“Last year, it was banks; this year it is countries,” says The Economist. It began with Greece (GDP 2.7% of euro zone) and Spain, and Portugal and Italy have been added. Euro zone GDP dipped 4% in 2009 and the euro plunged to $1.35 last week as its very survival is being questioned. Something drastic has to happen, sooner or later, unless US-EU (and Japan) leaders understand that stability can come only from a planned reduction of consumption and GDP.

Developed world consumers have started spending less but their governments want positive numbers. US goods exports were down USD 230 bn and bulk of what did not get exported could not have been consumed at home. Non-oil goods imports plunged USD 325 bn, across a wide array of goods. If prices are down and real consumption is the same, then why crib? US states are hiking taxes to cut cigarette consumption but that is going to hurt GDP numbers, or at best may push exports meant for re-imports.

China surprised the world last week by hiking banks reserves further to 16.5%, fuelling speculation about its economy is coming closer to a bubble effect, though few seem to be recognizing that household income accounts for a mere 55% of GDP, which, along with the option to make RMB expensive, gives it all the leeway it needs to regulate growth. Besides, exports of $1.2 tn in 2009 were the highest in the world, ahead of Germany’s 1.12 tn. Including Hong Kong’s $250 bn, forex reserves are now close to $3 tn.

IEA says world oil demand in 2010 will be 86.50 mbpd, the same as the peak in 2007, Vietnam is to build a $56 bn bullet train to connect Hanoi and Ho Chi Minh, Indonesia GDP was up 5% in Q4, and Spain, despite 20% unemployment, wants to increase the retirement age from 65 to 67. Mexico has started attracting medical tourists from across the border; though only about a million Americans go abroad for healthcare, numbers have to swell at a fast clip, whether Obama likes it or not.

Volatility in currencies continues to play havoc with lives of organizations producing real goods and services all over the world. Perhaps the euro’s value vis-à-vis the dollar needs to be fixed, like that of RMB, though that would be tantamount to withdrawing the tax US-EU financial companies are able to charge on every bottle of water or piece of clothing consumed in China, India and elsewhere. The point is that euro zone GDP for 2009 actually declined (further) in week to 14 Feb 2010! Stiglitz says US going bankrupt is absurd because it can print dollars. Oh! No printing facilities available for euro and yen?

Cash holdings of S&P 500 rose 14% last quarter; now they hold $2.18 tn in cash and equivalents, interest on which is obviously being paid by governments. Now that can spur some innovation, and a lot of profligacy.

Google, having $25 bn in cash, is to build fiber-optic networks to provide connectivity at 1 gigabit/sec, which is more than 20 times faster than most connections but would cost about $5,000 per connection. TV content producers like Discovery have started benefiting from consolidation of cable channels as they are able to collect fees more efficiently. A Walt Disney led consortium is to acquire into Bus Online of Beijing, which sells ad space in buses.

GE has charged Mitsubishi of infringement of two of its patents related to windmills, Areva, builder of nuclear plants, is acquiring solar firm Ausra of California, and FirstEnergy of Ohio will have a capacity of 24,000 mw after it completes purchase of Allegheny of Pennsylvania.

In the latest quarter, Coke volumes grew 29% and 28% in China and India, respectively. Pepsi was up 21% in India but negative in China. Confused? It is rather difficult to imagine Indians gulping 25% more in Q4-2009 than in Q4-2008. Cue for researchers – look at corresponding beer numbers.

McDonald’s is to close 430 of its 3,700 outlets in Japan, and SK Foods, one of the four companies that together buy all tomatoes produced in US, has admitted to having bribed executives of Kraft, Safeway, Pepsi and others. Marriott’s average revenue per room was down 12.3% last quarter.

Discover Financial sued Master and Visa for having coerced banks into not issuing Discover cards and won a $2.75 bn suit but the judge says it must be shared with Morgan Stanley, from whom Discover was spun off in 2007. J&J and Wal-Mart face two class action suits for sale of a supposedly toxin children’s shampoo, and Koito (Toyota group) has admitted it falsified safety data about passenger seats it supplies Airbus and Boeing. Toyota chairman is being criticised at home for not being adequately shameful about his company’s safety records and is expected to bow more when he visits the US next month.

A Sanofi-sponsored research says at least 27 mn Americans take anti-depressants and need to manage their problems better, a Singapore research says two cans of soft drinks a week increase risk of pancreatic cancer, and a Leicester University research says cheap electronic goods from China have caused problems for British burglars because economic viability of their activities has been adversely hit.

A restaurant in Dubai is offering a fat-free Camel Burger, and “Up in the Air,” originally shot as a documentary, went on to become a movie that won six Oscar nominations. China is fighting Google but a love supermarket is offering dating services after a $3 registration, and A msterdam found cocaine in roses imported from LatAm last week.

Austrian billionaire Rabeder has decided to give all his money to a charity that would offer microcredit in LatAm, a British think tank has suggested a 21 hr work week, and believe it or not but Sarah Palin is actually shifting to socialist thinking, perhaps hoping to be the first woman President of the US.


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