Wednesday, January 11th, 2012
FoxConn, which at last count had well over 1 million workers and rising, appears to have had enough of being the global electronic gadget sweatshop, and as the Telegraph reports, saw its workers threaten with mass suicides unless working conditions are not improved. “Around 150 Chinese workers at Foxconn, the world’s largest electronics manufacturer, threatened to commit suicide by leaping from their factory roof in protest at their working conditions. The workers were eventually coaxed down after two days on top of their three-floor plant in Wuhan by Foxconn managers and local Chinese Communist party officials.” Does this mean that in the latest Apple prospectus there will be a Risk Factor which says: “Our profit margins may be severely impaired if our contracted work force decides to proceed with mass self-induced genocide.” We will find out, but if anyone needed a loud and clear warning that the record profitability of high margin electronics producers is about to go down, this is it.
Needless to say, this is not the first time FoxConn has had close encounters of the suicide kind:
Foxconn, which manufactures gadgets for the likes of Apple, Sony, Nintendo and HP, among many others, has had a grim history of suicides at its factories. A suicide cluster in 2010 saw 18 workers throw themselves from the tops of the company’s buildings, with 14 deaths.
In the aftermath of the suicides, Foxconn installed safety nets in some of its factories and hired counsellors to help its workers.
The latest protest began on January 2 after managers decided to move around 600 workers to a new production line, making computer cases for Acer, a Taiwanese computer company.
“We were put to work without any training, and paid piecemeal,” said one of the protesting workers, who asked not to be named. “The assembly line ran very fast and after just one morning we all had blisters and the skin on our hand was black. The factory was also really choked with dust and no one could bear it,” he said.
What next? Each iPad coming with a disclaimer: “No Chinese workers committed suicide in the creation of this product“?
Several reports from inside Foxconn factories have suggested that while the company is more advanced than many of its competitors, it is run in a “military” fashion that many workers cannot cope with. At Foxconn’s flagship plant in Longhua, five per cent of its workers, or 24,000 people, quit every month.
“Because we could not cope, we went on strike,” said the worker. “It was not about the money but because we felt we had no options. At first, the managers said anyone who wanted to quit could have one month’s pay as compensation, but then they withdrew that offer. So we went to the roof and threatened a mass suicide”.
China has “dealt” with the issue:
A spokesman for Foxconn confirmed the protest, and said that the incident was “successfully and peacefully resolved after discussions between the workers, local Foxconn officials and representatives from the local government”.
He added that 45 Foxconn employees had chosen to resign and the remainder had returned to work. “The welfare of our employees is our top priority and we are committed to ensuring that all employees are treated fairly,” he said.
So all is well – please resume your sweatshop-facilitated iTunes enjoyment.
Tags: Assembly Line, Chinese Communist Party, Chinese Workers, Close Encounters, Computer Cases, Computer Company, Electronic Gadget, Electronics Manufacturer, Grim History, Mass Suicide, Mass Suicides, Party Officials, Profit Margins, Record Profitability, Risk Factor, Safety Nets, Sweatshop, Telegraph Reports, Working Conditions, Wuhan
Posted in Markets | Comments Off
Tuesday, September 6th, 2011
Investment vehicle NBNK is discussing the takeover of National Australia Bank’s UK assets, the Telegraph reports, in a deal that will kick-start the formation of a new banking group that could challenge Britain’s largest lenders. http://ftalphaville.ft.com/thecut/2011/09/06/669726/nbnk-looks-to-strengthen-lloyds-bid/
Big US banks in talks with state prosecutors to settle claims of improper mortgage practices have been offered a deal that is proposed to limit part of their legal liability in return for a multibillion dollar payment. The FT says talks aim to settle allegations that banks including Bank of America, http://ftalphaville.ft.com/thecut/2011/09/06/669681/us-banks-in-robosigning-settlement-talks/
Eurozone bank sector tensions have increased the volume of euros parked overnight at the European Central Bank to levels not seen for more than a year, the FT reports. Some €151.1bn was left by banks in the ECB’s deposit facility over last weekend, http://ftalphaville.ft.com/thecut/2011/09/06/669596/banks-park-record-volume-of-euros-at-ecb/
George Osborne needs to “step up a gear” and deliver a game-changing growth plan if he is to have a chance of reviving a flagging British economy in 2012, the CBI warned as it downgraded its forecasts for next year after a tumultuous August. http://ftalphaville.ft.com/thecut/2011/09/06/669526/cbi-presses-osborne-on-growth/
President Barack Obama used a Labor Day rally to call again for more infrastructure spending and a payroll tax cut ahead of Thursday’s nationally televised jobs speech, reports Reuters. “We’ve got more than 1 million unemployed construction workers ready to get dirty right now. http://ftalphaville.ft.com/thecut/2011/09/05/669511/obama-previews-big-jobs-speech/
Indian authorities have arrested a top mining baron as part of a crackdown on illegal iron ore extraction, in the latest move to stamp out political corruption in the country, reports the FT. Janardhan Reddy,http://ftalphaville.ft.com/thecut/2011/09/05/669426/indian-tycoon-held-in-illegal-mining-swoop/
Libyan oil production will not return to pre-war levels until late next year at the earliest, with many of the country’s oil facilities having suffered heavy damage and looting during the conflict, according to the newly appointed chairman of the country’s National Oil Company. Offering the most detailed assessment yet of the outlook for Libya’s oil output in an interview with the Financial Times, Nuri Berruiensaid it would be late 2012 or early 2013 before the country was again producing the 1.6m barrels per day it had before this year’s uprising agains Muammer Gaddafi . http://www.ft.com/intl/cms/s/0/c382946a-d7b5-11e0-a06b-00144feabdc0.html#axzz1X96Le14n
A Chinese official confirmed on Monday that Colonel Gaddafi’s regime sent representatives to China to discuss buying weapons from arms companies long after the imposition of UN sanctions but said the Chinese government was unaware of the visit at the time. Jiang Yu, the official, also stressed that no contracts were signed and no arms shipments were made. The revelations were first reported by the Globe and Mail of Toronto. http://www.ft.com/intl/cms/s/0/77a3e566-d7bb-11e0-a06b-00144feabdc0.html#axzz1X96Le14n
Asian shares fell on Tuesday, while the euro slid to a one-month low against the U.S. dollar as euro-zone sovereign debt concerns and global growth worries continued to drive investors from riskier assets. Japan’s Nikkei Stock Average shed 1.2%, Australia’s S&P/ASX 200 fell 1.2%, South Korea’s Kospi Composite lost 0.6% and New Zealand’s NZX-50 gave up 0.5%. Dow Jones Industrial Average futures were sharply down 246 points in screen trade. http://online.wsj.com/article/SB10001424053111904537404576553373055634128.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
Australia’s central bank left its cash rate target unchanged at 4.75% Tuesday, as expected by economists. Interest rates have now been on hold for almost a year, with the Reserve Bank of Australia balancing inflation concerns against an increasingly fragile world environment and signs of slowing in some industries locally. A high Australian dollar has also taken pressure off the central bank to tighten interest rates beyond its current “mildly restrictive” stance. The RBA raised interest rates seven times between October 2009 and November 2010, giving Australians some of the highest interest rates in the developed world. http://online.wsj.com/article/SB10001424053111904537404576553621174335878.html?mod=WSJASIA_hpp_LEFTTopWhatNews
International financial markets tumbled as a darkening global economic outlook and deepening fissures in Europe over its debt crisis fueled fears the world economy could slip into a period of prolonged malaise.The Stoxx Europe 600 index fell 4.1% Monday, with banks hard hit. The euro slid below $1.42, its lowest in a month. The declines followed a slide in Asia, where stock indexes in China and Japan dropped by about 2% Monday. On Tuesday morning Asian markets again moved lower, with Japan shares falling 1.2% by late morning. During early Asian trading the 10-year U.S. Treasury yields hit ashttp://online.wsj.com/article/SB10001424053111904537404576552871868770308.html?mod=WSJ_hp_LEFTTopStories
Italy’s industry minister has dismissed widespread calls for Rome to speed up its timetable for passing budget-tightening measures, rebutting criticism that the Italian government’s austerity package isn’t tough enough to dig the country out of the euro-zone debt crisis. http://online.wsj.com/article/SB10001424053111904537404576552383582883442.html?mod=WSJEurope_hpp_LEFTTopStories
South Korea’s revised second-quarter gross domestic product growth grew a revised, seasonally adjusted 0.9% from the previous quarter, confirming that Asia’s fourth-largest economy is slowing amid growing concerns about the possibility of the world economy falling into a double-dip slump. The revised growth rate is slightly faster than the 0.8% rate estimated by the Bank of Korea in July, but slower than the 1.3% on-quarter expansion in the first quarter. http://online.wsj.com/article/SB10001424053111904537404576553332497846662.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
U.K. retailers are braced for more downbeat news as summer earnings are expected to show continued weak consumer demand, especially for hard-hit electrical retailers, with the sector still nursing the wounds of the August riots and economic and market turmoil. Analysts expect no respite until December. Meanwhile, consumer confidence continues to fall and the threat of a return to recession looms large. Polling firm GfK NOP Wednesday said its main measure of consumer confidence fell to minus 31 in August, equalling the low it hit in April. In July, the index stood at minus 30. http://online.wsj.com/article/SB10001424053111904900904576552333414548232.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
Swiss bankers and politicians on Monday tried to deflect growing pressure from U.S. authorities on Switzerland to reveal additional client data in a continuing tax dispute between the two countries. Concerns arose over the weekend that the banks may have to hand over more client data by Tuesday, as details of a letter from U.S. Deputy Attorney General James Cole asking for more account information from potential U.S. tax dodgers became public, triggering a sharp response http://online.wsj.com/article/SB10001424053111904537404576552132246760552.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
Deutsche Bank AG Chief Executive Josef Ackermann warned that prospects for the financial sector are constrained by the mounting debt burden of sovereign and private debtors and that Germany’s largest bank might need to shed jobs if the negative market trend from August continues. Mr. Ackermann conceded that European banks don’t face a “rosy” future in their home markets unless they can gain market share. Deutsche Bank has made an attempt at this by taking over retail bank Deutsche Postbank and other units. http://online.wsj.com/article/SB10001424053111904537404576552110978260194.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
Spot gold hovered around $1,900 an ounce on Tuesday, as renewed fears over the euro zone’s debt crisis and concerns about stalled global growth drove investors to seek safety in bullion. Spot gold was flat at $1,900.64 an ounce by 0257 GMT, after hitting an intra-day high of $1,903.09 earlier, about $8 off the record of $1,911.46 set on August 23. U.S. gold gained 1.4 percent to $1,903.80. Spot gold is expected to touch $1,916 before it starts a moderate retracement, said Reuters market analyst Wang Tao. http://www.reuters.com/article/2011/09/06/us-markets-precious-idUSTRE78401J20110906
Oil fell more than 2 percent for a third successive day of losses on Monday, tumbling in tandem with other risk assets as European bank and debt jitters and doubts over global growth haunted traders. ICE Brent futures for October fell $2.25 to $109.92 a barrel by 3:30 EDT, nearing the 200-day moving average support line at $109.26. U.S. crude futures dropped $2.85 to $83.61 a barrel, putting the closely watched Brent/WTI spread at what would be a record close of $26.31. Volume was predictably thin, with Brent crude at only about 40 percent of its average and U.S. trading at 10 percent.http://www.reuters.com/article/2011/09/05/us-markets-oil-idUSTRE77838320110905
China’s economic growth may ease to below 9 percent in 2012, partly due to a weak global economy, a senior Chinese foreign exchange official said on Tuesday, backing market expectations that the world’s No. 2 economy is set for a mild easing. But even as the economy cools, Huang Guobo, the chief economist at China’s currency regulator, the State Administration of Foreign Exchange, told a forum that inflation is still a policy focus for Beijing in coming months. “The Chinese economy is facing serious challenges despite strong growth,” Huang said. http://www.reuters.com/article/2011/09/06/us-china-economy-safe-idUSTRE7850F020110906
Australian banks will need to meet new global capital rules ahead of the internationally agreed timetable under proposals made on Tuesday, although the move is unlikely to force any of them to raise any new equity immediately. The new Basel III rules, aimed at preventing another global banking crisis, require lenders to hold more capital aside in the form of equity, reserves and retained earnings in case of a sharp economic downturn. http://www.reuters.com/article/2011/09/06/us-australia-banks-idUSTRE78501D20110906
German Chancellor Angela Merkel told members of her Christian Democrats that Greece will not receive aid payments due this month unless it meets conditions of the rescue, two party officials said. The remarks, made at a meeting of ruling party lawmakers in Berlin late yesterday, were repeated by Finance Minister Wolfgang Schaeuble and reiterate existing policy, one of the officials said, speaking on condition of anonymity because the talks were in private. http://www.bloomberg.com/news/2011-09-05/merkel-said-to-tell-cdu-members-that-greece-must-meet-conditions-for-aid.html
Hurricane Katia “strengthened considerably” to a category 4, the second-highest level, as it churned over the Atlantic, the National Hurricane Center said. Katia had maximum sustained winds of 135 miles (215 kilometers) per hour, according to an advisory at 11 p.m. New York time yesterday. The system was about 450 miles south of Bermuda traveling northwest at 10 mph. http://www.bloomberg.com/news/2011-09-06/hurricane-katia-strengthens-to-category-4-travels-in-northwest-direction.html
The number of chief executive officers cutting profit forecasts fell 38 percent below average last month, even as the slowing economy pushed valuations to the lowest level at the start of September since 1985. A total of 138 companies reduced earnings forecasts in August, compared with the average of 221 for the same month since 2000, according to data compiled by Bloomberg. At the same time, the Standard & Poor’s 500 Index slumped 5.7 percent, pushing its price-earnings ratio to 13.3, the data show. Futures on the S&P 500 that expire this month fell as much as 2.8 percent today.http://www.bloomberg.com/news/2011-09-06/ceos-cutting-forecasts-fall-38-with-s-p-cheapest-in-september-since-1985.htmlCnbc.com
The current liquidity support measures being used by the European Union to stem the region’s banking and sovereign debt crisis won’t be enough, World Bank President Robert Zoellick told CNBC in an interview on Tuesday. “They’ve tried to pump money into it, they’ve tried in the past month… the ECB bought a lot of bonds. But, I think dealing with these problems through liquidity measures will not be sufficient,” Zoellick said during a visit to Singapore. http://www.cnbc.com/id/44403874
Republican presidential hopeful Mitt Romney will propose a jobs plan to cut corporate taxes, reduce federal regulations and get tough against China on trade. In a column set to appear in Tuesday’s USA TODAY newspaper, the former Massachusetts governor said his plan would consist of 59 proposals, including 10 that he would introduce on his first day in office. http://www.cnbc.com/id/44402688
The austerity measures implemented by British finance minister George Osborne risk pushing the UK economy into recession, Bill Gross, the manager of PIMCO, said in an interview with the Times newspaper. Gross, who manages the world’s biggest bond fund, told the newspaper that a “mid-course correction” of the fiscal plans would lift the economy and should not damage the country’s standing with bond investors. http://www.cnbc.com/id/44225214
The German constitutional court could, but probably won’t, throw the euro into chaos when it issues a key ruling Wednesday on Germany’s participation in the rescue mechanism for fiscally troubled euro members. But, analysts say, the judges are likely to impose restrictions on the German government that could make decision making in the zone even more cumbersome than it already is.http://www.nytimes.com/2011/09/06/business/global/german-court-ruling-could-complicate-euro-zone-decisions.html?_r=1&ref=global
Australia’s current-account deficit narrowed by 3.69 billion Australian dollars ($3.87 billion), or 33%, to A$7.41 billion in the April-June quarter, the Australian Bureau of Statistics reported Tuesday. Exports increased 8% to A$5.83 billion, while imports increased 4% to A$2.98 billion, the ABS said. In seasonally adjusted terms, the net deficit rose 19% to A$10.22 billion in the quarter. This is expected to detract 0.5 percentage points from April-June gross domestic product growth, the ABS said. http://www.foxbusiness.com/2011/09/05/australias-current-account-deficit-narrows/#ixzz1X9A3fRuj
The World Trade Organization’s top court on Monday upheld a prior ruling that the United States has the right to impose additional duties on imports of Chinese tires, U.S. Trade Representative Ron Kirk said in a statement. The WTO decision involves a dispute that began after the U.S. imposed 35% duties in September 2009 after the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers Union complained rising Chinese imports were damaging U.S. producers. The WTO verdict is a “tremendous victory for the United States as well as for American workers and manufacturers,” Kirk said in the release. http://www.foxbusiness.com/2011/09/05/wto-rules-against-china-over-us-tire-tariffs/#ixzz1X9A8ote8
A number of European banks would not survive a cut in the value of their sovereign debt investments, the chief executive of Deutsche Bank has warned. Speaking at a gathering of bank bosses in Frankfurt, Josef Ackermann said he was “stating the obvious”. His comments come as Greece is asking private investors to swap their current Greek bonds for others that pay less interest over a longer term.http://www.bbc.co.uk/news/business-14786589
Europe will not slide back into recession, and the euro remains “strong and resilient”, the president of the European Commission has said.Jose Manuel Barroso added that the Commission and national governments were “doing all it takes” to tackle the debt problems in the eurozone area. His comments came after rating agency Standard & Poor’s (S&P) said last week that the risk of a double dip recession in the eurozone had grown. http://www.bbc.co.uk/news/business-14784180
Forty-nine billion pounds was wiped off the value of the UK’s leading shares on Monday following renewed fears over the health of the British economy and concerns over the fate of British banks being sued by US regulators. The FTSE 100 tumbled 3.6pc – 189.45 points – to close at 5,102.58 after investor confidence was knocked by an unexpectedly sharp fall in services sector growth in August. The Markit/CIPS services purchasing managers’ index fell to 51.1 in August from 55.4 in July, the biggest drop since the foot and mouth crisis a decade ago. Economists were alarmed by the scale of the fall, which had been far larger than expected and triggered fears that the UK is now on course for a double-dip recession. http://www.telegraph.co.uk/finance/financialcrisis/8742841/FTSE-100-sees-49bn-wiped-off-shares-on-euro-fears-and-bank-lawsuit.html
Alarm bells were sounded over prospects for the British economy after growth in Britain’s dominant services sector slowed last month at its fastest pace since the 2001 foot and mouth crisis. The decline in growth increased the likelihood of further stimulus from the Bank of England, economists said. Activity was much weaker than economists had expected, falling to 51.1 in August from 55.4 in July on the Markit/CIPS services purchasing managers’ Index (PMI). It was the second-biggest fall on record, and confounded forecasts for a gentler drop to 54, although it remained above the crucial 50-mark that divides growth from contraction. http://www.telegraph.co.uk/finance/economics/8742519/Services-growth-slows-at-fastest-pace-since-2001.html
Bank bosses fighting proposals to force them to ringfence their high street operations from higher-risk investment banking businesses have been handed fresh ammunition today with a warning that the suggested split could wipe 0.3% off gross domestic product at a time when economic growth looks increasingly fragile. http://www.guardian.co.uk/business/2011/sep/05/item-club-ringfencing-gdp
In leaving its cash rate unchanged at 4.75 per cent today, the Reserve Bank effectively conceded that the next move in rates will be determined by events outside its and Australia’s control. The signs are however that it will cut rates if it gets the room to do so. In its statement announcing that its key rate had been left unchanged for a ninth consecutive month, the Reserve cited a litany of worries. http://www.smh.com.au/business/rates-out-of-rbas-control-20110906-1jvfa.html#ixzz1X9BvSDIJ
Economic data released today poured cold water on expectations tomorrow’s national accounts will reveal a big bounce in economic activity in the june quarter. In short, the seasonally adjusted real-terms figures showed government spending fell and imports grew faster than exports.The 0.4 per cent fall in government spending – mainly the result of falls in capital investment – will trim a tenth of a percentage point from growth. http://www.smh.com.au/business/big-gdp-rise-looks-less-likely-20110906-1jvb2.html#ixzz1X9C14lYi
A global recession is more likely than not as the US and European economies are at “stall” speed, Singapore’s finance minister says. Tharman Shanmugaratnam told a conference that the world has now “entered a phase where there is a self reinforcing cycle” of a loss of consumer confidence, which is leading companies to hold back on investing. “Asia will not be immune to a global slowdown. We are already at stall speed in US and Europe, which means we are now more likely than not to see a recession,” Mr Tharman said. http://www.smh.com.au/business/world-business/global-recession-likely-singapore-says-20110906-1jv8e.html#ixzz1X9C5o7Fm
Russia’s central bank has urged the country’s finance houses to sell stocks and diversify their portfolios in preparation for another European market implosion in the months to come. The bank said it had conducted a stress test showing the country’s banks losing 351 billion rubles ($11.3 billion) from a 20 per cent decline on the main European exchanges – a figure equivalent to more than six months of industry profits. “The main foreign markets threat is not coming from the US and its low (debt) rating, but from the European market,” said Sergei Moiseyev of the central bank’s financial stability department.http://www.smh.com.au/business/world-business/russian-central-bank-warns-of-european-crisis-fallout-20110906-1jurx.html#ixzz1X9CClqRp
Will a cut follow the pause? The question of how long Mark Carney will wait before he raises interest rates has shifted to include the possibility he could reduce borrowing costs in the face of a global slowdown. As warning signs for the recovery flash red, Mr. Carney is expected to keep Canadian interest rates on hold this week and could indicate that his year-long pause will continue for several months. http://www.theglobeandmail.com/report-on-business/carney-rate-pause-expected-but-cut-could-follow/article2154036/
European Commission chief Jose Manuel Barroso said he is confident the euro will survive and that the European Union will emerge stronger from the current economic crisis. Speaking as European markets tumbled on renewed fears over the risk of recession and euro zone debt, Mr Barroso expressed confidence that the fiscal consolidation and structural reform efforts underway would work.http://www.straitstimes.com/BreakingNews/Money/Story/STIStory_709928.html
The head of the World Bank on Monday urged China to rebalance its export-driven economy and said taming rising inflation remained the most important challenge for the country in the short term. Robert Zoellick said the world’s second-largest economy would have to focus more on domestic demand, and warned that the coming months would be a ‘sensitive time’ for many of the major developed economies.http://www.straitstimes.com/BreakingNews/Money/Story/STIStory_709687.html
South Korean economy is facing high inflation at home and growing external uncertainties from abroad, the finance ministry said Tuesday. “Amid high inflation at home, the economy is faced with downside risks of the global economy and expanding volatilities in the financial markets at home and abroad,” the Ministry of Strategy and Finance said in a so-called Green Book, a monthly report assessing the nation’s economic conditions. “Our economy saw employment continue to improve, but consumer price inflation rose sharply to the 5 percent range with some economic indicators faltering,” the report said. http://news.xinhuanet.com/english2010/business/2011-09/06/c_131102567.htm
Food banks like this one distributed 823,000 free meals to New Yorkers in 2010, up 30 percent from the previous year. Almost a fifth of New York residents are living below the federal poverty level, according to a 2009 study by the U.S. Census Bureau. A 2010 survey by the NYC Hunger Experience concluded that one out of three residents reduced their food intake during the recession to get by financially. http://news.xinhuanet.com/english2010/business/2011-09/06/c_131100867.htm
Retail trade volume in the eurozone rose by 0.2 percent in July compared with the previous month, the European Union’s (EU) statistical bureau Eurostat said on Monday. In July, food, drinks and tobacco dropped by 0.4 percent, while the non-food sector increased by 0.5 percent in the 17-member bloc. Year-on-year, the retail sales index declined by 0.2 percent in the euro area, according to Eurostat. Revised figures showed retail sales in the eurozone in June rose by 0.7 percent month-on-month and dropped by 0.7 percent year-on-year. http://news.xinhuanet.com/english2010/business/2011-09/05/c_131100620.htm
The fiscal policy would strengthen the goal of anti-inflation to ease the inflation affecting the domestic consumers, especially those mid & low income families, Bai Jingming, the deputy director of the Research Institute For Fiscal Science with the Ministry of Finance, said in a forum recently. Bai Jingming said, China`s fiscal policy tries to ease the inflation affecting the common people through subsidy. The policymakers might enlarge the subsidy scope in the later days. http://www.cs.com.cn/english/ei/201109/t20110905_3044255.html
The large-scale illegal mining in Karnataka, which is spilling over to Andhra Pradesh, has started taking its toll, with the first arrests by the CBI of Mr Gali Janardhana Reddy, a mining baron and former Tourism Minister of Karnataka, and Mr B.V. Srinivasa Reddy, Managing Director of Obulapuram Mining Corporation (OMC). In an early morning swoop on the palatial ‘Kuteera’, residence of Mr Reddy in Bellary town, about 350 km from Bangalore, a 12-member team of the CBI (Central Bureau of Investigation) took into custody Mr Janardhana Reddy. They also questioned his wife Aruna Lakshmi.http://www.thehindubusinessline.com/industry-and-economy/economy/article2425828.ece?homepage=true
Monsoon is now running in ‘surplus’ mode, having precipitated two per cent more than the normal for the season until now. Peninsular and central India has notched up nine per cent surplus while the northwest has run up five per cent in what has been a roller-coaster ride thus far. EAST IN DEFICIT. East and northeast is slowly falling back into deficit, assessed latest at 16 per cent. The rains have been biased to the west, central and northwest, which is normally a pattern identified with La Nina conditions in the Pacific. West Rajasthan (+44 per cent) and east Rajasthan (+32 per cent) are leading the surplus charts in the northwest, with no other subdivision in the region reaching anywhere near. http://www.thehindubusinessline.com/industry-and-economy/agri-biz/article2427147.ece?homepage=true
Keeping India’s credit outlook unaltered, global rating agency Moody’s on Monday projected the country’s GDP (gross domestic product) growth for the current fiscal at 7.5-8 per cent and cited high domestic interest rates coupled with the current global uncertainties as the near-term factors that could affect its economic expansion. Pegging India’s overall growth for 2011-12 at the same level as estimated by the Reserve Bank of India, Moody’s noted in its annual sovereign credit update on India that the ‘cyclical slowdown’ was unlikely to alter its credit outlook. http://www.thehindu.com/business/Economy/article2427338.ece
The slowdown in the U.S. economy has not seen any immediate pull back on existing projects. Investments into the existing projects are continuing, claims Phaneesh Murthy, Chief Executive Officer of iGATE Patni. Nevertheless, he expects customers to start monitoring more closely investments into newer projects. “My concern is that if the current slowdown persists for another quarter, customers could get into budgeting discussions in a negative environment. If that happens, the IT budgets for 2012 could be impacted and that does not augur well for 2012 for the Indian IT industry,” he said.http://www.thehindu.com/business/companies/article2426557.ece
The country’s textiles and clothing exports are expected to touch USD 32.35 billion in the 2011-12 fiscal, Parliament was informed today. “An exports target of USD 32.35 billion has been prescribed for the textiles and clothing sector for 2011-12. During 2010-11, the textiles sector achieved an export figure of USD 26.8 billion,” Textiles Minister Anand Sharma said in a written reply to the Lok Sabha here.http://economictimes.indiatimes.com/news/economy/foreign-trade/textiles-clothing-exports-to-touch-32-35-billion-in-fy12-textiles-minister-anand-sharma/articleshow/9872074.cms
Nigeria’s central bank plans to diversify its $33bn in foreign exchange reserves away from the dollar by switching a tenth of the stockpile into yuan, underlining the momentum behind China’s drive to internationalise its currency. “We are looking at anything to start with from 5% to 10% of our reserves,” central bank governor Lamido Sanusi said on Monday. The central bank has already said that it is considering reducing its reliance on the dollar, which economists say accounts for the bulk of its $32.96bn in reserves. The bank does not publish the currency composition of its assets.http://www.fin24.com/Economy/Nigeria-to-put-reserves-into-yuan-20110905
To prevent a freeze of its foreign reserves Iran withdrew its deposits from foreign banks and allocated 13 billion dollars of that reserves to buying gold and now that value of that gold has tripled. Bahmani said the central bank bought gold at a price of $656 per ounce and now the price of each ounce of gold has jumped to 1870 dollars and this shows that value of the gold that Iran bought has increased about three times. The central banker also added that value of Iran’s foreign exchange reserves has increased 6.5 billion dollars as the central bank changed some its reserves from dollar to other currencies.http://tehrantimes.com/index.php/economy-and-business/2255-value-of-irans-gold-reserves-triples-cbi-
The struggling decade-old Doha Development Round of free-trade talks must not be allowed to collapse, India’s trade minister said on Monday. The call came as failure threatens the negotiations on expanding the global free trade system by cutting subsidies and barriers for farm produce and reducing import tariffs on industrial goods and services. “We must not allow this round to collapse,” Anand Sharma told a trade gathering also attended by World Trade Organization (WTO) chief Pascal Lamy. http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/internationalbusiness/2011/September/internationalbusiness_September11.xml§ion=internationalbusiness
From one of the most intelligent minds and the father of Black Swans. Taleb on banks, moral hazard, and bonuses. Don’t forget he is probably rather short the market…. For the American economy – and for many other developed economies – the elephant in the room is the amount of money paid to bankers over the last five years. For banks that have filings with the US Securities and Exchange Commission, the sum stands at an astounding $2.2 trillion. Extrapolating over the coming decade, the numbers would approach $5 trillion, an amount vastly larger than what both President Barack Obama’s administration and his Republican opponents seem willing to cut from further government deficits. http://www.thetrader.se/2011/09/06/the-great-bank-robbery/
Probably one of the better papers on the European situation and the possible solutions, that was presented on The Trader some time ago. With renewed dynamics in the region, a report well worth reading. We see three plausible scenarios in the coming months: http://www.thetrader.se/2011/09/05/europe-on-the-brink-2/
Sell in May…? Once again, we had the usual “this time is different” arguments at the time. Back in May (3 months ago), people couldn’t think clearly, as QE2 was giving Investors a blurry picture. Many were talking of the resilient Economy, and “this time IS different”. But, boy, were they wrong. It is NEVER different. From ING research back in May; http://www.thetrader.se/2011/09/05/sell-in-may-this-time-is-different/
Tags: Bank Of America, Banking Group, Banks Park, Barack Obama, Bonds, British Economy, Canadian, Crude Oil, George Osborne, Gold, India, Indian Authorities, Infrastructure, Investment Vehicle, Iron Ore, Mortgage Practices, Multibillion Dollar, National Australia Bank, News That Matters, Ore Extraction, Outlook, Payroll Tax, Political Corruption, Record Volume, Settlement Talks, State Prosecutors, Telegraph Reports
Posted in Bonds, Brazil, Canadian Market, Gold, India, Infrastructure, Markets, Oil and Gas, Outlook | Comments Off
Sunday, November 21st, 2010
A few days back we asked whether if as part of the now certain Irish austerity package, the imminent rise in the corprate tax rate for offshore companies based in Ireland would result in a crunch in the bottom line for US corporations such as Google. Now that a hike from the prevailing 12.5% rate is inevitable, US companies have launched an offensive to make it clear that only Irish citizens will be subject to the critical austerity measures. The Telegraph reports that “the Irish government has been given a stark warning from some of the biggest American companies in Ireland on the risk of a mass exodus if the country’s low corporation tax rate is raised.” If companies, which are purely circumventing much higher US corporate tax rates, also have to share the austerity burden, they will simply depart from the already insolvent country, leaving it with even less tax revenues, thus accelerating the toxic loop of greater insolvency coupled with even less revenue. And since the IMF is backed primarily by the US, which is end-domicile to the bulk of the corporations in question, it is obvious that MNCs have all the leverage and will most certainly get their wishes, further widening the chasm between the “corporation” and the simple Guinness-drinking, potato chewing peasant. In the brave new world, the pursuit of life, liberty and happiness applies only to (bailed out) banks and corporations. Everyone else has been relegated to footnote status.
More from the Telegraph:
The warning – from executives at Microsoft, Hewlett-Packard (HP), Bank of America Merrill Lynch and Intel – spoke of the “damaging impact” on Ireland’s “ability to win and retain investment” should the country’s corporation tax rate be increased from 12.5pc.
It came as talks between members of the Irish government and the European Union and the International Monetary Fund continued around the clock on a financial aid package of as much as €100bn to shore up the country’s beleaguered banking system.
Although Brian Lenihan, the Irish finance minister, has indicated Ireland’s 12.5pc corporation tax rate – the lowest in the eurozone – will not be raised, a number of factions within the European Union are known to have pushed for it to be increased in return for the bail-out.
Nicholas Sarkozy, the French president, said yesterday that while raising taxes will not be a condition of the bail-out, he expects Ireland to raise its corporation tax rate: “It’s obvious that when confronted with a situation like this, there are two levers to use: spending and revenues. I cannot imagine that our Irish friends, in full sovereignty, [would not use] this because they have a greater margin for manoeuvre than others, their taxes being lower than others.”
Foreign corporations who had found a beneficial tax climate in Dublin (most notably Google) now account for a major portion of the country’s economy.
Foreign investment equates to €110bn – or 70pc – of all exports with US companies alone employing more than 100,000 workers.
Yet if Ireland does not relent, which is unlikely, the bulk of US corporations will simply depart for such recently beligerent partners to the US as China:
While the companies are not threatening to leave at this stage, the statement – signed by senior Irish executives from each of the four companies mentioned – does directly point out that although Ireland’s tax rate may be low in European terms, it is not when compared with locations such as Singapore, India and China.
Yet the biggest loser of all this may be Google, which as was portrayed recently in an extensive analysis by Bloomberg, benefitted massively by a complex (and perfectly legal) Irish-based tax avoidance trick, which adds up to $100/share to the stock price.
An expose in Bloomberg details how courtesy of various, perfectly legal, tax avoidance schemes, Google’s effective tax rate is 2.4%, which has boosted the company’s stock price by a whopping $100/share!
Is Google’s loss in market cap about to make the EU’s contribution to Ireland (whether $80 or $180 billion) seem pale in comparison?
h/t Titan Group ltd
Tags: Austerity, Bailout, Bank Of America, Biggest Loser, Brave New World, China, Footnote, Google, Hewlett Packard Hp, India, Insolvency, International Monetary Fund, Irish Citizens, Irish Government, Life Liberty And Happiness, Mass Exodus, Merrill Lynch, Offshore Companies, Peasant, S Corporation, Tax Revenues, Telegraph Reports
Posted in China, India, Markets | Comments Off