Articles

Long-term Decline in Crude Oil Demand and Competing U.S. and Russian Interests

Global Indian Times, January 11, 2025

Saudi Arabia is eager to boost supply and slash oil prices to punish Russia for exceeding its production quota. But the Saudis will likely manage supplies to keep prices around $70 to appease the U.S. administration.  

Book Review:

The Snowball: Warren Buffett and the Business of Life

by Alice Schroeder

Knowledge@Wharton, July 15, 2009*

Excerpts: Buffett’s most important act is donating his wealth, mostly to the Gates Foundation, and that too to be spent in twenty years, mainly on health care and education. As Buffett states, “… the idea of passing wealth from generation to generation so that hundreds of your descendants can command the resources of other people simply because they came from the right womb flies in the face of a meritocratic society.”

Also, unlike most other philanthropists, Buffett has not set up a foundation nor paid for buildings at hospitals or museums to try to perpetuate his name.

As an investor, Buffett is fearful when others are greedy, holding onto the cash generated by Berkshire’s businesses. Then, during severe stock market or industry declines, he is greedy when others are fearful, buying good businesses at very attractive prices.

Buffett’s three rules of portfolio management are: 1) don’t lose money; 2) don’t forget rule one and 3) don’t go into debt. His focus, an intellect which is a perpetual learning machine, rationality, confidence and an ambition from childhood to become rich, are identified by Schroeder and others as the personal traits that drove his success. Then, he attracts talented people to work, partner and deal with him due to his honesty, fairness, letting them do their job without interference and crediting them for any success. 

The world of music is ever growing and evolving, and we’re not just talking about sound trends. With the consistent introduction of varying revenue streams and distribution channels, the opportunity for profit grows, but so does the complexity. We take pride in clearly explaining and navigating the often foggy landscape of entertainment law and its relationship to music industry professionals of all types. We help our clients draft and negotiate contracts relating to recording, publishing, licensing and distribution, sponsorship and merchandising.

(By Ignatius Chithelen. Knowledge@Wharton does not list name of authors.)

How New Vendors Hurt P&G, L'Oreal, Hershey’s While Benefitting Walmart

February 18, 2025

Unlike previous generic store brand vendors, several new ventures use advanced automation, low-cost operations, social media marketing, and direct distribution to Walmart, Costco, Target, and other major retailers. The new vendors aim to take market share from high margin, high volume branded consumer goods sold by Procter & Gamble, Hershey's, L’Oreal, Estee Lauder and other legacy branded vendors.

The new vendors include Zuru, founded by the Mowbray brothers from New Zealand as a toy manufacturer in China. It has sold over $1 billion of diapers, sells hair care and eight other consumer goods, and is working on several more. Similarly, Feastables is a new chocolate brand sold by Walmart, Target, 7-Eleven, and other stores.

Some insights into the strategy and operations of Zuru is seen in this interview with co-founder Nick Mowbray; and on Feastables in this interview with founder Jimmy Donaldson aka Mr Beast. As Mowbray points out, since 2021, in part due to the impact of the disruptor brands, the stocks of Procter & Gamble, Unilever, L'Oreal, Estee Lauder, and Hershey’s have fallen while Walmart's stock has risen – as this chart shows. Avoid investing in stocks of most brand name food and consumer companies - they will likely get far cheaper and some may cut their dividends.

Also, it may be early to invest in alcohol companies. Currently, there is a lot of excess inventory. Though, as you may have read, Warren Buffett's Berkshire Hathaway recently invested $1.2 billion in Constellation Brands (STZ) which owns Modelo beer, Mondavi wines and other beer and wine brands. In the near future, as stocks of brand name food, alcohol and other consumer companies get very cheap, there will likely be mergers and buy-outs.

U.S. Job Layoffs And Temporary Professional Work Visas

Global Indian Times, February 2, 2024

U.S. tech companies manage labor costs mainly through Indian engineers on temporary work visas

Crude Oil Prices: Heading to New Highs 

Economic & Political Weekly, March 26, 2005 

Summary: Rising consumption in the US, China and countries like India is expected to push up worldwide demand for crude oil in the years to come. But the long-term supply situation looks not too promising as chances of finding massive low cost reserves appear slim.

Central Banks and Speculative Froth

Economic & Political Weekly, November, 24.2007

Summary: It has been the pattern over the past two decades, after every major bust, for the US Federal Reserve and other central banks to cut interest rates and liquefy credit markets. Such decisions have softened the blows to the global economy but they have also created speculative bubbles. Financial institutions and speculators have thus learnt to put pressure on central banks to bail them out, most recently from the housing bust in the US. But at some point the rescue measures will not work and the result will be major global economic and geo-political problems.

Entrepreneurs in India and Abroad

By Ignatius Chithelen and Shankar Parameshwaran*

From The Oxford Companion to Economics in India, Oxford University Press. 2011;2007

This essay seeks to answer why Indian professionals succeed as entrepreneurs in the US but are far less successful in India.

Why an Expected Decline in Crude Oil Prices May Not Benefit India

Global Indian Times, January 5, 2025

Lower crude oil prices will reduce demand for Indian labor in the Middle East countries and worsen India's foreign debt

The Future of the Indian Rupee Is Tied to Oil Imports

Knowledge@Wharton, 2013

The weakness or strength of the Indian rupee in the long run will continue to be largely determined by the level and costs of the country’s crude oil imports.

How Sugar Co-operatives in Maharashtra, India, Set Cane Prices Paid to Farmers

Economic & Political Weekly, December 24, 1983

Summary: Peasants, engaged in sugarcane cultivation for about half a century, had by the 1950s established a powerful position for themselves in the socio-political and economic life of Maharashtra. This power, which they continue to wield, has its chief economic base in sugar, both cultivation of sugarcane and its processing. This paper seeks to understand the main mechanism – payment of sugarcane prices – through which the peasants use the industrial extension of their agrarian operations to further their accumulation of capital.

Origins of Co-operative Sugar Industry in Maharashtra

Economic & Political Weekly April 6, 1985

This paper seeks to understand the origins of the co-operative sugar industry in the Ahmednagar district of Maharashtra, India’s largest sugar producing state. The conditions leading to the emergence of rich peasants in the region in the early 1900s and their relevant characteristics are discussed in Section I. The spread of canal irrigation, coupled with financial support from a co-operative credit infrastructure, enabled the rich peasants to cultivate sugarcane, extensively as well as intensively, as seen in Sections II and III. A series of defensive responses by the rich peasants, during the Great Depression of the 1930s, created the conditions for the shift in the 1950’s to co-operative manufacture and marketing of sugar. These conditions and the setting up of the first sugar co-operative are discussed in Section V. 

PASSAGE FROM INDIA TO AMERICA: Billionaire Engineers, Extremist Politics and Advantage to Canada and China

In this book, Ignatius Chithelen tackles several key questions about Indians and India: How does India, despite its acute poverty, produce World class engineers, doctors and scientists? Why are they so successful in America? Will India's economy soon grow as big as that of China? What are the risks of Islamic radicalism spreading among India's 180 million Muslims, due to the lynching of Muslims under Prime Minister Narendra Modi?