ZoneAsia-Pk: 100 billion dollars in a wink!

By Enum Naseer
ZoneAsia-Pk

The country is passing through a decisive period in history and this time, it’s not a false alarm- it’s a make or break situation. What is trifling in the current context is that the economy (according to Gallup Pakistan) gets only 6% of on-air time in talk shows. It is generally posited that talking about the economy can be a dry, even boring exercise for audiences that have in recent years found the sensationalism in mainstream talk shows addictive and that a discussion of the economy should be reserved for Sunday brunches in elite circles is very telling. Even though there is little point in asserting the all-pervasive effects of economic policies and its ubiquitous shadow in the daily troubles of the average Joe, it is needed. If the people don’t take interest and if the debate becomes an elitist pastime, what incentive is there for governments today and in the future, to awaken from their catatonic stupor?

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Pakistan in 2012: A year in review

The year 2012 was no less tumultuous for Pakistan than any other year. Starting from the Supreme Court and former premier Gilani at loggerheads to the return of Tahirul Qadri’s (untimely) arrival on the political scene, Pakistan has seen a healthy share of ups and downs this year. NATO supply routes were resumed, terrorism continued, Metro Bus project was initiated – it is difficult to remember when one event ended and the other began. For the purpose of simplification and to refresh the previous year, Spearhead Research put together a year in review, a compilation of all important news Pakistan saw.

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‘New’ Muslim League: 21 Gun Salute To Pakistan’s Old And Tired Politicians

HARRISS KHAN

• The old lot uniting again to produce the sequel to the same flop movie which they have been producing since day one
• Out of 180 million Pakistanis, 25 are playing musical chairs with this great nation

All of them deserve 21 gun salutes for being in their late 60s and 70s with hardly any level of energy left in them but still obsessed with the self-exaggerated notion that they are the only ones who can lead this brave nation out of crises.

ISLAMABAD, Pakistan-Leadership has to be a blend of mental stamina and zeal. If we search for leaders from history who led their people out of despondency and into glory, one striking commonality to all of them is that they were passionate about their causes and mature enough to transform them into reality.

Adolf Hitler says, ‘There are two types of people in politics: political philosophers and practical politicians. Former the marathon runners of history and latter the brow of a dying hero.”

Millions of Pakistanis saw old, dejected, time-tested and failed politicians or ‘leaders’ a few days ago trying to create yet another Muslim League named, Muttahida Muslim League, MML, under the chairmanship of Syed Ali Mardan Shah, known as Pir Sahib Pagara. Not surprisingly they repeated the same rhetoric as they have been doing throughout their lives, namely, ‘Let’s join hands to steer Pakistan out of crises and bring prosperity to our motherland.’

If one does the anatomy of each one of the upbeat leading members of MML, a horrifying conclusion pops up. And that is: They’re all in to save their political careers. It’s a marriage of convenience.

They all have been clinging to prominent posts in Pakistan throughout our 63 years of Independence and hardly have they come up with anything workable in the fields of domestic politics, economy, foreign and defense policy.

All of them deserve 21 gun salutes for being in their late 60s and 70s with hardly any level of energy left in them but still having the obsession with the self-exaggerated notion that they are the only ones who can lead this brave nation out of crises. Reading their minds, I can’t help but compare them to former U.S president Ronald Reagan. When Reagan became the president at the age of 71, he said, ‘Life starts after 70.’ But we know what Reagan did to the US.

One wonders who is responsible for the mess we are in at this critical juncture of time. If not them, then who? The youth of Pakistan, which comprises 70% of the population, is bewildered as there is no one to answer the aforementioned question. They see this League as the old lot uniting again to produce the sequel to the same flop movie which they have been producing since day one.

If these prominent figures were so serious about Pakistan then they should have unleashed some new faces [not their sons and daughters, please] and said, “Here are some of the new guns who would be leading from the front, and we would support them with our experience.”

It’s so strange that out of 180 million people we come across only 25 politicians who play musical chairs with one another and befool the ordinary people like us again and again. Why?

We see them every day, sitting with some ‘TV pseudo intellectuals’, where they utter such disjointed thoughts that one can hardly hold back laughter.

Are we short of upright, inspiring and level-head-over-the-shoulder type of lot? Or such compatriots of ours have given up? Sigh!

To sum it up, Pakistani nationalists have to come forward to apply breaks to this lot that enters into marriages of convenience when it suits them and parts ways when their pity personal interests collide.

Pakistan Paindabad.

India’s Bureaucracy Shame

By Shreyasi Singh

The wise say we shouldn’t repeat mistakes. Clearly, it’s not an adage that applies where the Indian bureaucracy is concerned. In the last ten days since I wrote about my recent frustrations with our bureaucracy when trying to get my passport renewed, two reports have validated the point I drew from my experience.

Flickr / Sarahptor

A survey carried out by The Political And Economic Risk Consultancy, a Hong Kong-based firm, has found bureaucracy in India to be the most ‘stifling in the world’. The survey included questions to 1300 business executives across 12 Asian countries, and on a scale where 10 was the worst score possible, India clocked a shameful 9.41.

Six Billion Rupees, Three Bureaucrats, One Government Department and No Electricity

A report by Xavia

Energy is the politics of today. What happens tomorrow is dictated by energy demand of today. Energy is the real blood pumping through the hearts of today’s economies. Just as a stoppage in the flow of blood would be fatal, a blockage in the flow of energy would devastate any economy.

Movers and shakers of the world have realized that energy demands must be meant to keep the status-quo in status-quo. As a result associations and networks have established, over the last few decades, which not only keep the status-quo as status-quo but have learnt of devious ways to maximize their personal profits. These networks operate at all levels, international, national and regional. Here we are going to disclose the workings of such a network, which operated for a relatively short period – only four years – but left a terrible impact on the economy of Pakistan.

The Alternative Energy Development Board

Alternative Energy Development Board (AEDB) was established in May 2003 with the main objective to facilitate, promote and encourage development of Renewable Energy in Pakistan with a mission to introduce Alternative/Renewable Energy at an accelerated rate to achieve 10% share of renewable energy in the energy mix of the country. Since its creation the Board has carried out following projects:

Pakistan, US seek ‘wide-ranging, long-term’ strategic partnership

* Policy Steering Group established to intensify, expand sectoral dialogue process in economy, trade, energy, defence, security
* US to improve market access for Pakistani goods
* Islamabad, Washington agree to discuss investment treaty to stimulate investment in Pakistan

WASHINGTON: The US on Thursday pledged to work to improve market access for Pakistani goods, as the two nations sought to turn the page on years of distrust.

Pakistan and the US said they would seek a “wide-ranging, long-term and substantive strategic partnership” after two days of talks led by US Secretary of State Hillary Clinton and Foreign Minister Shah Mehmood Qureshi.

In the joint statement, the US said it was “committed to work towards enhanced market access for Pakistani products as well as towards the early finalisation of Reconstruction Opportunity Zones (ROZ) legislation”.

Private Chinese firms don’t get bank loans? Think again

December 11th, 2009

Author: GE Anderson, UCLA

Just when you think you have it all figured out. The Bank of China, one of China’s Big Four state-owned banks, has been busy funding auto companies this week.

The Bank announced this week that it has approved a 20 billion yuan ($2.9 billion) line of credit for Beijing Auto Industry Holding Corp (BAIC). Some are speculating that this money may be used by BAIC in its continued pursuit of an overseas purchase, most likely Saab, or at least some of its assets.

BAIC is owned by the local Beijing government, so the fact that Bank of China is providing funds should not come as a big surprise. Bank of China and BAIC are both state-owned.

But BAIC is not the only Chinese auto company to get funding from Bank of China this week.

The Bank also announced that it will be providing a 15 billion yuan ($2.2 billion) line of credit to BYD, a private auto firm based in Shenzhen. (Announcement here in Chinese.) BYD, which is listed on the Hong Kong stock market, was made famous earlier this year because of an strategic investment by one of Warren Buffet’s companies.

Though BYD did not confirm this, apparently the lending facility will be used to support BYD’s R&D efforts in new energy vehicles and solar power generation.

This bit of news runs contrary to the story we always hear about private Chinese companies having difficulty getting financing. The biggest and strongest banks in China are, by design, state-owned, and therefore, the logic goes, they are only interested in supporting state-owned enterprises.

While China’s government wants its state-owned banks to be profitable, and is happy to boast about it when they are, these banks, like any SOEs are tools of the state. They will be used to serve the ultimate interests of the state. In this particular case, I am guessing that it is in the interests of the central government to demonstrate their commitment to research and development in the area of new energy vehicles just prior to the Copenhagen summit.

While BYD has yet to put anything close to a significant number of its hybrid or pure electric vehicles on the road, they are, among all Chinese companies, probably the furthest along in development.

Article originally appeared at GE Anderson’s ChinaBizGov website. GE Anderson is a China specialist, former CFO, and PhD Candidate in Political Science at UCLA. Research focuses on state-owned enterprises, corporate governance and China’s auto industry.

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Obama looking at all options for creating jobs

By DOUGLASS K. DANIEL, Associated Press Writer Douglass K. Daniel

WASHINGTON – President Barack Obama is considering all options to create jobs, including another stimulus package, while trying to pull the economy out of a deep recession and deal with a record deficit, White House advisers said Sunday.

Detroit residents, right, pick up forms to apply for federal stimulus funds at Cobo Center in Detroit, Wednesday, Oct. 7, 2009. Scuffles erupted and several people were treated for fainting and exhaustion as thousands of Detroit residents tried to apply for free federal money. (AP Photo/Carlos Osorio)

With more than half of the $787 billion recovery package yet to be spent, Obama aides said the administration is not ready to commit to additional measures.

“Everything is on the table,” senior adviser Valerie Jarrett said.

“You’ve got this huge national deficit and we’ve got to do what we can to bring that down. At the same time, it’s important to stimulate the economy,” Jarrett said. “Let’s wait and see. Let’s let the recovery bill do its job.”

Unemployment stands at 9.8 percent, with more than 4 million jobs lost this year. The deficit has reached $1.4 trillion and the national debt $11.9 trillion.

Adviser David Axelrod cited progress on reviving the economy, with expectations for growth in the third quarter this year. But he warned that the government should not make the mistake of ending its recovery initiatives too early at the risk of sending the economy back into recession.

“That doesn’t mean that we don’t look to the mid- and long-term for deficit reduction,” Axelrod said. “We have a stimulus program in place, an economic recovery program in place, that is not even 50 percent through. We have to see that through. And we’ll see what other measures we need to take.”

In appearances on the Sunday news programs, the advisers criticized those Wall Street firms that are paying huge amounts in compensation and benefits after accepting taxpayer assistance. Goldman Sachs , for example, has said it has set aside $16.7 billion for compensation so far this year, more than $500,000 per employee. Citigroup is paying $5.3 billion in bonuses to its employees and Bank of America $3.3 billion.

“I think the American people have a right to be frustrated and angry,” said Rahm Emanuel , the White House chief of staff .

Emanuel and the chairman of the Senate Banking, Housing and Urban Affairs Committee, Sen. Chris Dodd , D-Conn., said the compensation issue comes as banks and other financial institutions oppose efforts by the president and Congress to put in place regulations designed to prevent the kind of financial meltdown that began last year.

“They have a responsibility to the whole system,” Emanuel said. “And it starts with not fighting the financial regulatory system and the reforms that are necessary to protect consumers, homeowners and others.”

Dodd criticized banks for failing to make more credit available to small businesses and others.

“When you see these bonuses being paid out, it’s a source of outrage in the country, and it should be. What are these people thinking about at these companies?” he said.

Dodd said he hopes that Kenneth Feinberg , the Treasury Department’s point man on compensation, can take action that will lead the firms to reconsider their compensation plans.

Sen. Judd Gregg of New Hampshire , the ranking Republican on the Senate Budget Committee, said he believes procedural differences holding up an extension of unemployment benefits will be resolved soon. He said a way to cover an extension without adding to the deficit has been determined, but he offered no specifics.

Gregg said the latest deficit figures are evidence of “growing the government too much.”

“This deficit is driven by us. I mean, you talk about systemic risk . The systemic risk today is the Congress of the United States,” he said. “We’re creating these massive debts which we’re passing on to our children. We’re going to undermine fundamentally the quality of life for our children by doing this.”

Jarrett and Dodd appeared on NBC’s “Meet the Press,” Axelrod on ABC’s “This Week,” and Emanuel and Gregg on CNN’s “State of the Union .”

Reviving the Local Economy With Publicly Owned Banks

State and local leaders are considering creating publicly owned banks that can funnel credit to where it is needed most: directly into the local economy.

Ellen H Brown

The credit crunch is getting worse on Main Street, despite a Wall Street bailout now in the trillions of dollars. The Federal Reserve’s charts show that “base money” is rapidly expanding-meaning coins, paper money, and commercial banks’ reserves with the central bank. But the money isn’t getting where it needs to go to stimulate economic growth: into the bank accounts of American businesses and consumers. The Fed has been pumping out money to the banks, and their reserves have been growing at unprecedented rates, but the money supply in the real economy has been declining.

According to Ambrose Evans-Pritchard , writing last month in the UK Telegraph, U.S. bank credit and M3 (the broadest measure of the money supply) contracted over the summer at rates comparable to the onset of the Great Depression. In the summer quarter, U.S. bank loans fell at an annual pace of almost 14 percent. “There has been nothing like this in the USA since the 1930s,” said Professor Tim Congdon of International Monetary Research. “The rapid destruction of money balances is madness.”

Chartered banks are allowed to create credit on their books equal to many times their deposit base, but lately they haven’t been doing it. In more normal times, one dollar in base money has been fanned by the banks into $8.50 in loans. Today, one dollar in base money produces only one dollar in loans. Although the Fed has been frantically pushing cash into the banks, it can’t make them lend to consumers.

This is not because the banks are trying to be difficult. If they had prudent loans on which to turn a profit and the capital base to do it, they no doubt would. But their books have been choked with toxic assets, destroying their capital positions; and the “shadow lenders” who once took subprime loans off their books have gotten wise to the scam and gone away. Bankers who know the endangered state of their own books don’t trust each other, so money is tight all around. And the Fed has already dropped interest rates as low as they can go, so it has no more leverage with which to entice borrowers.

Local Government to the Rescue?

The Fed may have played all its cards, but state and local governments still hold a few aces . Some local politicians are looking into the feasibility of opening their own publicly-owned banks, providing them with their own credit machines. A new publicly owned bank would have a clean set of books, untainted by the Wall Street addiction to gambling in complex derivatives; and its profits would go back to the local government and community, rather than being siphoned off in exorbitant salaries, bonuses, and dividends. A publicly-owned bank could funnel credit where it is needed most, directly into the local economy.

One legislator who is considering a publicly-owned bank is Bruno Barreiro, County Commissioner for Miami-Dade County in Florida. In a September 23 article titled “Capital Sources: Recession Steers Banks Away from Business as Usual”, The Daily Business Review reported that Miami-Dade is planning to conduct a feasibility study proposing alternatives for becoming its own depository. Said the journal:

“Barreiro notes that throughout the year, a portion of the county’s $7.5 billion operating budget is deposited with outside financial institutions in return for an interest rate. However, he feels that given the instability of many banks, the county might be better off going into such a business on its own.”

Brian Bandell, writing in The South Florida Business Journal on September 11, reported that Barreiro is concerned that bank accounts are insured by the FDIC for only up to $250,000. The county often has over $50 million in a single account. If the county were to open its own depository institution, it could safeguard against these losses.

However, said Bandell, Barreiro is not proposing to allow the institution to make loans. Rather, the state’s money would be invested conservatively in Treasury bonds. The problem with that approach, said Miami banking analyst Kenneth Thomas, is that it would be a challenge to get good interest rates for the county’s deposits without making loans. “There’s a reason most other municipalities aren’t doing it,” he said.

In stopping short of making loans, the county could be missing a major business opportunity. The average interest rate on U.S. government bonds is currently 3.35 percent. If the funds in Miami-Dade’s operating budget were deposited in the county’s own bank, the money could serve as a reserve fund to support at least nine times that sum in loans. Assuming an average interest rate of 5 percent on these loans, the county could increase its revenues by over 1,000 percent (earning 45 percent interest instead of 3.35 percent). [A fuller explanation and references are available here .]

Maximizing the Potential of a Publicly-owned Bank

Economist Farid Khavari, a Democratic candidate for governor of Florida in 2010, is proposing a Bank of the State of Florida (BSF) that would take full advantage of the potential of a bank charter. It would not only act as a depository for the state’s funds but would actually make loans to Floridians at much lower interest rates than they are getting now. Among other benefits, the BSF could open up frozen credit markets, save homeowners many thousands of dollars in payments, produce major revenues for the state, and allow the state’s own debts to be refinanced at much lower rates. All those benefits are possible, says Khavari, because of the “fractional reserve” banking system used by all banks when they make loans. As he explained in a July 29 article in Reuters:

“Using the fractional reserve regulations that govern all banks, we can earn billions per year for Florida’s treasury, while saving thousands of dollars per year for Florida homeowners…For $100 in deposits, a bank can create $900 in new money by making loans. So, the BSF can pay 6% for CDs, and make mortgage loans at 2 percent. For $6 per year in interest paid out, the BSF can earn $18 by lending $900 at 2 percent for mortgages.

“The BSF can be started at no cost to taxpayers, and will be a permanent engine driving Florida’s economy. We can refinance state and local projects at 3 percent, saving taxpayers billions and balancing state and local budgets without higher taxes.”

The state would earn $15,000 per $100,000 of mortgage, at a cost of about $1,700; the homeowner would save $88,000 in interest and pay for the home 15 years sooner. “Our bank will save people about seven years of their pay over the course of 30 years, just on interest costs,” Khavari said. “We should work to support ourselves and our families, not the banks…What we have now…makes everyone work for a few greedy fat cats.”

Earlier Models

This sort of healthy public competition for the private banking monopoly has earlier precedents, going back to the colony of Pennsylvania in Benjamin Franklin’s day. Before Pennsylvania founded its own bank, the province was having difficulty attracting settlers, because there was a shortage of money with which to conduct trade. The settlers could get credit only by borrowing from British bankers at a hefty 8% interest, and even those loans were hard to come by. The provincial government then got the bright idea of printing its own paper money and lending it to the farmers at 5% interest. When credit became cheaper and more freely available, the local economy flourished.

The only state that owns its own bank today is North Dakota. North Dakota is also one of only two states (along with Montana) on track to meet their budgets by 2010. It currently has the lowest unemployment rate in the country and the largest budget surplus it has ever had, tallying in at $1.3 billion. Why this cold and isolated farming state should be doing so well when other states are teetering on bankruptcy has been the subject of several TV commentaries, including a spoof by Conan O’Brien on NBC’s Tonight Show, which attributed it to theft from tourists by local farmers. But North Dakota’s real secret seems to be that it has escaped the Wall Street credit debacle. The state has generated its own credit through its own publicly-owned bank for nearly a century.

The Bank of North Dakota (BND) was founded in 1919, when a political party called the Non Partisan League succeeded in uniting farmers suffering from an earlier credit crisis. The BND’s website states that the bank was originally formed to create additional competition in the credit industry, while providing a local source of capital for state investment and development. The BND avoids opposition from other banks by partnering with them in loan projects. According to the bank’s website :

“The primary deposit base of the BND is the State of North Dakota. All state funds and funds of state institutions are deposited with the bank as required by law…Use of the banks’ earnings are at the discretion of the state legislature. As an agent of the state it can make subsidized loans to spur development…[It] underwrites municipal bonds for all of the political units in the state, and has been one of the leading banks in the nation in the number of student loans issued. The bank also serves as the state’s ‘Mini Fed’…As a result of the banks’ services, it enjoys widespread support among the public and the independent banking community.”

Bringing the Model Current

The private banking system is in systemic failure , and the public is waking up to the fact. We have been fleeced by Wall Street; banks are not providing loans; and our savings are no longer secure. The publicly owned Bank of North Dakota has provided an alternative model that has worked remarkably well for nearly a century.

The BND has been around for so long, however, that skeptics can write off the state’s remarkable success to other factors. A modern-day public bank that quickly turned its flagging local economy around could set a precedent that was irrefutable. If Florida were to establish a successful public banking model, it could blaze a trail out of the economic wilderness for local governments everywhere.

Opinion Maker, regularly publishes the papers of Ellen who has developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health: Non-toxic Dentistry (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com and www.ellenbrown.com .

Cities Deal With a Surge in Shantytowns

An encampment of tents under an overpass in Fresno.

By JESSE McKINLEY

FRESNO, Calif. – As the operations manager of an outreach center for the homeless here, Paul Stack is used to seeing people down on their luck. What he had never seen before was people living in tents and lean-tos on the railroad lot across from the center.

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Inside California’s Tent Cities

“They just popped up about 18 months ago,” Mr. Stack said. “One day it was empty. The next day, there were people living there.”

Like a dozen or so other cities across the nation, Fresno is dealing with an unhappy déjà vu: the arrival of modern-day Hoovervilles, illegal encampments of homeless people that are reminiscent, on a far smaller scale, of Depression-era shantytowns. At his news conference on Tuesday night, President Obama was asked directly about the tent cities and responded by saying that it was “not acceptable for children and families to be without a roof over their heads in a country as wealthy as ours.”

While encampments and street living have always been a part of the landscape in big cities like Los Angeles and New York, these new tent cities have taken root – or grown from smaller enclaves of the homeless as more people lose jobs and housing – in such disparate places as Nashville, Olympia, Wash., and St. Petersburg, Fla.

In Seattle, homeless residents in the city’s 100-person encampment call it Nickelsville, an unflattering reference to the mayor, Greg Nickels. A tent city in Sacramento prompted Gov. Arnold Schwarzenegger to announce a plan Wednesday to shift the entire 125-person encampment to a nearby fairground. That came after a recent visit by “The Oprah Winfrey Show” set off such a news media stampede that some fed-up homeless people complained of overexposure and said they just wanted to be left alone.

The problem in Fresno is different in that it is both chronic and largely outside the national limelight. Homelessness here has long been fed by the ups and downs in seasonal and subsistence jobs in agriculture, but now the recession has cast a wider net and drawn in hundreds of the newly homeless – from hitchhikers to truck drivers to electricians.

“These are able-bodied folks that did day labor, at minimum wage or better, who were previously able to house themselves based on their income,” said Michael Stoops, the executive director of the National Coalition for the Homeless, an advocacy group based in Washington.

The surging number of homeless people in Fresno, a city of 500,000 people, has been a surprise. City officials say they have three major encampments near downtown and smaller settlements along two highways. All told, as many 2,000 people are homeless here, according to Gregory Barfield, the city’s homeless prevention and policy manager, who said that drug use, prostitution and violence were all too common in the encampments.

“That’s all part of that underground economy,” Mr. Barfield said. “It’s what happens when a person is trying to survive.”

He said the city planned to begin “triage” on the encampments in the next several weeks, to determine how many people needed services and permanent housing. “We’re treating it like any other disaster area,” Mr. Barfield said.

Mr. Barfield took over his newly created position in January, after the county and city adopted a 10-year plan to address homelessness. A class-action lawsuit brought on behalf of homeless people against the city and the California Department of Transportation led to a $2.35 million settlement in 2008, making money available to about 350 residents who had had their belongings discarded in sweeps by the city.

The growing encampments led the city to place portable toilets and security guards near one area known as New Jack City, named after a dark and drug-filled 1991 movie. But that just attracted more homeless people.

“It was just kind of an invitation to move in,” said Mr. Stack, the outreach center manager.

On a recent afternoon, nobody seemed thrilled to be living in New Jack City, a filthy collection of rain- and wind-battered tents in a garbage-strewn lot. Several weary-looking residents sat on decaying sofas as a pair of pit bulls chained to a fence howled.

Northwest of New Jack City sits a somewhat less grim encampment. It is sometimes called Taco Flats or Little Tijuana because of the large number of Latino residents, many of whom were drawn to Fresno on the promise of agricultural jobs, which have dried up in the face of the poor economy and a three-year drought.

Guillermo Flores, 32, said he had looked for work in the fields and in fast food, but had found nothing. For the last eight months, he has collected cans, recycling them for $5 to $10 a day, and lived in a hand-built, three-room shack, a home that he takes pride in, with a door, clean sheets on his bed and a bowl full of fresh apples in his propane-powered kitchen area.

“I just built it because I need it,” said Mr. Flores, as he cooked a dinner of chili peppers, eggs and onions over a fire. “The only problem I have is the spiders.”

Dozens of homeless men and women here have found more organized shelter at the Village of Hope, a collection of 8-by-10-foot storage sheds built by the nonprofit group Poverello House and overseen by Mr. Stack. Planted in a former junkyard behind a chain-link fence, each unit contains two cots, sleeping bags and a solar-powered light.

Doug Brown, a freelance electrical engineer, said he had discovered the Village of Hope while unemployed a few years back and had returned after losing his job in October. Mr. Stoops, of the homeless coalition, predicted that the population at such new Hoovervilles could grow as those without places to live slowly burned through their options and joined the ranks of the chronically homeless, many of whom are indigent as a result of illiteracy, alcoholism, mental illness and drug abuse.

That mix is already evident in a walk around Taco Flats, where Sean Langer, 42, who lost a trucking job in December and could pass for a soccer dad, lives in his car in front of a sturdy shanty that is home to Barbara Smith, 41, a crack addict with a wild cackle for a laugh.

“This is a one-bedroom house,” said Ms. Smith, proudly taking a visitor through her home built with scrap wood and scavenged two-by-fours. “We got a roof, and it does not leak.”

During the day, the camp can seem peaceful. American flags fly over some shanties, and neighbors greet one another. Some feed pets, while others build fires and chat.

Daniel Kent, a clean-shaven 27-year-old from Oregon, has been living in Taco Flats for three months after running out of money on a planned hitchhiking trip to Florida. He did manage to earn $35 a day holding up a going-out-of-business sign for Mervyn’s until the department store actually went of out business.

Mr. Kent planned to attend a job fair soon, but said he did not completely mind living outdoors.

“We got veterans out here; we got people with heart, proud to be who they are,” Mr. Kent said. “Regardless of living situations, it doesn’t change the heart. There’s some good people out here, really good people.”

But the danger after dark is real. Ms. Smith, who lost an eye after being shot in the face years ago, said she had seen two people killed in New Jack City, prompting her to move to Taco Flats and try to quit drugs. Her companion, Willie Mac, 53, a self-described youth minister, said he was “waiting on her to get herself right with the Lord.”

Ms. Smith said her dream was simple: “To get out of here, get off the street, have our own home.”

Tier II US cities challenge India’s BPO dominance

January 22, 2009

With cost advantages disappearing many companies are looking within the US for outsourcing BPO work. A fall in wage rates and an increase in the number of unemployed professionals, has ensured that locations in the US like Albuquerque, Tulsa and El Paso emerge as frontrunners as ‘near shore’ destinations for outsourcing of back-office work.

And this trend can very well challenge India’s dominance in the global business process outsourcing (BPO) industry says a report in the Economic Times.

Even though large companies like GE and Citi continue to send work offshore to India, many customers and vendors are discovering the potential of tier-II towns in the US and Mexico that offer similar cost advantage as well as closeness to customer locations.

Annual wages in Albuquerque, New Mexico for bilingual associate staff delivering business support services range from $20,000 to $35,000 per annum, which is almost on a par with costs in most locations in Latin America and only a small percentage greater than locations such as Philippines and India says the paper.

“One can hire staff in low-cost US locations for a low as $25K a year for back-office administrative work and reduce that further, to $22K a year as a result of tax incentives,” said an Everest Research analyst.

The unemployment rate in the US was as high as 7.2% as of last December 2% with almost 2 million workers losing their job between September to December according to the US Department of Labor.

Fidelity, one of the biggest providers of human resource and payroll outsourcing to customers such as IBM, GM and ABB, established its nearshore centre in Albuquerque despite incremental costs of employee healthcare in order to mitigate risks of moving the work offshore, where attrition rates can run higher than 30%, and also keep the intimate BPO work closer to customers the paper reported.

2009 will be the bleakest-ever for IT

January 29, 2009

The outlook for the Indian software in 2009 is “the toughest” ever seen and somewhat “overwhelming”. The industry, for the first time in its history, faces a top-line decline in the first half of the year. The story will be “not one of competitiveness but survival”.

The massive reorganisation in the US financial services industry which has led to closures, bailouts and mergers, is likely to lead to a cut in its IT expenditure by as much as 25 to 30 per cent, foresees Phanish Murthy, CEO of US-based iGate with large operations in India offering a combined platform for clients’ software and BPO needs. The BFSI (banking, financial services and insurance) vertical accounts for a third of the revenues of India’s software services industry.

The worst part of it is that you do not know as yet where exactly the trough is likely to bottom out. IT budgets, not just for BFSI but across industries, which are normally fixed annually are now being set on a quarterly or even monthly basis, adds Murthy. So client CTOs who will place the orders themselves do not know where they stand.

The same sentiment is expressed by Srini Rajam, chief of Ittiam, one of the leading technology firms in the country which creates intellectual property in the DSP (digital signal processing) space. Global semiconductor companies are looking at a revenue downturn of 20 to 25 per cent. Thus, the outlook for both services and product firms is equally bleak.

Just as budgets are being fixed for very short periods, revenue guidances are sometimes being revised not on a quarterly but a monthly basis as big listed firms seek to keep analysts in the picture. There is, in fact, a chance of the negative sentiment being “overdone” and firms “overreacting” in lowering sights. The outlook for consumer electronics has been hurt by both fall in overall consumer sentiment and rising unemployment. From chip makers to device makers – Intel, Samsung, Sony and even Microsoft – most have issued dire projections. The only exception is Apple.

Avinash Vashistha, head of Tholons, the offshoring consultancy, recalls that during the earlier crisis period of 2001-02, offshoring revenue growth had slowed, but in 2009 it is likely to be almost flat, negative in the first half and positive in the second half. What is more, virtually for the first time, the Indian industry will experience a pricing decline which will affect different players according to whether they have been commanding a pricing premium or not. TCS will not be hit on this score, but Infosys, which is used to a 10 per cent premium, will be.

Murthy visualises pricing pressure from two directions – one, customers looking for price cuts and two, stiff competition between vendors chasing fewer deals. In this scenario, cost cutting will be the foremost driver and quality and customer support will take second place. Similarly, application maintenance and support will gain precedence over application development.

How long will this continue? Murthy guesses that the current scenario will continue through the first half of 2009. The nadir will come for vendors as more and more companies in the US go into not just Chapter 11 mode (seeking a freeze on obligation to creditors) but Chapter 7 (liquidation). Vashistha sees offshoring going up eventually but that will be only in 2010, with pricing beginning to recover in mid-2010.

Rajam distinguishes the past from the present for the semiconductor industry by noting that it is familiar with cyclicality but till now the ups and downs have been mostly caused by its own actions like excessive buildup of capacity and inventory

National Debt Passes $10 Trillion, No One Notices

There are enough signs of the apocalypse already: the global financial crisis, reports that one in four mammals are at risk of extinction, the Cubs (briefly) making the playoffs. So maybe it’s no surprise that a huge milestone (or tombstone perhaps) slipped by without much notice. The national debt broke $10 trillion on Sept. 30, but honestly there was so much going on that we can forgive everyone for being distracted. Including us.

Ten trillion is an almost unimaginable number — so colossal that the even the people who worry about debt had trouble anticipating it. The National Debt Clock in Times Square, for example, didn’t even have room for that many digits. On Sept. 30, they had to squeeze the “1″ and the dollar sign into the same box.

How much is a trillion dollars anyway? Like we all learned in school, it’s a thousand billions, and as the old line goes, “a billion here and a billion there and pretty soon you’re talking about real money.” But the difference between a billion and a trillion is staggering.

With a billion dollars, you could keep about 45,000 people in a four-year college for a year — or, depending on their behavior, in jail. The College Board says private tuition and fees average $22,218 per year; the Bureau of Justice Statistics says the average cost per inmate is $22,650 per year. With a trillion dollars, you could cover tuition for 45 million people — and in 2006 there were only 17 million students enrolled in college nationwide.

You could think of lots of good ways to spend $10 trillion, but the point is that we don’t have it — we owe it. And hold on, folks, there’s more. Just to name a few:

This problem is getting worse. We’re adding to the debt at mind-boggling rates. In fact we’re spending more on interest on the national debt than we’re spending on the Iraq war. For 2008, the deficit was projected to be more than $400 billion – but that was before the Wall Street bailout. Not only did the Congressional Budget Office project a $400 billion deficit this year, they also anticipated a $400 billion deficit, next year, and the year after that, with further deficits for the next decade. The numbers could be much worse than that. The financial crisis and the recession that will almost certainly follow will reduce tax revenues because people who are unemployed and businesses that are losing money don’t pay taxes. So those figures are optimistic.

We’re borrowing to pay for the Wall Street bailout. True, as many have pointed out, the government may actually make money on the bailout in the long run. The bad debts the government buys should be worth something at some point, so the final bill may well be less than $700 billion. But that may be years off — the money we have to shell out up front will be paid over the next two years. At no point during the ragged, torturous congressional debate did we really talk about how the government’s going to pay for this. No one’s talking about tax increases or spending cuts to cover it. And when politicians don’t specify how they’re going to pay for something, that means they’re going to borrow. And, by the way, those little “sweeteners” — the Congressional earmarks for children’s wooden arrows, racetracks and the rums of Puerto Rico — are paid for with red ink too.

The irony of the government borrowing to head off the consequences of bad debts speaks for itself. The good news is that the U.S. government is one of the few institutions out there that can borrow. Banks won’t loan to each other, much less businesses and consumers, but the U.S. Treasury bond is one of the few safe havens left. And many would argue that this is not the time to quibble – when you’re trying to put out a fire, you don’t worry about where the water is coming from. But after the fire is put out, the debts are going to remain.

We’ve got more big bills on the way, and no plan to pay them. The Government Accountability Office estimates that rising health care costs and the retirement of the baby boomers mean a cool $53 trillion in “unfunded liabilities” ahead of us over the next several decades . By 2040, if nothing changes, the government won’t have any money for anything other than Medicare, Medicaid, Social Security and paying interest on the money we’ve already borrowed.

You know, of course, how the bank insists that you have a specific schedule to pay back your car loan or mortgage? (Never mind that this isn’t working out for lots of people right now). Well, the government doesn’t have one. The plan for paying off the national debt can be summed up as “maybe someday we’ll have a surplus again, and we can pay it down.” As for that $53 trillion in liabilities, that depends entirely on whether we as a nation can come up with a politically viable plan to fix Social Security and Medicare. You know how well that’s gone in the past.

Neither Barack Obama nor John McCain is talking about this problem. In fact what they’re saying right now will make the problem worse. If you saw the first presidential debate, you saw Jim Lehrer try to pin these guys down on how the Wall Street bailout would affect their plans. You also saw them both duck the questions. The nonpartisan Tax Policy Center says McCain’s plans would increase the national debt by $5 trillion over the next 10 years, while Obama’s would increase the debt by $3.5 trillion. Right now one of the biggest unspoken campaign promises for both men is to offer you lots of tax cuts and/or new programs the country doesn’t have the money for.

Like everyone else, we’re praying that the U.S. bailout and the world’s central banks can put out this financial fire, fast. Realistically, the country is going to be adding a lot to the national debt over the next few years. There’s no way around it, and frankly balancing the budget during a recession is difficult and may not even be advisable. But once we’ve got the private sector’s bad debts under control, we’ve got to get the federal government’s debt under control, too. The long-term problem for the federal government is predictable, inevitable — and completely solvable, if politicians show some leadership and the public starting demanding some real answers.

Indians flee Dubai as dreams crash

Wednesday, January 14, 2009

http://news.indiainfo.com/2009/01/14/0901140643_indians_flee_dubai_dreams_crash.html

Dubai: It’s the great escape by Indians whove hit the dead-end in Dubai.
Local police have found at least 3,000 automobiles – sedans, SUVs, regulars – abandoned outside Dubai International Airport in the last four months. Police say most of the vehicles had keys in the ignition, a clear sign they were left behind by owners in a hurry to take flight.
The global economic crisis has brought Dubai’s economic progress, mirrored by its soaring towers and luxurious resorts, to a stuttering halt. Several people have been laid off in the past months after the realty boom started unraveling.
On the night of December 31, 2008 alone more than 80 vehicles were found at the airport. "Sixty cars were seized on the first day of this year," director general of Airport Security, Mohammed Bin Thani, told DNA over the phone. On the same day, deputy director of traffic, colonel Saif Mohair Al Mazroui, said they seized 22 cars abandoned at a prohibited area in the airport.
Faced with a cash crunch and a bleak future ahead, there were no goodbyes for the migrants – overwhelmingly South Asian’s, mostly Indians – just a quiet abandoning of the family car at the airport and other places.
While 2,500 vehicles have been found dumped in the past four months outside Terminal III, which caters to all global airlines, Terminal II, which is only used by Emirates Airlines, had 160 cars during the same period.
"The construction and real estate industry has been hit following the global slowdown and the direct fallout is that professionals working in the realty industry are rapidly losing their jobs," said a senior media professional, in-charge of a realty supplement in Dubai. "In fact, my weekly real estate supplement usually had 60% advertisement and ran into 300-odd pages. In the last seven weeks, its down to 80 pages and with fewer advertisments," he added.
Mumbai resident D Nair (name changed) had been living in a plush highrise in Sharjah for the past four years. However, the script went horribly wrong when his contract was terminated. Nair used all his credit cards to their maximum limit, shopping for people back home. He then discarded his Honda Accord before returning to India for good. Nair, who stays in a rented apartment in Navi Mumbai today, has a Rs15 lakh loan with a Dubai bank.
Another such victim of the meltdown said he bid goodbye to his car in a small bylane near the airport and hailed a cab. "I was scared because a number of us were doing the same and did not want to be questioned by the police. There was no way I could afford to pay the EMI of 1100 Dhirams for my Ford Focus," he told DNA on condition of anonymity.
When contacted, the dealer for Asgar Ali cars in Sharjah said, "We are helpless and do not know how to tackle this issue. A large number of such owners are from Indian, Sri Lanka, Bangladesh and other South Asian countries."

War will not bring peace

Deborah Storie

‘WHAT is Kevin Rudd like?” “What type of man is he?” “Will he win the election?” Afghan friends and colleagues assailed me with these questions when I returned to Afghanistan in October last year. Their obsession with our federal election bemused me. Ten years ago they didn’t know when Australian elections were or that Australia had a prime minister.

My friends explained: “Your next prime minister is very important to us. We need to know whether he will be someone else who believes that guns are the answer to everything. You see if he is different, and if the next American president is different, if they are people of peace, then maybe there is hope for us.”

Fifteen months later, Kevin Rudd, British Prime Minister Gordon Brown and US President-elect Barack Obama insist that scaling up the military intervention will make Afghanistan and the world safer. But war can resolve neither Afghanistan’s conflicts nor the spectre of global terrorism. More troops and more guns will only plunge Afghanistan further into violence.

At the 2020 Summit, public psychologist Kate Barrelle explained how military interventions and economic sanctions can enforce compliance by “putting a lid on” resistance. The longer that lid remains in place, the more resentment wells up beneath it. When military or economic force increases, the pressure erupts in spurts of violence, such as increasing numbers of suicide bombers. Eventually, the lid gives and widespread violence explodes.

The military intervention might have worked had it moved immediately from deposing the Taliban to disarmament and then rapidly scaled down. It didn’t. NATO’s International Security Assistance Force in Afghanistan now numbers 47,600 troops, including 1090 Australians. With special forces and private security companies there are 70,000 troops in a country of about 32 million — one foreign soldier for every 460 Afghans.

The Agency Co-ordinating Body for Afghan Relief reports that non-government organisations cannot work in many regions where military units are active. Many rural communities consider international troops a major threat to their safety. And then there are the guns. Interceptions of “illegal munitions” receive international media coverage

as “bad guns”. We only hear about “legal” weapons when “terrorists” destroy military consignments en route to Afghanistan.

According to the Kabul Times, private security firms imported more than 800,000 guns last year — one for every 40 Afghans. The Afghan Government’s attempts to stem this influx were overruled. These are “good guns”. Instead of disarming Afghanistan, we’ve super-armed it.

Some aid and development workers refuse to travel in military planes, patronise coffee shops that have armed guards or travel under “armed protection”. This is partially self-interest — keeping such company is dangerous — and partially a principled refusal to support a security industry that generates and depends on fear. War economies thrive when fear erodes the foundations of peace.

Pedestrians lower their heads when they pass armed men in uniform: police, soldiers, guards. “Lambs by day,” they say. “Wolves by night.” Experience has taught them what empirical studies show: the availability of firearms and their presence in public directly correlates with the prevalence of violence.

In 2007, about 70 Afghan nationals were reported kidnapped in Kabul each month. Each morning, a family sends its four children in four directions to attend four schools. Why? “We don’t want to lose them all at once.”

I walked to the Kabul office one morning when two boys passed slowly on a bike. They asked each other, “Dakheli ya khareji?” (“A local or a foreigner?”) I responded, “Khareji ya dakheli, chi farq mekuna?” (“Foreigner or local, what difference does it make?”) They laughed. “If you had been a foreigner, we’d have thrown you into danger.” I played along with the joke, “And may peace be upon you, too!”

The overwhelming majority of Australian soldiers deployed in Afghanistan are brave men and women willing to die for the sake of others. Our desire to honour our soldiers does not oblige us to continue a counter-productive military campaign.

As an Afghan acquaintance confided, “Your governments think they are ‘stamping out terrorism’ … They keep a score card and think they are winning because they count more dead Talibs than dead Americans. That’s not how it works. But, if arithmetic is all your governments understand, tell them to look beyond their tally cards and see the trouble multiplying on the ground. For every Talib you kill, you make 10 more. For every mother you hurt, a thousand Talibs are born. You are breeding terror, not stamping it out.”

Our motives and what the war costs us are not the main issues. The human consequences are much more important. Local capacities for peace and non-military alternatives need to be taken seriously.

This will necessarily involve conversation, respectful dialogue — and drinking tea.

What type of man is Kevin Rudd? Does he believe that guns are the answer to everything? A year ago, I told my Afghan friends: “I will vote for Kevin Rudd. I hope that he and his government will be different.”

Rudd understands that he can best promote human rights in China within the context of respectful relationships. The same applies in Afghanistan. Rudd is rightly committed to promoting nuclear disarmament. The human suffering caused by small arms should prompt Rudd to extend his commitment to promote demilitarisation more generally. I would like to tell my Afghan friends that our still-quite-new Prime Minister is a man of peace. But I still don’t know.

Deborah Storie, the deputy chair of TEAR Australia, lived and worked in Afghanistan from 1992 to 1998 and still visits and works in the country regularly.