Monday, April 29, 2013

Pressure on Europe to reconsider cuts; China is 'biggest PC market'; Emerging India's ugly underside

1 Pressure on Europe to reconsider cuts (Andrew Higgins in The New York Times) Unemployment has surpassed Great Depression-era levels in Southern Europe. Recession is drifting to the once resilient economies of the north. Even some onetime hawks on government spending say they cannot cut any more. After years of insisting that the primary cure for Europe’s malaise is to slash spending, the champions of austerity, most notably Chancellor Angela Merkel of Germany, find themselves under intensified pressure to back off unpopular remedies and find some way to restore faltering growth to the world’s largest economic bloc.

On Friday, Prime Minister Mariano Rajoy of Spain, who once promoted aggressive budget cuts, became the latest leader to reject European Union targets for reducing deficits. That is one of several developments — a recent court ruling against job cuts in Portugal; a new, austerity-averse prime-minister-in-waiting in Italy; and mounting doubts among ordinary Europeans and even the International Monetary Fund — that have forced senior officials in Brussels to acknowledge that a move away from what critics see as a fixation on debt and deficits toward more growth-friendly policies is necessary. 

Europe is not about to throw open the spending spigots in the 27 nations of the European Union, even as the bloc teeters on the edge of a new regionwide recession. But officials are clearly shifting toward what Leonardo Domenici, an Italian member of the European Parliament, described as “austerity with a human face.” 

European Union officials insist that their economic policy has never been as dogmatic or narrowly focused on spending cuts as critics claim, and say they have long since moved beyond just austerity. But unable to speak plainly in any of the union’s 23 official languages, they have had trouble explaining their efforts in a manner that ordinary people can understand. 

2 China is ‘biggest PC market’ (BBC) China has overtaken the US as the world's biggest market for personal computers, according to a market data report. Research by the consultants IHS said PC shipments to the country rose to 69 million units in 2012. The US was the largest market up until 2011, last year it had orders for 66 million units. China is also the world's biggest internet market with more than 500 million users. Laptops are the fastest rising sector in developed markets and have overtaken PCs, but in China the sale of desktops and laptops is evenly split.

Peter Lin, senior analyst for computer platforms at IHS, said: "The equal share of shipments for desktop [PCs] and notebooks [lightweight laptops] in China is unusual, since consumers in most regions today tend to prefer more agile mobile PCs, rather than the bulky, stationary desktops. 

"The relatively large percentage of desktop PC shipments in China is due to huge demand in the country's rural areas, which account for a major segment of the country's 1.34 billion citizens. "These consumers tend to prefer the desktop." The Chinese government is investing heavily in computer infrastructure, and plans to spend around 40 trillion yuan ($6.4trn) building rural infrastructure in the next 10 years.

3 Emerging India’s ugly underside (Jason Burke in The Guardian) It is a very discreet neighbourhood. Here high walls mask lawns and villas and guards stand before polished steel gates. Chauffeur-driven imported SUVs and local tradesmen in battered delivery vehicles constitute the only traffic on the leafy, palm-lined lanes.

One morning late last month, the calm of Chatarpur, on the southern fringe of the Indian capital, was broken by three gunshots at one of the largest and most secure homes – that belonging to Deepak Bhardwaj, an aspirant politician and wealthy businessman. Hours later, Neeraj Kumar, Delhi's police commissioner, told reporters how two attackers had gained entry by pretending to have come "for booking the place for a marriage".

The "farmhouses", as the far from rustic mansions in this once rural zone are known, are popular venues for society weddings. Bhardwaj's 30-acre estate, including halls and lawns, was specially constructed to cater for the trade. "They went inside and started talking to Bhardwaj before shooting him twice at point-blank range," Kumar said. As the investigation progressed, it became clear, at least according to the police, that the story of the killing of Bhardwaj had everything that fascinates – and some would say characterises – the emerging modern India: family, jealousy, power, a rags-to-riches story, a "godman" or religious leader on the make, political ambitions and guns.

According to the Indian Express newspaper, Bhardwaj was born, son of a poor carpenter, in a small village in Haryana, a state adjacent to Delhi. When a new airport was built for the capital, he made his first fortune. Judiciously reinvested, particularly in properties snared in India's labyrinthine court processes, the millions began to stack up.

Raju, 62, a knife-sharpener who makes the rounds of the farmhouses on a battered bicycle, said he remembered the area as nothing more than fields and farms when he was young. He did not regret the change though. "Yes, there was space to run around and jungle and all that but we people were very, very poor and there were no jobs, no hope, nothing," he said. "And there were lots of snakes. Life today is much better."

Sunday, April 28, 2013

Greek MPs agree to cut 15,000 more jobs; Gold rally may lose steam; Millions desert Facebook; India tech freshers' pay in time warp

1 Greek MPs agree to cut 15,000 more jobs (BBC) The Greek parliament has passed a bill which will see 15,000 state employees lose their jobs by the end of next year. It is part of continuing moves by the centre-right government to cut costs and ensure more bailout money from international creditors. But it was vociferously opposed by protesters outside parliament.

The new law will overturn what had been a constitutional guarantee for civil servants of a job for life, says the BBC's Mark Lowen in Athens. The sector has been seen as notoriously bloated since it expanded in the 1970s and 1980s as successive administrations employed their own people, our correspondent adds.

State workers who have broken rules will be targeted for dismissal, but many are expected to be replaced by younger employees in key sectors such as health. So the law will not slim down the public sector, our correspondent says. That would be achieved by a parallel plan that would see 150,000 state jobs go by the end of 2015, by replacing only some of those who retire. The law is a condition for Greece to receive its next tranche of loans worth 8.8bn euros ($11.4bn). 

2 Gold rally may lose steam (Tatyana Shumsky in The Wall Street Journal) Gold prices are up 6.8% from recent 26-month lows, but there is evidence that these gains are temporary, traders and analysts say. A rush to buy physical gold and jewelry in India and China helped prices bounce higher last week. But at the same time, financial investors were leaving the market.

Gold held at exchange-traded funds, which trade and store the metal on the investors' behalf, continued to decline as investors sold their shares. In addition, Comex open interest, the number of futures contracts left open overnight without offsetting transactions, were dropping, a sign investors are moving to the sidelines.

"If the US is gently recovering, equities are performing better and there's no inflation pressure, why buy gold?" said David Wilson, director of metals research and strategy at Citigroup. Over the next 12 months, he expects gold prices to fall. Still, some investors say neither gold's downdraft nor its subsequent recovery have changed their reasons for owning precious metals.

Jeffrey Sherman, portfolio manager for commodities at investment firm DoubleLine, said his fund continues to hold precious metals as a hedge against the currency-eroding power of loose monetary policies. "We're printing more money than ever in the US," Mr. Sherman said, so he considers gold "an insurance policy" against a decline in the value of the dollar.

3 Millions desert Facebook (Juliette Garside in The Guardian) Facebook has lost millions of users per month in its biggest markets, independent data suggests, as alternative social networks attract the attention of those looking for fresh online playgrounds. As Facebook prepares to update investors on its performance in the first three months of the year, with analysts forecasting revenues up 36% on last year, studies suggest that its expansion in the US, UK and other major European countries has peaked.

In the last month, the world's largest social network has lost 6m US visitors, a 4% fall, according to analysis firm SocialBakers. In the UK, 1.4m fewer users checked in last month, a fall of 4.5%. The declines are sustained. In the last six months, Facebook has lost nearly 9m monthly visitors in the US and 2m in the UK. Users are also switching off in Canada, Spain, France, Germany and Japan, where Facebook has some of its biggest followings. A spokeswoman for Facebook declined to comment.

"The problem is that, in the US and UK, most people who want to sign up for Facebook have already done it," said new media specialist Ian Maude at Enders Analysis. "There is a boredom factor where people like to try something new. Is Facebook going to go the way of Myspace? The risk is relatively small, but that is not to say it isn't there." Alternative social networks such as Instagram, the photo sharing site that won 30m users in 18 months before Facebook acquired the business a year ago, have seen surges in popularity with younger age groups.

4 India tech freshers’ pay in time warp (Debjyoti Ghosh & PP Thimmaya in The Indian Express) India's $108-billion IT industry is among the country's largest organised private sector employers, but the bottom of the sector's pyramid appears to have little to cheer about. While the overall wage hike in the IT sector has dropped to single digits of late, the salaries of freshers have remained stagnant in the past three to four years. Experts say this trend is likely to prolong as firms navigate a difficult business environment.

Staffing companies point out that in the current market, on average, a fresher in the software services industry draws a salary in the range of Rs 2.75-3.5 lakh per annum when compared to Rs 2.75-3.3 lakh offered during 2008-09. Thanks to increasing margin pressure, demand-supply imbalance, declining business volumes and rising training costs, pay packages at the entry level have not seen an upward swing in the recent past. This is at a time when prices in the country have grown by more than 8% in each of these years.

TV Mohandas Pai, chairman, Manipal Global Education and former director at Infosys, opined that the freshers' salary is likely to remain at the same level for some more years due to the demand-supply mismatch. The IT industry absorbs around 250,000 engineering graduates every year but the annual output is around 600,000 students, giving them lesser bargaining power in a market-driven economy. The sector employs around three million people with close to 60% in the fresher category or well below two years of experience.

Friday, April 26, 2013

South Europe recession threatens to spread north; French jobless number at new high; 'Don't pray for a strong recovery'; Disposable people

1 South Europe recession threatens to spread north (Jack Ewing in The New York Times) Daimler’s glum forecast for 2013 is the latest evidence that Germany, and other relatively healthy countries like Austria and Finland, risk falling into the recession that has long afflicted their southern neighbors. The slowdown in Germany was foreshadowed by months of declining industrial output, said Carl B. Weinberg, chief economist of High Frequency Economics in Valhalla, NY “The EU has made Europe a much more cohesive economy, which is good when things are going up,” he said. “But when things are going down the multiplier is very strong. An outgoing tide lowers all ships.”

The region’s overall economic weakness as well as slowing demand in China and other big markets for German exports of consumer products, cars and sophisticated machine tools, industrial robots and construction equipment are finally taking their toll.  Just one more consecutive quarter of shrinking economic output and Germany would officially enter a recession. The same is true of Belgium, France, Luxembourg, Austria, even Sweden and Finland. The Netherlands has already suffered two quarters of declining gross domestic product. 

Further evidence of the spreading European recession came Thursday, first from Madrid, where the Spanish government reported that unemployment had reached a record level: 27.2%. Then new economic data from London indicated that Britain had barely avoided slipping back into recession for the third time since 2008. 

If Germany slips into recession, much would slide down with it. Germany and the other 26 countries of the European Union together represent the world’s second-largest economy and as a bloc it is the single largest US trading partner. The further delay in Europe’s recovery that a German recession would cause would seriously hamper growth in the United States, Asia and Latin America.

2 French jobless number at new high (BBC) The number of unemployed people in France rose to a fresh high last month, official data shows. There are now some 3.2 million people seeking work in France, 11.5% more than a year ago and 1.2% more than in February, the labour ministry said. The number of jobseekers is the highest since records began in January 1996.

The ministry does not express the jobseeker figure as a percentage of the work force, as done by the International Labour Organization. But it did say the unemployment rate was 10.2% at the end of 2012, and current unemployment had not breached the 10.7% high seen in 1997.

3 ‘Don’t pray for a strong recovery’ (Stephen King in The Guardian) The justification for giveaways isn't just political. It reflects a genuine fear that, following the dotcom crash in 2000 and 9/11 a year later, the west might succumb to a Japanese-style lost decade. It made sense to offer stimulus because the alternative was just too scary. In hindsight, it is now abundantly clear that, despite all the monetary and fiscal heavy lifting (or even because of it) the underlying pace of economic growth was deteriorating.

In the US, there was too much investment in housing and too little elsewhere. In the UK, employment growth became increasingly dependent on the direct and indirect effects of financial leverage. The only sectors to see gains were financial services, property and construction and the public sector. Policymakers also forgot that some of the big postwar drivers of economic growth were reaching maturity. The opening up of trade, the increased employment of women, the huge increase in educational attainment and the growth of consumer credit all contributed to a "step-change" in living standards that, while welcome, hardly suggested a permanent increase in growth rates.

The new reality is, I'm afraid, a world of significantly lower growth, where the gap between our expectations and actual income is getting bigger day by day. Neither Keynesians nor austerians have an answer to this sober outlook because both sides claim their own policies will ultimately take us back to a world of rapidly advancing living standards.

Praying for a strong recovery is not, however, the answer to our problems. By doing so, we'll only end up imposing a bigger and bigger cost on our children. Living within our means is hardly easy but the alternative is worse: false hope leads ultimately to financial crisis, political upheaval and social turmoil.

4 Disposable people (Khaleej Times) Unsafe working conditions in factories are a pressing problem in South Asia. Every now and then, an accident at an industrial site has the most tragic consequences. And now the collapse of a building housing a garments factory at the outskirts of Dhaka, Bangladesh, which has killed over 200 people, has set a new benchmark for tragedy. Eyewitnesses have described that the entire building was razed to the ground in just a few moments.

This incident again highlights the extremely poor safety standards for Bangladesh workers, who ironically partake in a multi-million dollar garments export industry.  The police have confirmed that cases have been filed against the building owner and the owners of the factories for causing unlawful deaths. But it would be overly optimistic to assume that such an accident will not take place again. Not just in Bangladesh, but even in India and Pakistan, unfortunately there is little regard for the lives for labourers. 

It’s high time that the governments of South Asian countries start enforcing strict safety standards at industrial sites. In fact, Western companies involved in importing goods from South Asia, should bear the responsibility of pressurising business owners to ensure the safest working conditions for their labourers.

Wednesday, April 24, 2013

Crisis for European Union as trust hits record low; Future of driving; Seven stages of outrage in India; Destruction of Syrian minaret like 'blowing up the Taj Mahal'

1 Crisis for European Union as trust hits record low (Ian Traynor in The Guardian) Public confidence in the European Union has fallen to historically low levels in the six biggest EU countries, raising fundamental questions about its democratic legitimacy more than three years into the union's worst ever crisis, new data shows. Euroscepticism is soaring to a degree that is likely to feed populist anti-EU politics and frustrate European leaders' efforts to arrest the collapse in support for their project.

Figures from Eurobarometer, the EU's polling organisation, analysed by the European Council on Foreign Relations (ECFR), a thinktank, show a vertiginous decline in trust in the EU in countries such as Spain, Germany and Italy that are historically very pro-European. The six countries surveyed – Germany, France, Britain, Italy, Spain, and Poland – are the EU's biggest, jointly making up more than two out of three EU citizens or around 350 million of the EU's 500 million population.

The findings, published exclusively in the Guardian in Britain and in collaboration with other leading newspapers in the other five countries, represent a nightmare for Europe’s leaders, whether in the wealthy north or in the bailout-battered south, suggesting a much bigger crisis of political and democratic legitimacy.

2 Future of driving (Casey B Mulligan in The New York Times) Google and other innovators are working on vehicles that someday might drive themselves with little or no attention from human passengers. The vehicles of the future will have fast, observant computers that automatically communicate position and road conditions with other vehicles on the road.

Ssmarter driving will lead to more driving, because smarter driving reduces the cost per mile of vehicle usage. The end result of additional driving could be more traffic and more aggregate fuel consumption. These days, a driver has three main costs of the trip to consider: fuel consumption, vehicle wear and tear, and time and attention devoted to driving that could be for something else.

Households and business may also begin to use vehicles with no human passengers or drivers in order to move goods from one place to another and, by economizing on the human driver costs, they may want to move more goods than they do today. As people take on additional activities in their personal vehicles, they may also demand larger vehicles that necessarily require more fuel per mile.

Before driverless cars are adopted, a number of hurdles must be cleared. Some refinements in vehicle technology need to be resolved; insurance companies and state regulators must also figure out liability issues. But expect new driving technologies to increase the number of vehicles on the road.

3 Seven stages of outrage in India (Sidin Vadukut in Khaleej Times) There is a world beyond headlines and tweets. Stage 1: A mainstream media outlet —usually a TV channel but sometimes the web site of a newspaper, never the newspaper itself — reports some kind of criminality/corruption/inhumanity that has taken place somewhere in the country. Stage 2: Some news junkie somewhere picks up on this headline and tweets the living daylights out of it. The first wave of outrage is limited to blogposts and Facebook postings and such things. It is around this time that somebody makes a tasteless joke about the incident.

Stage 3: As the outraged posts pick up, a second layer of outrage explodes as people want to know “Why mainstream media is not reporting about this and instead focussing on stupid things like cricket.” Stage 4: The secondary outrage completely overshadows the first one. Some even suggest that media silence is a conspiracy. Stage 5: The media responds to these charges with the sensitivity of a passenger airplane full of schoolchildren crashing into a home for blind orphaned baby rabbits. The original outrageous incident is analysed to bits but from purely one angle: Who is responsible for this inhumanity? Broadly it ends with fingers pointed at the following: government, police, inadequate parenting, British colonialism, deviation from the original Vedic path, cultural depravity, shameful media and, finally but most importantly, Sunny Leone.

Stage 6: The outrage bubbles over into the real world. And by ‘real world’, I mean Delhi. The Internet clogs up with extremely erudite 15,000 word editorials on the issue that nobody reads but everybody tweets.  Stage 7: Finally, just when true revolution seems around the corner, the cold, hard palm of democracy comes crashing down on the wet, perspiring cheeks of youthful rebellion. As they slink back to their homes and colleges, their ears ringing, the government announces a series of far-reaching reforms that will be tabled before the next session of parliament. 

Bonus Stage 8: Parliament is adjourned for the forthcoming session due to unrest. “India is not a nation, but an egg-puff of karmic efflorescence that is heaving its bosoms,” Rahul Gandhi says at a CII conference. A new Starbucks opens in Chennai.

4 Destruction of Syrian minaret like ‘blowing up the Taj Mahal’ (Ryan Lucas in San Francisco Chronicle) The 11th-century minaret of a famed mosque that towered over the narrow stone alleyways of Aleppo's old quarter collapsed Wednesday as rebels and government troops fought pitched battles in the streets around it, depriving the ancient Syrian city of one of its most important landmarks.

President Bashar Assad’s government and the rebels trying to overthrow him traded blame over the destruction to the Umayyad Mosque, a UNESCO world heritage site and centerpiece of Aleppo's walled Old City. "This is like blowing up the Taj Mahal or destroying the Acropolis in Athens," said Helga Seeden, a professor of archaeology at the American University of Beirut. 

The Umayyad Mosque complex, which dates mostly from the 12th century, suffered extensive damage in October as both sides fought to control the walled compound in the heart of the old city. The fighting left the mosque burned, scarred by bullets and trashed. Two weeks earlier, the nearby medieval covered market, or souk, was gutted by a fire sparked by fighting.

With thousands of years of written history, Syria is home to archaeological treasures that date back to biblical times, including the desert oasis of Palmyra, a cultural center of the ancient world. The nation's capital, Damascus, is one of the oldest continually inhabited cities in the world. The destruction of the minaret — which dated to 1090 and was the oldest surviving part of the Umayyad Mosque — brought outrage and grief.