1 The Guardian on new forces driving world economic order – one in which ‘rich’ countries run deficits and ‘poor’ countries accumulate assets. A new economic order is taking shape before our eyes, and it is one that includes accelerated convergence between the old western powers and the emerging world's major new players. For decades, many people lamented the extent to which the west dominated the global economic system. From the governance of multilateral organisations to the design of financial services, the global infrastructure was seen as favouring western interests. Suddenly, the world turned upside down: "rich" countries were running large deficits and, in some cases, tipping from net creditor status to net indebtedness, while "poor" countries were running surpluses and accumulating large stocks of external assets, including financial claims on western economies.
In an amazing turn of events, virtually every western country must now worry about its credit ratings, while quite a few emerging economies continue to climb the ratings ladder. We can now consider the image of western delegations heading to emerging countries to plead, cap in hand, for financial support, both direct and through the IMF.
Multilateral institutions, particularly the IMF, have responded by pumping an unfathomable amount of financing into Europe. But, instead of reversing the disorderly deleveraging and encouraging new private investments, this official financing has merely shifted liabilities from the private sector to the public sector. Fortunately it is not too late for policymakers to catch up. But doing so requires more than just better national policymaking in Europe and America; it is also time for urgent and deep reform of the multilateral system and its main institutions. That process requires joint leadership by the emerging world as a true equal and partner of western powers.
2 The Guardian on Fitch warning US of possible credit downgrade. Ratings agency Fitch has warned that it may downgrade America's triple-A credit rating unless action was taken to reduce federal debt. Fitch said the country's rising debt burden was not consistent with maintaining its top rating, but said it would probably not make a decision before 2013. Last month, Fitch changed its US credit rating outlook to negative from stable, citing the failure of a special congressional committee to agree on at least $1.2tn in deficit-reduction measures.
Despite Fitch's warning, US debt is being valued at levels that suggest it deserves to keep its AAA status. In the bond market, 10-year Treasuries are trading near their record high levels, pushing down the yield on the bonds to just 1.97%. Germany's 10-year bonds have a yield of 1.93%, with UK gilts have a yield of 2.06%. Both are AAA-rated nations. Ten-year debt issued by France, whose AAA rating looks rather shaky, is trading at a yield of 3.09%, – 50% higher than America's.
3 The San Francisco Chronicle on US population growing at the slowest pace since baby boom era of that began in the 1940s, quoting the Census Bureau. The nation's population increased 0.92 percent from April 2010 to July of this year. William Frey, a senior fellow at the Brookings Institution in Washington, said the decline was partly a result of fewer immigrants coming to the US, with the crash of the housing market offering fewer construction jobs for them.
4 The San Francisco Chronicle on Oracle profits diving 9% after the Redwood City software giant reported quarterly sales and profit that missed analysts' estimates. The stock closed at $25.77 for its biggest decline since 2002 and dragged down other software makers such as the Bay Area's Salesforce.com, VMware and Autodesk. Investors worry that corporate customers are spending less on programs that help them manage operations.
5 The New York Times on Indian Dalits fighting caste with capitalism. On his barefoot trudge to school decades ago, a young Ashok Khade passed inescapable reminders of what he was: the well from which he was not allowed to drink; the temple where he was not permitted to worship. At school, he took his place on the floor in a part of the classroom built a step lower than the rest. Untouchables like him, considered to be spiritually and physically unclean, could not be permitted to pollute their upper-caste neighbours and classmates. But on a recent afternoon, as Khade’s chauffeur guided his shimmering silver BMW sedan onto that same street in a village in the southern state of Maharashtra, village leaders rushed to greet him. He paid his respects at the temple, which he paid to rebuild. The untouchable boy had become golden, thanks to the newest god in the Indian pantheon: money.
As the founder of a successful offshore oil-rig engineering company, Khade is part of a tiny but growing class of millionaires from the Dalit population, the 200 million so-called untouchables who occupy the very lowest rung in Hinduism’s social hierarchy. The rapid growth that followed the opening of India’s economy in 1991 has widened the gulf between rich and poor, but the era of growth has also created something unthinkable a generation ago: a tiny but growing group of wealthy Dalit business people. With their new wealth they have also won a measure of social acceptance.
Dalits still lag behind the rest of India, but they have experienced gains as the country’s economy has expanded. A recent analysis by economists at the University of British Columbia found that the wage gap between other castes and Dalits has decreased to 21%, down from 36% in 1983, less than the gap between white male and black male workers in the US. The education gap has been halved.
6 The BBC reporting that over 1,500 custodial deaths have occurred in India in the last one year, quoting the country's Human Rights Commission. Most of the deaths in prison and police custody - 331 - were in the northern state of Uttar Pradesh. Rights groups say a large number of such deaths happen because of torture in custody, claims officials reject. The government routinely attributes deaths in custody to illness, attempted escape, suicide and accidents. An unnamed commission official told The Indian Express newspaper that they had collected the data on "the basis of individual complaints as well as those sent by prison authorities".
7 Khaleej Times on US going the Japan way. If you want to spook an economist, ask him about Japan. He will tell you of a ghastly place whose undying stagnation devours even the strongest stimulus. Quantitative easing, bank recapitalisations and fiscal spending all failed to revive the world’s soon-to-be fourth-largest economy. As the same measures fall flat in America, some are beginning to worry that the US could be headed for its own lost decades.
Both countries’ downturns started with bursting bubbles, but America’s housing bubble was less than half the size of Japan’s: in 1989, all the real estate in Japan was worth five times the country’s GDP while the US peaked at less than two. The stock-market bubbles were similarly skewed: Japanese stocks traded for 50 times earnings in 1989 while the S&P kissed 17 at its peak in 2007. The sinking feeling is corroborated by data: Real wages for most Americans are no better than in 1970. But globalisation isn’t zero-sum, and the market for truly innovative ideas is bigger than ever. These ideas are often born in the US, even now, and companies like Apple, Google and Facebook enjoy network effects on a global scale.
This is a key advantage over Japan, and America’s superstars will continue to profit mightily. Everyone else faces an uncomfortable reality: Unless you are one of the idea-slinging elite, then you are simply one of the many – competing for wages against not only countrymen but the entire world. The fact is that America is at much greater risk of continuing its own uneven growth than reliving Japan’s lost decades. Turning Japanese is beside the point. For most, being American will be bad enough.
8 Khaleej Times explaining why the world is a better place. At this time of Christmas and thoughts of peace on earth we should reflect that the world over most of public opinion is ignorant of just how much violence has declined over the last 3,000 years. Judging by the historical record the 21st century, thus far, is the least violent and safest century of all despite Iran, Afghanistan, Somalia and Sudan, with less people being killed in war than ever before and despite the preceding century being the greatest killing field of them all.
In this century the wars in Iraq and Afghanistan killed a mere four hundredths of a per cent of the American population. US war deaths in the two world wars, Korea, Vietnam and Iraq were 3.7 per 1000 of the US population yet Detroit in the 1970s and 80s had a homicide rate of 45 per thousand and the national average was 10 per thousand. All in all, the world is becoming a better place. Let’s rejoice and resolve to do even better rather than being taken in by the television news and the newspaper headlines.
9 The Dawn on Indian women taking to a mobile app to escape sexual harassment. A smartphone app launched in the Indian capital Delhi aims to fight a rise in sexual assault cases by enabling women to immediately alert friends or family if they feel at risk. The “Fight Back” app created by Indian non-profit Whypoll will —at the press of a single key —send an SOS message via text message, email and Facebook. Once the SOS is activated, recipients will be able to track the sender’s location via GPS and come to her aid. “I grew up in Delhi and it’s always been an unsafe city. And it just keeps getting worse. As a woman, you just don’t feel comfortable on the roads,” Whypoll co-founder Shweta Punj told AFP. “I was disgusted by the violence and wanted to do something about it.” Delhi now tops the list of India’s most unsafe cities for women, with 489 reported rape cases in 2010, up from 459 in 2009, according to police statistics.
10 The Wall Street Journal on Facebook’s desire to be a blue chip. Mark Zuckerberg spent Facebook Inc.'s early years trying to keep it cool. But the founder and CEO of the social-networking giant has spent the last 18 months methodically preparing Facebook to look and act more like a blue-chip business. "There was a period in Microsoft's evolution where they said, we want to put a computer on everyone's desk," said Mr. Zuckerberg in a recent interview. "That's the way that I want to run Facebook...We want to be operating in a way that we're working towards this longer vision of where we think the world should be." Facebook plans to file early next year with the Securities and Exchange Commission to take the stock public in the second quarter of 2012. The IPO could raise as much as $10 billion at a valuation of more than $100 billion. One remarkable thing is just how few employees are needed to create the company's $4 billion in revenues. Facebook employs 3,000, a number dwarfed by Microsoft's 90,000 and Google's 31,000.
11 The Wall Street on India staring at a repeat of the 1970s. The Indian economy hit choppy waters this year and investors fear it is about to get worse. Prime Minister Manmohan Singh's government has abandoned reforms, most spectacularly on foreign investment in retail this month. Some reassurance came from the central bank, which steadied the economy this year by fighting double-digit inflation. But that bit of stability is threatened after the Reserve Bank of India signaled that it's about to give up the fight, too. RBI Governor Duvvuri Subbarao is now losing his nerve. On Friday, he refused to hike interest rates for the first time this year and strongly suggested he would loosen credit next year. That's incredible given that the policy rate is still negative in real terms and growth in the broad money supply is running higher than expected.
Easy money is an easy response to flagging growth, but it's the wrong prescription. Subbarao seems to think he can trade off inflation in favor of growth, but the last 30 years of experience with priming the monetary pump—or even the last three—should have taught him that there is no such correlation in the long run. India's policy makers may not admit it, but they are stumbling into stagflation. The right way out of this mess is for Singh to drive growth through reforms and for Subbarao to maintain stable prices. It's bad enough that India's prime minister appears to have abdicated his responsibility, but its central banker will make things worse if he tries to compensate for Singh's failings.
Wednesday, December 21, 2011
Tuesday, December 20, 2011
Saudi prince picks Twitter stake; When slavery thrived in Rio; China bigger lender to poor countries than World Bank; Third Kim in North Korea
1 The San Francisco Chronicle of Saudi prince Alwaleed picking up a $300m stake in Twitter. Twitter received a $300 million investment from Saudi Prince Alwaleed bin Talal as it pushes through a redesign of its site to attract advertisers. Alwaleed, who leads the 2011 Arab Rich List, and his investment company agreed to buy a "strategic stake" in Twitter. A strategic holding means more than 3%, Ahmed Halawani, a Kingdom Holding director, said. That would give the San Francisco microblogging company a valuation exceeding $10 billion. "The company believes that social networking will change the fundamentals of the media industry," Halawani said. Alwaleed, whose other investments include holdings in Apple and General Motors, was ranked the richest Arab businessman this year by Arabian Business magazine, with assets valued at $21.3 billion. Kingdom Holding, 95% owned by the prince, is building the tallest tower in the world in Jeddah at a cost of $1.2 billion.
2 The Guardian on salvery in Rio. Locals in Rio de Janeiro called it the "cemetery of the new blacks", but in truth it wasn't much of a cemetery. Devoid of headstones, wreaths or tearful mourners, this squalid harbourside burial ground was the final resting place for thousands of Africans shipped into slavery. For decades the cemetery and those buried there between 1760 and 1830 were forgotten, hidden under layer after layer of urban development. But 15 years after the cemetery’s fortuitous discovery – during the renovation of Petrucio and Ana del la Merced Guimaraes’ family home when builders unearthed a series of muddy skeletons – academics now believe they have evidence of the true reach of the slave trade. Archaeologists and anthropologists studying bone and tooth fragments are shedding light on the horrors of a trade that saw at least 3 million slaves shipped from Africa to Brazil between 1550 and 1888, when the practice was officially abolished.
"It was ugly: a dump into which bodies were thrown and burned," said Sheila Mendonça de Souza, a bio-archaeologist studying the cemetery in Rio de Janeiro, once one of the busiest slave ports in the Americas. "People weren't buried in tombs, they were tossed away into mass graves." Archaeologists believe as many as 20,000 slaves may have been buried at the cemetery, mostly men aged 18-25 who died during the gruelling journey to Brazil or shortly after arriving. The dire conditions of the slave market and port, close to the cemetery, were captured by British writer Maria Graham, following a visit in the early 1820s. "Almost every house in this very long street is a depot for slaves … In some places the poor creatures were lying on mats, evidently too sick to sit up," she wrote.
3 Johannesburg Times on how South Africans are stressed during Christmas owing to “seasonal expenses”. Eight out of 10 South Africans get stressed out by the Christmas holidays. An online poll of 500 men and women conducted by Pharma Dynamics found that 92% were stressed out by "seasonal expenses". The study reported that women were more likely than men to worry about the extra costs associated with the festive season. Hosting relatives was a burden for 46% of those interviewed, while 42% said buying Christmas presents added to their stress levels. Not surprisingly, having sex was the least stressful activity.
4 The BBC on China’s place in the world economy. Whether we are on the verge of an "Asian Century" or not, one thing is clear: there has already been a dramatic shift in the geographic centre of the global economy. China is now front and centre, and its role as a leading dragon can be beneficial for growth prospects for the world economy. The world desperately needs engines of growth right now, and fortunately - with continued strong and pragmatic economic policy making - China can provide that impetus. China is now the world's second biggest economy and the largest exporter of goods, with 9.6% of the global share, followed by Germany, the US and Japan. China has an income per capita of $4,400 in current dollars and is well established as a high-middle income country. China's foreign reserves, which now exceed $3 trillion, are the largest in the world.
China has the potential to grow dynamically for another 20 years. This is in part because, as of 2008, the country still had a capita income that was just 21% of US per capita income - measured in purchasing power parity terms. This US-China income gap is evidence that a big technological gap still exists between China and the industrialised countries. China can continue to enjoy the advantage of backwardness before closing the gap.
However, China must tackle what amounts to a triple imbalance.Engineering a shift towards domestic demand and moving from an over-reliance on export-led growth represents the first rebalancing. The second rebalancing entails a structural transformation to reduce income disparities. In spite of the general improvement of living standards, China has shifted from a relatively egalitarian society in 1979 to a country with alarming income inequality. The Gini index [a common measure of social inequality] reached 41.5 in 2005, approaching the level of Latin American countries. The widening of disparity may threaten social stability and hinder economic growth. The third imbalance relates to environmental costs that have accompanied rapid growth. The future structure of production must shift towards cleaner technologies.
5 The BBC on China being a bigger lender to poor countries, than the World Bank. European officials may have flown to Beijing with their begging bowl underarm, but for developing countries, China's cheque book comes to you. Over the past few years, delegations from China's big banks have been criss-crossing the globe signing a plethora of billion dollar deals with some of the world's poorest nations. "Last year China provided more loans to the developing world than even the World Bank," says Jamie Metzl from the US-based Asia Society. "The role of China is large, it's growing and it's critically important." In 2010, the World Bank agreed $11.4bn worth of loans to some 36 African countries. China also agreed a host of loans to African governments. One of them, a loan facility to Ghana, reportedly is worth almost $13bn. As Dr Zhao Changhui from China's Export Import Bank happily points out, his country has $3tn waiting to be spent. The nation's politics may be red, but the balance sheet is most definitely black.
6 The Dawn on a third Kim in power in North Korea. An enigmatic personality who drew attention to himself and his country in ways that often defied geopolitical logic, North Korea’s Kim Jong-Il leaves behind him as successor a son who faces immense challenges and opportunities. That Mr Jong-Il’s death on Saturday was announced on Monday shows that the totalitarian and dynastic system he inherited continues to maintain its chokehold on the country. Kim Jong-Un, the new leader, is in his 20s and has no political experience, but is a general in the army and a member of the ruling Workers’ Party of Korea. More importantly, he was educated in Switzerland and belongs to that generation of young reformers who, despite opposition from the old guard, gave North Korea the Internet and mobile phones (though to a very limited elite). As the youngest of the third Kim generation to rule North Korea, Mr Jong-Un has to decide where he stands vis-a-vis some of its immediate problems, including nuclear disarmament. He is saddled with enough plutonium to build six to seven nuclear bombs and a stockpile of 1,000 missiles and 3,000 chemical weapons built at the cost of the country’s economic development, with perpetual food shortages a hard reality.
7 The Straits Times quoting IMF chief Christine Lagarde about the “dangeours juncture” that the world economy is at. The world economy is at a 'very dangerous juncture', IMF chief Christine Lagarde said on Tuesday referring to the potential impact on poorer nations during her first visit to Africa as head of the fund. 'Currently, the world economy stands at a very dangerous juncture,' she told a roundtable on Africa's economic future in the Nigerian city of Lagos. The International Monetary Fund managing director spoke of a crisis of confidence with high unemployment and slowing global growth.
8 The Straits Times on the imminent arrival of mind-reading machines. Century-old technology colossus IBM has depicted a near future in which machines read minds and recognise who they are dealing with. The 'IBM 5 in 5' predictions were based on societal trends and research which the New York State-based company expected to begin bearing fruit by the year 2017. 'From Houdini to Skywalker to X-Men, mind reading has merely been wishful thinking for science fiction fans for decades, but their wish may soon come true,' IBM said in its annual assessment of innovations on the horizon. 'IBM scientists are among those researching how to link your brain to your devices, such as a computer or a smartphone,' it continued.
9 The Straits Times on clashes in China as villagers oppose a coal-fired power plant. Police fired tear-gas and beat demonstrators who stormed government buildings in southern China on Tuesday to protest a power plant, witnesses said, in the latest violent unrest to hit the country. Residents of Haimen, a town in the province of Guangdong, are demanding the coal-fired plant be moved, saying it is damaging their health, demonstrators told AFP by telephone. They said a 15-year-old boy had been killed and more than 100 others badly beaten by riot police, although this could not be independently confirmed.
10 The Wall Street Journal on Indian government’s new tussle with Anna Hazare. The Indian government may once again be on a collision course with Gandhian activist and anti-corruption campaigner Anna Hazare after reports that the Cabinet had approved its own version of a historic anti-graft bill. Earlier in the day, the government also announced that it would extend the winter session of Parliament by three days in an effort to pass the landmark anti-corruption law that was the subject of nationwide protests in August led by Mr. Hazare. Parliamentary Affairs Minister PK Bansal said Parliament would meet for an extra three days from Dec. 27 to Dec. 29. The session had been scheduled to end Dec. 22. The Lokpal, or ombudsman, Bill envisages setting up an independent agency to investigate and prosecute senior politicians and civil servants suspected of graft.
With the tabling of the Lokpal legislation and the extension of the winter session, the government hopes to show that it is responsive to concerns about corruption. But Mr. Hazare was quick to dismiss the government's version of the bill after saying repeatedly in recent weeks that he would restart his protests if the government's version didn't satisfy his key demands. He announced his plans to go on a three-day hunger protest from Dec. 27 and to campaign against the government in the assembly elections in five states to be held next year. "The government is blind and deaf, it cannot see or hear the concerns of the people. Let the government go its way. I'll go mine," Mr. Hazare said at a television press conference.
11 The Economic Times on the likelihood of India’s mining crisis adversely affecting the country’s GDP by 5%. An unprecedented crackdown on corruption in India's mining industry, led by the Supreme Court and state-level agencies such as Karnataka's Lokayukta, coupled with rigorous enforcement of environmental norms is resulting in collateral damage to the economy, with plunging mining output leading to a fall in industrial production and GDP growth. Mining and quarrying activities account for 14% share of the index of industrial production while industry contributes around a quarter of the aggregate GDP. Analysts say stepped-up scrutiny of the mining sector, which accounts for 5% of the $1.4 trillion economy, is evolving into an economy-wide crisis as the increased uncertainty is discouraging investment in sectors such as steel and power.
12 Jim Walker warning in The Economic Times that fiscal deficit can worsen in India in 2012. Wholesale price inflation may well start easing off but we are always focused on money and credit growth. Here, we have a dilemma. Money supply growth has dropped off sharply but bank credit growth has been resilient and is now running at around 22% year-on-year. Part of this might be foreign loans being forced back onto Indian banks' books as European banks exit non-core markets. Nevertheless, it tells us that the Reserve Bank of India policy needs to be tighter for longer than perhaps the markets might expect. The fiscal deficit is, of course, the biggest problem. It is likely to worsen in 2012 rather than get better.
13 Financial Chronicle report on the likelihood of big time PE exits from India’s realty sector in 2012. Most private equity real estate fund managers have either hit the exit phase already or are readying themselves to exit investments to repay investors in their funds. In 2012, such funds are expected to sell assets worth around $2.5 billion, said real estate consultancy Jones Lang LaSalle. The real estate consultancy forecasts that realised returns for these funds will continue to be low given the negative market sentiment and weak economy. As a result fresh investments by real estate PEs are expected to be under $1 billion in 2012. “In calendar year 2010 and 2011 a total $3 billion of real estate private equity exits took place with an average return of only 1.2 times, much lower than the expectation of the investors,” said Anuj Puri, country head at Jones Lang LaSalle. The report titled ‘Reaping the Returns’ said real estate PEs invested approximately $13 billion in Indian real estate, so far, while exits have been worth around $3 billion.
14 Mint feature on the supply of hangmen dwindling as capital punishment becomes rarer in India. Ahmadulah, a hangman in Lucknow, Uttar Pradesh in northern India, was in his teens when he began his apprenticeship with his father. Together, they would walk the men in their final journey to death. He would cover their faces with black masks. His father would have already knotted the noose. He would steady their nervous legs before strapping them with rope. They were a team. After his father died, he went solo. In 1965, he was about 16, he reckons, when he carried out the first job alone. He spent the night over at prison, waking up at an ungodly hour between midnight and dawn, the time when most executions are carried out in the country. By his count, he has presided over 38 hangings to date.
Hunger drove him to become a hangman, he says as we move across the street to a small office still maintained by the erstwhile prison, and order a breakfast of buns, pakoras and sweets. The VIP prison was where he and his father would head for free food. They ate whatever was served to the cellmates. Often it would be their first and last meal of the day. On lucky days, they’d even get a supply of dry ration—white gram—to carry back home. “When you are very hungry, like when you want to sleep desperately, you will do anything to get it,” he says. Now, he has enough to eat. As a state retainer, he earns Rs 3,000 a month, a raise that kept up with inflation from Rs 15 in 1965. Greed holds him back from giving it up now, he says. It’s easy money. He hasn’t killed anyone in 20 years.
As capital punishment has become rarer, so has the supply of hangmen. The last hanging was carried out in 2004. But there are hundreds of convicts awaiting the death penalty, as cases remain pending in courts or lie on the table of the country’s President, who has the power to suspend and commute sentences. Some legal activists have been pushing for the abolition of the death penalty, saying it has not served as a deterrent. Judges, too, are ambivalent on whether a single judge or an entire bench could approve a death sentence.
2 The Guardian on salvery in Rio. Locals in Rio de Janeiro called it the "cemetery of the new blacks", but in truth it wasn't much of a cemetery. Devoid of headstones, wreaths or tearful mourners, this squalid harbourside burial ground was the final resting place for thousands of Africans shipped into slavery. For decades the cemetery and those buried there between 1760 and 1830 were forgotten, hidden under layer after layer of urban development. But 15 years after the cemetery’s fortuitous discovery – during the renovation of Petrucio and Ana del la Merced Guimaraes’ family home when builders unearthed a series of muddy skeletons – academics now believe they have evidence of the true reach of the slave trade. Archaeologists and anthropologists studying bone and tooth fragments are shedding light on the horrors of a trade that saw at least 3 million slaves shipped from Africa to Brazil between 1550 and 1888, when the practice was officially abolished.
"It was ugly: a dump into which bodies were thrown and burned," said Sheila Mendonça de Souza, a bio-archaeologist studying the cemetery in Rio de Janeiro, once one of the busiest slave ports in the Americas. "People weren't buried in tombs, they were tossed away into mass graves." Archaeologists believe as many as 20,000 slaves may have been buried at the cemetery, mostly men aged 18-25 who died during the gruelling journey to Brazil or shortly after arriving. The dire conditions of the slave market and port, close to the cemetery, were captured by British writer Maria Graham, following a visit in the early 1820s. "Almost every house in this very long street is a depot for slaves … In some places the poor creatures were lying on mats, evidently too sick to sit up," she wrote.
3 Johannesburg Times on how South Africans are stressed during Christmas owing to “seasonal expenses”. Eight out of 10 South Africans get stressed out by the Christmas holidays. An online poll of 500 men and women conducted by Pharma Dynamics found that 92% were stressed out by "seasonal expenses". The study reported that women were more likely than men to worry about the extra costs associated with the festive season. Hosting relatives was a burden for 46% of those interviewed, while 42% said buying Christmas presents added to their stress levels. Not surprisingly, having sex was the least stressful activity.
4 The BBC on China’s place in the world economy. Whether we are on the verge of an "Asian Century" or not, one thing is clear: there has already been a dramatic shift in the geographic centre of the global economy. China is now front and centre, and its role as a leading dragon can be beneficial for growth prospects for the world economy. The world desperately needs engines of growth right now, and fortunately - with continued strong and pragmatic economic policy making - China can provide that impetus. China is now the world's second biggest economy and the largest exporter of goods, with 9.6% of the global share, followed by Germany, the US and Japan. China has an income per capita of $4,400 in current dollars and is well established as a high-middle income country. China's foreign reserves, which now exceed $3 trillion, are the largest in the world.
China has the potential to grow dynamically for another 20 years. This is in part because, as of 2008, the country still had a capita income that was just 21% of US per capita income - measured in purchasing power parity terms. This US-China income gap is evidence that a big technological gap still exists between China and the industrialised countries. China can continue to enjoy the advantage of backwardness before closing the gap.
However, China must tackle what amounts to a triple imbalance.Engineering a shift towards domestic demand and moving from an over-reliance on export-led growth represents the first rebalancing. The second rebalancing entails a structural transformation to reduce income disparities. In spite of the general improvement of living standards, China has shifted from a relatively egalitarian society in 1979 to a country with alarming income inequality. The Gini index [a common measure of social inequality] reached 41.5 in 2005, approaching the level of Latin American countries. The widening of disparity may threaten social stability and hinder economic growth. The third imbalance relates to environmental costs that have accompanied rapid growth. The future structure of production must shift towards cleaner technologies.
5 The BBC on China being a bigger lender to poor countries, than the World Bank. European officials may have flown to Beijing with their begging bowl underarm, but for developing countries, China's cheque book comes to you. Over the past few years, delegations from China's big banks have been criss-crossing the globe signing a plethora of billion dollar deals with some of the world's poorest nations. "Last year China provided more loans to the developing world than even the World Bank," says Jamie Metzl from the US-based Asia Society. "The role of China is large, it's growing and it's critically important." In 2010, the World Bank agreed $11.4bn worth of loans to some 36 African countries. China also agreed a host of loans to African governments. One of them, a loan facility to Ghana, reportedly is worth almost $13bn. As Dr Zhao Changhui from China's Export Import Bank happily points out, his country has $3tn waiting to be spent. The nation's politics may be red, but the balance sheet is most definitely black.
6 The Dawn on a third Kim in power in North Korea. An enigmatic personality who drew attention to himself and his country in ways that often defied geopolitical logic, North Korea’s Kim Jong-Il leaves behind him as successor a son who faces immense challenges and opportunities. That Mr Jong-Il’s death on Saturday was announced on Monday shows that the totalitarian and dynastic system he inherited continues to maintain its chokehold on the country. Kim Jong-Un, the new leader, is in his 20s and has no political experience, but is a general in the army and a member of the ruling Workers’ Party of Korea. More importantly, he was educated in Switzerland and belongs to that generation of young reformers who, despite opposition from the old guard, gave North Korea the Internet and mobile phones (though to a very limited elite). As the youngest of the third Kim generation to rule North Korea, Mr Jong-Un has to decide where he stands vis-a-vis some of its immediate problems, including nuclear disarmament. He is saddled with enough plutonium to build six to seven nuclear bombs and a stockpile of 1,000 missiles and 3,000 chemical weapons built at the cost of the country’s economic development, with perpetual food shortages a hard reality.
7 The Straits Times quoting IMF chief Christine Lagarde about the “dangeours juncture” that the world economy is at. The world economy is at a 'very dangerous juncture', IMF chief Christine Lagarde said on Tuesday referring to the potential impact on poorer nations during her first visit to Africa as head of the fund. 'Currently, the world economy stands at a very dangerous juncture,' she told a roundtable on Africa's economic future in the Nigerian city of Lagos. The International Monetary Fund managing director spoke of a crisis of confidence with high unemployment and slowing global growth.
8 The Straits Times on the imminent arrival of mind-reading machines. Century-old technology colossus IBM has depicted a near future in which machines read minds and recognise who they are dealing with. The 'IBM 5 in 5' predictions were based on societal trends and research which the New York State-based company expected to begin bearing fruit by the year 2017. 'From Houdini to Skywalker to X-Men, mind reading has merely been wishful thinking for science fiction fans for decades, but their wish may soon come true,' IBM said in its annual assessment of innovations on the horizon. 'IBM scientists are among those researching how to link your brain to your devices, such as a computer or a smartphone,' it continued.
9 The Straits Times on clashes in China as villagers oppose a coal-fired power plant. Police fired tear-gas and beat demonstrators who stormed government buildings in southern China on Tuesday to protest a power plant, witnesses said, in the latest violent unrest to hit the country. Residents of Haimen, a town in the province of Guangdong, are demanding the coal-fired plant be moved, saying it is damaging their health, demonstrators told AFP by telephone. They said a 15-year-old boy had been killed and more than 100 others badly beaten by riot police, although this could not be independently confirmed.
10 The Wall Street Journal on Indian government’s new tussle with Anna Hazare. The Indian government may once again be on a collision course with Gandhian activist and anti-corruption campaigner Anna Hazare after reports that the Cabinet had approved its own version of a historic anti-graft bill. Earlier in the day, the government also announced that it would extend the winter session of Parliament by three days in an effort to pass the landmark anti-corruption law that was the subject of nationwide protests in August led by Mr. Hazare. Parliamentary Affairs Minister PK Bansal said Parliament would meet for an extra three days from Dec. 27 to Dec. 29. The session had been scheduled to end Dec. 22. The Lokpal, or ombudsman, Bill envisages setting up an independent agency to investigate and prosecute senior politicians and civil servants suspected of graft.
With the tabling of the Lokpal legislation and the extension of the winter session, the government hopes to show that it is responsive to concerns about corruption. But Mr. Hazare was quick to dismiss the government's version of the bill after saying repeatedly in recent weeks that he would restart his protests if the government's version didn't satisfy his key demands. He announced his plans to go on a three-day hunger protest from Dec. 27 and to campaign against the government in the assembly elections in five states to be held next year. "The government is blind and deaf, it cannot see or hear the concerns of the people. Let the government go its way. I'll go mine," Mr. Hazare said at a television press conference.
11 The Economic Times on the likelihood of India’s mining crisis adversely affecting the country’s GDP by 5%. An unprecedented crackdown on corruption in India's mining industry, led by the Supreme Court and state-level agencies such as Karnataka's Lokayukta, coupled with rigorous enforcement of environmental norms is resulting in collateral damage to the economy, with plunging mining output leading to a fall in industrial production and GDP growth. Mining and quarrying activities account for 14% share of the index of industrial production while industry contributes around a quarter of the aggregate GDP. Analysts say stepped-up scrutiny of the mining sector, which accounts for 5% of the $1.4 trillion economy, is evolving into an economy-wide crisis as the increased uncertainty is discouraging investment in sectors such as steel and power.
12 Jim Walker warning in The Economic Times that fiscal deficit can worsen in India in 2012. Wholesale price inflation may well start easing off but we are always focused on money and credit growth. Here, we have a dilemma. Money supply growth has dropped off sharply but bank credit growth has been resilient and is now running at around 22% year-on-year. Part of this might be foreign loans being forced back onto Indian banks' books as European banks exit non-core markets. Nevertheless, it tells us that the Reserve Bank of India policy needs to be tighter for longer than perhaps the markets might expect. The fiscal deficit is, of course, the biggest problem. It is likely to worsen in 2012 rather than get better.
13 Financial Chronicle report on the likelihood of big time PE exits from India’s realty sector in 2012. Most private equity real estate fund managers have either hit the exit phase already or are readying themselves to exit investments to repay investors in their funds. In 2012, such funds are expected to sell assets worth around $2.5 billion, said real estate consultancy Jones Lang LaSalle. The real estate consultancy forecasts that realised returns for these funds will continue to be low given the negative market sentiment and weak economy. As a result fresh investments by real estate PEs are expected to be under $1 billion in 2012. “In calendar year 2010 and 2011 a total $3 billion of real estate private equity exits took place with an average return of only 1.2 times, much lower than the expectation of the investors,” said Anuj Puri, country head at Jones Lang LaSalle. The report titled ‘Reaping the Returns’ said real estate PEs invested approximately $13 billion in Indian real estate, so far, while exits have been worth around $3 billion.
14 Mint feature on the supply of hangmen dwindling as capital punishment becomes rarer in India. Ahmadulah, a hangman in Lucknow, Uttar Pradesh in northern India, was in his teens when he began his apprenticeship with his father. Together, they would walk the men in their final journey to death. He would cover their faces with black masks. His father would have already knotted the noose. He would steady their nervous legs before strapping them with rope. They were a team. After his father died, he went solo. In 1965, he was about 16, he reckons, when he carried out the first job alone. He spent the night over at prison, waking up at an ungodly hour between midnight and dawn, the time when most executions are carried out in the country. By his count, he has presided over 38 hangings to date.
Hunger drove him to become a hangman, he says as we move across the street to a small office still maintained by the erstwhile prison, and order a breakfast of buns, pakoras and sweets. The VIP prison was where he and his father would head for free food. They ate whatever was served to the cellmates. Often it would be their first and last meal of the day. On lucky days, they’d even get a supply of dry ration—white gram—to carry back home. “When you are very hungry, like when you want to sleep desperately, you will do anything to get it,” he says. Now, he has enough to eat. As a state retainer, he earns Rs 3,000 a month, a raise that kept up with inflation from Rs 15 in 1965. Greed holds him back from giving it up now, he says. It’s easy money. He hasn’t killed anyone in 20 years.
As capital punishment has become rarer, so has the supply of hangmen. The last hanging was carried out in 2004. But there are hundreds of convicts awaiting the death penalty, as cases remain pending in courts or lie on the table of the country’s President, who has the power to suspend and commute sentences. Some legal activists have been pushing for the abolition of the death penalty, saying it has not served as a deterrent. Judges, too, are ambivalent on whether a single judge or an entire bench could approve a death sentence.
Friday, December 16, 2011
Arab Spring and the Lost Gen's voice; Catholic Church faces Dutch sex abuse charge; India's do-it-yourself Jhollywood; India rupee an abandoned child
1 The Guardian on the Arab Spring and how a lost generation found its voice. A year to the day since Mohamed Bouazizi's self-immolation in a sleepy Tunisian town kicked off a year of revolt, the convulsions have spread further than could ever have been imagined: in the depths of a Russian winter activists are planning their next howl of protest at the Kremlin; in a north American city a nylon tent stands against a bitter wind; in a Syrian nightmare a soldier contemplates defection. Quietly, a lifetime of old power structures – political, social, ideological – have been dissolved and the certainties of one generation have been replaced by the messy unpredictability of another. But to view the activism of 2011 through a nationalist, ethnic or even class lens is to miss its unifying trait – 2011 was the year of a global youth revolt.
It is far more than material privation that underlies this year's youth revolt, more than just a question of how to integrate into the globalised economy the talents and expectations of 80 million unemployed young people from the most well-educated generation in human history. "It's the first time in American history that a generation came along and was told: 'No, things are gonna be worse for you than they were for your parents'," says Jesse LaGreca, a prominent Occupy Wall Street figure. In the US the current crop have been called the boomerang generation due to young people's inability to flee their parents' nest.
It is easy to dismiss the interconnectedness of 2011's youth-driven resistance movements; and it is possible even to deny they amount to any kind of identifiable social phenomenon at all. The great revenge is this: the generation that grew up being told they were the heirs to Francis Fukuyama's end of history and victory of a liberal capitalist society, is now working its damnedest to prove how untrue this is, not for the sake of utopian re-imagination but to resolve the very serious problems that very system has created.
2 BBC report on ADB downgrading East Asia growth forecast for 2012. The Asian Development Bank has again downgraded next year's growth forecasts for emerging East Asia, warning of the impact of the European debt crisis. It now expects 14 economies in the region to grow by 7.2% in 2012, instead of the 7.5% it estimated in September. The bank defined emerging East Asia as Asean (Association of South East Asian Nations) countries plus China, Hong Kong, South Korea and Taiwan.
3 The Johannesburg Times on sex abuse charges against the Dutch Catholic Church. Tens of thousands of children have been victims of sexual abuse by the Roman Catholic Church in the Netherlands since 1945, an independent commission said on Friday, criticising what it called the church's cover-up and cultural silence. The commission estimated that 10,000 to 20,000 minors were sexually abused while in the care of Catholic institutions such as orphanages, boarding schools and seminaries, between 1945 and 1981, with offences ranging from the very mild to the serious, including rape. After 1981 there were few church-run homes for minors.
It said sexual abuse was no more prevalent in Catholic institutions than in similar ones run by other groups. Abuse by Catholic priests, laymen and laywomen was systematically covered up by the church to protect its reputation, the commission said, adding that the church was guilty of "inadequate supervision" and "inadequate action". The findings appear to paint a picture of wider abuse in the Netherlands even than in Ireland, in a scandal that has rocked the Catholic Church in Europe and the US and forced Pope Benedict to apologise to victims of sexual abuse by priests. Most of the cases involved mild to moderate abuse, such as touching, but it said that it estimated there were "several thousand" instances of rape.
4 The Dawn on India’s do-it-yourself Jhollywood. In one of India’s poorest, most violence-wracked states, being a movie star means doing your own make-up in a car mirror and then dancing to a soundtrack from a mobile phone. Los Angeles has Hollywood, Mumbai has Bollywood – and then there’s Jhollywood, a tiny but enthusiastic film industry in the eastern state of Jharkhand.
“This is the biggest problem of working in our movies, you have to do everything yourself… apply your own makeup, supply your own costumes,” Jhollywood’s leading female star Varsha Lakra grumbles with a smile. On a sunny Sunday morning in Ranchi, the scruffy state capital, Lakra, 24, is on location at her latest shoot. “Our films are made keeping our culture in mind and our culture is not that glamorous,” she admits. Jhollywood’s stars may have lives far different from Bollywood’s adored big-name screen legends, but they are hugely popular in the state. Filmmaking budgets are tiny, usually between 250,000 and 500,000 rupees (less than $6,000). The last few years have seen just three Jhollywood films released annually.
“There isn’t much money so sometimes you just have to make do with what you have,” Ranchi-based filmmaker Anil Sikdar told AFP. “It’s like you need an elephant for a sequence, but you can’t find one, so someone suggests getting a horse, but then you can’t find a horse, so what do you do? You use a dog,” he said, laughing.
5 The Wall Street Journal likening India rupee to an abandoned child. So, the Reserve Bank of India came to a gunfight carrying a knife. The effect of the RBI's efforts late Thursday to support the rupee lasted less than 24 hours. The beleaguered currency appreciated slightly after the RBI's technical moves aimed at reducing speculation. But by Friday afternoon, the rupee--which has fallen more than 18% against the dollar since April--was sliding back down. That's hardly surprising. While the RBI's measures will curb hoarding of dollars, the fundamental vulnerability that plagues the Indian currency remains. The rupee's rapid decline stems from a combination of high inflation – at 9.1% in November – slowing economic growth and a sizable current-account deficit, expected to reach 3% to 3.5% of gross domestic product this year, up from 2.5% last year. New Delhi's flat-footedness on critical economic reforms and heavy spending on populist schemes don't instill confidence either.
That gloomy picture has seen outflows from foreign institutional investors amount to a net $173 million, compared with last year's inward surge of nearly $29 billion. This is critical to India, which is a net importer and relies heavily on foreign capital inflows to finance its balance of payments. Meanwhile, India's weak fundamentals are unlikely to change soon. Until they do, a rebound in the rupee is implausible.
6 The Huffington Post on transgenders as flight attendants. A Thai airline that hired ladyboys to serve as cabin crew has taken to the skies. PC Air, which operates routes across Asia out of Bankok's Suvarnabhumi airport, had initially planned to only hire male and female staff. But the airline received more than 100 applications from transsexuals and decided to hire four. They join 19 female and seven male flight attendants on the airlines fleet of planes. "Today, we are ready to embark on the new journey and we would like to introduce our four transsexual angels," PC Air president Peter Can told the passengers before take off.
7 The Times of India on 90% of income tax arrears in India being owed by just a dozen people. The Comptroller and Auditor General has said 90% of the country's income tax (I-T) arrears are owed by just a dozen individuals, led by Pune-based stud farm owner Hasan Ali Khan. Government auditor CAG also noted in a report that these demands are "unrealisable 100%". Khan, with a tax arrear demand of Rs 503bn is followed by Chandrika Tapuriah, wife of his associate Kashi Nath Tapuria, with an outstanding of Rs 205bn, while late stock broker Harshad Mehta owes Rs 159bn in arrears.
"The demand against individuals is highly skewed, with 12 individuals (4.3 per cent of the total cases) accounting for 90% of the arrear demand. One individual, Hasan Ali, accounts for 43% of the total arrear demand. Interestingly all of this demand is categorised as unrealisable," CAG said in the report tabled in Parliament. Apart from Hasan Ali and Harshad Mehta, the list includes Kashinath Tapuriah (Rs 6bn), AD Narrotam (Rs 58bn), Hiten P Dalal (Rs 42bn), Jyoti H Mehta (Rs 17bn), Ashwin S Mehta (Rs 16bn), B C Dalal (15bn), S Ramaswamy (Rs 11bn) and Uday M Acharya (Rs 7bn).
8 The Financial Chronicle quoting MD Mallya, chairman of Indian Banks’ Association and chairman and managing director of Bank of Baroda: There is a significant increase in the number of accounts being referred to for corporate debt restructuring with us and also with individual banks.
9 Sidin Vadukut in Mint, about how a Twitter approach can revolutionise the workplace. Why not subject the entire cubicle experience to the 140-character treatment? What if all office communication—letters, presentations, circulars, announcements, suggestions, rules, policies, Blackberry Allocation Directives From The Supreme Politburo Of Administration—had to be communicated in 140 characters or less? Imagine the time, space and energy that would save.
It is no secret our modern workplaces sag and sigh under the weight of bloated communication. Look at this line from a research report on ERP by a major Indian software company: “It is also imperative to spend enough time on deriving the optimal to-be process design model. Also, it is important to baseline a core process framework that should drive the detailed process modelling on the ERP package and use a combination of top-down and bottom-up approaches for arriving at the to-be requirements set.” I wish I was making that up. But I am not. Imagine if the author of that report had to compress everything into a 140-character tweet. I suppose it would be something like this: ‘ERP is awesome. But you will definitely screw it up. So give us a call. Don’t make us send you our white paper. Thanks. #twarketing.’ Resignation letters, under this new Twitter communication paradigm, will no longer have to be written with the veiled passive aggression popular today. Instead you keep could keep it short, sweet and straight: ‘Hey @Boss, I quit. Low pay. Stupid coworkers. Terrible coffee. Relieve immediately. Prolonged notice period drama will lead to staggering drop in productivity. Open to counter-offer. Check DM for details. cc @HRManager.’
10 Business Standard’s TN Ninan about poor farm productivity. The bald truth is that half of India’s workforce toils in the fields to generate one-sixth of GDP. Since the other half produces the remaining five-sixths, non-agricultural incomes are typically five times agricultural incomes. The way to even out the imbalance is to get people off the land, and into non-agricultural occupations. But urbanisation and the growth of non-agricultural employment have been slow in India, an important reason being the stifling of industries that can provide entry-level, low-value work. The answer to the problems of high inflation and slowing growth, and low farm incomes, would lie in addressing the basic reforms that India is still to attempt – like labour laws. Instead, we have a food security Bill that will create irrational incentives which end up threatening agriculture itself. Talk of committing hara-kiri.
11 The Deepika reporting on Air India’s financial crisis. Federal civil aviation minister Vayalar Ravi said Air India’s financial obligations were to the tune of Rs 430 billion. Ajith Singh is taking over as the new aviation minister on Sunday. (Has he got work to do!)
It is far more than material privation that underlies this year's youth revolt, more than just a question of how to integrate into the globalised economy the talents and expectations of 80 million unemployed young people from the most well-educated generation in human history. "It's the first time in American history that a generation came along and was told: 'No, things are gonna be worse for you than they were for your parents'," says Jesse LaGreca, a prominent Occupy Wall Street figure. In the US the current crop have been called the boomerang generation due to young people's inability to flee their parents' nest.
It is easy to dismiss the interconnectedness of 2011's youth-driven resistance movements; and it is possible even to deny they amount to any kind of identifiable social phenomenon at all. The great revenge is this: the generation that grew up being told they were the heirs to Francis Fukuyama's end of history and victory of a liberal capitalist society, is now working its damnedest to prove how untrue this is, not for the sake of utopian re-imagination but to resolve the very serious problems that very system has created.
2 BBC report on ADB downgrading East Asia growth forecast for 2012. The Asian Development Bank has again downgraded next year's growth forecasts for emerging East Asia, warning of the impact of the European debt crisis. It now expects 14 economies in the region to grow by 7.2% in 2012, instead of the 7.5% it estimated in September. The bank defined emerging East Asia as Asean (Association of South East Asian Nations) countries plus China, Hong Kong, South Korea and Taiwan.
3 The Johannesburg Times on sex abuse charges against the Dutch Catholic Church. Tens of thousands of children have been victims of sexual abuse by the Roman Catholic Church in the Netherlands since 1945, an independent commission said on Friday, criticising what it called the church's cover-up and cultural silence. The commission estimated that 10,000 to 20,000 minors were sexually abused while in the care of Catholic institutions such as orphanages, boarding schools and seminaries, between 1945 and 1981, with offences ranging from the very mild to the serious, including rape. After 1981 there were few church-run homes for minors.
It said sexual abuse was no more prevalent in Catholic institutions than in similar ones run by other groups. Abuse by Catholic priests, laymen and laywomen was systematically covered up by the church to protect its reputation, the commission said, adding that the church was guilty of "inadequate supervision" and "inadequate action". The findings appear to paint a picture of wider abuse in the Netherlands even than in Ireland, in a scandal that has rocked the Catholic Church in Europe and the US and forced Pope Benedict to apologise to victims of sexual abuse by priests. Most of the cases involved mild to moderate abuse, such as touching, but it said that it estimated there were "several thousand" instances of rape.
4 The Dawn on India’s do-it-yourself Jhollywood. In one of India’s poorest, most violence-wracked states, being a movie star means doing your own make-up in a car mirror and then dancing to a soundtrack from a mobile phone. Los Angeles has Hollywood, Mumbai has Bollywood – and then there’s Jhollywood, a tiny but enthusiastic film industry in the eastern state of Jharkhand.
“This is the biggest problem of working in our movies, you have to do everything yourself… apply your own makeup, supply your own costumes,” Jhollywood’s leading female star Varsha Lakra grumbles with a smile. On a sunny Sunday morning in Ranchi, the scruffy state capital, Lakra, 24, is on location at her latest shoot. “Our films are made keeping our culture in mind and our culture is not that glamorous,” she admits. Jhollywood’s stars may have lives far different from Bollywood’s adored big-name screen legends, but they are hugely popular in the state. Filmmaking budgets are tiny, usually between 250,000 and 500,000 rupees (less than $6,000). The last few years have seen just three Jhollywood films released annually.
“There isn’t much money so sometimes you just have to make do with what you have,” Ranchi-based filmmaker Anil Sikdar told AFP. “It’s like you need an elephant for a sequence, but you can’t find one, so someone suggests getting a horse, but then you can’t find a horse, so what do you do? You use a dog,” he said, laughing.
5 The Wall Street Journal likening India rupee to an abandoned child. So, the Reserve Bank of India came to a gunfight carrying a knife. The effect of the RBI's efforts late Thursday to support the rupee lasted less than 24 hours. The beleaguered currency appreciated slightly after the RBI's technical moves aimed at reducing speculation. But by Friday afternoon, the rupee--which has fallen more than 18% against the dollar since April--was sliding back down. That's hardly surprising. While the RBI's measures will curb hoarding of dollars, the fundamental vulnerability that plagues the Indian currency remains. The rupee's rapid decline stems from a combination of high inflation – at 9.1% in November – slowing economic growth and a sizable current-account deficit, expected to reach 3% to 3.5% of gross domestic product this year, up from 2.5% last year. New Delhi's flat-footedness on critical economic reforms and heavy spending on populist schemes don't instill confidence either.
That gloomy picture has seen outflows from foreign institutional investors amount to a net $173 million, compared with last year's inward surge of nearly $29 billion. This is critical to India, which is a net importer and relies heavily on foreign capital inflows to finance its balance of payments. Meanwhile, India's weak fundamentals are unlikely to change soon. Until they do, a rebound in the rupee is implausible.
6 The Huffington Post on transgenders as flight attendants. A Thai airline that hired ladyboys to serve as cabin crew has taken to the skies. PC Air, which operates routes across Asia out of Bankok's Suvarnabhumi airport, had initially planned to only hire male and female staff. But the airline received more than 100 applications from transsexuals and decided to hire four. They join 19 female and seven male flight attendants on the airlines fleet of planes. "Today, we are ready to embark on the new journey and we would like to introduce our four transsexual angels," PC Air president Peter Can told the passengers before take off.
7 The Times of India on 90% of income tax arrears in India being owed by just a dozen people. The Comptroller and Auditor General has said 90% of the country's income tax (I-T) arrears are owed by just a dozen individuals, led by Pune-based stud farm owner Hasan Ali Khan. Government auditor CAG also noted in a report that these demands are "unrealisable 100%". Khan, with a tax arrear demand of Rs 503bn is followed by Chandrika Tapuriah, wife of his associate Kashi Nath Tapuria, with an outstanding of Rs 205bn, while late stock broker Harshad Mehta owes Rs 159bn in arrears.
"The demand against individuals is highly skewed, with 12 individuals (4.3 per cent of the total cases) accounting for 90% of the arrear demand. One individual, Hasan Ali, accounts for 43% of the total arrear demand. Interestingly all of this demand is categorised as unrealisable," CAG said in the report tabled in Parliament. Apart from Hasan Ali and Harshad Mehta, the list includes Kashinath Tapuriah (Rs 6bn), AD Narrotam (Rs 58bn), Hiten P Dalal (Rs 42bn), Jyoti H Mehta (Rs 17bn), Ashwin S Mehta (Rs 16bn), B C Dalal (15bn), S Ramaswamy (Rs 11bn) and Uday M Acharya (Rs 7bn).
8 The Financial Chronicle quoting MD Mallya, chairman of Indian Banks’ Association and chairman and managing director of Bank of Baroda: There is a significant increase in the number of accounts being referred to for corporate debt restructuring with us and also with individual banks.
9 Sidin Vadukut in Mint, about how a Twitter approach can revolutionise the workplace. Why not subject the entire cubicle experience to the 140-character treatment? What if all office communication—letters, presentations, circulars, announcements, suggestions, rules, policies, Blackberry Allocation Directives From The Supreme Politburo Of Administration—had to be communicated in 140 characters or less? Imagine the time, space and energy that would save.
It is no secret our modern workplaces sag and sigh under the weight of bloated communication. Look at this line from a research report on ERP by a major Indian software company: “It is also imperative to spend enough time on deriving the optimal to-be process design model. Also, it is important to baseline a core process framework that should drive the detailed process modelling on the ERP package and use a combination of top-down and bottom-up approaches for arriving at the to-be requirements set.” I wish I was making that up. But I am not. Imagine if the author of that report had to compress everything into a 140-character tweet. I suppose it would be something like this: ‘ERP is awesome. But you will definitely screw it up. So give us a call. Don’t make us send you our white paper. Thanks. #twarketing.’ Resignation letters, under this new Twitter communication paradigm, will no longer have to be written with the veiled passive aggression popular today. Instead you keep could keep it short, sweet and straight: ‘Hey @Boss, I quit. Low pay. Stupid coworkers. Terrible coffee. Relieve immediately. Prolonged notice period drama will lead to staggering drop in productivity. Open to counter-offer. Check DM for details. cc @HRManager.’
10 Business Standard’s TN Ninan about poor farm productivity. The bald truth is that half of India’s workforce toils in the fields to generate one-sixth of GDP. Since the other half produces the remaining five-sixths, non-agricultural incomes are typically five times agricultural incomes. The way to even out the imbalance is to get people off the land, and into non-agricultural occupations. But urbanisation and the growth of non-agricultural employment have been slow in India, an important reason being the stifling of industries that can provide entry-level, low-value work. The answer to the problems of high inflation and slowing growth, and low farm incomes, would lie in addressing the basic reforms that India is still to attempt – like labour laws. Instead, we have a food security Bill that will create irrational incentives which end up threatening agriculture itself. Talk of committing hara-kiri.
11 The Deepika reporting on Air India’s financial crisis. Federal civil aviation minister Vayalar Ravi said Air India’s financial obligations were to the tune of Rs 430 billion. Ajith Singh is taking over as the new aviation minister on Sunday. (Has he got work to do!)
Thursday, December 15, 2011
IMF fears 1930s-like slump; Banks are eurozone's faultline; Rule of law and Arab Spring; Ugliness in Indian psyche; Holy grail of Higgs hunters
1 The Guardian on the likelihood of a 1930s-like slump. The world risks sliding into a 1930s-style slump unless countries settle their differences and work together to tackle Europe’s deepening debt crisis, the head of the International Monetary Fund has warned. On a day that saw an escalation in the tit-for-tat trade battle between China and the US and a deepening of the diplomatic rift between Britain and France, Christine Lagarde issued her strongest warning yet about the health of the global economy and said if the international community failed to co-operate the risk was of "retraction, rising protectionism, isolation". She added: "This is exactly the description of what happened in the 1930s, and what followed is not something we are looking forward to." An IMF plan, agreed at the Brussels summit last week, involves obtaining €200bn from European countries and then asking the rest of the world to contribute. Beijing has so far proved reluctant to join in a rescue of the eurozone and has said it is up to Europe to sort out its own problems.
2 The BBC reporting on Fitch downgrade for six global banks. Fitch has downgraded six of the world's largest banks, citing the challenging financial markets. The banks are Bank of America and Goldman Sachs in the US, the UK's Barclays, France's BNP Paribas, Germany's Deutsche Bank and Switzerland's Credit Suisse. Fitch cut the "issuer default ratings" at the banks, which "reflect the ability of an entity to meet financial commitments on a timely basis". Last week, ratings agency Moody's downgraded France's three big banks due to their difficulty borrowing money.
3 BBC’s Robert Peston arguing that banks are eurozone’s faultine. If the latest EU council has failed to solve the eurozone debt crisis in a sustainable way, what could shock eurozone governments into effective evasive action – or in a worst case, be the explosion that causes the disintegration of the eurozone? The most likely disaster would be a big bank - or banks - running out of money. Conventional dollar funding of eurozone banks has almost completely dried up. The ECB is lending more and more euros to commercial eurozone banks. But the ECB can only lend against the security of assets that are pledged to it by the banks. It does not give unsecured loans.
Now banks all over the eurozone, in Greece, Cyprus, Portugal, Ireland, Spain and Italy (as the most extreme examples), are only alive at the moment thanks to the sheer scale of the money they've been able to borrow from the ECB and from their respective national central banks. What is keeping regulators around the eurozone on red alert is the danger that the banks under their scrutiny will run out of eligible collateral, and will no longer be able to borrow from the central bank. To state the obvious, when a bank can't borrow from anywhere, even from the central bank, to repay its own debts as they fall due, well that's what causes panic and bank runs - because no one would leave their money in a bank that can't repay its debts.
What's the solution? What's the circuit breaker that would prevent the tumbling dominoes of bank and sovereign defaults? It's the same as it ever was: mutualisation of all the eurozone's debts, which in practice means that the mighty German sovereign balance sheet would stand behind the enormous liabilities of the rest of the eurozone. Here is the simple equation which makes it quite hard to be optimistic about what lies ahead for the eurozone: the stability of the eurozone probably requires Germany to underwrite more-or-less all eurozone sovereign debts, to end the contagion from weak sovereigns to weak banks; but that won't happen unless and until there is an all-powerful finance minister (in effect) for the whole of the eurozone, to reassure Germany and the German people they wouldn't be throwing good money after bad.
4 The Khaleej Times on the rule of law and Arab Spring. In the long run, the rule of law is the ideal framework for a culture that is committed to tolerance and open to diverse viewpoints. It can prevent “political thuggery” used to intimidate opponents and competitors, and/or the misuse of religion as a policy instrument to prohibit freedom of expression. Looking ahead to the days following Arab elections, we know that the rule of law remains weak in most Arab countries. Arabs now have a golden opportunity to begin reshaping their future by evaluating candidates and new ruling parties in accordance with their commitment to these principles. This would be a way to prevent winners from abusing their new-found powers by building a new dictatorship and thus blocking future free elections, or prejudicing their outcomes. Without striving for the rule of law, we effectively guarantee a return to the starting point — and new monopolies on power in the Arab world.
5 Bikram Vohra in The Khaleej Times about the fairness craze sweeping India, titled ‘India’s colour of pure evil’. While Anna Hazare bleats on about his crusade against corruptio, there is a more insidious ugliness creeping into the Indian psyche. Some months back I wrote a piece expressing disappointment that a fine actor like Shah Rukh Khan thought it fit to sell skin fair cream to people who are naturally brown and darker by equating it with success at work and love. Last week, in India I was inundated by this fixation because it has now reached an ugly crescendo on TV and is reflected in sales rising exponentially to 18% per cent annually. In India, the finesse is so evilly refined that the thrust of the campaigns belittle men who use female skin whiteners and not male equivalents. The idiocy of this pigment war in a nation where 85% of the 1.2 billion are dark translates into sales crossing $430 million and growing.
Traditionally, Hinduism has never shown a preference for skin colour. Wikipedia says, “dark skinned people can be found in all castes of Hindu society. In the Mahabharata, Krishna was of dark complexion but was an epitome of beauty. The incarnation of Vishnu, Krishna himself (widely revered by Vaishnavites), was said to be “as black as a full raincloud”. One research paper says, “Individuals in South Asia have tended to see whiter skin as more beautiful. This was most clearly visible in British India, where skin color served as a signal of high status for the British. Few people are aware that two black cheerleaders (recruited from London) were banned from performing at the Indian Premier League cricket. Why? They were considered ‘too dark’. Elisha and Sherin were told to sit out and the stunned twosome wept bitterly. An organiser for IPL reportedly said: “The people here do not want to see dark people. They want beautiful white girls...” Who worked that one out?
According to a recent study by Hindustan Lever, men in southern states like Tamil Nadu, Andhra Pradesh, Karnataka and Kerala are enthusiastic users of skin whitening creams. Tribals are the biggest takers as they migrate from the rural areas to urban enclaves. The innocently believe they will have a better chance of getting jobs. But for celebrities to endorse this crime is unacceptable.
6 The Straits Times on Amazon selling over a million Kindles each week. Amazon said it is selling more than one million Kindles a week and the new Kindle Fire tablet computer is its top-selling item. 'Kindle Fire is the most successful product we've ever launched - it's the best-selling product across all of Amazon for 11 straight weeks,' Amazon Kindle vice president Dave Limp said. Besides the Kindle Fire, which went on sale in mid-November, Amazon offers a range of Kindle electronic book readers. (The clock ticking away for newspapers? )
7 Saswato R Das in The Times of India on the holy grail of Higgs hunters. Scientists at the European Organisation for Nuclear Research (CERN) - the world's largest particle physics laboratory near Geneva - have announced that they might finally have detected the elusive Higgs boson particle. This could be the fulfilment of a multi-decade quest in particle physics. For almost four decades, physicists have been hunting for this particle, nicknamed the ''God particle" by Nobel laureate Leon Lederman. The Large Hadron Collider (LHC) at CERN is the biggest, most complicated and most powerful atom smasher in the world, which can accelerate protons to 99.9999% of the speed of light. It was built at a cost of approximately $6 billion largely to detect the Higgs boson.
Now, it looks like the Higgs boson has been glimpsed in the debris of particle collisions within the LHC. Some may wonder, what is the big deal? Though it may sound esoteric and arcane, modern physics has led to tremendous leaps in technology, which have changed our lives. The entire electronics industry was spawned thanks to understanding gleaned by physicists. The World Wide Web was created at CERN. Accelerator science has led to many improvements in medical imaging, which routinely saves lives.
Without modern physics, it's doubtful there would have been companies like Google, Microsoft and Intel. No Apple or Facebook, no iPad or iPhone. There would be no Silicon Valley. (Of course, it has not been all good - Hiroshima and Nagasaki were also produced by modern physics.) More than anything else, a glimpse of the Higgs boson vindicates a huge body of intellectual work. So hard won, even this tantalising sighting is a tribute to what the human mind has accomplished: that, from a set of equations derived on a page, we can understand the basic workings of the universe, and build hugely complicated machines that can simulate fundamental physical processes. As the LHC goes to work to try to irrefutably confirm the detection, we should celebrate this achievement.
8 The Hindu story, ‘Crunch time for India firms as debts come due. Billionaire Anil Ambani's Reliance Communications, India's No.2 mobile carrier, has a $925 million US dollar convertible bond maturing in March at a conversion price of Rs 654 - more than nine times its current stock price. With India's economic growth buckling and the rupee at an all-time low, other companies, too, are expected to struggle to meet debt obligations in the coming months. Seeking to finance acquisitions and their aggressive expansion, Indian companies raised funds through foreign currency convertible bonds (FCCBs) and bank loans before the financial crisis struck in 2008. Many of those debts need to be repaid next year, and the timing could hardly look any worse. The Indian rupee has nosedived and is Asia's worst performing currency this year, and the stock market has dropped by more than a fifth, making it even tougher for debt-laden companies already reeling under weak business growth.
9 The Deepika reporting on Italy freeing prisoners owing to the government’s financial stress. Italy is freeing 3,300 prisoners facing 18 months or less in jail, in the backdrop of the financial crisis. These prisoners will be under house arrest for the rest of their jail terms. The government hopes to save $ 495,000 each week from the decision. Italy has 68,000 prisoners across 206 jails. (I couldn’t spot this story anywhere else.)
10 The Deccan Chronicle editorial on India MPs’ unacceptable behaviour. Our elected representatives are a privileged lot. Their sense of entitlement is such that they expect ordinary citizens to bow and scrape. But the manner in which some Bihar MPs threw a tantrum because they didn’t get air-conditioned first class seats in a Delhi-bound train surpasses all norms of public behaviour. It didn’t matter to them that a special coach couldn’t be attached due to a technical problem. For them, the idea of travelling in a “lower” class coach was simply unacceptable. The very notion of a “very important person” in a democratic republic sounds bizarre, but it has become a part of our public life that we cannot seem to get rid of. How deeply ingrained this is was reinforced by the railway minister’s response: instead of asking his fellow MPs to understand the situation, he straightaway suspended a senior railway official. Is it any wonder that people are disgusted? Politician-bashing is in the air, and while not all of it is justified, the political class might do well not to give further ammunition with such acts.
11 Ekalavya column in The Business Line, ‘Prime ministerial rope trick’. Robert Walpole became Prime Minister of England in 1715 because his King didn't know English. This was because in their usual practical way, the English had imported George I from Hanover in Germany. Their Parliament had passed a law in the previous century saying only Protestants could be kings. Very soon, Walpole became the most important minister and then the primus inter pares (first among equals). Out of this peculiarity, the cabinet system of government was born.
It has lasted because it works. If it hadn't, it would have morphed into something else — just as it is doing in India.
In 1947, India suddenly popped up on the scene. We replaced the king or queen with a President. And for a while it worked. But it suffered from a fatal flaw. Would the Prime Minister collude with the President of the country or the party? Britain had opted for the latter way back in the mid-19th century but India was still young, and starry-eyed about such things. Indira Gandhi solved the problem by becoming the president of the party; so, Prime Minister Indira Gandhi could collude with Congress president, Indira Gandhi, while formally taking orders from the President of the country — who she decreed was bound by her advice! Improvisation of the highest order, just as the George I-Robert Walpole one had been. No one knew what was going on.
But times change, people change, and above all needs change. In 2004, another tweak was needed, and given. It was an extraordinary example of the sort of ingenuity you can expect when Indian and Italian brains come together to create a new illusion. Thus, just as before, the Congress President and the Prime Minister remained the same person but a virtual Prime Minister, who lived in a different house, was manufactured. This took India right back to the Georgian era of England when the King still had a major say in policy and governance. It took the illness of George III, who also lost America in 1776, to finally settle power on Parliament acting through the Prime Minister and the government. We are getting there, too.
12 Financial Chronicle on FDI in China falling for first time in 28 months. China’s economic growth could be slowing further as data on Thursday showed the first year-on-year drop in foreign direct investment in 28 months and a fresh fall in new orders signaled a further contraction in factory activity. The data highlights increasing risks to China’s growth emanating from a deterioration in developed market economies while domestic demand is being dented by government efforts to rein in rampant real estate inflation. Still, total FDI in the year to date of $103.8 billion suggest 2011 is poised to be a record-breaking year.
2 The BBC reporting on Fitch downgrade for six global banks. Fitch has downgraded six of the world's largest banks, citing the challenging financial markets. The banks are Bank of America and Goldman Sachs in the US, the UK's Barclays, France's BNP Paribas, Germany's Deutsche Bank and Switzerland's Credit Suisse. Fitch cut the "issuer default ratings" at the banks, which "reflect the ability of an entity to meet financial commitments on a timely basis". Last week, ratings agency Moody's downgraded France's three big banks due to their difficulty borrowing money.
3 BBC’s Robert Peston arguing that banks are eurozone’s faultine. If the latest EU council has failed to solve the eurozone debt crisis in a sustainable way, what could shock eurozone governments into effective evasive action – or in a worst case, be the explosion that causes the disintegration of the eurozone? The most likely disaster would be a big bank - or banks - running out of money. Conventional dollar funding of eurozone banks has almost completely dried up. The ECB is lending more and more euros to commercial eurozone banks. But the ECB can only lend against the security of assets that are pledged to it by the banks. It does not give unsecured loans.
Now banks all over the eurozone, in Greece, Cyprus, Portugal, Ireland, Spain and Italy (as the most extreme examples), are only alive at the moment thanks to the sheer scale of the money they've been able to borrow from the ECB and from their respective national central banks. What is keeping regulators around the eurozone on red alert is the danger that the banks under their scrutiny will run out of eligible collateral, and will no longer be able to borrow from the central bank. To state the obvious, when a bank can't borrow from anywhere, even from the central bank, to repay its own debts as they fall due, well that's what causes panic and bank runs - because no one would leave their money in a bank that can't repay its debts.
What's the solution? What's the circuit breaker that would prevent the tumbling dominoes of bank and sovereign defaults? It's the same as it ever was: mutualisation of all the eurozone's debts, which in practice means that the mighty German sovereign balance sheet would stand behind the enormous liabilities of the rest of the eurozone. Here is the simple equation which makes it quite hard to be optimistic about what lies ahead for the eurozone: the stability of the eurozone probably requires Germany to underwrite more-or-less all eurozone sovereign debts, to end the contagion from weak sovereigns to weak banks; but that won't happen unless and until there is an all-powerful finance minister (in effect) for the whole of the eurozone, to reassure Germany and the German people they wouldn't be throwing good money after bad.
4 The Khaleej Times on the rule of law and Arab Spring. In the long run, the rule of law is the ideal framework for a culture that is committed to tolerance and open to diverse viewpoints. It can prevent “political thuggery” used to intimidate opponents and competitors, and/or the misuse of religion as a policy instrument to prohibit freedom of expression. Looking ahead to the days following Arab elections, we know that the rule of law remains weak in most Arab countries. Arabs now have a golden opportunity to begin reshaping their future by evaluating candidates and new ruling parties in accordance with their commitment to these principles. This would be a way to prevent winners from abusing their new-found powers by building a new dictatorship and thus blocking future free elections, or prejudicing their outcomes. Without striving for the rule of law, we effectively guarantee a return to the starting point — and new monopolies on power in the Arab world.
5 Bikram Vohra in The Khaleej Times about the fairness craze sweeping India, titled ‘India’s colour of pure evil’. While Anna Hazare bleats on about his crusade against corruptio, there is a more insidious ugliness creeping into the Indian psyche. Some months back I wrote a piece expressing disappointment that a fine actor like Shah Rukh Khan thought it fit to sell skin fair cream to people who are naturally brown and darker by equating it with success at work and love. Last week, in India I was inundated by this fixation because it has now reached an ugly crescendo on TV and is reflected in sales rising exponentially to 18% per cent annually. In India, the finesse is so evilly refined that the thrust of the campaigns belittle men who use female skin whiteners and not male equivalents. The idiocy of this pigment war in a nation where 85% of the 1.2 billion are dark translates into sales crossing $430 million and growing.
Traditionally, Hinduism has never shown a preference for skin colour. Wikipedia says, “dark skinned people can be found in all castes of Hindu society. In the Mahabharata, Krishna was of dark complexion but was an epitome of beauty. The incarnation of Vishnu, Krishna himself (widely revered by Vaishnavites), was said to be “as black as a full raincloud”. One research paper says, “Individuals in South Asia have tended to see whiter skin as more beautiful. This was most clearly visible in British India, where skin color served as a signal of high status for the British. Few people are aware that two black cheerleaders (recruited from London) were banned from performing at the Indian Premier League cricket. Why? They were considered ‘too dark’. Elisha and Sherin were told to sit out and the stunned twosome wept bitterly. An organiser for IPL reportedly said: “The people here do not want to see dark people. They want beautiful white girls...” Who worked that one out?
According to a recent study by Hindustan Lever, men in southern states like Tamil Nadu, Andhra Pradesh, Karnataka and Kerala are enthusiastic users of skin whitening creams. Tribals are the biggest takers as they migrate from the rural areas to urban enclaves. The innocently believe they will have a better chance of getting jobs. But for celebrities to endorse this crime is unacceptable.
6 The Straits Times on Amazon selling over a million Kindles each week. Amazon said it is selling more than one million Kindles a week and the new Kindle Fire tablet computer is its top-selling item. 'Kindle Fire is the most successful product we've ever launched - it's the best-selling product across all of Amazon for 11 straight weeks,' Amazon Kindle vice president Dave Limp said. Besides the Kindle Fire, which went on sale in mid-November, Amazon offers a range of Kindle electronic book readers. (The clock ticking away for newspapers? )
7 Saswato R Das in The Times of India on the holy grail of Higgs hunters. Scientists at the European Organisation for Nuclear Research (CERN) - the world's largest particle physics laboratory near Geneva - have announced that they might finally have detected the elusive Higgs boson particle. This could be the fulfilment of a multi-decade quest in particle physics. For almost four decades, physicists have been hunting for this particle, nicknamed the ''God particle" by Nobel laureate Leon Lederman. The Large Hadron Collider (LHC) at CERN is the biggest, most complicated and most powerful atom smasher in the world, which can accelerate protons to 99.9999% of the speed of light. It was built at a cost of approximately $6 billion largely to detect the Higgs boson.
Now, it looks like the Higgs boson has been glimpsed in the debris of particle collisions within the LHC. Some may wonder, what is the big deal? Though it may sound esoteric and arcane, modern physics has led to tremendous leaps in technology, which have changed our lives. The entire electronics industry was spawned thanks to understanding gleaned by physicists. The World Wide Web was created at CERN. Accelerator science has led to many improvements in medical imaging, which routinely saves lives.
Without modern physics, it's doubtful there would have been companies like Google, Microsoft and Intel. No Apple or Facebook, no iPad or iPhone. There would be no Silicon Valley. (Of course, it has not been all good - Hiroshima and Nagasaki were also produced by modern physics.) More than anything else, a glimpse of the Higgs boson vindicates a huge body of intellectual work. So hard won, even this tantalising sighting is a tribute to what the human mind has accomplished: that, from a set of equations derived on a page, we can understand the basic workings of the universe, and build hugely complicated machines that can simulate fundamental physical processes. As the LHC goes to work to try to irrefutably confirm the detection, we should celebrate this achievement.
8 The Hindu story, ‘Crunch time for India firms as debts come due. Billionaire Anil Ambani's Reliance Communications, India's No.2 mobile carrier, has a $925 million US dollar convertible bond maturing in March at a conversion price of Rs 654 - more than nine times its current stock price. With India's economic growth buckling and the rupee at an all-time low, other companies, too, are expected to struggle to meet debt obligations in the coming months. Seeking to finance acquisitions and their aggressive expansion, Indian companies raised funds through foreign currency convertible bonds (FCCBs) and bank loans before the financial crisis struck in 2008. Many of those debts need to be repaid next year, and the timing could hardly look any worse. The Indian rupee has nosedived and is Asia's worst performing currency this year, and the stock market has dropped by more than a fifth, making it even tougher for debt-laden companies already reeling under weak business growth.
9 The Deepika reporting on Italy freeing prisoners owing to the government’s financial stress. Italy is freeing 3,300 prisoners facing 18 months or less in jail, in the backdrop of the financial crisis. These prisoners will be under house arrest for the rest of their jail terms. The government hopes to save $ 495,000 each week from the decision. Italy has 68,000 prisoners across 206 jails. (I couldn’t spot this story anywhere else.)
10 The Deccan Chronicle editorial on India MPs’ unacceptable behaviour. Our elected representatives are a privileged lot. Their sense of entitlement is such that they expect ordinary citizens to bow and scrape. But the manner in which some Bihar MPs threw a tantrum because they didn’t get air-conditioned first class seats in a Delhi-bound train surpasses all norms of public behaviour. It didn’t matter to them that a special coach couldn’t be attached due to a technical problem. For them, the idea of travelling in a “lower” class coach was simply unacceptable. The very notion of a “very important person” in a democratic republic sounds bizarre, but it has become a part of our public life that we cannot seem to get rid of. How deeply ingrained this is was reinforced by the railway minister’s response: instead of asking his fellow MPs to understand the situation, he straightaway suspended a senior railway official. Is it any wonder that people are disgusted? Politician-bashing is in the air, and while not all of it is justified, the political class might do well not to give further ammunition with such acts.
11 Ekalavya column in The Business Line, ‘Prime ministerial rope trick’. Robert Walpole became Prime Minister of England in 1715 because his King didn't know English. This was because in their usual practical way, the English had imported George I from Hanover in Germany. Their Parliament had passed a law in the previous century saying only Protestants could be kings. Very soon, Walpole became the most important minister and then the primus inter pares (first among equals). Out of this peculiarity, the cabinet system of government was born.
It has lasted because it works. If it hadn't, it would have morphed into something else — just as it is doing in India.
In 1947, India suddenly popped up on the scene. We replaced the king or queen with a President. And for a while it worked. But it suffered from a fatal flaw. Would the Prime Minister collude with the President of the country or the party? Britain had opted for the latter way back in the mid-19th century but India was still young, and starry-eyed about such things. Indira Gandhi solved the problem by becoming the president of the party; so, Prime Minister Indira Gandhi could collude with Congress president, Indira Gandhi, while formally taking orders from the President of the country — who she decreed was bound by her advice! Improvisation of the highest order, just as the George I-Robert Walpole one had been. No one knew what was going on.
But times change, people change, and above all needs change. In 2004, another tweak was needed, and given. It was an extraordinary example of the sort of ingenuity you can expect when Indian and Italian brains come together to create a new illusion. Thus, just as before, the Congress President and the Prime Minister remained the same person but a virtual Prime Minister, who lived in a different house, was manufactured. This took India right back to the Georgian era of England when the King still had a major say in policy and governance. It took the illness of George III, who also lost America in 1776, to finally settle power on Parliament acting through the Prime Minister and the government. We are getting there, too.
12 Financial Chronicle on FDI in China falling for first time in 28 months. China’s economic growth could be slowing further as data on Thursday showed the first year-on-year drop in foreign direct investment in 28 months and a fresh fall in new orders signaled a further contraction in factory activity. The data highlights increasing risks to China’s growth emanating from a deterioration in developed market economies while domestic demand is being dented by government efforts to rein in rampant real estate inflation. Still, total FDI in the year to date of $103.8 billion suggest 2011 is poised to be a record-breaking year.
Gold slips 15% from record high; Reverse gender gap; China villagers revolt; Botswana's Bushmen; No rival for Lady Gaga; Sextortion
1 The San Francisco Chronicle on gold slipping 15% from its all-time high. The price of an ounce of gold has dropped 15% from its record high of $1,921.15 on Sept. 6. The shiny metal might be entering a bear market after a decade long winning streak, according to economist Dennis Gartman, who correctly predicted the commodities slump in 2008. Gartman said gold might fall as low as $1,475, making the decline more than 20%, the common definition of a bear market. He sold the last of his gold Monday.
2 The New York Times on the reverse gender gap. As the year ends, much of the talk around women has moved from empowerment and global gender gaps to the trend of young single women out-earning men and the rise of female breadwinners. For starters, young women today are moving quickly to close the pay gap, or in some cases have closed it already. They are marrying later and later, or not marrying at all. They no longer need husbands to have children, or want no children (40% of births in the US each year are now to single women). Women are ahead of men in education (last year, 55% of US college graduates were female). The emergence of this cohort of high-earning young women and the increasing number of female breadwinners are transforming gender relationships, upending patterns of matchmaking, marriage and motherhood, creating a new conflict between the sexes, redefining the word “breadwinner” and inspiring tracts on the leveling of men’s roles. It is being called the reverse gender gap. A cause to rejoice? Only future years will tell.
3 New York Times on a Chinese village in revolt over inequity. A long-running dispute between farmers and local officials in southern China exploded into open rebellion this week after villagers chased away government leaders, set up roadblocks and began arming themselves with homemade weapons, residents said. The conflict in Wukan, a coastal settlement of 20,000 people near the country’s industrial heartland in Guangdong Province, escalated after residents learned that one of the representatives they had selected to negotiate with the local Communist Party had died in police custody. The authorities say a heart attack killed the 42-year-old man, but relatives say his body bore signs of torture.
Spasms of social turmoil in China have become increasingly common, a reflection of the widening income gap and deepening unhappiness with official corruption and an unresponsive legal system. But the clashes in Wukan, which first erupted in September, are unusual for their longevity — and for the brazenness of the villagers as they call attention to their frustrations. Despite the government’s best efforts to control social media outlets, such frustrations have only grown as millions of Chinese gain access to unofficial sources of information and use new tools to organize protests. Last year, there were as many as 180,000 outbursts of what sociologists describe as “mass incidents”: strikes, sit-ins, rallies and violent clashes that have mushroomed alongside China’s breakneck economic expansion. Government figures from the mid-1990s put the number of such episodes at fewer than 10,000.
4 The BBC on child beggar rescue in Bangalore. Police in the southern Indian city of Bangalore have busted a child begging ring and rescued 292 children. More than 100 of the rescued children are infants, below the age of three. Police said many children were drugged with cough syrup. Nine people have been arrested and police say they are looking for the "kingpin" of the racket. "We started identifying child beggars about three months ago, as we felt there was a spurt in their numbers. We counted more than 1,000 child beggars in the city," a police officer said. The rescue operation was conducted throughout Bangalore's streets. Most of the children are believed to be children of migrant labourers coming into the city for work. The police say they believe the children were abducted and were being forced to beg by suspected traffickers. Campaigners say more than 60,000 children go missing every year in India and many of them end up as child labour, beggars or in brothels.
5 The BBC on US forces leaving Iraq. The US flag is to be lowered in Baghdad, formally marking the end of US military operations in Iraq after nearly nine years of war. Most of the 5,500 remaining soldiers have now left Iraq, with security in the hands of the Iraqi authorities. President Barack Obama, who came to office pledging to bring troops home, said the US left behind a "sovereign, stable and self-reliant Iraq". Some 4,500 US soldiers and more than 100,000 Iraqis have died in the war. It has cost the US some $1tr.
Republicans have criticised the pullout citing concerns over Iraq's stability, but most Americans support the move. Some 1.5 million Americans have served in Iraq since the US invasion in 2003. In addition to those who died, nearly 30,000 have been wounded. Troop numbers peaked at around 170,000 during the height of the so-called surge strategy in 2007, but as of this week only about 5,500 remained. Many of them have already left for bases in Kuwait prior to flying home. A small contingent of some 200 soldiers will remain in Iraq as advisers, while some 15,000 US personnel are now based at the US embassy in Baghdad - by far the world's largest.
6 BBC report on Thomas Cook being done in by global unrests. Thomas Cook has said it will close 200 UK branches over the next two years as part of its UK business turnaround plan - 125 more than previously announced. News of the closures came as the travel firm reported a £398m ($616m) loss for the year to the end of September. The world's oldest travel agency has been looking to cut its debts to restore the confidence of investors. In November, it secured £200m of new financing, just days after seeing its shares plunge 75% in one day. Its lenders, including Barclays, HSBC, RBS and UniCredit, agreed to provide the new facility until 30 April 2013.
Thomas Cook has blamed the unrest in Egypt and Tunisia and floods in Thailand, all key holiday destinations for the company, for hitting sales. "This has been a very challenging year for the group, despite which we still delivered an underlying operating profit of over £300m," said chief executive Sam Weihagen. Business has also been further hurt by news of the company's financial troubles. Rival TUI has run adverts under its Thomson brand claiming: "Another holiday company may be experiencing turbulence, but we are in really great shape". Thomas Cook’s shares have shed more than 90% of their value since March.
7 The Guardian reporting on huge executive pay increases in the US. Chief executive pay has roared back after two years of stagnation and decline. America's top bosses enjoyed pay hikes of between 27 and 40% last year, according to the largest survey of US CEO pay. The dramatic bounce-back comes as the latest government figures show wages for the majority of Americans are failing to keep up with inflation. America's highest paid executive took home more than $145.2m, and as stock prices recovered across the board, the median value of bosses' profits on stock options rose 70% in 2010, from $950,400 to $1.3m. The news comes against the backdrop of an Occupy Wall Street movement that has focused Washington's attention on the pay packages of America's highest paid.
8 The Guardian’s inspiring report about the return of Botswana’s Bushmen. Five years ago, on Dec 13, 2006, Botswana’s high court ruled that the government’s eviction of the Bushmen from their ancestral lands in the Kalahari had been illegal. It was one of the most hopeful stories to come out of Africa in decades. It began in stark tragedy, in the central Kalahari game reserve, ceded in perpetuity to the Bushmen by the British and then by the first government of independent Botswana. Five thousand Gana, Gwi and Tsila Bushmen lived there. (‘Bushmen’ is the name they mostly prefer.)
In February 2002, the Botswanan army raided the reserve. The soldiers charged into small desert villages and ordered people, at gunpoint, to get into the trucks that were drawn up outside. They were driven to camps outside their ancestral lands. Another group of soldiers made sure that they couldn’t go back to their villages: in Gugama, for example, they smashed the well and sealed it with concrete. There is something peculiarly repellent about blocking off the water supply in a desert. And when the president of the country called the Bushmen “primitive stone-age creatures” who were to be swept into the dustbin of history, it seemed like an offence against our common humanity.
By an unfortunate geological chance, the central Kalahari game reserve lies right in the middle of the world’s richest diamond-producing area. The diamond deposit at Gope, in the centre of the reserve, is valued at $3.3bn. The ethnic cleansing of the Kalahari was a horror story, and in many countries that is how it would have remained. But Botswana is not a dictatorship; it’s a stable, wealthy country with a free press and judiciary. Nevertheless, in a decision in January this year the Botswanan appeals court found that the Bushmen did indeed have the right to use the well, and to sink new ones. The court said that the government’s conduct towards the Bushmen had been ‘degrading’.
9 The Straits Times Lady Gaga dominating the music scene in 2011. Lady Gaga towered over other female musicians in 2011, heading a list of top earning women with an estimated US$90 million in income, according to a Forbes.com survey. The singer and performance artist made more than double her nearest rival - country/pop artist Taylor Swift - thanks to multiple endorsement deals and an estimated $1.3 million nightly gross ticket sales from her concert tour.
10 The Straits Times on sextortion. Six years ago, when university student Jane broke up with her boyfriend, he threatened to make public explicit photos and videos of her unless she got back together with him. While Jane's former boyfriend ended his threats after two months, her situation is one that appears increasingly common, say counsellors and legal experts. Counsellors said they started noticing women calling its helpline with such complaints about three years ago.
11 Anurag Behar writing in Mint about India drowning in rubbish. Standing in the exquisite Garhwal, if you move your eyes off the picture-perfect mountains and streams, and to the place you are standing, you will find rubbish. The Nilgiris, the Aravalis…it’s all the same. On the scorched plains of Gulbarga or of anywhere else, in this generally scorched nation, you will find the same heaps of rubbish. Rubbish is the common denominator of all landscapes in India.
It’s the plastic that has done it. The polyethylene (and similar material) bags are the primary culprits. The only way to handle plastic waste is to have civic systems to handle it. These are completely absent or woefully inadequate across the country. The plastic sets up another problem: it also does not let even organic waste decompose naturally. India’s high growth rate is generating an ocean of rubbish, for which we are doing nothing. This is the most visible of the many challenges posed by changing consumption patterns and urbanization.
2 The New York Times on the reverse gender gap. As the year ends, much of the talk around women has moved from empowerment and global gender gaps to the trend of young single women out-earning men and the rise of female breadwinners. For starters, young women today are moving quickly to close the pay gap, or in some cases have closed it already. They are marrying later and later, or not marrying at all. They no longer need husbands to have children, or want no children (40% of births in the US each year are now to single women). Women are ahead of men in education (last year, 55% of US college graduates were female). The emergence of this cohort of high-earning young women and the increasing number of female breadwinners are transforming gender relationships, upending patterns of matchmaking, marriage and motherhood, creating a new conflict between the sexes, redefining the word “breadwinner” and inspiring tracts on the leveling of men’s roles. It is being called the reverse gender gap. A cause to rejoice? Only future years will tell.
3 New York Times on a Chinese village in revolt over inequity. A long-running dispute between farmers and local officials in southern China exploded into open rebellion this week after villagers chased away government leaders, set up roadblocks and began arming themselves with homemade weapons, residents said. The conflict in Wukan, a coastal settlement of 20,000 people near the country’s industrial heartland in Guangdong Province, escalated after residents learned that one of the representatives they had selected to negotiate with the local Communist Party had died in police custody. The authorities say a heart attack killed the 42-year-old man, but relatives say his body bore signs of torture.
Spasms of social turmoil in China have become increasingly common, a reflection of the widening income gap and deepening unhappiness with official corruption and an unresponsive legal system. But the clashes in Wukan, which first erupted in September, are unusual for their longevity — and for the brazenness of the villagers as they call attention to their frustrations. Despite the government’s best efforts to control social media outlets, such frustrations have only grown as millions of Chinese gain access to unofficial sources of information and use new tools to organize protests. Last year, there were as many as 180,000 outbursts of what sociologists describe as “mass incidents”: strikes, sit-ins, rallies and violent clashes that have mushroomed alongside China’s breakneck economic expansion. Government figures from the mid-1990s put the number of such episodes at fewer than 10,000.
4 The BBC on child beggar rescue in Bangalore. Police in the southern Indian city of Bangalore have busted a child begging ring and rescued 292 children. More than 100 of the rescued children are infants, below the age of three. Police said many children were drugged with cough syrup. Nine people have been arrested and police say they are looking for the "kingpin" of the racket. "We started identifying child beggars about three months ago, as we felt there was a spurt in their numbers. We counted more than 1,000 child beggars in the city," a police officer said. The rescue operation was conducted throughout Bangalore's streets. Most of the children are believed to be children of migrant labourers coming into the city for work. The police say they believe the children were abducted and were being forced to beg by suspected traffickers. Campaigners say more than 60,000 children go missing every year in India and many of them end up as child labour, beggars or in brothels.
5 The BBC on US forces leaving Iraq. The US flag is to be lowered in Baghdad, formally marking the end of US military operations in Iraq after nearly nine years of war. Most of the 5,500 remaining soldiers have now left Iraq, with security in the hands of the Iraqi authorities. President Barack Obama, who came to office pledging to bring troops home, said the US left behind a "sovereign, stable and self-reliant Iraq". Some 4,500 US soldiers and more than 100,000 Iraqis have died in the war. It has cost the US some $1tr.
Republicans have criticised the pullout citing concerns over Iraq's stability, but most Americans support the move. Some 1.5 million Americans have served in Iraq since the US invasion in 2003. In addition to those who died, nearly 30,000 have been wounded. Troop numbers peaked at around 170,000 during the height of the so-called surge strategy in 2007, but as of this week only about 5,500 remained. Many of them have already left for bases in Kuwait prior to flying home. A small contingent of some 200 soldiers will remain in Iraq as advisers, while some 15,000 US personnel are now based at the US embassy in Baghdad - by far the world's largest.
6 BBC report on Thomas Cook being done in by global unrests. Thomas Cook has said it will close 200 UK branches over the next two years as part of its UK business turnaround plan - 125 more than previously announced. News of the closures came as the travel firm reported a £398m ($616m) loss for the year to the end of September. The world's oldest travel agency has been looking to cut its debts to restore the confidence of investors. In November, it secured £200m of new financing, just days after seeing its shares plunge 75% in one day. Its lenders, including Barclays, HSBC, RBS and UniCredit, agreed to provide the new facility until 30 April 2013.
Thomas Cook has blamed the unrest in Egypt and Tunisia and floods in Thailand, all key holiday destinations for the company, for hitting sales. "This has been a very challenging year for the group, despite which we still delivered an underlying operating profit of over £300m," said chief executive Sam Weihagen. Business has also been further hurt by news of the company's financial troubles. Rival TUI has run adverts under its Thomson brand claiming: "Another holiday company may be experiencing turbulence, but we are in really great shape". Thomas Cook’s shares have shed more than 90% of their value since March.
7 The Guardian reporting on huge executive pay increases in the US. Chief executive pay has roared back after two years of stagnation and decline. America's top bosses enjoyed pay hikes of between 27 and 40% last year, according to the largest survey of US CEO pay. The dramatic bounce-back comes as the latest government figures show wages for the majority of Americans are failing to keep up with inflation. America's highest paid executive took home more than $145.2m, and as stock prices recovered across the board, the median value of bosses' profits on stock options rose 70% in 2010, from $950,400 to $1.3m. The news comes against the backdrop of an Occupy Wall Street movement that has focused Washington's attention on the pay packages of America's highest paid.
8 The Guardian’s inspiring report about the return of Botswana’s Bushmen. Five years ago, on Dec 13, 2006, Botswana’s high court ruled that the government’s eviction of the Bushmen from their ancestral lands in the Kalahari had been illegal. It was one of the most hopeful stories to come out of Africa in decades. It began in stark tragedy, in the central Kalahari game reserve, ceded in perpetuity to the Bushmen by the British and then by the first government of independent Botswana. Five thousand Gana, Gwi and Tsila Bushmen lived there. (‘Bushmen’ is the name they mostly prefer.)
In February 2002, the Botswanan army raided the reserve. The soldiers charged into small desert villages and ordered people, at gunpoint, to get into the trucks that were drawn up outside. They were driven to camps outside their ancestral lands. Another group of soldiers made sure that they couldn’t go back to their villages: in Gugama, for example, they smashed the well and sealed it with concrete. There is something peculiarly repellent about blocking off the water supply in a desert. And when the president of the country called the Bushmen “primitive stone-age creatures” who were to be swept into the dustbin of history, it seemed like an offence against our common humanity.
By an unfortunate geological chance, the central Kalahari game reserve lies right in the middle of the world’s richest diamond-producing area. The diamond deposit at Gope, in the centre of the reserve, is valued at $3.3bn. The ethnic cleansing of the Kalahari was a horror story, and in many countries that is how it would have remained. But Botswana is not a dictatorship; it’s a stable, wealthy country with a free press and judiciary. Nevertheless, in a decision in January this year the Botswanan appeals court found that the Bushmen did indeed have the right to use the well, and to sink new ones. The court said that the government’s conduct towards the Bushmen had been ‘degrading’.
9 The Straits Times Lady Gaga dominating the music scene in 2011. Lady Gaga towered over other female musicians in 2011, heading a list of top earning women with an estimated US$90 million in income, according to a Forbes.com survey. The singer and performance artist made more than double her nearest rival - country/pop artist Taylor Swift - thanks to multiple endorsement deals and an estimated $1.3 million nightly gross ticket sales from her concert tour.
10 The Straits Times on sextortion. Six years ago, when university student Jane broke up with her boyfriend, he threatened to make public explicit photos and videos of her unless she got back together with him. While Jane's former boyfriend ended his threats after two months, her situation is one that appears increasingly common, say counsellors and legal experts. Counsellors said they started noticing women calling its helpline with such complaints about three years ago.
11 Anurag Behar writing in Mint about India drowning in rubbish. Standing in the exquisite Garhwal, if you move your eyes off the picture-perfect mountains and streams, and to the place you are standing, you will find rubbish. The Nilgiris, the Aravalis…it’s all the same. On the scorched plains of Gulbarga or of anywhere else, in this generally scorched nation, you will find the same heaps of rubbish. Rubbish is the common denominator of all landscapes in India.
It’s the plastic that has done it. The polyethylene (and similar material) bags are the primary culprits. The only way to handle plastic waste is to have civic systems to handle it. These are completely absent or woefully inadequate across the country. The plastic sets up another problem: it also does not let even organic waste decompose naturally. India’s high growth rate is generating an ocean of rubbish, for which we are doing nothing. This is the most visible of the many challenges posed by changing consumption patterns and urbanization.
Tuesday, December 13, 2011
The dire possibility of Greece leaving the euro; Gender equality in toys; Dark secrets of healthy bank balance sheets; China's commodity connection
1 The New York Times on the dire possibility of Greece leaving the Euro. The danger that Greece or some other deeply damaged country in the euro zone could leave the single-currency union can no longer be ruled out. And it was largely this prospect that drove leaders last week to agree to adopt strict fiscal rules that they hope will wrap the 17 European Union nations that use the euro into an even tighter embrace. Officially, the guardians of monetary union have refused to discuss in public the possibility of member states abandoning the euro. But as the truth dawns in Greece and other weak euro zone economies that the price for remaining bound to the single currency will be more hardship and sacrifice, a growing number of legal and financial experts are examining in detail what would happen if Greece abandoned the euro.
“We should be under no false pretenses that we are not currently on the drachma train,” said Jason Manolopoulos, a Greek hedge fund executive. “That does not mean we will end up there, but that is our present course.” Over the last year, Greeks have withdrawn almost 40 billion euros, or nearly $53 billion, in deposits from their banking system, equal to about 17% of the nation’s gross domestic product.
Investment banks, academics and lawyers are digging deep into what a euro exit would look like. Nomura forecast a 60% devaluation of the new drachma. UBS went further, warning of hyperinflation, military coups and possible civil war that could afflict a departing country.
One of the more detailed studies comes from Eric Dor, an economist at the Iéseg School of Management in Lille, France. In “Leaving the Eurozone: A User’s Guide”, Dor starts with the obvious: any return to the drachma would have to be preceded by an immediate freeze on bank deposits. To prevent panicked Greeks from sending the rest of their deposits abroad, transfers to countries outside of Greece would be halted. As the new currency inevitably lost value, new drachma accounts would remain frozen. Shops would be required to accept scrip or devalued euros circulating only within Greece until the country’s bank note printer, operated by the central bank, could churn out enough drachmas to replace the 200 billion euros in cash and deposits currently in Greece. Meanwhile, Greece would become a financial pariah. “I hope it does not happen,” Dor said. “But one has to be prepared.”
2 The Guardian on gender equality in toys. In the 70s, guns were for boys and dolls were for girls. Animals, transport and building-simulation were unisex. Our hippy parents did not know they were born. The form for children now is a gender essentialism so extreme that feminist mothers spend their whole lives (ironically) pink with fury. And the world of boys' toys is more than just blue, it is spiky and obnoxious, more likely to flash and to be designed to throw at people; there is an altogether darker, more nightclubby atmosphere to their hardware, and everything is prefixed or suffixed with the word "monster". This is why even parents who aren't that interested in gender politics still object: it's the narrowness of it all, the very extreme versions of masculinity and femininity that this consumer world represents. In respect of that, Hamleys has just axed its girls’ and boys’ floors following focus groups and customer feedback.
Inescapably, though, there is this idea underpinning the toy industry that male and female children are fundamentally different, that their interests stem from and reveal a difference in their brains. According to Dr Anne Moir, neuropsychologist and author of Brain Sex, "The brain is undifferentiated, but we are born with a tilt of interest. Little girls come into the world with a brain that is much more interested and gets much more pleasure from the social context of the world. Little boys come into the world and they take much more pleasure from the physical world; he's exercising his brain in that physical dimension, she's exercising her brain in that social dimension. The big differences are in what gives us pleasure, what motivates us, and that's why men choose some jobs and women choose other jobs."
The fascinating debate, between neuroscientific gender determinism and the sociological rebuttal, took place at the Battle of Ideas festival in London this year. To drag this back to the layperson's level, let's call it the parental level, the main argument against the separation of the sexes is that it's rubbish. One minute a kid might furiously identify himself with his sex. The next minute he will be dressed as Bo Peep. The market doesn't have much room for nuance, especially at Christmas. But Hamleys has taken a tiny step back from the brink of gender essentialism, and for that, as well as the late opening hours, I guess we should be grateful.
3 The Guardian on the secret of drawing up healthy-looking bank balance sheets. Banks use accounting loop holes to inflate their profits and bolster staff bonuses, according to a paper by the Adam Smith Institute. It says banks are able to use complex financial products such as credit default swaps to report profits that they might not otherwise be able to. Gordon Kerr, a former banker who wrote the report, said the blame lies with the International Financial Reporting Standards (IFRS) rules that allow banks to recognise their expectations of future income as current profits.
"The accounting regulation system needs radical reform so that banks are not encouraged to invest in risky assets to make themselves seem more profitable than they really are. Honest balance sheets are the cornerstone of a healthy financial system – right now, we don't have the transparency we desperately need to avoid a repeat of 2008," Kerr said. He outlined a number of ways banks can boost profits, for instance by buying a CDS – a credit default swap or type of insurance policy against a counterparty defaulting – as this allows them to provide certainty to cash flows that might otherwise be uncertain, even though the CDS is unlikely to pay out.
"Accurate accounting is at the root of the legal and scrutiny framework; without accurate accounts basic laws are incapable of enforcement. As this report shows, banks have been using loopholes in these rules to inflate their accounts and create false profits to pay for bonuses and short-term gains for their shareholders," Kerr said.
4 The Wall Street Journal on commodities’ future linked to China’s fortunes. You want to know where the global commodities markets are heading in the coming years? Then it's probably best that you remember a single word: China. As the biggest and one of the fastest-growing of the world's developing economies, China has become a voracious consumer of industrial and agricultural commodities. Its shifting needs are now the most important driver in the prices of many of those goods. That's why no single factor is likely to have a more far-reaching impact on commodities markets over the next few years than how Chinese demand changes as the country's economy evolves.
The consensus is that China is headed for slower economic growth than it experienced from 2001 to 2010, when its annual rate of expansion ranged from 8.3% to 14.2% and reached double digits six times, according to the World Bank. Demand for steel, copper and other industrial metals could drop significantly if China does stall, because those materials are heavily used in construction—which would be at risk from weakness in the Chinese real-estate market—and because China often accounts for some 40% of global demand for those materials. Coal demand could also tumble because the fuel is heavily used in China to generate power.
5 The Financial Times on ‘Call of Duty: Modern Warfare 3’ video game sales outstripping blockbuster movies. Call of Duty: Modern Warfare 3, the latest instalment in Activision Blizzard’s hit war-game franchise, has realised $1bn-worth of sales in 16 days, outpacing blockbuster movies including Avatar and Harry Potter, but marking a slowdown after its record-breaking first week. MW3 outsold Activision’s two previous Call of Duty instalments, Black Ops and Modern Warfare 2, demonstrating the growing importance of a Hollywood-style opening weekend sales and marketing blitz.
Activision is claiming a new high-water mark for video games in the entertainment wars by reaching $1bn in sales one day faster than 20th Century Fox’s Avatar, an indication of the ever-wider appeal of gaming beyond its teenage-boy origins. James Cameron’s 3D sci-fi epic set the previous record for reaching that milestone in 17 days in 2009, before going on to overtake Titanic as the biggest-grossing movie of all time, with total takings of $2.78bn, according to Box Office Mojo, the film website.
6 The Deepika reporting that across 200 battalions of the Central Reserve Police Force, 5,504 are nursing various illnesses including depression. Federal junior minister Jitender Singh said they were being provided counseling.
“We should be under no false pretenses that we are not currently on the drachma train,” said Jason Manolopoulos, a Greek hedge fund executive. “That does not mean we will end up there, but that is our present course.” Over the last year, Greeks have withdrawn almost 40 billion euros, or nearly $53 billion, in deposits from their banking system, equal to about 17% of the nation’s gross domestic product.
Investment banks, academics and lawyers are digging deep into what a euro exit would look like. Nomura forecast a 60% devaluation of the new drachma. UBS went further, warning of hyperinflation, military coups and possible civil war that could afflict a departing country.
One of the more detailed studies comes from Eric Dor, an economist at the Iéseg School of Management in Lille, France. In “Leaving the Eurozone: A User’s Guide”, Dor starts with the obvious: any return to the drachma would have to be preceded by an immediate freeze on bank deposits. To prevent panicked Greeks from sending the rest of their deposits abroad, transfers to countries outside of Greece would be halted. As the new currency inevitably lost value, new drachma accounts would remain frozen. Shops would be required to accept scrip or devalued euros circulating only within Greece until the country’s bank note printer, operated by the central bank, could churn out enough drachmas to replace the 200 billion euros in cash and deposits currently in Greece. Meanwhile, Greece would become a financial pariah. “I hope it does not happen,” Dor said. “But one has to be prepared.”
2 The Guardian on gender equality in toys. In the 70s, guns were for boys and dolls were for girls. Animals, transport and building-simulation were unisex. Our hippy parents did not know they were born. The form for children now is a gender essentialism so extreme that feminist mothers spend their whole lives (ironically) pink with fury. And the world of boys' toys is more than just blue, it is spiky and obnoxious, more likely to flash and to be designed to throw at people; there is an altogether darker, more nightclubby atmosphere to their hardware, and everything is prefixed or suffixed with the word "monster". This is why even parents who aren't that interested in gender politics still object: it's the narrowness of it all, the very extreme versions of masculinity and femininity that this consumer world represents. In respect of that, Hamleys has just axed its girls’ and boys’ floors following focus groups and customer feedback.
Inescapably, though, there is this idea underpinning the toy industry that male and female children are fundamentally different, that their interests stem from and reveal a difference in their brains. According to Dr Anne Moir, neuropsychologist and author of Brain Sex, "The brain is undifferentiated, but we are born with a tilt of interest. Little girls come into the world with a brain that is much more interested and gets much more pleasure from the social context of the world. Little boys come into the world and they take much more pleasure from the physical world; he's exercising his brain in that physical dimension, she's exercising her brain in that social dimension. The big differences are in what gives us pleasure, what motivates us, and that's why men choose some jobs and women choose other jobs."
The fascinating debate, between neuroscientific gender determinism and the sociological rebuttal, took place at the Battle of Ideas festival in London this year. To drag this back to the layperson's level, let's call it the parental level, the main argument against the separation of the sexes is that it's rubbish. One minute a kid might furiously identify himself with his sex. The next minute he will be dressed as Bo Peep. The market doesn't have much room for nuance, especially at Christmas. But Hamleys has taken a tiny step back from the brink of gender essentialism, and for that, as well as the late opening hours, I guess we should be grateful.
3 The Guardian on the secret of drawing up healthy-looking bank balance sheets. Banks use accounting loop holes to inflate their profits and bolster staff bonuses, according to a paper by the Adam Smith Institute. It says banks are able to use complex financial products such as credit default swaps to report profits that they might not otherwise be able to. Gordon Kerr, a former banker who wrote the report, said the blame lies with the International Financial Reporting Standards (IFRS) rules that allow banks to recognise their expectations of future income as current profits.
"The accounting regulation system needs radical reform so that banks are not encouraged to invest in risky assets to make themselves seem more profitable than they really are. Honest balance sheets are the cornerstone of a healthy financial system – right now, we don't have the transparency we desperately need to avoid a repeat of 2008," Kerr said. He outlined a number of ways banks can boost profits, for instance by buying a CDS – a credit default swap or type of insurance policy against a counterparty defaulting – as this allows them to provide certainty to cash flows that might otherwise be uncertain, even though the CDS is unlikely to pay out.
"Accurate accounting is at the root of the legal and scrutiny framework; without accurate accounts basic laws are incapable of enforcement. As this report shows, banks have been using loopholes in these rules to inflate their accounts and create false profits to pay for bonuses and short-term gains for their shareholders," Kerr said.
4 The Wall Street Journal on commodities’ future linked to China’s fortunes. You want to know where the global commodities markets are heading in the coming years? Then it's probably best that you remember a single word: China. As the biggest and one of the fastest-growing of the world's developing economies, China has become a voracious consumer of industrial and agricultural commodities. Its shifting needs are now the most important driver in the prices of many of those goods. That's why no single factor is likely to have a more far-reaching impact on commodities markets over the next few years than how Chinese demand changes as the country's economy evolves.
The consensus is that China is headed for slower economic growth than it experienced from 2001 to 2010, when its annual rate of expansion ranged from 8.3% to 14.2% and reached double digits six times, according to the World Bank. Demand for steel, copper and other industrial metals could drop significantly if China does stall, because those materials are heavily used in construction—which would be at risk from weakness in the Chinese real-estate market—and because China often accounts for some 40% of global demand for those materials. Coal demand could also tumble because the fuel is heavily used in China to generate power.
5 The Financial Times on ‘Call of Duty: Modern Warfare 3’ video game sales outstripping blockbuster movies. Call of Duty: Modern Warfare 3, the latest instalment in Activision Blizzard’s hit war-game franchise, has realised $1bn-worth of sales in 16 days, outpacing blockbuster movies including Avatar and Harry Potter, but marking a slowdown after its record-breaking first week. MW3 outsold Activision’s two previous Call of Duty instalments, Black Ops and Modern Warfare 2, demonstrating the growing importance of a Hollywood-style opening weekend sales and marketing blitz.
Activision is claiming a new high-water mark for video games in the entertainment wars by reaching $1bn in sales one day faster than 20th Century Fox’s Avatar, an indication of the ever-wider appeal of gaming beyond its teenage-boy origins. James Cameron’s 3D sci-fi epic set the previous record for reaching that milestone in 17 days in 2009, before going on to overtake Titanic as the biggest-grossing movie of all time, with total takings of $2.78bn, according to Box Office Mojo, the film website.
6 The Deepika reporting that across 200 battalions of the Central Reserve Police Force, 5,504 are nursing various illnesses including depression. Federal junior minister Jitender Singh said they were being provided counseling.
Bankocracy in Britain; Sarkozy sees two Europes; Coming Asian crunch; No birthday bash for Delhi; India economy distressed; Asia fears capital flight
1 The Guardian on bankocracy in Britain. The national interest. It's a phrase we've heard a lot recently. David Cameron promised to defend it before flying off last week to Brussels. The national interest he saw as threatened by Europe is concentrated in a few expensive parts of
London, in an industry that would surely come bottom in any occupational popularity contest (yes, lower even than journalists): investment banking.
On one issue in particular, Cameron had a good case: Britain wants banks to put more money aside for a rainy day than the EU is considering. Elsewhere, he just looked unreasonable – what exactly is wrong with having international banking supervision? Cameron is merely expressing more openly something Labour frontbenchers also believe: that the City is pretty much the last engine functioning in Britain's misfiring economy. What is it that justifies the kid-glove treatment of the finance sector? Switch on the news and you normally hear some minister or lobbyist talking about the vital contribution banking makes to employment. Our tax revenue. Or the role banks ideally play in directing money to needy businesses.
Yet they are largely bogus. On nearly any important measure, finance actually contributes less to Britain than manufacturing. Take jobs. The finance sector employs 1m people in Britain. Chuck in the lawyers, the PRs and the smaller fry that swim in its wake and you are up to a
grand total of 1.5m. And most of these people are not the investment bankers for whom Cameron went to war in Brussels. At the big British banks such as RBS and HBOS, 80% of the staff work in the retail business. Even in its current state of emaciation, manufacturing
employs 2m people.
The evidence and the voters are against investment bankers. So why do the politicians cling on to them? Part of the answer must be cultural. Running this government are two sons of bankers. Cameron's father was a stockbroker, Clegg's is still chairman of United Trust Bank (and
famously helped his son get some work experience). What are the results of bankocracy? It means that the main figures arguing for a Robin Hood tax are the Archbishop of Canterbury Rowan Williams and Bill Nighy. It means that opposition to the rule of banks isn't found
in Westminster, but in tents outside St Paul's or among a few grizzled academics and NGO-hands – with no political vehicle to carry them. Meanwhile, the politicians declare that the national interest of Britain can be defined by what suits one square mile of it.
2 BBC on Nicolas Sarkozy saying there are two Europes now. The French president has said that there are now clearly "two Europes", following last week's summit in which the UK vetoed EU treaty changes. Nicolas Sarkozy said he and Chancellor Merkel of Germany did everything they
could to persuade the UK to sign up to the EU deal to tackle the debt crisis. He said the agreement marked "the birth of a different Europe". UK PM David Cameron defended his decision, telling MPs he acted to protect the UK's financial sector. Sarkozy said that there is
one Europe "which wants more solidarity between its members and regulation, the other [is] attached solely to the logic of the single market".
3 The Khaleej Times on the coming Asian crunch. By 2050, Asia will have more than five billion people, while the European Union’s share of the global population will decline from nine per cent to five per cent. Annual economic growth in Asia over the past 30 years has averaged five per cent. Its GDP is projected to increase from $30 trillion to about $230 trillion by 2050. The balance of power in the twenty-first century is shifting — in social, economic, and, arguably, political terms — from west to east. Western anxieties about a looming “Asian century” stem largely from the precedent of 21st geopolitics, in which the West dominated less-developed nations. But this dynamic is outdated, and Asia would suffer as much as the West from any attempt to emulate the British and American empires of the nineteenth and twentieth centuries.
As Asian economic growth has increased, consumption in the region has also risen. Multinational companies and Western countries — both of which stand to benefit greatly from Asia’s increasing consumption — have encouraged Asians to aspire to a Western standard of living, with its high energy usage, electronic toys, and meat-heavy diet. Asian governments seem willing partners in this one-dimensional approach to development, and are eager to lead global economic growth. Yet it is neither desirable nor possible for Asians to consume in the way that Westerners do, and Asian governments should face up to this reality.
The planet simply cannot support five billion Asians consuming like Westerners. The earth’s regenerative capacity was exceeded more than 30 years ago, and we now use 30% more resources than the planet can sustain. Although we know this to be the case, the vast majority of
Western economists and institutions continue to encourage China and India to consume more. Asian governments must reject this trend, but, having been intellectually subservient for so long, it is not clear that they will. Asia must adopt three core principles to avert environmental and social crises. First, economic activity must be secondary to maintaining resources. Second, Asian governments must take action to re-price resources and focus on increasing their productivity. Third, Asian states must recast their central role as being to defend our collective welfare by protecting natural capital and the environment.
4 The Dawn on Delhi not having a birthday bash. The Indian capital of New Delhi marked its 100th birthday on Monday without any official celebrations of a day that revives memories of British rule over the country. On December 12, 1911, visiting King George V told crowds at
an elaborate imperial ceremony that India’s capital would be moved from the eastern port of Calcutta to a new city to be built next to the ancient settlement of Delhi. “New Delhi” was designed on a grand scale with tree-lined boulevards, a 340-room palace for the British
viceroy and elegant public buildings – all of which remain intact today. The centenary of the decision has been the subject of public lectures and discussion seminars, but there has been no programme or parades organised by city authorities. “The best may be still to come,” the Times of India declared in its editorial on Monday, pointing out that the sprawling city now had about 160 times as many residents as in 1911. With India undergoing a dramatic economic
transformation in the past 20 years, the country’s time under British rule before independence in 1947 has little resonance today for many Indians.
5 The Economic Times on India’s distressed economy. India’s industrial output fell for the first time in 28 months on the back of falling consumer demand and declining corporate investments, spooking the financial markets, but brightening the prospects of an interest rate cut. Production at factories, utilities and mines shrank 5.1% in October, far exceeding forecasts of a 0.5-1% decline, causing share indices to fall 2%, benchmark yields to drop, and the rupee to hit a new low of 52.61 against the dollar.
Last week, the government cut its growth forecast for the year to around 7.5%, but industrial output data released on Monday has raised fresh doubts about the economy’s ability to meet even the new target. While every segment of the manufacturing sector contracted in October,
capital goods output declined as much as 25.5%, suggesting a near shutdown in corporate investments and expansion. C Rangarajan, former Reserve Bank of India governor and chairman of the Prime Minister's Economic Advisory Council, said there was a need to watch inflation
for some more time before taking action. “Immediately, the RBI may take a pause. But, unless (inflation) numbers clearly indicate a decline, there may not be a policy reversal,” he said. Production of durables and consumer durables declined together for the first time since February 2009, a clear sign of weak consumer demand, as overall manufacturing output slid 6% in October.
6 The Economic Times on Infosys employees working on weekends to help company meet targets. Infosys is making its nearly 1,50,000 employees work extra hard this quarter by shortening two weekend breaks, a rare step which may mean the company is huffing and puffing to meet its revenue growth target. Staff at India's second-largest software exporter worked on November 19 and December 10 (both Saturdays), giving the company a revenue boost of 1-1.3% for the October-December quarter, JP Morgan analyst Viju K George wrote in a report. While all top-tier IT services providers have cited the weak global economic situation in their prognosis, Infosys has been particularly pessimistic in recent weeks. Its chief financial officer, V
Balakrishnan, said recently that the company may not reach the upper end of its sales growth forecast of 3-5% for the December quarter and 17.1-19.1% for the financial year, or $7.08-7.2 billion.
7 The Business Line on the risk of capital flight from Asia owing to Eurozone meltdown. A big risk to Asian economies from a Eurozone meltdown could come in the form of deleveraging or repatriation of funds as experienced during the US financial crisis. Quoting data from Bank for International Settlements (BIS), a panel of economists from Nomura Research, in a media call, said that total claims by European banks on Asia ex-Japan economies stood at $1.4 trillion as of June 2011. According to BIS data as of June 2011, India is the fifth largest Asian borrower from Eurozone banks. The Euro region lent India $61.4 billion or 3.4 per cent of India's GDP as of June 2011.
Could that pose a near-term risk of capital flight from India? While there was no immediate data available to confirm this, according to Tomo Kinoshita, Deputy Head of Economics, Asia ex-Japan at Nomura - of international banks' total claims due from India, 60% or $128.5 billion had a maturity of up to one year. This seen together with India's foreign exchange reserves of $311.5 billion as of September, does place India in the risk radar. China, Singapore, Hong Kong and
South Korea are other top Asian borrowers from European banks.
8 Business Standard report about old dams in India. Some 115 of them are more than a century old and capable of unleashing devastation if breached.
9 Mint’s comment on India overstating its export figure by $9 bn last week and on Monday saying capital goods output had grown by 25.5% before correcting it: ‘Sorry guys, the dog ate the GDP data’.
+++
My take on the day: Star of Delhi in Dec 1811 — Akbar Shah II. In Dec 1911 — King George V. In Dec 2011 — Anna Hazare.
London, in an industry that would surely come bottom in any occupational popularity contest (yes, lower even than journalists): investment banking.
On one issue in particular, Cameron had a good case: Britain wants banks to put more money aside for a rainy day than the EU is considering. Elsewhere, he just looked unreasonable – what exactly is wrong with having international banking supervision? Cameron is merely expressing more openly something Labour frontbenchers also believe: that the City is pretty much the last engine functioning in Britain's misfiring economy. What is it that justifies the kid-glove treatment of the finance sector? Switch on the news and you normally hear some minister or lobbyist talking about the vital contribution banking makes to employment. Our tax revenue. Or the role banks ideally play in directing money to needy businesses.
Yet they are largely bogus. On nearly any important measure, finance actually contributes less to Britain than manufacturing. Take jobs. The finance sector employs 1m people in Britain. Chuck in the lawyers, the PRs and the smaller fry that swim in its wake and you are up to a
grand total of 1.5m. And most of these people are not the investment bankers for whom Cameron went to war in Brussels. At the big British banks such as RBS and HBOS, 80% of the staff work in the retail business. Even in its current state of emaciation, manufacturing
employs 2m people.
The evidence and the voters are against investment bankers. So why do the politicians cling on to them? Part of the answer must be cultural. Running this government are two sons of bankers. Cameron's father was a stockbroker, Clegg's is still chairman of United Trust Bank (and
famously helped his son get some work experience). What are the results of bankocracy? It means that the main figures arguing for a Robin Hood tax are the Archbishop of Canterbury Rowan Williams and Bill Nighy. It means that opposition to the rule of banks isn't found
in Westminster, but in tents outside St Paul's or among a few grizzled academics and NGO-hands – with no political vehicle to carry them. Meanwhile, the politicians declare that the national interest of Britain can be defined by what suits one square mile of it.
2 BBC on Nicolas Sarkozy saying there are two Europes now. The French president has said that there are now clearly "two Europes", following last week's summit in which the UK vetoed EU treaty changes. Nicolas Sarkozy said he and Chancellor Merkel of Germany did everything they
could to persuade the UK to sign up to the EU deal to tackle the debt crisis. He said the agreement marked "the birth of a different Europe". UK PM David Cameron defended his decision, telling MPs he acted to protect the UK's financial sector. Sarkozy said that there is
one Europe "which wants more solidarity between its members and regulation, the other [is] attached solely to the logic of the single market".
3 The Khaleej Times on the coming Asian crunch. By 2050, Asia will have more than five billion people, while the European Union’s share of the global population will decline from nine per cent to five per cent. Annual economic growth in Asia over the past 30 years has averaged five per cent. Its GDP is projected to increase from $30 trillion to about $230 trillion by 2050. The balance of power in the twenty-first century is shifting — in social, economic, and, arguably, political terms — from west to east. Western anxieties about a looming “Asian century” stem largely from the precedent of 21st geopolitics, in which the West dominated less-developed nations. But this dynamic is outdated, and Asia would suffer as much as the West from any attempt to emulate the British and American empires of the nineteenth and twentieth centuries.
As Asian economic growth has increased, consumption in the region has also risen. Multinational companies and Western countries — both of which stand to benefit greatly from Asia’s increasing consumption — have encouraged Asians to aspire to a Western standard of living, with its high energy usage, electronic toys, and meat-heavy diet. Asian governments seem willing partners in this one-dimensional approach to development, and are eager to lead global economic growth. Yet it is neither desirable nor possible for Asians to consume in the way that Westerners do, and Asian governments should face up to this reality.
The planet simply cannot support five billion Asians consuming like Westerners. The earth’s regenerative capacity was exceeded more than 30 years ago, and we now use 30% more resources than the planet can sustain. Although we know this to be the case, the vast majority of
Western economists and institutions continue to encourage China and India to consume more. Asian governments must reject this trend, but, having been intellectually subservient for so long, it is not clear that they will. Asia must adopt three core principles to avert environmental and social crises. First, economic activity must be secondary to maintaining resources. Second, Asian governments must take action to re-price resources and focus on increasing their productivity. Third, Asian states must recast their central role as being to defend our collective welfare by protecting natural capital and the environment.
4 The Dawn on Delhi not having a birthday bash. The Indian capital of New Delhi marked its 100th birthday on Monday without any official celebrations of a day that revives memories of British rule over the country. On December 12, 1911, visiting King George V told crowds at
an elaborate imperial ceremony that India’s capital would be moved from the eastern port of Calcutta to a new city to be built next to the ancient settlement of Delhi. “New Delhi” was designed on a grand scale with tree-lined boulevards, a 340-room palace for the British
viceroy and elegant public buildings – all of which remain intact today. The centenary of the decision has been the subject of public lectures and discussion seminars, but there has been no programme or parades organised by city authorities. “The best may be still to come,” the Times of India declared in its editorial on Monday, pointing out that the sprawling city now had about 160 times as many residents as in 1911. With India undergoing a dramatic economic
transformation in the past 20 years, the country’s time under British rule before independence in 1947 has little resonance today for many Indians.
5 The Economic Times on India’s distressed economy. India’s industrial output fell for the first time in 28 months on the back of falling consumer demand and declining corporate investments, spooking the financial markets, but brightening the prospects of an interest rate cut. Production at factories, utilities and mines shrank 5.1% in October, far exceeding forecasts of a 0.5-1% decline, causing share indices to fall 2%, benchmark yields to drop, and the rupee to hit a new low of 52.61 against the dollar.
Last week, the government cut its growth forecast for the year to around 7.5%, but industrial output data released on Monday has raised fresh doubts about the economy’s ability to meet even the new target. While every segment of the manufacturing sector contracted in October,
capital goods output declined as much as 25.5%, suggesting a near shutdown in corporate investments and expansion. C Rangarajan, former Reserve Bank of India governor and chairman of the Prime Minister's Economic Advisory Council, said there was a need to watch inflation
for some more time before taking action. “Immediately, the RBI may take a pause. But, unless (inflation) numbers clearly indicate a decline, there may not be a policy reversal,” he said. Production of durables and consumer durables declined together for the first time since February 2009, a clear sign of weak consumer demand, as overall manufacturing output slid 6% in October.
6 The Economic Times on Infosys employees working on weekends to help company meet targets. Infosys is making its nearly 1,50,000 employees work extra hard this quarter by shortening two weekend breaks, a rare step which may mean the company is huffing and puffing to meet its revenue growth target. Staff at India's second-largest software exporter worked on November 19 and December 10 (both Saturdays), giving the company a revenue boost of 1-1.3% for the October-December quarter, JP Morgan analyst Viju K George wrote in a report. While all top-tier IT services providers have cited the weak global economic situation in their prognosis, Infosys has been particularly pessimistic in recent weeks. Its chief financial officer, V
Balakrishnan, said recently that the company may not reach the upper end of its sales growth forecast of 3-5% for the December quarter and 17.1-19.1% for the financial year, or $7.08-7.2 billion.
7 The Business Line on the risk of capital flight from Asia owing to Eurozone meltdown. A big risk to Asian economies from a Eurozone meltdown could come in the form of deleveraging or repatriation of funds as experienced during the US financial crisis. Quoting data from Bank for International Settlements (BIS), a panel of economists from Nomura Research, in a media call, said that total claims by European banks on Asia ex-Japan economies stood at $1.4 trillion as of June 2011. According to BIS data as of June 2011, India is the fifth largest Asian borrower from Eurozone banks. The Euro region lent India $61.4 billion or 3.4 per cent of India's GDP as of June 2011.
Could that pose a near-term risk of capital flight from India? While there was no immediate data available to confirm this, according to Tomo Kinoshita, Deputy Head of Economics, Asia ex-Japan at Nomura - of international banks' total claims due from India, 60% or $128.5 billion had a maturity of up to one year. This seen together with India's foreign exchange reserves of $311.5 billion as of September, does place India in the risk radar. China, Singapore, Hong Kong and
South Korea are other top Asian borrowers from European banks.
8 Business Standard report about old dams in India. Some 115 of them are more than a century old and capable of unleashing devastation if breached.
9 Mint’s comment on India overstating its export figure by $9 bn last week and on Monday saying capital goods output had grown by 25.5% before correcting it: ‘Sorry guys, the dog ate the GDP data’.
+++
My take on the day: Star of Delhi in Dec 1811 — Akbar Shah II. In Dec 1911 — King George V. In Dec 2011 — Anna Hazare.
Sunday, December 11, 2011
Car sales transform India; Online speech faces assault; Job-loss is fastest-growing fear; Britain's EU isolation; The divide in Russia
1 The San Francisco Chronicle on car sales transforming India. Little is changing modern India more than the spread of cars, a four-wheeled reflection of its economic transformation and a window into the aspirations of the new Indian middle class. Farmers and schoolteachers now buy cars. Maruti sells its cars with ads showing an idealized India that barely exists, even in the country's wealthiest enclaves: sprawling houses with white picket fences, highways with no traffic, friendly towns without a hint of litter. Everywhere, there are joyful Indians driving Marutis. That's the Indian dream they're selling. The fantasy began taking shape in 1991, when the government was facing crushing debt payments and dangerously low foreign-exchange reserves. Desperate to save itself, India abandoned socialism and embraced globalization to become one of the world's fastest-growing economies. Per capita income 20 years ago was $350, one-quarter of what it is today. The literacy rate was 42%. Cars were an unimaginable extravagance. The small middle-class spent years on waiting lists for cars. Then, for the most part, those folks had two choices: the Ambassador, a ridiculously outdated bubble-topped sedan whose design was borrowed from 1950s Britain; and the Maruti 800, a stripped-down economy model that resembled a metal box with wheels. What began in 1991, though, has turned India into an economic juggernaut, with a middle class that by some estimates has reached 250 million people. Indians bought 2.5 million cars last year, 25% more than the year before. Everywhere, cars are bringing change.
2 The San Francisco Chronicle on online speech facing an assault across the globe. Worldwide leaders gathered in The Hague, Netherlands, last week to discuss government responsibilities to protect online freedom, at a point when the principle is under attack around the globe. At a press conference last week, Indian telecommunications Minister Kapil Sibal pointed to online illustrations of Prime Minister Manmohan Singh and Congress Party leader Sonia Gandhi in "compromising positions," the Associated Press reported. "If somebody is not willing to cooperate on incendiary material like this, it is the duty of government to think of steps that we need to take," Sibal said. To their credit, the businesses have refused to cooperate. Google said it will remove material that is illegal or breaks its terms of service. But none of these companies wants to get into the messy business of determining and filtering merely controversial content. During her speech at the conference, Secretary of State Hillary Rodham Clinton criticized companies that provide censorship technology to oppressive regimes and insisted nations have far more to gain than lose by allowing unfettered online access.
3 BBC report that unemployment is world’s fastest-rising fear. A BBC World Service survey covering 11,000 people in 23 countries found unemployment was the world's fastest-rising worry. Corruption and poverty still ranked the highest, but unemployment was mentioned by 18% - six times the number citing it in the first survey in 2009. The growth in concern was found across all countries surveyed, although corruption emerged as the most talked about global concern. Next came extreme poverty. One in five had talked about that subject recently.
4 MJ Akbar wondering in The Khaleej Times, how one can censor a teashop. Censorship is generally the last temptation of self-delusional governments who want to console themselves with the illusion that their error is not misrule but vilification. The alibi for censorship is always national interest, of course. They want to eliminate debate, questions and consequent accountability because their greed for office is limitless. If censorship of the net was nothing more than a technicality — switching off the servers, for instance — it would have already happened. A democratic government does not, however, have the arbitrary authority of a Muammar Gaddafi or Assad, or the anonymous muscle of a Chinese Communist Party. Artificial arguments have to be used. But the government of India will soon discover that the net does not bend as easily as some of its collaborators in private sector communication. Social media is the largest teashop in human history. Rahul Gandhi is aware that the Anna Hazare movement has made brilliant use of social media to spread its anti-establishment message. Hazare has publicly blamed Rahul Gandhi for weakening the proposed Lok Pal legislation. The government can do nothing about Hazare. Is it trying to censor the Internet that carries Hazare’s message? If this is the logic behind telecommunication minister Kapil Sibal’s idea, then here is some breaking news. Get real. This teashop has no walls.
5 The Dawn on Britain facing EU isolation. Prime Minister David Cameron has made history by blocking EU treaty change in a move that has isolated Britain and this detachment will define the next chapter in this island nation’s notoriously tricky relations with continental Europe. Cameron, who styles himself a “eurosceptic,” seems to have pushed Britain further from the heart of Europe than even “Iron Lady” Margaret Thatcher dared to do in her battles in the 1980s when she said “No, No, No” to Brussels increasing its powers. The prime minister was left out in the cold in Brussels when France and Germany failed to give him the safeguards he wanted for the powerful City of London financial services industry, which accounts for 10% of economic output. “It is a black day for Britain and Europe,” Liberal Democrat Lord Oakeshott said. “We are now in the waiting room while critical decisions are being taken.” Britain, the EU’s third-biggest economy, was left on its own with an overwhelming majority of countries led by Germany and France agreeing to forge ahead with a separate treaty to build closer fiscal union to preserve the euro.
Britain never joined the 17-country single currency zone. Nevertheless, over 40% of Britain’s trade is with the euro zone and about three million jobs depend on trade with Europe. Analysts said Britain’s isolation could result in core EU nations effectively taking over decision-making without London. Regulation affecting financial services industry could now be decided by 26 rather than all 27 EU members.
6 Fareed Zakaria in The Khaleej Times about America’s investment gap. A World Economic Forum survey that ranks countries on their overall economic competitiveness puts the US fifth; the countries ahead of it, including Singapore and Finland, are tiny, with populations around 5% that of the US. The World Bank’s report “Doing Business” ranks the US No. 4 again behind a handful of tiny countries. The Organisation for Economic Cooperation and Development (OECD) released a study last week measuring tax revenue as a percentage of gross domestic product. The United States came in 27th out of 30 countries.
So, outside of the tax code, the US does not seem to have slipped very much in terms of competitiveness and ease of doing business. What has changed? The answer is pretty clear. Only five years ago, American infrastructure used to be ranked in the top 10 by the World Economic Forum. Now we’re 24th. US air infrastructure has gone from 12th to 31st, roads from eighth to 20th. The drop in human capital is greater. The US used to have the world’s largest percentage of college graduates. We’re now No. 14. Michael Spence, the Nobel Prize-winning economist, points out that the US got out of the Great Depression because of the spending associated with World War II but also because during the war, it dramatically reduced its consumption and expanded investments. People spent less, saved more and bought war bonds. That surge in investment — by people and government — produced a generation of growth after the war. If we want the next generation of growth, we need a similarly serious strategy of investment.
7 The Khaleej Times on the divide in Russia. For years, the Kremlin’s political engineers have been suppressing bottom-up movements and creating top-down manageable structures. They have cemented full control over countrywide television channels, and their heavy censorship has created a wall between the silent, TV-watching majority and a vocal, Internet-savvy minority. Big-name news anchors have not even mentioned the protests or the crackdown. The Kremlin controls the political system, the courts and the entire law-enforcement system, as well as regional finances and major industries.
Opinion polls (conducted before the elections) have consistently shown a widespread rentier mentality and a preference among young people for jobs at Gazprom and Rosneft, the state-owned natural-resources monopolies. These young people, officials and aspiring bosses, may well see the protesters as rivals or enemies meddling with their lucrative future. It’s not just the rentier state-supporting party and disorganised, quixotic protesters who have collided in Moscow. Two world views and two images of the country’s future are at odds. There are no easy ways out of the deadlock the Russian society has found itself in. Thanks to all those years of pretend politics and Potemkin party-building, Russia does not have a ready alternative to Vladimir Putin’s party. But Putin and his party are no longer as powerful as they were before the vote. Although a majority on paper, they can no longer act in the name of the people.
8 The Los Angeles Times on horses paying for the dire economy. Arabians, paints and quarter horses that were once prized possessions of families throughout Southern California are increasingly being cut loose as unaffordable luxuries, especially in communities trampled by double-digit unemployment and pocked with foreclosed homes. Some horses are sold off for a fraction of what their owners paid, saving them thousands in feed and care expenses. Scores of others have been abandoned, many found foraging for food or rescued from owners who starved them into bony cripples. Horse sanctuaries, some providing a home for more than 50 head, are struggling to stay afloat, and a few are declining to accept newcomers. "Up until two or three years ago, we'd find maybe two abandoned horses a year. It's a horse a week now," said Allan Drusys, chief veterinarian for Riverside County's Department of Animal Services.
2 The San Francisco Chronicle on online speech facing an assault across the globe. Worldwide leaders gathered in The Hague, Netherlands, last week to discuss government responsibilities to protect online freedom, at a point when the principle is under attack around the globe. At a press conference last week, Indian telecommunications Minister Kapil Sibal pointed to online illustrations of Prime Minister Manmohan Singh and Congress Party leader Sonia Gandhi in "compromising positions," the Associated Press reported. "If somebody is not willing to cooperate on incendiary material like this, it is the duty of government to think of steps that we need to take," Sibal said. To their credit, the businesses have refused to cooperate. Google said it will remove material that is illegal or breaks its terms of service. But none of these companies wants to get into the messy business of determining and filtering merely controversial content. During her speech at the conference, Secretary of State Hillary Rodham Clinton criticized companies that provide censorship technology to oppressive regimes and insisted nations have far more to gain than lose by allowing unfettered online access.
3 BBC report that unemployment is world’s fastest-rising fear. A BBC World Service survey covering 11,000 people in 23 countries found unemployment was the world's fastest-rising worry. Corruption and poverty still ranked the highest, but unemployment was mentioned by 18% - six times the number citing it in the first survey in 2009. The growth in concern was found across all countries surveyed, although corruption emerged as the most talked about global concern. Next came extreme poverty. One in five had talked about that subject recently.
4 MJ Akbar wondering in The Khaleej Times, how one can censor a teashop. Censorship is generally the last temptation of self-delusional governments who want to console themselves with the illusion that their error is not misrule but vilification. The alibi for censorship is always national interest, of course. They want to eliminate debate, questions and consequent accountability because their greed for office is limitless. If censorship of the net was nothing more than a technicality — switching off the servers, for instance — it would have already happened. A democratic government does not, however, have the arbitrary authority of a Muammar Gaddafi or Assad, or the anonymous muscle of a Chinese Communist Party. Artificial arguments have to be used. But the government of India will soon discover that the net does not bend as easily as some of its collaborators in private sector communication. Social media is the largest teashop in human history. Rahul Gandhi is aware that the Anna Hazare movement has made brilliant use of social media to spread its anti-establishment message. Hazare has publicly blamed Rahul Gandhi for weakening the proposed Lok Pal legislation. The government can do nothing about Hazare. Is it trying to censor the Internet that carries Hazare’s message? If this is the logic behind telecommunication minister Kapil Sibal’s idea, then here is some breaking news. Get real. This teashop has no walls.
5 The Dawn on Britain facing EU isolation. Prime Minister David Cameron has made history by blocking EU treaty change in a move that has isolated Britain and this detachment will define the next chapter in this island nation’s notoriously tricky relations with continental Europe. Cameron, who styles himself a “eurosceptic,” seems to have pushed Britain further from the heart of Europe than even “Iron Lady” Margaret Thatcher dared to do in her battles in the 1980s when she said “No, No, No” to Brussels increasing its powers. The prime minister was left out in the cold in Brussels when France and Germany failed to give him the safeguards he wanted for the powerful City of London financial services industry, which accounts for 10% of economic output. “It is a black day for Britain and Europe,” Liberal Democrat Lord Oakeshott said. “We are now in the waiting room while critical decisions are being taken.” Britain, the EU’s third-biggest economy, was left on its own with an overwhelming majority of countries led by Germany and France agreeing to forge ahead with a separate treaty to build closer fiscal union to preserve the euro.
Britain never joined the 17-country single currency zone. Nevertheless, over 40% of Britain’s trade is with the euro zone and about three million jobs depend on trade with Europe. Analysts said Britain’s isolation could result in core EU nations effectively taking over decision-making without London. Regulation affecting financial services industry could now be decided by 26 rather than all 27 EU members.
6 Fareed Zakaria in The Khaleej Times about America’s investment gap. A World Economic Forum survey that ranks countries on their overall economic competitiveness puts the US fifth; the countries ahead of it, including Singapore and Finland, are tiny, with populations around 5% that of the US. The World Bank’s report “Doing Business” ranks the US No. 4 again behind a handful of tiny countries. The Organisation for Economic Cooperation and Development (OECD) released a study last week measuring tax revenue as a percentage of gross domestic product. The United States came in 27th out of 30 countries.
So, outside of the tax code, the US does not seem to have slipped very much in terms of competitiveness and ease of doing business. What has changed? The answer is pretty clear. Only five years ago, American infrastructure used to be ranked in the top 10 by the World Economic Forum. Now we’re 24th. US air infrastructure has gone from 12th to 31st, roads from eighth to 20th. The drop in human capital is greater. The US used to have the world’s largest percentage of college graduates. We’re now No. 14. Michael Spence, the Nobel Prize-winning economist, points out that the US got out of the Great Depression because of the spending associated with World War II but also because during the war, it dramatically reduced its consumption and expanded investments. People spent less, saved more and bought war bonds. That surge in investment — by people and government — produced a generation of growth after the war. If we want the next generation of growth, we need a similarly serious strategy of investment.
7 The Khaleej Times on the divide in Russia. For years, the Kremlin’s political engineers have been suppressing bottom-up movements and creating top-down manageable structures. They have cemented full control over countrywide television channels, and their heavy censorship has created a wall between the silent, TV-watching majority and a vocal, Internet-savvy minority. Big-name news anchors have not even mentioned the protests or the crackdown. The Kremlin controls the political system, the courts and the entire law-enforcement system, as well as regional finances and major industries.
Opinion polls (conducted before the elections) have consistently shown a widespread rentier mentality and a preference among young people for jobs at Gazprom and Rosneft, the state-owned natural-resources monopolies. These young people, officials and aspiring bosses, may well see the protesters as rivals or enemies meddling with their lucrative future. It’s not just the rentier state-supporting party and disorganised, quixotic protesters who have collided in Moscow. Two world views and two images of the country’s future are at odds. There are no easy ways out of the deadlock the Russian society has found itself in. Thanks to all those years of pretend politics and Potemkin party-building, Russia does not have a ready alternative to Vladimir Putin’s party. But Putin and his party are no longer as powerful as they were before the vote. Although a majority on paper, they can no longer act in the name of the people.
8 The Los Angeles Times on horses paying for the dire economy. Arabians, paints and quarter horses that were once prized possessions of families throughout Southern California are increasingly being cut loose as unaffordable luxuries, especially in communities trampled by double-digit unemployment and pocked with foreclosed homes. Some horses are sold off for a fraction of what their owners paid, saving them thousands in feed and care expenses. Scores of others have been abandoned, many found foraging for food or rescued from owners who starved them into bony cripples. Horse sanctuaries, some providing a home for more than 50 head, are struggling to stay afloat, and a few are declining to accept newcomers. "Up until two or three years ago, we'd find maybe two abandoned horses a year. It's a horse a week now," said Allan Drusys, chief veterinarian for Riverside County's Department of Animal Services.
Friday, December 9, 2011
Germany prospers while unemployment strangulates its euro peers; In 10 years, China turns world trading powerhouse; 46m Americans on food stamps
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.
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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