Sunday, October 31, 2010

China's fast rise leads neighbors to join forces

China's military expansion and assertive trade policies have set off jitters across Asia, prompting many of its neighbors to rekindle old alliances and cultivate new ones to better defend their interests against the rising superpower.A whirl of deal-making and diplomacy, from Tokyo to New Delhi, is giving the United States an opportunity to reassert itself in a region where its eclipse by China has been viewed as inevitable.President Obama's trip to the region this week, his most extensive as president, will take him to the area's big democracies, India, Indonesia, South Korea and Japan, skirting authoritarian China. Those countries and other neighbors have taken steps, though with varying degrees of candor, to blunt China's assertiveness in the region.Mr. Obama and Prime Minister Manmohan Singh of India are expected to sign a landmark deal for American military transport aircraft and are discussing the possible sale of jet fighters, which would escalate the Pentagon's defense partnership with India to new heights. Japan and India are courting Southeast Asian nations with trade agreements and talk of a "circle of democracy." Vietnam has a rapidly warming rapport with its old foe, the United States, in large part because its old friend, China, makes broad territorial claims in the South China Sea.
The deals and alliances are not intended to contain China. But they suggest a palpable shift in the diplomatic landscape, on vivid display as leaders from 18 countries gathered this weekend under the wavelike roof of Hanoi's futuristic convention center, not far from Ho Chi Minh's mausoleum, for a meeting suffused by tensions between China and its neighbors.China's escalating feud with Japan over another set of islands, in the East China Sea, stole the meeting's headlines on Saturday, and Secretary of State Hillary Rodham Clinton proposed three-way negotiations to resolve the issue.Most Asian countries, even as they argue that China will inevitably replace the United States as the top regional power, have grown concerned at how quickly that shift is occurring, and what China the superpower may look like.China's big trading partners are complaining more loudly that it intervenes too aggressively to keep its currency undervalued. Its recent restrictions on exports of crucial rare earths minerals, first to Japan and then to the United States and Europe, raised the prospect that it may use its dominant positions in some industries as a diplomatic and political weapon.And its rapid naval expansion, combined with a more strident defense of its claims to disputed territories far off its shores, has persuaded Japan, South Korea, Vietnam and Singapore to reaffirm their enthusiasm for the American security umbrella."The most common thing that Asian leaders have said to me in my travels over this last 20 months is, 'Thank you, we're so glad that you're playing an active role in Asia again,' " Mrs. Clinton said in Hawaii, opening a seven-country tour of Asia that included a last-minute stop in China.Few of China's neighbors voice their concerns about the country publicly, but analysts and diplomats say they express wariness about the pace of China's military expansion and the severity of its trade policies in private."Most of these countries have come to us and said, 'We're really worried about China,' " said Kenneth G. Lieberthal, a China adviser to President Bill Clinton who is now at the Brookings Institution.The Obama administration has been quick to capitalize on China's missteps. Where officials used to speak of China as the Asian economic giant, they now speak of India and China as twin giants. And they make clear which one they believe has a closer affinity to the United States."India and the United States have never mattered more to each other," Mrs. Clinton said. "As the world's two largest democracies, we are united by common interests and common values."As Mr. Obama prepares to visit India in his first stop on his tour of Asian democracies, Mr. Singh, India's prime minister, will have just returned from his own grand tour - with both of them somewhat conspicuously, if at least partly coincidentally, circling China.None of this seems likely to lead to a cold war-style standoff. China is fully integrated into the global economy, and all of its neighbors are eager to deepen their ties with it. China has fought no wars since a border skirmish with Vietnam three decades ago, and it often emphasizes that it has no intention of projecting power through the use of force.At the same time, fears that China has become more assertive as it has grown richer are having real consequences.India is promoting itself throughout the region as a counterweight to China; Japan is settling a dispute with the United States over a Marine air base; the Vietnamese are negotiating a deal to obtain civilian nuclear technology from the United States; and the Americans, who had largely ignored the rest of Asia as they waged wars in Afghanistan and Iraq, see an opportunity to come back in a big way.In July, for example, Mrs. Clinton reassured Vietnam and the Philippines by announcing that the United States would be willing to help resolve disputes between China and its neighbors over a string of strategically important islands in the South China Sea. China's foreign minister, Yang Jiechi, reacted furiously, accusing the United States of plotting against it, according to people briefed on the meeting. Mr. Yang went on to note that China was a big country, staring pointedly at the foreign minister of tiny Singapore. Undaunted, Mrs. Clinton not only repeated the American pledge on the South China Sea in Hanoi on Saturday, but expanded it to include the dispute with Japan.China's rise as an authoritarian power has also revived a sense that democracies should stick together. K. Subrahmanyam, an influential strategic analyst in India, noted that half the world's people now live in democracies and that of the world's six biggest powers, only China has not accepted democracy."Today the problem is a rising China that is not democratic and is challenging for the No. 1 position in the world," he said.Indeed, how to deal with China seems to be an abiding preoccupation of Asia's leaders. In Japan, Prime Minister Naoto Kan and Mr. Singh discussed China's booming economy, military expansion and increased territorial assertiveness."Prime Minister Kan was keen to understand how India engages China," India's foreign secretary, Nirupama Rao, told reporters. "Our prime minister said it requires developing trust, close engagement and a lot of patience."South Korea was deeply frustrated earlier this year when China blocked an explicit international condemnation of North Korea for sinking a South Korean warship, the Cheonan. South Korea accused North Korea of the attack, but China, a historically of the North, was unwilling to hold it responsible.India has watched nervously as China has started building ports in Sri Lanka and Pakistan, extending rail lines toward the border of Nepal, and otherwise seeking to expand its footprint in South Asia.India's Defense Ministry has sought military contacts with a host of Asian nations while steadily expanding contacts and weapons procurements from the United States. The United States, American officials said, has conducted more exercises in recent years with India than with any other nation.Mr. Singh's trip was part of his "Look East" policy, intended to broaden trade with the rest of Asia. He has said it was not related to any frictions with China, but China is concerned. On Thursday, People's Daily, the Communist Party newspaper, ran an opinion article asking, "Does India's 'Look East' Policy Mean 'Look to Encircle China'?"That wary view may well reflect China's reaction to the whole panoply of developments among its neighbors."The Chinese perceived the Hanoi meeting as a gang attack on them," said Charles Freeman, an expert on Chinese politics and economics at the Center for Strategic and International Studies. "There's no question that they have miscalculated their own standing in the region."

Friday, October 29, 2010

He gave up a fat salary to feed the hungry

Madurai: He was our Catch last week, an incredible story of a young chef who shunned the lure of a job abroad and a fat salary to feed the hungry and abandoned of Madurai. This is Naryanan Krishnan, in the race for CNN's hero of the year, telling his story to NDTV. (Catch of the Day: He brings hot meals to India's homeless) He does it all himself - slices vegetables, prepares the rice - using his skills as a chef to cook large meals. Then, he takes food packets to the destitute and mentally ill, often feeding them with his own hands. Krishnan says he had an offer to be a chef at a five-star hotel in Switzerland, but a turning point in 2002 set him on a different course. "On that day I saw a hungry man eating his own human waste. I was shocked. Quickly I ran and bought him idlis. His face smiled with gratitude", Krishnan, now 29, recalls. Akshaya Trust, which Krishnan runs, feeds around 400 people thrice a day. All through public donations. As one of the top ten picked globally and now competing for the CNN's hero of the year award, Krishnan has already won $ 25,000. If he wins the top prize he will get $ 100,000.
He needs that money to complete his Akshaya Home, a Rs. three-crore rupee shelter for 400 abandoned and mentally ill people. "We will rehabilitate 400 people. They can work and get back to their families. They can, above all, die with dignity. They are now moving as dying destitutes." Krishnan says. To win and make the shelter a reality, all Krishnan needs is lots of Indians voting for him at the CNN website. (Vote for Krishnan here)

China wrests supercomputer title from US

A Chinese scientific research center has built the fastest supercomputer ever made, replacing the United States as maker of the swiftest machine, and giving China bragging rights as a technology superpower. The computer, known as Tianhe-1A, has 1.4 times the horsepower of the current top computer, which is at a national laboratory in Tennessee, as measured by the standard test used to gauge how well the systems handle mathematical calculations, said Jack Dongarra, a University of Tennessee computer scientist who maintains the official supercomputer rankings. Although the official list of the top 500 fastest machines, which comes out every six months, is not due to be completed by Mr Dongarra until next week, he said the Chinese computer "blows away the existing No 1 machine." He added, "We don't close the books until November 1, but I would say it is unlikely we will see a system that is faster." Officials from the Chinese research center, the National University of Defense Technology, are expected to reveal the computer's performance on Thursday at a conference in Beijing. The center says it is "under the dual supervision of the Ministry of National Defense and the Ministry of Education."
The race to build the fastest supercomputer has become a source of national pride as these machines are valued for their ability to solve problems critical to national interests in areas like defense, energy, finance and science. Supercomputing technology also finds its way into mainstream business; oil and gas companies use it to find reservoirs and Wall Street traders use it for superquick automated trades. Procter & Gamble even uses supercomputers to make sure that Pringles go into cans without breaking. And typically, research centers with large supercomputers are magnets for top scientific talent, adding significance to the presence of the machines well beyond just cranking through calculations. Over the last decade, the Chinese have steadily inched up in the rankings of supercomputers. Tianhe-1A stands as the culmination of billions of dollars in investment and scientific development, as China has gone from a computing afterthought to a world technology superpower. "What is scary about this is that the US dominance in high-performance computing is at risk," said Wu-chun Feng, a supercomputing expert and professor at Virginia Polytechnic Institute and State University. "One could argue that this hits the foundation of our economic future." Modern supercomputers are built by combining thousands of small computer servers and using software to turn them into a single entity. In that sense, any organization with enough money and expertise can buy what amount to off-the-shelf components and create a fast machine. The Chinese system follows that model by linking thousands upon thousands of chips made by the American companies Intel and Nvidia. But the secret sauce behind the system -- and the technological achievement -- is the interconnect, or networking technology, developed by Chinese researchers that shuttles data back and forth across the smaller computers at breakneck rates, Mr Dongarra said. "That technology was built by them," Mr Dongarra said. "They are taking supercomputing very seriously and making a deep commitment." The Chinese interconnect can handle data at about twice the speed of a common interconnect called InfiniBand used in many supercomputers. For decades, the United States has developed most of the underlying technology that goes into the massive supercomputers and has built the largest, fastest machines at research laboratories and universities. Some of the top systems simulate the effects of nuclear weapons, while others predict the weather and aid in energy research. In 2002, the United States lost its crown as supercomputing kingpin for the first time in stunning fashion when Japan unveiled a machine with more horsepower than the top 20 American computers combined. The United States government responded in kind, forming groups to plot a comeback and pouring money into supercomputing projects. The United States regained its leadership status in 2004, and has kept it, until now. At the computing conference on Thursday in China, the researchers will discuss how they are using the new system for scientific research in fields like astrophysics and bio-molecular modeling. Tianhe-1A, which is housed in a building at the National Supercomputing Center in Tianjin, can perform mathematical operations about 29 million times faster than one of the earliest supercomputers, built in 1976. For the record, it performs 2.5 times 10 to the 15th power mathematical operations per second. Mr. Dongarra said a long-running Chinese project to build chips to rival those from Intel and others remained under way and looked promising. "It's not quite there yet, but it will be in a year or two," he said. He also said that in November, when the list comes out, he expected a second Chinese computer to be in the top five, culminating years of investment. "The Japanese came out of nowhere and really caught people off guard," Mr Feng said. "With China, you could see this one coming." Steven J Wallach, a well-known computer designer, played down the importance of taking the top spot on the supercomputer rankings. "It's interesting, but it's like getting to the four-minute mile," Mr Wallach said. "The world didn't stop. This is just a snapshot in time." The research labs often spend weeks tuning their systems to perform well on the standard horsepower test. But just because a system can hammer through trillions of calculations per second does not mean it will do well on the specialized jobs that researchers want to use it for, Mr Wallach added. The United States has plans in place to make much faster machines out of proprietary components and to advance the software used by these systems so that they are easy for researchers to use. But those computers remain years away, and for now, China is king. "They want to show they are No 1 in the world, no matter what it is," Mr Wallach said. "I don't blame them.

Thursday, October 28, 2010

Gas Boom Mints Instant Millionaires

In the hills of northwest Pennsylvania, the boom in natural gas production turned mechanic Chris Sutton into a millionaire practically overnight.
Sutton recently leased his 154 acres of land on the Marcellus Shale to Talisman Energy for a $900,000 up front check, plus a 20% cut of the revenue of the natural gas extracted from his land.

A half hour away it's a very different story. Truman Burnett's retirement home is ruined: His pond is contaminated by a drilling accident on land owned by a neighbor and his well water is undrinkable.
Burnett doesn't blame the neighbor for the mishap, but the fortunes of Burnett and Sutton illustrate just how dramatically the shale gas phenomenon is dividing Pennsylvania.
Some are getting very rich, while others see nothing but problems.
Nearly everyone appreciates the economic benefits derived from the development of the cleaner, domestic energy source in the Marcellus, which stretches under Pennsylvania, West Virginia, New York and Ohio.
But as shale gas production takes off in the Northeast and in other shale formations across the country, people should pay attention to Pennsylvania.
[A Millionaire's Retirement Plan You Can Use ]
Here, debate about the speed of development, the influx of out-of-state workers, the safety of the drinking water, and the changing character of the area is dividing this state's rural communities.
A Boom in Bloom
Towanda, a town of some 3,000 people about 60 miles northwest of Scranton, is in the midst of a full-on energy boom.
Hotel rooms are impossible to get — one hotel was booked through December. Rents on two-bedroom apartments have gone from $400 to $1,500 a month. The downtown is jammed with traffic, much of it tractor trailers loaded down with drilling materials and equipment. One resident counted over 100 passing his house in an hour.
"We're being invaded," Jim Stuart, a longtime Towanda resident, said from the counter of a downtown diner. "And I don't deal well with things being shoved down my throat."
The invaders, mostly workers from Texas and Oklahoma, are here for the vast deposits of natural gas.
It's been long known that gas exists in this part of Pennsylvania, but extracting it was too costly. But a few years ago, shale gas became economical. The reason: Higher gas prices and advances in drilling and hydraulic fracturing.
Known as fracking, hydraulic fracturing is a process that involves breaking the shale with vast amounts of pressurized water, sand and chemicals. It's being described as one of the biggest developments in energy in a long time.
It was pioneered in Texas, then Louisiana and Arkansas. Now it's in Pennsylvania.
"It's been the opportunity of a lifetime," said Jodi Edger, who runs a construction and excavating company that builds the well pads and services the rigs. "If it wasn't for the oil and gas industry, there wouldn't be a whole lot up here."
Edger has doubled the size of his staff in the last year or so, going from 50 employees to over 100.
Laborers get $14 an hour, and backhoe and bulldozer operators earn $18 or more. Everyone has full benefits and gets overtime, which adds up fast. He says his people are putting in 60 and 80 hour weeks.
"You hear the doom and gloom about what's happening with the economy on the national news, and then you see what's happening up here," he said. "I can't even find a truck driver."
On the other side of town, Joe Snell sells welding gas and equipment to contractors working the rigs.
Snell said his sales exploded from about $10,000 a month last fall to over $50,000 a month now.
Lunching with three of his customers at a local diner, it was all jokes.
"Working up here, we found out the difference between northerners and southerners," said one of the welders. "Down there we're rednecks, up here they're hillbillies." Everyone laughed.
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For Brianna Morales, proprietor of the BriMarie Inn a half hour north of Towanda in the town of Sayre, the influx of workers has meant more business and the opportunity to meet new people.
"It's neat to learn some of the south's traditions, and the food they like," she said.
Hot Tempers
But the mood isn't always so light.
A few months back, there was a 15-person brawl outside a Towanda bar, supposedly over a girl. Such incidents are getting more common, said Mike Holt, owner of the Red Rose diner, who witnessed the rumble.
"These guys come up here, with their southern accents, all 'yes m'am, no m'am,' flashing lots of money, and the women are impressed," said Holt. "The local men feel intimidated."
At a bar in Sayre, one roughneck from Louisiana was seen carrying on with the local women, drinking, and pulling out a wad of bills.
After he left, one patron was overheard talking about the greed in town, and the damage this drilling may be causing the environment.
The Water
The traffic may be the most visible and most complained about thing in this region. But it's likely temporary — after the wells are drilled it'll be gone.
The longer lasting and more concerning issue is the impact this drilling is having on the water.
Much attention has been paid to the fracking process, and the federal Environmental Protection Agency is studying its safety.
But environmental officials in Pennsylvania, backed up by national environmental groups, say the focus on fracking, which happens thousands of feet below the water table under a mile or more of rock, is a bit misplaced.
"It's important to be clear about where the problems have been," said Pennsylvania Department of Environmental Protection Secretary John Hanger. "We have not had a single case of these [fracking] fluids coming back to the groundwater."
The problems have occurred near the surface. Fracking fluid has been spilled before being sent down the well.
The steel casing that lines the well holes has also failed, allowing natural gas and other chemicals to penetrate the drinking water. That's led to the much-publicized cases of people being able to light their taps on fire.
To remedy this, environmentalists and others are proposing a series of more stringent regulations, including tougher well casings, drilling farther from from water sources and people's homes, better treatment of the fracking fluid before it's discharged into the environment, seismic imaging of an area before it's drilled, and federal oversight of the whole process.
"I don't mind them extracting the gas, but take it at a slower pace, explore what's necessary to protect the quality of life," said Carol French, a landowner near Townada.
French has sold a lease to drill on her land, but is hoping it expires before gas production starts on her property. She said she'd sign again with better terms, but she just wants to make sure it's done right, "because I can't drink money."
Environmentalists give Pennsylvania credit for recently passing some additional regulations. Still, they they don't believe the regulations go far enough.
Outside analysts say additional regulations, particularly on water issues, will make gas production more expensive, but that the resource can still be developed economically.
"You're not going to kill the shale boom on the basis of these costs," said Robert Ineson, senior director for global gas at the consultancy IHS Cambridge Energy Research Associates. Additional regulations are "warranted, likely and affordable," he said, although he cautioned not to take them too far.
The industry is skeptical of such measures. The American Petroleum Institute pointed to a report showing that increased water regulations and federal oversight could slow development of this resource by about 20%.
But that, it seems, is exactly what many in Towanda want.

Monday, October 25, 2010

US Citizenship For Sale

Every day investors around the world choose to put their hard-earned cash into the U.S. Billions of dollars flow in the form of foreign direct investment, as when a group of Brazilians bought Burger King, and foreigners purchase hundreds of billions of U.S. stocks and bonds, as measured by the Treasury's TIC data.

But a small number of investors show up on these shores drawn by something more valuable than financial returns: the prospect of U.S. citizenship.

You can't simply purchase an American passport (at least not legally). But since 1990, foreigners with as little as $500,000 in cash have been able to invest their way to a quick green card, putting them on the path to citizenship. Quick, somebody call Lou Dobbs!

Yes, the U.S. government lets people with cash to jump the line for a green card through the EB-5 program.

Starting in 1990, 10,000 visas have been set aside each year for the EB-category. The program was designed to encourage foreign investors to create jobs by starting a new business or preserve jobs by investing in money-losing businesses. If they agree to invest $1 million, foreigners can get a visa, apply for green cards, and become conditional permanent residents.

After two years, provided they've made good on their promise to invest, created 10 jobs (family members don't count), and the business is still an ongoing concern, they can apply to have those conditions removed. And after five years with a green card, holders can apply for citizenship.
Of the 10,000 visas in the program, 3,000 are set aside for "targeted employment areas" -- rural areas, or places with an unemployment rate that's 150 percent or more of the national average. For these visas, the threshold is lowered to $500,000.

Another 3,000 visas are set aside for investments in "regional centers" -- areas or industries designated by states. (A full list of regional centers can be seen here.)

Some organizations, professional service firms, and companies promote the program as a whole, or market investment in particular projects as appropriate for EB5 aspirants, such as a ski resort in Vermont. Other entrepreneurs having a tough time raising cash are now seeking to use the program to tap into new sources of financing. The Wall Street Journal reported last week that developer Bruce Ratner is seeking to use the program to help raise funds in China for his massive, controversial Atlantic Yards development in Brooklyn, N.Y.

Now, many may view the prospect of giving favorable immigration treatment to investors as problematic. The phrase "bring us your moneyed investors yearning to breathe free" doesn't have the same poetic heft as the inscription about the tired, poor, huddled masses etched on the Statue of Liberty. From its inception, the price of citizenship has traditionally been a willingness to leave behind the old world and work hard -- not write a check to support the construction of a bunch of ski-in, ski-out condos.

But I happen to think this is a very good thing. If it were fully utilized, the EB5 program would bring at least $7 billion annually and create or preserve 100,000 jobs per year. It's not much in the grand scheme of things -- there are currently about 130 million Americans with payroll jobs. But given the trauma inflicted upon American workers in the past three years, every little bit helps. And this is something the U.S. should be doing more of.

One cure for the vast overhang of excess housing would be to offer expedited citizenship to people willing to purchase vacant homes in places in like Las Vegas or Detroit.

In fact, it's surprising that more people don't take the U.S. up on its offer. Consider the changing shape of the world's economic geography: We've got American companies with lots of cash that are reluctant to invest at home because they see better prospects abroad. Thanks to that same dynamic, millionaires are being minted by the millions in China, India, and Brazil, and elsewhere.

Unfortunately, the EB5 program has never come close to maxing out. According to U.S. Citizenship and Immigration Services, in 2009, just 1,028 people applied for EB5 status and 966 were approved, up from 776 applications and 485 approvals in fiscal 2007. Applications and approvals rose sharply in fiscal 2010, to 1,727 and 1,271, respectively.

I'm guessing the lackluster numbers can be chalked up to a failure of marketing rather than the limited attraction of the underlying product, or of its expense. In fact, the investment-related green card should probably be priced higher. Here's a thought experiment: Ask how much you'd have to be paid to give up American citizenship for you and your family and assume that of a randomly chosen foreign country. Something tells me the bidding would start at a point much higher than $500,000.

Monday, October 18, 2010

Apple: sales and profit surge, margins slip

Strong sales of iPads, iPhones and even Mac computers produced record revenue and profit for Apple in its fourth quarter.It was not enough, however, to sustain Wall Street’s exuberance for the consumer electronics company that has seemed to do everything right in analysts’ eyes. The company’s shares fell about 6 percent in after-hours trading on Monday after the company announced its results.Apple said that it sold 14.1 million iPhones in the quarter, ended Sept. 25, an increase of 91 percent from a year earlier. Consumers bought 4.2 million iPads, the tablet computer it introduced in April. Mac sales totaled 3.9 million, up 27 percent.But buried among quarterly results that any company would be more than happy to emulate was a decline in gross profit margins. Investors disliked the small blemish, sending Apple’s shares down.“There’s a lot of hype built up into Apple’s earnings,” said Shannon Cross, the managing director of Cross Research. She added, “Everything must go down at some point, I suppose. Clearly, there was pressure on the iPhone gross margins and the iPad.”Apple’s success has helped to propel its shares up over the last year, to close on Monday in regular trading at $318, a high.Otherwise, analysts remained enthusiastic about Apple, based in Cupertino, Calif. Indeed, it was a quarter that highlighted the company’s dominance in consumer electronics. The company said net income for the quarter rose 70 percent, to $4.31 billion, or $4.64 a share, from $2.53 billion, or $2.77 a share, a year earlier. Revenue rose 67 percent, to $20.34 billion, from $12.21 billion.On average, analysts had expected Apple to report net income of $4.06 a share on revenue of $18.86 billion.Apple’s profit margins are the envy of the consumer electronics industry. The problem was that the company’s newest products ware not as profitable as its computers and iPod music players. Strong sales of lower-margin products — the iPad among them — caused the decline, according to Apple executives.The company said gross margins fell to 36.9 percent, from 41.8 percent in the quarter a year ago. Apple predicted that its margins would slump a bit more, to 36 percent, in the current quarter. Executives repeatedly played down the importance in a conference call with analysts by saying that they were happy with where they were.The iPod was the only product in Apple’s lineup that showed a decline, with 9.1 million sold, down 11 percent.Steven P. Jobs, Apple’s chief executive, made a rare appearance on the regular quarterly conference call. He said he made an exception in honor of the company’s record quarter.But he used the occasion to attack Apple’s rivals, including Google, whose Android software powers a growing number of mobile phones. Sales of mobile phones using the Android operating system surpassed those for the iPhone in the United States in the third quarter.Just as a variety of Windows-based PCs held Apple computers to a tiny market share for decades, a variety of Android phones may one day make iPhones a bit player, some analysts have said. Mr. Jobs waved off suggestions that Google’s strategy would win, casting its approach as fragmented because of the variations of Android that he said are used by different phone carriers.“With iPhone, every handset works the same,” Mr. Jobs said. He added, “We think Android is very fragmented and more fragmented every day.”Mr. Jobs also criticized several companies that planned to challenge the iPad. He said that their plans to sell a device with a seven-inch screen would create a poor customer experience compared with the iPad, which has a 10-inch screen. The touch screen will be so small, Mr. Jobs said, that users will be unable to easily use their fingers to reach apps on the device.Peter Oppenheimer, Apple’s chief financial officer, said that a surprising number of businesses and schools had also been buying Apple’s products. IPhones provided the biggest piece of Apple’s revenue, with $8.8 billion in sales, followed by notebook computers with $3.2 billion. IPads and related accessories accounted for $2.9 billion.International sales accounted for 57 percent of all revenue in the quarter.

Saturday, October 16, 2010

World's largest diamond bourse opens in Mumbai

The world's largest diamond exchange opens in the city's business district Bandra-Kurla Complex on Sunday, taking India from a manufacturing to a trading hub and challenging the dominance of traditional centres like Belgium and Israel.Bharat Diamond Bourse (BDB), designed by eminent architect Balakrishna Doshi and spread over 20 acres with nine interlinked nine-storey towers each, has been set up at a cost of Rs.1,100 crore (over 200 million USD)."The objective is to establish necessary infrastructure facilities for the promotion of diamonds, diamond jewellery from India and provide all support and service facilities to the traders, importers, exporters and other stakeholders," said BDB president Anoop Mehta.India's diamond processing industry accounts for 70-75 percent of total diamond exports and employs 850,000 people, making it the largest cutting centre by value and number of employees. "All top 400 exporters are over here (at the bourse), which accounts for 90 percent of the turnover," said Mehta.Incorporated in 1984 with a group of diamond exporters in the city, the exchange expects the turnover to rise 10-15 percent annually the next five years.Currently, it has a turnover of $27-28 billion and hopes to grow substantially on higher participation from diamond traders across the globe. "We expect diamond traders from Israel and Belgium to start trading over here."The diamond industry is one of the fastest growing in the world. India today leads in every aspect of the trade, whether it be the number of pieces manufactured, maximum carats being exported and highest volumes. And the BDB will now afford it the best equipped infrastructure in the world, said Mehta."India is a major diamond manufacturing centre with 11 out of 12 diamonds in the world being cut, polished and processed here. The BDB will ultimately help make India an international trading centre for gems and jewellery and take the step towards creating a Brand India in the world of diamonds."With state-of-the-art facilities and security, the centrally-airconditioned BDB would have an inflow of over 20,000-27,000 people a day when it is fully operational in the next few months.It has parking space for over 2,200 vehicles, a 12,000-square foot Customs area, another 6,000-plus sq ft area for clearing agents, banks, restaurants, food courts, landscaped areas and other amenities for the staff, visitors, businessmen and clients.With BDB in operation, Mumbai's diamond trade currently conducted out of three buildings in the Panchratna neighborhood in south Mumbai would shift to the swank new location by December.

Thursday, October 14, 2010

India’s richest man has moved into world’s biggest private residence

Marking the end of seven years of construction work, India's richest man is planning a housewarming party for his 27-story palatial new home in Mumbai, replete with no fewer than three helipads and an air-traffic control station on its roof.
The 570-foot-tall glass tower, called Antilia, "features a swimming pool, a health club, a salon and a mini-theatre," reports the Times of India. "The first six levels comprise the garage where more than 160 cars can be parked. Atop the parking lot is Antilia's lobby, which has nine elevators." The house also has a garden that can accommodate trees, according to the Telegraph, and a separate ballroom. About 600 staffers will be required to run Antilia, named after the mythical island in the Atlantic.

The house belongs to Mukesh Ambani, who owns much of the oil and retail giant Reliance Industries. He is estimated to be worth about $27 billion. Experts told the Guardian that "there is no other private property of comparable size and prominence in the world." Ambani, the fourth-richest man in the world, co-ran Reliance with his brother before the two had a falling-out and split the company.
Some were surprised at the conspicuous show of wealth, since Ambani is known as a deeply private person not fond of hanging out with India's super-rich. "Perhaps he has been stung by his portrayal in the media as an introvert. Maybe he is making the point that he is a tycoon in his own right," Hamish McDonald, author of the book "Ambani and Sons," speculated in the Guardian.

In a 2008 New York Times profile, friends described the tycoon as something of a contradiction: a cold-blooded businessman whose heart also "bleeds for India." He wants to help pave the way for a better life for the country's poor, they said. A Reliance spokesman told the Times the house would cost about $70 million, but the Guardian says it's closer to $1 billion.

Billionaire Mukesh Ambani's $1-billion new abode 'Antila' may be the costliest home in the world, but it has not found a place in the Forbes' list of most expensive homes as the house is not for sale, the magazine has said.

"Our global list limits itself to homes currently on the market, and Ambani's behemoth isn't for sale," the American business magazine has said in a commentary on India's richest man Mukesh Ambani's plans to move into his new 27-storey skyscraper in Mumbai later this month.

Meanwhile, UK's Daily Mail has reported that Prime Minister Manmohan Singh and many others have been invited for Antila's house warming party later this month.

RIL spokesperson could not be contacted for comments.
"Among the guests is Prime Minister Manmohan Singh, who has previously called on business tycoons to be role models of moderation," Daily Mail said.

Noting that the huge gap between the price-tag of Antilla, the new home of Reliance Industries chairman, and the other top-priced homes across the world, Forbes said: "The last time Forbes ranked the world's most expensive homes was November 2009, when The Manor, Candy Spelling's Beverly Hills mansion, won out - it was priced at $150 million.

"That home is still for sale, and its price hasn't budged, qualifying it for the number one spot on our recent list of America's most expensive homes," it added.

Noting that the global list was a year old and new mansions may have come on the market since then, Forbes said that still "at $1 billion, the Antila outprices any home on the market, anywhere in the world, by an order of magnitude."

The magazine noted that the home "likely sets a record as the world's most expensive residential home."

Forbes said that Ambani began work on this home years ago when "he was worth $43 billion (his net worth is down by nearly a third)."

"Now fully constructed, it's the most ever spent on a home that we know of. In June the world's richest man, telecommunications billionaire Carlos Slim Helu paid $44 million for an Upper East Side Beaux Arts town house. One could interpret the two tycoons' recent moves as a billionaire version of keeping-up-with-the-Joneses.

"If that’s the case, Ambani won by a long shot," it added.

Recently, Forbes magazine predicted that Ambani, currently the fourth richest globally, would overtake Slim as the world's richest person in 2014.

"Given the enormous gap between the Antila's sale price and the known closing cost of any home sold in recent years, there's an awfully good chance that this is the most paid for a home, ever," Forbes said.

It added that the highest price paid for a home in 2010 was somewhere between $47 million and $72 million for Le Belvedere in Bel Air.

According to Forbes, Mukesh, along with his wife Nita Ambani, three children and a modest 600-person staff would move to new house.

The house would have facilities like a health club, gym, dance studio, a ballroom, guestrooms, numerous lounges, a 50-seat screening room, an elevated garden, three helipads, and underground parking for 160 vehicles, the magazine noted.

Wednesday, October 13, 2010

With $28 bn inflow, India a hit for foreign investors

Two years ago, when the crisis on Wall Street reached its pinnacle, the high-flying Indian stock market fell with a thud as foreign investors took nearly $5 billion out of the country.The situation is very different today. In September, foreign investors poured $7.1 billion into Indian stocks and bonds — a monthly record for foreign investment in India’s securities market. The major stock indexes appear poised to breach the highs that they set in early 2008, when many analysts first argued that fast-growth developing countries were “decoupling” from the developed world.Talk of decoupling is in the air again, especially here in India.The United States, along with much of Europe and Japan, may stay in the economic doldrums for some time. But many economists and policy makers here say that the problems in developed economies could benefit emerging nations like India, as Western hedge funds, banks and other investors hunt for growth opportunities.With an economic growth rate of nearly 9 percent and a stock market that is more open to foreign investors than mainland China’s, India has become a destination of choice for financial investors. In the first nine months of the year, foreigners invested $28.5 billion in Indian stocks and bonds — more than twice what they invested in the comparable period of 2009.The Sensex index, India’s equivalent of the Dow Jones industrial average, is up about 22 percent in the last 12 months and 114 percent since the end of 2008.On Wednesday the index closed up 2.4 percent, to 20,687.88 points, and is now less than one percentage point away from the record high set in January 2008.The Indian rupee has appreciated about 4 percent against the dollar so far this year.“The rest of the world is starved for growth,” said Manish Saini, an analyst and trader at Eastern Advisors, explaining why his New York-based hedge fund has increased investments in India and other emerging markets in the last year. “And India is still producing relatively high real rates of G.D.P. growth.”The strength of the market has been a boon for Indian companies, as well as the Indian government, which has been selling shares in state-owned firms. On Monday, it will start selling a 10 percent stake in Coal India, the world’s largest coal-mining company, in an initial public offering. The sale could fetch up to $3.4 billion.There are also plenty of skeptics, of course, who say that the Indian stock market may be getting dangerously frothy. And Indian individual investors, burned by the 2008 crash, have shown more wariness than foreign money managers.But foreign investors are moving money to emerging markets in part to take advantage of a growing gap between near-zero interest rates in the United States and Japan, and rising rates in India, Brazil and elsewhere. A key benchmark rate set by the Reserve Bank of India stands at 6 percent, up 1.25 percent since March. As the difference between rates grow, traders can make more money by borrowing cheaply in dollars and yen and investing that money in higher yielding stocks and bonds in developing economies.The Institute of International Finance, an association of financial firms, estimates that emerging markets will receive $825 billion in private capital flows this year, up from $581 billion in 2009.Some analyst and policy makers are increasingly worried about the torrent of cash flowing from developed to developing countries.In developed countries, the flows undercut the efforts of officials in Washington, Brussels and Tokyo to revive their economies by pumping money into the economy at low interest rates. And in developing countries, the flows threaten to raise the value of currencies, making their exports less competitive and potentially inflating bubbles in stock and real estate markets.Some Indian analysts say they fear that the increasing bullishness about developing nations is sending stocks here to dizzying heights that may not be justified, even in light of the country’s high growth rate, which some expect to slow somewhat in the coming months. Moreover, these people say investors appear to be ignoring the lessons of the recent financial crisis, which did not remain confined to the developed world.“There are fairly serious risks of frothiness in equity markets escalating if capital continues to pour into India,” said Eswar S. Prasad, an economics professor at Cornell. “We may be in the boom phase of a boom-bust cycle, with all the risks that entails.”Mr. Prasad, who has advised the Indian government on economic issues, says he worries that foreign investors in India could suddenly decide to withdraw their money, as they did in 2008, if the Indian economy slowed or if global markets were rattled by another crisis. That reversal could then pull down real economic growth in India by depriving the country of capital.In 2008, for example, India’s growth rate fell to 6.7 percent, from 9.2 percent, partly because foreign investors took billions of dollars out of Indian stocks and bonds and slowed down new investments. The slowdown severely hit real estate developers, airlines and other companies with large capital requirements.One big concern today is that the majority of the foreign money flooding into India is going into the stock market, rather than into new projects and start-up companies. While flows into the stock market have more than doubled, foreign direct investment into India fell more than 24 percent in the first seven months of the year, to $12.5 billion, compared with the comparable period a year earlier.Unlike holdings in the stock market, which can be sold quickly when traders in London or New York get nervous, direct investments in factories, stores and companies are harder to sell and are usually held for longer periods, economists say.Still, Indian officials, bankers and economists say they do not worry much about a repeat of 2008. Their optimism appears to be based in part on the belief that investors are unlikely to find better opportunities elsewhere in the world.India, these people say, is beginning a long period of high growth because its population is young and demanding more goods and services. The government is slowly beginning to improve infrastructure and further loosen control over the economy. And the financial system here is healthier than in Western countries, where banks still have many bad loans on their books.“If you look at the Indian opportunity, most things are going in its favor,” said Neeraj Swaroop, who heads Standard Chartered’s operations in India and South Asia. “And there aren’t too many real risks that we see around the corner.”Still, many Indians have become more cautious about the stock market. Individual investors, for instance, have not jumped at recent initial public offerings like that of SKS Microfinance, a lender to poor women that was very popular with institutional investors. By contrast, in early 2008, middle-class Indians clamored to buy public offerings like Reliance Power, an electricity firm that was relatively untested.Surjit S. Bhalla, an economist and fund manager based in New Delhi, said he recently downgraded his bullish outlook on the global economy, because of the dour news coming out of the United States, Europe and Japan. He is more hopeful about the Indian economy but said he believed that its stock market could fall 10 percent to 15 percent.“The Indian market rallied from last year on the expectations of broadly a V-shaped recovery, and it did obtain that,” said Mr. Bhalla, who is managing director of Oxus Research and Investments. “But when the V-shaped recovery became the prospect of a double-dip recession, it hasn’t corrected at all.”

Nano was born out of a doodle by Ratan Tata

Guess how 1 lakh ($2,200) car Nano was born? It took some idle doodling by Ratan Tata, head of the Tata Group of companies, at lifeless board meetings, says a book chronicling its making."It started by my spending a lot of time doodling at boring board meetings. Most of us are victims of the environment in which we are and...we lose sight of the fact that we have a greater responsibility - a responsibility to serve the communities we live in to improve the quality of life of people we work with," Ratan Tata recalled later at a gathering of Tata executives, according to the book "Small Wonder: The Making of Nano".Christabelle Noronha, who co-authored the book with Philip Chacko and Sujata Agarwal, says: "The Nano has been and remains essentially a product of Ratan Tata's imagination and his desire to recast the car as a means of affordable personal mobility for middle class India"."We had a strong feeling that the Nano story needed to be chronicled - that the story would be something that ordinary readers would be keen to know and understand," said Noronha."We had initially set out to publish the book for circulation within the Tata organisation. After this had happened, a fair bit of interest was expressed by publishing companies to take the book to a larger audience. That's when we decided to go public," Noronha said.The writers met more than 100 people from Tata Motors, including "engineers, dealers as well as Nano owners, before getting down to writing the book"."It took us a year to write the book. We began in April 2009," Noronha said.The writer said "one of the greatest plus points of Nano was to marry quality with affordability"."It has done this in a manner that is path-breaking and extraordinary. More than India needing a Nano, India deserves a Nano and a lot many breakthrough products of this kind. Creating this car has certainly been worth the effort," Noronha said."Nano has changed the rules of motoring business in more ways than one. It has shown that this country has the capability to be truly innovative in manufacturing," Noronha said."From what we gathered during the course of our research and interviews, the Nano project most certainly has been the highlight of the careers of the people involved in the making of the car," she added.Ratan Tata's initial doodle was to rebuild a car around a "scooter so that those using it could travel safer", says Noronha and colleagues in the book.He got in touch with an industry association and suggested a joint effort with Tata Motors "to fashion what he terms an Asian car: large volumes, many countries involved and different people producing different sets of parts."The response was tepid. "It was similar to what happened when Tata Motors wanted to make the Indica," the book said.Recalled Ratan Tata: "I remember people saying why doesn't Mr Tata produce a car that works before he talks about an Indian car."The book looks at the challenges, cost factor, the switch from Singur in West Bengal to Sanand in Gujarat, the first car and the world reaction. It also narrates the story and growth of Tata Motors in the process.Citing statistics, the book says there are some 600 million passenger cars on the world's roads today and the figure is strengthened by about 67 million new units every year.Not surprisingly, "the majority of these cars are in the developed world."The book, which will be launched later this month, has been published by Westland Ltd.

After Microsoft, AOL mulling bid for Yahoo: Report

Yahoo Inc.'s inability to snap out of a financial funk may be about to turn the embattled Internet company into a takeover target for the second time in less than three years.That possibility, floated in a story posted online late Wednesday by The Wall Street Journal, lifted Yahoo's shares by nearly 13 percent in Wednesday's after-hours trading.After snubbing a $47.5 billion buyout offer from the much larger Microsoft Corp. in 2008, Yahoo this time may find itself being courted by a smaller rival with its own problems, AOL Inc.If Yahoo gets another offer, it will likely be for considerably less than what the company could have gotten had it embraced Microsoft. Yahoo's market value now is less than $25 billion, even after factoring in the runup from the takeover speculation.Still, it appears AOL realizes it would need to bring in more financial muscle to get a deal done. The company, based in New York, is discussing the possible Yahoo offer with several firms that specialize in buying companies whose stocks have fallen out of favor, according to the Journal.The story identified Silver Lake Partners and Blackstone Group LP as two of the firms huddling with AOL. The Journal cited unnamed people familiar with the talks, which were described as preliminary.Yahoo hadn't been contacted by AOL or any of the other potential suitors, the Journal said.Both AOL and Yahoo declined to comment. Silver Lake and Blackstone didn't immediately return phone calls.Yahoo has been testing the patience of its shareholders for the past four years, as its financial performance flagged while the once-smaller Google Inc. blossomed into the Internet's most profitable company. More recently, Yahoo has been upstaged by rapidly growing Web hangouts such as Facebook and Twitter.Three different CEOs have tried to turn around Yahoo with little success. After former movie studio boss Terry Semel resigned under shareholder pressure in mid-2007, Yahoo co-founder Jerry Yang took over the helm and wound up spending much of his reign trying to fend off Microsoft's advances.While trying to thwart Microsoft, Yang discussed possible deals with AOL while it was still part of Time Warner Inc. and with News Corp., which owns in addition to The Wall Street Journal and the Fox television network.Microsoft finally withdrew its last offer of $33 per share in May 2008. Yahoo shares gained $1.97 in extended trading after finishing the regular session at $15.25, up 82 cents.Yahoo, which is based in Sunnyvale, promised better times when it brought in tough-talking Silicon Valley veteran Carol Bartz as CEO in January 2009, but she hasn't been able to spur revenue growth so far.Bartz has shaken things up by cutting costs, shutting down unprofitable services and negotiating an Internet search partnership with Microsoft.But some of her ideas and blunt comments seem to have alienated Yahoo's work force. The internal unrest has became more visible as other Yahoo top executives defect from the company.Some of Bartz's comments also may have ruffled some feathers at Alibaba Group, a Chinese Internet company in which Yahoo owns a 39 percent stake. If that's true, Alibaba CEO Jack Ma conceivably could help potential Yahoo bidders to finance a takeover by agreeing to buy back Yahoo's stake in his company after a deal is done.And if Yahoo shareholders or the company's board are tired of Bartz's leadership, selling to AOL would be one way of bringing in fresh face who is highly regarded in technology and media circles.AOL is run by Tim Armstrong, a former Google executive who is trying to feature more unique content on AOL in an effort to bring in more advertising revenue.Those efforts haven't done much yet. AOL's revenue fell 25 percent to $1.24 billion during the first half of this year. Yahoo's revenue increased 1 percentIf it were to buy Yahoo, AOL would gain access to one of the Internet's largest audiences as it tries to burnish its own brand.The specter of a possible takeover bid will likely intensify the interest in Yahoo's third-quarter earnings report due out next Tuesday. Analysts are already bracing for another round of lackluster results, and if that holds true, it could set the stage for an offer.Microsoft launched its unsolicited takeover bid in early 2008, just days after Yahoo announced a disappointing quarterly performance.

India wins United Nations Security Council seat

India on Tuesday became a non-permanent member of the United Nations Security Council (UNSC) winning the seat by an overwhelming majority.
India got 187 of the total 190 votes to win the seat, according to the Ministry of External Affairs (MEA) here.
External Affairs Minister S M Krishna thanked all the UN members for supporting India.
“India would continue to work with like-minded countries,” he said, adding that India would also work for reform in the UNSC.
With no competition from the Asia region, India was shoo-in for the seat.
After Kazakhstan pulled out from the competition this year, there was no challenger for India from the Asia region. India would hold the seat after a gap of 19 years.
Indian envoy to the UN, Hardeep Singh Puri, earlier said the BRIC (Brazil, Russia, India and China) nations in the UNSC can put up a united front on several issue.
In the absence of contest, South Africa and Brazil too are sure winners from Africa and Latin America respectively.
The voting was held to elect five of 10 non-permanent seats on the UNSC.
The UNSC is one of the principal organs of the United Nations and is charged with the maintenance of international peace and security.
There are 15 members of the Security Council, consisting of 5 veto-wielding permanent members (China, France, Russia, United Kingdom, and United States) and 10 elected non-permanent members with two-year terms.
Following is the statement of External Affairs Minister S M Krishna on India’s Election to UNSC
Good evening to all of you. I appreciate your presence here at this late hour in the evening.
I am happy to have this opportunity to inform you of India’s election as a non-permanent member of the United Nations Security Council for a period of two years beginning January 1, 2011. In the elections held at the United Nations Headquarters in New York a short while ago, India received 187 votes, the highest among the countries standing for election to the Security Council as non-permanent members. This represents over 98% of the total membership of the UN and is well ahead of the required 128 votes. This resounding endorsement of India’s candidature at the United Nations serves as a reaffirmation, if any were needed, of the overwhelming support that India enjoys in the international community. On behalf of the Government of India, I extend my sincere thanks to the overwhelming number of the UN Member States who have supported us.
India will take over the Asian seat in the Security Council vacated by Japan at the end of this year. It will re-enter the Security Council after an interregnum of nearly two decades.
There have been significant changes in the international scene since India last served on the Security Council. India has been integral to some of the important processes that induced these changes in the context of the financial and economic architecture, major shifts at the world trade and climate change negotiations as well as the recalibration of the global regime for civilian nuclear cooperation. The overwhelming support we have received is recognition of India’s contribution to these and other developments and, in turn, reflects the expectations of the international community from India. This support is also reflected in the formal endorsement for the UNSC non-permanent seat we received from the Asian Group in February 2010.
Let me now turn briefly to our priorities during our term in the UN Security Council.
The UN Security Council is at the centre of global politics. It is the principal organ of the United Nations entrusted with the maintenance of international peace and security. India’s traditional wisdom and desire to contribute to international peace and amity will result in our being the voice of moderation and constructive engagement in the decisions of the Security Council.
We live in a troubled neighbourhood. Our immediate priorities in the Council will include peace and stability in our near and extended neighbourhood, including Afghanistan, the Middle East and Africa, Counter-terrorism, including the prevention of the proliferation of weapons of mass destruction to non-state actors, and the strengthening UN peacekeeping.
It is of significance to note that, for the first time, the Security Council will witness the simultaneous presence of all BRIC [Brazil, Russia, India, China] and IBSA [India, Brazil, South Africa] countries, and three of the four G4 countries {India, Brazil and Germany}. The Council will also include a number of developing countries with which we have close ties as well as some of our global strategic partners.
India will also continue to work with like-minded countries and groups for bringing about much needed structural reform to the UN Security Council.
India offers a unique and unparalleled example of nation-building. We are willing to share our experience in nation-building with the world.
I have absolutely no doubt that we will utilize our tenure to provide a sense of satisfaction to all our partners and obtain their reaffirmation of the need for a permanent presence for India on the Security Council.
Membership of the UN Security Council, of course, entails higher responsibility. We will live up to that. India will also not only bring ability but add to the legitimacy of the Security Council and be pro-active on tackling the scourge of terrorism and strengthening the UN’s peacekeeping and peace-building efforts. We will demonstrate to the international community that India on the Security Council is good for the world.
As a founding member of the United Nations, India is fully committed to the principles and purposes of the UN. As the world’s largest democracy, a major contributor to UN peacekeeping operations, strong votary of the rights of developing countries, advocate for human rights and the rule of law, universal disarmament and respect for international law, voice of moderation and firm believer in the peaceful settlement of disputes, India has excellent credentials to serve on the UN Security Council. During its forthcoming term in the Security Council, India will discharge its obligations as a responsible member of the international community by remaining fully and actively engaged on all issues before the Council.

Kalam for adopting e-judiciary system

Former president Dr A P J Abdul Kalam said on Wednesday there was a need for adopting e-judiciary system in the country which will increase the efficiency of the various courts, ensure transparency and quicker disposal of cases. Kalam was speaking at the special convocation function of the National University of Advanced Legal Studies (NUALS) where he conferred honorary degree of Doctor of Laws (LLD) on former supreme court judge V R Krishna Iyer. The Supreme court should transform the present system into e-judiciary system, he said. The proposed action for connecting all the 15,000 courts in the country from the district court to apex court through a wide area network will further enhance the efficiency of the judicial system, he said. "At any time the complainant should be able to find out what stage of the case is ? In which court and on what date? And which subject will be dealt with by the court during a particular hearing, enabling the parties to be fully prepared for the case," he said.
This would bring in total transparency and the judges can also see how the case had progressed, how many adjournments had been sought, whether the grounds were trivial or serious and many such information which will make the delivery of justice impartial, he said

Across the US, long recovery looks like recession

In Atlanta, the Bank of America tower, the tallest in the Southeast, is nearly a fifth vacant, and bank officials just wrestled a rent cut from the developer. In Cherry Hill, N.J., 10 per cent of the houses on the market are so-called short sales, in which sellers ask for less than they owe lenders. And in Arizona, in sun-blasted desert subdivisions, owners speak of hours cut, jobs lost and meals at soup kitchens.Less than a month before November elections, the United States is mired in a grim New Normal that could last for years. That has policy makers, particularly the Federal Reserve, considering a range of ever more extreme measures, as noted in the minutes of its last meeting, released Tuesday. Call it recession or recovery, for tens of millions of Americans, there’s little difference.Born of a record financial collapse, this recession has been more severe than any since the Great Depression and has left an enormous oversupply of houses and office buildings and crippling debt. The decision last week by leading mortgage lenders to freeze foreclosures, and calls for a national moratorium, could cast a long shadow of uncertainty over banks and the housing market. Put simply, the national economy has fallen so far that it could take years to climb back.The math yields somber conclusions, with implications not just for this autumn’s elections but also — barring a policy surprise or economic upturn — for 2012 as well:* At the current rate of job creation, the nation would need nine more years to recapture the jobs lost during the recession. And that doesn’t even account for five million or six million jobs needed in that time to keep pace with an expanding population. Even top Obama officials concede the unemployment rate could climb higher still.* Median house prices have dropped 20 per cent since 2005. Given an inflation rate of about 2 per cent — a common forecast — it would take 13 years for housing prices to climb back to their peak, according to Allen L. Sinai, chief global economist at the consulting firm Decision Economics.* Commercial vacancies are soaring, and it could take a decade to absorb the excess in many of the largest cities. The vacancy rate, as of the end of June, stands at 21.4 per cent in Phoenix, 19.7 per cent in Las Vegas, 18.3 in Dallas/Fort Worth and 17.3 per cent in Atlanta, in each case higher than last year, according to the data firm CoStar Group.Demand is inert. Consumer confidence has tumbled as many are afraid or unable to spend. Families are still paying off — or walking away from — debt. Mark Zandi, chief economist of Moody’s Analytics, estimates it will be the end of 2011 before the amount of income that households pay in interest recedes to levels seen before the run-up. Credit card delinquencies are rising.“No wonder Americans are pessimistic and unhappy,” said Mr. Sinai. “The only way we are going to get in gear is to face up to the reality that we are entering a period of austerity.”This dreary accounting should not suggest a nation without strengths. Unemployment rates have come down from their peaks in swaths of the United States, from Vermont to Minnesota to Wisconsin. Port traffic has increased, and employers have created an average of 68,111 jobs a month this year.After plummeting in 2009, the stock market has spiraled up, buoying retirement accounts and perhaps the spirits of middle-class Americans. As a measure of economic health, though, that gain is overstated. Robert Reich, the former labor secretary, notes that the most profitable companies in the domestic stock indexes generate about 40 per cent of their revenue from abroad.Few doubt the American economy remains capable of electrifying growth, but few expect that any time soon. “We still have a lot of strengths, from a culture of entrepreneurship and venture capitalism, to flexible labor markets and attracting immigrants,” said Barry Eichengreen, an economist at the University of California, Berkeley. “But we’re going to be living with the overhang of our financial and debt problems for a long, long time to come.”New shocks could push the nation into another recession or deflation. “We are in a situation where our vulnerability to any new problem is great,” said Carmen M. Reinhart, a professor of economics at the University of Maryland.So troubles ripple outward, as lost jobs, unsold houses and empty offices weigh down the economy and upend lives. Struggles in Arizona, New Jersey and Georgia echo broadly.Florence, Ariz.In 2005, Arizona ranked, as usual, second nationally in job growth behind Nevada, its economy predicated on growth. The snowbirds came and construction boomed and land stretched endless and cheap. Then it stopped.This year, Arizona ranks 42nd in job growth. It has lost 287,000 jobs since the recession began, and the fall has been calamitous.Renee Wheaton, 38, sits in an old golf cart on the corner of Tangerine and Barley Roads in her subdivision in the desert, an hour south of Phoenix. Her next-door neighbor, an engineer, just lost his job. The man across the street is unemployed.Her family is not doing so well either. Her husband’s hours have been cut by 15 per cent, leaving her family of five behind on water and credit card bills — more or less on everything except the house and car payment. She teaches art, but that’s not much in demand.“I say to myself ‘This can’t be happening to us: We saved, we worked hard and we’re under tremendous stress,’ ” Ms. Wheaton says. “My husband is a very hard-working man but for the first time, he’s having real trouble.”Arizona’s poverty rate has jumped to 19.6 per cent, the second-highest in the nation after Mississippi. The Association of Arizona Food Banks says demand has nearly doubled in the last 18 months.Elliott D. Pollack, one of Arizona’s foremost economic forecasters, said: “You had an implosion of every sector needed to survive. That’s not going to get better fast.”To wander exurban Pinal County, which is where Florence is located, is to find that the unemployment rate tells just half the story. Everywhere, subdivisions sit in the desert, some half-built and some dreamy wisps, like the emerald green putting green sitting amid acres of scrub and cacti. Signs offer discounts, distress sales and rent with the first and second month free.Discounts do not help if your income is cut in half. Construction workers speak of stringing together 20-hour weeks with odd jobs, and a 45-year-old woman who was a real estate agent talks of her job making minimum wage bathing elderly patients. Many live close to the poverty line, without the conveniences they once took for granted. Pinal’s unemployment rate, like that of Arizona, stands at 9.7 per cent, but state officials say that the real rate rises closer to 20 per cent when part-timers and those who have stopped looking for work are added in.At an elementary school near Ms. Wheaton’s home, an expansion of the school’s water supply was under way until thieves sneaked in at night and tore the copper pipes out of the ground to sell for scrap.Five miles southwest, in Coolidge, a desert town within view of the distant Superstition Mountains, demand has tripled at Tom Hunt’s food pantry. Some days he runs out.Henry Alejandrez, 60, is a roofer who migrated from Texas looking for work. “It’s gotten real bad,” he says. “I’m a citizen, and you’re lucky if you get minimum wage.”Mary Sepeda, his sister, nods. She used to drive two hours to clean newly constructed homes before they were sold. That job evaporated with the housing market. (Arizona issued 62,500 housing permits several years ago; it gave out 8,400 last year.)“It’s getting crazy,” she says, holding up a white plastic bag of pantry food. “How does this end?”You put that question to Mr. Pollack, the forecaster. “We won’t recover until we absorb 80,000 empty houses and office buildings and people can borrow again,” he says.When will that be?“I’m forecasting recovery by 2013 to 2015,” he says.Cherry Hill, N.J.The housing market in this bedroom community just across the border from Philadelphia never leapt to the frenzied heights of Miami Beach or Las Vegas. But even if foreclosure notices are not tacked to every other door, a malaise has settled over the market. Home prices have fallen by 16 per cent since 2006, and houses now take twice as long to sell as they did five years ago.That’s enough to inflict pain on homeowners who need to sell because of a job loss or drop in income. Some are being forced to get rid of their houses in short sales, asking less than they owe on a mortgage. As of last week, 10 per cent of all listings in this well-tended suburb were being offered as short sales.Chrysanthemums bloomed in boxes on the porch of one of those homes as a real estate broker unlocked the front door. In the kitchen, children’s chores were listed neatly on an erasable white board. Dinner simmered in a Crock-Pot on the counter.There were few signs of the financial distress that prompted the owners to put their four-bedroom colonial on the market for less than they paid five years ago.The colonial’s owners, James and Patricia Furrow, bought near the top of the market in 2005 for $289,900. Mr. Furrow, 48, retired in July after 26 years as a corrections officer and supplements his pension with work as a handyman. But his income is spotty, and his wife, who works in a school cafeteria, does not earn enough to cover the mortgage on the house where they live with their three children.They have already missed a payment; they want to sell the house in hopes their lender will forgive the shortfall between their loan balance and the lower sale price. They are asking $279,900.“When we did buy, the market was still moving pretty good,” said Mr. Furrow. “Then it got to the point where people said it is not going to last. And of course it didn’t last.”Some of the homes being offered at distressed prices are dragging down prices for less troubled homeowners who hope to sell. And with foreclosures now in disarray, the market could be further weakened. “Even someone who is trying to sell a normal, well-maintained house is at the mercy of these low prices,” said Walter Bud Crane, an agent with Re/Max of Cherry Hill.So the houses sit, awaiting offers that rarely materialize. According to Mr. Crane, the average number of days that homes sit on the market has nearly doubled, to 62 this year from 32 in 2005. Buyers are chary, not sure if their jobs are secure. Open houses draw sparse crowds.In Camden County, where Cherry Hill sits, unemployment is near 10 per cent. Several large employers have closed or conducted huge layoffs, and others have pruned hours. With Gov. Chris Christie reining in spending, government workers are jittery.Real estate agents say it has rarely been a better time to buy: interest rates are at record lows, house prices have fallen and the selection is large.Tara Stewart-Becker, a 28-year-old financial services manager, said she and her husband would love to buy a sprawling fixer-upper just three blocks from the narrow colonial they purchased four years ago in Riverton, which backs onto the Delaware River.But a bad kitchen flood and a loan to pay for repairs has left Ms. Becker and her husband, Eric, owing more on their mortgage than the house is currently worth. Even though the couple make far more money than they did when they bought their house and could afford a larger loan and renovations, they cannot sell.“I would gladly take a new mortgage and stimulate the economy for the rest of my life,” Ms. Becker said.“Unfortunately, there isn’t anything that a government or a bank can do,” she added. “You just have to settle for less and wait.”AtlantaLong fast-growing, no-holds-barred Atlanta has burned to the ground before, figuratively and in reality, and each time it was a phoenix rising. But this recession has cut deeper than any since the Great Depression and left Atlanta’s commercial and high-end condo real estate in an economic coma.Over all, assuming a robust growth rate, industry leaders say it could take 12 years for Atlanta to absorb excess commercial space.“That one — see it?” Alan Wexler points to a gleaming blue tower as he drives. “A Chicago bank took it over six months ago. Sold at a 40 per cent discount.”“And over there” — he juts his chin at a boarded-up hotel topped by a Chick-fil-A fast-food restaurant crown. “That was going to be a condo. They just shut it down and walked away.”Mr. Wexler, a wiry and peripatetic real estate data analyst, describes it all on a drive down Peachtree Road, Atlanta’s posh commercial spine.He starts in the Buckhead neighborhood, which has more than two million square feet of vacant commercial space. A billboard outside one discounted condo tower promises “New Pricing from the $290s!” There are towers half-empty and towers in receivership. Office buildings that once sold for $85 million now retail for $35 million.Approaching downtown, Mr. Wexler hits the brakes and points to an older, white marble building. “See that one? It’s the Fed Reserve. That’s where they sit, look, sweat and wonder: How did we get into this mess?”That’s a question much on the minds and lips of residents.The commercial vacancy rate in Buckhead is near 20 per cent, and the Atlanta region has added jobs only at the low end.Mike Alexander, research division chief for the Atlanta Regional Commission, posed the question: “When do we start to add premium jobs again?”Lawrence L. Gellerstedt III, chief executive of Cousins Properties, sits in an office high atop an elegant Philip Johnson tower, with a grand view of the Atlanta commercial corridor running north. He does not see improvement on the horizon.“We’re all wondering what gets the economy producing jobs and growth again,” he says. “Atlanta always was the fair-haired child of real estate growth and now, it’s ‘O.K., poster boy, you’re getting yours.’ ”Small banks are a particular disaster, 43 having gone under in Georgia since 2008. (Federal regulators closed 129 nationally this year, up from 25 last year.) Real estate was the beginning, the middle and the end of the troubles. In one deal, dozens of Atlanta banks invested in Merrill Ranch, a 4,508-acre tract of desert south of Phoenix.The deal imploded and took a lot of banks with it.“No one was demanding documents or reading the fine print, and mortgage banks were fat and happy,” recalls John Little, a developer. “Well, that train couldn’t keep running.”He has a ringside seat on this debacle, as he sits in the office of a handsome condo complex he built in west Atlanta. He faced price discounts so deep that he decided to rent it instead.Nationwide banks have no interest in lending to local developers, and the regional banks are desperate for cash and calling in their loans.Mr. Little got lucky; he bought out his loan and kept his property. “Most of my generation of builders has gone under,” he said. “It’s still spiraling out of control.”

Monday, October 11, 2010

India set for non-permanent seat at United Nations Security Council

After a 19-year gap, India looks all set to get a seat on the United Nations Security Council (UNSC) as a non-permanent member. New Delhi hopes that this will eventually lead to larger UN reform and the big one: A permanent seat.The UNSC is the UN's main decision making body with 15 members. That includes five permanent members with veto power: The US, China, France, Russia and Britain. In Tuesday's vote five of 10 non-permanent seats have to be filled.Each seat on the council is reserved for a region - like Asia, Western Europe, Latin America. And with no other challenger from the Asia region after Kazakhistan pulled out earlier this year, India is a shoo-in.Indian diplomats led personally by Foreign Minister SM Krishna have been lobbying hard for the past three years. To win India needs two-thirds of the General Assembly vote, which adds up to 128.
India's last stint on the Security Council was in 1992.The UNSC's main responsibility is peacekeeping and international security, but reform and a push for a permanent seat for India will be big on India's agenda when US President Barack Obama visits next month.

Body sensing comes to smartphone

Sensor technology has become smaller, lighter and more powerful. At the same time, more attention is being paid to preventive health and personal fitness as an answer to the nation’s rising medical bills.A result, for sensor companies like BodyMedia, is an opportunity to marry body sensors to smartphones to create full-body monitors. Last week, BodyMedia announced that its armband sensors would be able to communicate with smartphones, wirelessly, using Bluetooth. Its health sensors will be one of the first devices, other than ear buds, that link to smartphones with Bluetooth short-range communications.John Stivoric, chief technology officer, says the company has been working closely with Apple and Google, to develop its smartphone application. It opens the door to allowing a person to monitor a collection of the 9,000 variables — physical activity, calories burned, body heat, sleep efficiency and others — collected by the sensors in a BodyMedia armband in real-time, as the day goes on.In the past, BodyMedia users had to consult personal data downloaded to a Web site or observe a few measurements on special watchband display, sold for $100.The smartphone, though, is full-fledged computer in hand. “It’s a dashboard for the human body, a great viewer into what your body is doing on the fly,” said Mr. Stivoric, the last of the four founders with a day-to-day role at BodyMedia.BodyMedia, based in Pittsburgh, has long been a cool yet ahead-of-its-time company. It was founded in 1999 by four researchers at Carnegie Mellon University. Three were affiliated with the Mobile and Wearable Computing Lab at the university, and the fourth was an artificial intelligence expert.The start-up came out with body-monitoring products when the state of the art — in the consumer marketplace at least — wasn’t much more than pedometers. BodyMedia was a darling at health and technology conferences, held up as a glimpse of the future. But it struggled as a business, since its offerings seemed a bit too big and a bit too costly for the mainstream consumer.But things may be changing for BodyMedia and similar companies, according to analysts.The Bluetooth-enabled armband costs $249 and the BodyMedia data service costs $7 a month, when purchased in an annual subscription. The new offerings go on sale next month, at the company’s Web site, and at Amazon.To date, BodyMedia has sold mostly to consumers in the United States, including as an offering through health clubs. In Europe, it has been used for clinical applications.Potential new markets, analysts say, include diabetes management and corporate wellness programs, where a number of health service companies have sprung up, including RedBrick Health, Virgin HealthMiles and Tangerine Wellness.“BodyMedia has been at it a long time, learned a lot and has accumulated a lot of intellectual property,” said Rob McCray, chief executive of the Wireless-Life Sciences Alliance, a trade organization for mobile health companies. “And this market is real now.”Body sensor computing holds its original appeal for the computer scientist on the founding team. The body is a data source, to be collected and analyzed. “Artificial intelligence is about digging through big data sets to find meaning,” said Astro Teller, who later founded a hedge fund management company, which uses AI techniques, and recently joined Google.In health care, that means using data to make “better personal and policy choices,” said Mr. Teller, who is chairman of BodyMedia.

Wednesday, October 6, 2010

Global economy gaining, US growth slowing: IMF

The global economy will likely strengthen the rest of this year and in 2011 as China and other emerging powers offset weakness in the United States and Europe.That's the latest outlook of the International Monetary Fund, which predicts the world economy will expand 4.8 per cent this year and 4.2 per cent next year. That would far surpass last year's 0.6 per cent decline, the worst since World War II. The IMF's forecast for worldwide growth this year is 0.2 per centage point more than its previous estimate in July.The international lending agency predicts the US economy will grow 2.6 per cent this year, below its previous estimate of 3.3 per cent, and 2.3 per cent next year.The IMF's forecast, released Wednesday, points to lingering weakness in the United States and Europe after the worst recession since the Great Depression.The agency says the global economy will require a balancing act: Countries with huge trade and budget deficits such as the United States will need to boost exports. And countries with big trade surpluses such as China must reduce their dependency on exports and boost domestic demand.The IMF forecast was prepared for the annual fall meetings of the 187-nation IMF and its sister lending organization, the World Bank. Finance officials from the Group of 20, representing the world's richest nations and fast-growing developing countries, are scheduled to hold talks Friday.Obama administration officials said they planned to press other G-20 countries such as China to honor commitments they've made to reduce their huge trade surpluses, which come at the expense of other countries. Such trade imbalances contributed to the global downturn.The prediction of 2.6 per cent growth for the United States this year is historically weak coming after a recession. But it marks a sharp reversal from the 2.6 per cent decline in US activity last year. That was the steepest drop since 1946. The US forecast is down from a 3.3 per cent projection the IMF made in July.But the US economy slowed sharply in late spring and summer this year as the European debt crisis shook the confidence of investors and businesses. The IMF's forecast of 2.3 per cent US growth for 2011 is down from its 3 per cent estimate in July.Growth prospects are even weaker in Europe. The 16 nations that use the common euro currency will see their economies average 1.7 per cent growth this year and 1.5 per cent next year, the IMF says. Still, both those forecasts are upgrades from July, following a debt crisis that began in Greece and had threatened to widen throughout Europe.Growth in Japan is projected to be 2.8 per cent in 2010 and 1.5 per cent in 2011. Its 2011 estimate was trimmed because Japan is still struggling to emerge from nearly two decades of anemic growth.Combined, advanced economies such as the United States and Europe are forecast to grow 2.7 per cent this year and 2.2 per cent next year.By contrast, emerging and developing economies such as those in China, Russia, Eastern Europe and Latin America, are expected to expand 7.1 per cent this year and 6.4 per cent in 2011 — more than double the growth rates of the advanced economies.Leading the growth surge is China, the world's second-largest economy. Growth in China is forecast to be 10.5 per cent this year and 9.6 per cent next year. Brazil's economy is expected to grow 7.5 per cent this year before slowing to 4.1 per cent next year.The IMF said the recovery from the recession remains vulnerable to threats, including soaring budget deficits in many nations. It says credible plans to cut deficits are urgently needed.The IMF's latest World Economic Outlook indicates that more than 210 million people across the globe are unemployed. That's an increase of more than 30 million since 2007 before the recession began.For the global economy to continue growing, the IMF said advanced economies such as the United States will need to see stronger spending by consumers and growth in exports.The administration has intensified its criticism of China over its currency. Washington contends that Beijing must move faster to allow the yuan to rise in value against the dollar. American manufacturers contend that the yuan is undervalued by up to 40 per cent, giving Chinese producers a big price edge over US companies.A senior Treasury Department official told reporters Tuesday that the need to reform currency policies would be a big part of the discussions. The official spoke on condition of anonymity to discuss US positions in advance of the meetings.The House, before adjourning for the midterm elections, approved legislation to impose economic sanctions on countries such as China that are found to have manipulated currencies to gain trade advantages. The Senate is unlikely to approve the measure this year. But House passage might give the administration more leverage with China on the currency issue.Lawmakers are under pressure to act at a time of high unemployment in the United States. More than 8 million people lost their jobs during the last recession, and the unemployment rate remains stuck near double-digit levels.

Tuesday, October 5, 2010

US in fight for future with India, China: Obama

Weeks ahead of his trip to India, US President Barack Obama has said America is in fight for future with countries like India and China who are spending massively on education, while his country has been cutting its budget on the sector."Think about it. China isn't slashing education by 20 per cent right now. India is not slashing education by 20 per cent. We are in a fight for the future - a fight that depends on education," Obama said in his remarks at a White House Summit on Community Colleges."Cutting aid for 8 million students, or scaling back our commitment to community colleges, that's like unilaterally disarming our troops right as they head to the frontlines," he said.Obama said he strongly disagrees with the economic plan that was released last week by the Republican leaders in Congress, which would actually cut education by 20 per cent.

"It would reduce or eliminate financial aid for 8 million college students. And it would leave community colleges without the resources they need to meet the goals we've talked about today," he argued."Instead, this money would help pay for a USD 700 billion tax cut that only 2 per cent of the wealthiest Americans would ever see - an average of USD 100,000 for every millionaire and billionaire in the country. And that just doesn't make sense - not for students, not for our economy," he observed."We can't accept less investment in our young people if our country is going to move forward. It would mean giving up on the promise of so many people who might not be able to pursue an education, like the millions of students at community colleges across this country," Obama said.The US President announced that the Gates Foundation is starting a new five-year initiative to raise community college graduation rates."This is critically important because more than half of those who enter community colleges fail to either earn a two-year degree or transfer to a earn a four-year degree. So we want to thank Melinda Gates for that terrific contribution," he said."The Aspen Institute and several leading foundations are launching a competitive prize for community college excellence. It's going to shine a spotlight on community colleges delivering truly exceptional results - places that often don't get a lot of attention, but make a tremendous difference in their students' lives," Obama said."So we're investing in community colleges. We're making college more affordable. Were bringing together businesses, nonprofits and schools to train folks for the jobs of a new century. Now, all of this will help ensure that we continue to lead the global economy - but only if we maintain this commitment to education that's always been central to our success," he said.