The new Tesla and all that it portends...

Tesla seems to be revolutionizing not just the manufacturing ( check out the link: https://mail.google.com/mail/u/0/#search/sent%3A+tesla/14896d170df9d892?projector=1 ) but other aspects like the basic concept of a car itself.  The article is attached below. The re-conceptualization of the car can in itself be celebrated as the advance of technology, but the larger trends are disturbing:

Soon all the roads'll be driverless roads,

and all the cars'll move without wheels;

You need one, it will be at your door,

Punch where you want to go, and sleep!

They uplink themselves to the Cloud,

Part of the 'net of everything;

You get into one, punch whither bound,

put on your music, and go to sleep!

It knows every pothole on the road,

and where it's jammed, and where it's choked;

It knows the freeways and the side-roads,

Ignoring you, it talks to the Cloud!

No more traffic violations,

and no more mistakes that drivers make;

Driven to and fro by automations,

One more fun thing in life is dead!

We play our games more and more online,

to watchers who cheer us, reclined;

Befriend the ghosts residing inside

our Computers, linked to Cloud Nine!

Our work is more and more virtual,

So is play, love and friendships;

No need to walk, bend, sweat or lift,

From the day we're born, till we're no more!

dinesh

http://www.technewsworld.com/story/81249.html

OPINION Detroit's Stupid Plan to Kill Tesla

In watching the illicit attempts of dealers and U.S. auto companies to try to kill Tesla, I have to think they are all wrongheaded. I don't drive a Tesla, but this kind of thing makes me really mad because it is so incredibly stupid.

Tesla is as much an idea as it is a company -- and an idea that should be flowing through the car industry anyway, because the world is changing. The way we buy most things is changing, and firms that try to fight waves like this typically find themselves out of business. I don't think the U.S. government will bail out the auto industry a second time.

This is my not-too-subtle way of saying that the market will move to Tesla's model -- the question is whether U.S. car companies will ride this wave or be buried by it.

Change Is in the Air

All markets are in the process of changing, from how we pay for things -- which largely had shifted from cash to credit and debit cards and now is shifting again to near field communications services like Apple Pay -- to how we buy them, shifting from stores like Sears to online retailers like Amazon.

It certainly could be argued that banks should be leading the charge to a different and far-safer payment method rather than a technology company, and that catalog companies like Sears should have done the online thing right before Amazon figured it out, but folks just don't like to learn to do things differently. You can almost hear the old codger executive say, "If it was good enough for my pappy and grandpappy, it is good enough for me," a few months before a firm goes out of business.

We exist in a world of change, and successful companies either learn to change with the world, or they receive the pleasures of early retirement or unplanned unemployment, and the U.S. auto industry has just missed that direr outcome several times in the last decade. You'd think auto companies would learn, but apparently they don't want to.

The Tesla Model

Tesla isn't just about the car, which is cool -- it is as much about the model, which is based solidly on how Apple brings things to market. The reason Tesla can do this is that the car, while looking a lot like other cars, is very different underneath. It has few moving parts, being mostly solid state, and the keystone feature is a large screen tablet-like interface that sits between the seats.

Because it is solid state, it doesn't need service often -- and because it is modular, it often can be repaired easily in the field or, like a laptop or tablet, sent to a centralized service facility for repair. Rather than you driving to a dealer to wait in line and waste half a day, Tesla drives a loaner to you and then swaps it back. (It will sell you the loaner for a slight upcharge if you'd rather keep it).

Even updates don't require a trip to a service facility because, like wireless devices, the car is always connected and tied to a cloud service that handles that part. It isn't just different -- it is like most of the devices that currently are causing upheaval in the technology market. That means this is a trend in much the same way as moving from horses to cars, or gas to electricity.

The Tesla is a big electronic appliance. It is solid state and very reliable, and much of its value actually comes from the cloud services it is connected to and the apps it runs. If Apple were to make a car, it would be a Tesla.

As a result, its move to self-driving appears far more quickly than similar moves from other companies, and given that self-driving cars have to be connected not only to some kind of centralized service but also to each other, the overall solution looks more like something you'd see in a high-technology product than in a typical car.

The thing is, to compete, all cars will need to evolve to become more like Tesla's, and dealerships simply won't be needed unless the industry embraces and changes the model.

Test drives likely will ensure that some kind of storefront will be needed. I expect we'll evolve away from brand-only stores to multibrand stores, with manufacturers sharing a footprint to keep costs down in low-volume regions. However, there is no doubt in my mind that this is the future, because cars have to become more like the Tesla, and the Tesla car forces a very different sales and service model.

Tesla's Problem Is the US Car Industry's Problem

Tesla's problem isn't that its model doesn't work. It works very well, which is why we are up to our armpits in expensive Tesla cars where I live. The problem is that there is an impressive number of politicians who own dealerships, and they don't want to lose their businesses.

I get that, but using political power to lock out Tesla is not just wrongheaded -- it should be illegal. Change is coming, regardless. With the latest law being passed in Michigan, Tesla appears banned from the Detroit auto show, which is just nuts -- because, gee I don't know, it basically makes the whole U.S. auto industry look stupidly blind.

Improving on Tesla

Now the Tesla S is a modular car, and you could certainly see how a dealership model could be made to work at scale. You build the basic cars, but given they are modular, the dealer then modifies them to order, swapping in and out the components, and the software can be smart enough to automatically scan and enable anything the system has to be connected.

Buyers can come back for upgrades as needed. As a buyer, you'd never again have to regret not getting something up front, and dealers could have upgrade specials, bringing you back in regularly to buy more stuff. That would help even out their revenue stream and offset their loss of regular service revenue as cars become more solid state.

They even could use wraps to change the color of cars, which would be designed to be wrapped more easily. Want a different color? For a relatively low fee, you can get that, stripes, or even a picture of your puppy on the vehicle.

Rather than fighting Tesla while the auto industry gets buried in recalls, why not learn from it and create something better that embraces the dealer model? Rather than denying choice, provide a better one. The outcome should be far more survivable, because the market is moving there, whether we like it or not. Self-driving cars, which basically will be rolling supercomputers, will require this change.

Wrapping Up: Pivotal Moments

In every industry, there are pivotal moments when influential people decide to go one way or another, and the industry changes forever. I think the auto industry has reached the moment when it can decide either to embrace the future and become something better, or fight the future and be crushed by it. I'm afraid the industry is making the wrong choice, and I doubt it will get another government bailout.

You don't support Tesla just because you like the car, you support it because it represents the future of automobiles. If we want the auto industry to survive in the U.S., we need to be on that wagon -- not under it. 

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Rob Enderle is a TechNewsWorld columnist and the principal analyst for the Enderle Group, a consultancy that focuses on personal technology products and trends. You can connect with him on Google+.

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The Myth of Cholesterol, and other matters

The disease called 'Diagnosis'

( Article by Dr. B M Hegde (may he live long) attached below after my comments)

Modern medicine is all about 'scientifically' looking for metrics - and you will find tons of them in the human body, from blood, to urine, to faeces, etc. Treat each one of them in isolation, forgetting that the body is a synergistic whole, and no one factor can be corrected without affecting something else; not to forget the effect body and mind have on each other. And once you have isolated each factor, it does not take much to generate a ton of data on what is 'normal' - in isolation, the 'normal' here is meaningless. Then what you do is define a range. Like blood cholesterol should be between so-and-so and so-and-so - this is derived based on the tons of data on hand. Arbitrarily cut-off the top and bottom 5% each, and define those as unhealthy. That gives you a percentage of the population who are by definition unhealthy based on cholesterol. Now make a person undergo 20 tests. By definition, he has a 5% chance of being unhealthy on each parameter - by the time 20 are done, you can calculate the odds of his remaining healthy. Once in a few years, the Association of Good Doctors will modify the 'normal' range to make sure more of us are 'unhealthy'. They will even invent diseases where there are none, or prescribe medical interventions where none were required so far.

It all starts with debunking what is good food. Good vegetables, good fruits, good food in general, are those that are natural, fresh, full of vitality, liable to spoil, and not inundated with chemicals. All this is violated by the 'food processing' and 'supermarket' industry which transports food over long distances and wants to not allow them to rot. And then you introduce some myths. You say that a few parameters like "calories", "vitamin B" etc.. are important, forgetting the many other things in food that are not measured, not measurable, or are subtle, and forgetting entirely about Nature wanted food to be. And then you say 'x calories are required'  or 'y vitamins' without considering the origin of the food itself. Even a rotting carcass has x calories and y vitamins but only vultures can digest it. Breast milk has a lot of cholesterol as Dr. Hegde points out below.

So instead of relying on our senses of sight, smell and taste to guide us, we read the labels. Which tell us that milk, after being pasteurized, homogenized, pulverized, denatured, fat-removed, is still good for health because the labels say so. Or that Coke is good, because it says 'Coke Zero'. If we ate foods only with zero calories, we would be dead in a very short time. And we do not rely on our hunger any more to guide us on how much to eat. We count calories! If you stop to think about it for a minute, you will realize how foolish this is.

And then the food industry puts together a bunch of chemicals, whose remote origins lay in food, and convinces us that it is good to eat. The labels, based on all the metrics, of course prove that this is so. 

The food industry is succeeding in making all of us unhealthy. And then the medical industry takes over. Their tests prove that we are unhealthy, even if are not, and they start shoving medicines into us, which we willingly consume. In fact, if you don't consume those medicines, or don't visit those doctors who prescribe them, you may not get insurance coverage. And insurance coverage is important since we all know how expensive medicine is. Why we need the medicine in the first place is because we are unhealthy; why we are 'unhealthy' is (a) because the 'tests' say so and (b) the food we eat is what the food lobby tells us is good for us. Since the whole 'system' is conspiring to keep us in this vicious loop, we need a lot of courage to start questioning the basics - and even more courage to follow in our own lives the inevitable conclusions that will follow.

And we continue to eat breakfast cereal from a packet, drink colas, ignore the simple laws of diet and good food, gorge on junk food, sacrifice our lives for our jobs, go to the doctors for regular medical check-ups, consume the inevitable statins that follow, and feel generally miserable; in order to take us out of the vague feeling of malaise, we turn back to the comforting arms of junk foods and medicines...  Come to think of it, it would be quite funny, if it were not so tragic...

dinesh

(Dr. B M Hegde's article attached)

Reminiscent of Medici and charlatans of medieval times, sickness merchants today actually go out hunting for patients through 'free' checkup camps. As a result, doctors are made to believe that a healthy person is one who has not yet been thoroughly examined!

The title is from the German book "The Disease Inventors" by Jörg Blech, original in German, translated by my friend, Herbert Nehrlich, a family physician in Hobart, Tasmania, Australia, especially for my use. The contents of this chapter are drawn heavily from that translation. Like the "free" check up camps in India there were traveling healers roaming the countryside in Germany. They also do not ask for any payment like their Indian counter parts. They used to come in their vehicles stopping in public squares or church yards. They lure people into their vans and examine them thoroughly only to release many of them as patients! "The gleaming bone-white Osteoporosis Research Mobile went on its maiden voyage in the summer of 2002, from Hamburg to Erfurt, through much of Germany. Women over 60 were urged to have a thorough preventive check-up done, with bone density measurement included. With this method, the aim is to find and identify those female citizens who suffer from age-related deterioration of the bone structure: the so-called Osteoporosis. This search for sick women is not entirely devoid of self-interest. It is sponsored by a foundation and by 14  pharmaceutical companies and makers of medical equipment and products.

"Men were not spared, either. Workers from Pfizer criss-crossed the country, visiting about 30 cities in their blue-white truck. "The Healthy Man" is displayed on the truck in large letters. The truck's platform can be extended so that the space on the ground floor is tripled in size. Inside are five examination cubicles as well as an "information bar". There, the assessment of visitors and passers-by is done inside of 10 minutes. Medically trained personnel measure cholesterol, blood sugar, blood pressure and weight. "If the man doesn't come in for his check-up then the check-up must visit the man", so says Pfizer. In the vicinity of a large golf tournament, for example, 6297 normal men were processed through the diagnostic vehicle. And, see the result: half of the men showed increased blood pressure and in 44 % the blood tests were outside of normal limits."

"The Osteoporosis Mobile and the Pfizer Truck seem like messengers for a medical profession that wants to permeate all of society. Reminiscent of Medici and charlatans of medieval times, sickness merchants today actually go out hunting for patients. The fact that they apparently find sick people everywhere affirms the nature of the situation. While it is true that Germans today are quite alert and long-lived, as never before in their history they do not fit into the norms of modern medicine. The medical risk factors have been deliberately set so that everyone can potentially be sick." And it works like this:

A laboratory test is performed on a large number of healthy people, for example on blood donors, military recruits or sport students. The next step is the calculation of the average of all the measured results. The 95 % in the middle are then arbitrarily declared  Normal Value  and the 5 %  outside of this –up or down-  are declared  "conspicuous ", even though  all subjects were healthy people. It follows that one can label all of mankind as ill: If always 5 % of a population shows an abnormal lab value then every subsequent testing raises the number of "suspects". After 20 measurements only 36 % of the subjects will be regarded as healthy. And, after 100 procedures this number shrinks to less than 1 %. Doctors deduced from this a malicious result: A healthy person is one who has not yet been thoroughly examined!

Some risk factors, however, were set from the outset in such a way that not 5 % but large segments of the population are instantly affected. Take cholesterol, where several years ago in Germany the margins were determined so that people with 'normal' values were in the minority and those with abnormal values were in the majority. How can this be?  A large study of 100,000 Bavarians resulted in an average cholesterol value of 260 mg/dl. The "National Cholesterol Initiative", a private interest group of 13 medical professors, nevertheless recommended in 1990 an upper limit of 200 and was able to have this accepted. The doctors of this "Cholesterol Initiative" represent lobbying groups, among them the industry-friendly "German League against Blood Pressure" as well as the "Lipid League" and the "German Society for Lab Medicine". In a "strategic paper" they demanded an aggressive expansion of the diagnosis. "Every doctor ought to know the cholesterol values of his patients".

Through the dedication of financially interested medics, the majority of the German population has been declared risk patients. In the 30 – 39 year age group, according to the arbitrary upper limit, 68 % of men and 56 % of women displayed abnormally high cholesterol. In the 50 – 59 year age group this rises to 84 % for the men and 93 % for the women. The absurd consequences of such margin limits: The patients alleged to be at risk feel healthy and fit.  The Viennese satirist Karl Kraus is right: "The DIAGNOSIS is one of the most common diseases".   Pre-occupation with cholesterol values is widespread,   promoted and encouraged vigorously by certain doctors and institutions because of the immense profits that can be earned.

One example, the National Association of Practicing Cardiologists, together with margarine manufacturer BECEL and pharmaceutical company PFIZER, as well as ROCHE DIAGNOSTICS regularly undertake "Health Initiatives" which are designed to persuade many people to have their cholesterol tested. In a brochure, available to anyone visiting a pharmacy, it states: "Starting at age 30, everyone ought to know his cholesterol level and have it re-tested every 2 years." The motto is: An increased cholesterol level is one of the most important risk factors for heart and circulatory diseases. The "New Pharmacy Journal" designates cholesterol as the "TIME BOMB" for your health. Yet, this wax-like substance is an essential part of life; it is needed in large amounts by the brain, which consists of 10 – 20% cholesterol (dry substance). Most cells of the organism can manufacture cholesterol if it is lacking in the food, which is fortunate as without this devilish molecule the cells would be doomed. However, many people become fearful of facing an early fatal heart attack at the mere mention of the word cholesterol. It spoils the breakfast egg for many and causes concern at the thought of buttering their bread rolls and having a piece of sausage. Driven by a guilty conscience, over one million people have had their cholesterol tested in 2001 as part of a "Health Initiative". Not unexpectedly, over half of the ones tested showed values above the arbitrarily set figure of 200. The participating doctors and companies of this "Health Initiative" reap direct profits: ROCHE DIAGNOSTICS manufactures instruments for cholesterol testing. Cardiologists get new patients who are immediately told to stop eating butter – which in turn helps BECEL, the margarine manufacturer.

PFIZER then sells cholesterol-lowering medicines – its world-wide sales are in the billions of Eurodollars. It is rare that a medical campaign which puts the label "PATIENT" on the vast majority of the population has been carried out with such force and marketing investment expenditure. A committee of the American Heart Association demands that regular cholesterol testing of 5-year old children be carried out. As soon as the child starts on solid food, doctors urge the parents to give their offspring only cholesterol-poor foods. Blood pressure would need to be checked from the 3rd birthday on. Actually, such early tests permit no conclusions as to future health of the tested children. "The screening of children, including of those  25 % whose families have been  identified as  having a high incidence of raised cholesterol levels and early heart disease, is a waste of money which probably does more harm than good", says Thomas B. Newman, epidemiologist at the University of California, San Francisco.

If these recommendations were to be taken seriously, breast milk could not be given to babies, as it is a veritable cholesterol bomb. The reality however shows that breast-fed babies do rather well in their development, which isn't a miracle - the bounty of cholesterol from the mother's milk is used for construction of nerve cells and the brain. The general impression that the public campaign clearly gives is that the cholesterol theory is an established fact. This is incorrect. Many physicians are very doubtful about cholesterol's alleged bad-guy role in the drama Heart Attack.  As early as in 1990, when the dubious upper limit of 200 was announced in Germany, cardiologist Herald Klepzig of the German Heart Foundation in Frankfurt distanced himself from this. Surrounded by cholesterol hysteria he said: "We would be happy if we could point to a single medical controlled study that shows that lives are saved through reduction of cholesterol. However, it is not difficult to find ten studies that show that a reduction of fat actually is correlated with increased mortality."

And Paul Rosch, president of the AMERICAN INSTITUTE OF STRESS and medical professor at New York Medical College comments: "The brain-washing of the public has been so successful that many people believe 'the lower the cholesterol values the longer the life span' , nothing could be further from the truth!" Indeed, the label of the 'evil cholesterol' is not supported by proof, only by circumstantial evidence – and of those, many are unable to stand up to scrutiny. In 1953 the researcher Ancel Keys of the University of Minnesota published an article which eventually became the foundation myth of the cholesterol theory. In his paper he shows a diagram that suggests a clear relationship between fat consumption and mortality from coronary heart disease in six countries. "The curve shows that there is hardly any doubt that there is a correlation between fat content of the food intake and the risk to die of coronary heart disease." (Comments from LANCET).

Impressive though the curve is, it has a flaw: Keys considered data from six countries only, even though data from 22 regions were available. And, when these are examined the correlation between high fat consumption and heart death disappears. Says Swedish physician Uffe Ravnskov "Had Keys included all countries nothing would have come of the curve"."   For example, mortality from heart disease was three times higher in the U.S. A than in Norway, although fat consumption in both countries was roughly identical." Critics like Ravnskov do not deny that there is a correlation between blood fats and coronary heart disease. Considering that 0.2 % of a population suffers from familial hypercholesterolaemia. People with this inherited illness do not have sufficient numbers of cholesterol receptors. Thus the cholesterol can barely be transported out of the blood into the cells. The result: Raised blood cholesterol. Levels are between 350 – 1000 mg/dl. The affected people have an increased risk of dying earlier than others, from heart infarct because they often suffer from a severe form of arteriosclerosis. Post mortems on people who had familial hypercholesterolaemia have shown that the cholesterol does not only get deposited in the blood vessels but everywhere in the body. "Many organs are practically impregnated with cholesterol", says Ravnskov. Therefore, it is a mistake to extrapolate this relationship between cholesterol and arteriosclerosis to people with normal cholesterol levels.

When the physician urges "risk patients" to switch to low cholesterol foods the consequences for old people can be potentially dangerous. The nutrition of old people is "already compromised through dentures, constipation, lack of appetite and food intolerance to many foods', says U.S physician Bernard Lown, a well-known heart specialist who, as a member of "International Physicians For The Prevention Of Nuclear War" received the 1985 Nobel Peace Prize. He was my Chief at Harvard. As a doctor, Lown witnessed how a very old female patient lost weight rapidly and became emaciated because of her attempts to lower her cholesterol levels. Lown stopped the dangerous nonsense. "I recommended that she ignore all doctor's advice eat whatever she fancied. Within six months she regained her lost weight as well as her vitality and spirit." The devilish cholesterol –we need it from cradle to grave.

This in short is the essence of the whole book. There is another chapter on how blood pressure became a disease but I could not get it translated. That shows how the disease high blood pressure was born out of the necessity to sell more drugs on long term basis to net billions of dollars of profit! Since this book is difficult to get for the common reader, I thought I better give the gist in the form of a chapter in this book. I am grateful to my friend, Herbert, for translating it to me so willingly. Herbert is a great humanist and an excellent doctor and a great writer. His ancestors came originally from Germany.

Further Reading:
* Jorg Blech. Disease Inventors.  German 1999

So you think smoking is bad for health?

Smoking has become very socially unacceptable nowadays. We are slowly going the way of the west, and it is difficult to light up in any gathering without getting withering glances from the others, if not face outright hostility. Media is full of messages against smoking. Any health article starts with the injunction to avoid smoking.

 

Looks like people are all committed to good health, right? A commitment to healthy habits and a healthy lifestyle? If you are one of those self-righteous ones who does not smoke, you also have a smug superior attitude which you wear on your sleeve, on how you are more responsible in taking care of your health.  Anyone I ask is positive that they are concerned about their health and are taking care of it well. Are you though? Whether you are a smoker or a non-smoker, you are very likely slave to a host of habits and lifestyle issues that are worse for your health than smoking.  I am listing a few of them here.

 

The first is excess of sugar in your diet. The human body is not capable of processing the amount of sugar we dump into it every day. The sugar we consume as part of our tea and coffee directly is bad enough, but if it were only that, the body would still manage. The amount of sugar we consume through soft drinks, breakfast cereals, ready-to-eat foods, and any kind of food that we buy off the shelves is humongous.

 (watch how much sugar in a can of coke:   https://www.youtube.com/watch?v=yKZ2ZqBYlrI ; how much sugar in your breakfast cereal:  https://www.youtube.com/watch?v=SBhZvVcKvSo )

 

Do you put that much sugar in the food you cook at home? You don't, right? If you think the "sugar substitutes" like aspartame are the solution, think again. The body cannot be fooled that easily – they are chemicals, and they have long term damaging effects on your health and wellbeing.

 

The second is table salt. Yes, ordinary salt of the variety all of us eat. The stuff that you buy as "refined, purified, salt" is nothing but a chemical powder NaCl. Natural salt has been a part of human diet for millennia, in fact it is essential to health. Natural salt has about 80-odd minerals and trace elements that make it a complete food easily assimilated by the body. That has been replaced with processed salt, which we have been convinced is good for us, since it is "processed" with "added iodine".  Guess what, the amount of salt in processed food is perhaps more than even the amount of sugar, which is what makes it bad, as anything excessive is bad. What makes it worse is that the processed foods of course use the "refined" variety of salt. Thus a perfectly natural part of human diet has been demonized. Salt is not bad for health, in normal quantities, what we normally use for our home cooking. Use unrefined natural sea salt (yes, that unglamorous stuff which our parents used to buy) and powder it at home. And put up with the fact that it absorbs moisture and becomes lumpy – that is because there are no chemicals in it to prevent that.

 

That of course brings us to processed food in general. What oil do you use at home? Refined, of course. And what does refined oil mean? To start with, at the extraction stage itself, a lot of heat and chemicals are applied to increase the yield of the press (which is why cold-pressed is much more expensive). A bunch of chemicals is then introduced including detergents to remove the "odors". As with all processed foods, a lot of the processing is done in order to improve the shelf life, transportability, and appearance. Your health, and the fact that you are going to eat this stuff, is of no concern.

 

Processed food has several chemicals added to it, in fact there is a list of several hundred for use by the food industry.

 

I can hear you say "But, they are FDA approved!".  Give me a break. The FDA knows nothing when it comes to health. They are here to serve industry, and not our health.  "But, they are within the safe limits for consumption". Is there any safe limit when it comes to arsenic, or radiation? Or for that matter, any other toxin? The body can handle bad stuff thrown at it, up to a point. But the rate at which we are throwing bad stuff into our bodies nowadays, it's a wonder we are still alive.

 

So you think smoking is bad for health? I don't deny that, but you consume stuff worse than that every minute of the day, which you think are healthy, but are as much or more damaging to your health. Food for thought - ruminate on that!

( this series of articles will be continued – I welcome your reactions – please post in my blog or write  to dinesh.gopalan@gmail.com )

On Jayalalitha's arrest

It is interesting to note the reactions to Jayalalitha's arrest. The usual protests by AIADMK supporters, and the discussion of the law and order problem is of course present; but they are anyway to be expected.

 

Whenever a big political figure is threatened with arrest or conviction, there is always the threat that their lawless supporters will cause a total breakdown of normal life. No one managed to do anything to Bal Thackeray in his lifetime, and whenever a figure like Jaya is involved there is always discussion of what their "cadres" might end up doing. This is a threat that is held out whenever these people are involved, and the political figures themselves encourage their supporters in this. At some level they behave as if they are above the law and not accountable to anyone; and messing around with them will interrupt normal life for everyone. This shows contempt for the law and it is a not too subtle attempt at blackmail.

 

It is felt that AIADMK may have to become "closer" to the ruling BJP dispensation at the centre, to mitigate or reverse some of the fallout. Politics is all about this, of course. There are several cases pending in various courts, and several possible cases lying under cover in various forums, and several instances of corruption with proof that can be brought to light. These are not used by the politicians and the powers that be to cleanse corruption from the system, but rather to blackmail each other, thus maintaining a delicate balance of blackmail and counter blackmail. One wonders where Jaya went wrong in this game. If she were savvy enough, the chargesheet would have been full of holes, and the prosecution lawyers incompetent, the witnesses would be contradicting themselves and turning hostile, some of them could have even made an early trip to meet their maker, and the case would have been riddled with holes worse than a swiss cheese in such way that no judge could have handed out any conviction. However, in all this weakening of the case, there would be enough solid evidence still available with someone to nail the person in future, the proverbial sword of Damocles which always hangs by a thread but is not supposed to snap. Of course, this is just a special court. There are several layers of appeals possible – all these could still happen if Jaya plays her game well.

 

If it is a way of cutting its potential threats down to size, then it is a masterstroke from the BJP.  It is rumored that the Saradha case is being used to keep Mamata in check. There are cases pending against Mulayam and Maya which could turn nasty; no doubt their emissaries would be reaching out to the centre to fix things before they turn nasty. All kinds  of electoral and political considerations will come into play in deciding on the quid pro quo.

 

 It is also true, say commentators, that DMK will get a shot in the arm with this verdict. Not because they are honest. No, everyone knows no one is. It helps them to prove to the TN public that the other person is equally bad; after Kanimozhi and Raja they badly needed this. 

 

They are discussing which puppet Jaya will seat on the throne while she is away, and already talking about how she will rule her empire from jail. When Ram went to exile, Bharat ruled in his place keeping Ram's slippers on the throne, refusing to sit on the throne himself. Ram went for noble reasons, and he didn't interfere in the kingdom from his vanvas,  but that is hardly the point. We have our own traditions to guide us; when the leader is in exile, or jailed, his / her puppet will rule. The last time around, Panneerselvan apparently refused to sit on the CM's chair when he was playing the role; I am not even sure if Rabri Devi stepped out of her kitchen to tend to her state. Akhilesh is slightly better – he is a younger puppet with a better accent.

 

In all this, the point to really note, is that no one is lamenting the fact that she is corrupt. No one is talking about cleaning up the system. There is no mention of sweeping the stables clean and starting afresh. There is no figure with a high moral standing who is an alternative to any of these people. Everyone is talking about how she is now in trouble because she got convicted, meaning of course, she was stupid enough to leave enough evidence lying around. No one is talking about how shocked they are that their leader let them down, no one seems to have been disillusioned that their leader is proven to be corrupt.

 

We know all that. There is nothing this case tells us that we don't know. Disproportionate assets? Of course. We would be extremely disappointed with our leader if she were still poor. We only look up to people with wealth and power. Either we worship them after they become wealthy, doesn't matter how, like Jaya, or we make them wealthy because we worship them, like Lord Balaji. That is the moral compass of this nation. We should be proud.

Real Estate Investment Trusts

After delaying for several years, SEBI has just approved the draft regulations for Real Estate Investment Trusts (REITs). There has been some hype of expectancy around this product and the market has been eagerly awaiting it. So have the HNI's (High Net Worth Individuals).  Such products appeal to the HNI's since they seem to be an avenue to invest in high-yielding real estate without actually getting their hands dirty by going and actually purchasing some real estate. And HNI's, especially of the salaried variety, don't want to get their hands dirty. They want to get high returns while ensconced in their offices, trusting the money managers who, they are assured, are there just for that purpose – to ensure that they get good returns while being inured from all the hardships such investments entail. And therein lies the rub. We think that since it is a structure that works fine in the developed western economies it will work fine here too.

 

But first the structure. SEBI has mandated that all these funds should be closed-ended, with an initial asset size for each fund of at least Rs.500 crores. Each unit in the initial issue will be at a minimum of Rs. 2 lakhs; follow-on issues at a unit size of minimum one lakh, thus ensuring that only the wealthy invest in it. In other words, it is risky, so don't blame us if it turns sour – you wealthy can afford to lose money! There are no great entry barriers for becoming a sponsor, and the sponsor can of course appoint his own "manager" who manages the fund. The trustees, needless to say, will be appointed by the sponsors, thus ensuring that there is no real "independence". But so far, it is no different from any Mutual Fund. These funds have to be compulsorily listed, but mere listing does not ensure liquidity as we all know. The manager has to invest at least 80 percent in completed and revenue generating properties. The balance can be invested in under-construction properties, or mortgage backed securities, or debt or equity of real estate companies. This whole bucket of the balance of upto 20 percent looks scary. This money will basically be invested directly with the builders and we know how honest and transparent they are reputed to be in India.

 

I see several problems with this structure.

 

1.       How independent are the managers, trustees and sponsors going to be? Who will be setting up these funds, and who are the entities that will control them?

 

2.       When you invest in real estate directly, even if in an under-construction property, you have more skin in the game. What kind of oversight and control over the builder will be exercised by the money managers? They are more into managing money; are they going to manage all the problems that come with being a landlord? They will leave it to the builders to manage, and send them periodic reports, preferably already in ppt form, so that they can present it to their bosses and investors.

 

3.       The primary problem in my view, is that this is a highly unregulated, opaque, non-transparent, not very honest, black-money prone, unstructured industry in India.  Things, especially with regard to valuations and cash flows, are never as they seem to be. There is a great incentive for the money manager to cut side-deals with the builder. And the investors will never know.

 

4.       SEBI has not mandated that any building regulations should be followed or checked for the investment properties. There is nothing in the guidelines pertaining to real estate; SEBI is treating this like any other mutual fund. The money managers who enter this game may not be experienced in the real estate industry, and the builders, as we know, are very experienced. The managers will be like new fish entering into a pool full of sharks.

 

5.       Valuation for NAV calculations will be an issue. In equity mutual funds there is a ready liquid market with daily quotes. Here the fund will appoint "experts" to determine the value. Since the assets are illiquid, and the valuations depend on assumptions, they can be manipulated to show a steady increase in NAV. Or a sudden drop as a prelude to some insider purchases. Or very aggressive valuations not providing for long-term repairs and renewal. The potential to play around with the numbers is enormous, and we as investors, are going to be investing at these NAVs.

 

6.       The upto 20 percent that can be invested in "under construction" projects is actually another conduit to lend money to the real estate industry.  Anyone who knows the Indian real estate industry will be worried.

 

7.       Exits from investments, both for the funds for their investments in projects, as well as for investors, is not going to be without cost. There will be a heavy illiquidity premium built into the price.

 

So where does that leave us? To invest or not to invest? Those of you who are not "HNI's" don't have to bother, this product is not for you, even as per SEBI's definitions.  Those of  you who are HNI's, remember all those PMS schemes you put your money into? The odds are you didn't make too much on it – as to the problems with PMS, I shall reserve that for some other time. You are going to trust your money to someone who may not know much about real estate, to invest it with builders who are not known for their honesty and fair dealings, in a market that is illiquid and full of "cash" transactions, in expectation of a higher return.

 

I would advise caution. At the very least, invest only if the sponsor is HDFC or something.