MUMBAI | BANGALORE: Mona Sandhu, a lecturer turned costume jewellery designer, set up a jewellery store in her home city of Karnal, Haryana, in 2006. The five-year-old store was doing well, selling about 70 pieces a week, but the limited pool of customers was stifling for the ambitious businesswoman.
On a whim, Sandhu set up a profile on Facebook at the end of last year with photographs of some of her products. To her surprise, she bagged an order the same day from a customer in California. Ten months on, Sandhu, whose social media page has been liked by 17000 visitors, is busy planning exhibitions in the US and UK.
As business on social media gains rapid acceptance, small-town entrepreneurs are securing customers from across the world. Sandhu gets over 100 orders a week mostly from customers in the US, Canada and the UK. On an average, individual customers order 5-10 pieces at a time, while a wholesale order starts at 40. "I have international recognition which has helped increase sales by 20 times since the launch of the page," says Sandhu for whom the Facebook page is the sole link with her customers.
For scores of entrepreneurs like Sandhu living in non-metros and towns with tight marketing budgets and no experience of running a commercial enterprise, Facebook has emerged as a significant marketing and sales tool. In fact, many of them are using their Facebook page as a substitute for a proprietary website. It costs nothing to set up a page, profile or group and it provides space for displaying photographs to boot.
Monday, August 15, 2011
No immediate threat to India's sovereign rating: S&P
NEW DELHI: Standard and Poor's has said there is no immediate threat to India's sovereign debt rating of BBB, though loose fiscal policy and the government's inability to carry forward economic reforms could have implications in the medium term.
"We do not see an immediate impact on India's sovereign rating (BBB-/Stable) resulting from the lowering of the US sovereign rating to AA+," Standard & Poor's sovereign analyst Takahira Ogawa said.
S&P recently lowered the sovereign rating of the US to AA+ from AAA. The ratings are opinions that reflect the ability and willingness of the rated entity to meet financial obligations.
The decision to lower the sovereign rating of the US had deleterious consequences for stock markets all over the world, including India.
Referring to problems with regard to high inflation and the fiscal deficit in India, Ogawa said, "Potential longer-term consequences may point to negative factors."
He further said that while tight policies could have a positive bearing on the country's rating, a deterioration in fiscal health and setbacks on the economic reforms front might result in a downgrade.
India has been struggling to deal with inflation, which is nearing the double-digit mark. Headline inflation stood at 9.44 per cent in June, while food inflation was 9.90 per cent for the week ended July 30.
On the fiscal side, rising prices of crude oil and high food and fertiliser subsidies, coupled with the inability of the government to raise Rs 40,000 crore from the divestment of equity in public sector companies during 2010-11, could create problems.
Inflation, Ogawa said, "remains India's biggest challenge in the near-term, as high inflation could push up credit costs and dampen the country's economic growth trajectory."
Although the pace of food price rise seems to have stabilised to "some extent", the prices of manufactured products are still increasing, he said.
Referring to public finances, Ogawa said, "Ballooning fiscal deficits also constrain the sovereign ratings on India. Continuing its fiscal consolidation policies into fiscal 2012 will be a key challenge for the government."
India's sovereign rating, S&P said, could be raised if "the government continues to reduce the public sector's deficits materially.
"For example, future government initiatives to significantly reduce subsidies for fertilisers, foods and fuels would be a positive factor in improving the expenditure structure of the budget and reducing the negative influence of potential external shocks on India's fiscal position," the agency said.
"We do not see an immediate impact on India's sovereign rating (BBB-/Stable) resulting from the lowering of the US sovereign rating to AA+," Standard & Poor's sovereign analyst Takahira Ogawa said.
S&P recently lowered the sovereign rating of the US to AA+ from AAA. The ratings are opinions that reflect the ability and willingness of the rated entity to meet financial obligations.
The decision to lower the sovereign rating of the US had deleterious consequences for stock markets all over the world, including India.
Referring to problems with regard to high inflation and the fiscal deficit in India, Ogawa said, "Potential longer-term consequences may point to negative factors."
He further said that while tight policies could have a positive bearing on the country's rating, a deterioration in fiscal health and setbacks on the economic reforms front might result in a downgrade.
India has been struggling to deal with inflation, which is nearing the double-digit mark. Headline inflation stood at 9.44 per cent in June, while food inflation was 9.90 per cent for the week ended July 30.
On the fiscal side, rising prices of crude oil and high food and fertiliser subsidies, coupled with the inability of the government to raise Rs 40,000 crore from the divestment of equity in public sector companies during 2010-11, could create problems.
Inflation, Ogawa said, "remains India's biggest challenge in the near-term, as high inflation could push up credit costs and dampen the country's economic growth trajectory."
Although the pace of food price rise seems to have stabilised to "some extent", the prices of manufactured products are still increasing, he said.
Referring to public finances, Ogawa said, "Ballooning fiscal deficits also constrain the sovereign ratings on India. Continuing its fiscal consolidation policies into fiscal 2012 will be a key challenge for the government."
India's sovereign rating, S&P said, could be raised if "the government continues to reduce the public sector's deficits materially.
"For example, future government initiatives to significantly reduce subsidies for fertilisers, foods and fuels would be a positive factor in improving the expenditure structure of the budget and reducing the negative influence of potential external shocks on India's fiscal position," the agency said.
What have widening income gaps got to do with globalisation & IT revolution?
London burns. The Arab Spring triggers popular rebellions against autocrats across the Arab world. The Israeli Summer brings 250,000 Israelis into the streets, protesting the lack of affordable housing and the way their country is now dominated by an oligopoly of crony capitalists.
From Athens to Barcelona, European town squares are being taken over by young people railing against unemployment and the injustice of yawning income gaps, while the angry Tea Party emerges from nowhere and sets American politics on its head. What's going on here?
There are multiple and different reasons for these explosions, but to the extent they might have a common denominator I think it can be found in one of the slogans of Israel's middle-class uprising: "We are fighting for an accessible future." Across the world, a lot of middle-and lower-middle-class people now feel that the "future" is out of their grasp, and they are letting their leaders know it.
Why now? It starts with the fact that globalisation and the information technology revolution have gone to a whole new level. Thanks to cloud computing, robotics, 3G wireless connectivity, Skype, Facebook, Google, LinkedIn, Twitter, the iPad, and cheap Internet-enabled smartphones, the world has gone from connected to hyperconnected. This is the single most important trend in the world today. And it is a critical reason why, to get into the middle class now, you have to study harder, work smarter and adapt quicker than ever before.
All this technology and globalisation are eliminating more and more "routine" work - the sort of work that once sustained a lot of middle-class lifestyles. The merger of globalisation and IT is driving huge productivity gains, especially in recessionary times, where employers are finding it easier, cheaper and more necessary than ever to replace labor with machines, computers, robots and talented foreign workers. It used to be that only cheap foreign manual labour was easily available; now cheap foreign genius is easily available.
This explains why corporations are getting richer and middleskilled workers poorer. Good jobs do exist, but they require more education or technical skills. Unemployment today still remains relatively low for people with college degrees. But to get one of those degrees and to leverage it for a good job requires everyone to raise their game. It's hard.
From Athens to Barcelona, European town squares are being taken over by young people railing against unemployment and the injustice of yawning income gaps, while the angry Tea Party emerges from nowhere and sets American politics on its head. What's going on here?
There are multiple and different reasons for these explosions, but to the extent they might have a common denominator I think it can be found in one of the slogans of Israel's middle-class uprising: "We are fighting for an accessible future." Across the world, a lot of middle-and lower-middle-class people now feel that the "future" is out of their grasp, and they are letting their leaders know it.
Why now? It starts with the fact that globalisation and the information technology revolution have gone to a whole new level. Thanks to cloud computing, robotics, 3G wireless connectivity, Skype, Facebook, Google, LinkedIn, Twitter, the iPad, and cheap Internet-enabled smartphones, the world has gone from connected to hyperconnected. This is the single most important trend in the world today. And it is a critical reason why, to get into the middle class now, you have to study harder, work smarter and adapt quicker than ever before.
All this technology and globalisation are eliminating more and more "routine" work - the sort of work that once sustained a lot of middle-class lifestyles. The merger of globalisation and IT is driving huge productivity gains, especially in recessionary times, where employers are finding it easier, cheaper and more necessary than ever to replace labor with machines, computers, robots and talented foreign workers. It used to be that only cheap foreign manual labour was easily available; now cheap foreign genius is easily available.
This explains why corporations are getting richer and middleskilled workers poorer. Good jobs do exist, but they require more education or technical skills. Unemployment today still remains relatively low for people with college degrees. But to get one of those degrees and to leverage it for a good job requires everyone to raise their game. It's hard.
Monday, August 8, 2011
Recession 2011: Behind the bluster, China reprices US risk
BEIJING: Chinese editorials flaying Washington for fiscal recklessness over its debt dramatics and downgrade mask a growing unease in Beijing: a fear that China's own economic policies are shifting too slowly.
Interviews with a dozen high-ranking Chinese officials and government economists revealed frustration with China's self-imposed fetters to the US dollar and louder calls for a change, but no clear short-term plan to break free.
The obvious answer -- allowing the yuan to rise more rapidly -- carries economic and political costs that China is probably not yet prepared to pay.
One idea that appeared to be gaining some traction in Beijing is to loosen restrictions on Chinese businesses and citizens investing abroad. That would help to reduce the build-up of cash inside China.
But it would only marginally trim China's US exposure. An estimated two-thirds of China's $3.2 trillion in reserves is invested in US dollar-denominated assets such as Treasuries, and the pile of cash grows each month thanks to a heavy trade surplus.
Standard & Poor's stripped the United States of its prized AAA rating on Friday, citing the government's rising debt burden, drawing a blast of criticism from official China media.
Some officials who spoke to Reuters sounded resigned to their fate, acknowledging that there is no viable alternative to investing in US Treasury debt.
But others saw the US debt debacle in recent weeks as just the sort of shove Beijing needs to speed up domestic reforms.
"We need to diversify to the greatest extent possible," said one People's Bank of China official who spoke on condition of anonymity because he was not authorized to speak to the media.
"China's position has always been very clear," he said. "First, we'll demand strongly that the United States strengthen its self discipline -- they can't just keep issuing debt without limit. Secondly, we need to speed up the pace of our domestic economic transformation and reduce our accumulation of foreign exchange reserves."
PUBLIC SHAME China's public response to the US debt troubles, expressed in a series of scathing commentaries in the state-controlled media, has been to censure Washington for neglecting its responsibility as issuer of the world's primary reserve currency and trying to "borrow its way out of messes of its own making".
But in interviews with Reuters, some officials quietly acknowledged Beijing's own policies have put China in an uncomfortable position, and argued they would have to change.
China has already laid out a five-year plan that envisages promoting domestic consumption, something the United States has urged for years as a way to reduce a gaping trade imbalance and shrink the vast heap of dollars Beijing invests in Treasuries.
But 2015 is a long way off. One idea for quicker change came up in conversations with several sources -- easing restrictions on foreign investment.
"The government will quicken its pace to allow Chinese companies and individuals (to) invest abroad," said a government economist with the National Development and Reform Commission, China's economic planning agency.
Cheng Siwei, a former vice-chairman of China's parliament, made the same point in a Reuters Insider interview on Monday.
Interviews with a dozen high-ranking Chinese officials and government economists revealed frustration with China's self-imposed fetters to the US dollar and louder calls for a change, but no clear short-term plan to break free.
The obvious answer -- allowing the yuan to rise more rapidly -- carries economic and political costs that China is probably not yet prepared to pay.
One idea that appeared to be gaining some traction in Beijing is to loosen restrictions on Chinese businesses and citizens investing abroad. That would help to reduce the build-up of cash inside China.
But it would only marginally trim China's US exposure. An estimated two-thirds of China's $3.2 trillion in reserves is invested in US dollar-denominated assets such as Treasuries, and the pile of cash grows each month thanks to a heavy trade surplus.
Standard & Poor's stripped the United States of its prized AAA rating on Friday, citing the government's rising debt burden, drawing a blast of criticism from official China media.
Some officials who spoke to Reuters sounded resigned to their fate, acknowledging that there is no viable alternative to investing in US Treasury debt.
But others saw the US debt debacle in recent weeks as just the sort of shove Beijing needs to speed up domestic reforms.
"We need to diversify to the greatest extent possible," said one People's Bank of China official who spoke on condition of anonymity because he was not authorized to speak to the media.
"China's position has always been very clear," he said. "First, we'll demand strongly that the United States strengthen its self discipline -- they can't just keep issuing debt without limit. Secondly, we need to speed up the pace of our domestic economic transformation and reduce our accumulation of foreign exchange reserves."
PUBLIC SHAME China's public response to the US debt troubles, expressed in a series of scathing commentaries in the state-controlled media, has been to censure Washington for neglecting its responsibility as issuer of the world's primary reserve currency and trying to "borrow its way out of messes of its own making".
But in interviews with Reuters, some officials quietly acknowledged Beijing's own policies have put China in an uncomfortable position, and argued they would have to change.
China has already laid out a five-year plan that envisages promoting domestic consumption, something the United States has urged for years as a way to reduce a gaping trade imbalance and shrink the vast heap of dollars Beijing invests in Treasuries.
But 2015 is a long way off. One idea for quicker change came up in conversations with several sources -- easing restrictions on foreign investment.
"The government will quicken its pace to allow Chinese companies and individuals (to) invest abroad," said a government economist with the National Development and Reform Commission, China's economic planning agency.
Cheng Siwei, a former vice-chairman of China's parliament, made the same point in a Reuters Insider interview on Monday.
Recession 2011: Euro zone investors gloomiest for nearly 2 years, says Sentix
BERLIN: Euro zone investor sentiment plummeted going into August, hitting its lowest level since September 2009 amid concerns global policymakers lack the tools to respond effectively to a deepening economic crisis, a survey showed.
Market research group Sentix said on Monday its headline index fell at its fastest pace on record to -13.5 in August from 5.3 in July, missing even the lowest forecast in a Reuters survey of economists for a drop to -1.0 by a long way.
Economists had on average forecast a fall to 1.9. "The mix of EU debt problems, the powerlessness of policymakers regarding this and the quarrels in the US regarding lifting the deficit ceiling have strongly unsettled investors," Sentix said in a statement.
The group said this mix of problems, as well as an historic downgrade of the US credit rating and turbulence on the financial markets, were reinforcing the impression that the outlook for the global economy was darkening.
A sub-index of current conditions fell to 3.50 from 19.25, while expectations dropped to -29.00 from -7.75. "Ever more investors see a spillover of the financial markets' problems into the real economy as a probable scenario," Sentix said.
Twin debt crises in Europe and the United States are stoking fears of the rich world sliding back into recession, and finance chiefs from the world's industrial powers pledged on Sunday to take whatever actions were needed to steady markets in an attempt to calm frazzled investors' nerves.
The market reaction was mixed on Monday. Asian bourses were still coloured red, but European shares rose and debt spreads eased, reassured by signs the European Central Bank had stepped up its support measures by buying Italian and Spanish debt.
"Countries' fragile financial framework is causing many investors to question how states and central banks can even tackle a possible recession," Sentix said, adding: "A global recession is giving notice that it is on its way".
Sentix based its data on a survey of 822 European private and institutional investors conducted between August 4 and August 6.
Market research group Sentix said on Monday its headline index fell at its fastest pace on record to -13.5 in August from 5.3 in July, missing even the lowest forecast in a Reuters survey of economists for a drop to -1.0 by a long way.
Economists had on average forecast a fall to 1.9. "The mix of EU debt problems, the powerlessness of policymakers regarding this and the quarrels in the US regarding lifting the deficit ceiling have strongly unsettled investors," Sentix said in a statement.
The group said this mix of problems, as well as an historic downgrade of the US credit rating and turbulence on the financial markets, were reinforcing the impression that the outlook for the global economy was darkening.
A sub-index of current conditions fell to 3.50 from 19.25, while expectations dropped to -29.00 from -7.75. "Ever more investors see a spillover of the financial markets' problems into the real economy as a probable scenario," Sentix said.
Twin debt crises in Europe and the United States are stoking fears of the rich world sliding back into recession, and finance chiefs from the world's industrial powers pledged on Sunday to take whatever actions were needed to steady markets in an attempt to calm frazzled investors' nerves.
The market reaction was mixed on Monday. Asian bourses were still coloured red, but European shares rose and debt spreads eased, reassured by signs the European Central Bank had stepped up its support measures by buying Italian and Spanish debt.
"Countries' fragile financial framework is causing many investors to question how states and central banks can even tackle a possible recession," Sentix said, adding: "A global recession is giving notice that it is on its way".
Sentix based its data on a survey of 822 European private and institutional investors conducted between August 4 and August 6.
Recession 2011: What happened to Barack Obama?
ATLANTA: It was a blustery day in Washington on Jan. 20, 2009, as it often seems to be on the day of a presidential inauguration. As I stood with my 8-year-old daughter, watching the president deliver his inaugural address, I had a feeling of unease. It wasn't just that the man who could be so eloquent had seemingly chosen not to be on this auspicious occasion, although that turned out to be a troubling harbinger of things to come. It was that there was a story the American people were waiting to hear - and needed to hear - but he didn't tell it. And in the ensuing months he continued not to tell it, no matter how outrageous the slings and arrows his opponents threw at him.
The stories our leaders tell us matter, probably almost as much as the stories our parents tell us as children, because they orient us to what is, what could be, and what should be; to the worldviews they hold and to the values they hold sacred. Our brains evolved to "expect" stories with a particular structure, with protagonists and villains, a hill to be climbed or a battle to be fought. Our species existed for more than 100,000 years before the earliest signs of literacy, and another 5,000 years would pass before the majority of humans would know how to read and write.
Stories were the primary way our ancestors transmitted knowledge and values. Today we seek movies, novels and "news stories" that put the events of the day in a form that our brains evolved to find compelling and memorable. Children crave bedtime stories; the holy books of the three great monotheistic religions are written in parables; and as research in cognitive science has shown, lawyers whose closing arguments tell a story win jury trials against their legal adversaries who just lay out "the facts of the case."
When Barack Obama rose to the lectern on Inauguration Day, the nation was in tatters. Americans were scared and angry. The economy was spinning in reverse. Three-quarters of a million people lost their jobs that month. Many had lost their homes, and with them the only nest eggs they had. Even the usually impervious upper middle class had seen a decade of stagnant or declining investment, with the stock market dropping in value with no end in sight. Hope was as scarce as credit.
In that context, Americans needed their president to tell them a story that made sense of what they had just been through, what caused it, and how it was going to end. They needed to hear that he understood what they were feeling, that he would track down those responsible for their pain and suffering, and that he would restore order and safety. What they were waiting for, in broad strokes, was a story something like this:
"I know you're scared and angry. Many of you have lost your jobs, your homes, your hopes. This was a disaster, but it was not a natural disaster. It was made by Wall Street gamblers who speculated with your lives and futures. It was made by conservative extremists who told us that if we just eliminated regulations and rewarded greed and recklessness, it would all work out. But it didn't work out.
The stories our leaders tell us matter, probably almost as much as the stories our parents tell us as children, because they orient us to what is, what could be, and what should be; to the worldviews they hold and to the values they hold sacred. Our brains evolved to "expect" stories with a particular structure, with protagonists and villains, a hill to be climbed or a battle to be fought. Our species existed for more than 100,000 years before the earliest signs of literacy, and another 5,000 years would pass before the majority of humans would know how to read and write.
Stories were the primary way our ancestors transmitted knowledge and values. Today we seek movies, novels and "news stories" that put the events of the day in a form that our brains evolved to find compelling and memorable. Children crave bedtime stories; the holy books of the three great monotheistic religions are written in parables; and as research in cognitive science has shown, lawyers whose closing arguments tell a story win jury trials against their legal adversaries who just lay out "the facts of the case."
When Barack Obama rose to the lectern on Inauguration Day, the nation was in tatters. Americans were scared and angry. The economy was spinning in reverse. Three-quarters of a million people lost their jobs that month. Many had lost their homes, and with them the only nest eggs they had. Even the usually impervious upper middle class had seen a decade of stagnant or declining investment, with the stock market dropping in value with no end in sight. Hope was as scarce as credit.
In that context, Americans needed their president to tell them a story that made sense of what they had just been through, what caused it, and how it was going to end. They needed to hear that he understood what they were feeling, that he would track down those responsible for their pain and suffering, and that he would restore order and safety. What they were waiting for, in broad strokes, was a story something like this:
"I know you're scared and angry. Many of you have lost your jobs, your homes, your hopes. This was a disaster, but it was not a natural disaster. It was made by Wall Street gamblers who speculated with your lives and futures. It was made by conservative extremists who told us that if we just eliminated regulations and rewarded greed and recklessness, it would all work out. But it didn't work out.
US crisis may hit export & capital flows: C Rangarajan
NEW DELHI: Prime Minister's Economic Advisory Council Chairman C Rangarajan today said the downgrade of the US sovereign rating will negatively impact exports and moderate capital flows into the country.
"More than the downgrade, what will be the impact for the rest of the world will be the slow pace of recovery in the US," he said in a statement.
"In the first half of the current calender year, the growth rate in the USA was 1.5 per cent. Perhaps for the year as a whole, other growth rates may not be much higher than that. That's a very, very slow pace of recovery and that has implications for the world in terms of capital flows, in terms of trade flow," he said.
Even Finance Minister Pranab Mukherjee said the downgrade of the US sovereign rating will have some implications on India, but added there was no need to press the panic button as the fundamentals of the economy remain strong.
"The recent developments in the US and the eurozone have injected certain uncertainty in global markets. These developments could have some impact on India. But as India's growth story is intact and its fundamentals strong, we are in a better position than many other nations to manage the challenge," Mukherjee told reporters outside Parliament House.
Mukherjee said there could be "some impact" on capital and trade flows, "but as India's growth story is strong, we could see FIIs viewing India as an attractive investment destination even if there is any temporary outflow".
Ratings agency Standard and Poor's on Friday lowered the sovereign credit rating of the US to AA+ from AAA, a development which raises concerns that investors will lose confidence in the American economy.
Justifying its rating, S&P said that predictability about US policymaking and political institutions has weakened at a time of fiscal challenge. A US Treasury official, however, said the decision of S&P was flawed.
"More than the downgrade, what will be the impact for the rest of the world will be the slow pace of recovery in the US," he said in a statement.
"In the first half of the current calender year, the growth rate in the USA was 1.5 per cent. Perhaps for the year as a whole, other growth rates may not be much higher than that. That's a very, very slow pace of recovery and that has implications for the world in terms of capital flows, in terms of trade flow," he said.
Even Finance Minister Pranab Mukherjee said the downgrade of the US sovereign rating will have some implications on India, but added there was no need to press the panic button as the fundamentals of the economy remain strong.
"The recent developments in the US and the eurozone have injected certain uncertainty in global markets. These developments could have some impact on India. But as India's growth story is intact and its fundamentals strong, we are in a better position than many other nations to manage the challenge," Mukherjee told reporters outside Parliament House.
Mukherjee said there could be "some impact" on capital and trade flows, "but as India's growth story is strong, we could see FIIs viewing India as an attractive investment destination even if there is any temporary outflow".
Ratings agency Standard and Poor's on Friday lowered the sovereign credit rating of the US to AA+ from AAA, a development which raises concerns that investors will lose confidence in the American economy.
Justifying its rating, S&P said that predictability about US policymaking and political institutions has weakened at a time of fiscal challenge. A US Treasury official, however, said the decision of S&P was flawed.
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