Global Economy

[Sanjay M]

How the mighty have fallen:

http://www.businessweek.com/the_thread/ ... ga_of.html

Silicon Graphics once used to sneer at the likes of Intel as being mere puny PC types.
Now Intel is practically the sole survivor, while SGI was sold for a mere $25M.

Tata will one day do the same to the current automotive elites.

[putnanja]

At the G20 high table, India plays low key

...
While global leaders, be it France’s Nicolas Sarkozy, China’s Hu Jintao or even Germany’s Angela Merkel have strong views on the two most critical issues — fiscal stimulus and financial markets’ regulation — India’s position so far suggests that it will be happy with just about a nicely worded G20 communiqué tomorrow.
...

On the Chinese proposal — though not put formally on the G20 agenda, but widely discussed — of a new global reserve currency, India is more cautious than forthcoming. “This means countries must be willing to yield their powers to expand and contract money supply to another international organisation,” said the PM’s sherpa Montek Singh Ahluwalia. “But with quotas of 2 per cent or so in such an organisation, does it make sense?” he asked.

...

[svinayak]

Harvard Begins Case Study as Tainted MBAs Reveal Damaged Brand

By Oliver Staley

April 2 (Bloomberg) -- Harvard Business School, stung by criticism that it hasn’t prepared alumni to cope with the economic meltdown, will dissect its performance using a practice it employs to examine corporations in crisis.

A task force, created in November at the direction of the dean, is writing a case study to scrutinize whether the school is failing to teach students to understand and manage risk in the current environment, according to Paul Healy, co-chair of the panel. The case study method is the technique Harvard uses to analyze decision making by executives during times of duress.

Harvard Business School’s 219 professors will tackle the case at a May 27 meeting and may use the discussion to propose curriculum changes.

“We’ll put them in the students’ seats,” Healy, a professor of business administration, said in an interview.

While officials at the business schools of Stanford University and the Massachusetts Institute of Technology say they have developed classes and projects to address the causes of the crisis, Harvard is using the collapse as an opportunity for self-reflection. The professors will ponder how the school’s reputation has been tarnished, and may debate articles critical of the institution and its graduates who helped trigger the financial crisis, Healy said.

Harvard’s alumni include Stanley O’Neal and John Thain, the former chief executive officers of Merrill Lynch & Co. who presided over the New York company’s decline; Rick Wagoner, the ousted CEO of General Motors Corp.; and Christopher Cox, former chairman of the U.S. Securities and Exchange Commission.

‘Brand is Damaged’

“I’m sure the brand is damaged, at some level,” Healy, a native of New Zealand, said in his office in Boston. “People that I know well tell me to my face, ‘You guys have some culpability,’ and I think that’s fair. It’s a good time for us to reflect and think about what the right things are for us to be doing.”

Professors may spend half a day meeting in groups of about 90 in Aldrich Hall, said Healy, who added the plans weren’t final. Aldrich, in the center of the campus, was built in 1965 with classrooms designed to facilitate case discussions. The last time the school overhauled its curriculum was in 2004, when it introduced a required ethics course after the 2001 Enron Corp. accounting fraud.

In 2007, even before the financial crisis, Stanford Graduate School of Business introduced a curriculum designed to develop critical thinking about leadership in small classes, replacing lectures.

‘Understanding Cheating’

The new series of seminars at the school, near Palo Alto, California, help “students discover and defend their values,” Dean Robert Joss said in an article for Stanford Business magazine’s forthcoming May/June issue. Classes include “Understanding Cheating,” which looks at why people make unethical decisions.

Yale School of Management, in New Haven, Connecticut, initiated a similar program in 2006, according to the school’s Web site.

At the MIT Sloan School of Management, in Cambridge, Massachusetts, students are taught to weigh the effects of their actions on society, not just on investors, said JoAnne Yates, the deputy dean.

“We would like our students, when they graduate, to understand not just quantitative instruments but how they fit into the whole world around finance,” she said. “We don’t want them all to think it is games with numbers.”

Schools need to consider how they teach and whether students can learn decision making based on intuition and not only numbers, said Louis Lataif, the dean of the Boston University School of Management and a 1964 graduate of Harvard Business School.

‘Scarlet Letters’

“There’s a certain self-consciousness now that we may be part of the problem,” Lataif said. “There’s a lot more to education than learning how to read balance sheets. Maybe a piece of what’s missing is not another course in ethics but the ability to think beyond the data and take action based on good instincts.”

Harvard business degrees are now “scarlet letters of shame,” wrote Philip Delves Broughton, a 2006 graduate of the school, in a March 1 column in the Sunday Times of London. “Time after time and scandal after scandal, it seems that a school that graduates just 900 students a year finds itself in the thick of it.”

Harvard Business School, founded 101 years ago, has more than 200 faculty members and almost 1,800 students seeking master’s degrees in business administration.

Thain Ousted

Under O’Neal, who graduated in 1978, Merrill Lynch lost more than $30 billion before its takeover by Charlotte, North Carolina-based Bank of America Corp. Thain, O’Neal’s successor who graduated in 1979, was ousted after spending $1.2 million to renovate his office. General Motors Corp., based in Detroit, has fallen more than 90 percent in New York trading from its peak during the tenure of Wagoner, a 1977 Harvard Business School graduate who was resigned on March 29 under pressure from U.S. President Barack Obama.

Cox headed the SEC from 2005 until January this year, as the agency failed under his watch to investigate Bernard Madoff’s fraud. Cox graduated from Harvard Business School in 1977.

While the school may bear a measure of responsibility for the graduates’ decisions, “there’s plenty of blame to spread around,” said W. Carl Kester, the deputy dean of academic affairs.

The school deserves credit for producing Jamie Dimon, CEO of New York-based JPMorgan Chase & Co.; Robert Kapito, president of BlackRock Inc., an investment company in New York, and others who are providing leadership and whose financial companies have survived, Kester said.

Errors in Judgment

Many of the graduates involved in failures attended the school 20 or 30 years ago, before classes on risk management, macroeconomics and leadership were required, Kester said.

“There are curricular changes that have taken place that I hope will inoculate students who have graduated in the last five or 10 years, and going forward,” he said. “I hope they will be a little less prone to some of the errors in judgment.”

Introduced in 1925, the case method exposes students to the details of quandaries faced by managers. There is often no single right answer, and the cases are used to stimulate debate and discussion, Kester said. A class may consider 25 to 30 cases each semester.

Hundreds of Cases

A student may study 600 cases in all, said Joseph Badaracco, chair of the MBA program. Most cases stay in the curriculum for three or four years, he said. Others, including one discussing the 1982 recall of Tylenol by Johnson & Johnson, based in New Brunswick, New Jersey, have been used for decades. Some companies, such as General Electric Co., in Fairfield, Connecticut, and Google Inc., in Mountain View, California, are popular subjects and taught repeatedly, he said.

Harvard Business School professors write about 350 cases a year, and sold 8.2 million copies of case studies in 2008 for adoption in business classes around the world, according to the school’s Web site. Case sales produced $29.2 million in 2008, or 6.4 percent of the school’s revenue, according to the annual report.

Professors have written cases being taught in this year’s courses to impart lessons about the global crisis. The subjects include JPMorgan’s acquisition of Bear Stearns Cos. and the lack of accounting controls at New Century Financial Corp., an Irvine, California-based subprime-mortgage lender that declared bankruptcy in April 2007. Other cases have been written to provoke discussion on mark-to-market accounting and on the role of credit-rating companies.

Lecture Series

Jay Light, dean of the school, formed the task force in November. The group, led by Healy and Peter Tufano, a finance professor, was charged with educating the faculty and students about the economic upheaval.

The panel already has created a series of seminars for professors and initiated a lecture series for students. The school also held a three-day alumni program, attended by 90 graduates.

In February, the group began working on the case to present to the faculty. The outcome may be recommendations for Light that could be implemented within a year, Healy said.

One change that may emerge is more emphasis on general- management and economics classes that knit together broad themes about risk and responsibilities, rather than on courses that focus on specific functions such as marketing, Healy said.

“Are there things we can do a better job of?” he said. “What do we teach? Things that come to mind might be understanding risk better, understanding risk management better. We do some, but maybe not as much as we should.”

‘Easy to Teach’

Harvard currently requires first-year master of business administration students to take “Business, Government and the International Economy” and “Leadership and Corporate Accountability.”

Until this year, those courses were viewed skeptically by some students and faculty, said Laura Alfaro, an associate professor who teaches international economics.

“They thought, this is a class you have to take but it doesn’t really matter,” she said. “Now, I don’t know if they still think that but they know they can’t say it out loud. We’re in a mode where it’s very easy to teach this course.”

To contact the reporter on this story: Oliver Staley in New York at ostaley@bloomberg.net.

[Ameet]

Microsoft and Yahoo trying again for different ways to get Kundali to match.

http://www.businessweek.com/technology/ ... _top+story

In a development that can't be too surprising but may revamp the Internet landscape, Yahoo (YHOO) Chief Executive Carol Bartz and Microsoft (MSFT) CEO Steve Ballmer have started talking about forging Internet search and advertising deals.

First reported by Kara Swisher in a post on the AllThingsD blog Boomtown on the morning of Apr. 10, the talks are at an early stage. They include "many scenarios, such as one in which the companies swap online advertising assets and deliver services to each other," Swisher wrote. Yahoo "might take over all of Microsoft's display and premium advertising business to sell along with its own, while Microsoft would run the search advertising business for the pair."

One source close to the situation said the talks are preliminary. They don't involve Microsoft buying Yahoo outright. Neither is a simple outsourcing of Yahoo's search to Microsoft likely, because Yahoo under Bartz has made it clear the company considers its search business, which trails far behind Google's (GOOG) but is far ahead of Microsoft's, a valuable asset it wouldn't easily part with.
Yahoo's Search Data

Microsoft has repeatedly indicated in recent months that it's still interested in a search deal with Yahoo. But the appointment of Bartz as the new Yahoo CEO in January, replacing co-founder Jerry Yang, effectively put further discussions on hold while Bartz found her footing.

It's believed that any deal Bartz would agree to would have to allow Yahoo continued access to data on Yahoo searches. That data is exceedingly valuable for mining buying intentions. Yahoo aims to use search data to help it more precisely target pictorial display ads, its mainstay business, to the most likely prospective customers. Such targeting is a key way Yahoo and others hope to boost display-ad rates, which have seen precipitous drops in recent quarters. As Bartz said in an early March interview at a Morgan Stanley (MS) conference: "Search data is extremely important."

Several people have suggested the attractiveness of a larger partnership between the two companies, in which Microsoft would handle all search ads for the two companies and Yahoo would take over display ads for the pair. But it's not clear whether that big an arrangement, which could be complex, is under serious discussion.

Not least, for Yahoo any deal would also have to include a whopping big check from Microsoft and likely ongoing payments. Yahoo probably wouldn't want such a deal to continue indefinitely, since if the arrangement allowed Yahoo to invest in and strengthen other parts of its business, it would want to retain the ability to take back control of search in the future—or at least play Microsoft off Google. A deal for Google to place ads on Yahoo search results imploded last summer, abandoned by Google when it was faced with the threat of an antitrust lawsuit by the Justice Dept.
Shareholder Pressure

For all those reasons, a Yahoo-Microsoft deal could take some time to work out. What may make it happen this time is that the two companies more than ever need each other to compete with Google, whose share of Internet searches remains as high as 72%—and whose share of search advertising revenues likely tops 80%. With search slowing and Yahoo and Microsoft continuing to lose ground to Google, shareholder pressure on the two companies to find common ground seems sure to rise.

Meanwhile, Yahoo faces the potential loss of search market share in the coming year and a half as its agreement with Hewlett-Packard (HPQ) and Acer to promote its browser toolbar expire. Because Yahoo is the default search engine on those toolbars, the end of those deals could eliminate some search traffic to Yahoo.

Microsoft, on the other hand, has hired a number of Yahoo search executives and engineers, including Qi Lu, now head of all of the Redmond (Wash.) company's online businesses. And it's preparing for a summer launch of a major new version of its search engine.

Stocks didn't trade Apr. 10, Good Friday, so it's not yet known what shareholders think of the new development. Whatever the particulars of any deal, they're less likely than last year's acquisition talks to get leaked until they're pretty much wrapped up. "I said this to Mr. Ballmer: I'm not going to negotiate with my 50,000 favorite friends," said Bartz recently: "We are going to negotiate as companies negotiate, and that is privately." But apparently not as privately as she would like.

[Sanjay M]

NYT:

Tech Recruiting Clashes With Immigration Rules

[Sriman]

Not sure where to post this but since it deals with international trade i'll post here.

PBS frontline program on black money and bribery in international deals:

http://www.pbs.org/wgbh/pages/frontline ... oney/view/

It concentrates mainly on the Al Yamamah deal (between Saudis and UK) and the subsequent corruption investigation on BAe. Robert Baer is interviewed only briefly but most of what's shown ties in with whatever Baer has written in his book 'Sleeping with the devil'. If you haven't read the book, Baer talks about the Al Saud-US nexus and the pivotal role played by Bandar bin Sultan in it. Baer also writes about the nepotism within the khan administration wrt Saudis and as if on cue they interviewed former FBI director Louis Freeh. Guess who Mr.Freeh represents now? Bandar Sultan of course.

A bit of yankee chest thumping is of course par for the course. Still a lot of things to chew on. Feel free to cross post to other threads if relevant.

[rsingh]

Nexsweek is full of articles about bright future for us banks, economy, good that came out of bad and wall street showing the right way yada yada. Crisis? WHAT CRISIS. It seems that Chinis are buying more bonds and Chinese economy has rebounded. It seems magazine received some bailout money and is doing what whitehouse spin doctors asked to do.

[svinayak]

http://www.myamericangoods.com/

Buy american

http://www.treasury.gov/tic/mfh.txt

Estimated foreign holdings of U.S. Treasury marketable and non-marketable bills, bonds, and notes
reported under the Treasury International Capital (TIC) reporting system are based on annual
Surveys of Foreign Holdings of U.S. Securities and on monthly data.

http://www.treasurydirect.gov/NP/BPDLog ... ication=np

TreasuryDirect is the first and only financial services website that lets you buy and redeem securities directly from the U.S. Department of the Treasury in paperless electronic form. You enjoy the flexibility of managing your savings porfolio online as your needs and financial circumstances change - all the time knowing your money is backed by the full faith of the U.S. government.

We offer product information and research across the entire line of Treasury Securities, from Series EE Savings Bonds to Treasury Notes. Our new TreasuryDirect accounts offer Treasury Bills, Notes, Bonds, Inflation-Protected Securities (TIPS), and Series I and EE Savings Bonds in electronic form in one convenient account.

[Vipul]

Kashkari to quit as head of US bank rescue programme: report.

Former NASA engineer and Goldman Sachs executive, Neel T Kashkari, the interim assistant secretary for financial stability in the US Treasury who heads the $700-billion troubled financial assets programme, is likely to call it a day on Friday, The Washington Post reported.

Kashkari was appointed as the interim head of the new Office of Financial Stability (See: Indian American Neel Kashkari to oversee US bailout plan) in October to oversee the US Congress-approved $700-billion bailout programme to assist distressed banks (See: US Senate bails out markets – passes $700-billion package)

Kashkari, 35, has been credited with helping to keep the country out of a complete financial meltdown, but he has also taken the brunt of Congress' criticism of the bailout programme.

Like his mentor Treasury Secretary Henry Paulson, Kashkari, too, has been criticised for trying to bail out Wall Street rather than the country's big banks.

The $700 -illion bank bailout programme, despite sucking huge funds from the Treasury, has not met with much success. Banks like Citigroup and Bank of America, which have received massive sums from the Treasury, are still to find their moorings.

While Bank of America chief executive Kenneth Lewis is widely believed to be on on the way out Citigroup CEO is also rumoured to be at the receiving end.

For Kashkari, who as a design engineer developed the precision latching technology (he developed the latches and test setup, integrated the laser distance measuring interferometers, and demonstrated that the latches could retain their precision to the nanometer level with appropriate pre-load) for the Space Interferometer Mission (SIM) and the Next Generation Space Telescope (now JWST) at TRW (now Northrop Grumman Space Technology), may be finding the $700 billion bailout programme too hot to handle.

Kashkari is likely to be replaced by Herb Allison, chief executive at the mortgage lending firm Fannie Mae since it was seized by the government in September.

Kashkari, originally a Republican, joined the Treasury as a special assistant to treasury secretary Henry Paulson in July 2006. He was appointed assistant secretary for international economics in the summer of 2008 and, on 6 October, 2008, Paulson named Kashkari interim head of the new Office of Financial Stability.

Kashkari's appointment as head of the financial stability programme, however, is an interim one and a permanent head of the Office of Financial Stability will require Senate confirmation.

Prior to joining the Treasury Department, Kashkari was a vice president at Goldman, Sachs & Co. in San Francisco, where he led Goldman's Information Technology Security Investment Banking practice, advising public and private companies on mergers and acquisitions and financial transactions.

Kashkari has a Bachelor's and Master's degree in engineering from the University of Illinois at Urbana-Champaign and an MBA from the Wharton School at the University of Pennsylvania.

[svinayak]

Our fate in American hands


By William Watson, Citizen Special
April 30, 2009



Early on in the economic crisis, which now seems so long ago, otherwise sensible people talked about how the increasing de-coupling of Canada from the U.S. meant we'd get off relatively easy. Buccaneer finance would hurt Americans, but Canada's growing ties with China, India and all the other shiny, new economic powers would save us. The 1900s were the American Century, but the 21st century belonged to our new pals and us.

It's now clear that was wishful thinking. Yes, our trade with the United States has fallen a bit -- from more than four-fifths of our exports in 2003 to just over three-quarters in 2008, and from 70.1 per cent of our imports to 63.4 per cent over the same period. But when your overall trade with a country (exports plus imports) remains at 70 per cent of your total trade, you're still effectively joined at the hip.

China and India may yet be our future but the summary trade statistics on StatCan's website doesn't even have a separate entry for them. Rather, the Americans take 75.5 per cent of our exports, Japan 2.4 per cent, the UK 2.9 per cent, other EU countries 5.2 per cent, other OECD countries 4.3 per cent and -- last but not quite least -- "Other countries" take 9.7 per cent of our exports. Maybe a decade ahead that will all be different (though it would help if tectonic shifts could move a little faster in getting China and India closer to us) but when you compare less than 10 per cent with more than 75 per cent, the U.S. is a proven performer while China and India are just promising young draft picks.

If you find all those numbers numbing, have a look at last week's Monetary Policy Report from the Bank of Canada. Why did the Bank have to revise its rosy January forecast that we would recover promptly?

Blame it on the U.S.: "Sustained positive growth [there] will likely be deferred by one quarter compared with the Bank's earlier projection, owing to the delayed implementation of stabilization measures in the banking sector." The fault, it seems, is President Obama's.

That the U.S. isn't snapping back quickly is bad news for us. We're highly-leveraged on U.S. sectors that have gone sour. There's a scary chart in the Report (number 17, if you're interested) that shows an expected five per cent decline in U.S. GDP this year, but a 25 per cent decline in "U.S. trade-weighted activity," those things the U.S. buys from its trading partners, which means us.

In a big financial crisis, people stop buying things with borrowed money.

What things? Cars and homes. What are two of our biggest exports into the U.S. market? Cars (and car parts) and construction lumber. The good news is that once these two sectors get going again, Canada benefits disproportionately. The bad news is that until they do, we hurt disproportionately.

Almost since it began in the late 1940s, critics have been decrying our reliance on the U.S. market. "Third options" have been proposed again and again and sometimes even tried and yet our U.S. trade numbers stay high.

Should we take advantage of our neighbour's current weakness and try again to diversify our trade?

If businesses figure the U.S. is too risky and unreliable a place to sell into, then maybe they should move more aggressively into other markets. It's their money (most of it) and they're the best judges of the trade-off between risk and convenience. Though trading with a bubble-prone behemoth has its dangers, so does trading with distant countries whose language, customs, laws and political systems are (in the nicest sense of this word) alien.

There's also the complication that most countries are now linked to the U.S. economy: Chinese-American economic interaction was virtually zero when Mao was emperor, but grew virtually by the hour since. So China is now caught up in U.S. economic cycles, too, and will be until the U.S. is a minor market, which won't happen soon. If you want to steer clear of the American business cycle, you've got to trade with Mars.

In the end, it's probably still unwise to bet against the U.S. The American economy remains the world's largest and, until last fall, one of its most dynamic. In fact, the crisis itself is a result of radical, technology-enabled innovation in the U.S. financial sector.

We're pretty smug these days about our more cautious banks, but in the long run derring-do has a higher return.

William Watson teaches economics at McGill University.

http://www.ottawacitizen.com/opinion/fa ... story.html

[Nandu]

Japan, with annualized GDP decline of 15%, is well into depression territory.

http://www.bloomberg.com/apps/news?pid= ... refer=asia

[Sanjay M]

MSNBC:

World's Biggest Debtor Nations

[amol.p]

The trillion dollar question: China or America?
Who is going to come out of the economic crisis stronger and with the whip hand - China or America, asks Niall Ferguson.

http://rs6.net/tn.jsp?et=1102599284833& ... V7Sst0Zw==

To simplify the story, think of an unhappy marriage in which one partner does all the saving, while the other does all the spending. (We all know at least one couple like that.) But then the partner with the retail therapy habit maxes out on his/her credit cards. At the same time, the parsimonious partner finds her/his job under threat. What previously was a stable relationship is suddenly on the rocks.

global importance and influence" of Chimerica, but warned of an impending "period of chillness". Could this be one of those great turning points in history, when the balance of power tilts decisively away from an established power and towards a rising challenger? It is possible. Financial crises often accelerate the gradual shifting of the geopolitical tectonic plates; they are to history what earthquakes are to geology

In short, it may be time to start believing the projections made by Jim O'Neill and his colleagues at Goldman Sachs, who predicted just a few years ago that China's gross domestic product could equal that of the United States by 2027. Three years ago, China did not have a single bank among the world's top 20, measured by market capitalisation. Today the top three are all Chinese. In 2006, the United States had seven of the top 20 banks, including the top two; today it has three, and the biggest, JP Morgan Chase, is rated fifth.

[SwamyG]

Here is a piece that disses BRIC as CRIB. There is some truth to the matter. It can also be construed as "divide and rule" or "psy-ops". Nevertheless interesting.

http://seekingalpha.com/article/143051-bric-or-crib

A sample:

One of the most important reasons why the BRICs do not have the economic clout that they would like is frankly they don’t deserve it. Goldman Sachs had a story (and more) to sell with its BRICs concept, but those same letters spell a real word, CRIB. The point is that the countries, outside of China, are not among the largest.

[svinayak]

Here is a piece that disses BRIC as CRIB. There is some truth to the matter. It can also be construed as "divide and rule" or "psy-ops". Nevertheless interesting.

They first create BRIC and hype it up. And then diss it.
If you look at BRIC they are so different and they all have different economic system. The only thing which is common is that they are $1T+ economy. The economic evolution of these countries are at different stages. India and Brazil are similar but their trading partners are so different. Russia is a energy power house and a military trade which is absent in the other powers. China is in a league of its own with trade with US and EU dwarfing all other BRIC countries.

[Suraj]

The reason BRICs matter is not absolute size of their economies, but their rate of growth. That's why they get attention disproportionate to the absolute size of their economy. India was adding as much or more to its economy annually than the likes of France or Germany, measured in absolute dollars. In size of economy, we also exceed all but US, China and Japan in PPP terms, and will soon overtake the latter, regardless of World Bank statistical jugglery. Just sour grapes in that article.

[SwamyG]

[url=http://rothkopf.foreignpolicy.com/posts ... hout_china]The BRICs and what the BRICs would be without China..[/quote]
The Bloomberg Financial TV channel has been steadily talking about the BRIC meeting the last 2-3 days. I did not see them spending hours together; but still devoted a few minutes. While CNBC is blissfully keeping the public blissful. The tone of articles that cover BRIC meeting is so different from the ones covering G8 meeting.

Morgan Stanley wants Indonesia to be part of BRIIC.

[Ameet]

EU: 1.9 million jobs disappeared in 1st qtr 09

http://www3.signonsandiego.com/stories/ ... dex=116843

Highlights:

Some 1.9 million jobs disappeared across the European Union in the first three months of this year – the sharpest drop in payroll numbers on record, the EU statistical agency Eurostat said Monday.

Just under 223.8 million people were employed in the EU in the first quarter, 146 million of them in euro-zone nations, Eurostat said.

EU business federation BusinessEurope forecasts that some 4.5 million workers may lose their jobs this year as company profits plunge. It represents more than 20 million European companies.

[Sanjay M]

India should be part of BRIM, not BRIC:

http://www.ft.com/cms/s/0/839b59aa-59c1 ... abdc0.html

[Virupaksha]

India should be part of BRIM, not BRIC:

http://www.ft.com/cms/s/0/839b59aa-59c1 ... abdc0.html

Suddenly Bric becomes a bad word in US . They seem to think that we cannot link it to SCO's economic angle

[SwamyG]

BRIC vs FUJUG

You know the concept of globalization is not some temporary phenomenon that got great press during the great global boom of 2003-2007 when the first ever BRIC summit happened today and world policy was discussed. To put into perspective, the cumulative GDP of Brazil, Russia, India and China is about $7 trillion, half the size of the US but we know that its emerging economies that hold the key to future global growth as 86% of the world’s population live in the developing world. The FUJUG countries, France, US, Japan, UK and Germany will continue to struggle with highly leveraged institutions, whether at the consumer, corporate (particularly the banking sector), and government levels but at the same time will depend highly and hopefully will capitalize on the growth and vitality of faster growing emerging markets.

[paramu]

I'll put the acronymn as FUGJU

[svinayak]

I'll put the acronymn as FUGJU

I will call is BRIC vs F*KDU

CEMENT (Countries in Emerging Markets Excluded by New Terminology).

http://en.wikipedia.org/wiki/BRIC

[wrdos]

India should be part of BRIM, not BRIC:

http://www.ft.com/cms/s/0/839b59aa-59c1 ... abdc0.html

Sure.
I think BRIC is only a concept adopted to treat the individual investors' money. The 4 countries are too different, and for most economic index C >= B+R+I.

[vina]

The 4 countries are too different, and for most economic index C >= B+R+I.

Yes. I agree with the the point. The Chinese economy is larger than the remaining 3 put together and the countries are very different indeed. However, if you look deeper, China fundamentally is an intermediate finisher/manufacturer that largely depends on raw material supplies from the rest of the world, and increasingly from B and R. C, B and R and directly linked to the business cycle of the US and Europe, they are not an endogenous source of demand commensurate with the size of their economies (especially China where China > B+R+I as usual in this case too ). That is where India is different. The Indian economy is sized by internal demand. Not that it is a great virtuous thing, but in the current circumstances it is and we need to both increase our share of global trade and also grow an internal market at a fast pace to drive overall growth.

[bala]

The 4 countries are too different, and for most economic index C >= B+R+I

Well China can crow about its economic indices. The fact of the matter is most of the manufacturing operations in China is labor arbitrage for international companies. The figures get inflated because of volume of operation. The recent worldwide economic meltdown proved how vulnerable China is with respect to its export market. China uses a lot of Russian originated stuff including military wares. To claim it is better than all the other three combined is a very hollow statement.

[Prem]

http://www.timesonline.co.uk/tol/news/w ... 514737.ece

Brazil, Russia, India and China form bloc to challenge US dominance
With public hugs and backslaps among its leaders, a new political bloc was formed yesterday to challenge the global dominance of the United States.

The first summit of heads of state of the BRIC countries — Brazil, Russia, India and China — ended with a declaration calling for a “multipolar world order”, diplomatic code for a rejection of America’s position as the sole global superpower.

President Medvedev of Russia went further in a statement with his fellow leaders after the summit, saying that the BRIC countries wanted to “create the conditions for a fairer world order”. He described the meeting with President Lula da Silva of Brazil, the Indian Prime Minister, Manmohan Singh, and the Chinese President, Hu Jintao, as “an historic event”.

( ThE comments on thr Article are more interesting than the news)

[SK Mody]

http://www.timesonline.co.uk/tol/news/w ... 514737.ece

Brazil, Russia, India and China form bloc to challenge US dominance
...

( ThE comments on thr Article are more interesting than the news)

From one of the comments:

Seem like the BRIC 'Fair World Order' is telling the New World Order where to go.

Namely to: France, Uraguay, Canada, Kenya, Oman Finland and Fiji.
[ ]
Yep, sounds good to me.
graham, London, UK

[vsudhir]

Dollar alternative is a complex issue: PM

[Singha]

yes the comments are very revealing indeed.

pretty much all the US posters are living in their dream cocoon. thats excellent, shows that
the process of retreat from empire is well managed via the media to not alert the citizens.
Got to give the US/UK leadership high marks for media control, although two Economist articles
I read yesterday spoke of massive spike in rifle and handgun sales in the 'red states' starting
from the moment Obama was sworn in and the scale of the economic calamity become more
open. people were quoted as saying "essentials" like milk, bread and guns were important.
one guy who owned 40 guns was buying his 41st incase he needed more firepower to defend
his private fortress. and many states have introduced new laws permitting gun carriage (even
concealed carriage) into state and public parks , restaurants and bars so long as the patron
doesnt drink (wink wink).

we dont want a sudden and messy retreat unlike USSR, just a gradual scaling back of
military and economic reach while ceding these to emerging powers like BRIC.

[harbans]

BRIC is only good as a rading bloc of sorts. Trade between them also is not so great a shake. Politically these nations have vast differences. At the most the bloc which they form can have some leverage in WTO agreements. But i don't see how this bloc can really take US's gfeostrategic dominance away. A grouping of like minded countries is more of a bloc. I see a India, Japan, South Africa, S Korea grouping to be more realistic in achieving geo srategic objectives along with trade incentives.

[Prem]

BRIC is only good as a rading bloc of sorts. Trade between them also is not so great a shake. Politically these nations have vast differences. At the most the bloc which they form can have some leverage in WTO agreements. But i don't see how this bloc can really take US's gfeostrategic dominance away. A grouping of like minded countries is more of a bloc. I see a India, Japan, South Africa, S Korea grouping to be more realistic in achieving geo srategic objectives along with trade incentives.

Harbans, all BRIC has to do is double the GNP twice in next 15-20 years and it will kill the old world economic order. WEST dont fear them now but they are smart enough to sense the implications of upcoming powerhouses getting together in economic grouping which can be deterimental to their "leadership".

[Singha]

as it become more lucrative to trade with bric economies, other independent MPs
like south korea, org of african states, ASEAN, mid east, CAR will deftly switch sides and join the new "ruling party" after settling on favourable terms.

east europeans - cheated and broken as their nations are also need a lifeline and
a dose of realism. just joining the EU isnt a instant ticket to riches and great lifestyles.

western govts and their media excel in undermining the confidence of other countries, other cultures with the intent of winning massive victories without overt war. people are rendered so shaken in confidence they stop dreaming and working for great things. internal 'agents' are asked to criticize and question harshly anything that will go against their paymasters interest - that way its marketed as domestic opposition from the 'oppressed masses toiling on less than $1/day'

[Viv Sreenivasan]

BRIC economies are still only 15% of world GDP. This is in nomial GDP btw. So all this talk of BRIC economies taking over the world are a bit premature. Its going to take a long long time.

[bart]

BRIC economies are still only 15% of world GDP. This is in nomial GDP btw. So all this talk of BRIC economies taking over the world are a bit premature. Its going to take a long long time.

Same was the case with Oiropeans during the 17th century. Didnt stop them from getting prepared and actively trying to increase their spheres of influence, and take advantages of the collapse of power structures in India and the self-imposed insularity of China.

[vsudhir]

BRIC economies are still only 15% of world GDP. This is in nomial GDP btw. So all this talk of BRIC economies taking over the world are a bit premature. Its going to take a long long time.

Significantly higher in PPP terms.

But this '15% onlee' fallacy afflicts many well-meaning folks around. See, tghe capital stock, the wealth, the income-generating assets etc of a country are usually stable and longterm things that don't change rapidly one year to the next. But at the margin, capital flows, new investments, new jobs etc can be critical. These flows, at the margin, seek growth potential and deliver growth.

The G7 is no longer cost competitive with the BRICs in an increasingly large spheres of economic activity. The incremental capital flow will seek out greener pastures in the BRICs more than in the G7. Sure, the G7 will hit back with multiple slumdawg style '80% lives on 42 a day' propagandu and that will help them some.

IMO, the BRIC hype doesn't do India much good. I'd rather the hype reduce, and only the smart money, which does its homework and sees through media BS and then finds India a longterm capital and investment abode, flow in here. Hot money flows should seriously be unwelcome at home. JMTs etc.

[SwamyG]

BRIC economies are still only 15% of world GDP. This is in nomial GDP btw. So all this talk of BRIC economies taking over the world are a bit premature. Its going to take a long long time.

Only time will tell if it is premature or not. One way to look at things is compare USA as it exists now to Britain as it existed 100 years ago. Just like Britain USA is not going to let the Empire crumbling down. USA differs from the Britain in terms of size - population and lass mass. It has these advantages, so it might be able to evolve better than what Britain did.

If India was a genie in a bottle, then it was let out of the bottle in 1991. It would be lot easier to kill the genie than put it back in the bottle.

Like Suraj remarked, it is just not 15% of World GDP, but it is by how much they are growing compared to others. We have the potential, time will tell how we do. But I am very bullish.

[vina]

We really have nothing in common with this BRIC business beyond headline level. Look at the commie thugs in China. Look at the business environment in Russia. Check this out.

Seized Telenor Stake in a Russian comapny moves towards sale . With capers like this, who the hell can do any business with Russia. It is a massive mafia economy, no rule of the law. With stuff like this Russia will go down the toilet faster than the word Perestroika

[g.sarkar]

Dhoom and Gloom in Kalifornia with the rise of unemployment:
http://www.sacbee.com/1232/rich_media/1698037.html
Gautam

[Ameet]

Mastercard picks Ajay Banga to be CEO apparent. Poached from Citigroup

http://www.bloomberg.com/apps/news?pid= ... _ApwwY8tEk

Ajay Banga, Citigroup Inc.’s most senior executive in Asia, left the U.S. bank for a role at MasterCard Inc. that puts him in line to succeed Chief Executive Officer Robert Selander.

“This is huge,” said Bill Smith, founder of Smith Asset Management Inc. in New York, who holds about 200,000 Citigroup shares. “This guy was talent.”

Banga will get a salary of $800,000, a $4.2 million signing bonus and $4.9 million in restricted stock, according to a regulatory filing.