Archive for the ‘business’ Category

Fearless economic forecasts

March 10, 2009

Dominique Strauss-Khan

In a warning delivered by IMF Managing Dir. Dominique Strauss-Khan during a conference of African finance ministers and central bank governors, the International Monetary fund (IMF) speaks of the deepening global financial crisis and the possibility that the world’s economic growth will be zero.

The financial meltdown can cause massive suffering, social displacement, and chaos in vulnerable countries.

The effects of the downturn may not be fast in reaching Africa, but Srausse-Khan said, “continued deleveraging by the world’s financial institutions, combined with a collapse in consumer and business confidence, is depressing domestic demand across the world.”—-Philstar (03/10/09)

Warren Buffet

On the other hand, American billionaire Warren Buffet who has the common sense of living “below his means” believes America will bounce back even though “it has fallen off a cliff.” The “Oracle of Omaha” who predicted the worst case scenario in the last 6 months, watches a nation swept with a housing slump, high unemployment, and inflation. He sees lack of confidence, confusion, and fear are defining consumer behavior at this time.—The Washington Times/ AP (03/09/09, Funk J)

Harry S. Dent

Similar gloomy predictions have been made by American economist Harry S. Dent in his book “The Great Depression Ahead : How to Prosper in the Crash Following the Greatest Boom in History.” The book is a good read. He speaks of this year as a bad season—ushering economic turmoil that none of the current generation has seen.

Nouriel Roubini

Nouriel Roubini, professor of NYU’s Stern School of Busicness believes the US recession could last up to 36 months. With no hope of ending the recession this year, “Dr. Doom” said,, “Growth is going to be close to zero and unemployment rate well above 10 percent into next year.”—-CNBC (03/09/09, Wells, J)

Pres. Barack Obama

But President Barack Obama offers bright economic forecasts with his proposed $3.55 trillion budget. He predicts that the economy will shrink by only 1.2%, and will recover in 2010 with a growth of 3.2%. However, non-partisan analysts believe this is overly-optimistic.—McClatchy Newspapers (02/26/09, Hall, K)

The public is less upbeat than Obama, but people are willing to give him the benefit of the doubt. Midway in the 100-day honeymoon period after assuming presidency, he gets a 67% approval rating, a very good grade at this time when Americans are fearful and disconsolate over the financial ruin they are dealing.(Photo Credit: Atsibatsi)=0=

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Buhi-Malinao road ushers in more commerce for Bicol

February 27, 2009

Linking communication is the most obvious benefit of having a road between towns and villages. Alternative routes of trade and commerce are made easy. These are expected in the recent completion of the 35 kilometer road (about half of 66 kilometer highway) which connects the 2nd and 4th districts of Camarines Sur to that of 1st district of Albay.

Leading to the port area of Tabaco, Albay, the highway makes it easier to reach Catanduanes Island in Bicol. Travel from Manila will be shorter than before.

The new road starts from Hanawan Ocampo, Camarines Sur onwards to Barangay Burokbusoc and Sagrada in Buhi, Camarines Sur, reaching up to Malinao, Albay. It is heralded as an accomplishment by LV Castaneda of the Department of Public Highways, (DPH.)

But Buhinon Jesus Valenciano (in a letter to Bicol Mail’s editor,) writes to question the integrity of the road. He fears that the “all-weather road” in some sections need cementing or asphalting. He says, without good maintenance, this road can easily fall into disrepair. —-Bicol Mail (02/19/09; 02/26/09) (Photo Credit: http://www.freewebs.com/infocenterbuhi/) =0=

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Obama addresses congress for the first time

February 25, 2009

Pres. Barack Obama at present enjoys high level of public support optimism and confidence. Americans badly needs him at this time even if political trust doesn’t necessarily translate to economic confidence. The stock market for the last month continues to flounder in spite of the change Obama has been pursuing.

Those badly hurt by the economic downturn watch silently where the recovery program will go. Rightly so, it is early to give in to pessimism, but there is a cause for concern.

Those with money are afraid to invest—the stock market behaves erratically as if to suggest that something isn’t right. It is expected to go for undetermined amount of time in spite of the bold assurances of Obama. People badly affected by the financial crisis are confused, some can’t get over their shock on what’s going on.

Opinion on B. Obama:

——————————–Approve———–Disapprove——–No Opinion

His job as president————63%—————–22——————-15
Foreign Policy——————-57%—————–17——————-26
The Economy——————-57%—————–32——————–11
Iraq Situation——————–54%—————–24——————–22
Source: New York Times (02/23/09, Zeleny, J; Thee-Brenan, M)

On Tuesday, February 23, at 9PM eastern time, Obama will address the joint congress. He enjoys strong political clout with about 2/3 of the American people supporting him. A rising number however is skeptical. In spite of the benefit of the doubt, many are struggling to fend off their ambivalence. There are those who feel they’re practically on their own, without much reason to believe the government will look after them since their finances have been ruined by mismanagement. They can’t take the thought of bailing out irresponsible Americans in cahoots with unscrupulous bank lenders who bought homes beyond their means.

Obama’s Disapproval Rating Doubles

According to a recent Gallup poll, Obama’s new disapproval rating rose from 12% last month to 24% this month. This is 50% higher than the 16% average for a month-old new presidency. —-Los Angeles Times ( 02/24/09, Malcolm, A)

Americans really can’t be too trusting these days, not even with Obama’s popularity. Words cannot change reality. Sixty (60%) of the public worries that someone in the family will lost a job in the coming months or the next year. Fifty-five (55%) of the Americans says they are just trying to make ends meet. While Americans are under no illusion to believe that the economic problem will die down soon, it’s unclear if they who are extravagant and used to good life can weather the turbulence of the recession.

In spite of the media’s overwhelming biased adulation for Obama (as described in Bernard Goldberg’s book “A Slobbering Love Affair: The True (And Pathetic) Story of the Torrid Romance Between Barack Obama and the Mainstream Media “)it is still the truth that matters. People can’t live with the promises and eloquent words of a president, they need to see tangible results, especially those who put their reliance on the government to solve their problems. (Photo Credit: Alex Johnson)=0=

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In spite of a collapsing financial world, $18.4 billion were spent for greedy bonuses in Wall Street

January 30, 2009

If there is consolation to American taxpayers damaged by the economic meltdown, Pres. Barack Obama criticized billions of astounding spending. He decried as “shameful” and “irresponsible” the $18.4 billion bonuses distributed during the past year for workers in Wall Street. Yes! In spite of a 44% cut on yearend perks given to the money merchants, the amount clearly shows the extravagance and greed of the people who are partly to blame for the financial crisis. A staggering $18.4 billion was spent as giveaways in spite of the $700 billion bail-out they asked and handed over by the government because of a crumbling economy.

This news doesn’t help the effort to bring back trust in the system. The disclosure speaks of top officials still engaged in reckless spending, some using large amounts of money in the shadows to continue their vice.

Amidst joblessness, home sales slump, and poor stock performance, Obama is facing the challenge of making the public believe. Congress has just approved the $825 billion “stimulus package” which is basically another big spending to mitigate the damaging effects of the financial mess. More enraged Americans fear that unless transparency and ethical practice in business is restored, there is little reason to hope that confidence will come back and the economy will be fixed in due time. (Photo Credits: Epicharmus x 2)=0=

Getting to know Charles Ponzi

January 13, 2009

Charles Ponzi (1882-1949) was a US immigrant from Lugo, Italy who swindled thousands of New Englanders in a postage-stamp scam in the 1920s. He popularized an investment which paid returns to investors out of the money paid by those who followed them rather than from profit. This illegal money operation was named after him. The Ponzi scheme as it is known today, evolved with many variations. Disregarding some differences in the swindling method, Ponzi had been sometimes referred to as the “pyramid scam.”

Promising 40% investment return against that which was offered by savings banks with only 5% yield, Ponzi convinced thousands of investors that he could make astounding profits on a buy and sell of international mail coupons. His scheme worked for sometime on the principle of “rob Peter to pay Paul.” Basically, it was a set-up of cash pay-off and distribution without real investment—http://www.sec.gov/answers/ponzi.htm

Ponzi’s fast money and high rate of return was too good to resist and many were snared into the fake investment operation. He became an instant millionaire who diverted the money of new investor-recruits to pay for those who invested earlier until the operation collapsed.

At the end of his financial fraud, only a third of the duped investors’ money was returned. Investors’ losses amounted to about $3 million to $7 million (about $75 million today)in those days. Ponzi was convicted for mail fraud and embezzlement, put to jail, and later deported. (Photo Credit: Wikipedia) =0=

Bernard Madoff, accused top Ponzi scheme artist is allowed bail

January 12, 2009

Ponzi scheme artist Bernard Madoff who was accused of swindling the business world of a staggering $50 billion had been granted bail against the assertion of prosecutors that he is a flight risk and an economic threat to the community. During the holidays while waiting for indictment, the former Nasdaq chairman sent friends and relatives diamond bracelets, jewelries, and gifts amounting to about $1 million in violation of a court-ordered freeze.

But Federal Magistrate Judge Ronald Ellis of Manhattan ruled that Madoff (who did not have prior convictions,) could stay in his luxurious $7 million Eastside Manhattan apartment with some additional restrictions— instead of being locked in jail.

“The anxiously awaited bail decision does put additional restrictions on Madoff, including forcing him to come up with a list of items at his apartment and allowing a security firm to check on the items. The security company will also be allowed to search all outgoing mail from Madoff to ensure that no property has been transferred”.—AP (01/12/09, Neumeister, L)

The judge’s decision disappointed and infuriated many who were victimized by the fraud, supposedly the largest ever in financial history. They believed the accused swindler who was reportedly fitted with an electronic surveillance tag on his ankle got a “different brand of justice than the guy in the street.”

Madoff’s decades-long fraudulent business activity operated similar to a pyramid scam under the guise of a legitimate trading powerhouse which promised high investment yields with low fees. His company which started in 1960 attracted high profile banks, industry leaders, well-connected individuals, loyal friends, and rich celebrities. R. Thierry Magon de la Villehuchet, a prominent hedge fund manager-client who lost $1.4 billion committed suicide in his office in Madison Avenue last month.

In spite of the gravity of the accusations and the public clamor that Madoff be confined in prison, the judge’s decision to put him on house arrest shows how the legal system operates. Following the course of a criminal proceeding, it will take some time before a conviction, if apt for this case, will be decided.

Of course this isn’t consolation. The erosion of trust is astounding. At the back of this monumental fraud, the government regulators appear negligent for the red flags of fraud has been there for years. They have not done a good job in protecting American citizens—especially those ordinary investors on the street. (Photo Credit: Adam Crowe) =0=

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Obama psyches the Americans of grim economic times

January 8, 2009

I don’t know of anyone who hasn’t been affected by the financial crisis caused by the meltdown of business in America. The most pitiful are the people who honestly saved and invested only to find out their portfolio has failed. They don’t have the luxury of youth and time to recoup the loss.

Those who rely on fixed income may find themselves without money if retirement and pension don’t pay. The jobless and hungry are easily agitated. Economic hardship is a perfect recipe for social unrest. With the public’s high expectations on the new administration, it’s dangerous if Barack Obama fails.

Barely two weeks before Obama is to be inaugurated as president, his campaign promises don’t jibe well with the gloomy realities of the times. His dire warnings prepare the spooked public of the bumpy road ahead. Spending is needed more than what the government originally told the people.

Obama can only say in grim and gray terms on how he’ll solve the economic problem, but he doesn’t give specifics. The cost of the stimulus package he asks the congress on Thursday, January 8, 2009 hasn’t been determined, but experts say it should not be more than $1 trillion dollars. The federal budget deficit is huge and critics warn of deeper pain if the government shoulder the money woes of private entrepreneurs.

There’s no guarantee that the bail-out of the banking system, the auto manufacturers, and housing industry will work. The economy is rife with dreary predictions of worsening unemployment, bankruptcies,and unrelenting housing slump. Americans are confused and want transparency in the transactions which put their life savings and taxes in line.

At a Glance, January 8, 2009:

540,000 unemployed projected for Jan. ’09 (up from 492,000 in Dec. ’08)
4.5 million workers on unemployment aid
2.4 million jobs lost in 2008
1.2 trillion dollars Federal Budget deficit
1 trillion dollars—estimated stimulus package needed

As of January 8, 2009, the joblessness is expected to have risen from 492,000 to 540,000 based on the number of newly-laid off people seeking state unemployment aid. The approximate number of workers taking unemployment benefits is at 4.5 million, many of whom are finding hard to get jobs.

Assuming that 500,000 additional jobs have been lost last month, it is estimated that at least 2.4 million jobs disappeared in 2008. Business downsizing and closures continue. The trend will be more elucidated on Friday, January 9, 2009 when the Department of Labor releases the most current employment report. The federal budget deficit is expected to reach $1.2 trillion this year, about 3X bigger than the previous year.

Like most Americans, I want Obama to succeed. Casting away politics, I feel it’s in our interest that the economy bounces back on its track. Yet, the public is suspicious and worried; their confidence is at its deepest low. In spite of bipartisan support, many aren’t optimistic that a quick recovery will come. Obama is asking for more government infusion of money, a stage for a possible run-away spending that isn’t in his “change” and “yes, we can” campaign plan.

The uncertainty which fuels this lack of confidence is magnified by the ugly economic picture. Even if the public keeps quiet, the cultural and social environment which made the people endure and outlast the Great Depression in the 1930’s might be slipping away— at worst, it might be nonexistent. Today’s Americans belong to a different generation of innovators. Whether the values of trust, honesty, and fair play have been eroded to impair recovery, nobody seems confident to answer.

There’s real fear as there’s hope. But many are shocked that the rules of governance and citizenship are quickly being changed to suit a social agenda whose end they don’t know. They aren’t used to live in poverty or be dictated upon on how they will use their money. Even if they pride themselves of resiliency, industry, and independence, the overall picture isn’t good. (Photo Credit: bscott2007)=0=

RELATED BLOG: “Dr. Doom’s economic crystal ball & the need to say the truth”
Posted by mesiamd at 10/30/2008

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GMA’s ditch-low approval rating, her kiddie “payback package" for OFW’s & a big store in Naga City rises

December 17, 2008

Negative (-30)

President Gloria M. Arroyo gets the lowest satisfaction rating in 2008, much lower than the (-)9 she got the year before. The Social Weather Survey (SWS) result from the 4th quarter poll at the end of November is thought to be bad. It attests to the unpopularity of the administration that’s wracked by corruption and nepotism, believed to be worse than that of Ferdinand Marcos.

Unresolved issues like joblessness, floundering economics, the Bolante fertilizer scam, Euro generals money laundering case, unabated maritime disasters, journalist killings, charter-change controversy, poor education and healthcare, Mindanao secessionist problem, CARP extension, unimplemented cheap medicine law, and the big C (Corruption) noticed by watchers abroad are in the long list of problems that stun the public.

P1.4 trillion

It’s the 2009 national budget which is approved in the second and last deliberation in the senate. Notable in the budget are less allocations for the Department of Agrarian Reform by P3.1 billion, Energy P61 million, Finance 13 million, Local Governments P436 million, Justice P215 million, Armed Forces P75 million, Public Works P3.4 billion, Social Welfare P243 million, and National Economic Development Authority by P25 million. The budget cuts on certain services are allocated in other areas. A P10 billion economic fund is being considered, but no appropriations are set aside for the Office of the Press Secretary, the Philippine Tourism Authority and Kilos Asenso.

4,000

SM, the large monopolistic mall-chain owned by business mogul Henry Sy, Sr. in the Phiippines, is making preparations to open its outlet in Naga City on March 2009. About 4,000 job-seekers are needed in the operation which is estimated to generate $12 million in wages and P40 million in taxes. Expected to compete with small stores of the area, SM may draw shoppers in neighboring towns.

The exact effects of such a huge business in the city of 160,000 people aren’t completely known. Will there be congestion in the city? Will money windfall benefit the Bicolanos? Will profits be carted away from the area and render the mom-and-pop stores struggling to survive? Did the Naga City officials do a thorough study on the cost-benefit of approving an SM store?

50,000

As a result of the global economic crisis, the number of Filipinos abroad expected to be laid off has increased. Pres. Gloria M. Arroyo has laid out a “payback package” assistance for retrenched overseas foreign workers (OFW’s,) a tepid offering of skills training, scholarships, and measly P10,000 ($200) to start a “business” upon their return to the country.

15,000

Participants of the Manila’s anti-charter change (cha-cha) rally were larger than expected, according to Makati mayor Jejomar Binay, the president of the United Opposition. More protests against Cha-cha and other frustrating issues are on the works with broadened support from various organizations. (Photo Credits: gmaresign; doublefault2; arty; gmaresign=0=

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Shrinking pan de sal doesn’t mean it’s economical

December 9, 2008

Filipinos will generally welcome pan de sal that is cheap even if it’s small. According to Simplicio Umali, Jr., the president of the Philippine Bakers Industry Group, bakers will shrink the bread further and sell it cheap. Members of the baker’s association agreed to make little pan de sals, probably next month.

The poor man’s bread at P1 peso will weigh only 20 grams, smaller than the regular pan de sal which is 30-35 grams sold for P3 pesos. The cost of a 600-gram bread loaf is pegged at P55.50.—Philstar (12/09/08, Osorio, E.)

Isn’t 20 grams too small? How much of the bread is air and how much is flour? Why try scrimping on the last indulgence of Filipinos who rely on the bread for breakfast and snacks? Most likely, smaller pan de sals will make people crave for more and perhaps spend more.

Whether this tiny bread prepared is nutritionally adequate to satisfy the hungry is unclear. Though affordable, a smaller version of the bread doesn’t mean it is economical. Making small bread pieces is labor-intensive and needs as much flour and packaging if it will be sold to satisfy. That’s why there are those who think keeping the regular-sized bread may still be a good idea.

When the bread becomes inordinately small, it’s expected to have low nutritional value. Shrunken and cheap, the bread will make the birds happy. Yet people with larger stomachs and bigger caloric needs may feel famished eating them. To compensate they’ll need to eat more which costs as much as the regular bread, volume per volume. (Photo Credit: Oggi108; KDLig)=0=

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Premature attrition of confidence

December 8, 2008

Even before Pres. Elect Barack Obama gets inaugurated on January 20, 2009, there are troubling signs in the horizon. The “Yes we can,” slogan of his campaign during the election seems dampened by the herculean task ahead. His mesmerizing words which don’t synch well with truth have started to show their cracks. From his camp, liberal supporters have started to show impatience.

Liberals are growing increasingly nervous – and some just flat-out angry – that President-elect Barack Obama seems to be stiffing them on Cabinet jobs and policy choices. Obama has reversed pledges to immediately repeal tax cuts for the wealthy and take on Big Oil. He’s hedged his call for a quick drawdown in Iraq. And he’s stocking his White House with anything but stalwarts of the left. Now some are shedding a reluctance to puncture the liberal euphoria at being rid of President George W. Bush to say, in effect, that the new boss looks like the old boss.”—YahooNews (12/08/08, Lee,C; Henderson, NM)

President George Bush must be smiling with relief. Obama’s new administration promises a 2.5 million job generation program which may cost taxpayers 500 billion to finance. To raise optimism, the upcoming president dangles Harvard technocrats to keep his magic in place. But many believe experts can only be as good as the results they can produce.

What the Obama team plans to accomplish is something that the public can’t take bait, hook and sinker. Americans have seen enough of the promises, ineptness, greed, corruption, and extravagance of their leaders. And they know intelligence and smartness aren’t guarantees for success.

This early, liberals from Obama’s party have raised concerns. The messianic black president who has been heavily supported by the partisan media is telling his people that economic hardship is on the way. The financial mess will get worse, he said—a let down on the expectation of the people. It makes his supporters start thinking whether their man is up for the job.

The $700 billion bailout package earlier forged by the government isn’t enough. The beleaguered American auto industry is asking for a rescue package of $36 billion dollars in the wake of more than half a million unemployed have been reported this month. More workers fear that they’ll be laid off from their jobs or they’ll lose their homes from forfeitures. Saddled by about $10.7 trillion debts, USA’s economic picture isn’t pretty. Americans face the worst economic uncertainty since 1974.

Economists Ben Shalom Bernanke and Henry Paulson aren’t sure if what they are doing will work. They are just as confused as the senators and congressmen in Capitol Hill regarding the economy. Their expertise hardly guarantees that things will get better. The heroics they display are dubiously too little too late, after private finances have been ruined.

Americans are nervously watching their investments wear away and go down the drain. The burnished promises they heard during the presidential election frustrate them. They realize consumer confidence isn’t easy to keep when things don’t do well. Stretching more patience, they need to wait and see what will happen. Uncertainty has started chipping on their trust. Many feel the economy is far from being fixed. (Photo credits: Cody Kiffen; M Dumlao98) =0=.

RELATED BLOGS: “Longer recession blues as more jobs are lost in USA” Posted by mesiamd at 12/05/2008; “Mr. Fix & the tall challenge to keep USA & the world to believe that we can quickly come out of the financial mess” Posted by mesiamd at 11/22/2008; “Like Filipinos, Americans Have Money Troubles Too!” Posted by mesiamd at 7/16/2008.

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