#30 Triple Glazing vs. Governance, Blood and Interest Rates
Mohammad Hassan - Pixabay
Triple Glazing Beats Governance
Our Delhi apartment sits above the home my parents built in the late 60s, on a broad street on the outer fringes of South Delhi. By 1984, when I built my bachelor apartment atop their home, our street had become the Outer Ring Road, and we were no more fringe than Nupur Sharma. I was paranoid about the increasing noise levels from the road, and, given the technology available at the time, decided to shut the front wall of my living-room to the outside world, using two layers of hollow concrete blocks. Despite my love of natural light, I left just one opening onto the front terrace, a door with a clumsy jugaad of double glazing, that would fog up in the monsoons, and occasionally spawn a patch of ugly green algae.
This summer, our apartment is finally being remodelled. The front terrace is being enclosed in glass, to expand our living space, bring in the light, and open up a view of the Ashoka trees that now sway 40 feet above the road. The double-glazing, our architects assured us, would be factory-sealed and installed in aluminium window frames measured on site, to ensure they shut snugly into silence. This sounded good until, a couple of months ago, the whining of a mason’s drill woke me out of a mid-day snooze, into a fever of new paranoia.
Would the double-glazing be enough? Was I now installing a persistent, insistent soundtrack of rumbling trucks and petulant horns? Would our new, expanded living room drive me deeper into the house, into the silence of our bedroom, rather than open up new spaces in which to work and meet business associates?
I called Saurabh, the lead architect on our project. “The double-glazing should be adequate; but if you want, I can check out better options”. I wanted, very much.
A couple of days later, Saurabh sent me specifications for triple-glazing. Like double-glazing, this construct has only one air-gap, but the front pane consists of two sheets of glass, held together by a thin laminate. The gains in sound insulation are quite substantial, and the manufacturers claim a reduction of noise levels by 38 decibels, or 14 times. The double-glazing reduces noise by 30 decibels, or only 8-fold.
The added cost? You don’t want to know - there is a price to be paid for paranoia. Four decades ago, I paid that price in blank walls and a dark room. Today, I have the choice of paying in rupees, and letting in the light. “Civilisation is a steady march away from No Choice”, Kevin Kelly wrote in ‘What Technology Wants’.
Sometimes those choices are created by civil society, or the government. A few years ago, our road turned quiet at night, when the government banned the entry of trucks into the city after 10 pm. It now seems as if there is a tacit relaxation, because heavy traffic rumbles along the road all night. Musical horns were banned by the Supreme Court in 2013, and the Central Pollution Control Board (CPCB) passed similar strictures in 2017. On our street, in addition, a neighbour moved the National Green Tribunal to impose severe restrictions on vehicular speed and the use of horns. In India though, the implementation of laws is guided by political relevance, sloth, and - as I wrote in NL 28 - bhaichaara. Traffic noise is not about to become part of an election agenda any time soon.
Air pollution in north India, especially in the National Capital Region (NCR), has been occupying headlines for several years now. Unlike noise pollution, there is a pretty wide-spread recognition of the impact of air quality on health. The response of our governance machinery has been reluctant and halting, and though a few measures have been implemented, the NCR continues to be the most polluted region in the world. Nobody, least of all senior government officials, is going to give up on room air purifiers any time soon.
The lesson of our times is clear - for those who can afford it, the march of technology is much more reliable than any advances in governance.
Long live triple glazing.
Blood and Interest Rates
AT the end of 2021, I wrote in NL 6 that inflation was going to be a joker in the 2022 pack. More than inflation in India, I said that “the bigger part of the story is interest rates in the US. As long as they have remained low, money has bounced around the world in the ‘search for yield’, meaning higher returns than the near-zero available in the US.”
That spring has rapidly sprung this summer. Real-interest rates in the US measure the difference between the interest (or yield) on 1 year government bonds, and consumer inflation. This measure hit a new 75-year low of -7.39% in the end of March, and forced the US Federal Reserve into an escalating series of interest rate hikes. When I wrote on this topic in December 2021, a 50 bps (.5%) rate hike in the US was viewed as being radical; last week the Fed hiked by 75 bps, and another 75 bps in July is more than possible.
US central bankers are hoping they can find a path by which both inflation and interest rates can be coaxed into a happy band around 2 or 3%. My deep study of US consumers - OK, only one young person - has me feeling a little sceptical. My son has had two major salary hikes in 6 months, as his employers have lost half his team members to a merry-go-round of higher wage offers, stoked by low unemployment. His discretionary income has jumped, and weekend holidays and gourmet restaurants are a logical response for a 24-year old. With inflation at over 8%, Fed Chairman Powell does not have the luxury of gradually coaxing down this surge in consumption; he’s going to have to take a sledgehammer to cheap money, as real interest rates are still strongly negative, at - 5.62%.
Quite independent of the state of the Indian economy, global investors are rebalancing portfolios away from risk, and into the relatively safe harbour of higher returns on government debt. The exodus of foreign investors from Indian equity has continued, month-on-month, for over a year now. Since January, FII withdrawals have exceeded 40,000 crore every month, but in June that number was hit by the 17th. On that same day, foreigners took 1 bn dollars (7,800 cr) out of India in one trading session, and if you were actively trading the market, as I was, you could literally see them selling into every wave of buying.
For domestic investors, the Indian share market has reached an inflection point, where returns on equity have gone to zero for the last 12 months. Meanwhile, returns on FDs are creeping up; on the margin, this is going to lead to some loss of domestic interest in Indian equities. For the last several years, I have believed that investors had bid Indian equities to irrationally high levels. Pendulums swing in both directions, and I am sure I will soon be writing, “the aversion to Indian equities has made our shares irrationally cheap”.
I’m not guessing how soon that will happen; just hoping I will ride the cycle well, and have the cojones to deploy my idle cash when the blood is in the streets. Believe me, that hasn’t happened yet.