Indian Economy – The Inflation Issue

The Indian economy is affected in a big way by the monetary policies made by the Reserve Bank of India with respect to the rupee. The policies are dictated to a large extent by global economic trends and their likely consequences vis-a-vis the Indian economy.

The Reserve Bank of India, also known as RBI which is the central banking institution of India and controls the monetary policy of the rupee as well as US$300.21 billion of currency reserves is trying to reduce persistently high price increases, which have stayed over eight percent for the past eighteen months. It raised interest rates by 0.25 percent to 8.5 percent in the last week. The central bank has increase interest rates by just under 4 percent since March of the previous year. Growth dawdled to almost 8 percent in the three months to June; this is the slowest it has been in the last 2 years.

Indian Economy – Supply Constraints

When it comes to the Indian economy, the primary reason why inflation in India is so stubborn is supply constraints, stated a well known economist. The lack of basic infrastructure, skills gaps and product markets raise costs. In the meantime, bad irrigation means that unexpected low rainfall will see the prices of food on the rise. As the rupee drops, and thus adds more to the inflation problem, to improve the Indian economy, India must tighten fiscal policy.

Indian Economy – The 4th Largest

The fourth-largest economy in the world behind the United States, China and Japan is India. Figures from 2010 illustrate that the Japanese economy was worth $4.31 trillion, with India following right behind at $4.06 trillion India might soon fall into the third place by surpassing Japan in terms of GDP (Gross Domestic Product) which is calculated in accordance to the domestic purchasing power of the rupee, which is also known as purchasing power parity.

After March’s devastating tsunami and earthquakes, Japan’s economy is widely expected to contract while the Indian economy will grow between seven and eight percent this financial year. The next six-to-eight months may see India surging ahead of Japan. Some leading experts on worldwide economic trends are of the opinion that by that time, in terms of purchase power parity, the Indian economy would be the world’s third largest.

China is rising as a strong global economy for the last two decades and is the world’s biggest holder of foreign exchange reserves with the reserves touching 1.2 trillion US dollars right up to a short while back. A number of countries around the world are involved in business with China due to its economical trends and are enthusiastically involved in a learning a Chinese language to comprehend and augment the business opportunities available.

French military and political leader during the latter stages of the French Revolution, Napoleon Bonaparte once said about China, “Let her sleep, for when she wakes, she will shake the world..” Nearly two centuries after the farsighted statement of the legend, China’s resting economy materialized so significantly that economic power that country holds now directly affects and facilitates the pace of universal market.

People around the world and countries are now knowingly moving forward to develop business relations with world’s fastest growing nation, a realm that is experiencing this massive changeover from a central-planned economy to a global-oriented market and has become a governing player in the international economy and financial system. Hence for better business understanding, business opportunity and cultural exchange, learning a Chinese language has become an all time high with something like thirty million people studying Chinese in universities, colleges and private courses.

Chinese is measured to be one of the world’s most well-liked languages and is a simple structured and tonal language where a single word can have dissimilar meaning depending upon the way it is pronounced. There are number of dialects in Chinese spoken in different provinces but the recognition of the Mandarin language is gaining and it has also been recognized as the official language of China.

To follow the suit, the United States is investing huge sums in set ting up schools that teach Chinese and passing bills to inspire the Chinese language program in schools across the nation and cultural exchanges to develop the ties between the two countries.

In spite of learning Chinese language in home countries, people often prefer to travel to China and spend time there to get acclimatize themselves with their custom, their culture and to gather experiences. With the huge demand of the Chinese language, chief cities in China are filled to capacity with Mandarin learning schools, many of which provide outstanding lodging facilities, resident Chinese speaking teachers and well qualified persons to teach Chinese as foreign language.This i might add also adds to the economy.

In addition to this, students can choose a Chinese language with the expectation of getting employment easily in areas like banking, trade, financial, diplomatic work, academics, news media, content management, tourism and many more. Each of these domains is very demanding and gives one an adequate amount of coverage of Chinese civilization, traditions and customs.

Therefore, if you strongly feel the need to learn a Chinese language, don’t waste any more time, Now is the right time to start of learning Chinese language and align yourself in the fast track of business by learning Chinese language, this is the right time to start. If going to china is out of your budget, there are a huge number of online resources and free online Chinese learning courses, audio lessons and other methods that can make you fluent in the Chinese languages that u wish to learn.

Number two in South America just to Brazil in area and the number of inhabitants, Argentina is a plain, rising from the Atlantic to the Chilean border and the soaring Andes peaks. First explored in 1516 by Juan Diaz de Solis, Argentina developed slowly under Spanish colonial rule.Here is a little information about the Argentine economical trends.

Contradictory to conservative economic insight, rich countries tend to stay rich and poor countries tend to stay poor. The exceptions have a tendency to be those “economic miracles”, such as Japan, that have pulled themselves out from the ranks of the poor into the ranks of the economically privileged.

Argentinean economic account stands in stark contrast to that outline. In the early 20th century, Argentina was one of the richest countries in the world, with a higher per capita income than that of other European countries like France or Germany. And while Argentina still enjoys many of the fruits of wealth, like a highly educated population and a modern infrastructure, income per head had fallen to a meager 43% of the rich-world average by 1987. In the wake of the economic collapse of 2001-2002, over half of the population fell under the poverty line, and a pretty large section were classified as destitute.

Argentinean Economy

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Ancestry of Riches

Between 1880 and 1914, Argentina went through an immense population boom as European settlers came in search of land to settle and make productive. Many ended up in the fruitful pampas region around Buenos Aires, and with the help of British-built rail links, a sell abroad economy was almost immediately in full swing. On top of an already vibrant wool and hide industry, Argentines were soon exporting corn, wheat, and flour to industrializing European cities. But the real money was in meat exports, made possible by the invention of the refrigerator ship in 1876; Argentina has been well-known for beef ever since then.

Argentinean Economy

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The Crisis of 2001-2002

As luck would have it, Argentina’s barefaced disregard for a primary tenet of “neoliberal” economics proved to be a influential factor in its downfall. As the boom of the 1990s roared on and the government’s tax take soared, economic control would suggest setting aside a “rainy day” fund for the event of a recession—because recessions are to be anticipated in any economy. Instead, the money was spent and new debt was piled up even in the good years. When the economy hit a bad patch in 1999, the government found itself in an awfully difficult state of affairs; it needed money fast and was already notably indebted.

The then just elected President, Fernando de la Rúa, had to pick up the pieces in 2000. He could try to stabilize the budget by cutting spending or raising taxes, but this would exacerbate the recession and additionally reduce tax revenues. In the face of this catch-22 situation, de la Rúa chooses to borrow his way out, in the hope that the recession would promptly and softly fade away. Sadly, this approach often leads to a downward spiral of its own, known as “explosive debt dynamics”, in which shareholders begin to fear a default on the debt, driving interest rates up and deepening the recession, thus escalating the debt even more. This is precisely what happened with the Argentinean economy.

Argentinean Economy

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What Happened After

This incredibly dark cloud of the economical collapse did have a silver lining. The peso improved to some extent and has held steady at about 3 to the US dollar, a level that makes Argentina’s products (and Argentina as a tourist paradise) much more alluring to the rest of the world. Actually, some have argued that one cause of the crisis was the overestimated exchange rate, which made Argentine exports less viable. The economy was rising again in 2003, and has since, fueled in part by high universal commodity prices. In 2005, GDP roared past its previous peak (in 1998), and many economists think Argentina is on firmer ground than it was in the 90s owing to the fiscal responsibility of Nestor Kirchner, the then elected president.

Looking to the future, rising discrimination is one apprehension genuinely felt by many Argentineans. The revival has put more riches in the hands of the rich, like the soy farmers leading the new export boom or those who were fortunate enough to get their money out before the depreciation. On the flipside, employment is up, and a financially solvent state will be in a much better position to help those on the lower rungs of the social order go up higher.

This week, the House Subcommittee on Immigration and practices within the law to arrange a hearing called “Legal Employment Act” (HR 2164). Bill sponsored by Representative Lamar Smith (R-Texas), would be authorized to use the E-verify system for all employers.

Although hailed as a success by Rep. Smith, E-Check program is actually a deeply flawed. If made mandatory, it would cripple the U.S. economy, destroy its social environment and lead to discriminatory results for workers, especially those in the Asia-American and Pacific Islanders (AAPI) community.

E-Verify is a federal program on the web program that provides employers a way to check work permits an employee and supplements I-9 form for new employees. In theory, employers can electronically verify the employment eligibility of their employees by the two federal agencies: 1) Department of Homeland Security (DHS), and 2) the Social Security Administration (SSA).

Sounds simple enough, right? Wrong. The drawbacks to the program far exceed its benefit.

Requiring use of E-Verify will prevent millions of American workers from getting jobs and cause many more workers to lose their jobs. Every day, employers already wrongfully receive red flags on workers, known as “tentative non-confirmations” (TNCs), based on errors in the E-Verify databases. These errors arise, for example, if a person’s name is misspelled or if his or her records are outdated.

E-Verify is particularly harmful for foreign-born workers, as green card holders and naturalized citizens are 20 times more likely than native-born citizens to falsely receive TNCs. This is especially troubling for AAPIs because more than 8 million AAPIs are foreign-born.

Furthermore, workers have little or no protection when they are falsely suspended or terminated as a result of E-Verify. Fane, a Tongan woman who was naturalized in 1993, was a victim of an improper E-Verify TNC. Although a U.S. citizen, E-Verify flagged her as unauthorized to work. She was not allowed to return to work until the issue was cleared up, losing out on two weeks’ worth of pay. Only after multiple trips to SSA did she discover that why she received a TNC: when she became a U.S. citizen, her records at SSA were not updated. Under E-Verify, Fane was never able to receive her two weeks’ worth of back pay – a heavy burden for a single mother of four children.

E-Verify promotes discrimination against AAPIs, as under-trained employers may assume a worker is undocumented if they receive a TNC in error and unduly fire the worker or simply not hire them at all. A government-funded study found that employer noncompliance with the E-Verify pilot program’s rules was “substantial,” finding that employers 1) engaged in prohibited practices such as pre-employment screening, 2) took adverse employment actions based on tentative non-confirmation notices, and 3) failed to inform employees of their rights. The proposed law would also allow employers to use E-Verify to prescreen job applicants. AAPI workers and other foreign-born or foreign-looking employees will have a harder time getting a job because employers may want to avoid the risk of E-Verify mismatches or errors. This opens to door to discrimination based on national origin and race.

In an ailing economy, we cannot afford to divert the time and resources of workers like Fane. The American Council on International Personnel reports that corrections at SSA usually take in excess of 90 days, and that employees must wait four or more hours per trip, with repeated trips to SSA frequently required to get their records corrected. E-Verify will jeopardize the productivity of its AAPI workers by creating hardship for employees.

Do not think the fans when they say that E-Verify will help our economy. E-Verify, with their high error rates and potentially discriminatory results will affect all workers, including U.S. citizens and green card holders. As the error rate is reduced and better implementation and accountability procedures are in place, we’ll let you hit the gas in this car broken. E-Verify is not ready for prime time and should not be mandatory.

European share fell for the sixth day Wednesday, with sentiment hit by a bearish assessment of the U.S. economy by Fed chairman Ben Bernanke.

The last strip was defeated by nearly 4.4% dropped out of the pan-European FTSEurofirst 300 index as a string of disappointing data of the largest economy in the world, including the weak labor market and production has raised fears that the pace of recovery may be slowing.

At 04:51, the index fell 1.1% to 1092.25 points, after falling as low as 1,089.78 – its lowest intraday level since March 21.

Investor sentiment was rattled after Bernanke acknowledged a slowdown in the economy but made no suggestion of a further stimulus to boost the economy.

“The question marks regarding the growth dynamics for the global economy are becoming bigger and this is weighing on the markets,” said Tammo Greetfeld, equity strategist at UniCredit.

“If we put this in perspective, the Euro STOXX could move towards the region of 2,650 or 2,700 points, which is the lower end of the valuation that we have seen over the last two years,” he said, adding that whether these levels could attract buyers depended on the extend of economic slowdown and deterioration of the euro zone debt crisis.

The Euro STOXX 50, the euro zone’s blue chip index, was down 1% at 2,746.68 points.

Mining shares, which are the worst performing sectors in Europe so far this year, fell 2.1% as copper prices shed 1.5%, reflecting a rise in the dollar as risk aversion intensified.

LOOKING UNLIKELY

Some investors were likely to have been disappointed by a lack of indications from Bernanke of further quantitative easing measures to support the economy in the wake of the Fed’s current $600 billion government bond buying, known as QE2, which is set to end in June.

“Other Fed members were also speaking yesterday with much the same message coming through: monetary policy is likely to remain accommodative for some time yet, but further QE looking unlikely at this stage,” Evolution Securities analysts wrote in a note.

Among individual fallers, Kabel Deutschland fell 6.2%, as traders pointed to unsurprising earnings and a proposed dividend that was not as high as some had hoped.

The euro, which has been used by a number of investors as a barometer for “risk-on/risk off” trends over the past year, has been sending a contrary signal over the past two weeks, rising about 5% while the Euro STOXX 50 has dropped 5% over the same period.

The 30-day rolling correlation between the euro and the Euro STOXX 50 has fallen to 0.2 from 0.6 back in early May, highlighting the fact that correlation strategies may be becoming less effective in the short-term.

Technical indicators also painted a bearish picture for equities, with the 14-day relative strength index on the FTSEurofirst 300 at 31.9 — inching towards “oversold” territory of 30 and below.

With the addition of a downbeat mood, German exports in April fell more than in January 2009, the Federal Statistical Office reported.

What’s the Latest Development?

Another attempt to make a go of using the power of the web to create an economy of “micro-payments” whereby individuals and corporations could charge tiny sums for their content. Flattr, a micropayment startup founded by Pirate Bay co-founder Peter Sunde, is preparing to launch a new feature that will combine its payment system with Twitter, and allow any Flattr user to send money to someone via their Twitter name.

What’s the Big Idea?

Could this help launch a “tip jar” system that actually works on a large scale and transforms the online content industry in much the same way The Pirate Bay disrupted it, but for the better? Or will it just be the latest failed micropayment startup? Since there aren’t any of the physical restrictions on money and transactions that occur in the real world this kind of micro-economy should work quite well. The only problem is that it never has.

It is not unusual for the American Heritage Credit Union in Philadelphia to get 500 resumes for a job advertisement, reports CBS News senior business correspondent Anthony Mason.
But business is growing, the company is taking: tellers, managers and assistant vice-president.

“We potentially could bring in 38 new positions by the end of the year,” said Flora Caranac with American Heritage.

Economist Ellen Zentner said when you base it off the last three months of data; it looks like the economy is getting some momentum on job growth.

“We’ve had the unemployment rate drop a full percentage point very quickly over just four months and that’s nearly unprecedented,” Zentner said.

In February, employment increased in 35 states. The biggest overall growth coming in California, Pennsylvania, Florida, Texas and Illinois.

But more than 6 million Americans have been unemployed now for six months or more, like Marianne Gannon, a former sales manager with Mastercard. She’s joined a job search group in Westchester County, New York.

Gannon, who has been out of work for 15 months, thinks there’s a bias against people who have been out of work for a long time.

“I applied one night to a particular company on their website,” Gannon said. “And two and a half minutes later I got an email saying ‘Thank you very much. We’ve reviewed your application and resume and we do not feel it is a fit.’”

On job web sites we found repeated postings for sales and management positions that required applicants to be “currently employed.” CBS contacted four firms for an explanation but none replied.

“Even friends or neighbors or whatever around here – they’re like, ‘you’re still out of work?’ It’s like what don’t you understand? The job market stinks,” Gannon said.

The new study, UCLA and the State University of New York at Stony Brook, the researchers found evidence of a trend towards the unemployed, according to a report that is often marked, even if they are voluntarily leaving a position.

Craig Alexander, senior vice president and chief economist at TD Bank Financial Group, recently spoke with members of the business community and local politicians in the framework of the 6th edition of the Economic breakfast.

By Lindsey Cole/The Oshawa Express

Flooding. Earthquakes. Tsunamis. Political instability. A recession.

Put all of these ingredients together and you have a recipe for a global economy that is facing some significant challenges.

But, believe it or not, the world is beginning to rally, with Canada fairing incredibly well in the mix, says Craig Alexander, senior vice president and chief economist for the TD Bank Financial Group.

He spoke to a group of local members of the business community as well as City staff and councilors at the 6^th Annual Economic Outlook Breakfast, put on by the City of Oshawa.

During his speech he highlighted several areas of improvement and the challenges that are facing the world, North America and the local economy.

He says it’s a tangled web and Canada’s success depends largely on the rest of the world.

“It was a severe recession,” he says of the 2009 economic downturn. “People didn’t know how bad the recession was going to be. People didn’t see a light at the end of the tunnel and if they did they thought it was a train.”

But, he says, overall countries are rebounding well and though a natural disaster can be seen as a setback, the tsunami in Japan will not completely decimate the country.

In North America imports will be affected for a short time when it comes to automobiles and technology but overall, things will rebound.

“The rebuilding will actually stimulate economic growth,” Alexander says of Japan. “The economic conditions are improving (on the whole). It’s a very positive outlook. Having said that, it’s a very risk filled environment. There are some very big challenges out there.”

Those challenges include inflation, the cost of food, oil prices and countries facing large deficits.

When it comes to food prices, nature is again to blame.

“Food prices have soared. There just isn’t that much food in the food we buy. An awful lot of it is the marketing, the packaging,” he says, adding prices soared six to eight per cent year over year. “The story is mother nature.”

But when it comes to oil prices, political unrest in the Middle East is the cause and it is cause for concern. Alexander says that is driving oil costs up and the worry is that the unrest will spread to large oil companies in large countries like Saudi Arabia.

“It’s a low probability that we’re going to have an oil shock,” he says, adding it’s something they are keeping an eye on. “If things cool down in the Middle East then you will see oil prices go down.”

Closer to home, the United States is beginning to rally, despite the housing crisis. This, in turn, is benefiting Canada.

“It (the Canada) just chugged along. It’s now recovered all the ground it lost. The U.S. is still in a hole, it’s still got a long way to go but there’s no question that it is improving,” he explains.

“Before Americans were spending like drunken sailors. Consumers have been going without for about two years.”
He says two million jobs were created in 2011 in the U.S., but the jobs lost during the recession amounted to 8.7 million. It shows a slow but steady growth rate, he adds.

When it comes to Canada and the local economy, Alexander says the nation is doing well.

“There was nothing fundamentally wrong with Canada. We were hit with a massive external shock,” he says. “Canada was chugging along nicely when it was sideswiped.”

He says locally Oshawa struggled on the manufacturing side of things, but as the country began to rebound so did Oshawa as car sales ramped up and jobs were created.

However, he adds that while Canada has managed to get most of the jobs back numerically, they went to different areas.

“The jobs haven’t been created in the places that lost them.”

It has moved to service jobs and for Durham that has meant huge improvements.

“The GTA is very competitive. The GTA is very robust. The region as a whole is very strong,” he says. “When you get in the Durham Region it gets a little more diversified.”

He says the GTA unemployment rate is 8.3 and Oshawa is 8.9, so Oshawa is still higher, but Oshawa’s plan is in the right direction, focusing on skilled labour, competitive taxes, retraining and building infrastructure.

“There are still a lot of people out there that need our support,” he says.

“The economy is fundamentally changing. It’s becoming a knowledge-based economy.”

A study by the World Bank published reports Thursday that the online gaming industry has become a company of 3 billion U.S. dollars offered wages to migrant workers in Asia to play all day, raise money virtual and sold to wealthy clients in the Western world for real money.

The report also highlights a new industry in which companies seeking to increase the popularity of its brands to pay low-skilled workers abroad to become his followers to Facebook or Twitter followers.

The study “Knowledge Map of the virtual economy,” World Bank is the first look in depth the impact of online gaming and social media in the developing world. The report was prepared by infoDev, an organization financed by donors to the bank. Lehdonvirta Vili, co-author, said that the bank should not pay the money in the industry because he said the dealmaking violates some of the terms of game publishers and service is cheating.

Known as “gold farming,” the game-playing profession took off in the early 2000s with games such as World of Warcraft and has become a complex industry.

Low-educated laborers in Asia spend hours each day advancing through levels of an online game, picking up gold, swords and gems that enhance a player’s status. Then gaming studios, which employ the players, sell those virtual goods to online retailers. Finally, the retailers sell those items to more than 120 million players worldwide, many of them in North America and Europe, who are unwilling to play the games all day to gather the items on their own.

The bank’s report indicates that online gaming has a positive impact in Asia because 70 percent of the industry’s revenue remains in the gaming countries, with most of that money going to the gaming studios. Compared with the $70 billion coffee market — in which only a small fraction of the revenue remains in the bean-growing countries — gaming has a “much better development impact,” the report concludes.

The report also includes a survey of 26 players and studio managers that offers a rough, yet rare demographic look at their lives: Most of the players work out of studios in China, in Beijing or Changsha, the capital of Hunan province. They earn an average wage of $2.70 an hour, one dollar more than Beijing’s minimum wage for part-time factory work.

“The larger point is that online gaming is often viewed as exploitation. Certainly it’s not a dream career, but the players’ earning is not at sweatshop levels,” Lehdonvirta said.

The gaming studios keep about two-thirds of the industry’s $3 billion in revenue. “Previous studies presumed that the players sold the goods, but that’s not true,” Lehdonvirta said. “If you’re a rural online game player in China, you have no way of setting up a Web site and developing a customer database, and maintaining customer relations.”

The report also focused on a trend in which companies pay low-skilled workers in India, Bangladesh and the Philippines to “like” their Facebook fan pages or become a follower of that company on Twitter. The practice inflates a brand’s popularity.

Twitter regularly suspends accounts created only to follow others. Sean Garrett, a company spokesman, wrote in an e-mail: “We’ve seen numerous instances wherein the accounts that are bought are later suspended. . . leaving the company with few followers and no recourse.”

Facebook spokesman declined to comment on. Site rules allow companies to offer coupons, for example, people, if “as” a page of ads across Facebook.

A web design company that closed last week, more than 17 million federal tax liens, and a lawyer for the company, said Tuesday that contributed to his decision to “relax” its operations.

HIT Web Design, also known as Heritage Web Design, unexpectedly closed its doors on March 8, with little attention to employees or customers. Provo attorney Sonny Olsen said HIT was unable to meet existing obligations and outstanding “because of the economy and levy a tax dispute.

“HIT made the most reasonable and prudent decision that it could given what the recession has done to this company and the industry,” Olsen said.

The Internal Revenue Service filed four tax liens on HIT Web Design’s property in Provo from Oct. 25 to Nov. 8, according to Utah County Recorder’s Office records.

The company also is known as Heritage Internet Technologies and Heritage Web Solutions.

HIT was contesting the liens “well in advance of the company dissolving, and [the tax liens are] making it impossible to resolve the wage claims and liability claims while it is pending,” Olsen said. “So HIT Web Design is working with IRS to resolve these issues.”

The company also is “evaluating its position” to try to address other liabilities, he said.

“HIT is well aware of the wages owed to employees at the time of HIT, and management intends to pay for these requirements to the extent that it has power,” Olsen said in a statement.