IMF Sees US-Led Global Growth Slowdown

♠ Posted by Emmanuel in ,, at 1/29/2008 10:17:00 PM
The uber economists at the IMF are forecasting global growth to slow down as the effects of the US subprime mess affect other parts of the world. It goes back to the same argument that US consumption represents $9.6 trillion in demand annually, whereas Chinese and Indian consumption represents only $1.6 trillion combined. At the end of the day, who'll buy all this stuff if Americans don't? We'll's good to note that the IMF believes African growth will increase this year despite it all. What follows are a table of IMF predictions and a blurb on emerging economies:
Emerging markets and developing countries

Despite some slowing of export growth, emerging market and developing countries have thus far continued to expand strongly, led by China and India. These countries have benefited from the strong momentum of domestic demand, more disciplined macroeconomic policy frameworks, and in the case of commodity exporters, from high food and energy prices.

Growth in emerging market and developing countries is also expected to ease, moderating from 7.8 percent (annual basis) in 2007 to 6.9 percent in 2008. In China, growth is projected to decelerate from 11.4 percent to 10 percent, which should help alleviate overheating concerns.

But growth in Africa is projected to pick up to 7.0 percent from 6.0 percent in 2007.

The New International B-School Order

♠ Posted by Emmanuel in at 1/29/2008 09:34:00 PM
The times are a-changing: the Financial Times has just released its latest business school rankings. It is notable that four out of the top 20 schools are now in the developing world whereas only 2 were in 2007 and only 1 was in 2006. INSEAD (with joint campuses in Switzerland and Singapore), the China Europe International Business School, the Hong Kong University of Science and Technology Business School, and the Indian School of Business are adding diversity to the previously Western-centric list. 25% of the top 20 business schools are now in the developing world; who would've guessed this thing could happen? It's a good deal, I think: business educators are going to where the students are--in Asia--instead of the other way around.

Philip Morris Sees Death Sticks' Growth Outside US

♠ Posted by Emmanuel in ,,, at 1/29/2008 03:32:00 PM

Like oil and water, tobacco companies and corporate social responsibility don't seem to mix. As sales of cigarettes have stalled in the developed world, the marketing focus of tobacco products has moved to the developing world where there are so many more lungs to foul up. While I am not a smoker, I am sometimes wary of the excesses of the nanny state with regard to tobacco. By all means, do ban smoking in public areas given the deleterious effects of secondhand smoke. But, leave people free to smoke in private--if they are determined to kill themselves, it's their choice and there's not much you can do about it. To evade further legal and regulatory entanglements, Philip Morris International will soon be spun off from Philip Morris USA. In addition, the company is preparing a whole new lineup of products to, ah, die for--a few of which are demonstrated in the clip above. Smoke 'em if you got 'em, and Philip Morris International is busy making sure that its fine products are available from Afghanistan to Zimbabwe. Below is part of the writeup from the Wall Street Journal on the impending smoke fest soon to hit international markets. You light up my life...
Sitting in his office overlooking Lake Geneva, Philip Morris International Chief Executive André Calantzopoulos takes a long drag from an unusually short cigarette. Called Marlboro Intense, the product has been shrunk down by about a half inch, and offers smokers seven potent puffs apiece, versus the average of eight or so milder draws.

The idea behind Intense is to appeal to customers who, due to indoor smoking bans, want to dash outside for a quick nicotine hit but don't always finish a full-size cigarette. Pointing to his lit Intense, the CEO says there are "possibly 50 markets that are interested in deploying it."

Marlboro Intense is likely to be part of an aggressive blitz of new smoking products PMI will roll out around the globe once the company -- now a unit of New York-based Altria Group Inc. -- becomes a standalone entity. That change will be set into motion tomorrow, when the Altria board is expected to approve a long-awaited decision to split PMI from Philip Morris USA. The move would free the tobacco giant's international operations of legal and public-relations headaches in the U.S. that have hindered its growth.

The separate entity, for example, would be exempt from U.S. tobacco regulations and out of reach of American litigators. Importantly, its practices would no longer be constrained by American public opinion, paving the way for broad product experimentation.

By as early as March, PMI could be operating as an independent company -- the third most profitable consumer goods concern in the world after Procter & Gamble Co. and Nestlé SA. The move will make it easier for the tobacco behemoth to market an array of new smoking concepts, each targeted to different foreign populations, who, collectively are expected to smoke 5.2 trillion cigarettes this year.

Among the new products in test phase is a hand-held electronic smoking device called the Heatbar, which emits less smoke than a regular cigarette. Another is Marlboro Wides -- an extra-thick cigarette whose package flips open from one side. To appeal to customers in some emerging markets, the company is making sweet-smelling cigarettes that contain tobacco, cloves and flavoring -- with twice the tar and nicotine levels of a conventional U.S. cigarette.

While smoking rates in developed countries have slowly declined, they have shot up dramatically in some developing counties, where PMI is a major player. These include Pakistan (up 42% since 2001), Ukraine (up 36%) and Argentina (up 18%).

Some antitobacco types are sounding alarm bells that an independent PMI will be a corporation which, from a practical viewpoint, is stateless and answers to no one. "There is a fear that after the spinoff, PMI will become even less accountable than it is today," says Richard Daynard, a professor of law at Northeastern University, who worked as a consultant on class actions against tobacco companies.

Mr. Calantzopoulos, 51 years old, says such concerns are a "misconception." He notes that regulatory regimes in Europe, for instance, are harsher than in the U.S., where the most severe restrictions were created in a late 1990s settlement of antitobacco lawsuits by the states.

The World Health Organization's Framework Convention on Tobacco Control, an international public-health treaty, has 152 participating countries, including China, Brazil and Pakistan. While it has led to greater regulation in many of the world's markets, countries such as Indonesia and Russia haven't signed on.

Bono on the Davos Question

♠ Posted by Emmanuel in at 1/28/2008 09:01:00 PM

In brief: make sure industrialized country governments live up to their aid commitments so that the Millennium Development Goals can be met come 2015.

Latin Migrants Seek Work--as Rent-a-Cops in Iraq

♠ Posted by Emmanuel in at 1/28/2008 08:21:00 PM
This is globalization for you (and perhaps exploitation for Marxist readers): Latin migrants are now being recruited to work as security guards in Mess-o-potamia. While they do not get quite the same perks as ex-US armed forces mercenaries working for private contractors, their pay is relatively good judging by the standards of their home countries. Doesn't it make you want to take out a lifetime subscription to "Soldier of Fortune" magazine? (Don't bother answering that; it's a rhetorical question.) From the LA Times:

Yo Blair Warns Against US Protectionism

♠ Posted by Emmanuel in at 1/28/2008 01:58:00 AM
Former British PM Tony Blair has come out warning against US isolationism, particularly on trade matters. The newly-appointed JP Morgan advisor [nudge-nudge, wink-wink] suggests that there is much to lose if the US retreats from the world stage and more or less walks away from the international institutions it has helped set up over the years. From the Wall Street Journal:
Tony Blair cautioned U.S. presidential candidates not to lock themselves into damaging protectionist or isolationist policies they could have a tough time walking away from once in office.

In an interview with The Wall Street Journal yesterday at the World Economic Forum here, the former British prime minister expressed concern that a suddenly more gloomy outlook for the global economy could lead the U.S. and other nations to close themselves off.

"I understand all the protectionist pressures in the U.S.," Mr. Blair said. "On the other hand, I think it would be extremely unfortunate if people bolt themselves in positions that become difficult to extract themselves from, because the reality in the world is that we're going to have to open up world trade, not close it down."

Mr. Blair neither singled out candidates nor said whom he favors. However, Democratic candidates in particular have championed "fair" over free trade. Sen. Hillary Clinton has called for a "timeout" on multilateral trade deals.

Mr. Blair also said there is a risk that U.S. presidential candidates will lock themselves into isolationist policies during the campaign, given the price to the military of staying in Iraq, Afghanistan and other hot spots. "There's a ready political advantage to saying: 'Enough is enough, we don't want any more. Why should we have to sort out the problems of the rest of the world?' But on the other hand, for the rest of the world, that engagement is vital."

Mr. Blair, who is Middle East envoy for the U.S., the European Union and Russia and who recently joined J.P. Morgan Chase & Co. as an adviser, said that instead of turning inward, it is "urgent" that countries reach deals to increase trade and strengthen outdated international institutions -- from the International Monetary Fund to the United Nations -- as the global economy comes under strain.

That was a common refrain at this year's annual meeting of global business and political leaders in Davos, which was otherwise dominated by concerns over how to resolve a liquidity crisis in the global financial system...

Pascal Lamy, director general of the World Trade Organization, has been wrestling since 2001 to change the rules of global trade through the stalled Doha round of global trade negotiations. "Behind this technical side of the negotiations, there is a power game going on" between developed countries who set the old trade rules and poorer and emerging countries that want to change them, Mr. Lamy said in an interview.

Many of the changes sought by Mr. Blair and others at the U.N. Security Council, the IMF, the World Bank and the International Atomic Energy Agency aim to give emerging economies such as China, India and Brazil a bigger stake, often at the expense of overrepresented European countries...

IMF head Dominique Strauss-Kahn was also in Davos to push his efforts to change that organization's focus to include surveillance of global markets, adding to its dwindling business of lending to and stabilizing troubled national economies. But he said that in order to work, the U.S. and other developed economies need to let the IMF set up surveillance authorities on their territories too -- something that isn't happening yet.

"I don't want to use apocalyptic language, it isn't helpful, but it is now urgent to do these things," said Mr. Blair. "At some point, the reality is so sharp that it is going cut through the bureaucratic lethargy that has left the situation as it is."

The World According to Obama's Advisor

♠ Posted by Emmanuel in , at 1/27/2008 03:37:00 AM
Guilty of taking cheap shots at America myself, I am amazed that even Barack Obama's foreign policy advisor Parag Khanna is doing the same in today's edition of the New York Times Magazine. He too says American hegemony is dead. You will not be surprised that I think the USA is becoming the Britney Spears of world politics: bloated, overindulgent, and in need of rehab to cure its excesses. However, Khanna's prescriptions are strange indeed for helping America adjust to a post-hegemonic existence. As you would expect from an advisor to a politician, he does not suggest the sensible route of belt-tightening and sacrifice to cure fiscal ailments. Instead, we get this:
Given our deficits and political gridlock, the only solution is to channel global, particularly Asian, liquidity into our own public infrastructure, creating jobs and technology platforms that can keep American innovation ahead of the pack.
Unfortunately, our man's grasp of economics leaves something to be desired; America already is using foreign liquidity to plug its massive savings shortfall. It's been doing so for years as necessitated by this thing called the "current account deficit." All the while, Dubya has overseen the bloating of American bureaucracy with investments in public infrastructure known as the Homeland Security Act and what else have you. Combating terrorism has already spawned a lot of technological innovation. Big government conservatism is already channeling global liquidity into US public infrastructure which has resulted in the creation of many public sector jobs.

Khanna also contradicts himself on many occasions. For instance, he says that "Americans lose control of assets to wealthier foreign funds," yet before that:
In true American fashion, we must build a diplomatic-industrial complex. Europe and China all but personify business-government collusion, so let State raise money from Wall Street as it puts together regional aid and investment packages.
Huh? I thought Wall Street needed cash infusions from sovereign wealth funds because they were unable to raise capital domestically? How are these same Wall Streeters which have gone begging abroad going to find money to aid foreigners, then? It does not compute.

Besides, why is Khanna so keen on aid? Wasn't the US the largest aid donor for the longest time? Why is he so sure that more aid will buy off geopolitical allies now when it has been unable to do so in the past? Nor is it clear why US investment abroad would be welcome. Go ask Venezuela, Iran, Russia, or many of those other states Khanna says are in the "second world" if they welcome American investment and the rest of the neoliberal package that went with it.

But wait, there's more. Khanna also makes the case that Turkey is becoming further integrated into the European Union. Is this the same Turkey which is being offered only a "privileged partnership" (AKA a sucker's deal) by France and Germany--the EU's bigwigs? Is this the same Turkey which is now complaining about the EU thus being in danger of becoming a "Club of Christians" according to Turkish Foreign Minister Ali Babacan?

I could go on, but suffice to say that I am not entirely on board with Khanna given that his article is riddled with factual inaccuracies and inconsistencies. Overall, though, I do agree that the US is down in the dumps and needs fixing up (like Ms. Spears). Unfortunately, his politically palatable no-sacrifice solutions are unlikely to get America there. Sacrifice and hard work don't win votes in today's America, unfortunately. Next solution to "fix" what ails America, please.

UPDATE: Here's more for Khanna to ponder regarding the alleged "Europeanization" of Turkey: the ruling AK Party is now planning to introduce legislation that will enable headscarf wearing in Turkey's universities. Message to Khanna: more skyscrapers ≠ "Europeanization."

Martin Wolf Chairs Panel of Superpundits @ Davos

♠ Posted by Emmanuel in , at 1/26/2008 06:20:00 PM
If you've got the scratch, head over and see the Financial Times' Martin Wolf chairing a panel featuring some of the financial world's most-watched figures. These are:

Dominique Strauss Kahn, Director-General of the IMF
Palaniappan Chidambaram, Indian Finance Minister
Yoshimi Watanabe, Japanese Financial Services Minister
Christine Legarde, French Finance Minister
John Thain, Chairman of Merrill-Lynch
Larry Summers, former US Treasury Secretary

The main topic for discussion is the possibility of the developing world decoupling from the subprime-led slowdown in the US. Interesting stuff. Chidambaram predicts an 8-8.5% growth rate for India in 2008, so you can say he's an optimist on decoupling. As they always say, we'll see...

Sarkozy Asking the Impossible?

♠ Posted by Emmanuel in at 1/25/2008 06:09:00 PM
I got a chuckle while reading an Associated Press writeup of rogue trader Jerome Kerviel managing to lose $7+ billion at Societe Generale, or SocGen to those in the biz. This staggering sum is, by far, the largest single loss at the hands of a single trader. When asked to comment on the incident, Sarko had this to say:
Sarkozy said he will announce new proposals at a Tuesday dinner in London with other European leaders on how to boost transparency in the financial sector and encourage the "moral improvement of financial capitalism."
The "moral improvement of financial capitalism"?! I am laffing so hard...

CNET Reviews One Laptop Per Child

♠ Posted by Emmanuel in at 1/22/2008 09:02:00 PM
Now that the One Laptop Per Child XO-1 should soon be commercially available under the Give 1, Get 1 scheme, the folks over at CNET have given it a rundown. It earned a score of 7.5 or "Very Good." Currently running is this soap opera [1, 2, 3] of Intel withdrawing from the OLPC project's board of directors over the OLPC folks supposedly wanting Intel to discontinue selling its low-cost Intel Classmate model. True or not? Regardless of that saga's outcome, favorable reviews like CNET's should help make the OLPC a more commercially viable unit:

What is it: Ultraportable for children in developing countries

What we think: A superbly designed tool for learning that will appeal to geeks as well as kids

Most new computers are built from the latest components, with a healthy over-performance margin to allow for the demands of future software. Not the XO-1. A modest 433MHz processor has to handle operating system, software and graphics all on its own, with just 256MB of RAM to work with, and a mere 1GB of Flash memory storage.

A key feature is its wireless performance. Not only do you get full 802.11b/g functionality, but also 802.11s, which enables mesh networking -- even when powered down. Get within range of another XO-1 -- tested at over two kilometres in the Australian outback -- and you can piggyback on its Internet connection, swap files or enjoy multi-player gaming. There are dedicated buttons to pull up graphical maps of your local mesh 'group' and wider wireless neighbourhood.

Multimedia features are pretty good -- a built-in VGA webcam can capture video at up to 30fps, and the stereo speakers are loud, if tinny. The XO-1 also uses brand new battery tech -- lithium iron phosphate -- that promises to last the planned lifetime of the computer, an impressive five years.

Answering the "Davos Question"

♠ Posted by Emmanuel in at 1/20/2008 07:29:00 PM

With the 2008 Davos summit to be held soon from 23 to 27 January in Switzerland, YouTube has asked its viewers to submit entries concerning what the "Davos Question" is. Above is an entry set to music that I thought was comprehensive and interesting if relying too much on standard anti-globalization rhetoric. BTW, you can scan the other submissions on YouTube. On the World Economic Forum site, you can also see various bigwig CEOs like Nissan-Renault's Carlos Ghosn address this question. The Holy See also chimes in with a message about the need for peace-development-environment.

A lot of fine talk, yes, but what about action?

Can you search R-E-C-E-S-S-I-O-N?

♠ Posted by Emmanuel in at 1/20/2008 06:07:00 PM
I was visiting the Yahoo! site when I came across this interesting graphic care of those search engine folks. With outspoken CNBC commentator Jim Cramer yelling his head off about Fed Chairman Ben Bernanke having "no idea" about how things bad are, Joe Sixpack has gone in search of news about the impending economic slowdown Stateside. What are the areas most concerned about a further economic slowdown in the land of the free? The amount of hits coming from various states may give some clues. What follows is a bit of Yahoo! commentary and the relevant chart:

Over the past seven days, searchers propelled queries on "economic recession" and "recession" upwards. Lookups like "last u.s. recession" and "recession proof jobs" spiked. Even "stagflation"—a term not normally found strolling the Buzz aisles—more than doubled its numbers.

Most interest has focused on figuring out exactly what the pundits mean when they drop the you-know-what utterance. Demand for "definition of a recession economy" surged nearly 500%. Questions asking "what is a recession" picked up 260%, while "what is a recession economy" and "are we in a recession" nearly vaulted off the list.

As for the parts of the country most actively seeking fiscal answers online, New York; Washington, D.C.; and Tennessee top the list of areas typing "recession" into the Search box. To find out how fervently your state is hitting the Web for the big "r," check the map below...