Job Losses

If you are in the job market looking for a job, then pretty much every state is a red state. The graph complied by Slate Magazine and based on Unemployment statistics from the US Department of Labor, reflects how the great economic crisis took such a heavy toll on the job.

Its scary to say the least. And today's numbers released that the US lost another 85000 jobs in Dec 2009, points to what many economists have been calling a Jobless Recovery

You can view the graph moving from blue to red at Job Losses

About Soulmates and Jobs

Searching for a soulmate is like searching for a job. Just as when you look for a job, you weigh the good and bad things about it and settle for a middle ground, same is true when you are looking for a soulmate. Atleast that's what Betsey Stevenson believes. In a commentary for Marketplace she writes:

Economists simply can't believe in one soulmate. There are too many people in the world and the odds of finding that one person in five billion are, well, you can do the math.

So if economists don't believe in soulmates, why do we think people get married?

Searching for a spouse is very similar to searching for a job. There is not one perfect job for each of us, but there are clearly better and worse jobs. So we hunt, for a spouse and a job. When do we stop? When the offer in the hand is better than the likely offer in the bush.

Woes of the Indian IT Industry

Global recession has hit the Indian IT industry hard. An article in the Outlook Magazine captures the worsening woes of the Indian IT industry. Things have become so bad according to some anecdotal accounts, if you are an eligible bachelor working for an IT company, your chances of finding a groom are lets say abysmal. The paragraphs below capture the contrast between the heady days of 2005 and 2006, when an IT job was a sure shot ticket to wealth, and the woes of today.

Multiple job offers and generous pay hikes were nothing unusual in the IT industry. Talent was hard to come by. Companies had to pay plenty in cash, bonuses, perks and stock options to retain existing employees, and attract new hires by the thousands. New contracts from US clients were flowing in easily and IT companies had a simple formula for success: they could grow as much as they could hire. They often behaved like sharks in a feeding frenzy. They hired indiscriminately.

The city’s IT wealth was once the envy of the rest of the nation. The software professional was once the dream job of millions of students. There were over 10,000 individual dollar millionaires (with an investible surplus of Rs 4.5 crore) and 60,000 super-rich people (investible surplus of Rs 50 lakh) in the city in 2006. Bangaloreans invested Rs 22,000 crore in mutual funds in March 2006, up from Rs 8,000 crore in June 2004, according to a study by American Express. But all the fame and wealth of the IT professional is slowly melting away.

Pubs in Bangalore are empty; one is even offering “recession discounts”. Real estate prices, both housing and commercial, are sliding. The Promoters and Builders Association of Pune has launched a scheme where the developer will pay three EMIs in case a customer loses a job. Senior officials in a private sector bank confirm employees in the IT sector are in the negative list of borrowers. Many jobless are putting their cars and houses up for sale. Parents don’t want to marry their daughters to IT professionals.

Read the complete article at Woes of the Indian IT Industry

Desperate Times Call for Desperate Measures

The times are bad for newspaper publications across the US. With falling advertisements, the main source of revenues for all print media, cutbacks on key journalistic staff and even bankruptcies are becoming commonplace. Indeed these are desperate times if you are in the newspaper business.

In these desperate times, today's story about LA Times running a fake ad on the front page of the newspaper raises an interesting debate.

Traditionally, front page of the newspapers, devoid of any advertisements, have been reserved for the most important news of the day. Critics, even staff of LA Times, have come out opposing the front page ad, calling it an incalculable damage to the institution just to raise some quick cash. But defenders say, if selling front page advertisement can raise much needed money which will result in the newspapers not having to cut back staff, why not do it. After all newspaper is also a business which needs to survive and retain the best of talent.

So was the LA Times right in selling its prime spot for advertisement to generate some much needed cash? Has the front page ad compromised the credibility and integrity of the newspaper? Would enough readers care about the ad more or the contents that the newspaper covers?

I think as long as LA Times does not compromise on the credible and informative news coverage, most readers would not even bother about the advertisement. They would take it in stride for what it is "A necessary evil".

Questions I Want to Ask AIG Executives

Bonus: a sum of money granted or given to an employee in addition to regular pay, usually in appreciation for work done.

This is how Dictionary.com defines bonus. With this definition in mind, I am not sure how to react to the news about AIG executives receiving $165 Million in bonuses.

Bonus is something that you get when you perform better then expected or the company wants to share some of the profit with the employees. I understand if the bonuses were paid by companies who were profitable or companies that were rewarding their employees for their expectational performance. But,AIG which has received $170 Billion from the taxpayers to keep it afloat, rewarding bonuses to the same executives who remained blind to all the risk that the company was taking, putting not just the company but the entire US economy at risk: I fail to comprehend this.

Here are some questions that I would like to ask these AIG executives that are receiving their big bonuses today:
1. When your company reported the largest quarterly loss in corporate history of $61.7 billion in the last three months of 2008, how can you sit there and except this bonus with a straight face?
2. What are you going to do with the $165 million bonus? If you have no idea can I give some suggestions: buy a big house, a yatch, drive around in a Bentely or a Ferrari and don't ever come back again asking for bailout money.
3. When millions of hardworking people have lost their jobs, homes and life savings by the very actions that you guys took, how come you are being rewarded with $165 million and these hardworking people are left with nothing?
4. Is there no limit to your rapacious desire for more? Did you leave your moral and ethical compass at the door when you walked into AIG?

If any of you have other questions to ask the highly paid executives at AIG, please pen them.

Whats in the Stimulus Package to Kick Start the US Economy

The American Recovery and Reinvestment
Act of 2009,aka economic stimulus package, was signed into law this week by President Barack Obama. Total size of the package is $787 Billions and includes a mixture of spending and tax cuts. Now the question is, are there enough provisions in the bill which will help jump-start the ailing US economy. Read the summary of the bill to find out.

SPENDING

AID TO POOR AND UNEMPLOYED

_ $40 billion to provide extended unemployment benefits through Dec. 31, and increase them by $25 a week; $20 billion to increase food stamp benefits by 14 percent; $4 billion for job training; $3 billion in temporary welfare payments.

DIRECT CASH PAYMENTS

_ $14.2 billion to give one-time $250 payments to Social Security recipients, poor people on Supplemental Security Income, and veterans receiving disability and pensions.

INFRASTRUCTURE

_ $48 billion for transportation projects, including $27.5 billion for highway and bridge construction and repair; $8.4 billion for mass transit; $8 billion for construction of high-speed railways and $1.3 billion for Amtrak; $4.6 billion for the Army Corps of Engineers; $4 billion for public housing improvements; $6 billion for clean and drinking water projects; $7.2 billion to bring broadband Internet service to underserved areas; $4.2 billion to repair and modernize Defense Department facilities.

HEALTH CARE

_ $24.7 billion to provide a 65 percent subsidy of health care insurance premiums for the unemployed under the COBRA program; $86.6 billion to help states with Medicaid; $19 billion to modernize health information technology systems; $10 billion for health research and construction of National Institutes of Health facilities; $1 billion for prevention and wellness programs.

STATE BLOCK GRANTS

_ $8.8 billion in aid to states to defray budget cuts.

ENERGY

_ About $50 billion for energy programs, focused chiefly on efficiency and renewable energy, including $5 billion to weatherize modest-income homes; $6.4 billion to clean up nuclear weapons production sites; $11 billion toward a so-called "smart electricity grid" to reduce waste; $6 billion to subsidize loans for renewable energy projects; $6.3 billion in state energy efficiency and clean energy grants; and $4.5 billion make federal buildings more energy efficient; $2 billion in grants for advanced batteries for electric vehicles.

EDUCATION

_ $44.5 billion in aid to local school districts to prevent layoffs and cutbacks, with flexibility to use the funds for school modernization and repair; $25.2 billion to school districts to fund special education and the No Child Left Behind law for students in K-12; $15.6 billion to boost the maximum Pell Grant by $500 to $5,350; $2 billion for Head Start.

HOUSING

_$4 billion to repair and make more energy efficient public housing projects; $2 billion for the redevelopment of foreclosed and abandoned homes; $1.5 billion for homeless shelters; $2 billion to pay off a looming shortfall in public housing accounts.

SCIENCE

_ $3 billion for the National Science Foundation for basic science and engineering research; $1 billion for NASA; $1.6 billion for research in areas such as climate science, biofuels, high-energy physics and nuclear physics.

HOMELAND SECURITY

_ $2.8 billion for homeland security programs, including $1 billion for airport screening equipment.

LAW ENFORCEMENT

_ $4 billion in grants to state and local law enforcement to hire officers and purchase equipment.

___

TAXES

NEW TAX CREDIT

_ About $116 billion for a $400 per-worker, $800 per-couple tax credits in 2009 and 2010. For the last half of 2009, workers could expect to see about $13 a week less withheld from their paychecks starting around June. Millions of Americans who don't make enough money to pay federal income taxes could file returns next year and receive checks. Individuals making more than $75,000 and couples making more than $150,000 would receive reduced amounts.

ALTERNATIVE MINIMUM TAX

_ About $70 billion to spare about 24 million taxpayers from being hit with the alternative minimum tax in 2009. The change would save a family of four an average of $2,300. The tax was designed to make sure wealthy taxpayers can't use credits and deductions to avoid paying any taxes. But it was never indexed to inflation, so families making as little as $45,000 could get significant increases without the change. Congress addresses it each year, usually in the fall.

EXPANDED COLLEGE CREDIT

_ About $14 billion to provide a $2,500 expanded tax credit for college tuition and related expenses for 2009 and 2010. The credit is phased out for couples making more than $160,000.

CHILD TAX CREDIT

_ About $15 billion to provide the $1,000 child tax credit to more families that don't make enough money to pay income taxes.

EARNED INCOME TAX CREDIT

_ $4.7 billion to expand the Earned Income Tax Credit for low-income families with three or more children.

HOMEBUYER CREDIT

_ $6.6 billion to repeal a requirement that a $8,000 first-time home buyer tax credit be paid back over time for homes purchased from Jan. 1 to Nov. 30, unless the home is sold within three years.

AUTO SALES

_ $1.7 billion to makes sales taxes on paid on new cars, light trucks, recreational vehicles and motorcycles tax deductible through the end of the year.

RENEWABLE ENERGY INCENTIVES

_ About 20 billion in tax incentives for renewable energy and energy efficiency over 10 years, including extending tax credits for energy produced from wind, geothermal, hydropower and landfill gas; grants to build renewable energy facilities; tax credits for purchases of energy-efficient furnaces, windows and doors, or insulation; tax credit for families that purchase plug-in hybrid vehicles.

BONUS DEPRECIATION

_ $5 billion to extend a provision allowing businesses buying equipment such as computers to speed up its depreciation through 2009.

REPEAL BANK CREDIT

_ Repeal a Treasury provision that allowed firms that buy money-losing banks to use more of the losses as tax credits to offset the profits of the merged banks for tax purposes. The change would increase taxes on the merged banks by $7 billion over 10 years

When he signed the bill , the President said that the bill will help save or create 3.5 million jobs going forward. A quick glance at the above summary and you should realize that the bill is top heavy with tax cuts and aid for low income Americans. The only provisions with any seeming potential of creating jobs are spending on Infrastructure, Health Care, Alternative Energy and Home Land Security. Now, whether these provisions will help in creating or saving 3.5 million jobs and kick start the economy is the Trillion Dollar question.

Who's to Blame for the Financial Crisis?

Not a day goes by without the news of more layoffs, dropping stock market, or dropping house values. But who are the people who precipitated this meltdown. Time compiles a list of 25 people who may have contributed to the current mess. The list includes who's who including former US and foreign leaders, high flying bankers, market regulators, and former CEO's of once invincible corporations.

Find out who these 25 people are at 25 People to Blame For

The Origins of the Current Financial Crisis

Want to know all about the current financial crisis, then a new report published by the Brookings Institute is a place to start.

The report provides a good primer to understanding the root causes for the current financial meltdown.

Satyam - An Aberration or a Sign of Corporate Maleficence?

Today's admissions by Ramalinga Raju, the former CEO of Satyam Computers, to the largest corporate fraud in Indian history could not have come at a worse time for corporate India. With the world economy in a tailspin , caused by the US subprime crisis, and growth in India slowing, this crisis to one of Indian software industries titans could have devastating impact on the Indian economy.

First there is the question of jobs. With Satyam employing 53,000 people, barring any miracle, most of these people would lose their jobs. With the IT sector hit hard by the economic downturn in the United States, and the other big three IT giants (TCS, Wipro and Infosys) dealing with layoffs of their own, there is not much appetite to accommodate any of the 53,000 employees who will be laid off.

Second, there is the question of regulation, lack of oversight and independence. I find it hard to believe, no matter what Ramalinga Raju said in his letter to the board of directors and government regulators about none of the senior management and directors knowing that he was cooking the books. If Ramalinga Raju acted in this alone, then none of the BOD and senior management is fit to serve the company. But if the senior management and BOD's knew and kept the shareholders, regulators and the employees in the dark, then are as guilty as him and must face the same fate as Ramalinga Raju.

Third, there is the question of the regulators role in letting this happen. This scandal, which some are calling India's Enron, puts the focus on the whether there is enough governmental oversight and proper corporate governance in all of the publicly traded companies. If this thing can happen in what was until recently a very respected company, claiming 150 of the Fortune 500 companies as its clients, what is there to stop this from happening in any other company. Was Satyam just an aberration or is it the first domino to fall from the cupboard of corporate maleficence that may be pervasive across corporate India? Should we believe the venerable Narayana Murthy when he says that this was an isolated case and a failure of governance?

Finally, all of corporate India will be watching the authorities to see how fast they can get to the bottom of this. If there is even a hit of favouritism or corruption in how the case is handled, then the image of India as a emerging economy will suffer. If foreign and domestic investors cannot trust the authorities to do the job of safeguarding their investments and regulating a free and fair market, then investment will dry up and so will the economic engine. The boom that India has enjoyed over the last two decades will be just a blip in the radar screen.

This crisis gives India an opportunity to show the world that when it comes to free and fair markets and ethical corporate governance, India is second to none. It must show the world that no matter who the guilty person in this scandal is, they will be brought to justice. The future of India depends on it.

Want a Dream Job - Become a Walkin Billboard

NY Post details the story of a out of work banker who landed a dream job after being out of work for almost a year. His innovative idea, wearing a billboard which read "MIT grad for hire" while walking the streets of New York.

As they say luck favors the brave....

Read the complete story at Walking Billboard

India's Right Left Problem

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Draw a line between Chennai and Chandigarh. Seven out of the eight IPL cricket teams are on the line or to the 'Right' of this line. The only team that is to the 'Left' of this line, expectedly, is the Kolkatha team. And when the IPL will be expanded in the following seasons, one can readily think of teams from Ahmadabad, Nagpur, Goa, Kochi or perhaps Vadodara - all to the 'Right' of my imaginary line.

But to conceive of an IPL team from say Lucknow or Patna or Bhubaneswar - all to the 'Left' of my line even after ten years from now is as remote as snow in Chennai. The reference to IPL teams, at the outset, is to merely sensitise the reader to the issue on hand - growing regional (economic) disparity and its impact on national politics. After all, sport is an index of prosperity, isn't it?

While India had grown for the past three decades at approximately six per cent per annum, states like Gujarat, Tamil Nadu and Maharashtra which are to the 'Right' of this line grew much faster rate than the national average. In contrast, states like Bihar, UP and Bengal - those on the 'Left' of this line grew lower than the national average. In the process, they did pull down the national average substantially.
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Read the full article at Right and Left

More Raj Thackeray 1, 2, 3, 4, 5, 6

India’s tricky path to industrialisation

A recent editorial in the Financial Times discusses the failed venture of Tata Motors to set up a manufacturing facility for the worlds cheapest car, the Tata Nano in West Bengal.

I wholeheartedly agree with the central notion of the article that if India is to prosper, industrialisation is the way to go. But suggesting that we follow China's lead and use force to grab land and suppress dissent and freedom of speech just in the name of national progress is ludicrous.

Agreed that half of China's population now lives in the urban area, but measuring progress by just having high tech industrialized cities, without providing the basic rights to individuals who live there is just myopic and lacking foresight. What good is the life of an individual when they have no opportunity to express any view that is contrary to the Party line. What good is all your luxurious city life, if at the first sign of dissent you are silenced and thrown into a dungeon.

That's where democracy comes into the picture. Had it not been for the farmers dissent, it would not have been revealed that the process of how the land was allocated is not fair. So this has provided a learning experience for the parties involved and the next time when such a deal happens, they will make sure that these learnings are applied when negotiating the deal and that will lead to a better outcome.

I agree that with the editorial that industrialisation is needed and is needed badly if India is to lift its teeming masses out of poverty. But doing it by suppressing freedom of speech and expression is the wrong way to go about it. And this is a delicate path which India has to walk, where it modernizes itself without giving up its democracy.

The Ever Reliable Dabbawala

The Mumbai Dabbawalas or meal carriers have become the talk of the management consulting and Western Business world due to their efficient and error free rate of delivery of 170,000 meals to their destination each day. So famous have the dabbawalas become that Harvard Business School has produced a case study on them and their efficient logistics system which mostly relies on "human and social ingenuity" and does not use any technology.

Read the article on the dabbawalas in management trends section of the Economist magazine.

US Debt Collected from India

If you have a credit card, auto loan or other debt that is outstanding, and the next time a collection agency calls they might as well be sitting thousands of miles away in India. Thats right, Indian debt collectors collected about $51 billion in oustanding debt last year which America's have run on their credit cards, auto loans etc. All this by just a phone call from India.

Read more at US Debt Collected from India

Tit for Tat?

The Desmoines Register carries a story of a guy, Dave Steward, who was fired from his job because he posted a cartoon which compared Managers to Drunken Lemurs on his office's bulletin board. In response to this, Scott Adams, the creator of Dilbert is running a series of cartoons this week (starting from Feb 20th) basically lampooning the managers at Catfish Bend Casino where Dave Steward worked. You can read more about the story and also look at the cartoons by clicking Tit for Tat?. Is this just a case of, as The Desmoines Register puts it, art imitating life, or life imitating art. I dont know but its just some great stuff.....

Should Governments and Universities attract students irrespective of their nationality

Economist magazine has a new debate on "Should governments and universities attract students irrespective of their nationalities or residence". This debate could not have come at a more opportune time. With increased globalization, the world economy is very much on the doorsteps of a knowledge based economy. Human intellectual capital is in high demand. With this is prespective, it makes total sense for governments and universities across the world to attract the best and the brightest to work or study in their countries or universities respectively.
International students being the best and brightest in their field of study contribute to the intellectual capital of the country that they are being educated. They also contribute to increasing the diversity and culture of that particular country and the communities that they live in. Also the students have a profound impact on the economy of the countries they study in as they tend to work in that country for atleast a couple of years. Once they go back to their home countries, they will apply the knowledge and work experience gained to improve the standards of living in their home countries. In short they act as good ambassadors for the country of study.
Critics would argue that there are grave social, economic and security concerns in letting international students into a particular country. But the fact is when the benefits are weighed against the drawback, the benefits far outweigh the risks.

You can read more about the debate and post your points of view at Economist Debate

A Clean Energy Revolution

Global Warming is one of the most urgent issue facing the entire world. The UN appointed Intergovermental Panel on Climate Change in its recently released report concluded that "most of the observed increase in globally averaged temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas concentrations via the greenhouse effect. Therefore efforts on a global scale much being immediately to reverse the increase of these greenhouse gases."
Though governments across the world are slowly coming on board to the science behind global warming, there is a Clean Energy Revolution that is being powered by private industries and educational institutions.
This past week Google launched its new strategic initiative RE "Less Then" C which stands for Renewable Energy Cheaper then Coal. The focus on this initiative will initially be to develop electricity from advanced solar thermal power, wind power technologies, enhanced geothermal systems and other potential breakthrough technologies. The goal of this initiative according to Google is to develop one gigawatt of renewable energy capacity that is cheaper then coal.(One gigawatt can power the city of the size of San Francisco).
Then there is this initiative called as Vehicle Design Summit, which is a global collaboration between the esteemed educational institutions on six of the seven continents. The goal of this project is to bring to market a super efficient hybrid plug-in vehicle which averages about 200 MPG with minimal life cycle costs and widely accepted in developing and developed countries. The vehicle is called VDS Vision 200 and the groups plans to unvile it by August of 2008. Each of the universities involved is responsible for developing a part/parts of this visionary vehicle.
Though these are some of the examples of the Clean Energy Revolution that is beginning to take shape, more needs to be done on a global scale to reverse the trend of global warming before it is too late. Each of us can contribute to this cause by being more energy efficent in our daily lives. Whether it is switching to energy efficient light bulbs or driving less, every bit matters.

To read more about Google's RE "Less Then" C initiative check out the link Google Goes Green
To read more about the Vehicle Design Summit project check out the link VDS

The Global Economic Power Shift

America is no more the largest economic powerhouse. This title now belongs to the European Union. And Brussels is using this new found economic power to drive new regulation and force stricter environmental standards. In his new book titled "Exposed" Mark Schapiro from the Center for Investigative Reporting writes about how the European Union is setting the high ground for anything new on consumer product safety and environmental policy.
Everything from cosmetics and toys which are used on a daily basis to electronic waste whose impact on the environment is slow and steady have new set of regulations from the EU. And the funny part is some of the chemicals in cosmetics, toys electronics and other items that are banned in the European Union are still present in products in the US. Consider for example a chemical called as phthalates. The United States remains one of the few countries in the world which permits imports of toys made with polyvinyl chloride additives called phthalates. Phthalates help make the toys soft and malleable so that they can be sucked by kids. But scientific evidence suggests that phthalates impede testosterone production and sexual development in infant boys. Kids toys are not the only products which have phthalates. They are present from anything from shower curtains to cars. But infants are the most vulnerable of the lot to the harmful effects of phthalates. The EU has banned phthalates eight years ago.
In his book, Mark Schapiro argues that there is a fundamental difference between the EU and the US on how they look at regulation. In the US, concern to public safety from a product is not enough to have it taken out of the market. There needs to be irrefutable scientific proof of the harmful effects of the product on humans. This kind of proof is hard to come by most of the times. The Us also considers the current benefit to consumers from the product as well as the cost for the industry to make the change happen. The EU in contrast adopts a more precautionary approach. The EU does not wait for 100% scientific proof on harmful effects of chemicals and other substances. For them to wait for 100% proof is to wait and watch as the damage is being done irreversibly.
Mark Schapiro aslo points out that in the EU most of the healthcare is paid for by the government unlike the US. If you think about it, if the EU does not act on these issues, it will be paying from its pockets for the healthcare costs associated with all these chemicals for its consumers 20-30 years down the line. In the US there is less of an incentive to act on these issues from a healthcare point of view as most of the cost is borne by the consumers themselves. And this is not going to change.
But one can argue that changing regulations often can impede growth and hurt the economy and drive away companies to less regulated countries. Mark Schapiro argues that this is where the EU's economic muscle kicks in. Because EU is the largest economic power, companies cannot ignore them. They have less of an incentive to move out as they are losing on the sales. This forces the companies to innovate and develop new products which are compliant with the standards. These regulations remove the perverse incentive of not doing anything and maintaining the status quo. They spur innovation, create new jobs, are good for the economy, the consumers and the environment. In short every-body is a winner.

You can read more about the book Exposed at Center for Investigative Reporting
To read more about the battle in California over phthalates see the link Toxic Toys

Technology to the rescue

New York times has a very good article on how technology can be used to change the lives of the underprevilaged in India. The website is started by Mr. Sean Blagsvedt. The website BabaJob provides a network for the economically backward people to find jobs and explore opportunities.You can read more about this at initiative at
Technology to the Resuce