Global implications as India slows; Spanish scare sinks euro; South Africa's jobs challenge; Mixing milk and sewage water in India; 'Desperate housewives' syndrome

1 India economy slows, with global implications (The New York Times) India's coalition government just celebrated the third anniversary of its tenure with a self-congratulatory banquet that could not have been more poorly timed: India's currency, the rupee, is falling; investment is down; inflation is rising; and deficits are eating away at government coffers. India's problems have dampened hopes that it, along with China and other non-Western economies, might help revive the global economy, as happened after the 2008 financial crisis. Instead, India is now facing a political reckoning, as the country's elected leaders must address difficult, politically unpopular decisions -- or risk even deeper problems.

"When India was being run comparatively well in 2008, they seemed to cope with these external shocks" said Glenn Levine, a senior economist at Moody's Analytics in Sydney, Australia. "I think people are starting to question the long-term Indian story. That is the difference now." India's economy is still expanding, with growth projected at about 7% this year. But the slowdown has punctured the once-bubbly mood in the business and political classes and brought sharp criticism of the government.

Indian business leaders, foreign investors and analysts say India's strengths are being undermined by growing political dysfunction. India is desperate for investment in mining, roads, ports, urban housing and other areas, but Indian businesses and foreign investors are starting to shy away. Indian corporations, unable to obtain governmental licenses or permissions for projects, are investing overseas instead. Foreigners also are pulling back; their investment in Indian stocks and bonds totalled only $16 billion in the last fiscal year, compared with $30 billion the year before.

2 Young and global need not apply in Japan (The New York Times) Notoriously insular, corporate Japan has long been wary of embracing Western-educated compatriots who return home. But critics say the reluctance to tap the international experience of these young people is a growing problem for Japan as some of its major industries lose ground in an increasingly global economy. Discouraged by their career prospects if they study abroad, even at elite universities, a shrinking portion of Japanese college students is seeking higher education in the West. At the same time, Japan’s regional rivals, including China, South Korea and India, are sending increasing numbers of students overseas — many of whom, upon graduation, are snapped up by companies back home for their skills, contacts and global outlooks.

3 Facebook stock loss over 24% (San Francisco Chronicle) Facebook shares fell to a new low, extending losses from the worst-performing large initial public offering during the past decade to more than 24%. The stock fell 9.6% to $28.84 in New York, below the prior low of $30.94 on May 22. Facebook began trading May 18 after underwriters sold shares at $38. About $25 billion in market value has been erased from Facebook as bearish sentiment built in stock and options markets after the social-networking site went public while US equities headed for the biggest monthly decline since September.

"People are disillusioned," Matt McCormick, who helps oversee $6.2 billion at Bahl & Gaynor, said. He doesn't own shares of Facebook. "A lot of investors believed the hype," he said. "In this type of volatile market environment, people are not going to take chances." Facebook and Morgan Stanley, its lead underwriter, faced criticism for boosting the number of shares sold in the IPO by 25% to 421.2 million in the days before the deal. They also increased the asking price to $34 to $38 from $28 to $35.

4 At RIM, hints of loss, 5,000 layoffs (San Francisco Chronicle) Struggling BlackBerry maker Research In Motion warned that it will have an operating loss in its current March-to-June quarter and said there will be significant layoffs this year. Ontario-based RIM, a pioneer in the smart-phone market, made no mention of a sale of the company, but new chief executive Thorsten Heins did not rule it out after RIM's last earnings were released in late March. "It's a disaster, it's bad," Jefferies analyst Peter Misek said. "The problem is you can't see a path to a sale until you stabilize the business." Misek said if the advisers weren't brought in to consider a sale originally they are likely considering it now. Misek expects RIM to announce as many as 5,000 layoffs soon.

5 Spanish scare sinks euro (The Guardian) The euro sank to a near two-year low against the dollar on Tuesday amid worries about the solvency of Spanish banks, and as the governor of the country's central bank quit. The single currency fell below $1.25 after rating agency Egan-Jones cut the country's credit rating. Against the pound it was worth 79.95p. Spain's borrowing costs are near euro-era records amid worries about when the country will recover from its second recession in three years and start cutting its 24% unemployment rate.

6 South Africa’s jobs challenge (Johannesburg Times) If South Africa wants to meet the National Development Plan's aggressive targets of reducing unemployment from 27% to 6% by 2030, 11 million more jobs must be created. Additionally, the proportion of adults working in rural areas must rise from the present 29% to 40%.

7 Mixing milk and sewage water in India (Dawn) Indian police said they had arrested and charged four men in Mumbai who are accused of selling milk mixed with sewage water in plastic packets scavenged from garbage bins. The four vendors are suspected of adulterating milk for the last six months and are accused of putting their customers’ health at risk by selling it in a western suburb of the city. Police said one of the vendors’ methods was to rummage through garbage bins and collect empty milk packets, which they would fill with 60% milk and 40% gutter water, before sealing the packet with a burning candle.

The raid comes after a meeting of Indian dairy farmers this month called for strong legislation to curb the malpractice of adulterated milk being sold to consumers. The sale of fake products in branded packaging collected from rubbish dumps is believed to be widespread in India. In 2010, police busted a gang in New Delhi believed to be making thousands of dollars a month by selling local Indian whiskey in the bottles of premium brands such as Johnnie Walker and Glenfiddich.

8 ‘Desperate housewives syndrome’ in Australia (The Age) Australian women are succumbing to "Desperate Housewives Syndrome," an eating disorder in middle-age, driven by the desire to look as thin as the celebrity stars of shows such as Desperate Housewives. There's been an increase in the number of women experiencing eating disorders in middle age according to Professor Phillipa Hay, Foundation Chair of Mental Health at the University of Western Sydney. Hay says a rise in body image and weight and shape concerns is to blame. "There may be more pressures on older women to retain the appearance of youth," she says and "there may be more pressures to be a 'super woman' – successful in the workplace and at home and 'looking good' as well."

9 India rupee fall isn’t a shock absorber (The Wall Street Journal) The silver lining of India’s rupee falling 20% against the dollar over the past nine months is that it should make Indian industry more competitive. Not so fast, says Eswar Prasad, professor at Cornell University, and former official with the International Monetary Fund. He doesn’t think it will work in India’s case. “The rupee isn’t able to act as a shock absorber like in an economy with a strong, vibrant manufacturing sector,” he says. “Unless the domestic policy environment shifts, it’s not going to help. The domestically oriented ducks need to line up before focusing on external reforms.”

A falling currency normally is seen as a “shock absorber” for a weak economy. Currency devaluations after the Asian financial crisis in the late 1990s were key factors in eventually igniting growth in Thailand, South Korea and Indonesia. It’s a tool many in Greece wish they had instead of being tied to the euro.  Mr. Prasad says a weak currency isn’t enough on its own, however. You need the infrastructure, policy reform and know-how to exploit the weak currency. Government policymaking needs to be conducive to new investments.

10 Arvind Panagariya writing in The Economic Times on how one man, PH Kurien, issued the first compulsory licence in India to Natco to manufacture the drug Naxevar. That one decision brought the price of the drug down from Rs 2,80,428 at which Bayer was selling it, to a mere Rs 8,800. The intro of the story goes: It is said that only God and a few good men and women run India. One such is PH Kurien. (I’ve enjoyed interacting with Kurien when he was heading the Kerala Financial Corporation, and also during his stint with the District Primary Education Programme, and can vouch for what Panagariya says.)