Red shoots have started overshadowing the imaginary green shoots on the global economic horizon as a host of industries, including airlines, automobiles, hotels, media, textiles, paper, technology, energy and steel, continue to report lower output and gloomy outlook. Dow and Nasdaq softened a tad last week and oil plunged nearly ten percent, though the dollar largely remained where it was. A scenario of stability can still be sketched by a skilful artist but cascading effects of shrinking demand for real goods and services can be expected to produce more red than green shoots in H2.

Retail sales in EU have declined for 13 consecutive months, Japan’s GDP plunged 14.2% in Q1 as factories are producing only two third of last year, and unemployment has risen to 5.3%. Interestingly, while US feels comfortable at 5-6%, Japan considers anything above 5% alarming. Germany is losing clout in euro zone because with 8.3% unemployment, it isn’t as strong as it used to be, manufacturing plunged 21.6% in S Africa in April, financial services in UK may cut nearly 50,000 jobs in 2009, and Australia, which was being put right alongside China and India until yesterday now wears a gloomy look. Employers in US have cut 6 mn jobs since Jan 2008, which should theoretically cut GDP by $300 bn.

Thomas Friedman has urged his country to out-innovate the world but that can only be called utopia. A glitch in computers at Chicago airport made planes wait for passengers for several hours last week and computers have been malfunctioning at NYSE even after having cut transaction time from 350 to 5 milliseconds since 2007. While mobile phone charges in Europe continue to be ridiculously high, even after a 50% cut that went into effect this month, carriers in Asia, Africa and LatAm have taken a lead in replacing credit cards with cell phones, the argument being that worldwide there are a billion who have mobile phones but no bank accounts.

Not surprisingly, a few months back, when Geithner told an assembly at Peking that US debt was safe, the audience burst out laughing. As US troops began withdrawing from Iraq last week, the Iraqis shocked oil MNCs by offering a fixed fee for oil production, instead of the traditional output sharing arrangements. Most gasped and got up from the table but a consortium of BP and China Petro agreed. Incidentally, China has now replaced the US as the biggest importer of Japanese goods; it has been the largest exporter to Japan for several years.

The renewable energy front continues to be vibrant with Sears tower going green, and Hong Kong levying HK$0.50 on every plastic bag and helping buildings cut energy consumption, Americans and Germans going for fuel efficient smaller cars and Obama announcing plans for cutting energy consumed for lighting (7% of total).

Panasonic is to cut salaries of 10,000 managers, Cathay and Singapore hope to write back hedging losses running into hundreds of millions, and Air France, KLM and Martinair have admitted having fixed prices in Canada. GM’s Opel is losing 6 mn euros a day, Michelin will eliminate 2,900 jobs, and Pirelli, known more for its calendars than tires, is to invest $200 mn in its five plants in Brazil.

Towers Perrin and Watson Wyatt have announced a $3.5 bn merger, Mizuho of Japan is to raise $6.3 bn from new shares issue, Wal-Mart has endorsed compulsory provision of health insurance by large companies, Disney has agreed to pay $452 mn to expand its park in Hong Kong, even as it awaits clearance of a new park in Shanghai, and Lear Corp (auto seats) is filing for bankruptcy.

Saks is to procure 20% less this year from vendors, Unilever will invest $140 mn to produce ice cream in Russia, and JP Morgan and Citigroup have started buying Jumbo (about $500,000 plus) mortgages again. Abbott has lost a $1.67 bn patent infringement suit.

News of GM unveiling its two-seater PUMA made hilarious reading while KFC refusing to give free chickens because its offer received unexpectedly high response was a bit of a shock. What can these conglomerates do? CEOs aren’t allowed to buy $35K commodes anymore, nobody is buying $100 mn apartments in Manhattan and NY Yankees are unable to sell $2,500 tickets.

Bernard Madoff was sentenced to prison for 150 years, where he will work for 40 cents an hour. Italian Mafia’s annual revenues have been estimated at about $180 bn, one half of which is profit. China has given up its attempts to filter Internet content but is still trying to control virtual currency used in online gaming, Russia swooped down on Moscow’s 30 casinos to cut crime, almost 1,500 hedge funds closed shop worldwide last year, and UK continues to tax liquor several times higher than neighboring France. Excessive emphasis on freedom has taken Japan to a stage where two third of 20-35 men are being described as grass eating sex-averse ‘herbivores’ who would rather guzzle beer and watch television than work and behave like heads of their families.

Savings in US are surging rapidly, personal debts are declining, and bank deposits are growing. Roubini says savings rate will ultimately reach 10-11% but that may turn out to be the understatement of the century. What the consumers are out to save is not the debt owed to swindlers but the future of their children. Nothing illustrates sanity of the US consumer more than the largely stable figure for charity ($307 bn in 2008 against $314 bn in 2007) and decision of most cities to cancel fireworks on independence day.

What’s next? Some big boys to follow GM? Something similar to the 1997 Asian financial crisis? Which are the vulnerable industries and geographical regions? Stop worrying about these mundane matters and try to get an invitation to an Italian state banquet. If this sounds bizarre, search Google images for Mara Carfagna.

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