Sunday, 16 May 2010

“We aren’t Greece,” Krugman screamed, tweeted and blogged last week.
“You aren’t Greece but you will be if you don’t move fast enough and when you do become Greece, you will make the whole world Greece,” a tweet back to him.

The trillion dollar European plan for saving the euro failed to “shock and awe” and the trio of Greece, Spain and Portugal saw euro plunging to 1.22 while oil hurtled towards $70 at an unbelievable speed last week. What the scene will be if dollar attained parity with euro and oil touched 50? A euro buys in Europe less than what a dollar buys in the US and perhaps euro-dollar parity would turn out to be nirvana for eurozone like it did in the aftermath of the dotcom bust. Impact on Asia may not be as intense as is expected since domestic consumption is growing.

The volcano in Iceland erupted yet again, bringing aviation in Europe to a near standstill yet again. May be it would stop only when rich boys UK and Denmark stop bullying the tiny nation for recovering a debt the people of Iceland do not owe.

The consumer in the developed world has to cut consumption. Should oil plunge to 50 or below, all economic data and GDP figures will go haywire, making data dressing a difficult task. Economics of solar and wind energy would change dramatically and the developed world would find it even more difficult to compete with Asian manufacturers.

The trillion dollar plunge in NYSE market cap on May 6 rattled Washington last week, leading to Washington summoning St operators to unravel the mystery that some attributed to extraterrestrials and N Korea too. Paranoia made way for some pragmatism by week end and the US moved closer to comprehending the meaning of unfettered financial innovation. Senate voted to leash the credit card industry and prosecutors probing big boys of the St (Goldman, Morgan Stanley, Citi, Deutsche, JPMorgan, Merrill Lynch, UBS, Credit Agricole and Credit Suisse) accelerated investigations.

However, as on date, the St is busy with swaps, CDOs and leveraged loans as if Lehman happened in 1929, not 2008. Nevertheless, the strain of managing the world’s largest economy has started showing on Obama and Geithner, both of whom have aged a decade in less than two years.

As the tech sector moves to make the consumer move from laptops to smaller devices, wars in smartphones market have started becoming smarter. Google says its Android software had displaced iPhone as the second largest smartphone software, prompting Apple to contest the claim. HTC, Apple and Nokia are engaged in patent wars, each accusing the other two of infringement. Looks like it is Apple’s profitability, not volumes, that has made rivals sit up; Nokia has changed management twice in seven months as its revenue dipped 19% last year and profit plunged 76%.

Meanwhile, Wal-Mart seems to be in for further growth in sales of mobile-phone services as consumer appetite for pre-paid (contract-free) SIM cards is growing. P&G is realizing the awesome power online communities have vested in the consumer as moms across US have ganged up against Dry Max diapers.

Mobile and cloud computing are the hot areas with Microsoft claiming 500 mn users and Google 25 mn. SAP has bought accounting software firm Sybase for $5.8 bn and one reason is it wants its solutions to be accessible from mobile devices. Microsoft has updated its Office software yet again but whether it has made some sensible change this time would be clear only by 2011. Global online adspend is now over 15% of total.

In last ten years 227 companies fell off the Global Fortune 500 list. Farmers in China bought over 20 mn household appliances in Jan-Apr as subsidies continue to be doled out in rural areas. The new British PM called the change of guard a historic and seismic shift but few expect any radical change in policies.

China is tripling subway rail system under a $146 bn plan. Malaysia has raised interest rates for the second time this year. After US, debate on healthcare has started intensifying in Germany. In 12 months to 31 March 2010 US saw 1.53 mn bankruptcy filings and the country is losing $60 bn in taxes because of transfer pricing by its MNCs.

The worst seems to be over for Toyota as its sales in US have recovered despite recall of 8 mn vehicles. In year to March 2010 its sales fell less than 100,000 units in US. Volkswagen says it will have to pay money to get rid of its Spanish unit Seat that had operating losses of 340 mn euros last year; its Bentley unit is also losing money. SABMiller has patented an easy-to-open beer can that converts into a drinking cup when the top has been removed.

Michelle Obama wants to eradicate the 15% childhood obesity in one generation and hubby is backing her. Research says British bureaucrats working 10-11 hours suffer more heart problems than those putting in only 7 hrs and 55% of Russians believe bribes have to be paid for most public services; Russia is ranked 146th on the corruption perception index. The private prisons industry in US has probably crossed the billion dollar mark as it continues to have 0.756% of population in jails and private prisons offer lower escape and mortality rates.

Driving schools in Japan are offering lessons in driving BMWs with massage and manicures thrown in. Chinese households are offering foreign visitors free stay in exchange for lessons in English. Whistleblowers in US received $2.39 bn in awards between 1987 and 2009 for providing information on companies making false claims for their products, the latest being a $45 mn award shared by two who said AstraZeneca was marketing a schizophrenia drug by making false claims. Abu Dhabi now has a vending machine selling gold and Google says its cars photographing streets around the world have inadvertently collected personal data of individuals tapping open WiFi networks.

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