Two Democracies Never Have A War?

The notorious North Korea and prosperous South Korea have come close to a war once again. This time, it is said that this attack is the strongest after their 1953 war..

Who is the culprit? That would be too broad a question to ask. In other words, who attacked first this time? If you are regular reader on geopolitical issues, it wouldn't take you much time to point out North Korea. Not because of notoriety, but it is the non democratic country between the two. If you observe of all world conflicts in the present as well as the past, one out of the two countries involved is a non-democratic country, owned by a ruler, monarch or a fascist. It is always this side that has got something to do with creating trouble.

To mention a few recent examples, Saddam Hussein when ruling Iraq created trouble for the entire region. Mahmoud Ahmedijenad is out there to create trouble for Saudi Arabia, Israel and US. Pervez Musharraf, in his time, created unnecessary tensions for India. In case of India china 1962 war, China was the authoritarian state.

So, it's time for North Korea to create trouble. It is an open fact their only motivation to live is for North Korean military and beating South Korea, as they got no other option.

Image from New York Times

The map above shows the island in red which was attacked (it is disputed), whereas the island with black plane, Inchon was the one where people fled.

"Never At War: Why Democracies Will Not Fight One Another" is an interesting book written by Spencer Weart explains marvelously why two liberal democracies never have war. Sure, there are exceptions as always. But then, th argument that one of the two countries is not indeed a democracy. That is specifically true in case of India Pakistan wars, where Pakistan did have a democratically elected person on power, but it was flawed. To be more clear on this, the way Democracy Index is calculated by Economist Intelligence Unit, there are many a 'hybrid regimes' where a namesake democracy exists but rule of law does not necessarily rule. Examples would be Russia, Pakistan, Turkey, Lebanon and Palestine where a democracy is on the cover, but ruler is different. The book gives excellent examples on wars fought in history, medieval era and modern era along with the voting rights of the people in these countries.

To get an alternative view, try reading the book, 'Democracies at War' which goes further one step and analyzes why democracies win 80% of the wars fought by them!

You might be interested in going for a Google search of why 'no two democracies ever had a war', I found the first page of ten results itself very interesting.

More interesting facts regarding this topic would be written in coming posts. So, keep visiting!  

Obama, You Could Have Done This on India Visit

The President, the Uncle Sam, on his recent India visit could have done something better than what blunder he has already committed.

Sure, the President of the world's superpower has provided excellent lip service and satiated the emotional Americans, he has talked everything good but when it comes to delivering, he has miserably failed.

Unemployment grew by 4 million after Obama took the office at White House, and the deals that he has signed in India would get him an estimated 54,000 jobs in US. Yes, let the problems increase and then solve it to prove your greatness, let us hope Obama doesn't fall in any trick like this, which is the diplomacy of worst kind and not workable in today's world where dissemination of information is faster than before.

Image from Hourly Updated World News

To read a little bit on India - US relations, an excellent article can be found at Asia Times.

US invested a lot in India in the last 50 years, that includes funds for setting up IITs and IIMs, where the cream of India studied on Indian Govt.'s subsidy and later on worked in US! It's a two way relationship for sure, when it comes to trade. But, this time, in US - India trade, India clearly seems rising and Obama wants more share of that, especially in defense deals. For that, Obama spent the longest visit in a foreign country since coming to Office, 4 days, in India, where expenses were $200 million per day!! All this, for giving lip service to India, and it is not perceived as something nice in India.

An important thing to note is the role reversal that India and US have had as compared to a few decades back. Then, in '60s, US was championing investments abroad and India was protective. Now, US is protective, does not want jobs to go out due to outsourcing and wants investments from abroad. Of course, US also wants to invests in India, as he appealed India to open up their multi-brand retail market to foreign players, defense deals, etc. For that, there is no need to spend more than $1 billion and travel to the country.

He could get all the business and trade deals by paying the Indian babus, i. e. the bureaucracy in India, or the top government servants!

After all, what's CIA for? But, Obama does not possess the intellect or the common sense. By indulging into sycophancy, Indians look down on him, and not look up.

It is dangerous to see an emotional person taking the White House where a rational, intellectual and a smart one should have been. It is important for the entire world, and also for India, that US remains in control of the world. Imagine, China going at the helm of world powers, that would be a disaster for sure as there isn't a single occasion where China has ever done anything benign.

And as for the UN Security Council seat for India, why doesn't he give it to India for once? The UNO is a dead organization but it will satisfy the ego of the young country India! After all, India is, for sure a benign and a democratic nation and wouldn't cause any harm to world politics after inclusion. Practically, it's going to make no difference but help earn a goodwill among India's youth and business deals, trade deals would all take place easily. But, Obama goofed up there as well and ensured some diplomatic ambiguous statements which did not clearly say India getting a seat among the veto powers of UN. That makes more Indians to listen and forget what he says!

Starting a Free Blog or Website?

Are you starting your own free blog (Wordpress, Blogger, etc.) or a website domain? There are certain things for you I wish to share.

I have always wondered what a job of a SEO is. I still wonder what it is. I have now understood it's an interesting task, tedious and takes a bit of your time. Sure, there are many SEO websites out there and many a books as well.

A recommended one is SEO Made Simple: Strategies For Dominating The World's Largest Search Engine

You can go on for reading a book, eBook, it is all your choice. But, as with this blog, Whatever Strikes!, I can share some of my experiences.

First, you need a smooth, fast and reliable internet connection which is not really a problem at most urban centers. And then, there are just so many things!

A few of the tools are provided by Google itself, which are free for use for Blogger users (free blog owners as well as domain owners). You just got to go Google Webmaster Central or Google Webmaster Tools, as I find they are called by both names. Other website owners options like Analytics (for advanced statistics), Adsense (for revenue generation) are merged with it. To be publicly searchable, your blog/site has to be indexed in at least one search engine, preferably Google. Google Webmaster Tools does the work for you! I do not need to ascertain how important this step really is. Also, you can target your traffic to a particular country through the settings at Google Webmaster, do you wish.




The next step is to open a FeedBurner account. Thankfully, it is now acquired by Google. The options like email subscription (found towards the top right of this page), bookmarking (towards the bottom of this post) along iwth many other interesting and useful ones are provided for free.

For bookmarking, AddToAny.com would be a one-stop-shop that would provide all the solutions.

Now, comes the important part of traffic and traffic ranking. Alexa is still the most famous name in this regards, but it has the hassle of 'Claiming Your Site'. Go on Alexa.com and claim it for yourself. Other ones like Quantcast and StatBrain do it all automatically.

If you are writing on a particular topic, say photography, finance, economy, politics, etc., it is all the more easy for you to list your site under a category in a directory. Sadly, that is one problem with my site as I write anything that strikes! The first directory to claim is DMOZ, the world's largest human edited project, but claiming your site on Google Webmaster claims for DMOZ automatically. Eaton Web, Globe of Blogs are other ways to go for publicizing your blog and do not forget the big daddy of all, Technorati!

My Technorati code (as they call is claim token) came out to be G2TAKXDFPJFY. Why am I entering this? Well, I am supposed to enter it as part of verification which I thought of doing along with this post. There are others like Popdex and Blogdex, do not underestimate them.

Finally, use tools like StatCounter and Clustrmaps if you please. After having a big number of visitors, that makes a good impression. Clustrmaps shows how geographically spread your visitors and can have an appeal for visitors across the globe. Not worth missing for sure.

And the last thing to do, go on something like MyWebsiteRanking.com and check some details regarding your own site. Initially, you should be ready to take some emotional beatings as you might even start from a PageRank of -2 and other demotivating facts. Well, there is always a beginning for everything.

And indeed, you own a blog or a site, or open up one in future, do link me or check in here often!

What is Economics?

A wonderful question indeed!

What is economics? I do not think there is one definition. People from different professions with different viewpoints would have their own definition on this, each not being wrong. We will look at what our reputed sources say followed by own definitions.

Wikipedia gives the source of its definition at Online Etymology Dictionary. It defines it as

1530s, "household management," from L. oeconomia, from Gk. oikonomia "household management, thrift," from oikonomos "manager, steward," from oikos "house" (cognate with L. vicus "district," vicinus "near;" O.E. wic "dwelling, village;" see villa) + nomos "managing," from nemein "manage" (see numismatics). The sense of "wealth and resources of a country" (short for political economy) is from 1650s.

To put in simple words, the above definition means "managing a household". Another definition of economics albeit with a different usage reported at same source is

as a term in advertising, at first meant simply "cheaper" (1821), then "bigger and thus cheaper per unit or amount" (1950).

 Answers.com defines it as:

The social science that deals with the production, distribution, and consumption of goods and services and with the theory and management of economies or economic systems.

Another one that is worth noting from ingrimayne.com is:

One of the earliest and most famous definitions of economics was that of Thomas Carlyle, who in the early 19th century termed it the "dismal science."

At the turn of the century, Alfred Marshall's Principles of Economics was the most influential textbook in economics. Marshall defined economics as

a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing. Thus it is on one side a study of wealth; and on the other, and more important side, a part of the study of man.

I have had enough of them. Let me put forth my views!

Image Credit: ScienceAmigo.Com

As I opened my textbook on economics written by Harvard Economics Professor Gregory Mankiw, I found another one. Well, you may check Gregory Mankiw's blog on interesting economic reads and I highly recommend his book if you want in an easy to understand language. Economics is no doubt all about supply and demand. The definition given there was

Economics is the art of managing unlimited demand (human wants) with limited supply (resources).

Sure, that one did make sense and was an interesting one. Then our professor of economics, Prof. Azhar Khan, who teaches at Gokhale Institute of Political Economy, Symbiosis Institute of Business Management and Symbiosis Institute of International Business (all located in Pune) came with a definition of his own and was by far one of the best teachers I have ever had. It was

Economics is the sum effect of social structure, historical accidents and prevailing social attitudes.

In the first lecture, his elaboration was convincing. India's social structure of castiesm which ensured a few perennially rich and few perennially poor, separation of Pakistan which was a lucky historical accident, and the prevailing social attitudes where youth philosophy comes in the picture would all determine India's economy.

In my Std. IX, I remember Economics as a subject coupled together with Geography (Oh, see the effect, I still write subject names in capitals) in one textbook. It was in the syllabus of Maharashtra Board in India. It had a very simple definition that I found appealing.

Economics is the study of sources of income.

That's it! That's how economic problems and financial problems differ. If you are jobless, it is an economic problem as there is no source of income, if you have money in bank but cannot withdraw it out due to bank holidays, it is a financial problem. Sure, that was at school level but it help explained a lot. Sectors of the economy like services, agriculture, manufacturing, trade, etc were a part of economics whereas jargons on stock market, money markets, bonds, equity, derivatives, etc. were a part of finance. The lesser said on accountancy or book keeping, the better!

Three Interesting Questions On Finance!

Here is what I find something really interesting and weird in the world of finance. To start with, it is the relation between assets, debt and equity.

As you might be knowing, or if you are unaware better get to know this very basic equation,

Assets = Debt + Equity

Sure, it can be found replicated all over the internet and finance books start with this basic equation in their introductory chapters.

Please note this is applicable at the corporate level and not at your personal level. At a personal level, you do not have any equity. So, removing equity from the equation, it makes it

Assets = Debt

:P :P
If you can read it, that is the surest way to bankruptcy!! Buy your assets on debt! Jokes apart, the point that I am trying to drive home is that there is a large difference between corporate perspective and an individual's perspective. Sometimes, the things can be absolutely upside down as well.
At corporate level, debt increases financial leverage. At a personal level, having high debt absolutely reduces your leverage!

That is fine. But, as usual, my critical mind has a very trivial query.

Image Credit: themillionairesecret.net

Why is it that a company has to fund its assets by opting for debt or using money raised through equity? Both, debt as well as equity are not owned by the company! Can't the company use its own money for funding its assets???


I really cannot understand that! Why has the company got to use others' money for building/constructing/buying its assets? And there is one more from my side.



Earnings, Cash Surplus are a liability in balance sheet.


Ohh, the very basic fundamental of a business is to earn profits, right? Then, why is it that earnings or cash surplus is seen as a liability! For those not from a finance background, a balance sheet should have sum of assets equal to sum of liabilities. I honestly think that earnings, the very purpose of a company's creation, are a 'liability' just because some odd financial analyst found it an eureka moment discovering that the equation, sum of assets = sum of liabilities would always be solved by putting earnings in liability!

As I type this, my mind has got one more query.



Why is it that in a balance sheet, the sum of assets should always equal sum of liabilities?


Well, that is the rule of a balance sheet, you can get it confirmed by checking a balance sheet of any year of a company. Going by definition, an asset is what you 'own', whereas a liability is what you 'owe'. If I am an owner of a company, from my company's perspective, it is quite obvious that I want to 'own' more than what I 'owe'. That is why companies are built, to own more money and not equal it by owing to someone else!
So, why the hell do we equal it every time as if it is a mandate? It is time rules of the world changed and not follow blindly what some finance guru in the '60s found something to be an eureka moment!

On a serious note, please comment through the answers section if you know the answer for the questions that I have posed up in bold. Please, or else my critical mind won't be satisfied!

Does Investing in Real Estate Make Sense?

NO!

The question is answered. How? That's what the post is all about. Just spare 4 minutes of your life's time to read a counter view on why it does not make sense to invest in real estate.

I am sure, most of the people in the world have hypnotized you by now that investment in real estate is the best investment. Especially, if you are a visitor from the eastern countries, particularly India, I can understand your emotions for real estate. Put all your emotions aside, and let logic and rationality come into the fore of your mind when it comes to money matters.

First, just ask a question to yourself, are these fans of real estate investment financially literate? Probability is that 9 out of those 10 brains you know would not be aware about what goes in he capital markets, stock markets, etc. All their brains know is cash in, cash out without any concern for time value of money.

We have been brought out to think that real estate is an asset, not a liability. It is both, let us elaborate on the difference which is more important for you. For living, you and your family would not need more than a 2BHK (bedrooms, hall and kitchen) or a 3BHK flat. Sure, that is an asset, or rather a necessity as you do not have to worry about rents and any conditions laid out by your owner. But, if you possess any more property than your necessity of living, it is all a liability.

Image Credit: Examiner.com

How? The taxes to be paid, the interest to be paid in case if it is on loan amount, it's maintenance, etc. You never know what's going on the land you bought, is it safe or not? It does not ensure you cash-in-hand. Buying property and selling off is another tiresome process which would involve real estate agents or brokers, their fees, selling it would take some time depending on the demand supply equations, real estate agent's commission once again.. Rather than this, think if you can potentially surf the internet and make yourself more financially literate!

Now, how exactly is that a liability? Our assets and liability are measured by cash value, where these definitions have come from accountancy. If you are aware, economics>finance>accountancy. Robert Kiyosaki's book, 'Rich Dad Poor Dad' offers a practical and different world-view of assets and liability than the normal. It is based on the cash flow and not cash value. Out of the 3 major financial statements that a corporation gives out every year, viz., Income Statement (also called Profit and Loss Statement), Balance Sheet and Cash Flow, Cash Flow has it's own and highest importance for the financial community. And that is why, I think, measuring assets or liability based on cash flow  is more important than anything else.

If you own a house, which is not rented, or rather no one is ready to take it on rent, you are unable to maintain which depreciates value, and you are supposed to pay property tax, water bills, electricity bills howsoever small they may sound, it is not an asset from any viewpoint. It is a liability as there is no inward cash flow involved although cash value appears high.

Moe importantly, cash is the emperor whereas profit is the king is an oft repeated statement in the world of finance. You might think that it would be profitable to sell it in the long run (with all the costs), but it would still involve time and no cash-in-hand which is more important. Putting the same amount in banks savings account, time deposits, investment plans, could have potentially turned out better with lesser hassles as you could do all this with the help of a few clicks!

If you believe in the hypothesis that real estate/property rates never fall, think again. Property rates have seen a steady downfall in UK and US! Nothing is recession proof.

Most importantly, if you believe there would be a real estate boom at some time in the future, which I am sure there would be one, a smart move would be to buy stocks of cement companies, lock manufacturing companies, paint companies, furniture companies, real estate companies, retail sector, FMCG sector, as all of it is bound to rise as real estate goes up! It would take only a few clicks to do this and you would be helping the economy of your country as well. How? The very money that you would put in shares or other financial instruments would be used by these major companies to fund their operations. They would become stronger, grow and create more job opportunities in future. On the contrary, what would a dead investment in some lone land at a far off place contribute to the economy except that agent's commission and a minuscule tax for the government?

And finally, there are hoards of people looking for buying property when not needed who are financially not literate. Leave it for them, they would keep buying! I have always wondered why those of my friends and acquaintances investing in shares have had a blind eye towards real estate... A few reasons were listed, a few would be written later in coming blog posts, so stay subscribed or keep visiting!