1 The New York Times on how Germany has prospered while its euro peers have been strangulated by unemployment. During the first nine years of the euro’s existence, it seemed to be a great success for what are now called the peripheral countries of the euro zone. Able to borrow at low rates and benefiting from a buoyant global economy, many countries boomed. But over the last five years, those countries have suffered more than others. Nowhere are the changing fortunes within the euro zone more apparent than in the unemployment statistics. At the end of 2006, the unemployment rate in Germany was 9.6% and nearly four million people were out of work. Now the rate is down to 5.5% and just 2.3 million people are classified as out of work. Both of those figures are the lowest since 1991, the year Germany was unified.
Germany has benefited from many factors. It held down its labour costs during the boom, strengthening its competitive position relative to other members of the euro zone. The northern countries — Austria, Belgium, Finland, Luxembourg and the Netherlands — also have a collective unemployment rate of 5.5%, with Finland the highest at 7.8%. France, the second-largest country in the euro zone, has not done as well and its unemployment rate has risen to 9.8% from 8.9%. It is the other countries where the most pain has been felt. The number of people out of work has doubled in those 10 countries as a group. The rise in the number of unemployed workers is largest in Ireland and Spain, where it has approximately tripled. Italy and Portugal have done better, with the number of people out of work growing by less than 50%. Put another way, at the end of 2006, 32% of the unemployed workers in the euro zone were Germans. Now the figure for Germans is 14%. The peripheral countries’ share went to 61% from 39%.
2 The New York Times on China turning the world’s trading powerhouse 10 years after it joined the WTO. As China heads into a weekend of speeches celebrating its 10 years as an official member of the global trade community, the rest of the world may want to contemplate the exported $49 microwave oven and the imported $85,000 Jeep Grand Cherokee. Sunday is the 10th anniversary of China’s joining the World Trade Organisation — a membership that helped turn China into the world’s biggest economy after the US. Companies and consumers worldwide have benefited from China’s emergence as a top trading partner. And yet, because of special breaks and loopholes for China when it joined the WTO, it still shields its domestic markets from foreign competition much more than any other big nation.
Consider that $49 microwave oven and $85,000 Jeep. Microwave oven prices have plunged in the West over the past decade, largely because China has combined inexpensive labour, excellent infrastructure and heavy factory investment to produce the ovens and a wide range of other consumer goods for export, making creature comforts more affordable to customers around the world. But price tags on imported cars at dealerships in Beijing, Shanghai and other Chinese cities signal how China has continued to protect its home market. In the US, prices for a Detroit-made Jeep Grand Cherokee start at $27,490. But in China, after tariffs and other protective fees, it sells for $85,000 or more. (It’s no surprise that Chrysler has sold fewer than 2,500 of them so far this year in China.)
3 The San Francisco Chronicle reporting that 46 million Americans are on food stamps. 46 million. That's how many Americans receive food stamps, up about two-thirds from four years ago. The government spent a record $71.8 billion on the program in the last fiscal year, or about 12% of the national grocery bill. Created as a temporary measure in 1939 and revived in the 1960s, food stamps are now provided through plastic cards rather than stamp-like coupons. As Congress threatens to cut the program, supermarkets, farmers and antipoverty activists have forged a coalition to try to spare it from the chopping block.
4 BBC report on giant insurers facing ratings downgrade. Some of Europe's top insurance companies have been warned their credit rating could be downgraded as a result of the European financial crisis. The warning comes from the rating agency Standard and Poor's, which earlier this week warned most eurozone countries they could be downgraded. Allianz, Aviva, Axa, Generali and Mapfre were among 15 firms warned. S&P said the "credit watch" was related to the earlier warning on the ratings of 15 of the 17 countries of the eurozone. In a statement it said: "We are placing the ratings on certain European insurance providers on credit watch negative.
"Depending on the outcome of our review of the ratings on the eurozone member governments, the long-term ratings on these insurers could be lowered by one or two notches, and short-term ratings for some issuers could be lowered by one notch." The full list of insurers also names Caisse Centrale de Reassurance, CNP Group, Irish Public Bodies Mutual Insurances, Millenniumbcp-Ageas Group, Nacional de Reaseguros, Pozavarovalnica Sava, RSA Insurance Ireland, Societa Cattolica di Assicurazione, Triglav Group and Unipol Group. Among the countries warned on Monday were Germany, the Netherlands, Finland, Luxembourg and Austria, who were told their rating could be marked down one notch. France, the eurozone's second-largest economy, was warned it could be given a two-notch cut downgrade.
5 Irfan Husain in The Dawn about Indians and Pakistanis attending to the call of nature in the open. Foreigners visiting India and Pakistan for the first time are bemused to see so many people relieving themselves in the open. According to a UN survey, 600 million Indians, or 55% of the population, defecate outdoors along roads, railway tracks and fields. In Pakistan, the figure is lower at 48 million, but is still shockingly high. It is common in both countries to see men standing or squatting against a wall or a tree. The amount of ammonia absorbed by the soil must make it some of the most fertile in the world. But women have a harder time. Many girls in Pakistan don`t go to school because there are no separate toilets for them.
One major issue surrounding the whole area of sanitation in India and Pakistan is the use of a particular class as sanitary workers. These unfortunate people are the descendants of the `untouchables` and have traditionally served as sweepers, even though they have been theoretically freed from this occupation. In Pakistan, an aggressively Muslim nation, this caste continues to bear their ancient cross because other Pakistanis consider it below their dignity to clean the gutters. Paradoxically, the intensifying of religious extremism in Pakistan has gone hand in hand with our rigid attitudes towards class and caste. In India, although Gandhi made it a point to reach out to the Dalits, his example has not struck a chord with millions of Indians. The reality is that despite widespread unemployment, the vast majority of Pakistanis would rather beg than accept becoming sanitary workers as they consider it demeaning. Until these outdated attitudes change, we will have to put up with dirty streets and the unedifying sight of people defecating in public.
6 The Wall Street Journal on India’s focus on ‘backward’ castes to move forward. Despite India's expanding economy, the fruits of rising wealth have largely bypassed many rural areas. So India is trying to engineer advancement for its underclass through a vast and growing affirmative-action program. To decide who should benefit, officials are adapting a means of categorization long viewed by many as one of the great evils of Indian society: the Hindu caste system. Since 1993, India has almost doubled, to 2,251, the number of groups on its official list of "backward classes" that are entitled to 27% of central-government jobs and university admissions, and a varying proportion of state jobs. Officials are in the process of classifying roughly 200 more groups as officially "backward" so that they benefit as well. And for the first time in 80 years, the nation is conducting a "caste census," tallying India's thousands of sub-castes. A caste census has long been taboo, for fear it would reinforce discrimination. But this year, lower-caste groups forced the government's hand. Their hope: The tally will show low-caste numbers are much higher than thought, justifying more government benefits and perhaps even job quotas in the private sector.
7 The Economic Times on India getting its export math wrong and showing an excess of $9bn. Computer and human errors have overstated India's export figures by almost $9 billion, the government said on Friday. This confirms fears about the robustness of the country's export performance and adds to the vulnerability of the rupee. Commerce secretary Rahul Khullar said exports for the first seven months of the fiscal would now need to be restated down by $9 billion to $170.8 billion, a calculation error he said occurred due to a system crash and mistakes in classification and data entry by officials.
8 The Economic Times quoting Reserve Bank of India governor Subbarao as saying the financial leadership of the West has failed us. Duvvuri Subbarao blamed the financial leaders of the West for letting the so-called innovations cause the second global crisis in less than three years even as European leaders scramble to fix the two-year-old sovereign troubles. "There is a vacuum in financial leadership globally. They lacked foresight to see problems of financial innovations. We have gone through one crisis, and I am scared of saying we are going through another." Nearly two years after Euro leaders started to contain the debt turmoil, their fifth effort led to the creation of $267-billion war-chest and evolved rules to curb recurrence of the fiscal mess. They advanced the beginning of a 500-billion euros rescue fund to next year and scrapped the demand that bondholders share losses in sovereign rescues.
9 Minhaz Mechant in The Times of India about an India-US partnership being pivotal in the new world order. In the emerging world order, the India-US partnership will be as pivotal as the Anglo-US axis was for most of the 20th century. China will play the role of the old Soviet Union with economic satellites in an arc curving down from central Asia to Africa where China is now the world's biggest investor. As one of the pivots in this new world order, India has three priceless assets and two damaging liabilities. The assets are its growing economy, market size and plural democracy. The liabilities? Misgovernance and social inequality. Unless good governance overlays our economic growth, poverty will persist. No nation can be great if nearly half of its people live in penury. Inclusive growth follows from good governance. Without that, India's rise as a great power will falter.
10 TN Ninan asking in the Business Standard, ‘Ready for 6.5%?’ Consumers have begun to hurt from the high interest rates, and demand is unlikely to revive quickly, as jobs are becoming scarce and salary hikes are likely to be modest — not enough in most cases to neutralise the increase in monthly loan repayment instalments following the interest rate hikes. Corporate investment will not revive till interest rates have dropped some way down, and a cautious Reserve Bank of India that believes in “baby steps” will take months before it brings down interest rates to levels that change the calculus on business risk. So a 6.5% rate of growth in 2012-13 seems plausible, even probable. If that comes about, it will be the worst performance since 2002-03, when it was 4% because of a poor monsoon.
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