Economy or the Environment?…the Administration’s balancing act

Almost 2 years into this administration, most Americans know where the government stands on environmental issues; but, with the economy still reeling from the recession; voters have little penchant for unpopular administrative decisions, that often have a negative impact on the economy.

Recently, the U.S Import Export Bank (referred to as Ex-Im) refused to assume a loan-guarantee for Bucyrus International citing the negative environmental impact of the proposed sale. The proposed sale we are referring to is worth $600 million USD over a 3 year period and would save/create 1000 American jobs across Bucyrus’s supply chain; Reliance Power Ltd, part of the Reliance conglomerate, headed by Anil Ambani cancelled the order as the sale was contingent on receiving favorable financing from Ex-Im.

Reliance is now on the look out for purchasing mining equipment from competitors in China and the European Union; this brings us back to the nagging question- “Why did Ex-Im refuse to finance the deal in the first place?”; apparently, the proposed coal powered plant’s carbon emissions did not meet the stringent standards set by the Obama administration to cap greenhouse emissions worldwide; the irony of that decision is that India still plans on building the plant with or without the equipment from Bucyrus.
In order to get a perspective on India’s power requirements, let us crunch some numbers- India has an electrification rate of 64.5%, with more than 400 million people still without access to electricity; Over 73% of India’s electricity is generated by coal powered plants (Figures from 1998) up from 46% in 1971 (Source: International Energy Agency).

Given these figures, and the fact the India is a growing economy in transition, the Indian government’s priorities do not have a semblance of similarity with those of the Obama administration. That being said, let us reiterate Ex-Im’s mission-”Ex-Im Bank’s mission is to assist in financing the export of U.S. goods and services to international markets“. The role of Ex-Im is to finance American exports and create American jobs; not to serve a moral diktat on the consequences of American exports. If environmental concerns are grave enough, I am sure India and any other developing nation in its place would weigh the pros and cons and act accordingly, we must remember that we cannot impose our agenda on sovereign nations, especially if it has financial ramifications in our own backyard.

Deloitte getting ready for acquisitions?

Deloitte Chief Executive Barry Salzberg hinted that they may be on the look out for more acquisitions after the successful integration of BearingPoint’s government consulting practice; amid signs of a steady, but delicate economic recovery.
However, he was vague on the details and did not entirely rule out the possibility of buying either Booz & Company or A T Kearney, though he seemed to more intrigued by firms engaging in enterprise sustainability and hardcore data analytics.

As detailed in a post earlier; Booz and ATK were discussing a merger, but the results of those talks are not public knowledge, so it will be interesting to see what kind of consulting partnerships will endure in a post-recession economy.

Update (as of July 6, 2010)- Booz and ATK’s merger talks are called off

Finger painting on the iPad

Is Technology and contemporary art incompatible?…realism pioneer David Kassan proves otherwise with this brilliant exposition of finger painting on the iPad

Amazon acquires Woot!!

Woot, the eclectic Dallas based e-tailer, which pioneered the “1 item sale per day” concept and spawned a gazillion imitators was acquired by Amazon in a deal, whose terms have not yet been disclosed. Staying true to its corporate weirdness, CEO Matt Rutledge sent out a letter to employees proclaiming that “Woot and all our various sites will continue to be an independently operated company full of horrible, useless products and an untalented jerkface writing staff, same as it ever was”

I am not sure if fellow “wooters” would be thrilled with this development, it takes away some of the bohemian and cool factor that made Woot so successful in the first place. Back in my college days, my roomies and I would be waiting for the clock to countdown to 12:00 AM to check out the latest, cheaply priced gizmos that the site had to offer..oh and by the way, we got great deals on a whole bunch of items.

Though word on the motivation for the acquisition is unclear, a rapping monkey put out by woot could offer some clues

Ben Nelson soaked in oil in new Pro-Environmental ad

Though most Americans show varying levels of disagreement on the role of government-interference or the lack thereof in the free market; surely no one can deny that this new ad churned by progressive Democratic veterans group-VoteVets is a funny gem!!

Life, Liberty and the Pursuit of Cheap Coffee!

After its acquisition by Starbucks in 2003, further development of Seattle’s Best Coffee was shoved to the backburner, while Starbucks struggled to come to terms with its own inner demons (bloated cannibalized locations and lackluster same stores sales).
Apart from establishing SBC stores in Borders, SBUX did little to invest in developing the SBC brand and it seemed destined to die a slow and painful death. Recently however, Starbucks ramped up efforts to resurrect and relaunch Seattle’s Best Coffee in an attempt to woo blue-collar and price conscious customers, who were flocking to McDonalds and DunkinDonuts, as fast-food operators stealthily, but surely encroached on gourmet coffee territory.
According to the Wall Street Journal, Starbucks plans to open over 30,000 locations, while winding down its own domestic retail operations, and focus efforts on global expansion.
Well, that sounds good right?… at least for SBUX shareholders, but this is all before they debuted an uncanny logo, which strangely, but not surprisingly, is highly reminiscent of big oil and blood donation drives.

Old Logo versus New Logo

Though the new logo is edgy and modern, it does not evoke the aura of aroma filled rooms, where coffee connoisseurs delicately sample the best beans, which are then carefully roasted and packed into rustic jute bags, before being shipped to mom and pop stores all over the world. To me, the ubiquitous white droplet drowning in a sea of blood appears to be unappealing and am mighty sure that consumers will have little love to spare for the SBC’s makeover. To add insult to injury, the logo looks far worse, when slapped on a cup and could easily pass off as an ad for HBO’s True Blood.

Though most of us enjoy coffee in a disposable paper cup, wrapped in a cardboard sleeve and topped with a solo cap, we still have a certain level of affinity towards the brand (however cheap it may be) and the new logo is just too bland to generate any association with the brand, whether positive or negative. The only feeling I get, when I hold an SBC cup in my hand is that of extreme nonchalance.
But, lets hope for the best and see if we grow to love it, just like these enthusiastic employees have!

Ocado IPO launching in July 2010!!

Ocado, the Brit online grocery retailer is gearing up for an IPO launch as early as next month, according to the Financial Times. Various sources (WSJ, FT) speculate that Ocado could be valued anywhere between $733 million at the low-end to $2.2 billion at the high end.

It would be interesting to see if these optimistic preliminary evaluations hold up; given that the company is yet to post a net-profit since its founding by former Goldman Sachs bankers in 2002. However, the lack of profitability is apparently not a strong enough deterrent for enthusiastic partners like UBS, P&G, Al-Gore and Jorn Rausing (Tetrapak) who have pumped in over $444 million into Ocado since 2000; with the three founders still retaining a 22% stake in the company.
Though some critics contend that the Ocado case exemplifies another bout of “Irrational Exuberance” among investors, it remains to be seen if Ocado’s highly automated and supremely efficient warehouse management system is indeed a game changer and if online grocery retailing is here to stay; that being said, North American markets are radically different from British markets and Ocado’s single warehouse model- a 23 acre behemoth that serves over 65% of British postal codes, can be extremely difficult to duplicate in low population-density areas. Apart from logistical challenges, retail stores could themselves develop an online sales channel (Peapod, which now operates, as a distinct arm of Stop & Shop, which in-turn is held by supermarket operator-Ahold). For now, I am content with admiring their smooth and precise warehouse operations and my investment dollars are safe, right where they belong, in my pocket!!