Thursday, October 16, 2008

Social Entrepreneur: Harish Hande (Part 1)

Dr. Harish Hande is the co-founder of Selco, a rural sustainable energy company which has over 80,000 installations and 25 retail sales and service centers all over Karnataka, a state in Southern India. Among it’s many accomplishments, Selco has created India’s first rural solar financing program using regional banks. I recently talked with Harish about the development of Selco and his journey as a remarkably committed social entrepreneur.
SM: Tell us bout your childhood, where you grew up and what kind of education you had. This will help us put the interview in context. HH: I grew up in a steel town in Orissa, a state on the East Cost of India. I did all of my schooling up to 12th grade there, and then I went to the IIT for undergraduate work in Energy Engineering. I did my Master’s and PhD at the University of Massachusetts, Lowell, also in Energy Engineering.
SM: All of your educational background is in Energy Engineering? HH: Yes. I concentrated on one discipline and have all of my training there.
SM: What did you do after you finished your Masters, did you work anywhere? HH: No, I have not worked anywhere else. Selco Is my first job, and hopefully it is my last.
SM: Did you just decide to pick up the pieces, leave Massachusetts and go to India to start Selco? HH: It did not happen exactly like that. My PhD revolved around rural electrification, and during my fieldwork I looked at Sri Lanka and India. However, while I was doing my Master’s I also focused on rural electrification, I was looking at the Dominican Republic. I had gone there for a very brief visit.
The person installing solar panels there later on became my friend. It was at that moment that I realized solar power was such a viable energy solution. When I came back to the US, and I prepared for my field work in Sri Lanka and India, the questions about what was a reliable solution for rural electrification which was also feasible, emerged. There were various solutions which seemed could be applied, but while I was doing the actual solution design work, I came upon the solution that became Selco. I also met my cofounder then.
SM: What year was this? HH: Sometime between 1992 and 1993.
SM: Can we then say that you started Selco in 1993? HH: As a concept, that is correct. As a formal company we started it in 1995.
For more click on the title

INTERVIEW-UN prepares to feed more as financial crisis bites

By Megan Rowling
DUBLIN, Oct 15 (Reuters) - The U.N. food agency expects to feed around a third more hungry people next year, as the global financial crisis adds to the pressure of high food prices on poor nations, a top official said on Wednesday.
Sheila Sisulu, deputy executive director at the U.N. World Food Programme (WFP), said an increase of around 30 million in the number the agency helps would offset a decline in food and fuel costs.
WFP is providing aid to some 90 million people in 2008, and plans to widen assistance to the newly poor in urban areas who have been hit hard by food inflation in the past two years.
"If those people now lose their jobs as a result of the financial crisis, then we will see the effect again possibly in insecurity in some countries -- riots and so forth," Sisulu told Reuters ahead of a conference on hunger organised by aid agency Concern Worldwide.
"We will see the effect of the financial crisis on the village road."
People who have survived on money sent by relatives working overseas are also likely to need help as tough economic times translate into fewer jobs and lower remittances, Sisulu said.
As a result, the agency expects to request the same level of funding from donors in 2009, she said. Earlier this year, soaring food and energy prices forced WFP to double its budget to close to $6 billion.
International food prices have since declined, partly due to the slowing world economy. They fell to a nine-month low in September but were still 51 percent higher than two years ago, according to the U.N. Food and Agriculture Organization.
Sisulu said the impact of the global food crisis would deepen just when it was slipping down the agenda.
"I think it will get worse -- less as a direct correlation of the financial crisis but more because people are getting complacent," she said. "Just because it's off the headlines, people think it's gone."
But in the coming months, countries where crops have failed, such as Ethiopia and Zimbabwe, will need increased food aid.
Last week, WFP said the number of Zimbabweans facing severe food shortages would rise from more than 2 million to 5 million early next year, before the next harvest.
The agency appealed for $140 million to provide food rations there over the next six months. It warned that without fresh contributions, it would run out of stocks in January, just when the need was greatest.
Sisulu said she hoped donors would understand the urgency of the situation at a time when global financial turmoil could start to have a domino effect in poor countries.
"If you take southern Africa, we are entering the lean season. Anybody who loses their job now loses the planting time, and that will add pressure to those numbers like in Zimbabwe," she said. (Editing by Alison Williams)

Global Food Crisis: Meet Three Families Fighting for Survival

by Scott Cotter
While many of us are feeling the squeeze of higher prices, sponsored families supported by Children International now find themselves facing a real crisis.
Many already teeter between calamity and survival. To stay afloat, they often master the fine art of eking out an income in jobless communities through persistence, hard work and ingenuity. They've summoned the courage to keep going, and to work harder for just pennies a day.
Sponsorship helps by covering the cost of many basic necessities so families can focus their resources where they're needed most. But with every cent being stretched to the limit, the food crisis has pushed many over the line. Some remove children from school so they can work and provide additional income. They may forego medicine or health care for the sick, resort to collecting water from contaminated (and free) sources, or simply go hungry.
As this crisis unfolds, we're taking a closer look at those most affected - the poorest of the poor - and examining how rising prices are taking a toll.
The Bisa Family: Tabaco, Philippines
Ailene feels all alone.
Just a few months ago, lightning struck and killed her husband, Ronnie, as he fished to put food on the table and earn a living. In his absence, Ailene is raising three daughters - Ronilyn, Maria and Melody, ages 13, 8 and 4 - all by herself.
"We're still not used to my husband being gone," she utters. "My youngest keeps asking when he'll come back. I still can't believe how we're able to survive."
Scared - and terribly lonely - she has turned to the only things she knows for the survival of her family...laundry and weaving. The result of her hard work and mountains of worry is less than $5 a week. It's enough to buy a little fish, some rice and bread and a few vegetables; there's never anything left over for other necessities.
"We still haven't reached the point where my daughters have nothing to eat at all," she offers, "but we have experienced missing some meals. It doesn't matter if I don't eat as long as my daughters don't go hungry."
Ailene's two youngest, Marie and Melody, are sponsored and have recently been diagnosed with malnutrition. They're enrolled in Children International's feeding program in Tabaco, and Ailene says the school supplies and tuition, medical care and clothing helps alleviate some of the financial strain. Still, she adds, the future seems uncertain at best. "In the coming weeks, I'm not sure what will happen."
The Chisala Family: Lusaka, Zambia
The winds whip up a small dust cloud that tumbles across the patch of bare earth in front of the Chisala home before carrying it down the road and off toward other block dwellings scattered here and there.
It's lunchtime, yet in the compounds it is eerily quiet. Not a single person can be seen outside tending to a charcoal cook stove preparing something for lunch. There is no capenta (staple fish), there is no mealie meal (corn meal), not even a few withered vegetables to prepare.
Paul Chisala stands looking at the lifeless road and squints against the searing midday sun. Quietly, he laments the situation. "I can no longer buy a 25 kg bag of mealie meal because I can no longer afford it."
The Chisala family isn't alone. While rising food prices - as much as 75 percent - have devastated families around the globe, sub-Saharan Africa may be ground zero for this crisis.
Families already in trouble because of overwhelming unemployment, rampant disease and an undervalued currency survive on next to nothing. The average income in the communities Children International serves is just $20 a month.
The outcome is easy to see. Paul says his daughter, Kareen, 10, often goes to school hungry because they have nothing to feed her. Or, she refuses to go because her hunger leaves her feeling weak and unable to study.
"I have tried to look for a job, but there are no jobs," Paul reveals. "All I manage to get are part-time jobs. There are times when I go for two months without any work. I end up begging for food from my brother, who is a soldier."
Children International is attempting to alleviate the problems by supporting community schools where children can get breakfast before starting the day. This not only helps prevent more malnutrition and helps children concentrate, it gives families more incentive to make sure their children - children like Kareen -go to class.
The Lozot Family: Guatemala City, Guatemala
Olivia Lozot is known as "The Garbage Lady," an unflattering nickname she shrugs off without a thought.
Her family, she and her four children, eat and earn a living from what others throw away. "I have always worked," explains Olivia. "But now that I have small children, I can't get a job."
The family lives in one of Guatemala City's many slums, amidst a backdrop of gang warfare, drugs and depression. They have no electricity, running water or everyday comforts beyond two small beds. For a mother of four who can't read or write, there are few opportunities.
That's why Olivia makes her own. And her children, Ana, 15, Donal, 11, Marcos, 3, and Jesus, 1, are often there by her side. They look for nylons, glass bottles and aluminum cans ... anything they can sell.
"When we go to the dumpster," says Olivia, "I carry extra clothes because the smell of garbage gets in their clothes."
Although Olivia can't read or write, she wants her children to attend school. Donal attends school for children who work, going in the morning before he joins his mother and siblings in the garbage around noon. Ana, however, refuses to go, choosing instead to dig in the trash all day and care for her younger siblings.
"Sometimes, I feel sad and desperate," confesses Olivia. "I tell the children when there is food they can eat but when there isn't they must tolerate it."
Still, despite the difficulties, Olivia wants her children to someday realize a better life ... something that has always eluded her.
Children International's sponsorship program helps by reducing her expenses for school supplies, clothing, health and dental care and other basic needs. But as prices for basic necessities go up - especially for food - the money she could use to help them improve their future also remains elusive.
Making Do
As prices for food and other staples continue to send shockwaves throughout the global economy, families most affected - those earning just a few dollars a day - will have to learn how to cope. Many will work even harder than they do now. While others will simply be forced to do without.
Sponsorship is one answer, helping reduce the expenses families face for many of their most basic necessities. And your additional support can help assist families in critical need. Please call now or visit this link to make a donation to help ease the struggle families face during this food crisis.
About Children International:
Children International is a nonprofit, humanitarian organization that works to ease the burdens of poverty on children through one-to-one child sponsorship. Our programs and services provide health, educational, material and emotional assistance to impoverished children and families in 11 countries around the world.

Bailout, fallout

From Business world Online:
Hold the cheering. The modest upturns — after major crashes — now being reported in global stock markets in response (possibly) to massive govern- ment bailout plans in the US, Germany, the UK, and France do not indicate that the present crisis is over. The sad fact is that the "rescue" packages do not resolve problematic conditions in the US and the networked rest of the world. These conditions still mean a deep US recession and a global economic slowdown that will affect everyone.
To realize why, one needs only to revisit how the US Federal Reserve Board’s easy money policy over the past several years brought the world to the mess it now finds itself. It began with easy credit causing American consumers to go on a home-buying binge, developers to embark on a construction rampage, aggressive Wall Street firms to "securitize" pools of even "subprime" home mortgages and peddle these as low-risk securities, and hitherto conservative savings and commercial banks to ignore their traditional credit standards and take on debt instruments whose risk-return character they did not fully appreciate. It continued with American spending leading to huge US trade deficits, with financial institutions in countries running huge trade surpluses with the US needing places to invest their dollars and parking these in high-yielding subprime mortgage notes insured via credit default swaps, with increased demand for American debt paper fueling an even greater production of the same, and with a steep inflationary spiral in the US. It ended with the housing bubble finally bursting, with real estate prices plunging, with homeowners failing or unwilling to make good on their mortgage payments on reduced-value houses, with insurance companies (like AIG) unable to make good on all their default guarantees, and with a financial tsunami raging through markets that had the sophistication (or was it naiveté?) to embrace exotic credit derivatives.
In effect, over the past several years, the rest of the world funded America’s consumer spending boom by lending America money. This is why banks and investment funds outside America are holding vast amounts of American debt paper and why they are now reeling from seeing these assets turn "toxic" and lose much of their value. The bailout plans supposedly address this problem.
The main elements of those rescue plans involve using public money to take toxic assets off the hands (and books) of private institutions and to inject additional capital to shore up the diminished equity of badly hit banks. What the bailout aims to do, in essence, is hold up prices of overvalued American securities by effectively introducing an artificial price floor. As I argued in my column three weeks ago ("Failure of nerve?") when the American plan was still being discussed in the US Congress, this will not work as expected. Astute investors would see through this and, consequently, would consider a government "rescue" as merely a short-term window for dumping bad assets before the supports collapse and prices drop even further.
In that September 25 column, I further argued that a US government rescue of Wall Street "fat cats" was the wrong thing to do, not only from a moral standpoint but also from a practical problem-solving standpoint. I said that spending an enormous amount of public money to take bad assets off the balance sheets of private financial institutions would simply hold back the equilibrating forces of the market from quickly pushing prices of these securities down to their intrinsic values. I thought that this would therefore only delay the restoration of some measure of certainty — the certainty that prevailing prices are reflecting what other investors actually think certain pieces of paper are worth — to an already frightened market and raise uncertainty to the level that leads to a selling frenzy. As it turns out, this is what has been happening. What compounds the problem is that governments of other countries whose own financial markets have been affected by the American tsunami have decided to throw substantial amounts of their own taxpayers’ money into bailing out private institutions of their own.
In fairness to the architects of these bailouts, their objective seemed merely to provide some temporary respite to allow the prices of overvalued American securities to ultimately stabilize in a less frenzied fashion and provide the institutions holding them the time to somehow make the capital adjustments that will cover the holes in their balance sheets created by the sudden dissipation of significant asset values. Much of the pressure, however, for extensive government action to "stabilize" markets appears to come from politically important financial players, both in the US and other countries, who just want the chance to get out before the market hits bottom and want as much of their losses as possible to be absorbed by taxpayers. No one can reasonably believe the rhetoric of these big moneymen that their concern is about the "system" surviving. Their only concern (I believe) is making sure that they themselves survive this sudden downturn that has caught them "long" on overpriced assets. What quick passage by developed-country governments — over public protests — of these rescue packages demonstrates is that, like moneymen everywhere, fat cats have greater clout with their government than the ordinary taxpayer.
In any event, much as bailouts of fat cats grates against all notions of fair play, this might be tolerable to the taxpayers who will pay for these bailouts if the expenditure of their money will actually fix what’s wrong with the financial system, both in America and in the networked rest of the world. The problem is that these bailouts only delay a real resolution. Markets don’t really turn back up until they have hit true bottoms.
I don’t believe that those bailouts will restore to investors the hoped-for level of confidence in American paper or in American institutions. I think that the confidence that has hitherto caused the rest of the world to channel its collective savings into America — thereby financing for years America’s expanding debt and fueling its housing boom — has already been irreparably damaged, at least for now. This is already evident. Investors all over the world are getting rid of American paper as quickly as they can and seeking refuge in commodities and other assets with more tangible values. Those with large holdings of American dollars must be scrambling for ways to convert these into assets denominated in other currencies. By now, everyone must have concluded that — given America’s persistent and increasing current account deficits — the American dollar must be seen as even weaker than it has been taken to be, and weakening. The US Fed will probably raise interest rates to slow down the momentum to sell dollars but that will also dampen economic activities in the US, aggravating its recession.
Necessarily, the end of easy credit and a drop in American consumption means that firms in countries now supplying the US with goods and services are going to experience serious contractions in demand. Since the US is the world’s biggest importer and consumer, a US recession means significant slowdowns in countries with export-driven economies. Moreover, given the protracted boom period in the US and the price heights reached in its inflationary spiral, this recession is likely to be long and deep.
The fallout will definitely affect us. Not as much as it will affect other countries, though, because we do not have large accumulations of American paper and our economy is not as dependent on our exports to America as others (the US accounts for only about 15 percent of our exports). Also, Filipinos have not been — fortunately, in an ironic sort of way — in any kind of consumer spending bubble, so there is nothing that can burst. Still, we need to brace ourselves. Even the wake of a tsunami can sweep flimsily built structures away.

Don't Blame Capitalism

From Washington Post
By Peter SchiffThursday, October 16, 2008;
Amid the chaos of recent days, as the federal government has taken gargantuan steps to stabilize the financial markets, realigning the U.S. economic system in the process, comes a nearly universal consensus: This crisis resulted from government reluctance to regulate the unbridled greed of Wall Street. Many economists and market participants who were formerly averse to government interference agree that a more robust regulatory framework must be constructed to cage the destructive forces of capitalism.
For the political left, which has long championed the need for such limits, this crisis is the opportunity of a lifetime.
Absent from such conclusions is the central role the government played in creating the crisis. Yes, many Wall Street leaders were irresponsible, and they should pay. But they were playing the distorted hand dealt them by government policies. Our leaders irrationally promoted home-buying, discouraged savings, and recklessly encouraged borrowing and lending, which together undermined our markets.
Just as prices in a free market are set by supply and demand, financial and real estate markets are governed by the opposing tension between greed and fear. Everyone wants to make money, but everyone is also afraid of losing what he has. Although few would ascribe their desire for prosperity to greed, it is simply a rose by another name. Greed is the elemental motivation for the economic risk-taking and hard work that are essential to a vibrant economy But over the past generation, government has removed the necessary counterbalance of fear from the equation. Policies enacted by the Federal Reserve, the Federal Housing Administration, Fannie Mae and Freddie Mac (which were always government entities in disguise), and others created advantages for home-buying and selling and removed disincentives for lending and borrowing. The result was a credit and real estate bubble that could only grow -- until it could grow no more.
Prominent among these wrongheaded advantages are the mortgage interest tax deduction and the exemption of real estate capital gains from taxable income. These policies create unnatural demand for home purchases and a (tax-free) incentive to speculate in real estate.
Similarly, the FHA, Fannie and Freddie were created to encourage lending by allowing primary lenders to turn their long-term risk over to the government. Absent this implicit guarantee, lenders would probably have been much more conservative in approving borrowers and setting interest terms, and in requiring documentation of incomes and higher down payments. Market forces would have kept out unqualified buyers and prevented home-price appreciation from exceeding the growth in household income.
Interest rates contributed the most to creating the housing boom. After the dot-com crash and the slowdown following the attacks of Sept. 11, 2001, the Federal Reserve took extraordinary steps to prevent a shallow recession from deepening. By slashing interest rates to 1 percent and holding them below the rate of inflation for years, the government discouraged savings and practically distributed free money.
Artificially low interest rates invigorated the market for adjustable-rate mortgages and gave birth to the teaser rate, which made overpriced homes appear affordable. Alan Greenspan himself actively encouraged home buyers to avail themselves of these seeming benefits. As monetary policy caused houses to become more expensive, it also temporarily provided buyers with the means to overpay. Cheap money gave rise to subprime mortgages and the resulting securitization wave that made these loans appear safe for investors.
And even today, as market forces deflate the credit bubble, the government is stepping in to re-inflate it. First came the Treasury's $700 billion plan to purchase mortgage assets that no one in the private sector would buy. Now it has recapitalized banks to the tune of $250 billion, guaranteeing loans between banks and fully insuring non-interest-bearing accounts. Policymakers say that absent these steps, banks would not be able to extend loans. But given our already staggering debt burden, perhaps more loans are not the answer. That's what the free market is telling us. But the government cannot abide solutions that ask for consumer sacrifice.
Real credit can be supplied only by savings, so artificial steps to stimulate lending will only produce inflation. By refusing to allow market forces to rein in excess spending, liquidate bad investments, replenish depleted savings, fund capital investment and help workers transition from the service sector to the manufacturing sector, government is resisting the cure while exacerbating the disease.
The United States reached its economic preeminence on the strength of its free markets. So far, the economic disaster exacerbated by government policies is creating opportunities for further government interference, which will lead to bigger catastrophes. Binding the country to a tangle of socialist ideals will seal our fate as a second-rate economic power.
The writer, who was economic adviser for Ron Paul's 2008 presidential campaign, is president of Euro Pacific Capital. He is the author of "The Little Book of Bull Moves in Bear Markets."