realise is that applying for financial aid is even more hectic. If one has submitted his or her application correctly on the dreaded 31st December deadline, they can, for the most part, be sure that they are through the hectic process but with financial aid, things are extremely tricky. Each institution has its own deadline and to add to the confusion, each institution has its own preferred forms and some even have their own online financial aid applications. But the irony is that to apply for financial aid, some of the forms cost money: not infinitely-impossible-to-pay money, but the sort of money which caused my parents a significant burden. While I do recognise that the testing service involved is more than justified to charge us the money (after all they do have to send it those applications to colleges) but still it seems pretty ironic to give money to get money

Indus day

Today was the day of River Indus, or Darayay Sindh. The home to one of the world's oldest civilization, River Indus plays a piotal role in the lives of people of Pakistan. It is the river which helps run the biggest canal system in the world and helps run the agrarian economy of Pakistan (which was the face saver for Pakistan in the previous financial year). It is a the backbone of the fairly important fishing industry of Pakistan. It gives food to the whole country and it is a symbol of Sindh. Therefore, it is impossible to ignore the importance of the river and the river does deserve its very own day.

Test tube baby

In my biology class some days back, we discussed the issues of having test tube babies. One of the issue which my teacher raised was the exorbitant cost of the procedure; a single IVF treatment easily costs upward of $5000, which is considered expensive even in developed countries such as the US, let alone countries like Pakistan. The argument that the procedure is expensive is pretty debatable. We have to consider the utility that consumers (i-e couples) get from the product. A childless couple wants nothing more than a baby in their house. Mostly, they are willing to pay their entire saving to hear the cries of their own baby. The psychological and physical torment of being childless is also considerable. Thus, for a couple that is so desperate to have a child, it is logical to say that the utility gained from such a procedure is practically infinite. Thus, even though a price tag of $5000 may be an effective deterrent for a good with much smaller marginal utility, but for a good that gives the couple its own child seems extremely inexpensive because of the marginal utility it gives. This argument highlights another aspect: the utility we gain from goods can sometimes be caused by the evolutionary roles nature has caused us to play in the world :)

Gas Loadshedding

To the lucky souls that are yet unaware of the monster known as load shedding, it is a beast which the gas management company has decided to unleash upon the Pakistanis every weekend. This monster cuts off all gas supplies in the gas stations!! With such draconian a regulation in place, almost all activity comes to a standstill in the weekends because the cars do not have fuel. I have (un)fortunately experienced first hand the consequences of the regulation and can tell you that they are not pretty. But I am not going to grumble about this because I have something else to talk about. The actual imposition of this regulation is not as strong as it might be expected. (Still, most of the gas stations adhere to the rules set) but occasionally, during the load shedding time, one of the gas stations ignores the rules and continues to operate even in the prohibited period. Today, as I watched my car slow down as it used up the last traces of the gas and frantically prayed to God that I find some gas station which has decided to evade the regulation (I didn't!), it occured to me that this situation is very similar to collusion. The various cartels that form between the firms in the industry also follow the basic assumption: the other firms would also act according to the cartel rules and not take unfair advantage by cheating. Similarly, in the Load shedding model :) , the stations agree to forgo their potential earnings because a) it is a law and b) they can console themselves that they are not the only ones suffering but just as in cartels, a firm might cheat and earn even more profits, a gas station might risk ignoring the ban and open up. It would not only attract infinitely many customers (which does happen) and can act as a monopoly and charge as much as it wants (and consumers pay the price it wants; gas has inelastic demand) . Although, this practice is extremely unethical but what can we do: in economics, everyone is a profit maximiser :)

China's 1,459-year-old Buddha gets $10.8M facelift

With surpluses running all time high (see my post a few days back), the chinese have started spending hefty amounts on the makeover of cultural landmarks. China's oldest Buddhist statue, which is on the brink of collapse, is about to get a $10.8 million facelift.
The 1459 years old Meng Mountain Buddha in northern Taiyuan citywill be restored and repaired after the closure of seven nearbycoal mines which inflicted environmental damage. The closure took place in 2007 for the protection of statue.

What will happen tomorrow?

Jang News, Pakistan's largest newspaper, has issued journal called "Kia Hoga 2010" (What will happen?). This journal, a first in Pakistan, is being published under the license of "The Economist" and will not only feature the enticing,"economicy" articles similar to those in The Economist but also articles on a diverse array of subjects including the ubiquitous actress Meera. The price of the journal is slightly on the costly side (The price is Rs. 150) but considering that it is a licensed journal of "The Economist", I am very willing to pay the price.
I have searched for the official site of the journal but I have failed to find it thus far. However, rest assured that I will post any updates about the journal as they come.

After surpassing US in automobile industry and beating Germany in 2007 to become the world's second largest economy, China has gone on to become the biggest exporter in the world, beating Germany by the boost in exports in December 2008. The exports jumped 17.7%, for the first time in 14 months, and continue to underline the power China is achieving in the world economy.
Even though, China taking over US as world's largest economy in immediate futureremains a media hype (the assumption being that it continues to grow at its present rate for the next 25 years, which is, frankly, a bit too early to tell), the growing influence China is achieving is establishing it as a power to be dealt with. American and other governments continue to stress that such surpluses come from the price competitiveness which is endowed to the Chinese exporters by the government subsidies and from the widespread dumping which the exporters carry out in western markets. To counter the threat, the western governments have passed legislations-US has passed specific specific anti-dumping laws while the EU has imposed curbs on Chinese shoes. What would be interesting to watch in the future will be whether, with these strict regulations, the chinese government would succeed in becoming the world's largest economy even in the distant future.

World stocks take a plunge as inverstors anticipate the US jobs data

World stocks have fallen as the US jobs data, due Friday, looms. The job data which are expected to shed some light o the state of recovery of the world's largest economy, can define the fate of markets for the next week or two.
In Europe, the FTSE 100 index of leading British shares was down 19.98 points, or 0.4 percent, at 5,510.06 while Germany's DAX fell 52.78 points, or 0.9 percent, to 5,981.55. The CAC-40 in France was 21.55 points, or 0.5 percent, lower at 3,996.12.
It seems investors look forward to such reports so that they can establish the way markets should go in the new year. The market participants predict that for the first time in last two years, the figures could show jobs rising. However, the market is convinced , especially after a weaker than expected private jobs report, that at least 10000 jobs were lost in December.

Yahoo and Microsoft ink web agreement

It is official. Yahoo! and Microsoft announced earlier that they have finalised the details of their planned internet search and advertising partnership. The companies hope to implement the deal this year with the approval of anti-trust regulators.
Although the software and web giants had planned to complete their agreement by October 27 but the talks had continued given what they called "complex nature of the transaction". The plan to ink a 10-year Web search and advertising pact was unveiled in July and promises to set the stagee for a Yahoo!Microsoft offensive against the growing power of Google, the king of lucrative search and advertising market.
Under the no cash deal, yahoo will use Microsoft's new bing engine on its site while Yahoo! will provide the exclusive global sales force for premium advertisers.