Will It Get More Worse In USA

The USA is a great nation for entrepreneurship and innovation, it has the best science in the world, the most creativity in the arts, it is the number one economy in the world, it has an energy unrivaled by other nations and we have chosen to move to this great nation with our family.  So everything that follows must be seen as friendly criticism from a person who loves this country.

Now most of my friends in the USA agree on what is great about this nation. But when I speak to some American friends they seem to be unaware of the shortcomings of the USA compared to others, and this is what I would like to focus on. Here are some quick examples.

The USA ranks 38th in life expectancy which is shocking considering that it has the best medical science in the world.  And this generation is the first one that will live less than the previous generation. The average American is expected to live two years less than, say, the average Spaniard. This is partly because the USA has a medical system that leaves 50 million people uninsured and many others under-insured or worried about losing their insurance (my wife Nina, for example, can’t get medical insurance to have our next baby because pregnancy is considered a pre-existing condition and we moved to USA when she was already pregnant).  It is also partly because the USA is the nation with the highest percentage of its population obese, over 30%.  The WHO studied overall level of health and concluded that Americans rank 72 in the world. Family structure is also weak as the USA has the highest divorce rates in the world. Moreover inequality is on the rise: as this Wikipedia article argues, the top earning 1 percent of households gained about 275% over a period between 1979 and 2007, compared to a gain of just under 40% for the 60 percent in the middle of America's income distribution.

The USA has a legal system that is extremely expensive and unreliable and tends to favor those with resources to pay for it. The USA spends almost half of what the whole world spends in the military and since WWII (in which the USA did an amazing job), other military interventions have been of dubious value for such a huge investment, especially Iraq and Afghanistan. The USA leads all developed countries in executions by death penalty, it has a love for guns that makes its murder rate unusually high for a developed nation, it has the highest incarceration rates of the developed world mostly focused on one ethnic group, African Americans. The USA has more people in jail or parole than Madrid has people.   And while the USA has most of the best ranked universities in the world, according to PISA scores the USA ranks very poorly compared to other developed nations. The USA is also the largest polluter in the world together with China but a leader on a per capita basis. The American lifestyle is great but not scalable to the world as a whole.  Replicating this lifestyle on a global basis will lead to extreme competition over resources and high environmental damage.

Yes, the USA is great nation. I am happy to be here teaching at Columbia-- this country probably has the most educated elite in the entire world. It has incredible business creativity and it is home to the Apples and Googles of this world and in this sense, they are an example for the whole world to follow. It also has individuals who are among the most driven in the world and who want to succeed and do as much as they can.  But it has a number of very important issues to address, many of which were not part of the recent presidential debates (climate change for example) and which seem to rarely be part of the conversation with many of my American friends.

Source: Linkedin.com

 

GREECE ECENOMIC WOES MAY HURT US

Your 401(k) could sink again. A plummeting euro may make it harder for American companies to sell goods overseas. Credit could be tightened.Skip to next paragraph

These are all potential complications of a European debt crisis that risks spiraling out of control. And in today's interconnected global economy, Greece's troubles could over time become a headache for all of Europe and by extension the rest of the world.

That includes President Barack Obama as he faces an already difficult re-election bid, and voters as well, from machine tool makers in Michigan to chemical plant workers on the Gulf coast. Pensioners and home buyers also could be affected.

RELATED: The Greek debt conundrum, explained 

All this because Greece is at a crossroads, unable to form a government and decide whether it will continue on a path of harsh austerity measures or walk away from its debts and give up on the euro. That would leave many European countries holding their debts and shake the foundations of a currency used by 331 million people.

Here's what a Greek debt default and exit from the 17-nation eurozone might mean for people in the United States:

Banks

The short-term financial consequences of Greece defaulting may be limited across the Atlantic. American banks already have sharply reduced their exposure to Greece by more than 40 percent to $5.8 billion, according to the government, and Cornell University economist Eswar Prasad said he foresees little immediate blowback for the U.S. financial sector.

But the concern is that market speculation would then fall on the far larger economies of Spain and Italy. Both are deep in the red and heavily dependent on credit markets to stay afloat. And their debts are held by Europe's big banks.

Economists call this threat contagion. Scared investors sell off their assets in Europe's most troubled economies and the governments struggle to access credit while falling into deeper recession. A crisis as bad as Greece's in a bigger nation would have severe global implications.

"Greece is peanuts as far as the United States is concerned," said Uri Dadush, former economic policy chief at the World Bank. "But if Greece leads to the contagion of Spain and Italy, the euro could implode. This is big business for the U.S. We're talking trillions of dollars in direct and indirect exposure to the European banking sector."

Economists cite the example of Lehman Brothers' collapse in 2008 and the financial turmoil that followed. A repeat scenario could see credit lines dry up as banks short of funds limit their risks, making it harder to secure loans for business expansion and home mortgages.

Lending and credit growth remain especially weak in Europe, where over $1 trillion in cheap, three-year loans to financial institutions by the European Central Bank helped stave off a complete credit cutoff. A massive bailout fund has been set aside in case Spain or Italy fails, too, but a default by either country could spell disaster for German, French and other heavily exposed banks. They, in turn, deal extensively with American banks.

"It's a question I don't want to find out the answer to, honestly," Dadush said. "There is a real danger of global depression."

Markets

Many pension funds, insurance companies and other big investors have dumped or written off investments in Greece such as government bonds. But there's no telling how the markets will respond to a default.

For investors who have already faced a half-decade of turbulence, this weekend's failure in Greece to form a new government led Monday to steep market drops across Europe. Britain's FTSE slipped 2 percent, while Germany's DAX was off 1.9 percent and France's CAC 40 fell 2.3 percent. In the U.S., the Dow Jones industrial index was down 0.8 percent at 12,714.

Each round of bad news from Europe raises uncertainty. No one knows how a Greek exit from the euro would work and the financial swings have added to the stress on Europe's economy. And every time stocks plunge and the borrowing costs for troubled countries rise, businesses and consumers grow more cautious. This makes them more reluctant to expand companies or buy more property.

Europe's turmoil "does not bode well for the fledgling U.S. recovery," Prasad said. He predicted that uncertainty in Europe will rattle U.S. financial markets, as happened last year, shaking fragile consumer and business confidence.

Individual American investors should be concerned as well, even if most have little direct exposure to southern Europe. Market declines across Europe could drag down Asia and the United States, hitting portfolios and retirement funds. And when people feel poorer, economies shrink.

Trade

Exports have been a bright spot for the U.S. economy, and Europe has played a big role. More than half of U.S. foreign investment and a fifth of all American exports go to the European Union. A significant slowdown there could mean less revenue for U.S. companies, less expansion at home and lost jobs for American workers.

"Right now, the best case scenario in Europe is a recession," said Chad Moutray, economist at the Washington-based National Association of Manufacturers. "Any of the worst case scenarios threaten our growth strategy."

U.S. manufacturers have added 167,000 jobs over the last five months, but a European economic collapse would hamper growth in two ways. It would weaken Europe's general demand for goods. And if investors flee Europe for safer bets elsewhere, the value of the euro would sink and make American products more expensive.

Many major U.S. companies not only export but have large operations in Europe. General Motors and Ford both make cars there and have faced slack sales in a competitive market that offers manufacturers little pricing power.

Unemployment rates of over 50 percent for people under 25 in Spain and Greece have undermined the market for first-time car buyers in those countries. Unemployment across the eurozone is already at 10.9 percent, a record since the common currency was introduced in 1999. If that figure worsens still, it would further dampen American sales.

Politics

Any new economic crisis presents a problem for Obama, even if Europe's problems are largely beyond his control.

Higher unemployment, a surge in gas prices or collapsing stock portfolios in the United States would undermine the president's argument that he has slowly but surely guided the U.S. out of its worst downturn since the Great Depression. His November showdown against Republican candidate Mitt Romney is still too close to call and will hinge on the economy.

"He's put us on a road to become more like Greece," Romney said last month, hammering away at a campaign message that has focused on debt, unemployment and the lackluster state of the American economy.

Even if a Greek default may also undermine the harsh austerity tactics championed by some Republicans, Obama would face a severe backlash if Europe's ills were to cause the U.S. to slip into a double-dip recession. That seems unlikely for now, but Obama is already challenged by unemployment hovering around 8 percent and an economy only expected to grow by about 2.5 percent this year, still slow for an economic recovery.

Yet Obama can do little about Europe's ills. His administration insists that Europeans should fix their own problems without U.S. assistance — a stance it must take because there is no appetite for U.S. taxpayers to help bail out Greeks or anyone else in Europe. Washington has pressed Europe to stimulate their economies more.

But Obama can't even control the U.S. economy, after pushing through a $787 billion stimulus package in 2009 that critics charged with not doing enough to create jobs and spur economic recovery.

"As has happened several times before, when our economy gets going, events elsewhere can intervene and throw a monkey wrench in the works," Obama senior campaign adviser David Axelrod recently said. "We're not hoisting a 'Mission Accomplished' banner. We know there is a lot of work left to be done and the headwinds are part of that equation."

EURO Downfall

The euro touched the lowest level in five weeks against the dollar and the yen on speculationEurope’s spreading debt crisis will curb economic growth and pressure the region’s central bank to ease monetary policy.

The 17-nation currency maintained this week’s slide versus the greenback before Spain auctions up to 4 billion euros ($5.4 billion) of bonds today and France sells as much as 8.2 billion euros of debt. European Central Bank President Mario Draghispeaks in Frankfurt tomorrow. The Dollar Index reached the highest since October as economists forecast a U.S. report today will show manufacturing activity increased.

“We are seeing diverging trends with the U.S. economypicking up and the European economy headed for recession,” saidRichard Grace, Sydney-based chief currency strategist and head of international economics at Commonwealth Bank of Australia.“Those diverging economic trends and the likelihood of further ECB rate cuts are going to gradually weigh on the euro.”

The euro fell to $1.3422, the lowest since Oct. 10, before trading at $1.3475 as of 1:07 p.m. in Tokyo from $1.3463 in New York yesterday. The common currency declined to 103.41 yen, matching the lowest level since Oct. 10, before trading little changed from yesterday at 103.78. The yen was at 77.02 per dollar from 77.06.

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, reached 78.467, the highest since Oct. 10 before falling 0.2 percent to 78.228.

European Debt Sales

Spain will auction bonds maturing in 2022 and France will sell as much as 7 billion euros of notes and 1.2 billion euros of inflation-linked debt today.

Italian 10-year bond yields fell six basis points to 7 percent yesterday. The ECB purchased larger-than-usual sizes and quantities of the nation’s debt under its Securities Market Program, according to two people with knowledge of the trades. An ECB spokesman in Frankfurt declined to comment.

U.S. banks face a “serious risk” that their creditworthiness will deteriorate if Europe’s debt crisis deepens and spreads beyond the five most-troubled nations, Fitch Ratings said yesterday.

Rising bond yields from the Netherlands to Finland and Austria suggest European officials are struggling to convince investors they can stem the crisis. The euro-area economy is heading toward a “mild recession” by the end of the year, Draghi said on Nov. 3.

Downward Trend

“The euro is in a clear downward trend,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp., a currency margin company. “Europe’s situation hasn’t changed at all and its crisis has yet to be behind us.” The euro may fall below 100 yen by year-end, he said.

Europe’s shared currency slid 1.6 percent over the past six months versus nine developed-nation peers tracked by Bloomberg Correlation-Weighted Indexes. The yen gained 8.9 percent and the dollar rose 4.1 percent, the best performers.

The yen tends to strengthen during periods of financial stress because Japan’s export-reliant economy doesn’t need foreign capital to balance current accounts -- the broadest measure of trade. The dollar benefits due to its status as the world’s reserve currency.

“The bottom line would be to stay defensive,” said Bilal Hafeez, global head of foreign-exchange research in Singapore at Deutsche Bank AG. “The best currency for me is the yen.”

Hafeez expects the yen to appreciate toward 70 per dollar in the next three to six months, strengthening past its postwar record of 75.35 set on Oct. 31.

Japanese Intervention

Japan has sold yen in the foreign-exchange market three times this year as a strong local currency reduces the competitiveness of its exporters.

Japan’s “approach over the last year or so has been to do periodic one-day interventions, often extremely large, and I think they may continue with that,” said Hafeez. That method of market operation “isn’t really the type of intervention that will turn the currency trend around.”

Demand for the dollar increased before a report forecast to show manufacturing in the Philadelphia region expanded in November at the fastest pace in seven months, a sign U.S. factories may provide more support for the recovery.

The Federal Reserve Bank of Philadelphia’s general economic index increased to 9 from 8.7 last month, according to the median estimate of economists surveyed by Bloomberg News. Readings greater than zero indicate expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware.

The pound touched the lowest level in four weeks against the dollar after the Nationwide Building Society said its index of U.K. consumer confidence fell to a record low in October as Europe’s crisis and the unemployment outlook worsened. Retail sales including fuel slid 0.2 percent in October, following a 0.6 percent gain the previous month, a separate report is projected to show today according to economist estimates.

“The U.K. economy continues to struggle,” said Commonwealth Bank’s Grace. “The pound is probably going to underperform. The Bank of England has made it clear that they’ve got an easing bias.”

The currency was little changed from yesterday at $1.5730 and earlier touched $1.5691, the lowest since Oct. 20.

Is Petroleum Tax Moratorium (Freeze) Necessary to Easy Economic Hardship?

Global economies have been showing signs of recovery from one of the longest economic recessions. However, the current resurgence in the price of oil, is by far the single biggest threat that is likely to wipe the few gains made on the economic front. High cost of oil is slowing down economic growth across the board. High unemployment, deeply entrenched toxic debts, inflation, and so forth in many developed economies, are exposing the fragile nature of the global economy. Developing nations on the other hand are being hit particularly harder, with their citizens resorting into mass action due to their inability to feed themselves.

Tanzania is amongst countries experiencing chronic energy shortage, and could join some of the economically  troubled countries should speculation continue to drive oil prices further, proportionally to the cost of food , and other basic necessities. Unrest in the Middle East, and North Africa, increasing demand for oil in the Asian continent, declining supply of oil in the global market, and now a disaster in Japan, have been the driving factors behind the sudden resurgence in the cost of oil in the commodity markets. And once Japan switches into the recovery mode, we should expect to pay more for petroleum products. This will most likely cripple the economic recovery, and further weaken the already fragile global economy

Productivity has declined significantly in many developing nations including Tanzania. The daily rise in the price of oil has regenerated into economic hardship , giving birth to the new wave of social and economic unrest amongst youth  in these developing nations; the pattern precipitated by the inability to afford food by many citizens. The cost of oil is placing a strenuous impact on transport, cost of food, freight, and the entire supply chain. Four months ago, one liter of gasoline was Tsh, 1,680, today the same liter is Tsh,1,980 an 18% increase. 1 kilogram of sugar was Tsh. 1,200, today the same kilogram is Tsh. 2,000 a whopping 67% increase. One kilogram of rice was Tsh. 900 a few months ago, today the same kilo fetches Tsh 1,400, and the list goes on.

In general, commodity prices have sky rocketed across the board in the recent months, and the increase can be attributed to many factors including the high cost of petroleum, whereby  the high cost of equipment and farming input, production, processing, and  transporting commodities must be passed on, back to the consumer in the form of high prices. To curb the rising cost of food, it is necessary for the government to think of temporary drastic measures such as extending incentives to domestic farmers in the form subsidies on farming input and equipment, as well as Interest free loans.

Subsidization of petroleum, Imposition of tax moratorium on all commodities and petroleum products, and also the adoption of STRICT commodity price regulation, that will deter greedy merchants from exploiting consumers. These temporary measures will ease the economic pain, by leaving more money in the pockets of the consumer, which will in turn maintain economic activity. This is my idea, what do you think?

Mungu Ibariki Tanzania

John Mashaka
Dar Es Salaam, Tanzania
mashaka.john@yahoo.com

How Japan’s Crisis could improve the Global Economy

Investors around the world have panicked following the massive crisis in Japan caused by an earthquake, made worse by a tsunami, and radiation leaks at nuclear power plants.

Apparently there are stories about how Japan’s disaster could weigh on the global economy. This may be true. But let me offer an unconventional point of view that Japan’s woes could be a boost for the global economy.

According to International Monetary Fund (IMF), In 2010 the global economy grew by 5% and is anticipated to grow by 4.4% and 4.5% in 2011 and 2012 respectively.

Very few analysts are of the opinion that the disaster will undo the 4+% rate of global growth expected this year, or that the setback that the Japanese economy may suffer will be anything but a temporary one.

Japan is one of the world’s economic engines however its importance is dropping. Japan is the world’s number 4 economy after the United States, China and The EU.

Japan Crisis

The earthquake and tsunami damaged airports, Ports, factories and roads, disrupting the consignment of goods in and out of the country. Four container ports of medium size on Japan’s northeast coast were harshly damaged that they are not expected to resume operations for months or even years.

Certain commodities are particularly vulnerable. Japan used up 500,000 ounces of platinum and 750,000 ounces of palladium in the new cars it built in 2010. Exportation of new Japanese cars could be delayed while the ports are straightened out, and Japan has lost 23% of its electrical power as its nuclear power plants have shut down. Demand for base metals, particularly zinc and nickel, could also take a knock.

Moreover, Japan Exports to Europe, United States and rest of the world the manufactured components which can be sold alone or used in other manufacturing. For example, Japan is a major supplier of flash memory chips, commonly used in portable electronics. Delays in shipping could impact big buyers such as Intel, the world’s biggest semiconductor company, and Texas Instruments.

Therefore it can be clear now how this could disrupt manufacturing around the world.

On the other hand

v  Japan is the third-largest consumer of oil in the world after United States and China (4.4 million barrels of oil per day). During this Crisis, Japan could use less oil which will result to low demand and therefore decrease in oil prices (first Law of Demand). Lower oil prices should help the economies of the rest of the world to accelerate, or at least put off the risk of a global recession caused by an oil shock.

v  Japan will have to rebuild which means they will be importing things like aluminum, copper, steel and nickel plus wood, paper, and food. Importation of these things will increase the demand and therefore lead to increase In prices which will be an advantageous for poor exploited countries which produce these materials.

v  Japan is the number 1 market for exports of U.S. corn (Japan bought nearly 15 million tons of U.S. corn in 2009-2010). In the short-term, livestock operations in Japan are going to suffer, and that will lower Japan’s corn demand. But in the intermediate-term, not only will those livestock producers come back online, but Japan is probably going to have to import more corn and other grains as it rehabilitates its swamped farmland and broken infrastructure.

v  Good news for natural gas: Japan has shut down 11 nuclear reactors with a total capacity of 9.7 gigawatts (the equivalent of 200,000 barrels of oil a day, or 4.5% of Japan’s consumption). Even if some of those reactors come online, I think nuclear power is dead in Japan for years to come. This should be a boost for natural gas, a commodity that has suffered from oversupply recently.

v  A deluge of easy money. Japan’s central bank decided to inject an enormous 26.5 trillion yen (about $324 billion) into its financial system in the first three days of this week, so as to provide stimulus and prop up the economy and financial system. Moreover it can be suggested that they are probably not done yet! All that cash has to go somewhere (increase spending) which may result to increase in commodity prices.

Where to Invest?

We have already seen bargain-hunting investors dive into Japanese stocks Wednesday, scooping up shares of beaten-down companies. It can be argued that they are not yet matured due to the fact that  the selling in Japan may not be over yet. Give me a few days when we don’t have more bad news on one of Japan’s nuclear power plants. Then maybe I will be ready to buy.

The Japanese are a tough, resilient, industrious people. We can be sure that not only can they bounce back from this, but also they can rebound strongly.  Remember 1995, Japan was hit by a devastating quake that killed more than 6,400 people, about 4,600 of them in the city of Kobe. Within 15 months of the quake, manufacturing in Japan returned to normal levels.

To be sure, one fly in the ointment is how Japan is going to finance all this reconstruction. The government is expected to spend at least $200 billion, and the Japanese government’s debt is already an alarming 225% of the country’s economic output.

But as long as governments can create paper and pass it off as money — and there’s no sign that’s going to end any time soon, Japan should be okay.

And you know what else should do well as Japan prints money to pay for its reconstruction? The money you CAN’T print (gold and silver). Apparently, investors in Japan are selling gold in a hurry. But the World Gold Council says that Japanese investors have been selling gold into the market for years. The real buying is elsewhere in the world, including China, India and the Middle East.

How to Invest

Pullbacks in gold, oil and other hard assets can be bought just wait for a bottom before you commit your cash. We are not there yet.

A more interesting way to play it is to wait for a bottom in the Japan iShares (EWJ), a broad basket of Japanese stocks, and then buy it.  This is how real investors will do.

Royal Bank of Scotland pays £375m to 323 key staff

The bank announced that it paid a total of £375m to 323 people designated as "code" or key staff.
RBS, 83%-owned by the taxpayer after a government bail-out in 2008, made a £1.67bn loss in 2010, after losses of £3.6bn in 2009 and £35bn in 2008.
RBS has already disclosed that chief executive Stephen Hester received a pay package worth £7.7m for 2010.

Mr Hester said in the bank's annual report that its recovery was "ahead of schedule", highlighting the fact that the bank had returned to operating profit. Before restructuring costs, strategic disposals, bonus tax, fair value changes and a host of other exclusions, this operating profit came in at £1.9bn.
"We have much work still to do and there are significant obstacles still to overcome," Mr Hester warned.
Pay restraint?

The BBC's business editor, Robert Peston, points out that the "code" staff, as defined under rules set by the Financial Services Authority, earned, on average, £1.2m each.

• Robert Peston's latest blog

They are those executives who are perceived to do things that have a bearing on the risks that banks takes.

However, he adds that this definition excludes other RBS staff, such as traders, who earned even more than this. "For what it's worth, RBS's code staff earn less than Barclays' code staff, whose average pay was £2.4m per head," our business editor adds. "So presumably the chancellor of the exchequer will point to this disparity as proof that taxpayer-owned RBS is showing restraint."

Although the RBS pay undercut Barclays' figure, it was higher than that of HSBC, which said it paid 280 staff an average of just over £1m each. Banks have been releasing this information in accordance with new EU rules on disclosure of remuneration.  Publication of the figures also follows the banking sector's Project Merlin agreement with the UK government, aimed at curbing high pay and boosting bank lending.


Source: http://www.bbc.co.uk/news/business-12778142

US Economy and Inflation Threats

In United States, the cost of living in Washington has increased by 0.5% in February, highlighting the highest monthly rate of inflation June 2009 as petrol prices continue to be pushed up by unrest in the Middle East, the Labour Department said.

On the other hand, a key gauge of the economy's performance rose for the eight straight months. The New York-based Conference Board's index of leading economic indicators gained 0.8 per cent in February, after a 0.1-per-cent rise in January due to snow storms in much of the US.

Over the last few months Inflation rate in the US has been increasing steadily amid strong gains in oil and food prices. This has prompted some policymakers to push the US Federal Reserve to pay more attention to the threat of inflation and consider tightening monetary policy.

The February price gain slightly beat the forecasts of economists, who had been predicting a 0.4-per-cent inflation rate. Consumer prices rose 0.4 per cent in January.

According to the department, Energy prices have increased suddenly and powerfully by 11% in the past year. The so-called core inflation rate, which excludes more volatile food and energy prices, rose just 0.2 per cent.
The United States central bank has so far shrugged off the fears of higher inflation, pointing to the low core rate and preferring to continue prodding the world's largest economy into a stronger economic recovery.
The Fed this week held interest rates at record lows of near 0 per cent and kept in place an unprecedented programme to buy up 600 billion dollars in government bonds. The European Central Bank by contrast is considering a rate increase in April.

The United States central bank has said it expects the spike in oil and food prices to be temporary. While the economy was now on a 'firmer footing,' unemployment remained too high at 8.9 per cent, the Fed's decision-making board said in its statement on Tuesday.

For the last 12 months, the inflation rate climbed to 2.1 per cent, compared to a year-on-year rate of 1.6 per cent in January. The core inflation rate stood at 1.1 per cent over the same period.
Ken Goldstein of the Conference Board said that sharply rising food and energy prices could yet prove a 'headwind' for the economy's recovery. Goldsteain stated 'Still, the way inflation will move is unclear, given the degree of slack in the overall economy, and especially in the labour market,'.

References:
http://www.monstersandcritics.com/news/business/news/article_1626827.php/US-inflation-nears-two-year-high-economy-strengthening

Impact of Tsunami to Japan Economy

Tokyo: Japan will suffer severe economic costs from last Friday’s devastating earthquake and tsunami but major ratings agencies Moody’s and Standard and Poor’s said on Monday they did not anticipate any effect on its sovereign ratings. One initial estimate has put the economic cost at 15 trillion yen ($183 billion).
Meanwhile, Bank of Japan unveiled plans to pump in 15 trillion yen into the economy. Analysts said the economy could even tip back into recession.
Global stocks hit 6-week low, Nikkei plunges
Tokyo: The Nikkei average tumbled 7.5%, its biggest decline in a single day since October 2008, and more than 4.9 billion shares changed hands on the exchange’s first section, the highest number since World War 2. World stocks also hit a six-week low driven by a slide in Tokyo shares.
Oil below $99 as disaster stuns world economy 
Singapore: Oil prices dropped below $99 a barrel on Monday in Asia after the tsunami, denting demand for crude from the world’s third-largest economy.
Honda, Toyota, Nissan suspend production
Tokyo: Honda Motor Co said it will suspend all production in Japan at least until March 20. Toyota Motor also said it would suspend production at all its domestic car plants until at least March 16.
Nissan Motor also shut down all four of its auto assembly plants in Japan.
Japan quake tests supply chain from chips to ships
Seoul/Taipei: Global companies from semiconductor makers to shipbuilders moved to minimise major supply disruption. The killer quake and ensuing tsunami destroyed infrastructure and knocked out factories supplying everything from high-tech components to steel, forcing firms such as Sony Corp to suspend production.
Plant closures and production outages among Japan’s high-tech companies were among the biggest threats to the global supply chain as an estimated fifth of all global technology products are made in Japan.
Big quake cost estimate weighs on insurers 
London: Shares in European insurers fell steeply on Monday after analysts estimated over the weekend that the earthquake could cost the industry $35 billion, making it one of the most expensive disasters ever. 
Employees safe, monitoring situation: IT majors
New Delhi: Indian IT giants TCS, Infosys and Wipro on Monday said their employees in tsunami-hit Japan are safe and are constantly monitoring the situation there.
TCS has over 200 people in Japan, while its peers Infosys and Wipro have over 250 people and 400 employees, respectively.

Source: http://www.hindustantimes.com/Tsunami-turmoil-has-wide-impact/Article1-673429.aspx

An Open Letter to the President of the United Republic of Tanzania

Dear your Excellency,

Greetings from the Far East. It is my hope you are doing well.

Of late we have witnessed the political climate in North Africa changing rapidly. This is due to the popular demonstrations and "uprisings" that have toppled governments. First it was Tunisia then followed Egypt and perhaps Libya will be next. I wish to convey to you that the reasons that led to discontent among the populace of these two countries are not markedly different from the situation at home. Before I venture into the reasons I wish to clarify that we are a democracy as such this differentiates Tanzania from Tunisia, Egypt, Libya, Bahrain etc therefore on the face of it we may think we are safe. However, kindly persue the subsequent paragraphs to understand the gravity of the situation.

On a surgical analysis, it is evident that economic conditions are the main causative agents of the protests. This does not mean I am overlooking the political ones however the economic hardships are the main drivers of the "revolutions".

Majority of the protesters were complaining of high food prices, rising fuel costs, massive unemployment, inefficient educational system, corruption, rising income inequality, police brutality and complete lack of accountability by those in power just to name but a few. On looking at these grounds it is clear that the nation (Tanzania) is in the same predicament. The fuel prices are at the roof causing a pinch into every inhabitant's pocket. The domino effect of this is inexplicable on such small space and since you hold economics degree I need not explain the obvious to you.

Further the educational system is in a mess. From primary schools to the university level the government seems to have abdicated its responsibility of providing quality education to the populace. It was easy after liberalization in 1990's to view this as a responsibility of the private sector however we are witnessing the repercussions presently. There is a big shortage of schools plus universities both of which are under-equipped resource-wise. From the lack of teachers to lack of facilities and books the problems are endless.

What is annoying many is the ineptness of the government to deal with the problem surgically. It has to take students to protest for anything meaningful to be done! There seems to be no meaningful government plans of action to alleviate this problem something, which only spells doom for the future.

Rising income inequality is visible from the opulence of the few including the government officials. There is a big gap between incomes in the government servants. The income plus perks of the high-ranking bureaucrats make that of teachers, doctors, lecturers and even the normal civil servant look like loose change. While the government complains of not having money to increase the salaries, we can see new mashangingi being bought, Tea only for the high ranking members in the office continuing to be served. It

makes one wonder, if you do not possess money then how do u service these two of the many unnecessary components.

Not only that, the income inequalities resulting from the business entities or businessmen with close ties to the officials in government also provide fuel for people to hate their government. The media is abuzz with such stories and not all can be discounted with mere deniability or by cooking up a conspiracy story because of the integrity of the journalists who provide them.

At this juncture sir, I think it is pertinent I touch on the subject you may of late hate to hear, corruption and lack of accountability. I have stressed your dislike because some of the allegations have been projected personally to you. Many of the corruption scandals have happened under your nose. The biggest of them all was the Richmond saga. Richmond was the precursor of Dowans. In other words Richmond sold the contract it had with Tanesco to Dowans. The Parliamentary probe committee found that the contract was

awarded under dubious circumstances to an entity that never had any expertise in power generation. Several people were named in the report as the main persons responsible in putting the country at loss. The then prime minister resigned however to the amazement of the nation, no one else was punished. Now we may have to cough billions of shillings in damages for terminating a contract that many feel shouldn’t have been signed at all or was voidable at the option of the government. This has sparked public outrage. What has enraged many of us is the sum proposed to be paid and

which the government was easily willing to release while the culprits who consciously put the country into the quagmire have not been brought to book. It is total lack of accountability that has permeated every corner of the government you run Mr. President. One of the essential questions being asked is where was the government going to get all this money at such a short juncture and if such money is available why is the government complaining of not having money to implement developmental projects.

Politically the recently concluded general elections which returned you to power was full of allegations of rigging and of the state agencies helping your party. This has prompted calls which I believe are justified of rewriting the Constitution so as, among other things, to make some offices like the Chairman of the election commission not a presidential appointee. It is no secret that the Constitution is unsuited to the present political atmosphere.

Even members of your own political party recognize this fact so it makes us wonder why even such a basic element which is inevitable the Government drags its feet to accomplish.

Your Excellency, as I know you are a busy man, I think I should not consume much of your precious time with what has been repeated so many times by Mwananchi and Mwanahalisi. There are still issues to discuss like Police brutality to unarmed lawful protesters in Arusha with no action taken by you to punish those responsible.

Mr. President as I end this letter I wish to remind to you again the purpose of writing. I wanted to show you that the conditions, which prevailed in the North African states that have experienced forceful regime change, precipitate also in our beautiful country. Therefore it is time for the government to tackle these issues before the situation gets out of hand. The masses have shown that no regime is immune from challenge therefore should never get complacent. It is my hope that your wisdom will prevail and ensure the economic as well as political problems are solved in a meaningful way to the satisfaction of everyone.

Your law-abiding citizen,

Ntemi Massanja