Yesterday we were searching for one of our budy home in U.P and certainly we ask someone abt her address and Guess ..what he said NO IDEA i smile and my freinds and me equivalently said Get idea.
Thats what Barrons are doing nowadays to trap everyones mind to make everyone an AD box which can promote you which is far more fantbulous than A.B .Initiated by him and now used by everyone in INDIA,
People living in Metro have an usual habit of saying NO IDEA... and thats where an Empty mind caught something very general and Launch Idea as large.
SOooo
NXXT time u say NO IdEA ????
SAy no To NOOOOoooooooo
otherwise someone can make u buy IDEa....
WHAt An IdEA SIR JI....
Wednesday, March 16, 2011
Saturday, September 4, 2010
India's disappointing government Much less than promised The economy is powering on, but the Congress-led coalition is squandering an opportunity to i
THE weightlifting auditorium has a leaky roof. The athletes’ village has no kitchen. Stagnant monsoon water, abuzz with dengue-carrying mosquitoes, collects at most of the stadiums being hurriedly built for the Delhi Commonwealth games, which are due to begin on October 3rd. The security arrangements, in terrorism-stricken India, are shot to pieces because of 24-hour processions of workmen at most venues. Manmohan Singh, the prime minister, reiterates the official line that these will be the “best games ever”. That may depend on how you define “best”.
This shambles, for which corruption, feuding ministries, sapping bureaucracy and shoddy workmanship are all to blame, does not matter to many Indians. Athletics is not cricket. And few know much about their country’s image abroad. Yet it is depressing, not least because it mirrors how large parts of India are run.
When Mr Singh’s government, a coalition dominated by the Congress party, came to power in May last year it was considered to be in a strong position to improve matters. Congress had won a general election convincingly, letting it shake off a few of the troublesome partners, including Communist parties, who dogged its outgoing coalition administration. Its main opposition, the Hindu nationalist Bharatiya Janata Party, was deflated by electoral defeat. And Congress’s leaders, Mr Singh and Sonia Gandhi, the party chief, are highly regarded.
The government has at least managed the economy steadily. On August 31st it said that output had grown by 8.8% in the second quarter compared with the same quarter last year. This figure was made especially rosy by the relative gloom of a year earlier. Yet it puts India back in its wished-for realm of 9% growth, and it is based on strong growth in job-creating manufacturing, which increased by 12.4%.
But almost everywhere else the results are disappointing. The government has brought almost none of the economic reform India needs. And it has done no more in other pressing areas, like infrastructure and health care, than its predecessor. It may even have jeopardised one of that government’s biggest achievements, a civil nuclear co-operation deal with America that was expected to lead to big investments in nuclear energy. On August 30th India’s upper house passed a nuclear-liability law that will make suppliers of nuclear fuels and related gear liable for 80 years in the event of any malfunction. That may well deter them.
Worse, the government’s poor management of several crises makes it seem incompetent. These include violent separatist protests in Kashmir, where an 11-year-old boy was killed by police on August 30th, becoming the 65th victim of the year, and a worsening Maoist insurgency in east India, which has cost almost 900 lives this year.
The easy response to this disappointment is to blame unrealistic expectations. Despite hopes bandied about by businessmen, there never was much prospect of this leftist government bringing economic reform to India’s statist financial sector or protected retail industry.
But even when the government has tried bits of reform it has often got stuck. The biggest, an effort to prune the country’s dreadful thicket of indirect taxes into a tidier form, an all-India Goods and Services Tax, has been pushed back by a year, to April 2012. Another, to scrap a petrol subsidy, announced in June to many loud public protests, has been followed by only one rise in petrol prices, which suggests they are not yet free.
The government’s inability to make itself work better is a more basic failing—richly evident in the games’ foul-up—for which Congress, in charge of the Delhi state government, is especially guilty. To address a big weakness of the previous government, road-building, an able minister, Kamal Nath, was appointed. He promised to build an average of 20km a day, but this looks unlikely.
In education, another priority, early progress has slowed. The education minister, Kapil Sibal, has promised an array of improvements, including universal primary education, partly provided for through private schooling. This has been enshrined in law, yet its implementation is bogged down. State governments are against any change that the centre will not fund; and its negotiating skills are poor.
A lack of strong leadership underlies that. Mr Singh’s power is limited. From her central Delhi bungalow, at 10 Janpath, Mrs Gandhi controls the government. Ministers also pay more heed to the man expected to be the next prime minister, her 40-year-old son Rahul, than to the current one. Yet on the rare occasions when Mr Singh has decided to put his shoulder to the wheel, it has moved. That explains why the America-India nuclear deal was passed by the previous government, despite much hostility to it.
Why Mr Singh, a formidable economist and liberal, has not tried to do more—especially to calm the crises in Kashmir and the east—is baffling. But his reluctance to act more vigorously explains why he is rated less highly at home than abroad. According toNewsweek he is the world leader “other leaders love”. India Today, by contrast, found that 1% of Indians consider him their first choice for prime minister.
Mr Gandhi, a late-developer, meanwhile shows little interest in the tough business of policy. He is devoted to rebuilding Congress, especially in populous north India; forthcoming state elections, in Bihar in October and West Bengal next year, will be important tests of his progress. This ambition also explains Mr Gandhi’s single recent policy statement. After the government forbade a big mining company, Vedanta, to extract bauxite from a mountain in Orissa sacred to local tribes, he rushed to present himself to them, on August 26th, as their “soldier in Delhi”. Indeed they need one. And the tribal vote, about 8% of the total, would certainly be helpful to Congress.
But it would be more useful for India if Mr Gandhi could get a long-stalled land-acquisition bill through parliament. It would redefine the terms under which the government can acquire land for industry, an urgent need, in a poor, crowded country.
Asia
Still rising
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GIVEN the consistently disappointing data we've seen out of the American economy in recent weeks, the outlook for this morning's August payroll employment report was uncomfortably uncertain. Initial jobless claims have risen ominously of late, and a number of indicators of economic activity have edged downward, leading some to believe that the Labour Department would provide evidence of a sharp retrenchment in labour markets for the month.
In fact, the figures aren't that bad. The headline number is negative—off 54,000 for the month—but that's overwhelmingly due to the continued drawdown in temporary census employment, which subtracted 114,000 jobs from the August report. Ex-census, the economy added 60,000 jobs in August. Private employment rose by 67,000 for the month. Since December of 2009, private employment has grown by a total of 763,000.
Meanwhile, revisions to previous months' data indicated a better labour market performance than was previously believed. The June employment change was revised from a drop of 221,000 to a decline of 175,000, and the change in July was revised from a decline of 131,000 jobs to a dip of just 54,000. (In both cases, the headline negative figures were also attributable to the unwinding of temporary census hiring). July private employment growth was revised up to 107,000 jobs.
Of course, these positive moves still don't amount to an economy producing enough jobs to rapidly bring down the unemployment rate. The jobless rate ticked up in August, from 9.5% to 9.6%. The upward shift doesn't necessarily signal a deterioration. Household employment (figured as part of a different survey from the payroll number) rose by 290,000 for the month, but that was not enough to compensate for the 550,000 worker increase in the size of the labour force. But at this point in the business cycle, labour force growth is a positive sign. Still, all involved would prefer to see the economy adding far more jobs; at this pace, full employment might not return until mid-decade.
Some potentially good news is the drop in long-term unemployment in this report. Both the number and percentage of unemployed workers off the job for more than 26 weeks declined in August. A key question is whether the drop is due to reemployment or departures from the labour force. The average and median durations of unemployment also fell.
Temporary help services continued to be a strong source of employment growth, as did the health and education sector. Manufacturing employment offset some of this rise, due largely to normal cycles in the production schedule in the automobile industry. Hours and earnings both showed slow but steady growth, yet again.
The overall picture is of a labour market that continues to chug along in the right direction, albeit far too slowly. The pace of employment recovery implies several long, hard years ahead for American workers. But given the mood on markets and around dinner tables lately, one has to appreciate the continuation of the upward trend.
Afloat on a Chinese tide China’s economic rise has brought the rest of emerging Asia huge benefits. But the region still needs the West
WITH markets still on edge after the worst financial crisis in decades, and fears of renewed recession stalking the West, this week seemed a poignant moment for China’sPeople’s Daily to detect a “golden age of development”, for Asia at least. Yet developing Asia, led by China itself, is booming. China’s GDP barrelled along in the first half of the year, growing by 11.1% compared with a year earlier. The newly industrialised little tigers—Hong Kong, Singapore, South Korea and Taiwan—as well as most of South-East Asia seem to have fully recovered from the downturn. Even Thailand, mired in political turmoil, grew by 9.1% in the second quarter.
The dream is that this gilded future is now insulated from rich-world downturns: that China—now having, after all, officially overtaken Japan as the world’s second-largest economy—can drive growth for the whole region. One day, maybe. Not yet.
That the idea has currency at all reflects a remarkable transformation in itself. During the East Asian financial crash of the late 1990s, many in the region blamed China as a proximate cause of the debacle. Its emergence as a big competitor, the argument went, stalled the rapid export growth on which countries such as Thailand had come to depend, poking large holes in their current accounts, and precipitated the collapse of confidence.
Since then, and especially since the surge that followed its accession to the WTO in 2001, China’s economic clout has grown as fast—or faster—in its own region as anywhere. And with East Asia, unlike with Europe and America, China tends to run trade deficits. It is now the biggest trading partner for both Australia and India. It is the biggest export market for Japan, South Korea and Taiwan; the second-biggest for Malaysia and Thailand; the third-biggest for Indonesia and the Philippines, and so on.
Everyone is waking up to the potential of the Chinese market. Indian poultry farmers have learned that once-discarded chicken’s feet can actually be sold. Hoteliers in Bali grapple with night-classes in Mandarin.
Still, few are yet confident in the “golden age”. People’s Daily used the term in reporting the views of “many” taking part in the “Sixth Beijing-Tokyo Forum” in Tokyo. It seems unlikely the many included the Japanese contingent. The economic news at home was worrying—though it would have been grimmer still were it not for the healthy growth in recent years in exports to China. In this context, the report read rather like a young sports champion consoling the veteran whom he has just bested.
Even in much of young, vigorous developing Asia the boom seems too precarious for triumphalism. One reason for this is statistical. Growth figures in parts of Asia have been so spectacularly good partly because they were so spectacularly bad in the first half of 2009. Singapore’s extraordinary first-half GDP growth of 17.9% looks slightly less otherworldly against last year’s first-half contraction of 5.3%. In the depth of the crisis, as trade for a while seized up, the region, as one of the most trade-dependent in the world, saw growth plummet.
That trade dependence is another reason for sobriety. Outside of China and India (which this week reported 8.8% second-quarter growth compared with a year earlier), developing Asia remains heavily dependent on external demand. And despite the heady growth of sales to China, the most important sources of demand remain the “G3” of America, Europe and Japan.
Asian exports to China fall broadly into three categories. Industrialised countries, notably Japan and South Korea, have found a big market for capital goods. Countries such as Australia and Indonesia have fed China’s growing appetite for commodities and raw materials such as coal, iron ore and palm oil. But many Asian exporters have been selling components, as part of globalised supply chains in which “made in China” often means “assembled in China from bits produced all over the place”.
It is hard to work out from published trade figures where components imported to China from, say, Malaysia, end up. But Malaysian officials believe that some 60% of their exports to China are destined for the G3. (By contrast, less than 30% of Indonesia’s exports to China are re-exported.) A recent study of such “global production sharing” in East Asia by the Asian Development Bank (ADB) concluded that it has played a pivotal role in the region’s dynamism and growing interdependence. But it has not lessened the region’s dependence on the global economy.
Other studies have also found that China has already had quite a big positive impact on growth in other countries in the region. Besides providing an export market, it is a source of tourists, investment opportunities and demand for services. And, less measurably, it is a source of economic optimism: a boost to consumer and business sentiment.
Not quite the rising tide that lifts all boats
Its economy, however, for all its three-decades-long boom, still only accounts for 8% of global GDP in current dollars; domestic private consumption, though growing fast, remains a small part of national GDP by global standards (36%). This will grow as China reforms its economy to give a bigger share to household income, for example by lifting wages for China’s factory workers. On August 29th Wen Jiabao, China’s prime minister, must have enjoyed lecturing Japanese visitors on the need to tackle the problem of “relatively low wages” at Japanese factories in China.
This “rebalancing”, though, could take decades. In the short term the high-speed growth much of the rest of the region has enjoyed will moderate. Growth will not be measured against the worst of the slump; and faltering recovery in the G3 will dent exports, however well China does. The golden age is not here yet.
Theories about why some rich-world economies are doing better than America’s don’t stand up
AMERICA is used to making the economic weather. It has the world’s largest economy, its most influential central bank and it issues the main global reserve currency. In recent months, however, some rich-world economies (notably Germany’s) have basked in the sunshine even as the clouds gathered over America.
On August 27th America’s second-quarter GDP growth was revised down to an annualised 1.6%. That looked moribund compared with the 9% rate confirmed in Germany a few days earlier. America’s jobless rate was 9.5% in July (figures for August were released on September 3rd, after The Economist went to press). But in Germany the unemployment rate is lower even than before the downturn. Other rich countries, including Britain and Australia, have enjoyed sprightlier recent GDP growth and lower unemployment than America.
This unusual divergence within the rich world has fostered many competing theories to explain it, including differences in fiscal policies, exchange rates and debt levels. Most of these do not quite fit the facts. On one account Germany and, to a lesser extent, Britain have been rewarded for taking a firm grip on their public finances. In this view, the promise to tackle budget deficits has had a liberating effect on private spending by reducing uncertainty. In America, by contrast, anxiety about public debt is making businesses and consumers tighten their purse strings.
The theory is a little too neat. Although credible plans to curb deficits are helpful to medium-term growth, they are unlikely to explain sudden spurts. Britain’s budget plans were announced towards the end of the quarter, on June 22nd. Germany’s were set out two weeks earlier. They could scarcely explain why GDP growth was strong. Indeed for most of the second quarter, fiscal uncertainty hung over both countries: in Britain because of a close election, in Germany because of commitments to help Greece and other countries. And the immediate impact of austerity is to dampen growth: witness the slump in Greece.
Perhaps the explanation is found in currency movements. One effect of the euro-area crisis was to push the euro down against the dollar in the early months of this year—helping German firms but harming American exporters. Much of Germany’s second-quarter GDP growth came from trade, even as a wider trade gap sapped America’s economy. A weak pound could also explain Britain’s renewed economic strength, much as a surge in the yen has increased worries about Japan. On August 30th Japan’s central bank said it would offer banks ¥10 trillion ($118 billion) of six-month secured loans at its benchmark interest rate of 0.1%, on top of the ¥20 trillion of three-month loans it had already pledged. It hopes that this flood of money will push down borrowing costs, cap the yen’s rise and help exporters.
The currency theory also has holes in it. The yen’s surge is too recent to explain why Japan’s GDP barely rose in the second quarter. Net trade added almost nothing to Britain’s GDP growth in the last quarter. Indeed America’s export growth has been much stronger (a sudden surge in imports was behind the second-quarter trade gap). And demand for the sort of exports Germany has done well with, mostly luxury cars and specialist capital goods, tends to be insensitive to shifts in the exchange rate.
Britain is an awkward challenger to another theory: that a debt hangover is holding back consumers in countries that had housing booms. Consumer spending in Britain (and in America) rose at about the same rate as in thriftier Germany during the second quarter.
Britain stands out in another respect, too: its unemployment rate has risen by far less than in other places that had also racked up big mortgage debts. Divergent trends in unemployment may be better explained by the sort of recession each country had than by variations in jobs-market flexibility, says Kevin Daly at Goldman Sachs. In America, Ireland and Spain, the collapse of labour-intensive construction swelled the dole queues. Britain also had a housing boom but its tight planning laws kept its construction industry small, so fewer jobs were lost when the bust came. The downturns in Japan and Germany, deeper than America’s (see chart), were mainly caused by the collapse in world trade. That hurt capital-intensive export industries—which were also more likely to rebound quickly—so fewer jobs disappeared.
Some think America’s slowness to create new jobs is leading to undue pessimism about the rest of the world’s prospects. “If US growth is not enough to give us a big payrolls figure, it’s deemed a disaster,” says Marco Annunziata at UniCredit. But fast-growing emerging markets, such as China, have kept the world economy ticking over. Germany has done well because its exporters have made headway there. China’s vibrancy also explains why Australia’s GDP rose at its fastest rate for three years in the second quarter.
The best explanation for the uneven pattern of rich-world activity is also the most prosaic: America’s recovery is more advanced and its firms have rebuilt their stocks sooner. Europe’s business cycle tends to lag America’s by a quarter or two. Recent indicators point to greater convergence. The index of American manufacturing published by the Institute of Supply Management unexpectedly picked up from 55.5 to 56.3 in August. The corresponding indices for the euro area and Britain fell back, to 55.1 and 54.3 respectively. America’s economy may have some unique troubles, but its fortunes are still strongly tied to the rest of the rich world.
Finance after the crisis: Deutsche Bank A tamer casino
Germany’s biggest bank is trying to make investment banking boring. The latest in our series of profiles of financial institutions after the crisis
JOSEF ACKERMANN, the head of Deutsche Bank, combines a silky manner with blunt words. When the German government set up a bail-out fund to stabilise the country’s banking system, he said he would be “ashamed” to use it. When Europe and the IMF bailed out Greece, Mr Ackermann said he doubted it would pay back the loans. And when regulators and economists say that big banks should be broken up, with “casino” investment banks split off from “utility” retail banks, Mr Ackermann retorts that “smaller banks will not make us safer.”
Mr Ackermann speaks with the authority of a man who steered his bank through the crisis more deftly than most. Deutsche did not escape unscathed. In 2008, a year in which it had confidently forecast a record profit of more than €8 billion ($11.7 billion), it posted a net loss of almost €4 billion because of a huge hit to its investment bank (see chart). Yet it emerged from the crisis as the leading member of an exclusive club of large banks—others include Barclays and Credit Suisse—that did not have to take direct injections of public funds (although all, of course, benefited from a wide range of other government props to the system).
More striking still is the fact that Deutsche was able to cover its losses without having to raise significant amounts of new private capital. The two small rights issues it undertook, totalling nearly €3 billion, were to fund its purchase of a minority shareholding in Deutsche Postbank, a large German retail bank.
Although Deutsche Bank placed proprietary bets by buying bonds and other securities for its own account, it did so on a far smaller scale than most of its main rivals. Many of the positions it took were tightly hedged. Its holdings of commercial-property securities, for instance, were partly protected by insurance policies written by AIG, an American insurer. By some estimates more than $12 billion flowed from AIG to Deutsche Bank in collateral as a result of these policies. Deutsche has taken its approach of hedging risks so much to heart that when it released details of its holdings of European government bonds earlier this year, it emerged that the majority of its holdings of German government debt was hedged against default.
Even though Deutsche was one of the biggest issuers of subprime securities it was also one of the first banks to place bets that these bonds would collapse in value, leading critics to charge that it was betting against its own clients. “There are always people who will say that if you lose less money you are too clever,” says one executive. “The proof [that we weren’t betting against clients] is that we also lost money.”
Deutsche Bank was quick to cut its losses when markets turned sour, too. Whereas some banks held on to positions, Deutsche quickly cut risk. In the weeks after Lehman Brothers’ collapse it dumped billions of euros in loans to private-equity firms and cut more than 900 jobs.
Underlying this relatively strong performance is the way Deutsche blurs the distinctions between casino banking and utility banking. Its investment bank’s long-standing strategy is to concentrate on client-driven “flow” businesses such as foreign-exchange, bonds and derivatives while holding as little risk as possible on its own balance-sheet. For the past six years Deutsche Bank has been the world’s largest currency trader: it now conducts almost one in five of the world’s foreign-exchange trades. It is also the world’s largest trader of interest-rate swaps and features among the top three traders of most other sorts of financial instruments.
The crisis has reinforced this positioning. Deutsche has reduced its proprietary-trading activities. And the collapse or merger of many of its competitors has enabled it to make big gains in trading for clients. In foreign exchange, for instance, the top five banks now command 55% of the market, compared with 36% in 2001. With less competition and volatile markets, the investment banks that are still standing have been earning fat margins trading in currencies, commodities and bonds.
Yet these spreads are already beginning to shrink as rivals regain their footing. Trading volumes fell in the second quarter across the industry. Investors are pressing Deutsche Bank to reduce its reliance on investment banking, no matter how stable its executives insist it has become. Deutsche has said in the past that it wants investment banking to account for no more than 60% of its total earnings. It has missed this target more often than hit it, however, and has quietly dropped mention of this goal. For the foreseeable future analysts expect investment banking to remain its main source of profit (see chart).
There are promising prospects elsewhere. Businesses such as private banking and wealth management offer juicier margins. Expanding abroad is another avenue. Early in 2010 Deutsche finalised the acquisition of Sal Oppenheim, a venerable banker to Germany’s richest families that had fallen on hard times by lending them too much. A few months later it closed the purchase of parts of the Dutch commercial-banking business of ABN AMRO.
A bigger challenge is to improve the performance of its retail-banking businesses. In Germany there are too many banks and the margins are razor-thin. In trying to expand at home, Deutsche Bank has already bought almost a third of Deutsche Postbank, which has the nation’s biggest branch network. But this badly run bank is short of capital and Deutsche Bank would be forced to bolster its capital reserves again if it were to buy all of it within the next six months (as seems likely). Mr Ackermann is due to retire in 2013. Having succeeded in making investment banking seem relatively dull, making retail banking more exciting may be his last big task.
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