Frappucino Recession

I saw this interesting article in the Sunday Times, October 26, 2008. Reproduced below.

From The Sunday Times

October 26, 2008

Sunk in the sloppy mess of the Frappuccino recession

The more Starbucks a country has, the worse its economic crisis. Where lies the link between coffee and greed?

Daniel Gross

Remember the once-fashionable McDonald’s theory of international relations? The thinking was that if two countries had evolved into mass-consumer societies, with the middle classes able to afford Big Macs, they’d generally be able to find a peaceful way of adjudicating disputes. In other words, they’d sit down over a Happy Meal to resolve their issues rather than use mortars.

The recent unpleasantries between Israel and Lebanon, which both have McDonald’s franchises, put paid to that reasoning. Still, the Golden Arches theory of realpolitik was good while it lasted.

In the same spirit, I want to propose the Starbucks theory of international economics: the higher the concentration of expensive, faux-Italian Frappuccino joints in a country’s financial capital, the more likely the country is to have suffered catastrophic financial losses.

Think about it. The economic crisis has its roots in sub-prime mortgages and a credit crisis. If you could pick one brand name that personifies these twin bubbles, it has to be Starbucks. The Seattle-based coffee chain followed new housing developments into the suburbs and exurbs, where its outlets became pitstops for estate agents and their clients. It also carpet-bombed the business districts of large cities, especially the financial centres, with nearly 200 in Manhattan alone.

And frothy Starbucks treats provided the fuel for the boom – the caffeine that enabled the Wall Street and City boys to stay up all hours putting together deals, and helped mortgage brokers work overtime as they processed dubious loans for people who couldn’t really afford them. It’s no accident that Starbucks based many of its outlets on the ground floors of big investment banks. (The one around the corner from the former Bear Stearns HQ has already closed.)

Like American financial capitalism, Starbucks took a great idea too far (quality coffee for Starbucks, securitisation for Wall Street) and diluted the experience unnecessarily (sub-prime food such as egg-and-sau-sage sandwiches for Starbucks, sub-prime loans for Wall Street). Like so many sadder-but-wiser building developers, Starbucks operated on a philosophy of “build it and they will come”. Like many of the humiliated Wall Street and City firms, the coffee company let number-crunching get the better of sound judgment: if the waiting time at one Starbucks was more than a certain number of minutes, the company reasoned that an opposite corner could sustain a new outlet. Like the housing market, Starbucks peaked in the spring of 2006 and has since fallen precipitously.

America’s financial crisis has gone global in the past month, spreading across Europe and Asia. Why? Because many of the banks feasted on American sub-prime debt and took shoddy risk-management cues from their US cousins. Indeed, the countries whose financial sectors were most connected to the US-dominated global financial system have suffered the most.

What does this have to do with the price of coffee? Well, when you start poking around Starbucks’s international store locator, some interesting patterns emerge. At first blush, there’s a pretty close correlation between a country having a significant Starbucks presence, especially in its financial capital, and huge financial cockups. Take the UK, which has had to nationalise the odd bank (698 Starbucks). Or take just London, which in recent years has been the wellspring of many toxic innovations and a hedge-fund haven (256 Starbucks).

In Spain – now grappling with the bursting of a speculative coastal real-estate bubble – the financial capital, Madrid, has 48 outlets. In Dubai, 48 Starbucks outlets serve a population of 1.4m. And so on: South Korea, which is bailing out its banks big time, has 253; Paris, the locus of several embarrassing debacles, has 35.

But there are many spots on the globe where it’s tough to find a Starbucks. And these are precisely the places where banks are surviving, in large part because they haven’t financially integrated with banks in the Starbucks economies.

In the entire continent of Africa, I count just three Starbucks (in Egypt). We haven’t heard much about bailouts in Central America, where Starbucks has no presence. Argentina, a pocket of relative strength, has just one store. Brazil, with a population of nearly 200m, has a mere 14. Italy hasn’t suffered any significant bank failures, in part because its banking sector isn’t very active on the international scene. The number of Starbucks there? Zero. And the small countries of northern Europe, whose banking systems have been largely spared, are largely Starbucks-free (two in Denmark, three in the Netherlands, none in Sweden, Finland or Norway).

So, having a significant Starbucks presence is a pretty important indicator of the degree of connectedness to the form of highly caffeinated, free-spending capitalism that got us into this mess. It’s also a sign of a culture’s willingness to abandon traditional norms and ways of doing business in favour of fast-moving American ones. The fact that Starbucks or its local licensee felt there was room for dozens of outlets where consumers would pay for expensive drinks is also a pretty good indicator that excessive financial optimism had entered the bloodstream.

This theory isn’t foolproof. Some places with relatively high concentrations of Starbucks – such as Santiago, Chile (27) – have been safe havens. Russia, which has just six, has blown up. But it’s close enough.

So if you’re looking for potential trouble spots, forget about the Financial Times or the Bloomberg terminal. Just look at the user-friendly Starbucks store locator.

The next potential trouble spot? I’ve just returned from a week in Istanbul, Turkey, a booming financial capital increasingly tied to the fortunes of western Europe. There are so many Starbucks that I gave up counting (in fact, 67 of them). I have no plans to move my money there.

Daniel Gross is the Moneybox columnist for Slate.com and business columnist for Newsweek

Movies

There have been some good movies in India lately and I have had fun with the family watching them.

Two recent wonderful movies that I saw were Mama Mia and Rock On.

We had seen Mama Mia in London as a play - a wonderful play with lots of ABBA music. I remember it to have been somewhat lewd, given the theme where the bride is trying to find out which one of the three men are her father. Therefore, when the movie was released in Mumbai, I was keen to see this with the family, with the trepidition that there could be some adult stuff. Thankfully, it did not turn out to be so.

Meryl Streep, Pierce Brosnan and the lovely Amanda Seyfried are fantastic in the movie. The movie is set in a fantastic greek island, with lovely sights. Merly Streep herself sings many of the ABBA songs, which as you can imagine, we all thoroughly enjoyed. It just reminded us of our days in europe - did feel a little sad at leaving Europe last year to come back to India. A great movie, overall. We all enjoyed it thoroughly.

The other movie which made a huge impact on me was Rock On. A simple story of reunion of an old rock band, it has been very well made with some great music. Farhan Akhthar is great as a singer. It is heartening that there is some maturity emerging in the Indian movie scene with some great quality movies. The movie is clean, and the kids enjoyed it. I must add that i went to see the movie with the kids last week when the wife was away at Hyderabad to attend a wedding. That was my way of babysitting the kids, rocking on with movies, pizza, chaat etc.

We also saw Singh is Kinng, which is kind of crappy, but relaxed movie. You dont know what to expect next and there are some good song sequences shot at Egypt, which is nice. While Katrina is not a great actor, I do remain a fan of her dance.

I do want to see Wall E with my son, Journey to the Centre of the Earth and the Last Lear. The entertainment options in Mumbai are clearly quite a lot.

Janmashtami, Power of Faith, etc etc

Yesterday, or today (depending upon your religious calender), was/is Jamnashtami, the birth of Lord Krishna. It brought back a number of memories.

Since this was the first Janmashtami after returning to India, my wife decided to do it the traditional way - preparing the laddus, payasams, puliyodarai, etc etc. My daugther drew the footprints from the outside door to the altar - symbolic of Krishna walking in. And we did the puja. And like the true sardar who loves his langar, I relished on the food subsequently. My kids then chanted Vishnusashasranamam - credit to my wife for teaching this to the kids.

Janmashtami brought back memories of two years ago, when Ramki (IIMA 86, D2) came down to visit us in London on Janmashtami day. He is a disciple of Krishna Premi and after the satsang at Sundar's place, we asked him to speak. For those who dont know Ramki - he lives in Chicago and spends a significant amount of time on religion. He and his wife are deeply religious and he regularly discourses at temples, marriages and other places in the US. After campus in 1987, I got in touch with Ramki in an interesting way. I was posted in London (the first time) for a brief 3 months in 1995 and on one of the evenings, my wife and I decided to visit Wembley. We were having dosas in a wembley restaurant, when I spotted Ramki with his wife in the same restaurant - I promptly reintroduced myself and went to his house - which was ofcourse a temple - I discovered then how religious the couple were. We have since kept in touch on and off. I did visit him in Chicago in 2004 and true enough I got to partake some prasadam on the cold January evening - because there was some religious event on that day. So, coming back to two years ago, it was indeed a treat for us to listen to Ramki and his wife Saroj on that day. He left us a CD of one his discourses on Rukmini Kalyanam - what a discourse. Felt so proud to listen to this fantastic discourse, while at the same time feeling totally like an ignoramus for not really knowing much about our religion and the scriptures.

Back to Malad yesterday, my wife and I decided to visit the temples. About a kilometre from our house is Bangur nagar, a mini Matunga to us - this area has the Tambrams, the mallus and the bongs with the temples - there is a Ramar Temple, an Iyyappa temple and an Bengali temple. You have a branch of Giri Trading next to the Ramar temple and a shop similar to Mysore concern, where you can buy Ambika appalam, pickles, murukku and a lot of the south indian items. So, as you can imagine, my wife and I feel like home here. So at 10 pm, after the puja at home, we stepped out to the Ramar temple, which was open until midnight for the Janmashtami. and as expected, there was a group of people doing bhajans. We then went across to the Ayyappa temple and there was well, there was a satsangh with devotees singing to Guruvayurappan and Krishna. We also visited a community hall, where the Bangur Nagar charitable association had put up a really large idol of Krishna and prayers were going on.

The night was young and the kids were at home - I had frankly slept through the afternoon (being a saturday). My wife and I decided to go to Gokuldam, the outstanding temple in Goregaon, near the Oberoi Mall. We reached there at 11.15 pm, the temple was not open, however there were crowds outside and we were told that the temple will open for midnight arathis. There was a Cafe Coffee Day (CCD) exactly opposite the temple and we walked across and took a garam masala chai while we waited for the temple to open. So were a few other people. The mix of religion and tradition with modernity is just heady - I could not have imagined having a coffee at Starbucks/CCD just before a darshan a few years ago.

The temple opened at 11.45 pm - there was a large rush and there was also a police bundobust outside. Talk about the power of faith - a really large group of people- men, women, children assembled for darshan close to midnight. Faith brings unity. And we could see that. Such crowds also are an opportunity to put on a quasi-anthropological hat on people behaviour. The first thing that comes to your mind is the way people behave in crowds. In India, there is a lot of jostling, pushing around. Even when the crowd is still. People are always trying to push forward and there is usually little courtesy to let the other person first. As an opposite, I used to travel by train to work in London and for those who know Victoria station – usually there is a crowd standing outside between 8.15 am to 9.15 am or so. The amazing thing about those crowds is that – while there are lots of people, no one is actually touching anyone else. There is a respectful space between the people despite the crowd and even as the crowd moves, people keep that few centimeter distance – so that you don’t really get pushed around. That does not happen here.

Interestingly, this jostling behaviour, the push to be the first one is not restricted to the crowds at temples, where people come from all backgrounds. Yesterday morning, I had gone to my daughter’s school for the parent teacher meetings, meeting 8 of her teachers took a good two hours – the principal reason was that there was no particular order for people to see the teachers, and we all waited around the teacher’s table. This is an international school and you see parents from very well off families, but when it comes to waiting for your turn, it is non-existent. It was almost embarrassing for me to push through and with one teacher, my daughter and I patiently waited, while other parents went out of turn. Fortunately, the teacher noticed that we were not getting to see her and after one of the students, promptly called us.

My mind also went back to the Iskon temple in London, where the crowds and the ambience are quite different from the Iskon temple at Juhu. My wife had proposed that we go there today, but I have turned it down just to avoid the crowds. I see that the cable operator is offering live darshan of the Iskon temple proceedings – we might see that for a while. Though I must admit that one reason I like the Iskon temple at Juhu, is the samosa that you get at the food counters. (There is one sight that I will never forget at Iskon temple, London – someone had brought a large rabbit/hare on a leash. I have never before seen a pet rabbit on a leash – so that memory will be completely indelible).

So it has indeed been an interesting day yesterday – the schools, the puja, the temples, the people behaviour. We slept late, it was past 1 am when we went to bed. This morning has been a lazy start so far. A perfect time to write a blog, which is what I am doing, but my internet connection keeping going on an off, and I am writing this on Microsoft word. When the connection comes on, I will cut and past this out on the blog.

I am looking forward for the rest of this Sunday.

Mushrooms in the Office !

We are in the heavy rainy season in Mumbai. So a few leaks here and there in different buildings is to be expected. In my office, the carpet at one corner of the office became soaking wet with the rains. This ofcourse was cleaned out by the housekeeping team. The dampness remained though.

Imagine my surprise a couple of days later, when I saw three mushrooms sprouting from the carpet in the corner. Clearly that was a damp, dark corner - ideal conditions for any fungus to sprout I suppose. But this must surely be a world first - mushrooms in the office. I showed it around to my colleagues and we all had a good laugh. The housekeeping boys came in once again and sprayed some anti fungal stuff to take out the mushrooms, but it was good fun nevertheless.

Moving on, one of the issues I have faced after coming back to India is getting a good pair of trousers which fit me. I have now got used to Marks & Spencer for a few years now. I spotted a Raymonds showroom in Inorbit where they were tailoring trousers. That was a godsend - did not realise that people still stitched trousers. I ordered two of them and gave my M&S trouser as a sample 3-4 days ago. I have just come back after a trial of the trousers - incomplete with all the basting stitch, but fitted perfectly well ! I cant wait till Sunday when I get the completed trousers. And if this experiment goes well, I need to stitch a good jacket.

Else the five days of holiday at home are at an end now - I go back to work tomorrow morning.

Missed Trains, Singh is Kinng et al !

In the middle of the long Independence day weekend. Should have been writing this blog from Delhi, where we were supposed to do a short holiday. But that was not to be !

It all began when we decided to travel to Delhi by Rajdhani Express - its been years since we have travelled by train - so seemed liked a good idea - also considering that the fares are far cheaper than travelling by plane these days - what with all the fuel hikes. My colleague in Admin, kindly agreed to help with the train bookings.

I should have known that this was going to be difficult. A waitlisted Tatkal ticket was the first step. And then my colleague with some effort got me a letter from the Prime Ministers Office for a special quota allocation of 4 berths on the August Kranti Rajdhani.

The day came and my family came to pick me up at 3.30 pm on the 14th of August and we started driving to Bombay Central - there was a tremendous traffic jam and at 4.40 pm, we were at Mahim and a long way to drive to Bombay Central. We decided to jump out of the car at Mahim and took the local suburban train - another first experience for us - with our bags et al and travelled First Class (if you can call this) to Bombay Central.

The reservations board at Bombay Central was completely packed and so used the services of a good porter who helped me to find a TTE. Who then sadly confirmed that there was no confirmation of any reservation for us. My little son, who was so excited at simply looking at the trains was hugely disappointed.

We then began the long drive back hom - it took us 3 1/2 hours to get back home. We contemplated going to the airport and booking our flight tickets to Delhi. But I guess our excitement balloon had been pricked and we decided to stay put at home. My wife insisted that she does the Varalaxmi Pooja the next day. Which is what we did.

Badri and Kumkum came home and we all went to Singh is Kinng - which was quite nice actually - there is no real story here and the movie is all fun. We just managed to get 5 tickets. My kids were in the first row at Fame Malad, Kumkum in the third row, Badri in the 4th and me in the 5th. But it was worth it. We quite liked it.

Today the 16th, saw us back at InOrbit, where we had lunch at Rajdhani, a lovely rajasthani food place, which we have grown to love. And then we shopped a bit for the kids and myself at Crossword. I have been struggling to get my fit on trousers - so as a first, we went to the Raymonds Showroom and gave an order to get my trousers stitched. Not taking any chances, gave my Marks & Spencers trousers as the sample to be matched exactly. If this works, will probably do so.

tomorrow is the last day of holiday for me now - I will give up the Monday and Tuesday holiday and get to work - sad.

I should have taken the family to Hongkong, which was the original plan anyway ! Will plan this out now.

Holidays, Surgery etc

Gosh, its been more than 3 months since Feb 23, when I wrote my last blog. Lots to write and we are becoming Mumbaikars once again - cannot really believe that we have been here for more than 7 months.

Let me begin with the latest - I had a surgery for hernia last week - a long pending matter for over 5 years, that I finally got rid off. Great surgeon Dr. Bhandarkar at the Hinduja Hospital who did it under a Laparascope, minimally invasive. On monday, the sutures go off and I should be back at work. But I must admit that one humbling moment was when I was wheeled into the 3rd floor where all the operating theatres are. At 8 am in the monring, there was lots of traffic - I saw at least 6 other patients like myself, all in hospital attire, waiting to be wheeled into the respective theatres. This was my first surgery, so you can imagine - lots of feelings. I was most unsure about anesthaesia. I went into Op Theatre 1 and walked to the operation table. I lay down on it - first feeling - it was warm, it was a heated table - probably to compensate the cold atmosphere in the room. the operation theatre was large and very much looked like ones you see in one of the hospital soaps like House. There was Gold FM playing and belting out some nice songs. The guys got to work pretty quickly - they put a needle on my left wrist and started drip feeding the anesthesia. I must have been awake after that for no more than a minute. I only woke up a couple of hours later in the recovery room. The hospital room was nice - with a TV an all. I had some drips on for a few hours and it was quite boring being strapped to the bed. But by late afternoon, I was able to get up and walk around. I discharged the next day.

The rains have just begun and Mumbai has started cooling - my kids, esp Hrishi loved the first rains and played in the rains with the other kids. He is looking forward to it, but we have told him how dreary it is likely the become. On the very first day of rain, a stretch of road near the domestic airport caved in with 3 hour traffic jams. A couple of days earlier, a high tide drenched Juhu. So, dont know what the monsoons this time have in store for us. Fingers crossed !!

We took a brief holiday at the end of April - we drove to Mahabaleshwar and Panchgani. Two great things - I drove myself - without the driver. Long distance driving in India for the first time for me. The expressway is great to drive and the NH4 thereafter is also great. We stayed at a lovely Birla bungalow which was fantastic - reminded me of some of the ITC bungalows that I had stayed in years ago.

On the way to Mahabaleshwar, we drove across to the Japalouppe Equestrian Centre, where my daughter was camping. It was her birthday as well - so it was good to give her a surprise. We had bought a cake the previous day, but had forgotten to carrry it the next morning. We bought some chocolates instead. The horse riding centre was quite nice - quite a few horses, large grounds. The kids certainly appeared to have fun.

Mahabaleshwar was fun - our best was the visit to Tapola whihc is about 30 kms from Mahabaleshwar - lots of lakes converging - great views, great drive as well - reminded me of Lake District in the UK. It was very beautiful. It was good to take this holiday.

The kids schools have just begun after the hols.

Overall, things are beginning to fall into a pattern. Cant complain.

Furious February

Feb has been a very furiously busy month so far. A leap year with an extra day of hard work !

At work we have just been in the middle of some key stuff with meetings every single day and coordinating across the countrywide network. Days have just flown by and I am pretty tired at the end of each day. Its fun though !

Our wedding anniversary (16th) was on Feb 7. It just passed - it was a working day though I did manage to come home in a decent time to go out for dinner with the family and buy a gift. After some years, I remembered the greeting card for my wife, but she did not buy one for me. She has preserved every single card that we exchanged over the years ! Reading them now evokes a bit of nostalgia, but also some of those sound a little silly as well !! What we do in our romantic youth !

For sometime now, we have been contemplating to start some charity in a small way - and we thought that we will use our anniversary and birthdays to do some donations. www.giveindia.com was a pleasant surprise in terms of the ease of donating - I particularly like the theme of children and gave a small amount to some children charities. In the UK, I was contributing a small monthly sum to SPCC - Society for Prevention of Cruelty to Children. I have also discovered through a friend that it is possible to spend a day at an orphanage, give them whatever food they want and play with them for a while. We are proposing to do this.

I was on the plane the other day with Alyque Padamsee on my neighbouring seat and he asked me if I wanted to become a member of the 2% club - where we can give away 2% of our salary each year to charity. I have not responded to him - not sure if I want the badge of the 2%. We want to do what we want to charity and we want to enjoy this process. Let us see where this process takes.

We are now making it a habit to go driving on Sundays - with me working all six days, Sunday is becoming precious. Two weekends ago, drove across to the Chinmaya mission in Powai and spent sometime. It was nice.

My brother has relocated from London to India this week - a couple of days ago, we spent time together - went to Inorbit Mall and had dinner at Rajdhani, the Rajasthani restaurant. It was our second time - great food, though heavy.

Its been a busy saturday at work as I write this. Looking forward to a quiet tomorrow, though might work from home, might of course do a short drive with the family.

Next week promises to be busy at work - but also when we will see our first opera in Mumbai - at the Tata Theatre - Madame Butterfly. But more about that after we have seen it.....

Kalaghoda Fair 2008

Currently, the Kalaghoda fair is on in Mumbai. Last Sunday, we decided to drive out from Malad to Kalaghoda. This is a really long drive and I was driving such a distance for the first time. i really cannot drive on the other days with the traffic, especially in a Toyota Innova. We got there in an hour - not a bad first time driving.

It was a perfect day - we reached there around 2.30 pm - parked the car at Fort, opposite the HSBC bank and walked to Kalaghoda - brought back old memories - the Bombay House on our left, the pavement sellers of books, imported digital equipment, the Khyber restaurant, Rhythm house...

The carpark at Kalaghoda was gaily decorated - lots of children there in a Surf Excel sponsored painting and claymaking - my children are older and hence were not too interested. But interesting displays including some papier mache Kalaghoda, a wired horse, some environmentally friendly cars all set the tone. We merrily clicked away.

We went into the main street, which had been shut for traffic and had become a walking street. Stalls on either side were selling handicrafts, books, and a number of stalls put up by the NGOs. I must admit that the pricing was atrocious. We bought a mat for our devghar (the altar at home). There were lots of foreigners there - this is like a typical street festival that you see in other parts of the world.

We had some icecream at Gelatos, ate some chaat - while we wandered around. There was a stage and at 5.30 pm there was a spirited Tibetian performance. Several performances till 10 pm was in the schedule, though sadly, we did not choose to stay beyond 6.30 pm.

We went into Rhythm House as we were leaving and picked up a few CDs. It was a wonderful experience.

The drive back was somewhat eventful - we did not realise that there was some rioting going on in Shivaji park and the traffic was diverted - there were a few tense moments, but we got back home alright.

Overall a great day out for the family !!!

Cold Mumbai

Cold and Mumbai !! An oxymoron one would have thought.

But we appear to have brought our London weather to Mumbai. Mumbai has hit one of the coldest patches. Two days ago, on Feb 7, the temperature was 8.6 deg C. That is almost unbelievable. I had to wear my jumper to work with the cold weather.

Frankly, for us it is better this way than coming into some hot and sultry weather. three years ago, when we moved to London from Singapore, we had moved in december and had to weather the cold. But it was fun in a different sort of way - the shopping for coldwear in Singapore and London, the first experience with the snow, the kids making the snowman.

The big difference between London and Mumbai is in the commuting - it would have been a cold walk to the railway station in Beckenham in the UK. In Mumbai, the chauffer driven car is an affordable luxury.

In Mumbai, the cold weather continues !!

From Versailles to Versova

We are now in India - I have begun my new job at Aditya Birla Retail. The kids are in school. We have moved into our home - this is the same apartment that we purchased just before leaving India a few years ago.

Just before we left London, we had taken a fantastic holiday in France. We stayed at the Marriott Holiday Village near Disney village outside Paris. Hiring a car, we drove around. One of the best things that we did was the visit to the Palace of Versailles. There, we hired bicycles and cycled around the magnificent grounds . I was remarking to my wife - it is going to be Versailles to Versova (for those who know Mumbai, Versova is a suburb of Mumbai - quite near where we currently stay).

As we settle down, certain things have become obvious - we all work too hard, the traffic is crazy, DIY does not work, but getting help is neither easy. Its all a bit of a struggle, but we get along. Mumbai ofcourse is a very vibrant city.

We live in Mindspace - very close to two of the best shopping destinations of Mumbai - the InOrbit Mall and Hypercity. Frankly, between these two places, we get everything that we want. Unbelievable that we dont need to go anywhere else !

In some ways, I have realised that we dont really miss London - maybe the pace has been so hectic that we dont have time to think about what we miss ! The weather in Mumbai has been great - yesterday was near 11 deg Celcius - that was delicious to us.