Month: December 2012

Deal on ‘fiscal cliff’ could be reached in a week: Obama

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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President Barack Obama told business leaders on Wednesday, a deal on the “fiscal cliff” could be reached in a week if Republicans accepted the idea of higher tax rates on the wealthy.

He also called for a smooth increase in the nation’s borrowing.

“We’re not insisting on rates out of spite, but rather we need to raise a certain amount of revenue,” Obama told the Business Roundtable, an association representing chief executives of large US firms.

“Among some Republicans over the last several days, I think there’s been some recognition they can accept some rate increases as long as it’s combined with serious entitlement reform and additional spending cut,” Obama said. “If we can get the Republican leadership to accept that framework, then the numbers actually aren’t that far apart.”

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“Another way of putting this: We can probably solve this in about a week,” Obama added. “It’s not that tough.”

Shortly before he spoke, however, Republicans said the talks were deadlocked, and they demanded a meeting with the president to move the negotiations forward.

“Nothing is going on,” House Majority Leader Eric Cantor told reporters, following a meeting with fellow Republicans. “We ask the president to sit down with us.”

Obama warned congressional Republicans against following a strategy of threatening not to raise the debt ceiling in order to get concessions from the White House. “I will not play that game,” he said.

The president is embarked on an aggressive campaign to pressure congressional Republicans to compromise on steps to avoid the so-called :fiscal cliff.” He wants corporate executives that it would hurt the nation’s economy to have another protracted political fight over raising the debt limit.

It was the reluctance of congressional Republicans to agree to such an increase in 2011 without deep spending cuts that brought the nation to the brink of default. The result was a historic lowering of the US credit rating and a setback to the recovery from a recession that ended in 2009.

The statutory ceiling on US Treasury borrowing is USD 16.4 trillion. The nation is expected to hit the legal limit near the year’s end, although it can tap emergency measures to stave off a default and keep the government running into early 2013.

If Congress fails to raise the borrowing cap, analysts expect the Treasury would run out of options to avoid a default some time in the latter half of February. That forecast could change depending on how the administration and Congress deal with the fiscal cliff at the end of the year.

The president and congressional Republicans are battling over how to avoid automatic tax increases and deep spending cuts. The president wants to extend expiring tax cuts for all but the wealthiest Americans while Republican leaders are dug in against allowing any taxes rises at all.

If the administration and lawmaker remain at loggerheads,going over the fiscal cliff is projected to throw the weak economy back into recession.

Obama, re-elected to a second term last month in part on a pledge to raise taxes on the wealthy, has sought to pressure Congress into yielding on tax increases with a stream of meetings with a wide range of interest groups, including businesses, nonprofits and governors.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

2012’s most overused buzzwords

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Calling yourself “creative” is getting less and less creative.

LinkedIn has released its list of the most overused buzzwords on LinkedIn Profiles, and for the second year in a row, “creative” tops the list.

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 (Read More: The Killer Resume: How to Get Hired by the Machines.)

Here are the ten words popping up most often in profiles of US professionals:

1. Creative (translation: I breathe)

2. Organizational (What? Are you “organized” or “organizational?”)

3. Effective (zzzz)

4. Motivated (yawn)

5. Extensive experience (blah blah blah)

6. Track record

7. Innovative

8. Responsible

9. Analytical

10. Problem solving (This one has got to go … it makes my eyes glaze over)

New words on the list this year are “responsible” and “analytical”, replacing “communication skills” and “dynamic” from last year. I’d much rather hire someone who’s responsible and analytical than dynamic, and do you really have to tell someone you have communication skills? Can’t they tell by the way you communicate?

As for our obsession with being creative, Nicole Williams at LinkedIn said you can’t just call yourself creative if you want to stand out. You need to link to projects you’ve worked on “that truly were different, unique and compelling.”

(Read More: Seven Things You’re Doing Wrong on LinkedIn.)

Americans aren’t the only ones fixated on the word.

“Creative” is also the most overused LinkedIn term in Canada, Australia, New Zealand, Germany, Singapore, Sweden, and the Netherlands. I’m trying to think of an example of Swedish creativity beyond Volvo, or anything at all from New Zealand beyond Peter Jackson, sheep, “Flight of the Conchords” and “Xena: Warrior Princess”. Actually, New Zealand kinda rocks when you look at that list.

Meantime, “motivated” is the most overused adjective on LinkedIn profiles from Malaysia, Saudi Arabia, South Africa, United Arab Emirates and the U.K. That’s a motley crew.

Egyptians and Indonesians most often refer to themselves as “multinational”, the Swiss are “analytical”, and those from Spain are “specialized.”

The most eyebrow-raising word comes from Italy, slowly working its way out of a harrowing recession. The favorite term Italians use on LinkedIn? “Responsible.”

But by far the most interesting response is from Brazil, where the overused buzzword used by professionals is “experimental.” Which is a lot more creative than “creative”.

– By CNBC’s Jane Wells; Follow her on Twitter: @janewells

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

In Europe, everyone will worry about ‘default’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The key word of 2013 will not be debt, growth or recession – it will be default. No one will want to use that word and will instead use terms like “forgiveness” and “realignment of future commitments.” Here are five predictions for how this story will play out.

Greek Debt Forgiveness

This is already being discussed with officials in Germany floating the idea that Greek debt held by EU governments and the ECB should be forgiven. This will mean that all the Greek debt held on the books of EU governments and the central bank will be worth just 25 cents in the euro, significantly reducing Greece’s debt burden as the coalition government battles to meet spending and revenue targets set by the so-called Troika. Once Greece gets this deal, others like Ireland, Portugal, Spain and Italy will begin to ask why they cannot get similar terms.

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Unfunded Liabilities

Unfunded liabilities like public sector pensions will come under attack by policy makers across the world in 2013. Public sector pensions in Europe, generally quite generous, will have to be renegotiated if governments are serious about getting their budgets in order over the short, medium and in particular long-term. As we have seen at the city and state level in the United States, revenue collection at the local level has in many cases become a way of transferring taxes from workers to former police and fire officials. No government is likely to address this issue in 2013, but the debate will begin, and those who lose will take to the streets and strike to protect themselves against what is ultimately a default, no matter what you call it.

More Austerity

Days after this piece is published, the UK Chancellor George Osborne will deliver his 2013 budget plans to the Houses of Parliament. With his government’s poll ratings very low, the chances are that Osborne and his boss, David Cameron, will decide to double down on austerity measures and take the axe to benefits for the unemployed. Aiming to make multi-year savings of over 10 billion pounds, the cuts will be hailed as putting the UK on the road to a sustainable debt burden, but will be seen by the millions of British unemployed in the U.K. as a default by the government on their entitlements.

Currency Wars

With US federal debt topping $16 trillion and the majority of G7 countries’ Treasuries also highly indebted, 2013 is likely to see lots of discussion about currency wars. The term, first coined by Brazilian finance minister Guido Mantega, will be wheeled out every time U.S. government policy is perceived by its creditors in the emerging world as being dollar negative. The U.S. Treasury will say it is committed to a “strong dollar” policy as the Asian exporters try to stop their currencies rising and making their exports uncompetitive in the world’s biggest market. Given the dollar’s safe haven status, it is highly uncertain that U.S. authorities could manage the dollar lower, even though the total amount of debt America would owe its creditors would fall as a result.

And Finally…

Here are five quick-fire predictions: Angela Merkel will win the German general election, Silvio Berlusconi won’t go to prison, the Spanish housing market will fall sharply, Dmitry Medvedev will lose his job as Russian Prime Minister and the euro zone will NOT win the Nobel Peace Prize for economics.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Which country is most corrupt, and which is least?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The US may have the world’s largest economy, but it does not even crack the top 10 percent when it comes to a perceived lack of corruption.

That is just one of the findings in the 18th annual Corruption Perceptions Index released Wednesday by Transparency International, a global non-profit organization dedicated to fighting corruption.

The US ranked 19th out of 176 countries in this year’s index, scoring 74 on a scale of zero to 100, where zero is “highly corrupt” and 100 is “very clean.” Transparency International says it scores each country using multiple sources of data on perceived corruption in the public sector.

“Corruption is the world’s most talked about problem,” said Transparency International Managing Director Cobus de Swardt in a statement. “The world’s leading economies should lead by example, making sure that their institutions are fully transparent and their leaders are held accountable.”

Among the countries with scores higher than the United States are Hong Kong, which ranks 14th with a score of 77, Germany at 13th with a score of 79, and Canada and the Netherlands which tie for 9th place with a score of 84.

Denmark, Finland and New Zealand tied for the “cleanest” country this year, each scoring 90 in the index.

(Read More: 10 Corruption Hot Spots)

There is also a three-way tie for the most corrupt country, between Somalia, North Korea and Afghanistan, which scored just eight points each.

“In these countries, the lack of accountable leadership and effective public institutions underscore the need to take a much stronger stance against corruption,” Transparency International said.

Transparency International, which has been issuing its corruption rankings since 1995, said it has updated its methodology this year. That, and the fact that the study ranks just 176 countries in 2012 versus 183 in 2011, makes year-to-year comparisons difficult.

Turmoil

Nonetheless, the data suggest worsening corruption in some countries in turmoil. For example, Greece fell to 94th place in 2012 from 80th last year. Egypt ranks 118th in 2012, compared to 112th in 2011. Italy drops three places to 72nd.

Transparency International says it has consistently warned euro zone countries to deal with corruption as they tackle a financial crisis.

Despite a long history of pronouncements about corruption and a major crackdown after 9/11 attack, the US has never been a stellar performer in the rankings. Last year, it recorded its worst finish ever at 24th.

New Zealand, Denmark and Finland, by contrast, have consistently finished at or near the top. New Zealand finished first last year, followed closely by Denmark and Finland in a tie for second place. Last year’s most corrupt countries were Somalia and North Korea.

Two countries profiled earlier this year in the CNBC Investigations Inc. documentary Filthy Rich remain among the more corrupt in the world, according to Transparency International.

(Read More: Greed Keeps Public Corruption, Bribery Alive)

The former Soviet Republic of Azerbaijan, which is home to abundant oil reserves and a key network of pipelines, ranks 139th with a score of 27 – a slight improvement from last year’s 143rd place finish. The country has been the subject of international scrutiny over the business dealings of President Ilham Aliyev’s family.

Oil-rich Equatorial Guinea has also been the subject of international scrutiny, with the governments of the US and France attempting to seize property linked to President Teodoro Obiang Nguema Mbasago – the longest serving head of state in Africa – and his son, Minister of Forestry Teodoro Nguema Obiang Mangue. Equatorial Guinea improved to 163rd place in this year’s rankings, from 172nd in 2011.

Watch an encore presentation of “Filthy Rich” Thursday, December 5 at 8:00pm ET on CNBC.

– By CNBC’s Scott Cohn; Follow him on Twitter: @ScottCohnCNBC

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Is Asia’s hot spot for investment under threat?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Indonesia has emerged as a “darling of investors” attracting record inflows over the past few years attracted in part by its huge and cheap labour force. However, Southeast Asia’s largest economy is going to implement double-digit wage hikes in 2013 which raises the question – Is the country’s position as a hot spot for foreign investment under threat?

Following growing protests in November, the governor of the country’s capital city Jakarta, agreed to raise its monthly minimum wage for 2013 by 44 percent to USD 230, marking a shift in bargaining power of workers.

This comes on the heels of similar moves earlier in the month by six other provincial governments who approved a hike in minimum wages of up to 26 percent for next year – significantly higher than the 10 percent average seen this year – and other provinces are expected to follow suit soon.

The large jump in labour costs has caught many business owners offguard, with two large business lobby groups last week calling for the wage hike in Jakarta to be reviewed.

Rishi, (who only wanted to be known by his first name) manages his family`s synthetic yarn manufacturing factory located a few hours drive from Jakarta, in Bandung. He told CNBC that his business will take a sizable hit from the mandatory 25 percent hike in minimum wage next year.

“Yarn spinning is a labour-intensive industry, a 25-percent increase in wages can make a significant dent to our bottomline, especially when you have 3,000-plus employees,” he said.

“Wage rates usually rise on a steady basis in line with inflation, which is factored in our financial projections, however a sudden 25 percent will have to be absorbed by the company as a cost,” Rishi added. He noted that the yarn industry is highly commoditised, with prices based on global markets, making it difficult to pass on extra costs to buyers.

Investment Will Continue

While higher wages will dent the profitability of existing business and narrow Indonesia`s cost advantage over its Asian peers – the monthly minimum wage in Bangkok is USD 195, for example – economists said the rise in labour costs will not overturn the country`s foreign direct investment (FDI) story.

FDI in Indonesia leaped 22 percent in the third quarter from a year earlier to a record high USD 5.9 billion.

“For manufacturing, the story is not over. There is still a wide minimum-wage discrepancy between regions which allow room to maneuver or relocate within the country,” said Helmi Arman, Indonesia economist at Citi. In regions such as North Sumatra, for example, the minimum wage will be raised to USD 135 next year.

For capital-intensive industries such as metals, autos and chemicals – which have contributed to the recent strong growth in FDI – Arman said average labor costs make up just 3 percent of the goods produced and is therefore unlikely to deter new investors.

Consumption Boon

According to Su Sian Lim, Asean economist at HSBC, the rise in wages will be a boon for foreign investment, particularly in the consumption sector.

“FDI is drawn to Indonesia for reasons beyond cheap labour. Its population of 240 million represents not just a source, but a significant market. Rising incomes, helped along by minimum wage hikes, only raises its allure,” she said.

Thailand, which lifted wages across the country by 36-40 percent in April this year, has seen a considerable strengthening in private consumption as a result, Lim said.

Private consumption in the country rose 2.2 percent in the third quarter, from the previous three months,compared to a rise of 0.9 percent in the second quarter.

“This bodes very positively for Indonesian consumption. As it stands, consumption has already been growing at above trend so far this year, the impulse from a larger than usual minimum wage hike next year could fuel an even faster rise,” she said.

Regional Trend

Indonesia is not the only country in the region that has come under pressure to raise wages. Malaysia is set to introduce minimum wages for the first time in 2013, while Vietnam is set to increase its minimum wage by 25-30 percent for the private sector next year.

Hak Bin Chua, Asean economist at Bank of America Merrill Lynch, however, said he is not worried about the impact this will have on the region`s competitiveness.

“Threat from minimum wages on the region’s competitiveness is not a major risk…Minimum wages might actually do some good by reducing wage inequality and encouraging greater labour participation,” Chua wrote.

While wages in the region are rising, they continue to remain well below that of the world`s manufacturing hub China. Average salaries in the coastal regions of the mainland, for example, are still 60-percent higher than those in Jakarta, according to data from Citi.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Top performing currency in 2013? Not what you think

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Asia’s biggest laggard could turn into one of the best performers next year. We are talking about the Indian rupee which has tanked 13 percent since its peak in February, but one expert predicts this beleaguered currency is in for a big turnaround in the new year.

Weighed down by anemic growth and lack of investor interest as the government struggled to implement economic reforms, the Indian rupee has had a tumultuous year. For example, it fell more than 17 percent over February-June, raising the cost of imports and fueling inflation.

But come 2013 and the rupee will see its fortunes change, according to Bank of America-Merill Lynch (BAML), which expects the currency to rise 10 percent against the US dollar next year.

The bank’s forecast is based on expectations of a loosening in monetary policy and more economic reforms from India to attract foreign direct investment. In September, the Indian government came up with a slew of investor-friendly initiatives like opening up the retail and aviation sectors to foreign investment.

“We are in a low global growth, excess liquidity environment, where capital flows will drive the appreciation. It (rupee) could be one of the world’s best performing currencies next year,” said Claudio Piron, head of Asia ex-Japan fixed income and forex strategy at Bank of America-Merill Lynch.

He added that the Reserve Bank of India (RBI), which has held the benchmark interest rate at 8 percent since April, will cut rates by up to 100 basis points next year, helping to support the country’s growth outlook and boost inflows into its equity market – a positive for the rupee.

India’s stock market, after being one of Asia’s worst performers last year, has risen 25 percent so far this year, attracting more than USD 19 billion in foreign institutional investor inflows. About USD 7.5 billion of which entered the market after the government announced its reforms in mid-September.

While India’s growth has largely disappointed investors this year, slowing to 5.3 percent in the third quarter, Piron said he expects a pickup in momentum next year to 6.5 percent from around 5.5 percent for 2012. He forecasts inflation to ease to an average of 6.8 percent next year, from 7.6 this year.

Too Many Uncertainties

While, the currency offers value to investors as it is trading at historical lows when measured against a basket of 36 currencies, Justin Harper, strategist at IG markets, said the rupee is a dangerous currency to bet on given the history of Indian politics and the government’s track record on u-turning on reforms.

Late last year, the government went back on its promise to allow foreign direct investment into multi-brand retailing under opposition from political rivals.

(Read more: Indian Government Agrees to Vote on Supermarket Reforms)

“If you’ve had two bad years – there’s no reason they can’t have 3 bad years,” Harper said referring to the fact that the rupee fell 19 percent in 2011, and is likely to end this year lower too.

So far, over the past 10 years, no Asian currency has delivered two consecutive calendar years of losses.

Jonathan Cavanagh, senior forex strategist at Westpac, who is upbeat on the currency, forecasts it to strengthen against the greenback next year, but at a slower pace. He expects the rupee to appreciate a little over 2 percent by the end of next year to around 53 against the greenback, however, agrees there are many risks facing the currency.

“We see the rupee rising against the US dollar next year, but there are many factors at play – how the reform agenda goes, you need to see some real positive steps on the foreign direct investment front,” he said, adding that the success of the rupee will also depend on global risk sentiment, how much the RBI is able to cut rates by and whether India is able to reduce its trade deficit.

India has been struggling with a ballooning trade deficit, which surged to $185 billion for the financial year ended March 2012, due to elevated oil prices. The country imports two-thirds of its crude needs.

“From my perspective you need to see a lot of boxes ticked, but if they do get ticked, it could be one of the best performing currencies next year,” Cavanagh said.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow