Could 2016 Electoral Split give rise to the American Phoenix?

2016 US elections are fraught with a rancorous debate and character assassinations. At the moment there is total chaos which reflects a severe split among the American voters. On the surface it is hard to comprehend why there is so much polarization. But a closer inspection of trends shows this is not a new phenomena but has been growing steadily over the past decade.

Electoral College is uniquely American way of electing the US President, where using a "winner-takes-all" method, electoral votes for are all (but 2) states are pledged to the candidate who wins the most votes in a specific state. This is why everyone focuses on the state-level counts to see which states are "Red" vs. "Blue".

However, due to this oversimplification lot of information about the voter preferences are lost which might help to explain the current degree of polarization. University of Michigan professor Mark Newman developed different ways to visualize the past election results of 2012 using voter data at the congressional district on a geographic map as well as on a cartogram, where sizes of states re-scaled according to population instead of area and the color scale ranging from red (for 70% Republican or more) to blue (for 70% Democrat or more), Maps of the 2012 US presidential election results

As is clearly evident from the above Chart (D) in 2012 President Obama, Democrat (Blue) was reelected despite some massive opposition of very strong Red areas.

While Pundits are predicting a victory for the Democratic candidate (Clinton) in Nov, 2016, it is worrisome to think what would happen in the "Red" areas who are looking to the Republican candidate (Trump) to represent their points of view. Could this turn out to be like the election of 1860 when Abraham Lincoln won but later had to deal with the American Civil War. Could this once more be the Rise of the American Phoenix!!!

Planning: Early Decision NOT always an Easy Decision

Sanjeev Maddila, PhD

Deciding which college to attend is one of the biggest decisions we (or our parents) make in our lives. It is especially hard for the 17-yr old teenager brain especially if they try to consider the possibility that this choice could possibly impact the rest of their lives. For these same reasons, we parents constantly fret about how our kids are coming along with their college apps. These days that's all we seem to talk about at our house.

As if it wasn't hard enough to choose among thousands of colleges based on multiple criteria (like the fees/budget, location, areas of study, reputation, admissibility etc.) we also need to choose when to apply to those colleges. Some of the more selective ones offer the option of applying Early (by Nov 1) in addition to regular deadline of Dec 31st

However, there is a slight twist to these Early applications - Early Action or Admit (EA) vs. Early Decision (ED). If you apply early decision, you sign a binding contract agreeing to enroll if you're accepted. Because of this binding agreement to enroll, you can only apply to one school ED. (Single choice Early Action, is like EA but you can apply only to one college)

Some of the popular and top schools like Brown, Boston U, CMU, Cornell, Dartmouth, Duke, Johns Hopkins, Northwestern, NYU, Tufts, and U Penn ... offer higher rates of acceptance to their ED applicants which account for 40-60% of the incoming class of undergraduates. According to Washington Post "At 37 schools the early-decision share of enrolled freshmen in 2015 was at least 40 percent."

Despite the inherent advantage of higher acceptance rates for ED, the decision is not so easy. In my analysis of the 2015 ED data of 64 schools (from Washington Post article) I see two distinct groups, ones where there is a significant advantage, while the other with not so clear advantage.

Let me illustrate my analysis (using applications data from 2015 Common Data Set) for two of the popular highly selective schools.Complete List of Early Decision Schools

Both Cornell and NYU picked about 40% of their incoming class from ED applicants who were 11% and 15% of the total applicants respectively. Acceptance rates of ED applicants was 26% at Cornell and 29% at NYU, which means acceptance rates for regular decision (RD) were 14% at Cornell and 34% for NYU.

Assuming all other things equal between ED and RD (a big assumption), you were twice as likely to get accepted into Cornell if you applied ED (26%) vs RD (14%), while you would have been better off applying RD (34%) at NYU instead of ED (29%), while keeping open all your options. Above chart shows % improvements in Acceptance rates expected for Early Decision over Regular Decision.

So think carefully before you apply - Early decision is NOT always the best decision.

Sourcing: Carpets from Persia, Time is right now...

• Published on August 1, 201

Sanjeev Maddila, PhD

Strategic Analytics & Consultancy, MD-SUMPURA

What would life be without the Belgian chocolates, French fragrances, Indian spices, Chinese silks, Italian shoes .. a bit bland don't you think. Thanks to colonial expansions and global trade, people around the world have been able to enjoy these fine things for more than four centuries.

While most finer luxuries of life are available in the US a few things are still hard to get - at least legally, like the Cuban cigars which have been banned ever since the cold-war dispute with the island nation. But that is about to change as the 50-year old ban is about to be lifted.  Another thing that's hard to come by are the handmade rugs from Iran.  Ever since 1995, a total global trade embargo on Iran to punish them for their Nuclear forays blocked them from exporting their oil, natural gas, and carpets to the word. Again, recent diplomatic breakthroughs have led to unfreezing their US assets and allowing them to trade freely.

But this may have come too late for Iran's carpet industry which has suffered during the total blockade resulting in loss of their production capacity while countries like China and India have stolen much of their demand by selling cheaper (machine-made/hand-made) carpets as inferior substitutes. Iranians kept their industry going while waiting for the ban to lift and and made a lots of rugs. Now with embargo lifted all this inventory is starting to show up at the US wholesalers (on both the East and West coasts) who are selling them on internet auction sites (like eBay).  Some of these are going at 60-80% discounts off their prices from 20-yrs ago.

There is just no substitute for the real thing, and right now may be the best time to buy a genuine "Persian" rug.  Prices are at all time low and there is lots of inventory. But this won't last forever ... so act quickly so you can enjoy one of the finest things in life and preserve it for the next gen...

* Learn how to buy a good rug.  "Persian" is not the same as "Oriental", which is anything that is made in India/China/Pakistan/Nepal...all except Iran, and they have been repeatedly accused of violating many international child labor laws in their 500 yrs old carpet weaving industry which got started with help of the Persian artisans who came with the Mogul rulers to India.

Sourcing: Carpets from Persia, Time is right now...

• Published on August 1, 201

Sanjeev Maddila, PhD

Strategic Analytics & Consultancy, MD-SUMPURA

What would life be without the Belgian chocolates, French fragrances, Indian spices, Chinese silks, Italian shoes .. a bit bland don't you think. Thanks to colonial expansions and global trade, people around the world have been able to enjoy these fine things for more than four centuries.

While most finer luxuries of life are available in the US a few things are still hard to get - at least legally, like the Cuban cigars which have been banned ever since the cold-war dispute with the island nation. But that is about to change as the 50-year old ban is about to be lifted.  Another thing that's hard to come by are the handmade rugs from Iran.  Ever since 1995, a total global trade embargo on Iran to punish them for their Nuclear forays blocked them from exporting their oil, natural gas, and carpets to the word. Again, recent diplomatic breakthroughs have led to unfreezing their US assets and allowing them to trade freely.

But this may have come too late for Iran's carpet industry which has suffered during the total blockade resulting in loss of their production capacity while countries like China and India have stolen much of their demand by selling cheaper (machine-made/hand-made) carpets as inferior substitutes. Iranians kept their industry going while waiting for the ban to lift and and made a lots of rugs. Now with embargo lifted all this inventory is starting to show up at the US wholesalers (on both the East and West coasts) who are selling them on internet auction sites (like eBay).  Some of these are going at 60-80% discounts off their prices from 20-yrs ago.

There is just no substitute for the real thing, and right now may be the best time to buy a genuine "Persian" rug.  Prices are at all time low and there is lots of inventory. But this won't last forever ... so act quickly so you can enjoy one of the finest things in life and preserve it for the next gen...

* Learn how to buy a good rug.  "Persian" is not the same as "Oriental", which is anything that is made in India/China/Pakistan/Nepal...all except Iran, and they have been repeatedly accused of violating many international child labor laws in their 500 yrs old carpet weaving industry which got started with help of the Persian artisans who came with the Mogul rulers to India.

Strategy: Amazon Moves to takeover Campus Bookstores

• Published on July 29, 2016

This summer during my son's college visits I noticed many top-notch institutions (in the Midwest and on both the coasts) have teamed up with Amazon to let them takeover their campus bookstores. Barnes&Noble is out - Amazon is in.

Almost overnight Amazon has transformed itself from an online e-commerce site to a demand fulfillment/logistics business.  They are growing their "real world" presence to support their enormous "online" presence and starting to offer next-day delivery service in major metros by opening new warehouses, building a door-to-door delivery service using Amazon vans, opening retail outlets... so their move to takeover campus bookstores is an extension of the same strategy. They get pre-existing storefronts located in premium campus locations, right next to their target customers (students) which can also serve as convenient pickup spot for all the stuff they already buy online.

This move is also good for campus bookstores - they remain relevant on the campus and to their student body.  They also receive a small cut of the online Amazon sales incl. the textbook orders which had significantly shifted away from the bookstores to online vendors like Amazon.

These new Amazon stores look nothing like the previous bookstores and have been transformed into a new type business which is more relevant to the students. Design of these stores closely resembles the retail store designs of Apple, Microsoft, UPS and FedEx ... showing very strong branding, consistent design across campuses, very limited product displays (low inventory), kiosks for order processing, most orders are placed online, and customers show-up to pick-up their item.

Its clear Amazon wants to sell them much more than just books and spirit ware. Lots of the millennials already buy many of their day to day supplies online instead of going to the big-box stores.  By seamlessly integrating their online catalog/ordering, Amazon will be able to deliver the same experience without all that inventory... that's not just good its brilliant.  

Not long before this idea moves beyond college campuses, so Walmart, Target, FedEx, USPS, UPS... should all watch-out or be Amazoned!!!

Politics: 2013 Critical for Europe

Excerpted by SUMPURA Management Consultancy from Startfor

Taken as a single geographic entity, Europe has the largest economy in the world. Should it choose to do so, it could become a military rival to the United States. Europe is one of the pillars of the global system, and what happens to Europe is going to define how the world works and in 2013 we will begin to get clarity on the future of Europe. The question is whether the European Union will stabilize itself, stop its fragmentation and begin preparing for more integration and expansion. Alternatively, the tensions could intensify within the European Union, the institutions could further lose legitimacy and its component states could increase the pace with which they pursue their own policies, both domestic and foreign.

It has been more than four years since the crisis of 2008 generated a sovereign debt and banking crisis that has turned to an economic crisis in Europe, moving into recession and unemployment across the Continent. If you divide EU into three parts based on unemployment: 1) five EU states significantly below the US rate of unemployment (Austria, Luxembourg, Germany, Netherlands and Malta) 2) seven countries with unemployment around the U.S. rate of 7.7% (Romania, Czech Republic, Belgium, Denmark, Finland, the United Kingdom and Sweden), and 3) remaining 15 states are above U.S. unemployment levels; 11 have unemployment rates between 10 and 17 percent, incl France (10.7%), Italy (11.1%), Ireland (14.7%) and Portugal (16.3%). Two others are staggeringly higher -- Greece at 25.4% and Spain at 26.2%. These levels are close to the unemployment rate in the United States at the height of the Great Depression.

Bear in mind that the unemployment rate goes up for younger workers. In Italy, Portugal, Spain and Greece, more than a third of the workforce under 25 is reportedly unemployed. It will take a generation to bring the rate down to an acceptable level in Spain and Greece. Even for countries that remain at about 10 percent for an extended period of time, the length of time will be substantial, and Europe is still in a recession. It also creates unrooted young people full of energy and anger. Unemployment is a root of anti-state movements on the left and the right. The extended and hopelessly unemployed have little to lose and think they have something to gain by destabilizing the state. It is hard to quantify what level of unemployment breeds that sort of unrest, but there is no doubt that Spain and Greece are in that zone and that others might be. Full enormity of EU’s unemployment situation has not yet sunk in, nor the fact that this kind of unemployment problem is not fixed quickly. It is deeply structural. The U.S. unemployment rate during the Great Depression was mitigated to a limited degree by the New Deal but required the restructuring of World War II to really address.

The European Union has been so focused on the financial crisis that it is not clear to me that the unemployment reality has reached Europe's officials and bureaucrats, partly because of a growing split in the worldview of the European elites and those whose experience of Europe has turned bitter. Partly, it has been caused by the fact of geography. The countries with low unemployment tend to be in Northern Europe, which is the heart of the European Union, while those with catastrophically high unemployment are on the periphery. It is easy to ignore things far away. Fabric of EU is not old enough, worn enough or tough enough to face the challenges. And since the core promise of the European Union was prosperity, the failure to deliver that prosperity -- and the delivery of poverty instead, unevenly distributed -- is not sustainable. If Europe is in crisis, the world's largest economy is in crisis, political as well as financial. And that matters to the world perhaps more than anything else.

This is why 2013 is a critical year for Europe, and for the world.

(Excerpted by SUMPURA from Startfor http://www.stratfor.com/weekly/europe-2013-year-decision)

Sourcing: Moving On From BRICS to CIVETS

Ten years after Brazil, Russia, India and China were dubbed the BRICs, any early mover advantage for investing in them has long gone. But lovers of acronyms will be relieved to learn the latest investment theme claiming to steal a march on emerging markets also has a catchy name

The CIVETS group of countries—Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa—are being touted as the next generation of tiger economies, even if they are named after a rather more shy and retiring feline. They all have large, young populations, with an average age of 27. This, or so the theory goes, means the countries that make up CIVETS will benefit from fast-rising domestic consumption. They are also all fast-growing, relatively diverse economies, which means, unlike the BRICs, they should be less heavily dependent on external demand

Early numbers suggest that while Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa make strange bedfellows, CIVETS investors could prosper. Although it was only established in 2007, the S&P CIVETS 60 index is ahead of the S&P BRIC 40 and S&P Emerging BMI over one and three years. While investing in acronyms is not always the most sensible approach, it seems the CIVETS might just pay off

Colombia

Colombia is emerging as an attractive destination for investors as it works to distance itself from its troubled past. Elected in 2010, President Juan Manuel Santos has continued the center-right policies of former President Alvaro Uribe, prioritizing security and attracting overseas investors. With a population of 46 million, Colombia has substantial oil, coal and natural gas deposits. Other industries include textiles, coffee, nickel and emeralds.

Indonesia

The world's fourth-most populous nation, Indonesia's massive domestic consumer market helped it weather the global financial crisis better than most. Turning in a GDP growth rate of 4.5% in 2009, it bounced back above the 6% mark the following year and is predicted to stay there for the next few years at least. With the lowest unit labor costs in the Asia-Pacific region and a government ambitious to emerge as a credible manufacturing hub it is no surprise some analysts see this country of 240 million people as the next BRIC.

Vietnam

Vietnam has been one of the fastest growing economies in the world for the past 20 years, with the World Bank projecting 6% GDP growth this year rising to 7.2% in 2013. Its population of 90 million and proximity to China have led some analysts to describe it as a potential new manufacturing hub. Cynics suggest Vietnam is better viewed as a holiday destination than an investment opportunity and it is only included within the CIVETS to make the acronym work.

Egypt

Revolution may have put the brakes on the Egyptian economy for the moment, but analysts expect it to regain its growth trajectory as soon as political stability returns. The World Bank is predicting growth of just 1% this year as a consequence of Egypt's part in the Arab Spring. That compares to 5.2% last year and pre-recession levels of 7% or more. But whenever normal business is resumed, Egypt will be in a position to capitalize on its many advantages.

Turkey

Located between Europe and major energy producers in the Middle East, Caspian Sea and Russia, Turkey's growth prospects look strong. The World Bank expects GDP growth of 6.1% this year, falling back to 5.3% in 2013. That said, its economy contracted 4.7% in 2009, revealing its vulnerability to external shocks. Turkey has relatively few natural resources of its own, but it has a diversified economy as well as major natural gas pipeline projects which make it an important energy corridor between Europe and Central Asia.

South Africa

Already the most developed country on the continent by a long way, South Africa has become a diversified economy, being rich in resources like gold and platinum and also attracting manufacturing investment. Rising commodity prices, renewed demand in its automotive and chemical industries and spending on the World Cup have helped South Africa back into growth after it slipped into recession during the global economic downturn. Developed world-standard financial, legal and accounting institutions mean corporate governance is of as high a standard in South Africa as in any other emerging market country. They also make the country a gateway to investment into the rest of Africa.

excerpted by SUMPURA Management Consultancy from WSJ 
http://online.wsj.com/article/SB10001424053111904716604576544492334928256.html