India is facing a significant economic

As with most other places in the world, India is facing a significant economic slowdown that is aggravating an already serious liquidity crisis. The government is finding it increasingly difficult to implement additional fiscal or monetary measures, and as a result, has tried to bring liquidity by lifting FDI restrictions and attempting to lure back foreign investment. But politics is getting in the way. The government cannot allow political expediency to derail the progressive lifting of FDI restrictions, even during tough times like these. Many international companies are still looking to enter the country, despite facing enormous uncertainties about their financial health in their existing markets. With a more open India, they will enter and bring with them a significant amount of capital investment and managerial expertise. This will help India pull out of the recession in the short to medium term and also help establish the conditions to sustain economic growth over the long term. Indian companies will use the additional funds from their foreign partners to keep their staff employed and continue with capital expansion plans. Indian companies with global ambitions will have greater access to world-class infrastructure and managerial knowledge that will enable them to better compete around the globe. With increased competition, Indian consumers will be able enjoy the highest-quality products at the lowest cost.
Indicorps offers prestigious grassroots public service fellowship to implement sustainable development projects with community-based organizations across India. As a total-immersion leadership program, Indicorps will encourage you to explore your role as a catalyst of change. Fellowship projects promote both personal growth and collective action towards a secular India that is inclusive, peaceful, and participatory. The program requires a minimum commitment of one year. Investors constantly hunt for alternative assets that might improve the risk-adjusted returns on their financial portfolios. When stock markets experience a downswing, investors search for more profitable alternatives. Financial newspapers fill headlines with record prices paid for certain works of art, giving rise to the idea that investing in art might be a profitable pursuit. Moreover, Artprice recently reported a booming emerging art market for Russia, 780% growth for the Chinese15 (contemporary) art market since 2001, and 830% for the Indian (contemporary) art market inthe past decade. To determine if these reported returns are feasible and indicate reasonable investment alternatives, we analyze whether investing in emerging art markets yields a competitive risk-adjustedreturn in comparison with other, more traditional asset classes that could be used optimally todiversify a financial portfolio.
India exhibits the strongest Sharpe ratio of all three emerging art markets and by far the strongest average annual return. Moreover, the Indian art index has a negative market beta and a nearly zero correlation with the S&P 500, which makes it another interesting investment for a well-diversified portfolio.I know very little about art or art markets, since my “right brain” never progressed beyond those sunsets and sunrises in 4th grade, and hence can’t really offer any opinions hereThe Fellowship starts on August 15, 2009. Housing and food are provided and a small stipend will cover basic living expenses.Ila Patnaik and Lant Pritchett discuss the problems facing Indian policy makers.

India’s economy

Despite slowing from highs of 8% to 9% growth, India’s economy will grow close to 6% in 2009. Amid domestic and global liquidity crunch, large domestic savings and corporate retained earnings are financing investment. Sluggish labor market and wealth effects have hit urban consumption. But low export dependence, a large consumption base and the high share of employment (two-thirds) and income (one-half) coming from rural areas has helped sustain consumption. Pre-election spending, especially in rural areas, and high government expenditure, are also pluses. Timely monetary andSalman Khan, a portfolio manager in California has created hundreds of free educational videos, available on his web site, the Khan and on YouTube. These videos cover the basics of banking, finance and the current credit crisis — I saw a couple and they’re quite good. Even more importantly, there are hundreds of videos on mathematics (algebra, calculus, trignometry, probability and more) and physics. Salman has three degrees from MIT and one from Harvard, so he knows what he’s talking about. Anyone, anywhere in the world can benefit — all you need is access to the Internet. A good idea, fantastically implemented. Thank you, Salman for investing all this time and energ
Kudos to Amit Varma and Reuben Abraham
Amit Varma, India’s foremost blogger and award-winning columnist, has been busy recently.His first novel, My Friend Sancho releases this week in fine bookstores all across India. Click here for launch details — so far, it’s Mumbai, Delhi, Kolkata, Bangalore and Chennai. If you’re in any of these towns, this is bound to be a fun event. Amit is a delightfully witty and amiable chap, if we say so ourselves credit measures have played a key role in improving private demand, liquidity and short-term rates and reducing the risk of loan losses. Credit is largely channeled by domestic banks, especially state-controlled ones, which have low loan-to-deposit ratios and little exposure to toxic assetsGiven Roubini’s track record over the last three years, he’s certainly built some cred. Do you agree with his assessment on India, though?“For what it’s worth, a key conclusion from the IMF’s new World Economic Outlook is that recessions caused by financial crisis typically end with export booms, with the trade balance improving,on average, by more than 3 percent of GDP. I find this a disturbing result: we’re now suffering from a global financial crisis, which means that the usual driver of recovery will only be available if we can find another planet to export to.”Paul Krugman With results still coming in, projections show the United Progressive Alliance is likely to win about 250 seats, making it a shoo-in to form the next government and provide continuity, a stable administration and progress on key economic and corporate reforms.Wall Street Journal, Prime Minister Manmohan Singh’s electoral victory, the biggest any Indian politician has scored in two decades, may loosen political shackles that have restrained the country’s economic growth as it struggles to free half a billion people from poverty…..Political stability will make India a more attractive investment destination as Singh, 76, seeks the funds to stimulate Asia’s third largest economy.Bloomberg, May 18 2009.Many are called, but few are chosen, as the saying goes. But could it just be that this time around, and on a one-off, never to be repeated basis, India might find itself right there in the midst of things, with a 50-50 opportunity to add its name to that select and noble band, the chosen few. After all, someone has to lead the next global charge? The majority of the developed economies are either bogged down in the substantial quantities of debt that they desperately need to pay off, or weighted down by those elderly populations who are weakening consumption growth and leading to export dependence (Germany, Japan…). And as Krugman humorously points out, someone will have to add the extra demand which will allow global trade to start to grow again, so why should India not supply a significant part of this new demand, after all we are more likely to find consumers in India than we are on MarsSalman Khan, a portfolio manager in California has created hundreds of free educational videos, available on his web site, the KhanAcademy and on YouTube. These videos cover the basics of banking, finance and the current credit crisis — I saw a couple and they’re quite good. Even more importantly, there are hundreds of videos on mathematics (algebra, calculus, trignometry, probability and more) and physics. Salman has three degrees from MIT and one from Harvard, so he knows what he’s talking about. Anyone, anywhere in the world can benefit all you need is access to the Internet. A good idea, fantastically implemented. Thank you, Salman for investing all this time and energy. Kudos to Amit Varma and Reuben AbrahamAmit Varma, India’s foremost and award-winning columnist, has been busy recently. His first novel, My Friend Sancho releases this week in fine bookstores all across India. Click here for launch details so far, it’s Mumbai, Delhi, Kolkata, Bangalore and Chennai. If you’re in any of these towns, this is bound to be a fun event. Amit is a delightfully witty and amiable chap, if we say so ourselves.

An Army psychiatrist accused of killing 13 people

An Army psychiatrist accused of killing 13 people during an attack on his Texas post will likely plead not guilty to the charges against him and may use an insanity defense at his military trial, his attorney said Monday.John Galligan, the civilian attorney for Maj. Nidal Hasan, said he is considering an insanity defense among other options, but that it's too early to determine his defense strategy."Based on the evidence thus far, his mental status must be raised," Galligan told The Associated Press by phone from his office near Fort Hood, about 130 miles southwest of Dallas. "Anybody who allegedly engages in conduct that is completely contradictory to his lifestyle and military career — an insanity defense has to be considered."Hasan has been charged with 13 counts of premeditated murder in the Nov. 5 shooting at Fort Hood, and military officials have said they may file more charges. More than two dozen others were wounded in the shooting spree, which happened at a building where soldiers finalize their wills and are medically screened before they are deployed.Galligan said military law requires his client to plead not guilty if prosecutors seek the death penalty, but he said that decision has not been made.
Hasan remains in intensive care at a San Antonio military hospital, where he was taken after being shot during the attack. At a hearing in his hospital room Saturday, Hasan was ordered to remain in custody until trial.Galligan said he is frustrated because prosecutors are taking too long to respond to his questions and requests. He said he has asked why no witnesses were allowed to testify during Saturday's hearing, aMonsieur was arrested in August after he arrived in New York. He faced six counts of smuggling, conspiracy, money laundering, and violating weapons trafficking laws and export controls in relation to a US trade embargo on Iran.
An Iranian national named in Monsieur's indictment, Dara Fotouhi, remains at large.
According to statements from Monsieur and documents filed in the case, the two men are experienced arms dealers who have worked closely with the Iranian government to procure military items.In February, Monsieur made contact with an undercover agent seeking engines for the F-5 fighter jet and the C-130 transport aircraft for export to Iran.Known as J85-21 models, they are replacement engines for the F-5 that was sold to Iran before the 1979 Iranian revolution. Designated as defense articles, they cannot be exported without licenses from the State Department and US treasury Department.Monsieur is alleged to have maintained a regular e-mail contact with the undercover agent regarding the requested engines and parts. Monsieur is also alleged to have overseen the transfer of 110,000 dollars from Dubai to a bank account in Alabama as payment for the parts, the statement said."Today's plea underscores the threat posed by Iranian procurement networks and the international arms traffickers who help supply them," David Kris, Assistant Attorney General for National Security, said in a statement. Related article: Iran needs 'just solution' on nukes, says Brazil"The guilty plea of Monsieur reflects the government's commitment to ensuring that critical technologies and military-grade weapons not fall into the wrong hands," US Immigration and Customs Enforcement (ICE) Assistant Secretary John Morton added.nd why it was closed to the news media. He said he had planned to question Hasan's commander, who in documents indicated Hasan would be moved to an unspecified hospital but did not say when.Fort Hood officials did not immediately return calls seeking comment.

Rigorous final meeting

President Barack Obama held a "rigorous final meeting" with his Afghanistan war council and is expected to announce his revised strategy for the eight-year-old conflict just after his Thanksgiving break.Military officials and others expect Obama to settle on a middle-ground option that would deploy an eventual 32,000 to 35,000 U.S. forces. That rough figure has stood as the most likely option since before Obama's last large war council meeting earlier this month, when he tasked military planners with rearranging the timing and makeup of some of the deployments.The president has said with increasing frequency in recent days that a big piece of the rethinking of options that he ordered had to do with building an exit strategy into the announcement in other words, revising the options presented to him to clarify when U.S. troops would turn over responsibility to the Afghan government and under what conditions.
As White House press secretary Robert Gibbs put it to reporters on Monday, it's "not just how we get people there, but what's the strategy for getting them out."Obama held the 10th meeting of his Afghanistan strategy review since mid-September on Monday night, with a large cast of foreign policy and military advisers, to go over that revised information from war planners. The two-hour Situation Room session was aimed at discussing "some of the questions that the president had, some additional answers to what he'd asked for," Gibbs said.The spokesman said the president left the war council meeting without announcing a decision to the group, but added it would become public soon."After completing a rigorous final meeting, President Obama has the information he wants and needs to make his decision and he will announce that decision within days," Gibbs said late Monday.The White House is aiming for an announcement by Obama next week, either Tuesday or Wednesday, after Congress returns from its Thanksgiving break. Military officials, congressional aides and European diplomats said they expect Obama to deliver a national address laying out the revamped strategy.Congressional hearings would immediately follow that address, including testimony from the U.S. commander in Afghanistan, Gen. Stanley McChrystal. Others likely to take part in hearings would be Secretary of State Hillary Rodham Clinton, Defense Secretary Robert Gates and U.S. Ambassador to Afghanistan Karl Eikenberry. All four were among the approximately 20 top administration officials and Obama advisers participating in the talks Monday night — one of the biggest groups gathered for these sessions in some time.The force infusion expected by the military would represent most but not all the troops requested by Obama's war commander, for a retailored war plan that blends elements of McChrystal's counterterror strategy with tactics more closely associated with the CIA's unacknowledged war to hunt down terrorists across the border in Pakistan.
McChrystal presented options ranging from about 10,000 to about 80,000 forces, and told Obama he preferred an addition of about 40,000 atop the record 68,000 in the country now, officials have said.Obama has already ordered a significant expansion of 21,000 troops since taking office. The war has worsened on his watch, and public support has dropped as U.S. combat deaths have climbed.The additional troops would be concentrated in the south and east of Afghanistan, the areas where the U.S. already has most of its forces, military officials said. The new troops that already went this year were directed to help relieve Marines stretched to the limit by far-flung postings in Helmand province and that would continue, while the U.S. effort would expand somewhat in Kandahar.The increase would include at least three Army brigades and a single, larger Marine Corps contingent, officials said.All officials spoke on condition of anonymity because the decision is not final.

Limited job options

Faced with limited job options, many young adults are turning to an old standby to weather the recession: moving back in with mom and dad.Nearly 1 in 7 parents with grown children say they had a "boomerang kid" move back home in the past year, according to a study being released Tuesday by the Pew Research Center. In a turnabout in the rite of passage in which a college graduate finds a job and an apartment, many are returning to their parents' empty nests because of tight finances or as they pursue an advanced degree."The journey home for Thanksgiving won't be quite so far this year for many adults," said researchers Wendy Wang and Rich Morin, who wrote the report. "Instead of traveling across country or across town, many grown sons or daughters will be coming to dinner from their old bedroom down the hall."Pew's survey and analysis of government data found that the share of adults 18 to 29 who lived alone declined from 7.9 percent in 2007 to 7.3 percent this year. Drops of that magnitude were also seen during or immediately after the recessions of 1982 and 2001.
Roughly one-third, or 35 percent, of boomerang kids said they had lived independently at some point in their lives but had to move back in with their parents. About half of the grown children worked full- or part-time, while 25 percent were unemployed and 20 percent were full-time students.The findings are the latest to highlight the sweeping social impact of a recession that began in December 2007. The effects have included declining immigration and U.S. migration between states, as well as increased carpools, use of public transit and "doubling up" of families in single-residence homes.Data released earlier this year showed that older Americans will make up virtually all of the growth in the U.S. work force in the coming years as a nearly unprecedented number hold onto jobs and younger people decide to stay in school.
Among 16- to 24-year-olds, less than half, or 46.1 percent, are currently employed, the smallest share since the government began collecting such data in 1948. At the same time, a record high of about 11.5 million Americans ages 18 to 24, or nearly 40 percent, attended college in October 2008."Boomerang kids are a major trend, and they represent a shift in cultural norms," said David Morrison, president and founder of Twentysomething Inc., a marketing and research firm. "Young adults are the first to feel the brunt of a bad economy and the last to feel the benefits of a recovering economy. So the first way you hedge your bets is to minimize your expenses." Saying there is now less of a stigma in moving back home, Morrison predicted that the trend of boomerang kids may lessen somewhat but still continue after the economy recovers. That could create longer-term ripple effects in social relationships, from multigenerational family tensions to delayed marriage, he said.According to the latest Pew survey and census data.About 20 million people ages 18 to 34 live at home with their parents roughly 30 percent of that age group. That's up from about 18 million, or 27 percent, in 2005.About 12 percent of young adults ages 18 to 34 said they were forced to move in with a roommate because of the poor economy.Fifteen percent of adults 18 to 34 said they had postponed getting married due to the recession. That share increases to 21 percent for adults ages 25 to 34, when many people tend to get married.Fourteen percent of adults 18 to 34 say they delayed having a baby.Pew based its findings on data from the Bureau of Labor Statistics and the Census Bureau. It also interviewed 1,028 people ages 18 and older by cell phone or landline from Oct. 21-25. The poll has a margin of error of plus or minus 3.9 percentage points.

Californians to be asked to spend more during unprecedented.

Supporters of a proposed $11 billion water bond say the money is urgently needed to fix California's water supply problems, yet billions of dollars in previous bond money still hasn't been spent, according to the California treasurer.About half of the $20 billion in water and levee improvement bonds passed since 2000 was unspent as of July, according to the State Treasurer's Office most recent report on debt affordability. It is unclear how much of that money is actually available for new efforts, since lawmakers have appropriated billions for specific projects, according to Jason Dickerson, debt service analyst for the Legislative Analyst's Office.
Some of those commitments could be changed by lawmakers if they want to redirect funds or by voters if they revise earlier bond measures.
But projects also could already be under way with the expectation that they would be paid later when bonds are sold to investors, Dickerson said.
Despite that spending, bond supporters say more is needed and they will spend the next year making the case for the biggest water bond ever proposed.
"It really is a need for investment in the tens of billions of dollars in the next few decades," said Mark Cowin, deputy director of the Department of Water Resources.
"In light of population growth and climate change, we knew we've got to invest even more."
At $11.1 billion, the measure is twice as big as the last record-breaking water bond -- Proposition 84, the $5.4 billion bond initiative that passed in 2006, shattering the record set four years earlier with the $3.4 billion Proposition 50. If the slate of ambitious projects to reform distribution and improve supply sounds familiar, that's because it is. And no wonder: that new measure was written largely by lobbyist Joe Caves, who was a key player behind previous water bonds. Caves, whose biggest client is The Nature Conservancy, is a master broker who brings together environmentalists, business groups and various parts of the state that often have very different interests. He could not be reached Friday.
The bond measure, which will go to voters next November, was passed as part of a five-bill package to overhaul the state's water system. It includes $3 billion to build new surface or groundwater reservoirs, $455 million for drought relief projects and $2.25 billion for Delta projects. Supporters, including Gov. Arnold Schwarzenegger and the sponsor of the bond measure, state Sen. Dave Cogdill, R-Modesto, say the inclusion of $3 billion for new dams makes this bond measure important and different. "This is a comprehensive solution that takes into account all aspects of dealing with safe, reliable water," said Cogdill spokeswoman Sabrina Lockhart.Most of the other half of the bond is for programs that were funded by earlier bonds, including groundwater cleanup, water recycling, land conservancies and grants for regional water projects. Critics, including some environmentalists, contend that the state has overpromised water. They say the state's farms and cities must use less water, and the state cannot spend its way out of the problem with new dams, canals and other infrastructure.
"This bloated bond just throws money at water without the thoughtful stewardship the taxpayers deserve," said Jonas Minton, a water policy analyst at the Planning and Conservation League, a state environmental group.
State Treasurer Bill Lockyer recently sounded a warning that the state was issuing too much debt and water improvements should be paid mostly through rate increases.
"If we keep going down the road we're headed, debt service is going to devour more than 10 percent of general fund revenues in 2014-2015," said Lockyer spokesman Tom Dresslar. "That is unprecedented. We need to adopt a smarter, long-term approach to planning and financing infrastructure in this state."
If approved, an $11 billion bond could cost the state's general fund between $600 million and $800 million a year to repay once the money is fully accessed, the LAO said.
Local water agencies, meanwhile, have also been on an unprecedented spending spree to upgrade and maintain water infrastructure.
For example:
-- The Contra Costa Water District spent $450 million to build Los Vaqueros reservoir, which was completed in 1998.
-- The Metropolitan Water District of Southern California completed its $2 billion reservoir in 2002.
-- The San Francisco Public Utilities Commission is in the middle of a $4.6 billion upgrade of its water system.
-- The East Bay's largest water district, the East Bay Municipal Utility District, is expected to complete a $922 million project with Sacramento County next spring to take water out of the Sacramento River.
In each of those cases, water agencies relied on ratepayers to make the investment.
"Those who need surface storage and have the ability to pay for it have done so," said Catherine Freeman of the Legislative Analyst's Office. "The state of California has been doing a lot of investing in infrastructure, and they've been doing it outside the general fund."
The result of California's wave of investment by ratepayers and taxpayers is several new regional reservoirs, groundwater storage and billions for water efficiency, conservation and recycling. Voters will have to decide if a massive slug of taxpayer-backed borrowing is the way to fix the state's continuing water problems.

Thai economy

The Thai economy is export-dependent, with exports of goods and services equivalent to over 70% of GDP in 2008. Thailand's recovery from the 1997-1998 Asian financial crisis (which brought a double-digit drop in GDP) relied largely on external demand from the United States and other foreign markets. From 2001-2006, the administration of former Prime Minister Thaksin embraced a "dual track" economic policy that combined domestic stimulus programs with Thailand's traditional promotion of open markets and foreign investment. Real GDP growth strengthened sharply from 2.2% in 2001 to 7.1% in 2003 and 6.3% in 2004. In 2005-2007, economic expansion moderated, averaging 4.5% to 5.0% real GDP growth, due to domestic political uncertainty, rising violence in Thailand's four southernmost provinces, and repercussions from the devastating Indian Ocean tsunami of 2004. Thailand's economy in 2007 relied heavily on resilient export growth (at a 17.3% annual rate), particularly in the automobile, petrochemicals, and electronics sectors. Persistent political uncertainty and the global financial crisis in 2008 weakened Thailand’s economic growth by reducing domestic and international demand for both its goods and services (including tourism). Due to minimum exposure to toxic assets, Thai banks have limited direct impact from the global financial crisis. Nonetheless, Thai economic growth slowed to 2.6% in 2008, with fourth quarter growth dropping below zero. In 2009, the contraction continued. First quarter GDP was down by 7.1% year-on-year. To offset weak external demand and to shore up confidence, the Abhisit administration introduced two stimulus packages worth $43.4 billion. The government projected that the Thai economy would be down 3.5% for the year but would see positive growth of 2.5% in 2010.
The Royal Thai Government welcomes foreign investment, and investors who are willing to meet certain requirements can apply for special investment privileges through the Board of Investment. To attract additional foreign investment, the government of Prime Minister Abhisit has promised to look for ways to expand investment opportunities, focusing more on green technology/manufacturers.
The organized labor movement remains weak and divided in Thailand; less than 2% of the work force is unionized. In 2000, an amended State Enterprise Labor Relations Act (SELRA) was passed, giving public sector employees similar rights to those of private sector workers, including the right to unionize. In 2009, efforts to streamline the State Railway authority met resistance from the powerful railways union, including a short strike which halted trains nationwide, showing that organized labor still has some potential political clout.
Roughly 40% of Thailand's labor force is employed in agriculture (data based on Bank of Thailand.) Rice is the country's most important crop; Thailand is the largest exporter in the world rice market. Other agricultural commodities produced in significant amounts include fish and fishery products, tapioca, rubber, corn, and sugar. Exports of processed foods such as canned tuna, canned pineapples, and frozen shrimp are also significant.
Thailand's increasingly diversified manufacturing sector is the largest contributor to growth. Industries registering rapid increases in production included computers and electronics, furniture, wood products, canned food, toys, plastic products, gems, and jewelry. High-technology products such as integrated circuits and parts, hard disc drives, electrical appliances, vehicles, and vehicle parts are now leading Thailand's growth in exports. Nonetheless, with export growth weakened in 2008 and inflationary pressure becoming less of a concern, the Bank of Thailand loosened monetary policy, allowing the baht to depreciate relative to the dollar to stimulate exports. Machinery and parts, vehicles, electronic integrated circuits, chemicals, crude oil and fuels, and iron and steel are among Thailand's principal imports.
The United States is Thailand's largest export market and third-largest supplier after Japan and China. While Thailand's traditional major markets have been North America, Japan, and Europe, economic recovery among Thailand's regional trading partners has further boosted Thai export growth (21.6% in 2004, 15.0% in 2005, 17.2% in 2006, 17.3% in 2007, and 16.8% in 2008). Export growth has also been high in some of Thailand's non-traditional export markets including India, China, and the Middle East.
Thailand is a member of the World Trade Organization (WTO) and the Cairns Group of agricultural exporters. Tourism contributes significantly to the Thai economy (about 6%). As a result of political protests that closed Bangkok’s airports from late November to early December 2008, tourism figures declined significantly at the end of December, a time when tourism is normally at its peak in Thailand.
Bangkok and its environs are the most prosperous part of Thailand, and the seasonally barren northeast is the poorest. An overriding concern of successive Thai Governments has been to reduce these regional income differentials, which have been exacerbated by rapid economic growth in and around Bangkok. The government has tried to stimulate provincial economic growth with programs such as the Eastern Seaboard project and the development of an alternate deep-sea port on Thailand's southern peninsula. It also is conducting discussions with Malaysia to focus on economic development along the Thai-Malaysian border.
Although the economy has demonstrated moderate positive growth in recent years, future performance depends on continued reform of the financial sector, attracting foreign investment, and improving domestic investment and consumption to balance past reliance on exports. Telecommunications, transportation networks, and electricity generation showed increasing strain during the period of sustained economic growth (the projected energy needs of the country exceed current capacity) and may pose a future challenge. Thailand's growing shortage of engineers and skilled technical personnel may limit its future technological creativity and productivity.
GDP (2008): $274 billion. Annual GDP growth rate (2008): 2.6%.Per capita income (2008): $4,125. Unemployment rate (2008): 1.4% of total labor force.Natural resources: Tin, rubber, natural gas, tungsten, tantalum, timber, lead, fish, gypsum, lignite, fluorite.Agriculture (8.9% of GDP): Products--rice, tapioca, rubber, corn, sugarcane, coconuts, soybeans.Industry: Types--tourism, textiles, garments, agricultural processing, cement, integrated circuits, jewelry, electronics, petrochemical, and auto assembly.Trade (2008): Merchandise exports--$175.3 billion. Products--automatic data processing machines and parts, automobiles and parts, precious stones and jewelry, refined fuels, rubber, electronic integrated circuits, polymers of ethylene and propylene, rice, iron and steel and their products, rubber products, chemical products. Major markets--ASEAN, EU, U.S., Japan, China, and Singapore. Merchandise imports--$175.1 billion. Products--crude oil, machinery and parts, electrical machinery and parts, chemicals, iron and steel and their products, electrical circuits panels, computers and parts, other metal ores and metal waste scrap, ships and boats and floating structure, jewelry including silver and gold. Major suppliers--Japan, ASEAN, China, EU, U.S., and Malaysia.

The European Union

The European Union may have inched out of its sharpest recession since the global slump of the 1930s, but green shoots are not emerging uniformly across the 27-nation bloc's eastern member states.Contrasts are sharp among the 10 ex-communist countries that have joined the EU since 2004.

The situation in Poland, the only EU nation to have enjoyed sustained growth this year, compares with the stark lot of countries such as Latvia or Hungary, where the economies have been in freefall."In terms of growth, eastern Europe will trail behind the rest of the world," said Erik Bergloef, chief economist at the European Bank for Reconstruction and Development, which focuses on the ex-communist bloc."Over the next few years, this will be the region with the lowest economic growth," he said in an interview in the Austrian daily Der Standard.Combined third-quarter figures last week showed that the EU -- the world's biggest trading bloc -- had joined Japan and the United States in returning to growth, albeit modestly.The entire EU economy grew by 0.2 percent in July to September compared with April to June, after five straight quarters of shrinking. A recession is generally defined as two quarters of economic contraction in a row."Central and eastern Europe countries remain highly dependent on western Europe, which is much more powerful economically. As a result, their future hinges on recovery in western Europe," Polish analyst Witold Orlowski, of PricewaterhouseCoopers, told AFP."Countries like Bulgaria or the Baltic states, which are heavily dependent on foreign capital, are suffering the most. They are dicing with disaster and are still worried about the stability of their currencies," he said.The Baltic trio of Latvia, Lithuania and Estonia had earned reputations as tigers within the EU, topping the growth tables, before their overheated, credit-fuelled economies went off the rails last year.Latvia, like Hungary and Romania, has had to be bailed out by the International Monetary Fund."Poland, the Czech Republic and Slovakia, who made fewer mistakes, can look to the future more serenely," said Orlowski.Slovakia -- which adopted the euro in January, joining ex-communist Slovenia in the 16-nation eurozone, and is heavily dependent on car and white goods exports -- posted 1.6-percent growth in the third quarter."That's even stronger than the growth in Germany and the Czech Republic" which expanded by 0.7 and 0.8 percent respectively, said Tatra Banka analyst Juraj Valachy in Slovakia.

In the Czech Republic, Raiffeisenbank analyst Michal Brozka said: "The recession is behind us. We're in a stabilisation phase, but we still need to wait for a real recovery."In the Baltics, Lithuania emerged from recession with estimated 5.1-percent growth in the third quarter, but still saw its economy shrink by 14.3 percent compared with the same period of 2008.

Finance Minister Ingrida Simonyte urged caution after that data was released, saying she would only talk about recovery after two quarters of growth and that it was "too early to say when we'll see the result in people's pockets."

Rimantas Rudzkis, chief analyst at the bank DnB Nord in Lithuania, said that while signs of recovery should appear there in the second half of 2010, "faster and more sustained economic development could only be expected in 2012 at the earliest".Latvia's economy contracted by 18.3 percent in the third quarter compared with the same period in 2008. Riga has not yet published a comparison of the third quarter with the second.Estonia, meanwhile, posted a 2.8-percent contraction against the second quarter and 15.3 percent compared with 2008."The situation in the Baltic states is the least optimistic, because they have been subjected to the severest recession in the EU," said Violeta Klyviene, an analyst at Danske Bank in Lithuania.

Hungary's economy shrank 1.8 percent from the second quarter and by 7.2 percent compared with last year. The figures for Romania were 0.7 percent and 7.1 percent respectively.Bulgaria posted its worst performance since the crisis began as its economy shrank by 5.8 percent in the third quarter compared with 2008. Analysts said a recovery was unlikely until 2011.

World Bank PCGs

Partial credit guarantees (PCGs) support government borrowing from commercial lenders or government bond issues to finance public investment projects. They provide compreh. MIGA offers political risk insurance (PRI) coverage to foreign direct investors for any combination of the following political risks: transfer restriction, expropriation, war and civil disturbance, and breach of contract. MIGA can insure direct equity, quasi-equity, non-equity direct, and other investments. To insure debt, however, it must have an equity link. MIGA guarantees cover new foreign currency-denominated investments, including "new" investments to existing investments, investments by private for-profit and nonprofit organizations, and publicly owned investors and organizations that operate on a commercial basis. MIGA can cover any freely usable currency, which may include local currency investments/loans. Under certain circumstances, MIGA can cover investments by local investors.

ensive cover against all risks. Policy-based guarantees are a type of PCG that are not associated with specific public investment projects, and instead support agreed policy reforms. Both PCGs and PBGs are available only to IBRD countries and require a government counter-guarantee. Partial risk guarantees (PRGs) cover commercial lenders for a private sector project against default arising from a government-owned entity failing to perform its obligations. PRGs can cover changes in law, failure to meet contractual payment obligations, expropriation and nationalization, currency transfer and convertibility, nonpayment of a termination amount, failure to issue licenses in a timely manner, other risks to the extent they are covered by a contractual obligation of a government entity, and noncompliance with an agreed dispute resolution clause. PRGs can be provided in both IBRD and IDA countries and require a government counter-guarant. IFC PCGs are a credit-enhancement mechanism for debt instruments (bonds and loans). They are an irrevocable promise by IFC to pay principal and/or interest up to a predetermined amount, irrespective of the cause of the payment default. They can be applied to a single credit or to a portfolio of credits This provides a credit enhancement guarantee in a non-lending situation where the objective is to back up a client’s performance of its obligation in a commercial transaction that involves the provision of goods and services, such as guarantees of bid or performance bonds (called standby letters of credit in the United Stat.The Global Trade Finance Program (GTFP) supports trade transactions by offering confirming banks partial or full guarantees that cover payment risk on issuing banks in emerging markets. Guarantees issued under the GTFP cover import and export transactions and extend to both political and commercial payment risks. IFC's Global Offshore Liquidity Facility (GOLF) provides single risk coverage for transfer and convertibility risk.

Indian Economics

Nouriel Roubini, of the infamous (and silly) Dr Doom moniker, says India might just do OK.
Is the “offshoring” of the tournament a signal that the government is unsure of the overall security situation? Is this an indication of how over-stretched and creaky the governance infrastructure is?
What signal does this send to investors? After all, perception is everything, and for really large investments, it is typically “which BRIC ie, Brazil or Russia or India or China” which is often key.
Of course, it is also possible to read too much into one thing. Apparently England also got pushed out because their security would be over-stretched, so the questions raised above need to be qualified.
India’s elections ARE a mammoth exercise, and even more so, with terrorism threats.
What do you think?
Comments (9)
March 26, 2009
Deregulation In India During These Tough Times
Filed under: Business, Regulatory reforms, Retail — Prashant @ 6:00 am
IEB reader Suresh Dalai sends us this thoughtful guest post
As with most other places in the world, India is facing a significant economic slowdown that is aggravating an already serious liquidity crisis. The government is finding it increasingly difficult to implement additional fiscal or monetary measures, and as a result, has tried to bring liquidity by lifting FDI restrictions and attempting to lure back foreign investment. But politics is getting in the way. The government cannot allow political expediency to derail the progressive lifting of FDI restrictions, even during tough times like these. Many international companies are still looking to enter the country, despite facing enormous uncertainties about their financial health in their existing markets. With a more open India, they will enter and bring with them a significant amount of capital investment and managerial expertise. This will help India pull out of the recession in the short to medium term and also help establish the conditions to sustain economic grow
Despite slowing from highs of 8% to 9% growth, India’s economy will grow close to 6% in 2009. Amid domestic and global liquidity crunch, large domestic savings and corporate retained earnings are financing investment. Sluggish labor market and wealth effects have hit urban consumption. But low export dependence, a large consumption base and the high share of employment (two-thirds) and income (one-half) coming from rural areas has helped sustain consumption. Pre-election spending, especially in rural areas, and high government expenditure, are also pluses. Timely monetary and credit measures have played a key role in improving private demand, liquidity and short-term rates and reducing the risk of loan losses. Credit is largely channeled by domestic banks, especially state-controlled ones, which have low loan-to-deposit ratios and little exposure to toxic assets….link
Given Roubini’s track record over the last three years, he’s certainly built some cred. Do you agree with his assessment on India, though?
May 18, 2009
Is The Indian Economy Heading For Its Finest Hour?
Filed under: Capital markets, Fiscal policy, Monetary policy, Trade — Edward @ 10:13 pm
“For what it’s worth, a key conclusion from the IMF’s new World Economic Outlook is that recessions caused by financial crisis typically end with export booms, with the trade balance improving,on average, by more than 3 percent of GDP. I find this a disturbing result: we’re now suffering from a global financial crisis, which means that the usual driver of recovery will only be available if we can find another planet to export to.”
Paul Krugman With results still coming in, projections show the United Progressive Alliance is likely to win about 250 seats, making it a shoo-in to form the next government and provide continuity, a stable administration and progress on key economic and corporate reforms.
Prime Minister Manmohan Singh’s electoral victory, the biggest any Indian politician has scored in two decades, may loosen political shackles that have restrained the country’s economic growth as it struggles to free half a billion people from poverty…..Political stability will make India a more attractive investment destination as Singh, 76, seeks the funds to stimulate Asia’s third largest economy.
Many are called, but few are chosen, as the saying goes. But could it just be that this time around, and on a one-off, never to be repeated basis, India might find itself right there in the midst of things, with a 50-50 opportunity to add its name to that select and noble band, the chosen few. After all, someone has to lead the next global charge? The majority of the developed economies are either bogged down in the substantial quantities of debt that they desperately need to pay off, or weighted down by those elderly populations who are weakening consumption growth and leading to export dependence (Germany, Japan…). And as Krugman humorously points out, someone will have to add the extra demand which will allow global trade to start to grow again, so why should India not supply a significant part of this new demand, after all we are more likely to find consumers in India than we are on Mars. (more……. )
Comments (2)
The El Dorado for auto-didacts
Salman Khan, a portfolio manager in California has created hundreds of free educational videos, available on his web site, the Khan Academy and on YouTube. These videos cover the basics of banking, finance and the current credit crisis — I saw a couple and they’re quite good.
Even more importantly, there are hundreds of videos on mathematics (algebra, calculus, trignometry, probability and more) and physics. Salman has three degrees from MIT and one from Harvard, so he knows what he’s talking about.
Anyone, anywhere in the world can benefit — all you need is access to the Internet. A good idea, fantastically implemented.
Thank you, Salman for investing all this time and energy.
Kudos to Amit Varma and Reuben Abraham
Amit Varma, India’s foremost blogger and award-winning columnist, has been busy recently.
His first novel, My Friend Sancho releases this week in fine bookstores all across India. Click here for launch details — so far, it’s Mumbai, Delhi, Kolkata, Bangalore and Chennai. If you’re in any of these towns, this is bound to be a fun event. Amit is a delightfully witty and amiable chap, if we say so ourselves.
And, by the way, it appears that we may have to add another adjective while describing the multi-faceted Mr Varma. According to Business Week magazine, Amit is one of the (ahem) 50 most powerful people in India. Who knew?Blogger Amit Varma brings a particular libertarian point of view to his columns and blog items, but also a risqué sense of humor that keeps readers hooked. He won the 2007 Bastiat Prize for his columns in Indian business paper Mint, and for a select group of Indians, he represents a libertarian, anti-tax and anti-government sensibility that is still quite rare in the country.
Another friend of ours, Reuben Abraham, who is among many other things, a professor at the Indian School of Business has been selected as one of the Young Global Leaders by the World Economic Forum. By the way, Reuben is a true citizen of the world. He visits more countries than almost anyone else we know — we suspect he adds new booklets in his passport twice a year. So, if you’re an IEB reader in Patagonia, rest assured that you’ll get a chance to meet Reuben sooner rather than later.
The Internet may have worked wonders for Obama in the US, but is unlikely to be even half as effective in India.In a nation where a quarter of eligible voters are now between the ages of eighteen and twenty-five, the 2009 elections will see a potential 100 million young Indians heading to the polls for the first time between 16 April and 13 May. This isn’t any old India, as PepsiCo’s recent series of TV commercials suggests, this is “Youngistaan,” the Land of the Young. And just as the demographic reality of India’s youth bulge hasn’t passed soft drinks corporations by, neither has it escaped the attention of India’s political hopefuls. In the run-up to the elections, national and regional parties alike have been anxiously reworking their campaign strategies to appeal to youth – or what the media now chummily refers to as Young India. At the heart of this drive is Obama-inspired online campaigning. Stirred by the Democrats’ success in the United States, India’s major parties have been eagerly integrating the internet into their election drives.
However, they have two big pan-India challenges to overcome: the myriad languages of India and the limited reach of the Internet. Read more here
Comments (6)
April 20, 2009
Weekend Reading: 19 April, 2009
Filed under: Agriculture, Basic Questions, Entrepreneurship, Environment — Prashant @ 7:04 am
Social entrepreneurship inching forward in India, albeit slowly and fitfully : India’s Spirit Of Business Booming
Hygiene doesn’t make it too often to the media. However, as anyone who’s spent more than 24 hrs in India knows, the lack of adequate toilets is a huge, huge issue.
Two links on that subject: Bloomberg – India Failing to Control Open Defecation Blunts Nation’s Growth and a more rigorous analysis from Nimai Mehta -The Preference Bias in Sanitation: Explaining Failures in Public Provision
Comments (1)
April 13, 2009
Weekend Reading: 12 Apr, 2009
Filed under: Agriculture, Basic Questions, Business, Growth, Labour market — Prashant @ 7:46 am
India’s Underground & Hinterland seem to be the topics du jour :-)
In the Wall Street Journal, Peter Wonacott says India Defies Slump, Powered by Growth in Poor Rural States.
Rama Lakshmi of the Washington Post said as much last month: Vast Rural India Sparkles As an Expanding Market
About 72 percent of India’s billion-plus people live in rural areas. For years, the poverty of rural India was seen as reining in the country’s economic growth. But today, analysts say, rural India is a critical audience for marketers because it has been relatively insulated from the crippling blow of the global slowdown.
India’s rural destiny still depends on good monsoon rains and robust agricultural production, but four years of bumper crops and heavy government investment in rural infrastructure have given birth to what some analysts call an emerging economy within India.
Last month, Patrick Barta of the Wall Street Journal called it The Rise of the Underground.
Given this, it’s not entirely coincidental that The American, the journal of the American Enterprise Institute wonders how Lalu Yadav managed to turn around the Indian Railways, the world’s 2nd largest employer (the Chinese Army is #1) and in doing so, morph from Huey Long to Jack Welch — The Indian Railway King
Comments (2)
March 27, 2009
IPL Rescheduling & Signals To Investors
Filed under: Basic Questions, Business, Defense & Security — Arjun Swarup @ 5:29 pm
After 26/11, Jack Welch pointed out that the attacks posed a question for India in terms of its ability to manage itself. China, although under authoritarian rule, had managed to pull off the Beijing Olympics, and assured safety for investors. India faced that question, post 26/11.
Now, with the cancellation of the IPL tournament in India and its move to South Africa, what message has gotten sent out?
th over the long term. Indian companies will use the additional funds from their foreign partners to keep their staff employed and continue with capital expansion plans. Indian companies with global ambitions will have greater access to world-class infrastructure and managerial knowledge that will enable them to better compete around the globe. With increased competition, Indian consumers will be able enjoy the highest-quality products at the lowest cost.

Slow-Growth Economy

How to Navigate a Slow-Growth Economy

* By Rob Silverblatt
* On 10:31 am EST, Thursday November 19, 2009

o
Buzz up! 0
o Print

After the dust clears from the furious rally in stock prices, what will happen next? It's the question in the back of every investor's mind, and the answer could be far from encouraging. The way many economists see it, the market is headed for a sustained period of slow growth as the tepid borrowing environment and sluggish employment prospects balance out the recent rash of enthusiasm.

For investors, this turning point in the market provides ample reasons for tempered expectations. But even amid a slowdown, there are a number of opportunities for solid returns. Here are some tips for navigating a slow-growth economy.

[See 4 Small Caps With Room to Run.]

Pay attention to dividends. Under normal market conditions, investors can expect a healthy balance of dividend payments and companies' earnings growth to anchor their returns. But if corporate earnings falter in a slow-growth climate, dividends will take on mounting importance.

On its surface, this is a troubling proposition, mostly because the recession caused struggling companies to slash their dividends and the situation hasn't improved much during the recovery. But even though the overall dividend yield for S&P 500 companies lingers at a paltry 2 percent, there are pockets of the market where dividends remain strong.

Josh Peters, editor of Morningstar's monthly DividendInvestor newsletter, uses the example of Altria, the parent company of Philip Morris USA. "Within that S&P 500 figure of 2 percent, you've got a lot of companies like your Googles and your Apples that pay nothing. But you've also got companies like Altria that have a 7 percent dividend yield," he says. This high yield, he notes, provides a cushion in slow-growth periods, since dividends compensate for stalled earnings increases. "Altria just does not have to grow very fast--it doesn't have to raise its dividend [or] its earnings very much--in order for you to have an overall return that is decent," he says.

This insulation often stems from the business models that companies with strong dividends tend to adopt. "For them, the dividend is a high priority," says Peters. "They run the business so they can pay that dividend and raise it over the long run. And that means that they leave room for perhaps a slower economic environment or a recession." Apart from Altria, Peters singles out McDonald's, utilities provider Southern Co., and Chlorox.

Meanwhile, he argues that companies that don't pay out steady dividends could potentially suffer in the next couple of years. "If a slow-growth economy is going to hand out its punishment to companies that need the earnings growth the most . . . it's going to make it a lot harder to own a stock like that," he says. "If you don't have a decent dividend yield that provides a basis for getting a regular, predictable return, then it's 100 percent just a bet on earnings growth and valuation expansion, and I think a slow economic growth environment makes both of those much harder to achieve."

Look for innovation. Stocks across the board got a boost from renewed investor confidence as the market moved off of its March lows, but that honeymoon effect looks destined to fade. "We're moving on from the early economic improvement and all the stocks being helped by just being undervalued and by better prospects across the board," says Kim Scott, manager of the Ivy Mid Cap Growth fund. "Now you really need to separate the wheat from the chaff, and there are still plenty of good growth companies out there. I wouldn't say it's a candy store, but there are a lot of good companies."

[See 10 Products That Boomed During the Recession.]

For Scott, looking for innovation is the key to finding companies that can bring in solid earnings, even in a slow-growth economy. By sector, she likes information technology, industrial technology, and portions of healthcare and consumer discretionary. As for companies, she says that a number of common household names, such as J. Crew, Urban Outfitters, and Chipotle, have the types of innovative business models that can provide investors with some immunity to slow growth.

"These are the kinds of companies where you still see opportunity," she says. "They have great concepts that appeal to consumers. They still have the opportunity to grow their square footage, and then as the economy recovers, they're going to get same-store sales growth."

Overall, though, prospects for earnings boosts look likely to decrease in the near future. But Scott believes investors are already braced for that outcome. "I think generally expectations are tempered," she says. "I think that's been done."

Understand the labels. Investors love to kick around terms like slow growth, but it's important that they also know where the economic forecasts are coming from. After all, understanding how the market entered a phase is the first step to approximating when the phenomenon will pass. In this case, slow growth is the result of high unemployment rates and a rough credit environment.

"We had a society that was using credit egregiously, and that's come to a screeching halt," says Scott. "And so the forced or voluntary reduction in the use of credit by consumers is a reason why we'll have a slower-growth economy."

Peters compares the current recovery to the economy's growth in the years following the recession that kicked in around the turn of the century. The last time around, the credit markets were not nearly as tight. "If you look at the next economic expansion, you don't really have much prospect that wage growth is going to accelerate because you're still going to have globalization acting as a damper on wages, to say nothing of 10 percent unemployment or higher coming out of this recession," he says. "[And] you're not going to have that secondary driver of borrowing to enable consumers to spend beyond means or spend all the way up to their means."

Laura Rowley Money & Happiness

Laura Rowley Money & Happiness Laura Rowley, Money & Happiness The Question of Measuring Financial Progress by Laura Rowley Email this Page IM this StoryBookmark this StoryAdd to your Del.icio.us accountDigg this StoryPrint this Story Very Good (81 Ratings) 3.0617282/5 Posted on Wednesday, November 18, 2009, 12:00AM I recently spoke with a professional financial coach about the value of monitoring your net worth. As many readers know, net worth is all of your assets minus your liabilities. Imagine you sell everything you own -- home, car, etc. -- and add that to the value of your cash savings and investments, such as stocks and bonds. Then subtract everything you owe -- mortgage, student loan, auto loan, credit card debt, etc. That's your net worth. My coaching friend plugs all this information into a software program and monitors her net worth on a monthly basis. Obviously, as you pay off debts and accumulate savings, your net worth rises. She feels this is the best way to monitor financial progress. I used to agree, but I have given up tracking my net worth, because it turned into a feel-good exercise that was disconnected from my goals. For instance, we have been saving for years to cover the cost of our children's college educations. This is a hefty liability, and right now, those savings exaggerate our net worth. In 15 short years, when all three kids have graduated from college, the money will be gone. (Unless the hereditary gods smile on us, and they get basketball scholarships like their dad did. But we're not banking on their jump shots.) Philosophically, of course, we'll have the "net worth" of educated (and with any luck, gainfully employed) children. But it's not really fair to include college savings in our net worth when they are, for all intents and purposes, spoken for. "That's intuitively correct," agrees Charles Farrell, principal with Northstar Investment Advisors in Denver. "It's as if a company looked at its assets and included the pension plan it owes to employees. You can't do that. It's not net worth that I consider important, but 'am I going to have enough money to support myself in retirement?'" Farrell says a focus on net worth can distract from the primary goal in personal finance, "to create a pool of assets from which you can generate income for your retirement years," he says. "So whatever supports that goal can go into your net worth, whatever doesn't really should be looked at differently." For instance, if someone buys a $40,000 car, it's an asset in the strict sense of net worth, but it won't help you retire; the same is true of a big house. "If your house goes up in value and you don't plan on moving, all it does is increase your property taxes," says Farrell, adding that the real value of a home is that you have a place to live for free in retirement once the mortgage is paid off. "If you bought real estate in California in 1985 and sold 2003, you got lucky," he says. "But you can't rely on luck as part of your planning." Thus instead of monitoring net worth, it makes more sense to break out major financial goals, prioritize them and monitor progress toward each one. But how do you measure progress and ensure your targets don't conflict or compromise retirement savings? Farrell attempts to address those issues in his new book, "Your Money Ratios: 8 Simple Tools For Financial Security," which will be published in December by the Penguin Group. The book offers some fairly simple calculations to give people a sense of whether they're on track to meet their goals based on income and age, and still save enough to maintain their current lifestyle in retirement. Farrell first described a capital-to-income ratio for retirement, which calculates the savings required based on earnings and age, in the Journal of Financial Planning. (I wrote about it in this column.) In his book, Farrell adds several other ratios, including: A mortgage-to-income ratio that estimates the maximum level of mortgage debt someone should carry and still have money left to set aside for retirement; An investment ratio, which suggests how much of a portfolio to put in stocks versus bonds; An education-to-average-income ratio, which determines the amount of education-related debt an individual can safely rack up based on expected earnings after graduation. Why base financial goals on ratios? Farrell says the inspiration came from corporate finance, where "we use ratios all the time to analyze companies on the equity side or fixed-income side," he explains. "If you look at a number of different ratios it's a very efficient way to boil down a huge amount of data and get a good picture of company's finances." The difference in personal finance is that those numbers must change over time. "A company's debt-to-capital ratio might be the same in 1980 and in 2010 and that's okay, but in personal finance you have a goal," he explains. "At some point you stop earning income and have to live off earnings from assets, and that requires understanding of how ratios change over time." Keeping the Right Ratios What I like about the use of ratios is that it imposes discipline on emotional spending decisions. When you do the math based on specific goals, real household income and exact time frames related to age, it becomes crystal clear that you really can't afford to blow out the back of your home to expand the kitchen, no matter how attractive or tax-deductible the financing may be. At minimum, such calculations help consumers avoid the personal finance debacles that come from winging it (which tend to lead to larger economic fiascos that hurt everyone). Critics suggest such simple calculations aren't helpful, because every household's situation is unique. In the book "Spend 'Til the End," for example, authors Scott Burns and Laurence Kotlikoff, a Boston University economist, advocate "income smoothing" -- taking on debt when you are young and making very little, and paying it off when your income peaks, to prevent starving in your 20s and oversaving in your later years. For example, a couple with six kids should theoretically save less for retirement than a single person, because the former will experience a sharp drop in expenses when the kids leave the nest. But Farrell argues that effective income smoothing demands accurate predictions about future earnings (a tough task given increasing income volatility). "I can't tell you how many people say what they think they'll make in the future and never make it," he says. "The ratios benchmark off the reality that you're living today -- that's what keeps the discipline. If your income pops up, you're now behind on the ratio. What that tells you is you don't have the assets to support that new lifestyle in retirement." To maintain the higher-income lifestyle in retirement requires ramping up savings, so if someone constantly refers back to the ratio they can stay on track. Moreover, suggesting that a little debt is acceptable in your 20s is kind of like suggesting you can be a social smoker in your 20s. For some people it will morph into a nasty life-long habit. "If you don't start (saving) when you're younger, you're highly unlikely to wake up one morning and do it," Farrell argues. "It's sad when you see people get to the point when they are no longer viable in the workforce and don't have the assets to support themselves. It's a serious business, and you have to treat it as a life-long endeavor."

China First project

Chinese bank may back $7.5b Qld project
Friday November 20, 2009, 5:56 pm
Resource house Ltd chairman Clive Palmer says a Chinese bank is interested in backing the company's proposed $7.5 billion coal mine and infrastructure development in central Queensland.
Professor Palmer said the president of Chinese industrial company Metallurgical Corporation of China Ltd (MCC), Shen Heting, had personally delivered to him in Brisbane a letter of support for the project from a major Chinese bank.
MCC intends to take a 10 per cent equity interest in the thermal coal mine and infrastructure project, dubbed the China First project.
The project includes a 490 kilometre standard gauge, heavy haul railway line linking the proposed mine site near Alpha, west of Emerald in Central Queensland, to a 40 million tonne per annum, two-berth export coal terminal at Abbot Point near Bowen.
Under a memorandum of understanding signed with Resource house, MCC will develop the project and also arrange for 70 per cent of project costs through debt financing.
"This is a most significant day for the China First project when someone of the stature of Mr Shen comes to Australia to personally deliver a letter of support for the project from the Chinese banks," Prof Palmer said in a statement on Friday.
"It speaks volumes for the strength of the project and the interest from China in developing a new world-class coal region such as the Galilee Basin."
Mr Shen and a high-level delegation of Chinese business leaders will be hosted by Resourcehouse over the weekend and visit the proposed development site.
Prof Palmer has said the China First development was "the project of the century", because it will open up a massive coal resource.
Establishing the mine and associated infrastructure will create 6,000 jobs during construction and 1,500 during operation.
The project has been granted major project facilitation (MPF) status by Federal Infrastructure Minister Anthony Albanese and declared a significant project by the Queensland government.

Italy contributed to a tumultuous start

SEATTLE: David Beckham, whose extended stay in Italy contributed to a tumultuous start to the Los Angeles Galaxy's season, has a chance now to help them lift the Major League Soccer title.
The star-studded Galaxy take on battling Real Salt Lake on Sunday in Seattle in the MLS Cup final, the US league's championship match.
It seemed an unlikely scenario early in the season for a club that equalled the league's worst record in 2008, and started 2009 with 11 draws in their first 13 matches.
England star Beckham was at the centre of a storm as he stayed on at Italian club AC Milan four months beyond his original loan period, sparking the wrath not only of Galaxy fans but also of teammateLandon Donovan - who questioned Beckham's commitment to the US league in a book.
Thanks in part to the intervention of coach Bruce Arena - whose efforts this season earned him Coach of the Year honors - the two mended fences and led the Galaxy to the Western Conference crown.
"He has done a lot of things throughout the year to show that he wants to be here," Donovan - named Thursday the MLS Most Valuable Player - said lately of Beckham.
Arena said he wasn't surprised that Galaxy fans came around, saying Beckham's demeanor on the pitch "demonstrated he cares about the LA Galaxy.
"His performance has quieted his detractors," Arena said. "I never felt David wouldn't be able to handle it. He's played with the biggest clubs in the world. I thought he was able to handle anything, and he's done that."
Indeed Beckham, who was spotted this week wearing a protective boot but is expected to be ready to play, is vying for a championship in a third league.
After earning six English premiership titles with Manchester United, he earned a Spanish League crown withReal Madrid.
Real Salt Lake's season also got off to a slow start, with a seven-match winless run.
They scratched their way into the playoffs despite a losing record, but won three straight playoff games to earn the Eastern Conference title.
"I don't think any of us focus on who are the underdogs or anything like that," Arena said. "Very little separates one team from the other.
"Salt Lake have been a competitive team throughout the season."
The Galaxy will be seeking their third league title and are in the championship match for a record sixth time.
Real are in the final for the first time, but coach Jason Kreis was irked when pressed on his team's underdog status.
"Wow, it sounds like we better not even go," he said sarcastically. "We don't even have a chance, do we?"
He said attention to fundamentals would continue to stand his team in good stead. It was getting away from that early in the season that cost them, he said.
"I contributed to that because I was very overconfident," Kreis said. "I think I added to what was a little bit of an underlying thing on the team that we were a bit overconfident going into this season. We had been reading a bit too much about how we would compete for a championship this year, and we forgot the little things that got us here.
"We don't have stars on our team, and we had got away from that a little bit."

Economy Minister

The Opposition Smer party appeals to Premier Mikulas Dzurinda to consider the current chaos in the healthcare sector as of equal importance to finishing his term in office, Smer chairman Robert Fico said at a news conference on Wednesday in Bratislava. Smer expects objective solutions to be forthcoming. It also hopes that Dzurinda will not try to cover the problems and look for culprit(s) among the Opposition, Fico said, alluding to the accusation earlier this month that opposition parties had fomented the crisis involving physicians refusing to sign contracts with health insurers. "The current problems in health care show that patients and health care workers have become hostages of Dzurinda's Cabinet, thanks to the failure of health care reforms, and Dzurinda's inability to admThis year's international "Autosalon" motor show has made progress towards improving its quality because the automobile industry has became a real phenomenon in Slovakia, Economy Minister Jirko Malcharek said at the show's launch at the Incheba centre in Bratislava on Tuesday. According to Malcharek the higher quality of both the cars on show and the stands as a whole mean that the exhibitors are beginning to appreciate their clients better. In addition, these shows have become more important for Slovakia, noted Malcharek. According to the economy minister, Slovaks have begun to view the car industry as something of which they can be proud. "As the Dutch can be proud of their cheese, and the Belgians their beer, Slovaks can take pride in their car production," he said.it radical mistakes," added Fico.
In addition, Fico aled to healthcare workers not to go on strike. "Smer is preparing to solve these problems and will make system changes in the healthcare sector if the party is a part of the next Government after the June 17 general election," he declared. According to Smer shadow health care minister Pavol Paska, the healthcare sector needs more money and Smer wants to accommodate the sector. Therefore, it plans to approve a new bill on insurance companies, optimise the chain of healthcare facilities, and, meanwhile, it plans to forego a revenue source for providers by cancelling the healthcare user fees.