Expectations that the Bank of Japan will cut interest rates doubled yesterday after the government urged the central bank to do more to support the ailing economy.
Investors saw a 40 percent chance that the policy board will reduce the overnight call rate from 0.3 percent at this week’s meeting, according to calculations made by JPMorgan Chase & Co. based on interest-rate swaps trading, up from 20 percent earlier in the day.
The Tankan result, job cuts and market turmoil will probably prompt the central bank to cut borrowing costs this week, according to Takehiro Sato, chief Japan economist at Morgan Stanley in Tokyo.
“Monetary easing policies will likely be ushered in with a rate cut,” Sato wrote in a report on Dec. 15. He said the central bank will also consider buying stocks and corporate debt as well as increasing the amount of government bonds it purchases each month from 1.2 trillion yen ($13 billion).
Tuesday, December 16, 2008
UN approves piracy land pursuit
The United Nations Security Council has unanimously approved a resolution allowing countries to pursue Somali pirates on land as well as sea. It is an extension of the powers countries already have to enter Somali waters to chase pirates. Countries will need the permission of the transitional Somali government. It comes after two vessels were seized by suspected Somali pirates off the coast of Yemen, adding to the dozens of ships hijacked in the area this year. It is the fourth resolution approved by the council since June to combat piracy off Somalia's coast.
This year is coolest since 2000
Scientists say, The world in 2008 has been cooler than at any time since the turn of the century. The Cooling La Nina conditions in the Pacific brought temperatures are down to levels last seen in the year 2000. The World Meteorological Organization (WMO) notes that temperatures remained about 0.3C above the 1961-1990 average. Computer models suggest that natural cycles may cool the Earth's surface in the next few years, masking the warming impact of rising greenhouse gas levels. Scientists used data from two major monitoring networks, one co-ordinated by the UK's Hadley Centre and University of East Anglia (UEA) and the other by the US National Oceanic and Atmospheric Administration (Noaa), the WMO reports that despite the cooling, 2008 still ranks among the 10 warmest years on record.
Food Poverty in NYC Soars as Recession Hits Home
NYC Hunger Experience 2008 Update: Food Poverty Soars as Recession Hits Home, a report released today by the Food Bank For New York City shows that over the past five years, the number of New York City residents having difficulty affording needed food has spiked to nearly 4 million - doubling from approximately 2 million in 2003 - representing almost half of all New York City residents (48 percent). Approximately 3.5 million New Yorkers are concerned about needing food assistance (soup kitchens, food pantries and/or food stamps) during the next twelve months, including 2.1 million who have never accessed it before. This mirrors the finding that 3.7 million New Yorkers would not be able to afford food within three months of losing their household income. This alarming prospect may become all too real with unemployment at a 15-year high of 6.7 percent and predicted to reach 9 percent by the end of 2009.
http://www.marketwatch.com/news/story/Food-Poverty-NYC-Soars-Recession/story.aspx?guid={92BC8B09-5DAB-47E6-BF6B-C6FD277EAA67} (here's the link, for some reason I can't enclose the link)
http://www.marketwatch.com/news/story/Food-Poverty-NYC-Soars-Recession/story.aspx?guid={92BC8B09-5DAB-47E6-BF6B-C6FD277EAA67} (here's the link, for some reason I can't enclose the link)
MUFG to acquire Citi Japan trust bank
Citigroup will sell its Japanese trust bank to a unit of Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research, Stock Buzz) for around $276 million, as the struggling U.S. bank looks to sell assets worldwide.
The U.S. banking giant has previously said it has no plans to sell its Japanese brokerage and investment banking units, or other core businesses in Japan.
The company has all but closed its consumer lending business in Japan, shutting down more than 30 outlets and 540 unmanned branches.
The U.S. banking giant has previously said it has no plans to sell its Japanese brokerage and investment banking units, or other core businesses in Japan.
The company has all but closed its consumer lending business in Japan, shutting down more than 30 outlets and 540 unmanned branches.
If there was ever a time to be a high roller...
So the economy sucks. I think most of the hundreds of posts on this blog can attest to that. But if there's one thing that might make you feel better, it's that falling prices have made luxury goods much more accessible to consumers, whether you have 30 dollars or 30 million dollars to spare.
This article describes how yacht makers are knocking off $18 million on their $48 million mega yachts, making the boats 'only' $30 million. Luxury home prices are falling rapidly, especially in Hollywood. Rare and fine wines are going for $300,000 less. And if you want a plane to go with your $1.56 per gallon gas prices, you could buy a commercial jet for $3 billion.
This article was written by an author who took advantage of a high lobster supply in Maine due to falling demand. Lobster, usually considered a splurge for a meal (excluding Red Lobster), has fallen in price -- but it won't last long because eventually supply will adjust when lobster fishermen reduce their catch.
And while I don't have any articles to back it, the recession is affecting the fashion industry as well. Finally these stores cannot justify most of their huge markups, and are lowering prices/having bigger sales that you will probably not see for awhile. Just go to saksfifthavenue.com to take advantage of $600, $1000 reductions on good, current-season designer stuff (and not old crap).
If you ever wanted to live the high life, I guess now's the time.
This article describes how yacht makers are knocking off $18 million on their $48 million mega yachts, making the boats 'only' $30 million. Luxury home prices are falling rapidly, especially in Hollywood. Rare and fine wines are going for $300,000 less. And if you want a plane to go with your $1.56 per gallon gas prices, you could buy a commercial jet for $3 billion.
This article was written by an author who took advantage of a high lobster supply in Maine due to falling demand. Lobster, usually considered a splurge for a meal (excluding Red Lobster), has fallen in price -- but it won't last long because eventually supply will adjust when lobster fishermen reduce their catch.
And while I don't have any articles to back it, the recession is affecting the fashion industry as well. Finally these stores cannot justify most of their huge markups, and are lowering prices/having bigger sales that you will probably not see for awhile. Just go to saksfifthavenue.com to take advantage of $600, $1000 reductions on good, current-season designer stuff (and not old crap).
If you ever wanted to live the high life, I guess now's the time.
CPI for the West falls 1.8 percent
The data the Consumer price index for the West has fallen once again, this time by 1.8% in the month of November. This follows decreases in both October and September, which definitely is signaling that our economy is hitting a recession. As the article states, this past year the CPI has only risen 1% which is the lowest in 25 years.
I personally find this interesting because I would have thought that with interest rates so low that inflation would be on the rise. But I think that the fall in housing prices, decrease in oil prices, and the drop in the stock market have been too big.
Personally I don't see this as such a bad thing. Yes, the economy and job market are hurting but I think it kind of good that prices are readjusting downward.
Any personal thoughts?
I personally find this interesting because I would have thought that with interest rates so low that inflation would be on the rise. But I think that the fall in housing prices, decrease in oil prices, and the drop in the stock market have been too big.
Personally I don't see this as such a bad thing. Yes, the economy and job market are hurting but I think it kind of good that prices are readjusting downward.
Any personal thoughts?
Interest Rates hit near-zero
According to this FT article, the Fed has cut interest rates to near zero in an attempt to stimulate investment and protect the economy from a much-feared deflation. They announced that interest rates would now be fixed between 0 and .25 percent, the "lowest the rates can go." As a result, US stocks and Treasury bonds 'surged' but the dollar weakened against the euro and the yen. The Fed also assured the public that it was prepared to improve economic conditions (or prevent them from worsening further) with a large quantity of reserves and by promoting the purchasing of longer-term securities.
The situation here is similar to Japan in the 90s, when they experienced a 0% interest rate and threat of deflation. However, it is good that the Fed is trying to boost consumer confidence. And by setting a limited range of interest rate fluctuations, maybe it will encourage investors who are expecting the interest rates to drop further to realize that it can't go much lower, and they might as well take advantage of rates now.
This article shows the limitations of monetary policy now. I agree with Obama's statement that the US is in need of a "big fiscal stimulus." If the interest rates hit zero with no major improvement in sight, it may be the only other option.
The situation here is similar to Japan in the 90s, when they experienced a 0% interest rate and threat of deflation. However, it is good that the Fed is trying to boost consumer confidence. And by setting a limited range of interest rate fluctuations, maybe it will encourage investors who are expecting the interest rates to drop further to realize that it can't go much lower, and they might as well take advantage of rates now.
This article shows the limitations of monetary policy now. I agree with Obama's statement that the US is in need of a "big fiscal stimulus." If the interest rates hit zero with no major improvement in sight, it may be the only other option.
Economic woes may fuel insecurity: Sugar
Northrop Grumman Corp CEO Ron Sugar predicted that U.S. defense spending would continue at a high rate regardless of the Economic hard times and large government expenditures to stimulate the economy. Sugar say that this "economic meltdown" can cause additional security threats and cause the U.S to be vulnerable to attacks.
"We're going to see more mischief, more ethnic tensions, more fights over resources." Says Sugar. The U.S has been burning through equipments and military spending because of the war in Iraq and Afghanistan, but Sugar does not see a slow down in arms purchases even when the U.S is looking to withdraw from Iraq. Northrop has been winning big contracts from the Pentagon and The company's strong revenue growth may allow it overtake Boeing Co. Sugar said. Sugar said his company generated about $11 billion annually, or a third of its overall revenues, from work on information technologies, and said sales in that sector looked likely to expand given mounting concerns about cybersecurity.
The issue of national security is defiantly an important one to Economic development and progress, but at the same time money spend on military will crowd out money going into to sector with higher returns. The nature of national security is that it is hard to predict the demand and access its utilities because one never knows when attacks can happen or the scale of a crises. So i think this leads to the classic dilemma of Guns or Butter.
(Side Note: I think its Ironic that person with such a sweet name as Sugar is one the Top Weapons Dealer, looking at the name I'd think he'll be selling popsicles.)
"We're going to see more mischief, more ethnic tensions, more fights over resources." Says Sugar. The U.S has been burning through equipments and military spending because of the war in Iraq and Afghanistan, but Sugar does not see a slow down in arms purchases even when the U.S is looking to withdraw from Iraq. Northrop has been winning big contracts from the Pentagon and The company's strong revenue growth may allow it overtake Boeing Co. Sugar said. Sugar said his company generated about $11 billion annually, or a third of its overall revenues, from work on information technologies, and said sales in that sector looked likely to expand given mounting concerns about cybersecurity.
The issue of national security is defiantly an important one to Economic development and progress, but at the same time money spend on military will crowd out money going into to sector with higher returns. The nature of national security is that it is hard to predict the demand and access its utilities because one never knows when attacks can happen or the scale of a crises. So i think this leads to the classic dilemma of Guns or Butter.
(Side Note: I think its Ironic that person with such a sweet name as Sugar is one the Top Weapons Dealer, looking at the name I'd think he'll be selling popsicles.)
OPEC Plans to cut output further
OPEC will make its biggest oil production cut ever, reducing output by 2 million barrels a day, or 2.5% of its total production. The cartel is trying to catch up with the plummeting demand for oil in these hard times, and decrease the swelling supply. Prices are dropping, and OPEC, which accounts for 40% of the oil supply, doesn't like it. Some analysts say their best bet is to keep prices moderate during this recession and help the economy out of it in order to reap future benefits in places like the US, Japan and Europe.
Chinese Car poised to invade the U.S
The crises is Detroit is about to face further competition from abroad, as Chery looks to gain U.S auto market shares. Chery Auto, base in Wuhu Anhui province had won a $1.5 billion deal from the Export-Import Bank of China, in the $4 trillion government stimulus plan. Chery is looking to enter into the U.S market through buying assets from the Chrysler. Chana another car maker from China whom has been a partner of Ford is looking to purchase Ford's Volvo division. Detroit beware!!! it looks like the Big Three are starting to face more and more competitions as they loose their market shares and giving rise to newer and possibly more efficient car companies.
Slump Hits India’s Car Industry
Carmakers Nissan and Renault have cut back on joint projects planned for
Irish Banks to be Recapitalized
The Irish government plans on providing 10 billion euros to recapitalize its banks. The money will go to four different banks. The finance minister said, “the financial institutions are so embedded in our economy…they are of systematic importance to our economy.” Shares of one bank, Bank of Ireland, have fallen 92 percent this past year.
Japan Doubles Size of Rescue Plan
The Japanese government has increased its stimulus plan another 23 trillion yen. This is an increase from the 27 trillion yen plan it passed in October. Half of the money will go to help stabilize financial markets. The Japanese yen soared to a new high, hurting the stocks of the country’s exporters.
Chinese Car Sales Hit by Slowdown
Both retail sales and car sales were down in
Daily China-Taiwan Flights Begin
Daily passenger and cargo flights have begun between
Slump in Japan Firms’ Confidence
Japanese business confidence has had the biggest drop in 34 years. The drop was due to fears the economy is headed towards a very long recession. The Tankan survey, which measures business sentiment, fell to -34 from -3. This was the fourth straight decline of the index. Analysts speculate interest rates will be lowered sometime in the future, the exact date is unknown.
North Korea Launches First 3G Phone Network
The first hi-tech mobile phone network for
Castro on First Presidential Trip
US Sales and Producer Prices Fall
Both producer and retail prices fell quite a bit in November due to decreased consumer spending and the reduction in energy prices. Sales fell 1.8 percent, which is the fifth consecutive decrease, but better than October’s 2.9 percent decrease.
The percentage fall is retail sales was not a bad as analysts had expected. Gas price reduction played a major part in the decrease in these percentages.
Pound Continues to Fall Against Euro
Pound Sterling has fallen to a new low against the euro. The US dollar also fell against the euro due to interest rate cut talks. For every one pound it costs 1.1084 euros, or for every euro its 90.22 pence. The dollar fell to $1.3662 against the euro and $1.5294 against the British pound.
The decline in the dollar is due to the uncertainty of the
US Industrial Output Falls by 0.6%
The
Output was up 1.5 percent in October, which is higher than the estimated 1.3 percent. Output at US mines, which includes oil drilling, was up 2.5 percent.
These not so horrible numbers could possibly have been padded due to the increase in oil production following hurricane Ike and the end to strikes at Boeing.
Obama Picks Nobel Man for Energy
US President-elect Barack Obama has picked Steven Chu for his energy secretary. He is a Nobel winner in physics. He is the director of the Lawrence Berkeley National Laboratory and is an energy specialist. Some of the other members of Mr. Obama’s energy team that were recently picked are:
-Carol Browner: will co-ordinate a council on environmental change
-Nancy Sutley: Head of the council on environmental quality
Mr. Obama has made climate change one of his top priorities, stating that we must “move beyond our oil addiction and create a new hybrid economy.”
Fraud Risk ‘Rises’ During Crunch
Fraud will likely increase in the workplace during the global economic downturn, a report has found. The reason for the increase will be because of false figures to make performance look better and because employees, who are facing tough times, are more likely to commit fraud. The typical person who commits fraud is a manager who is male between the ages of 35 to 55. This individual usually works in the finance department and has worked at the company for many years.
Overall, fraud is on the rise and the report states that during the global economic downturn it’s only going to get worse. It will take months to see if the reports findings will come true.
US Rate Cut Towards Zero Expected
The US Federal Reserve is expected to cut rates again from an already historical low of 1 percent. It is expected to decrease to .5 percent or possibly .25 percent. With these cuts, the policy makers at The Fed are running out of options. Other tools they have would be buying debt backed by home loans.
Massive Job Losses in Congo Mines
More than 200,000 jobs have been lost in the Democratic Republic of Congo. The reason for this is the decrease in mineral prices due to the global economic crisis. The number of job losses could increase by another 100,000 by the end of this month. The price of producing things like cobalt and copper are greater than the prices of the actual commodities. Forty firms have shut down in the past month due to the collapse in prices. The Democratic Republic of Congo produces 40 percent of the world cobalt. The situation could be helped if the government would decrease taxes on the mining sector.
A Visual Guide to the Financial Crisis
I found this link a while back through the website Digg.com and thought it was very interesting. Basically it gives a visual illustration to the current financial problems and shows how interconnected some of the problems are.
It starts out with what I personally believe has been a major problem, with historically low interest rates. This coupled with excess funds from the burst of the dot com bubble meant that a large investment went into the housing sector. The diagram also gives some nice quotes. I especially like the last one from President Bush.
It starts out with what I personally believe has been a major problem, with historically low interest rates. This coupled with excess funds from the burst of the dot com bubble meant that a large investment went into the housing sector. The diagram also gives some nice quotes. I especially like the last one from President Bush.
After Rate Cuts: The Fed's New Ball Game
This article talks about the Fed's new plan to save the economy and bring us out of the recession. It says that the main instrument (that they hope will be effective) is to print a bunch of money. Everything I have learned in my economic education has shown that this is not the answer. This article acknowledges that the end result could be high inflation and even larger government debt when the recession is cleared. So what are they thinking?? Is a short term fix really that important that we want to cause irreparable damage??
Bankruptcy Filings up 30% this year
This article is about the rather large bankruptcy percentage increase in the United States. It explains that the number of company bankruptcies, as well as individual ones, have both risen. However, the article goes on to explain that the bankruptcy rates are actually lower than that of two years ago. This is rather surprising to me. Why weren't people worried about this two years ago when it happened... Most likely the recession is the simple answer, but any ideas?
Monday, December 15, 2008
Obama filling up the Energy Department
US President-elect Barack Obama has tapped physics Nobel Prize winner Steven Chu as his new energy secretary. Dr Chu shared the 1997 Nobel Prize for physics for his work on cooling and trapping atoms using laser light and is a leader in the field to combat climate change using scientific methods. He now is the director of the Lawrence Berkeley National Laboratory.
Mr Obama also picked former head of the New Jersey Department of Environmental Protection, Lisa Jackson, to lead the environmental protection agency (EPA), and has named Nancy Sutley, a deputy mayor of Los Angeles, as head of the White House's council on environmental quality.
Announcing the environment team, the president-elect vowed to "move beyond our oil addiction and create a new hybrid economy".
I don't know much about the new appointee-elect (is that what you would call them?) but I know their home state and towns don't have the best relationship with nature right now. Maybe they have done a lot respectively.
What's good with Russia?!?!?
A gang of seven racist skinheads, who killed 18 non-Slavic migrants, in Russia's capital have been sentenced to jail terms of between six and 20 years. The murders originally took place between August 2006 and October 2007. The jail sentences are so low beacuse most of the attackers were minors at the time. If you follow the link you can see some of the footage the youths took with a camera phone. The heaviest jail term was handed to Roman Kuzin, one of the leaders, who got 20 years.
I really hope they spend time trying to rehabilitate those kids, not just throw them in jail. You have to stop the racism at the source, not just punish bad behavior, otherwise it won't stop. I think a lot of it has to do with recources. If everything is prosperous and people have jobs I do not care who comes in and out the country that much. But when you see whoever from half-way across the world come and take your fathers job. And it is a recurrence then you'll will just think it is all their fault.
Siemens in corruption settlement
German industrial giant Siemens has agreed to pay over $1.3 billion to settle charges. Siemens is charged with bribery and falsifying its books. As part of the settlement, Siemens will still be able to bid for government contracts in the US. Once again, I feel that this is more of a slap on the wrist for this huge company than a true punishment. They got off easy.
Banks hit worldwide by US 'fraud'
Bernard Madoff has been charged with fraud in what is the biggest case ever in the history of markets. All in all, it amounts to a loss of $50 billion worldwide. A lot of banks in the UK, Spain and France are some of the biggest losers. US prosecutors say Mr Madoff, a former head of the Nasdaq stock market, masterminded a fraud of massive proportions through his hedge fund and investment advisory business. What he did is pay off people already invested in the hedge fund with money from new investors. If found guilty he could face 20 years in prison and a $5m fine. I think he would be getting off easy with this sentence, and he needs to be made an example of, what do you guys think?
Obesity 'controlled by the brain'
Seven new gene variants discovered by scientists suggest that obesity is largely a mental problem. The findings conclude the brain plays a major role in the functions of an appetite, and obesity cannot be blamed solely on metabolic flaws. All seven variants were picked up by a study led by Icelandic company deCODE Genetics, while six of the seven were also identified in a second, independent study by an international team dubbed the Giant consortium.
I think this can do more for people for losing weight. The more control they are aware that they have, the more motivated they will be to change their weight.
Around the World in 80 days
The Bush administration continues it's travels around the world embarks on a late series of foreign policy initiatives. This week the start of the show is Secretary of State Condolezza Rice working at the United Nations seeking help fighting Somali pirates, trying to avert a humanitarian disaster in Zimbabwe and reaching for momentum in Middle East peace efforts.
The State Department did not release details of Dr. Rice's schedule before her trip, but the U.S. is circulating a resolution that would authorize military force against pirates in Somalia, including land and air attacks on pirate bases. Again they are stopping one of the many symptoms of what is a bigger problem.
Oil Prices Rise With Upcoming OPEC Meeting
Oil prices have risen to about $49 a barrel with the rumor of OPEC cutting supplies by 2 million barrels per day. The leaders in OPEC are trying to combat predictions that oil prices will sink below $30 a barrel in early 2009.
Saudi Arabia said $75 a barrel is a fair price. But what I want to know is shouldn't they have tons of money saved up from when oil was almost $150 a barrel? It seems only fair that prices sink really low for a period.
Saudi Arabia said $75 a barrel is a fair price. But what I want to know is shouldn't they have tons of money saved up from when oil was almost $150 a barrel? It seems only fair that prices sink really low for a period.
Christmas Shopping Down
This holiday shopping season has been the worst in decades. Some stores have had to slash their prices 50-70% to draw shoppers in. It is expected that many households will reduce their shopping budget to almost half of what it was last year.
Saturday Dec. 13 was the best shopping day of the season, but still did not compare to last year. Sales on "Black Friday" were 34.5% lower than they were last year. One positive that is coming from this is that shoppers can expect to see even bigger deals in the days to come. Large department stores and electronic stores are going to be looking to reduce their stock and trying to win over reluctant shoppers with great deals.
Saturday Dec. 13 was the best shopping day of the season, but still did not compare to last year. Sales on "Black Friday" were 34.5% lower than they were last year. One positive that is coming from this is that shoppers can expect to see even bigger deals in the days to come. Large department stores and electronic stores are going to be looking to reduce their stock and trying to win over reluctant shoppers with great deals.
No End In Sight
U.S. homes are predicted to have lost $2 trillion in value over the past year. There is no end in sight for the mortgage crisis and the falling property values compound the problem. Now homeowners owe a mortgage that is worth more than their home.
Stan Humphris, CEO of zillow.com, said,"When we look for a turnaround we look for two or three consecutive quarters [of smaller price declines]...We also want to see sales numbers pick up, inventories go down and improvements in foreclosure figures. Foreclosures really muddy the picture."
One area of the country where home values are increasing are in metropolitan North Carolina and South Carolina.
Stan Humphris, CEO of zillow.com, said,"When we look for a turnaround we look for two or three consecutive quarters [of smaller price declines]...We also want to see sales numbers pick up, inventories go down and improvements in foreclosure figures. Foreclosures really muddy the picture."
One area of the country where home values are increasing are in metropolitan North Carolina and South Carolina.
Blagojevich Blunder
I know the economy is pretty bad right now, but resorting to auctioning off President-elect Obama's Senate seat? Really? When I first heard about this on the news, I honestly thought it was a joke, but unfortunately for myself and the rest of the country, it was only the tip of the iceberg. Rod R. Blagojevich has been charged with not only auctioning off the senate seat, but also for participating in "pay-for-play" schemes, harassing the Chicago Tribune, and trying to get himself either a chair position, or a better paying job for his wife. The kinds of stuff he is reported to have said in taped phone conversations in unbelievable, it sounds like something straight out of a movie.
U.S. Auto Bailout Remains Elusive
Along with the bailout in the finacial sector in U.S. market, there has been consideration for U.S auto industry as they are currently seeking for support from the government.
As credit became hard to obtain, the automobile industry has been facing decrease in demand for cars in addition to the increase in energy prices. Due to this, the U.S. hasendorsed the idea o a goverment bridge loan in return for signifcant stemps to retrucure automobile companies to make them more competitive. This bridge loan is projected as $14 billion dollars but still it remains elusive as the goverment faces other difficulties.
As credit became hard to obtain, the automobile industry has been facing decrease in demand for cars in addition to the increase in energy prices. Due to this, the U.S. hasendorsed the idea o a goverment bridge loan in return for signifcant stemps to retrucure automobile companies to make them more competitive. This bridge loan is projected as $14 billion dollars but still it remains elusive as the goverment faces other difficulties.
Semiconductors, helmets and ginseng are all No. 1
This article describes the major items that Korea produces that are high in demand by oversea countries. Especially in 2007, there has been 127 Korean products that clained top global market shares, and among them are semiconductor chips, LCD monitors, and Kimchi as wel.
With the maintanance of the high market share for these items, it is a hope for Korea to have increase in the export as these items are constantly in demand to recover from the current recession.
With the maintanance of the high market share for these items, it is a hope for Korea to have increase in the export as these items are constantly in demand to recover from the current recession.
Japan machinery orders down 4.4 percent in October
Industrial Asia is composed of three countries; Japn, Austrailia and New Zealand, and as for december Japn is facing 4.4 percent decline which shows a rapidly worsening economy.
The primary reason for this decline is due to the less demand of goods as well as decrease in the investment for the firms as they are facing credit crunch.
Historically, Japan has been facing economic hardship but through the development of the industrial sector, they were able to make a comeback.
As the decline is expected to decrease further, there are concerns with the recession in Japan where industrial sector is the main driven force in the economy for Japan.
The primary reason for this decline is due to the less demand of goods as well as decrease in the investment for the firms as they are facing credit crunch.
Historically, Japan has been facing economic hardship but through the development of the industrial sector, they were able to make a comeback.
As the decline is expected to decrease further, there are concerns with the recession in Japan where industrial sector is the main driven force in the economy for Japan.
World stocks rocket on hopes of fresh policy action
The stock market is currently facing difficulties due to the current financial crisis. However, the global stock market has been rebounded sharply due to the fresh US goverment action to right the deepening recession in the massive job losses.
As the stock market around the world like Britain, France and EU have been facing declines of around 6%, and Japan, Hong Kong and Korea were also facing declines.
However, due to the new policies they ahve been facing increase in the stock market up to 8%.
Although they face faced recent increase in the stock market, the are hoping for more fresh policy become more stabilized.
As the stock market around the world like Britain, France and EU have been facing declines of around 6%, and Japan, Hong Kong and Korea were also facing declines.
However, due to the new policies they ahve been facing increase in the stock market up to 8%.
Although they face faced recent increase in the stock market, the are hoping for more fresh policy become more stabilized.
OECD urges US health system reform, supports fiscal stimulus
This article emphasizes the importance of health system in US. Beofore the economy gets worsened, it is believed that they would inject more public money to help out the people in U.S. As 16% of the people are unprotected from healthcare, the goverment must step in to help out the people.
The goverment has currently imposed many fiscal stimulus like the curren huge bailing package for the financial institutions, and ther are some worries that continual support from the goverment may increase the debt in this country.
As the U.S. is th eonly OECD country that does not provide universal healthcare insurance, it would bring more devistation to people in U.S. especialy with the current recession as thounds of job cuts are being made everyday.
The goverment has currently imposed many fiscal stimulus like the curren huge bailing package for the financial institutions, and ther are some worries that continual support from the goverment may increase the debt in this country.
As the U.S. is th eonly OECD country that does not provide universal healthcare insurance, it would bring more devistation to people in U.S. especialy with the current recession as thounds of job cuts are being made everyday.
U.S. trade deficit grew in October as exports slowed
It seems that Asian countries are not only the ones who are facing decrease in the exports. According to this artcile, the U.S. exports also have declined, facing trade deficit for U.S. In October for the first tim, exports fell by 2.2 percents especially due to declines in sale of automobiles and consumer goods. The primary reason for this is due to the strengthening of the dollar against major world currencies, thus the price that foreigners would have to pay has increased on American goods.
As compared to the decrease in exports, the trade deficit may not be so devistating as it has occured due to the strengthening of the dollar. Although this may bring trade deficit, the strengthing of the dollar may bring other positive effects in return.
As compared to the decrease in exports, the trade deficit may not be so devistating as it has occured due to the strengthening of the dollar. Although this may bring trade deficit, the strengthing of the dollar may bring other positive effects in return.
Econmic outlook for Asia and Pacific Region
This is an image that I found in the IMF website which shows how the current global recession is influencing the Emerging Asian Countries. The emerging Asian countries are China, India, Hong Kong, Korea, Singapore, Taiwan, Indonesia, Malaysia, Philippines, Thailand and Vietnam.
For the project of GDP for 2009, it will continue to decline further from 2008. The main component of this decline is due to decreas in private consumption and gross fixed investment but also due to the decrease in exports.
As there has been significant decrease in the general demand for goods from overseas due to the current recession, Asian countries where export is a significant part of the component in increase in production has been significantly decrased.
OECD warns of worst recession since early 1980s
This article is regarding the current economic recession. According to Organization for Economic Cooperations and Development (OECD), the world recession is the worst since the early 1980s. The output expected will decrease by 0.4 in 2009 for the 30 market democracies that makes up the membership of OECD countries. As a result, number of unemployment would also rise over 8 million, in addition to deflation.
Especially, for U.S, and Japan, the contraction is expected as 0.9 and 0.1 respectively.
According to the OECD's chief economist, many OECD economies are in a protracted recession of a magnitude not expected since the early 198s.
I think it gives another aspect of the current recession, by showing that even the members of the OECD countries arefacing slowing of growth and increase in unemployment
Especially, for U.S, and Japan, the contraction is expected as 0.9 and 0.1 respectively.
According to the OECD's chief economist, many OECD economies are in a protracted recession of a magnitude not expected since the early 198s.
I think it gives another aspect of the current recession, by showing that even the members of the OECD countries arefacing slowing of growth and increase in unemployment
Chrina Will Not Invest In Risky Markets
China is expected to have a growth of 4.9% next year. Because of this large growth many other coutries are looking to China to help with investments. However, experts are saying it is very unlikely China will help. A major reason China will be doing so well in the face of world demise is that they have such a large number of emerging markets.
Attacked Mumbai hotels to reopen
Efforts are underway to open sections of two luxury hotels in Mumbai that were targeted during deadly attacks in the city last month. The managements of the two hotels have announced parts of the Taj Mahal Palace and Tower and of the Oberoi Trident will reopen on Sunday and they both have begun accepting bookings ahead of the reopening.
"To reopen the Taj with such speed but with no loss of attention to details, shows our resolve to commemorate all the innocent and brave people who lost their lives during the terrorist attacks," said Raymond Bickson, managing director and chief executive of the Indian Hotels Company, which owns the hotel.
I Love My State
Jesse Jackson Jr. said he wants his good name back after being identified in the "pay to play" scandal with Blagojevich. However, it is reported that reps for Jackson offered the governor one million dollars to have him selected.
It's pretty ironic that Obama won on a platform of change and this is happening with people he associates with for his old position.
It's pretty ironic that Obama won on a platform of change and this is happening with people he associates with for his old position.
Obama Picks Donovan
Obama selected Shaun Donovan, New York's Housing Commissioner, to be his Housing and Urban Development.
Obama said, "To stem the rising tide of foreclosures and strengthen our economy, I've asked my economic team to develop a bold plan that will dramatically increase the number of families who can stay in their homes...But this plan will only work with a comprehensive, coordinated federal effort to make it a reality."
The only thing I'm uneasy about is Obama is still pushing for every American to own a home right now- shouldn't we let things be fixed before we make more morgages to people who may not be the best candidates?
Obama said, "To stem the rising tide of foreclosures and strengthen our economy, I've asked my economic team to develop a bold plan that will dramatically increase the number of families who can stay in their homes...But this plan will only work with a comprehensive, coordinated federal effort to make it a reality."
The only thing I'm uneasy about is Obama is still pushing for every American to own a home right now- shouldn't we let things be fixed before we make more morgages to people who may not be the best candidates?
Calm returns to Athens after riot
Calm has returned to the Greek capital, Athens, after eight consecutive days of rioting sparked by the shooting dead by police of a 15-year-old boy. At the police station where the officer charged with the murder of Alexandros Grigoropoulos was based, people threw petrol bombs on Saturday night. A protest outside the police station is designated for Monday. Although things have calmed down a poll suggests most people think the riots are a social uprising, as opposed to just the reaction to a shooting. The poll concludes that sixty per cent of those questioned by the Kathimerini newspaper rejected the assertion that the disturbances have been merely a series of co-ordinated attacks by a small hard core of anarchists. Some 300 people staged a peaceful vigil at the site of the boy's death.
New Thai prime minister elected
Thailand's opposition leader, Abhisit Vejjajiva, has been confirmed as the country's new prime minister after a special vote in parliament.
It was announced by Chai Chidchob, speaker of the lower house, that the Democrat Party leader had beaten ex-police chief Pracha Promnok by 235 votes to 198 to become Thailand's fifth leader in just over two years. The last prime minister, Somchai Wongsawat, and several other People Power Party leaders were barred from politics for five years. The article also reports that there are accusations of behind-the-scenes bargains to persuade the MP's to switch sides, with enticing cabinet posts and large sums of cash offered by both sides.
Unemplyment Benefits Are Running Out
"With unemployment claims reaching their highest levels in decades, states are running out of money to pay benefits, and some are turning to the federal government for loans or increasing taxes on businesses to make the payments," Jennifer Steinhaur said.
Indiana has already had to borrow from the government and Ohio is close to having to do the same. Unemployment has reached a height not seen since 1982 and many states have not kept a fund to prepare for high unemployment. A major reason for the problem is that some states have not increased their taxes to fund unemployment benefits.
Indiana has already had to borrow from the government and Ohio is close to having to do the same. Unemployment has reached a height not seen since 1982 and many states have not kept a fund to prepare for high unemployment. A major reason for the problem is that some states have not increased their taxes to fund unemployment benefits.
UK Economy Is Falling
The head of Barclay's bank, John Varley, says he believes housing prices in the UK will continue to fall and will end being 30% lower than at their peak. He also suspects that unemplyment will rise to 7.5%- that would be an additional 700,00 jobs lost. Also, foreign investors in the UK have decreased because of the downward slope the value of the pound is on.
A main distinction between the UK and US is that the EU has strict rules as to the limitations of the government on situations like this. The government is restricted from helping the banks because rules state the government cannot rack up a debt to help boost the economy. Therefore, the only measure the government can do is keep inflation artificially low.
A main distinction between the UK and US is that the EU has strict rules as to the limitations of the government on situations like this. The government is restricted from helping the banks because rules state the government cannot rack up a debt to help boost the economy. Therefore, the only measure the government can do is keep inflation artificially low.
Asian Markets Soar
Markets in China and Japan increased 2.5-5% at the end of last week. It is suspected that the increasing possibility of an automaker bailout in the US is the reason the markets went up. No, official statement has been made yet, but hopefully the Asian markets reflect what will happen in the US.
Gas Prices Going Back Up?
After 86 consecutive days gas prices are starting to increase once again. Over the past two months there has been a 57% drop in oil prices. All but 2 states now have average gas price below $2. Since the prices have dropped so much demand has increased for gasoline and it is feared that gas prices have bottomed out.
Hopefully, the cheap prices continue through the summer, but it is not likely.
Hopefully, the cheap prices continue through the summer, but it is not likely.
McCain vs. Palin-winner McCain (not)
McCain will not back Palin if she decides to run for president. He mentions other up and coming governors he would like to see assume more leadership in the GOP. Also, McCain speaks in the past tense when he says it was, "a great joy to know Palin."
Trouble in paradise with the ex-running mates? Neh, never saw this one coming.
Trouble in paradise with the ex-running mates? Neh, never saw this one coming.
More Pain at Goldman and Morgan Stanley
In the midst of this financial crisis and recession, the banks have undoubtedly been hit the hardest so far by the problem. Even with their federal aid and the gigantic bailout they received from the government this quarter does not bode well for banks. For the first time in its history of being a publicly traded company, Goldman Sachs will announce a quarterly loss. They are logging a $3.50 loss per share but insiders are saying it will be closer to $5, which means upwards of a $2 billion loss. Morgan Stanley isn't having the best quarter ever and will most likely lose about 37 cents per share, which isn't as bad as Goldman, but all losses are bad. How many more banks and investment firms will report losses in the next quarter?
New Forecast of the US economy. What's coming next?
Here we go with another forecast of the US economy in the months to come. This article compares the current recession with the recessions of 1973-75 and 1981-82. From the survey of 54 economists, the downturn is expected to end in June 2009. Since it was said to start in December 2007, the current recession will be lasting for 18 months, 2 months longer than the two previous recessions.
"This recession has centered not on businesses but consumers, who are being hit by dwindling home prices and job losses. The economists on average said the unemployment rate will peak at 8.4% in response to this recession. While that actual rate was surpassed in both the 1970s and 1980s, it would mark a four-percentage-point increase from the low of 4.4% in March 2007. Only the 1973-75 recession, with a 4.1-percentage-point increase, had a larger jump in the postwar period." Economists also expect job cuts to continue into 2010. Some others with more pessimistic view even thinks job market will not recover until four more years. With that being said, probably the best choice for us will be to buy more time studying (master, PhD, etc), because it'll take more time than previously forecasted for the economy to recover.
"This recession has centered not on businesses but consumers, who are being hit by dwindling home prices and job losses. The economists on average said the unemployment rate will peak at 8.4% in response to this recession. While that actual rate was surpassed in both the 1970s and 1980s, it would mark a four-percentage-point increase from the low of 4.4% in March 2007. Only the 1973-75 recession, with a 4.1-percentage-point increase, had a larger jump in the postwar period." Economists also expect job cuts to continue into 2010. Some others with more pessimistic view even thinks job market will not recover until four more years. With that being said, probably the best choice for us will be to buy more time studying (master, PhD, etc), because it'll take more time than previously forecasted for the economy to recover.
India Unveils Stimulus Moves After Central Bank Cuts Rates
Indias goverment will increas the goverment spending to ease taxes to stimulate the economy. The goverment has planned 200 billion rupees ($4 billion) more than reviously planned package.
In addition to the fiscal stimulus, the goverment has requested currency-swap with the U.S. Federal Reserve to increase the amount of capital in the Indian domestic market.
The problems that each of the countries deal are very different but the main idea of monetary easinig and providing fiscal stimulus to the domestic market are simlar around the countries. Although there may be challeges in imposing policies, but through strengthening of the economy structure and development, it can significantly increase the effctiveness of those policy implemented.
In addition to the fiscal stimulus, the goverment has requested currency-swap with the U.S. Federal Reserve to increase the amount of capital in the Indian domestic market.
The problems that each of the countries deal are very different but the main idea of monetary easinig and providing fiscal stimulus to the domestic market are simlar around the countries. Although there may be challeges in imposing policies, but through strengthening of the economy structure and development, it can significantly increase the effctiveness of those policy implemented.
China hit hard by fall in exports
On December 11, the Chinese goverment anounced that the exports fell in November for the first itme in seven years due to the global financial crisis. As China remains to be the largest exporter in the world, the decreased in the export resulted from the decrease in the demand for oversea goods has influeced the export in China significantly.
The chinese exports decline about 2.2 % and imports fell 17.9% in China.
This huge drop in imports has been the biggest since the early 1990s, and the goverment pledge to do everything that they could to maintain a stable health economy.
This figures from China has been a big suprise to other Asian countries, as goods demand are large in China. Due to this the GDP of China is expected to decrease in 2009 until 2010 where the recovery of the financial crisis occurs.
The chinese exports decline about 2.2 % and imports fell 17.9% in China.
This huge drop in imports has been the biggest since the early 1990s, and the goverment pledge to do everything that they could to maintain a stable health economy.
This figures from China has been a big suprise to other Asian countries, as goods demand are large in China. Due to this the GDP of China is expected to decrease in 2009 until 2010 where the recovery of the financial crisis occurs.
South Korea Cuts Interest RAte to 3%, a Record.
One of the ways that U.S. is seeking the recovery from the recession is by lowering interst rate, known as the expansionary monetary policy. Decrease in the interst rate would give incentive for people to spend rather than save which is a Keynesian approach of looking at the econmy, and it would also help the firms to invest more by borrowing more credit from financial institutions.
This policy is not only used in U.S. but also used in South Korea. According to The New York Times, South Korea's central bank anounced to cut the interest rate in its history in an attempt to cushion it seconmy from the global down turn. Similarly in Taiwan and China, the interst rate has been cut to 2% and 2.4% respectively.
The Asian Development Bank presented the expected frowth of Asia's dveloping nations to slow to 5.8% from 9%. As the countries are quickly seeking for ways to increase production and initate growth in the economy, such policies that allows more capital flow, incrase in availabilty of credit, and growth in the econmy are currently implemted.
This policy is not only used in U.S. but also used in South Korea. According to The New York Times, South Korea's central bank anounced to cut the interest rate in its history in an attempt to cushion it seconmy from the global down turn. Similarly in Taiwan and China, the interst rate has been cut to 2% and 2.4% respectively.
The Asian Development Bank presented the expected frowth of Asia's dveloping nations to slow to 5.8% from 9%. As the countries are quickly seeking for ways to increase production and initate growth in the economy, such policies that allows more capital flow, incrase in availabilty of credit, and growth in the econmy are currently implemted.
China Will Define Oil Prices
There as been decrease in production of all goods and services observed through out th world. One may say that the reason for this is due to the finacial crisis, the decrease can also result from the increase in the energy prices.
Historically, the oil prices has been increasing significantly, the explaination for this is due to the lmited supply of oil, which decreases the supply of the oil every time we use it. However, increase in the demand for oil can also be the driving force for the price increase.
In this article, China's demand for oil will determine the prices of oil next year. As china plays a singificant role in the demand for oil, increase in the oil demand for China can easily increase the oil prices. Although production for all countries around the world is expected to significantly decreased as financial crisis is expected to continue, it is projected that China would remain on the growth path. This may rise concerns regarding the price of oil as all countries are facing difficulties in the Economy. Increas in the energy prices would bring further damange to the economy.
I feel that as no one firm has the ability to increase their production, increase in the energy prices would bring further damange to the economy by further reduing the production. I believe that it would help significantly for all countries if any policy regarding subsity towards energy are implemented.
Historically, the oil prices has been increasing significantly, the explaination for this is due to the lmited supply of oil, which decreases the supply of the oil every time we use it. However, increase in the demand for oil can also be the driving force for the price increase.
In this article, China's demand for oil will determine the prices of oil next year. As china plays a singificant role in the demand for oil, increase in the oil demand for China can easily increase the oil prices. Although production for all countries around the world is expected to significantly decreased as financial crisis is expected to continue, it is projected that China would remain on the growth path. This may rise concerns regarding the price of oil as all countries are facing difficulties in the Economy. Increas in the energy prices would bring further damange to the economy.
I feel that as no one firm has the ability to increase their production, increase in the energy prices would bring further damange to the economy by further reduing the production. I believe that it would help significantly for all countries if any policy regarding subsity towards energy are implemented.
Bank Bailout Should be Reversed
David Kudla, CEO of Mainstay Capital Management, had stated that if the bank bailout had failed there would have been a global catastrophe. But, according to Roger Nightingale, an economist from Pointon York, thinks otherwise. He believes that the banks should pay back their bailout money to help out the other industries. When the government decided to give help to the banks because they were "special" gave the other industries hope that if they were about to fail that the government will bail them out too. Now that the government has declined the auto bailout, they should get the banks to repay their bailout money and help the other industries, while helping out the banks with a cut in the interest rates and no fiscal adjustments.
Sunday, December 14, 2008
Japan's economy to contract at faster pace
One of the strongest country in Asia, Japan is contracting at a faster pace due to the global financial crisis. The main reasons for the fast contraction in the economy is due to the decrease in exports and production. According to this artcle, Japan's industrial output fell by 3.1% in Octber which a record of 8.6 % fall in the fourth quater. AS for the GDP, it has been creased by 0.9%. It is expected that the recesion in Japan would likely to continue till 2009, and a slow recovery would be initiated.
During this semester for another class, I have reserached the effect of the global financial crisis in the Asian countries. Very similar to this article, I found that there has been increasing amount of corporate bankrupcies due to the financial crisis. The main reasons were the decrease in overseas demand in Japnese goods which significatly decreased the export of the country, tight domestic financial conditions which limited the availability of credit for the finacial instiutions resuling in decrease in the growth. As projected on this article, the GDP for all countries around the world including Japan would decrease and a slow steady growth would be intiated at the end of 2009.
There are policies implemented to recover from the financial crisis, but as all countries are facing dried up liquidity in the money market, all countries including Japn are currently facing difficulties in recoving from the crisis rapidly and effectively
During this semester for another class, I have reserached the effect of the global financial crisis in the Asian countries. Very similar to this article, I found that there has been increasing amount of corporate bankrupcies due to the financial crisis. The main reasons were the decrease in overseas demand in Japnese goods which significatly decreased the export of the country, tight domestic financial conditions which limited the availability of credit for the finacial instiutions resuling in decrease in the growth. As projected on this article, the GDP for all countries around the world including Japan would decrease and a slow steady growth would be intiated at the end of 2009.
There are policies implemented to recover from the financial crisis, but as all countries are facing dried up liquidity in the money market, all countries including Japn are currently facing difficulties in recoving from the crisis rapidly and effectively
Last Full Week of the Stock Market this Year, Still Many Questions
With the failure of the auto bailout this week, and the Fed meeting upcoming, Wall Street might not have the normal year end surge that it usually has this year. The bailout news might effect the meeting of the Fed, who is expected to lower the interest rate another .5%, but if the Bush administration helps out the auto companies, then that might instill some hope into the market. Even though some analysts still think that the market is resilient and holding in there even with all of the bad news, there still seems as if there is more to come.
Capitalist Fools
Another joseph stiglitz article, which identifies five key mistakes that led to the current crisis-under Reagan, Clinton, and Bush II—and one national delusion.
No. 1: Firing the Chairman under the Reagan administration
No. 2: Tearing Down the Walls
No. 3: Applying the Leeches
No. 4: Faking the Numbers
No. 5: Letting It Bleed
It will give you another perspective for the current economic situation. If you were in Prof. Simon's monetary and fical policy this semester, this is a best summary of what we've learned in the class! Highly encouraged to read guys.
No. 1: Firing the Chairman under the Reagan administration
No. 2: Tearing Down the Walls
No. 3: Applying the Leeches
No. 4: Faking the Numbers
No. 5: Letting It Bleed
It will give you another perspective for the current economic situation. If you were in Prof. Simon's monetary and fical policy this semester, this is a best summary of what we've learned in the class! Highly encouraged to read guys.
China, South Korea reach 180b yuan currency swap deal
The globalization has decreased the boundaries between the countries generating free flow of information, culture as well as exchange in capital and goods. This has allowed countries to keep close relationship in the economy which is one of the main reasons that created the spilover effect of the financial crisis.
Among the countries that are influenced by the global financial crisis, one of them is Asian countries. The effect of the global financial crisis has brought devistation in the Asian economy which resulted in slowing of ecnomic growth and decrease in export. To minimze the effect and to recover from the devistations, Asian economies have beem imposing policies to help out the financial sector as well as to keep the confidence level relatively high to maintain the demand for goods. Similar to the bailout plan, one of the plans that Asian countries created is the 180bilion Yuan currency swap deal.
According to this article, China and South Korea have reached a deal regarding currency swap of 180 bilion yuan which is about 26.28 billion dolars. The deal is expected to last for thre years and can be extended with agreements of both sides. The aim for this policy is to proide adequate liquidity for financial systems of the two major East Asian economies.
However, as the Korean won has depreciated by more than 30% this year due to the spread of the financial crisis, the curency swap would definately provide more stable won value as it proivides South Korea with more liquidity to stabilize its curency.
Personally, this is a very good news for me as all of my familes are back in Korea. There has been many policies imposed by the Korean goverment including the currency swap with the Federal Reserve of U.S., but it has not been enough to provide stabilization in the econmy. As Korea and U.S. has been keeping a very close relatioship historically, any deviation in U.S. can have significant and immediate effect in Korean economy. I hope further policy can be implemented to stabilize the economy in Korea.
Among the countries that are influenced by the global financial crisis, one of them is Asian countries. The effect of the global financial crisis has brought devistation in the Asian economy which resulted in slowing of ecnomic growth and decrease in export. To minimze the effect and to recover from the devistations, Asian economies have beem imposing policies to help out the financial sector as well as to keep the confidence level relatively high to maintain the demand for goods. Similar to the bailout plan, one of the plans that Asian countries created is the 180bilion Yuan currency swap deal.
According to this article, China and South Korea have reached a deal regarding currency swap of 180 bilion yuan which is about 26.28 billion dolars. The deal is expected to last for thre years and can be extended with agreements of both sides. The aim for this policy is to proide adequate liquidity for financial systems of the two major East Asian economies.
However, as the Korean won has depreciated by more than 30% this year due to the spread of the financial crisis, the curency swap would definately provide more stable won value as it proivides South Korea with more liquidity to stabilize its curency.
Personally, this is a very good news for me as all of my familes are back in Korea. There has been many policies imposed by the Korean goverment including the currency swap with the Federal Reserve of U.S., but it has not been enough to provide stabilization in the econmy. As Korea and U.S. has been keeping a very close relatioship historically, any deviation in U.S. can have significant and immediate effect in Korean economy. I hope further policy can be implemented to stabilize the economy in Korea.
Job Losses Worst Since '74: 533,000 Shed in November
This is another interesting article I found regarding the curent recession.
This article emphasizes that the current job cuts especially November were sum up to 533,000 which isthe largest one0month drop since 1974. With this job cut, the current unemployment is determined as 6.7% which is a result of a constant increase from 2007.
It was really interesting to see two articles that are published recently that talks about different point of view regarding the recession. When looking at this article alone, the huge number of job cuts and the emphasis as comared to 1974 seems may bring worries, however when comparing to the situation during Great Depression, the current recession may not seem so serious.
This article emphasizes that the current job cuts especially November were sum up to 533,000 which isthe largest one0month drop since 1974. With this job cut, the current unemployment is determined as 6.7% which is a result of a constant increase from 2007.
It was really interesting to see two articles that are published recently that talks about different point of view regarding the recession. When looking at this article alone, the huge number of job cuts and the emphasis as comared to 1974 seems may bring worries, however when comparing to the situation during Great Depression, the current recession may not seem so serious.
U.S. recession not close to 1930s: NBER
Currently, there has been many articles that explains about the negative effect that the financial crisis has on the economy, resulting recession, but I haven't really seen articles that had a different view on the recession.
In this article, the current U.S. economic recession isescribed as not even close to the Great Depression. According to James Poterba, the president of the National Bureau of Economic Research quoted that"We are in a very differnt place than the U.S. economy as comared to the 1930s, and it is possible to have the worst postwar recession without getting anywhere close to what it was in the 1930s..."
As the unemployment rate projection of 8~9% which is far from how it was during the reat Depression, he emphasized that the current depression may be longer than average but not as serious as how it is discussed in the media currently.
It was interetsing to see different point of view regarding the current recesion as it is one of the major economic concern currently.
In this article, the current U.S. economic recession isescribed as not even close to the Great Depression. According to James Poterba, the president of the National Bureau of Economic Research quoted that"We are in a very differnt place than the U.S. economy as comared to the 1930s, and it is possible to have the worst postwar recession without getting anywhere close to what it was in the 1930s..."
As the unemployment rate projection of 8~9% which is far from how it was during the reat Depression, he emphasized that the current depression may be longer than average but not as serious as how it is discussed in the media currently.
It was interetsing to see different point of view regarding the current recesion as it is one of the major economic concern currently.
New England Faces Big Downturn
This is an article abou the effect of the financial crisis in the U.S. There has been many articles and concerns regarding the recession and the financial institutions, but this article mainly focuses on how it is influencing the states in U.S.
Along with the current recession in the U.S. economy, New England states are also facing a significant recession. This recession will lay off 250,000 jobs which is about 3.6% of its employment, and it is predicted that unemployment would continue to increase through 2011. As the industries in New England states are highly concentrated in business investments and high-income dependent industries, the recovery is expected to be weaker and slower as compared to other regions in the nation. With the sharp decline in the housing market and the growth of real income per capita, New England will continue to experience recession.
Along with the current recession in the U.S. economy, New England states are also facing a significant recession. This recession will lay off 250,000 jobs which is about 3.6% of its employment, and it is predicted that unemployment would continue to increase through 2011. As the industries in New England states are highly concentrated in business investments and high-income dependent industries, the recovery is expected to be weaker and slower as compared to other regions in the nation. With the sharp decline in the housing market and the growth of real income per capita, New England will continue to experience recession.
Gender inequality hinders Korea's advancement
Social services provided by governments are becoming more crucial as women's roles in economy are getting important. In Korea, as the wasted female labor is a big obstacle for economic development, the government seeks hard for solutions.
The World Economic Forum publishes Global Gender Gap Index every year, which shows the level of inequality in a country. I think it is also interesting to look at.
http://www.weforum.org/en/initiatives/gcp/Gender%20Gap/index.htm
Based on the report linked above, let's share where your countries are located in terms of gender inequality and real stories about inequality in your countires.
The World Economic Forum publishes Global Gender Gap Index every year, which shows the level of inequality in a country. I think it is also interesting to look at.
http://www.weforum.org/en/initiatives/gcp/Gender%20Gap/index.htm
Based on the report linked above, let's share where your countries are located in terms of gender inequality and real stories about inequality in your countires.
Big cheese bailout for Parmesan
Here in US, people talk about bail out of the car manufacturers. But in Italty, cheese companies are subjects to the government bail out. I thought it is so interesting considering all the bail outs they have.
Parmigiano Reggiano, Italy's King of Cheese, is in trouble. Robust in flavour and crumbly, it is a classic of Italy's artisan food traditions, made by hand by 430 craft producers around the city of Parma. But with Italian consumption falling as costs soar, almost a third of producers now face bankruptcy. Now Italy's Minister of Agriculture, Luca Zaia, has come to the rescue, promising to buy 100,000 Parmigiano Reggiano cheeses, and also 100,000 of its less costly competitor, Grana Padano.
This is Italy's big cheese bailout. Essentially, the government will be gobbling up 3 per cent of Parmesan production at an estimated cost of €50m (£44.7m) and distributing it to the needy. Each 35kg wheel of Parmigiano costs between €8 and €8.50 to make, but the wholesale price has declined for the past four years even as the cost of milk and energy has soared.
"We just need a bit of time to reorganise ourselves," said Giorgio Apostoli of Coldiretti, Italy's agriculture lobby. "This is a historic product with an ancient tradition. There ought to be policies to safeguard those who produce it."
But Professor Giuliano Noci, of the Milan Polytechnic, said a better solution would be for the government to "launch a sustained marketing campaign in the emerging markets such as Brazil, Russia and India, to educate consumers to appreciate the quality" of the cheese.
Parmigiano Reggiano, Italy's King of Cheese, is in trouble. Robust in flavour and crumbly, it is a classic of Italy's artisan food traditions, made by hand by 430 craft producers around the city of Parma. But with Italian consumption falling as costs soar, almost a third of producers now face bankruptcy. Now Italy's Minister of Agriculture, Luca Zaia, has come to the rescue, promising to buy 100,000 Parmigiano Reggiano cheeses, and also 100,000 of its less costly competitor, Grana Padano.
This is Italy's big cheese bailout. Essentially, the government will be gobbling up 3 per cent of Parmesan production at an estimated cost of €50m (£44.7m) and distributing it to the needy. Each 35kg wheel of Parmigiano costs between €8 and €8.50 to make, but the wholesale price has declined for the past four years even as the cost of milk and energy has soared.
"We just need a bit of time to reorganise ourselves," said Giorgio Apostoli of Coldiretti, Italy's agriculture lobby. "This is a historic product with an ancient tradition. There ought to be policies to safeguard those who produce it."
But Professor Giuliano Noci, of the Milan Polytechnic, said a better solution would be for the government to "launch a sustained marketing campaign in the emerging markets such as Brazil, Russia and India, to educate consumers to appreciate the quality" of the cheese.
Bank of America to cut up to 35,000 jobs
Bank of America Corp said on Thursday it plans to eliminate 30,000 to 35,000 jobs over three years, reflecting its pending purchase of Merrill Lynch & Co and weaker business activity stemming from the economic recession.
The cuts could affect as much as 11.4 per cent of the combined companies' workforce of about 308,000 people, and are intended to help save $7 billion of annual costs.
Bank of America said the cuts will come from both companies and affect all business lines, and in part reflect "the weak economic environment, which is affecting the level of business activity."
The Charlotte, North Carolina-based bank said it won't determine the final number of cuts until early 2009, and that as many as possible will come through attrition.
Bank of America employs about 247,000 people and Merrill about 61,000. The merger values Merrill at about $20.5 billion and is expected to close on January 1, 2009, creating the largest US bank by assets.
Financial companies have announced more than 250,000 job cuts this year, according to outplacement firm Challenger, Gray & Christmas Inc, as losses soared from mortgages, credit cards and securities write-downs.
Bank of America announced its cuts less than four weeks after Citigroup Inc set plans to eliminate 52,000 jobs, or 15 per cent of its workforce, by early 2009.
'If you asked me six months ago I would be surprised, but in this day and age, it doesn't look as draconian, especially compared with what Citigroup did,' said Howard Diamond, chief executive of Diamond Consultants, a Chester, New Jersey, recruiter.
Other financial companies to cut jobs in recent months include Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley. Bank of America previously said it would cut 7,500 jobs following the July 1 purchase of mortgage lender Countrywide Financial Corp.
Bank of America spokesman Scott Silvestri said the bank would not elaborate on where the latest job cuts will come from, how many might come from attrition, or where the banks' business activity had been hurt.
One recruiter said attrition could account for most of the announced job cuts, and that more cuts may be needed to make Bank of America more competitive.
Eventual losses may be 'substantially higher' than 35,000, with many coming from the middle ranks, said Gustavo Dolfino, president of WhiteRock Group LLC, a New York-based recruiter.
Shareholders of Bank of America and Merrill approved the merger on December 5. The transaction was originally valued at $50 billion, but the value has fallen because Bank of America shares have declined.
The cuts could affect as much as 11.4 per cent of the combined companies' workforce of about 308,000 people, and are intended to help save $7 billion of annual costs.
Bank of America said the cuts will come from both companies and affect all business lines, and in part reflect "the weak economic environment, which is affecting the level of business activity."
The Charlotte, North Carolina-based bank said it won't determine the final number of cuts until early 2009, and that as many as possible will come through attrition.
Bank of America employs about 247,000 people and Merrill about 61,000. The merger values Merrill at about $20.5 billion and is expected to close on January 1, 2009, creating the largest US bank by assets.
Financial companies have announced more than 250,000 job cuts this year, according to outplacement firm Challenger, Gray & Christmas Inc, as losses soared from mortgages, credit cards and securities write-downs.
Bank of America announced its cuts less than four weeks after Citigroup Inc set plans to eliminate 52,000 jobs, or 15 per cent of its workforce, by early 2009.
'If you asked me six months ago I would be surprised, but in this day and age, it doesn't look as draconian, especially compared with what Citigroup did,' said Howard Diamond, chief executive of Diamond Consultants, a Chester, New Jersey, recruiter.
Other financial companies to cut jobs in recent months include Goldman Sachs Group Inc, JPMorgan Chase & Co and Morgan Stanley. Bank of America previously said it would cut 7,500 jobs following the July 1 purchase of mortgage lender Countrywide Financial Corp.
Bank of America spokesman Scott Silvestri said the bank would not elaborate on where the latest job cuts will come from, how many might come from attrition, or where the banks' business activity had been hurt.
One recruiter said attrition could account for most of the announced job cuts, and that more cuts may be needed to make Bank of America more competitive.
Eventual losses may be 'substantially higher' than 35,000, with many coming from the middle ranks, said Gustavo Dolfino, president of WhiteRock Group LLC, a New York-based recruiter.
Shareholders of Bank of America and Merrill approved the merger on December 5. The transaction was originally valued at $50 billion, but the value has fallen because Bank of America shares have declined.
S Korea parents fined
A South Korean court has fined the parents of a teenager more than $60,000 for failing to supervise their son an 18-year-old with attention deficit hyperactivity disorder after he raped a local seven-year-old girl in 2006. The court found it necessary because he had grown up watching porn and had imitated a film he had seen, during the attack.
The boy is serving a 10-year sentence but the court ruled that his parents are also liable for his crime. A court statement read, "The parents could have prevented the crime with appropriate education but failed to show enough attention to their child and neglected their duty to raise their child so that he can properly adjust to society.
I don't feel that this was necessary, but I also do not know all of the details. If the boy had ADHD maybe the parents were too busy working to try and support some special medication and doctors bills, and schooling to be around him all the time. They also could have just been neglectful. There are just too many questions left to answer. Even so if you saying the boy is responsible enough to serve 10 years then his parents can't be that ($60,000) responsible as well. I feel like the court was trying to have it's cake and eat it too here, you can't just throw around blame at everyone involved. Next they should sue the porn producers and distributer. I wouldn't endorse it either but depending on the situation one could even blame the girl to an extent.
Pact targets Pakistan terror link
While unveiling a £6m ($8.9m) deal with Pakistan he calls "the most comprehensive anti-terrorist program" between the UK and another country, Gordon Brown has proclaimed three-quarters of the most serious terror plots being investigated by UK authorities have links to Pakistan. Gordon, who is currently in Pakistan meeting President Asif Ali Zardari, was in India in talks with premier Manmohan Singh. UK police would like to question Pakistani suspect, Mohammed Ajmal Amir Qasab, in the Mumbai attacks, about terror groups operating from Pakistan. Mr Brown's series of meetings in the region came as Pakistan accused India of violating its airspace, which India has denied, but has concedes to a security overhaul blaming Pakistan-based militants for the Mumbai attacks.
Gaza crowds for Hamas anniversary
Tens of thousands of Hamas supporters are rallying in a Gaza City stadium to celebrate the 21st anniversary of the militant group's founding. The mass rally was not without spectacle. It had a sea of green flags, and trying to portray Hamas, which has ruled Gaza since a violent takeover in June 2007, as a symbol of strength. In Cairo Israeli and Egyptian officials were to meet in a bid to renew a six-month-old Gaza ceasefire with Hamas. However, many, including Hamas political chief Khaled Meshaal, have doubts about success.
Armies 'attack Uganda rebels'
In Uganda three African armies, Ugandan, DR Congolese and the government of South Sudan's, have launched a joint offensive against Ugandan rebels based in eastern DR Congo, military officials say. The rebel group is known as the Lord's Resistance Army (LRA) in the Garamba region of DR Congo. This attack seems to to be incurred by LRA leader Joseph Kony, wanted by the International Criminal Court stalling on a peace deal. The LRA has led a rebellion for more than 20 years in northern Uganda and the fighting has displaced some two million people.
President Bush has SKILLZ!!!!
Check these razor sharp reflexes of president Bush has he dodges shoes thrown at him at a press conference on a surprise visit to Iraq. An Iraqi journalist was the thrower of the shoes and yelled "this is a goodbye kiss from the Iraqi people, dog," before he was wrestled to the ground. The soles of shoes are considered an insult in Arab culture. During the trip, Mr Bush and Iraqi PM Nouri Maliki signed the new security agreement between the two countries.
All the president had to comment on the topic was "All I can report is a size 10," he said according to the Associated Press news agency.
Although he was wrestled down by many I wonder how many men in the room secretly applaud George Bush's attacker.
All the president had to comment on the topic was "All I can report is a size 10," he said according to the Associated Press news agency.
Although he was wrestled down by many I wonder how many men in the room secretly applaud George Bush's attacker.
The worst has yet to come?
The article titled, "8 really, really scary predictions," attempts to show how things will get worse, much worse before they get better. Although the article is frightening with its statistics, it fortells a future that will probably not be far from the truth. Often to stimulate spending and raise consumer confidence, statistics of the economy are presented in a brighter manner to lower the likelihood of there being a self fufilling prophesy. The article predicts that we will likely see GDP fall further throughout 2009, and the recovery of 2010/2011 will be minimal ranging around "1-1.5%." Also that unemployment will rise another two percent, nearing 10%, something that has not been seen for decades. Home prices are predicted to fall another 15% before finally bottoming out in 2010. Finally, article highly recommends to stay away from risky investments in the stock and credit market and stick to secure low returns. This is definitely a grim article, but nevertheless portrays the near future more accurately that some may want to consider or face. It also does not say that wealth will be impossible to gain over the upcoming years, but rather it must be accumulated using different methods and strategy than before.
Another top broker accused of fraud on Wall Street
Bernard L. Madoff, a former chairman of the Nasdaq Stock Market and a force in Wall Street trading for nearly 50 years, was arrested by federal agents Thursday, a day after his sons turned him in for running what they said their father called "a giant Ponzi scheme."
Mr. Madoff's Fairfield Sentry Ltd., a hedge fund run by Madoff Investment Services to invest in shares in the S&P 100, claimed to be up 5.6% through the end of November, a period when the Standard & Poor's 500-stock index was down 37.65%. In October, Fairfield Sentry was said to be down 0.06%, a month when the S&P 500 lost 16.8%. Since its inception in December 1990, the fund averaged a 10.5% annual return, according to fund documents.
Such returns sparked widespread skepticism for years on Wall Street. News stories raised questions about his approach. A number of traders suggested his firm could be buying shares for its own account just before it filled orders for customers, an illegal act called front-running.
In 2001, Mr. Madoff told Barron's that charges of front-running were "ridiculous."
U.S. District Judge Louis Stanton, who is overseeing the SEC's case against Mr. Madoff and his firm, on Thursday appointed Lee Richards, a Manhattan lawyer, as the firm's receiver in order to preserve its assets and accounts outside the U.S. The judge also ordered Mr. Madoff and his firm not to move assets. At a hearing set for Friday, the judge will consider the SEC's request to grant powers to the receiver over the entire firm, and a complete asset freeze.
Saturday, December 13, 2008
As the Rich Get Poorer, Teenagers Feel the Crunch
It is impossible to quantify how many affluent parents have trimmed allowances in recent months — or how many of their offspring, in turn, have sought either formal employment or odd jobs. But interviews with dozens of teenagers, parents, educators and employers suggest that many youngsters from well-to-do families seem to have found a new work ethic as the economic crisis that has jeopardized their parents’ jobs and investments has also led to less spending money for Saturday night movies or binges at Abercrombie & Fitch.
Teenage participation in the national labor force has fallen steadily since 1979, when 49 percent of all 16- and 17-year-olds had some kind of work; last year, the figure was 30 percent. A recent study by the Center for Labor Market Studies at Northeastern University showed that teenage employment from 2005 to 2007 rose with household incomes that go up to $150,000 a year: 14 percent of teenagers from families earning less than $20,000 a year work, as do 26 percent of those whose families make $60,000, 32 percent of those earning $80,000 and 33 percent of those between $120,000 and $150,000.
Teenage participation in the national labor force has fallen steadily since 1979, when 49 percent of all 16- and 17-year-olds had some kind of work; last year, the figure was 30 percent. A recent study by the Center for Labor Market Studies at Northeastern University showed that teenage employment from 2005 to 2007 rose with household incomes that go up to $150,000 a year: 14 percent of teenagers from families earning less than $20,000 a year work, as do 26 percent of those whose families make $60,000, 32 percent of those earning $80,000 and 33 percent of those between $120,000 and $150,000.
In Poland, Style Comes Used and by the Pound
this is not a tale of people buying used clothes in the midst of recessionary gloom. The global economic crisis has yet to hit a majority of Poles. Thrift stores here have become impromptu laboratories of the changing mores and attitudes in a country adjusting to newfound wealth. Young Poles here in the capital are now confident enough in their ability to buy new clothes that they at last have taken to wearing old ones. Those eking out a living on fixed incomes, especially retirees, still lack the means to do otherwise.And so the hip and the strapped meet at secondhand stores like Tomitex, on Nowowiejska Street in downtown Warsaw.
The pronounced stigma of buying used clothes in a poor country was once a powerful deterrent for shopping — or at least admitting to shopping — at secondhand stores, known here by the derogative colloquialism lumpex, which translates as something like bum export. That stigma has been replaced among the young by a playful attitude toward vintage clothing and bargain-hunting that would not be out of place among their contemporaries in London or New York. It is all part of the ferment of a capital rife with traffic jams as the new and used imported cars have outstripped the capacity of the roads to carry them all. One boutique for the latest new styles, aptly named Luxury & Liberty, has opened in the former headquarters of the governing Polish United Workers’ Party, which also previously housed the Warsaw Stock Exchange since the end of Communism. Poles, who under Communism had few choices for clothes, now have the entire spectrum, but the full breadth is only available to a few. The gulf between the haves and have-nots is wide, and the two sides are increasingly bumping against each other quite literally.
The pronounced stigma of buying used clothes in a poor country was once a powerful deterrent for shopping — or at least admitting to shopping — at secondhand stores, known here by the derogative colloquialism lumpex, which translates as something like bum export. That stigma has been replaced among the young by a playful attitude toward vintage clothing and bargain-hunting that would not be out of place among their contemporaries in London or New York. It is all part of the ferment of a capital rife with traffic jams as the new and used imported cars have outstripped the capacity of the roads to carry them all. One boutique for the latest new styles, aptly named Luxury & Liberty, has opened in the former headquarters of the governing Polish United Workers’ Party, which also previously housed the Warsaw Stock Exchange since the end of Communism. Poles, who under Communism had few choices for clothes, now have the entire spectrum, but the full breadth is only available to a few. The gulf between the haves and have-nots is wide, and the two sides are increasingly bumping against each other quite literally.
Foes warned off 'testing' Obama
The US Defense Secretary has warned opponents of the US against trying to "test" Barack Obama with a crisis in the early days of his presidency stating that "Anyone who thought that the upcoming months might present opportunities to test the new administration would be sorely mistaken." And "President Obama and his national security team, myself included, will be ready to defend the interests of the United States and our friends and allies from the moment he takes office on January 20th."
More dead in Sudan
Over 50 people were killed in tribal clashes in South Darfur on Friday. Combatants from the African Fallata trib attacked their rival Arab Habaniya tribe. Armed cattle rustlers, from the two tribes, wage regular against each other. Six policemen, including an officer, were among the killed people. They were attempting to stop the tribal conflict. Three of the attackers’ vehicles were destroyed.
Fears of New Ethnic Conflict in Bosnia
SARAJEVO, Bosnia and Herzegovina — Thirteen years after the United States brokered the Dayton peace agreement to end the ferocious ethnic war in the former Yugoslavia, fears are mounting that Bosnia, poor and divided, is again teetering toward crisis. On the surface, this haunted capital, its ancient mosques and Orthodox churches still pocked by mortar fire, appears to be enjoying a renaissance. Young professionals throng to stylish cafes and gleaming new shopping malls while the muezzin heralds the morning prayer. The ghosts of Srebrenica linger — recalling the worst massacre in Europe since World War II — but Sarajevans prefer to talk about President-elect Barack Obama or the global financial crisis.Yet for the first time in years, talk of the prospect of another war is creeping into conversations across the ethnic divide in Bosnia, a former Yugoslav republic that the Dayton agreement divided into two entities, a Muslim-Croat Federation and a Serbian Republic. The power-sharing agreement between former foes has always been tense. Now, however, the uneasy peace has been complicated by Kosovo’s declaration of independence from Serbia in February, which many here worry could prompt the Serbian Republic to follow suit, tipping the region into a conflict that could fast turn deadly.
“It’s time to pay attention to Bosnia again, if we don’t want things to get nasty very quickly,” Richard C. Holbrooke, the Clinton administration official who brokered the Dayton accord, and Paddy Ashdown, formerly the West’s top diplomat in Bosnia, warned recently in an open letter published in several newspapers. “By now, the entire world knows the price of that.”
Sketching a worst-case example, Srecko Latal, a Bosnia specialist at the Balkan Investigative Reporting Network in Sarajevo, warned that if the Serbian Republic declared independence, Croatia would respond by sending in troops, while the Bosnian Muslims would take up arms. If Banja Luka, the capital of the Serbian Republic, were to fall, he continued, Serbia would be provoked into entering the fray, leading to the prospect of a regional war.
For the country to progress, leaders on all sides say, the structure established by the Dayton accord must be overhauled. The country’s two entities have their own Parliaments, and there are 10 regional authorities, each with its own police force and education, health and judicial authorities. The result is a byzantine system of government directed by 160 ministers, a structure that absorbs 50 percent of Bosnia’s gross domestic product of $15 billion, according to the World Bank. While untangling that bureaucracy would be difficult, persuading the country’s leaders to put aside their fundamental differences might be harder.
“It’s time to pay attention to Bosnia again, if we don’t want things to get nasty very quickly,” Richard C. Holbrooke, the Clinton administration official who brokered the Dayton accord, and Paddy Ashdown, formerly the West’s top diplomat in Bosnia, warned recently in an open letter published in several newspapers. “By now, the entire world knows the price of that.”
Sketching a worst-case example, Srecko Latal, a Bosnia specialist at the Balkan Investigative Reporting Network in Sarajevo, warned that if the Serbian Republic declared independence, Croatia would respond by sending in troops, while the Bosnian Muslims would take up arms. If Banja Luka, the capital of the Serbian Republic, were to fall, he continued, Serbia would be provoked into entering the fray, leading to the prospect of a regional war.
For the country to progress, leaders on all sides say, the structure established by the Dayton accord must be overhauled. The country’s two entities have their own Parliaments, and there are 10 regional authorities, each with its own police force and education, health and judicial authorities. The result is a byzantine system of government directed by 160 ministers, a structure that absorbs 50 percent of Bosnia’s gross domestic product of $15 billion, according to the World Bank. While untangling that bureaucracy would be difficult, persuading the country’s leaders to put aside their fundamental differences might be harder.
Failed States, Cholera, and ‘Preventive Action’
One discussion centered on creating an international mechanism for humanitarian intervention when a malfunctioning nation’s leadership fails to address a building crisis like the cholera outbreak in Zimbabwe, or when it consciously abuses its people by conducting or abetting mass killings. There was no clear path to establishing such a protocol, although those at the meeting appeared to agree that the United Nations Security Council, in its current form at least, would never be the vehicle given the veto power of states dead-set against anything resembling outside interference in internal affairs.
But when the world watches avoidable disasters unfolding in plain sight, what should be done? With global media and Web connectedness, everyone — to some extent — bears witness to starvation or genocide or the like. Awareness comes with responsibility.
Still, in the long history of nation states, and given human beings’ persistent tribal tendencies, when does an outside institution, however well intentioned, have the right to intervene in another country? Who decides which interventions are moral and “right,” and which are not justified? There is a fundamental tension with us, still, between the rights of individuals (or individual states) and of the larger community (or community of nations). This was at the heart of my recent post on the enduring dream of global-scale thinking and action, with extends from Darwin through Havel and on through Bill and Melinda Gates’ view that all lives have equal value.
How this plays out will certainly help determine how many bumps there are in the road toward 9 billion people seeking a decent life. At the meeting, former Secretary of State Madeleine K. Albright proposed an intermediate step through which rich countries could help speed the progress of poorer ones, creating new ways citizens can serve overseas to help foster freedom, economic development, and improve lives.
But when the world watches avoidable disasters unfolding in plain sight, what should be done? With global media and Web connectedness, everyone — to some extent — bears witness to starvation or genocide or the like. Awareness comes with responsibility.
Still, in the long history of nation states, and given human beings’ persistent tribal tendencies, when does an outside institution, however well intentioned, have the right to intervene in another country? Who decides which interventions are moral and “right,” and which are not justified? There is a fundamental tension with us, still, between the rights of individuals (or individual states) and of the larger community (or community of nations). This was at the heart of my recent post on the enduring dream of global-scale thinking and action, with extends from Darwin through Havel and on through Bill and Melinda Gates’ view that all lives have equal value.
How this plays out will certainly help determine how many bumps there are in the road toward 9 billion people seeking a decent life. At the meeting, former Secretary of State Madeleine K. Albright proposed an intermediate step through which rich countries could help speed the progress of poorer ones, creating new ways citizens can serve overseas to help foster freedom, economic development, and improve lives.
Indian navy 'captures 23 pirates'
A navy spokesman said the Indian navy had responded to a mayday call from MV Gibe, flying under the Ethiopian flag. and has arrested 23 Somali and Yemeni pirates who tried to storm a ship in the Gulf of Aden. As a precaution several countries have warships patrolling the gulf amid growing international concern about piracy. A cache of arms and equipment is reported to have been confiscated, including seven AK-47 assault rifles, three machine guns, and a rocket-propelled grenade launcher.
Last month, India's navy thought it had sunk a pirate "mother vessel" off Somalia but it later emerged that the vessel was actually a Thai fishing trawler that had been seized by pirates off Yemen.
US Defence Secretary Robert Gates said better intelligence was needed for a land attack on pirate bases to be considered, and also called for shipping companies to do more to protect their vessels travelling through the Arabian Sean and Indian Ocean, speaking at a security conference in Bahrain.
UK caused cholera, says Zimbabwe
An ally of Zimbabwean President Robert Mugabe has said the cholera outbreak in Zimbabwe which has left hundreds dead was caused by the UK. Even though on Thursday, Mr Mugabe said the spread of cholera had been halted, aid workers warned that the situation was worsening and the outbreak could last for months.
Report Spotlights Iraq Rebuilding Blunders
BAGHDAD — An unpublished 513-page federal history of the American-led reconstruction of Iraq depicts an effort crippled before the invasion by Pentagon planners who were hostile to the idea of rebuilding a foreign country, and then molded into a $100 billion failure by bureaucratic turf wars, spiraling violence and ignorance of the basic elements of Iraqi society and infrastructure.The history, the first official account of its kind, is circulating in draft form here and in Washington among a tight circle of technical reviewers, policy experts and senior officials. It also concludes that when the reconstruction began to lag — particularly in the critical area of rebuilding the Iraqi police and army — the Pentagon simply put out inflated measures of progress to cover up the failures. In one passage, for example, former Secretary of State Colin L. Powell is quoted as saying that in the months after the 2003 invasion, the Defense Department “kept inventing numbers of Iraqi security forces — the number would jump 20,000 a week! ‘We now have 80,000, we now have 100,000, we now have 120,000.’ ”
Among the overarching conclusions of the history is that five years after embarking on its largest foreign reconstruction project since the Marshall Plan in Europe after World War II, the United States government has in place neither the policies and technical capacity nor the organizational structure that would be needed to undertake such a program on anything approaching this scale.The bitterest message of all for the reconstruction program may be the way the history ends. The hard figures on basic services and industrial production compiled for the report reveal that for all the money spent and promises made, the rebuilding effort never did much more than restore what was destroyed during the invasion and the convulsive looting that followed.
By mid-2008, the history says, $117 billion had been spent on the reconstruction of Iraq, including some $50 billion in United States taxpayer money.When the Office of Management and Budget balked at the American occupation authority’s abrupt request for about $20 billion in new reconstruction money in August 2003, a veteran Republican lobbyist working for the authority made a bluntly partisan appeal to Joshua B. Bolten, then the O.M.B. director and now the White House chief of staff. “To delay getting our funds would be a political disaster for the President,” wrote the lobbyist, Tom C. Korologos. “His election will hang for a large part on show of progress in Iraq and without the funding this year, progress will grind to a halt.” With administration backing, Congress allocated the money later that year. In an illustration of the hasty and haphazard planning, a civilian official at the United States Agency for International Development was at one point given four hours to determine how many miles of Iraqi roads would need to be reopened and repaired. The official searched through the agency’s reference library, and his estimate went directly into a master plan. Whatever the quality of the agency’s plan, it eventually began running what amounted to a parallel reconstruction effort in the provinces that had little relation with the rest of the American effort.
The United States could soon have reason to consult this cautionary tale of deception, waste and poor planning, as troop levels and reconstruction efforts in Afghanistan are likely to be stepped up under the new administration. The incoming Obama administration’s rebuilding experts are expected to focus on smaller-scale projects and emphasize political and economic reform. Still, such programs do not address one of the history’s main contentions: that the reconstruction effort has failed because no single agency in the United States government has responsibility for the job.
Among the overarching conclusions of the history is that five years after embarking on its largest foreign reconstruction project since the Marshall Plan in Europe after World War II, the United States government has in place neither the policies and technical capacity nor the organizational structure that would be needed to undertake such a program on anything approaching this scale.The bitterest message of all for the reconstruction program may be the way the history ends. The hard figures on basic services and industrial production compiled for the report reveal that for all the money spent and promises made, the rebuilding effort never did much more than restore what was destroyed during the invasion and the convulsive looting that followed.
By mid-2008, the history says, $117 billion had been spent on the reconstruction of Iraq, including some $50 billion in United States taxpayer money.When the Office of Management and Budget balked at the American occupation authority’s abrupt request for about $20 billion in new reconstruction money in August 2003, a veteran Republican lobbyist working for the authority made a bluntly partisan appeal to Joshua B. Bolten, then the O.M.B. director and now the White House chief of staff. “To delay getting our funds would be a political disaster for the President,” wrote the lobbyist, Tom C. Korologos. “His election will hang for a large part on show of progress in Iraq and without the funding this year, progress will grind to a halt.” With administration backing, Congress allocated the money later that year. In an illustration of the hasty and haphazard planning, a civilian official at the United States Agency for International Development was at one point given four hours to determine how many miles of Iraqi roads would need to be reopened and repaired. The official searched through the agency’s reference library, and his estimate went directly into a master plan. Whatever the quality of the agency’s plan, it eventually began running what amounted to a parallel reconstruction effort in the provinces that had little relation with the rest of the American effort.
The United States could soon have reason to consult this cautionary tale of deception, waste and poor planning, as troop levels and reconstruction efforts in Afghanistan are likely to be stepped up under the new administration. The incoming Obama administration’s rebuilding experts are expected to focus on smaller-scale projects and emphasize political and economic reform. Still, such programs do not address one of the history’s main contentions: that the reconstruction effort has failed because no single agency in the United States government has responsibility for the job.
Survey Asks: Internet Access or Sex?
Intel came up with a novel way to show how important the Internet and computing have become in the lives of Americans. In conjunction with Harris Interactive, the company conducted a survey of adults in the United States under the prosaic-enough banner “Internet Reliance in Today’s Economy.”
But the first “key finding” from the study is a little more attention-grabbing. According to the study, 46 percent of women and 30 percent of men would opt to forgo sex for two weeks instead of giving up access to their precious Internet for the same period.
More broadly, those surveyed said access to the Internet ranked highest among the discretionary spending items they could not live without. Cable television, dining out, shopping for clothes and gym memberships followed in declining importance.
But the first “key finding” from the study is a little more attention-grabbing. According to the study, 46 percent of women and 30 percent of men would opt to forgo sex for two weeks instead of giving up access to their precious Internet for the same period.
More broadly, those surveyed said access to the Internet ranked highest among the discretionary spending items they could not live without. Cable television, dining out, shopping for clothes and gym memberships followed in declining importance.
White House removes protections for endangered species
With just over a month remaining in office, the Bush administration loosened federal protection of plant and animal species threatened with extinction.On Thursday, the Interior Department announced a change to Section 7 of the Endangered Species Act, which required federal agencies to consult with scientists at the Fish and Wildlife Service or the National Marine Fisheries Service to determine whether a project is likely to affect any listed species.Under the new rule, federal agencies such as the Federal Highway Administration can in many cases simply check with their own personnel to determine if their activities will harm any of the 1,247 animal and 747plant species listed as endangered or threatened.So under the new rules, federal agencies that are undertaking a project need not check with Fish and Wildlife or National Marine Fisheries under these circumstances:
Where the action has no effect on a listed species or critical habitat, or
Where the action is wholly beneficial, or
Where the effects of the action can not be measured or detected in a manner that permits meaningful evaluation using the best available science, or
Where the effects of the action are the result of global processes and can not be reliably predicted or measured on the scale of species current range, or would result in an insignificant impact to a listed species, or are such that the potential risk of harm to a species is remote.
“The rule strengthens the regulations so the government can focus on protecting endangered species as it strives to rebuild the American economy,” said Secretary of the Interior Dirk Kempthorne.
Where the action has no effect on a listed species or critical habitat, or
Where the action is wholly beneficial, or
Where the effects of the action can not be measured or detected in a manner that permits meaningful evaluation using the best available science, or
Where the effects of the action are the result of global processes and can not be reliably predicted or measured on the scale of species current range, or would result in an insignificant impact to a listed species, or are such that the potential risk of harm to a species is remote.
“The rule strengthens the regulations so the government can focus on protecting endangered species as it strives to rebuild the American economy,” said Secretary of the Interior Dirk Kempthorne.
White House assessing options to aid carmakers
The White House and congressional Democrats had agreed on a $14 billion measure that would have extended short-term financing to the industry and set up a "car czar" to make sure the money was used to turn the Big Three into competitive companies. The legislation, however, died when Senate Republicans demanded upfront pay and benefit concessions from the United Auto Workers that union officials rejected.
The failure on Capitol Hill prompted urgent requests for White House intervention. Administration officials were dispatched to weigh the pros and cons of a range of other bailout actions. White House and Treasury Department officials are keeping details of their discussions closely held for fear of affecting markets, but financial experts have zeroed in on a few likely avenues for helping the auto industry and its 3 million workers.
One way is to tap directly into the $700 billion financial rescue bailout fund to provide loans to the carmakers. Another is to use part of the bailout fund as a kind of collateral for emergency loans the automakers could get from the Federal Reserve. The administration also could do nothing, leaving open the possibility that one or more of the automakers could go bankrupt. It also could wait for the new Congress, flush with more Democratic votes when it returns in early January, to try again to get bailout legislation passed.
A second possibility offers Bush some political cover. Treasury Secretary Henry Paulson could use part, but not all, of the $15 billion left of the first $350 billion allocated to the TARP to back up loans the automakers could get from the Fed's emergency lending program. That would leave some money to help troubled financial institutions, which Bush has long argued should be the first in line for TARP money.
Federal Reserve Chairman Ben Bernanke has said he's reluctant to use the Fed's emergency lending program for the automakers. Decisions about giving financial aid to Detroit are best left to Congress, he says.
The failure on Capitol Hill prompted urgent requests for White House intervention. Administration officials were dispatched to weigh the pros and cons of a range of other bailout actions. White House and Treasury Department officials are keeping details of their discussions closely held for fear of affecting markets, but financial experts have zeroed in on a few likely avenues for helping the auto industry and its 3 million workers.
One way is to tap directly into the $700 billion financial rescue bailout fund to provide loans to the carmakers. Another is to use part of the bailout fund as a kind of collateral for emergency loans the automakers could get from the Federal Reserve. The administration also could do nothing, leaving open the possibility that one or more of the automakers could go bankrupt. It also could wait for the new Congress, flush with more Democratic votes when it returns in early January, to try again to get bailout legislation passed.
A second possibility offers Bush some political cover. Treasury Secretary Henry Paulson could use part, but not all, of the $15 billion left of the first $350 billion allocated to the TARP to back up loans the automakers could get from the Fed's emergency lending program. That would leave some money to help troubled financial institutions, which Bush has long argued should be the first in line for TARP money.
Federal Reserve Chairman Ben Bernanke has said he's reluctant to use the Fed's emergency lending program for the automakers. Decisions about giving financial aid to Detroit are best left to Congress, he says.
Sarkozy scorned for Dalai meeting
Chinese state media (which really means the Chinese government) has launched a co-ordinated attack on French President Nicolas Sarkozy for meeting Tibet's spiritual leader, the Dalai Lama.
One newspaper said he had shown the "wild ambition of a king of the world". Another accused him of his duplicity.
Meanwhile in France, websites have been hacked and material hostile to the country and its president has appeared a lot on Chinese internet forums.
Mr Sarkozy countered that he would not compromise his "European values".
He met the 73-year-old Tibetan leader at a gathering of Nobel Peace Prize winners in Poland last Saturday, despite Chinese protests.
Beijing accuses the Dalai Lama of leading a movement for Tibet's full independence from China.
The spiritual leader said last week he was seeking autonomy within China, rather than independence from it, but he also urged the European Union - China's biggest trading partner - to stand up to Beijing on human rights.
Man Sarkozy has been pissing everyone off recently. This time though I find it weird Beijing is so pissed Sarkozy saw the Dalai Lama. I don't remember them being so mad when he has seen almost every dignitary in the past half century. If China got as mad every time as they did (or pretended to) with Sarkozy they wouldn't have anyone left in the world to get mad at.
Gates in Iraq to discuss troops' status
US Defense Secretary Robert Gates is on an unannounced visit to Iraq, where he is expected to meet with senior military commanders. Gates, who was recently reinstated as the secretary of defense by US President-elect Barack Obama, arrived at the Balad airbase in northern Baghdad on Saturday to discuss the drawdown of US troops. The visit comes as the US prepares to cut its troops levels and begin to pull forces out of Iraqi cities, stationing its forces in military bases and camps, In accordance with a security pact signed between Washington and Baghdad. The pact mandates that US combat forces withdraw from Iraqi cities by next June and from the whole country by the end of 2011.
Earlier in the day Iraq's Prime Minister Nouri al-Maliki dismissed a suggestion by government spokesman Ali al-Dabbagh that US troops may need to stay in the country for 10 years despite the two sides' agreement. "What was announced about the Iraqi forces needing 10 years in order to be ready is only his [Dabbagh's] personal point of view and it doesn't represent the opinion of the Iraqi government," Maliki said, AP reported. Before flying to Baghdad from the Bahraini capital of Manama, Gates had urged Arab nations to help fight the spread of violent extremism by funding and training Afghan security forces and reaching out more aggressively to the fledgling Afghan government.
He also urged Persian Gulf Arab leaders to set aside old hostilities inflamed in the Saddam era and forge diplomatic ties with Iraq.
how do you get over Recent Historical tensions like this one and help a Iraq and Afghanistan, esp. when your country is financially unstable? More financially solvent and wealthier countries are pulling out and then telling the Gulf to 'help their Arab brothers". This doesnt seem completely right to me....
Earlier in the day Iraq's Prime Minister Nouri al-Maliki dismissed a suggestion by government spokesman Ali al-Dabbagh that US troops may need to stay in the country for 10 years despite the two sides' agreement. "What was announced about the Iraqi forces needing 10 years in order to be ready is only his [Dabbagh's] personal point of view and it doesn't represent the opinion of the Iraqi government," Maliki said, AP reported. Before flying to Baghdad from the Bahraini capital of Manama, Gates had urged Arab nations to help fight the spread of violent extremism by funding and training Afghan security forces and reaching out more aggressively to the fledgling Afghan government.
He also urged Persian Gulf Arab leaders to set aside old hostilities inflamed in the Saddam era and forge diplomatic ties with Iraq.
how do you get over Recent Historical tensions like this one and help a Iraq and Afghanistan, esp. when your country is financially unstable? More financially solvent and wealthier countries are pulling out and then telling the Gulf to 'help their Arab brothers". This doesnt seem completely right to me....
Actor Hugh Jackman to host Oscars
A little mind numbing news to clear everybody's heads of all the intellectual stimulation.
Organizers have announced Australian actor Hugh Jackman will be the host of the 2009 Academy Awards.
Although the 40-year-old star has not hosted the event before, he has presented the award for best original score in 2007.
Best known for playing Wolverine in the X-Men films, the actor can currently be seen in Baz Luhrmann's epic Australia.
His involvement marks a change of pace for the ceremony, which in recent years has employed a comedian or comic actor as master of ceremonies including last years host John Stewart who is the star of the satirical who The Daily Show.
There ya go. Does your brain feel better now?
Mumbai suspect requests legal aid from Pakistan
The only surviving suspect in last month's attacks in Mumbai has written a letter to the Pakistan High Commission, or embassy, seeking legal aid, CNN's sister network in India reported Saturday, quoting a Mumbai police official.
Investigators said that Mohammad Ajmal Kasab is from Faridkot village in the Okara district of Pakistan's Punjab province and that the other nine attackers also are from Pakistan. Pakistani officials have denied that assertion, blaming instead "stateless actors."
Rakesh Maria, Mumbai's joint police commissioner of crime, said Saturday that Kasab's three-page letter was written in Urdu. In the letter, Kasab confesses his role in the attacks, CNN-IBN said.
The letter is to be delivered to the commission's New Delhi, India, office, possibly Monday, the network reported.
Investigators said that Mohammad Ajmal Kasab is from Faridkot village in the Okara district of Pakistan's Punjab province and that the other nine attackers also are from Pakistan. Pakistani officials have denied that assertion, blaming instead "stateless actors."
Rakesh Maria, Mumbai's joint police commissioner of crime, said Saturday that Kasab's three-page letter was written in Urdu. In the letter, Kasab confesses his role in the attacks, CNN-IBN said.
The letter is to be delivered to the commission's New Delhi, India, office, possibly Monday, the network reported.
Iceland: Cracks in the crust
the collapse of the krona and nationalisation of the country’s three largest banks in early October, which forced the country to secure help from the IMF, have left Iceland’s economic miracle and Mr Oddsson’s reputation in tatters. For weeks, protesters have gathered in Reykjavik’s main square each Saturday calling for his removal from office. On the chilly afternoon of December 1st a few hundred of them, shouting “David out, David out”, gathered at the Arnarson statue and marched down the hill to the central bank. In the lobby, they were met by riot police, who eventually defused the situation.
Almost no other private creditor is lending them anything; Iceland has turned instead to the IMF. In November the fund agreed to a $2.1 billion two-year standby programme, which was supplemented by promises from Nordic countries and Poland, as well as Britain, the Netherlands and Germany. The package will be worth $10.2 billion in total—more than half of Iceland’s GDP.
The IMF calls the collapse of the banks the biggest banking failure in history relative to the size of an economy. In 2007 Iceland’s three main banks made loans equivalent to about nine times the size of the booming economy, up from about 200% of GDP after privatisation in 2003 (see chart 1). Only about one-fifth of those loans were in kronur; interest rates on these were punitively high. Ordinary citizens instead borrowed from their banks in cheaper currencies such as yen and Swiss francs to buy even the most modest homes and cars.
But after the banks collapsed in early October, the currency slumped and domestic interest rates rose sharply (see chart 2). Exchange controls imposed in the heat of the crisis have severely restricted access to hard currency. Initially, there were fears for the payments system. But after an initial panic, credit and debit cards appear to work normally again; Reykjavik’s stores are filled with Christmas shoppers, and restaurants still serve up expensive delicacies such as grilled whale.
But people are mostly living on borrowed time as well as borrowed money. The IMF programme forecasts that the economy will contract by 9.6% next year. Many workers have been laid off but, thanks to Iceland’s labour laws, they have three months’ notice, so the impact is not yet being fully felt. Many young Icelanders, who have never known unemployment, are expected to lose their jobs as businesses shut down. Vilhjalmur Egilsson, head of the Confederation of Icelandic Employers, the main business organisation, says that “corporate Iceland is technically bankrupt” because of its foreign debts. It is unable to refinance loans because the new capital controls mean all credit to the country has dried up.
The scale of what confronts Ms Hjaltested and other Icelanders is only just becoming clear. According to the IMF, the failure of the banks may cost taxpayers more than 80% of GDP. Relative to the economy’s size, that would be about 20 times what the Swedish government paid to rescue its banks in the early 1990s. It would be several times the cost of Japan’s banking crisis a decade ago.
Almost no other private creditor is lending them anything; Iceland has turned instead to the IMF. In November the fund agreed to a $2.1 billion two-year standby programme, which was supplemented by promises from Nordic countries and Poland, as well as Britain, the Netherlands and Germany. The package will be worth $10.2 billion in total—more than half of Iceland’s GDP.
The IMF calls the collapse of the banks the biggest banking failure in history relative to the size of an economy. In 2007 Iceland’s three main banks made loans equivalent to about nine times the size of the booming economy, up from about 200% of GDP after privatisation in 2003 (see chart 1). Only about one-fifth of those loans were in kronur; interest rates on these were punitively high. Ordinary citizens instead borrowed from their banks in cheaper currencies such as yen and Swiss francs to buy even the most modest homes and cars.
But after the banks collapsed in early October, the currency slumped and domestic interest rates rose sharply (see chart 2). Exchange controls imposed in the heat of the crisis have severely restricted access to hard currency. Initially, there were fears for the payments system. But after an initial panic, credit and debit cards appear to work normally again; Reykjavik’s stores are filled with Christmas shoppers, and restaurants still serve up expensive delicacies such as grilled whale.
But people are mostly living on borrowed time as well as borrowed money. The IMF programme forecasts that the economy will contract by 9.6% next year. Many workers have been laid off but, thanks to Iceland’s labour laws, they have three months’ notice, so the impact is not yet being fully felt. Many young Icelanders, who have never known unemployment, are expected to lose their jobs as businesses shut down. Vilhjalmur Egilsson, head of the Confederation of Icelandic Employers, the main business organisation, says that “corporate Iceland is technically bankrupt” because of its foreign debts. It is unable to refinance loans because the new capital controls mean all credit to the country has dried up.
The scale of what confronts Ms Hjaltested and other Icelanders is only just becoming clear. According to the IMF, the failure of the banks may cost taxpayers more than 80% of GDP. Relative to the economy’s size, that would be about 20 times what the Swedish government paid to rescue its banks in the early 1990s. It would be several times the cost of Japan’s banking crisis a decade ago.
China and India, suddenly vulnerable
Asia’s two big beasts are shivering. India’s economy is weaker, but China’s leaders have more to fear.
THE speed with which clouds of economic gloom and even despair have gathered over the global economy has been startling everywhere. But the change has been especially sudden in the world’s two most populous countries: China and India. Until quite recently, the world’s fastest-growing big economies both felt themselves largely immune from the contagion afflicting the rich world. Optimists even hoped that these huge emerging markets might provide the engines that could pull the world out of recession. Now some fear the reverse: that the global downturn is going to drag China and India down with it, bringing massive unemployment to two countries that are, for all their success, still poor—India is home to some two-fifths of the world’s malnourished children.
The pessimism may be overdone. These are still the most dynamic parts of the world economy. But both countries face daunting economic and political difficulties. In India’s case, its newly positive self-image has suffered a double blow: from the economic buffeting, and from the bullets of the terrorists who attacked Mumbai last month. As our special report makes clear, India’s recent self-confidence had two roots. One was a sustained spurt in economic growth to a five-year annual average of 8.8%. The other was the concomitant rise in India’s global stature and influence. No longer, its politicians gloated, was India “hyphenated” with Pakistan as one half of a potential nuclear maelstrom. Rather it had become part of “Chindia”—a fast-growing success story. If China’s growth rate were to fall to that level, it would be regarded as a disaster at home and abroad. The country is this month celebrating the 30th anniversary of the event seen as marking the launch of its policies of “reform and opening”, since when its economy has grown at an annual average of 9.8%. The event was a meeting of the Communist Party’s Central Committee at which Deng Xiaoping gained control. Tentatively at first but with greater radicalism in the 1990s, the party dismantled most of the monolithic Maoist edifice—parcelling out collective farmland, sucking in vast amounts of foreign investment and allowing private enterprise to thrive. The anniversary may be a bogus milestone, but it is easy to understand why the party should want to trumpet the achievements of the past 30 years (see article). They have witnessed the most astonishing economic transformation in human history. In a country that is home to one-fifth of humanity some 200m people have been lifted out of poverty.
...
The gap between mouth and trouser
One worry is that China’s rulers will try to push the yuan down to help exporters. That would be a terrible idea, not least because the government has the resources to ease the pain in less dangerous ways: it is running a budget surplus and has little debt. Last month it announced a huge 4 trillion yuan (nearly $600 billion) fiscal-stimulus package. Some who have crunched the numbers argue that this was all mouth and no trousers—much of it made up by old budget commitments, double-counting and empty promises. It was thus mainly propaganda, to convince China’s own people and the outside world that the government was serious about stimulating demand at home. That may yet prove to be unfair: what matters is when infrastructure money is spent, not when it is announced. Yet there is little sign that the regime is ready to take radical steps in the two areas that would do most to persuade the rural majority to spend its money rather than hoard it: giving farmers better rights over their land; and providing a decent social safety-net, especially in health care.
Still, China does at least have trousers, with deep pockets. India, in contrast, is not seen as a big potential part of the answer to the world’s economic problems. Not only is its economy far smaller; its government’s finances are also a mess. Its budget deficit—some 8% of GDP—inhibits it from offering a bigger stimulus that might mitigate the downturn (see article). This is alarming. If China reckons it needs 8% annual growth to provide jobs for the 7m or so new members of its workforce each year, how is India to cope? A younger country, its workforce is increasing by about 14m a year—ie, about one-quarter of the world’s new workers. And, perversely, its great successes of recent years have been in industries that rely not on vast supplies of cheap labour but on smaller numbers of highly educated engineers—such as its computer-services businesses and capital-intensive manufacturing.
In two respects, however, India has a big advantage over China in coping with an economic slowdown. It has all-too extensive experience in it; and it has a political system that can cope with disgruntlement without suffering existential doubts. India pays an economic price for its democracy. Decision-making is cumbersome. And as in China, unrest and even insurgency are widespread. But the political system has a resilience and flexibility that China’s own leaders, it seems, believe they lack. They are worrying about how to cope with protests. India’s have their eyes on a looming election.
THE speed with which clouds of economic gloom and even despair have gathered over the global economy has been startling everywhere. But the change has been especially sudden in the world’s two most populous countries: China and India. Until quite recently, the world’s fastest-growing big economies both felt themselves largely immune from the contagion afflicting the rich world. Optimists even hoped that these huge emerging markets might provide the engines that could pull the world out of recession. Now some fear the reverse: that the global downturn is going to drag China and India down with it, bringing massive unemployment to two countries that are, for all their success, still poor—India is home to some two-fifths of the world’s malnourished children.
The pessimism may be overdone. These are still the most dynamic parts of the world economy. But both countries face daunting economic and political difficulties. In India’s case, its newly positive self-image has suffered a double blow: from the economic buffeting, and from the bullets of the terrorists who attacked Mumbai last month. As our special report makes clear, India’s recent self-confidence had two roots. One was a sustained spurt in economic growth to a five-year annual average of 8.8%. The other was the concomitant rise in India’s global stature and influence. No longer, its politicians gloated, was India “hyphenated” with Pakistan as one half of a potential nuclear maelstrom. Rather it had become part of “Chindia”—a fast-growing success story. If China’s growth rate were to fall to that level, it would be regarded as a disaster at home and abroad. The country is this month celebrating the 30th anniversary of the event seen as marking the launch of its policies of “reform and opening”, since when its economy has grown at an annual average of 9.8%. The event was a meeting of the Communist Party’s Central Committee at which Deng Xiaoping gained control. Tentatively at first but with greater radicalism in the 1990s, the party dismantled most of the monolithic Maoist edifice—parcelling out collective farmland, sucking in vast amounts of foreign investment and allowing private enterprise to thrive. The anniversary may be a bogus milestone, but it is easy to understand why the party should want to trumpet the achievements of the past 30 years (see article). They have witnessed the most astonishing economic transformation in human history. In a country that is home to one-fifth of humanity some 200m people have been lifted out of poverty.
...
The gap between mouth and trouser
One worry is that China’s rulers will try to push the yuan down to help exporters. That would be a terrible idea, not least because the government has the resources to ease the pain in less dangerous ways: it is running a budget surplus and has little debt. Last month it announced a huge 4 trillion yuan (nearly $600 billion) fiscal-stimulus package. Some who have crunched the numbers argue that this was all mouth and no trousers—much of it made up by old budget commitments, double-counting and empty promises. It was thus mainly propaganda, to convince China’s own people and the outside world that the government was serious about stimulating demand at home. That may yet prove to be unfair: what matters is when infrastructure money is spent, not when it is announced. Yet there is little sign that the regime is ready to take radical steps in the two areas that would do most to persuade the rural majority to spend its money rather than hoard it: giving farmers better rights over their land; and providing a decent social safety-net, especially in health care.
Still, China does at least have trousers, with deep pockets. India, in contrast, is not seen as a big potential part of the answer to the world’s economic problems. Not only is its economy far smaller; its government’s finances are also a mess. Its budget deficit—some 8% of GDP—inhibits it from offering a bigger stimulus that might mitigate the downturn (see article). This is alarming. If China reckons it needs 8% annual growth to provide jobs for the 7m or so new members of its workforce each year, how is India to cope? A younger country, its workforce is increasing by about 14m a year—ie, about one-quarter of the world’s new workers. And, perversely, its great successes of recent years have been in industries that rely not on vast supplies of cheap labour but on smaller numbers of highly educated engineers—such as its computer-services businesses and capital-intensive manufacturing.
In two respects, however, India has a big advantage over China in coping with an economic slowdown. It has all-too extensive experience in it; and it has a political system that can cope with disgruntlement without suffering existential doubts. India pays an economic price for its democracy. Decision-making is cumbersome. And as in China, unrest and even insurgency are widespread. But the political system has a resilience and flexibility that China’s own leaders, it seems, believe they lack. They are worrying about how to cope with protests. India’s have their eyes on a looming election.
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