Lessons for all of us...

I helped one of my students, JB, get an internship last summer. Being one of our brightest, he did very well despite the fact that his main passion is music. The firm continued his employment after the summer, and it looks likely that he might work there after graduation. He wrote a thoughtful, useful essay about his internship experience as part of his independent study. Parts of his paper are reproduced here.
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.....However, I do feel there are a few unique strengths to my perspective, some of which I have already stated—
• My internship has so far lasted almost eight months, which is a long time for an internship
• My internship is at a staggeringly large Fortune 500 corporation
• I did a variety of projects in multiple departments
• A great deal of my time was spent on a project in which I critically examined and reported on administrative habits and processes
• My managers consistently and purposefully provided me with “learning experiences”

I – “The Right Attitude”
My Observations
A large part of “the right attitude” is very straightforward and may nearly be summed up in one word: humility. No matter how qualified or intelligent you are, the given purpose of an internship is to learn. This assumes a certain ignorance on the part of the intern, and you must keep this fact squarely in mind—pride will yield nothing useful. The mistakes you will inevitably make on the job will only torment you more if your ego is involved. Additionally, if you come across to others as cocky, you will learn much less, annoy people much more, get little or no help when you need it, and potentially get yourself into something that is over your head.
For this reason, it is very important to clearly state when you are not capable of something—your supervisors must know what projects are appropriate for you. In my case, this often amounted to explaining that I was not capable at all, particularly since my major had nothing to do with logistics! When this happened, my supervisors were generally more than glad to either give me something else to do or help me learn the skills I needed.
But merely admitting that you can’t do something is insufficient. You must constantly ask questions—remember you are assumed to be ignorant! Your embarrassment will be short lived compared to the mess you may create if you labor under a wrong assumption or just decide to “wing it.” For example, I would often ask what exact format was desired for my reports, rather than devise what “made sense to me.” And then there was the vast sea of cryptic acronyms that I always had to have translated for me.
The second major part of “the right attitude” is eagerness. You must always seem glad to do your projects! Over my first month, I gained a reputation for always wanting projects, which was very instrumental in gaining a lengthy extension on my “summer’ internship. This includes going to all team outings or “offsite meetings.” Additionally, you must always seem glad to be a part of your team. In my case, such meetings were particularly important—the issue of my continued employment was first raised not at work, but sitting at a bar! In some ways, perceived eagerness is even more important than how effectively you do your job.

II – Technology
My Observations
This is perhaps the most absolute and objective topic I can cover. In short, you must have a working knowledge of Microsoft Office. There are other systems which are commonly used for certain things, but everyone is expected to be able to use all the programs of Office with reasonable comfort.
Upon starting my internship, I was capable in Word and could at least get through a basic PowerPoint presentation, but had never used Outlook or Access and had used Excel only once! Early on, there was one occasion where I tried to describe basic Excel formulas to someone in the finance department, using phrases like “you know, when you make it so the cells will do math and fill in a spreadsheet for you.” I genuinely viewed formulas as some high-level function of the program—so complete was my ignorance! Luckily, this particular individual was an Excel expert and offered to tutor me in the Excel skills I would need (this is another instance where humility was key). As I went on, other members of my extended team showed me how to use the other programs.
Since completing my various crash courses, I have used all of the Microsoft office programs almost on a daily basis. Excel has proven particularly useful—last summer, I would often do sets of calculations to assist the sourcing manager in pricing decisions. Other times, I would model various metrics, or make checklists when establishing company contacts. Outlook, of course, is used for all of my e-mails, as well as my appointments. And while Access is still a mystical beast in my mind, I know just enough to use several of the logistics databases.
In all, learning these programs is probably the most valuable of the “tangible” and résumé-worthy skills I have acquired during my internship.

III – Communication
My Observations
There are certain formalities to “professional” language that often intimidate students. In this area, I have one key observation—that these “formalities” serve to standardize and simplify communication, and it is in this manner that radically different people can exchange information effectively. Once this is realized, professional language ceases to be a code you must crack and instead becomes a convenience. The acid test is fairly simple—when you specifically state everything you mean to in a clear and polite way, your language is likely just fine. Language and phrases particular to the company are things you will pick up as you go along.
For me, the issue of clear communication most often came up in e-mails—there are few things more bothersome than a confusing writer. Unfortunately, they are plentiful and generally come in two unique flavors—those who write too much and those who write too little. Those who write too much often obscure the necessary information with useless garbage, and those who write too little often leave out necessary information altogether! The latter will often use Internet acronyms and abbreviations as well (IMHO, LOL!).
Avoid both these traps in your e-mails and cultivate a willingness to ask others for clarification. Better yet, be ready to talk through your questions on the phone. Some people just can’t write to save their lives.
It’s also worth noting one small but significant lesson I had to learn the hard way. When writing e-mails, always refer to someone you don’t know personally by their first name or their full name. Much to my embarrassment, I more than once I mistook the gender of a seemingly obvious name (like “Joe”) and referred to a woman as “Mr.”!

IV – Office Politics
My Observations
My observations and advice are best served by briefly relating another story and then analyzing it. Unfortunately, I will have to gloss over the details to the point of making it very uninteresting.
At one point, I had to calculate a large finance number for the logistics department that involved contributions from every subsection of the department. This demanded I approach the head of each subsection and then work with individual members of their team to arrive at their correct number. Most people were willing to help, but I ran up against one stubborn obstacle—a member of the international team and a member of the finance team seemed to harbor some slight dislike for each other, and each claimed that the calculation I needed done was the other’s responsibility. As a result, I was forced to go back and forth between the two for several days in an attempt to convince one or the other to investigate the information I needed. In approaching each, I was always sure to state that I was doing this because my superior—also their superior—wanted me to gather the information and that I was merely the messenger boy intern. I was also extremely polite and tried my very hardest to speak well of whoever I referred to (most of the time). Eventually, I approached my superior and told him of my problem, whereupon he had a meeting with both individuals and told them work on the information together.
There are three things to note here.

1) I was always very polite and tried to be nice about everyone
2) I quickly pulled out my “I’m just an intern” card
3) I deferred to my superior

If you do these three things, you should be able to avoid unpleasantness about as much as is possible. A large part of rule 1 ties back to communication—cultivating a vocabulary of neutral or politically correct terms and phrases (such as “I’m not comfortable with that”) should serve you well. If ever I violated one of these rules, I eventually regretted it.

V – Useful Administrative Habits
My Observations
This section is meant cover several useful habits I cultivated that would not readily fit under my other topics.
1) First, if you don’t already, you must find some method of organizing and keeping track of your projects. I personally used a spreadsheet (which is included in the back of this paper), but most anything that can function as a checklist will do. Liberally using the calendar function of Outlook will serve you well also—I found it most important in reminding me to keep track of my hours!
2) Concerning e-mails, I have two pieces of advice. First, never permanently delete any e-mails, unless they’re something completely useless like spam—instead, store them on a remote drive. Second, always put something relevant and descriptive in the subject line of your e-mails, in case you have to go back and do a search for them. I have been saved from trouble countless times by being able to reference my old e-mails—it is most particularly useful in proving to others that you did indeed send them the information that they claim you did not!
3) A small thing that many people seem to forget about is carrying paper and pen! When you’re going to ask someone questions, bring along either a legal pad or at least carry some post-it notes in your pocket. Relying on your memory alone will eventually betray you, and constantly re-asking questions you’ve forgotten the answers to tends to annoy everyone involved.
4) Most of all, always do what you say you’re going to do when you say you’re going to do it. I would sometimes stay after hours to finish projects by the deadlines I had quoted to others. This is a necessary habit in general, but is particularly so when you’re being judged as a potential employee. If you are perceived as reliable, a measure of success will always follow you.
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Food for thought.....

I know how hard it is for you to put food on your family.
--George W. Bush, Greater Nashua, NH, 01/27/2000, appearing in the Chamber of Commerce

One of my former students was kind enough to forward me an article that appeared on the CNBC website. Titled "What College Graduates Can Expect Out Of The Job Market" it provides some insights into the current job market. Here is an extract from it..

"....It goes without saying that employers these days can afford to be choosy.Most start by screening out candidates with less than a 3.0 grade point average.They may also weed out anyone who has not had relevant work experience.“Employers are really looking for internship experience or any kind of work experience,” says Koncz.Leadership skills are also important, including positions in campus clubs, professional organizations and sororities or fraternities.“When we asked employers to rate how they would decide between two equally qualified candidates, the number one response was leadership skills,” says Koncz. “They want to see on your resume that you took charge and can handle responsibility.”But those are just the qualifications that may you through the door.Once you’re in the interview seat, employers who responded to a recent NACE survey said the qualities they prize most are communication skills, a strong work ethic, the ability to work in a team and initiative...."

That's one of the reasons why I am not optimistic that the problems facing us are going to be solved anytime soon. The writing abilities of some of our students leads one to despair...
Recent examples...
The better educated people are in the country the better health care should grow to be and the research for renewable resources may expand as well.
The lender loses money and the person taking the lone will get in trouble and be in debt.
Comparitive advantage is the situation in which one country that has the absolute advantage over the other countries decides to maximize its production by specializing in one particular product that it is absolutely the best at producing with the least amount of resources and trading with another country, for the other products, that may not be better than the country with the absolute advantage but can produce a bigger profit by specializing in what it produces the best.

More importantly, though, it is the sloppy work-ethic and the lack of desire to learn that will hold us back. We have had things too easy for too long....

Fairly analyzing "Fair trade"

Today our class discussed Fair Trade. We had studied Free Trade and Free Trade Agreements the past few days, and today the class debated the idea of "Fair Trade."
There was an excellent discussion for nearly an hour, and the topic will be picked up on Monday. The goal is to eventually tie the notion of Fair Trade to Individual and Collective values, and then generate ideas for discussion and implementation of "fair trade" principles.

Here are the pictures of the whiteboard with student ideas..

Many things happening for "The First time since a LONG time.."

The Japanese economy is mired in its worst state since WWII.
GE slashed its dividend for the first time since WWII.
US GDP declined the most (in 4Q 2008) since 1982.
The list goes on...

An unhealthy situation....

Rising costs prompting small businesses to drop health insurance benefits

According to a new report by the Illinois Main Street Alliance, 12 percent of nearly 500 small businesses polled in a dozen states have dropped coverage for their workers within the past two years. In addition, 35 percent reported switching within the past two years to insurance that covers fewer services.

Average rate increases for 2009 for most large employers are projected to be from 7 percent to just below 10 percent, according to benefits consulting firm Mercer. An individual renewing or purchasing products in the open market can expect premiums to increase by at least 10 percent, Mercer said.

No Principle in Principal

From today's Tribune...

Congress is poised to give bankruptcy judges more power to modify primary home mortgages in an attempt to halt the foreclosure crisis, a move Democrats and housing advocates have been pushing for two years in the face of stiff opposition from Republicans and the mortgage industry.

The House of Representatives is expected to pass the legislation Thursday.

The measure would temporarily remove an oddity in bankruptcy law: Judges can reduce or cram down the principle on a vacation home, car, or boat, but they cannot do it to a mortgage for a primary residence.

As it is now, bankruptcy often results in higher mortgage payments on a primary residence because skipped payments and other fees are tacked on to the principle, for which homeowners are responsible under their repayment plans.

Can we "expense" the Education?

Two interesting stories...

Citing tough financial times, Northwestern University's president today said that the institution will reduce operating expenses and bump up tuition. In a letter to alumni, faculty and administration, President Henry Bienen wrote that the university's endowment was $5.6 billion, down 24 percent from the high point of $7.4 billion last year, and that changes would be needed to weather the current worldwide economic predicament.Despite the university's overall financial strength, he wrote, "there will ... be a need for sacrifices."
Undergraduate tuition, room and board for the 2009-10 school year will grow 3.6 percent to $49,791, but it will be the smallest percentage increase in more than 40 years, the letter said.

An Option to Save $40,000: Squeeze College Into 3 Years. Here’s one way of cutting college costs: get a degree in three years, instead of four. This fall, Hartwick College, a small liberal arts college in Oneonta, N.Y., will offer students the option of doing just that, at a savings of more than $40,000. In the college’s three-year degree program, students will complete the standard 120 credits, taking 18 credits in the fall, 4 in a January term and 18 in the spring. Students will be able to keep their summers free for internships or jobs. Whether for a three-year degree or a four-year one, Hartwick’s tuition next year will be $32,550, 3.9 percent higher than the current year. Room and board will be about $9,000.

US Lags Behind Europe in Regulating Toxicity of Everyday Products..From Democracy Now

Food for the Body and the Brain

This is a great piece by Democracy Now..

No Love in this Card..No Bang in this Ben..

American Express Co. is paying some cardholders $300 each to close accounts so the lender can reduce the risk of defaults as the recession deepens. People who got the offer to "simplify" their finances must pay off their entire credit card balance by April 30, according to New York-based American Express.

NYT reports...While the United States economy is likely to worsen significantly over the next year, the Federal Reserve is “committed to using all available tools” to stanch the financial crisis and unfreeze credit markets, the Fed chairman, Ben S. Bernanke, told the Senate Banking Committee on Tuesday. But he added that the economy was suffering through a “severe contraction” and could get even worse than recent forecasts.
***What is this guy saying? He has been holding back ammunition just in case the situation gets worse? Ben, you should have used all tools available already...***
The article goes on to say that "The Fed has taken some extraordinary steps in recent months in the hopes of increasing the flow of credit to businesses and households. In December, the Federal Open Market Committee lowered its key interest rate to virtually zero, its floor. The Fed has been buying mortgage-backed securities — considered the leading cause of the meltdown after the housing bubble burst — that have been guaranteed by the federal government. It has also begun unprecedented programs as a lender. It has expanded the Term Auction Facility, which loans to banks. It has also introduced the Term Asset-Backed Securities Loan Facility, which finances consumer loans, and which the Fed recently announced it would expand in both size and scope; and the Commercial Paper Funding Facility, which provides loans in exchange for short-term business i.o.u.’s. Mr. Bernanke said these actions had contributed to improvements in short-term funding markets and the commercial paper market, and declines in the conforming fixed mortgage rate and the London Interbank Offered Rate (Libor), the rate on which borrowing costs for consumers and businesses are often based. The Fed has also been working in partnership with the Treasury Department, headed by Secretary Timothy F. Geithner, to coordinate intervention in the financial markets. On Monday, the Treasury, the Fed and federal bank regulatory agencies issued a joint statement announcing that the government might demand direct ownership in major banks after they undergo a “stress test” to determine their viability going forward. The test, which will be applied to the 20 biggest banks, will be used to measure whether banks have enough capital to survive a worsening downturn. Monday’s statement stopped short of announcing a plan to “nationalize” any banks officially. But it indicated that banks deemed to be inadequately capitalized under a scenario in which the economy gets significantly worse would be forced to accept additional private and public capital. Officials have also announced measures intended to help prevent “unnecessary foreclosures.” "

When a contractual obligation is not an obligation....

Recently, there has been a lot of coverage of the excesses of the auto execs, including the use of private jets. These managers, who have made many millions of dollars while running the companies to the ground, are reneging on contractual obligations made to retirees.

Ford reaches deal with UAW on retiree healthcare- The pact will allow the automaker, which owes billions of dollars to a healthcare trust, to make as much as half its payments in equity rather than cash.

A bankruptcy judge on Tuesday tentatively approved Delphi Corp.'s request to stop paying for health care and life insurance benefits for its retired salaried workers, but he left the door open for some retirees to be excluded from the move. U.S. Bankruptcy Judge Robert Drain in Manhattan ruled that the auto parts supplier has a right to change the retirees' benefits under bankruptcy law and that the cuts are justified given the company's dire finances, its troubles finding financing and the overall state of the automotive industry.

While it may be too much to expect these firms to meet their obligations, the fact is that the managers, who should be held responsible, are getting away without any punishment. Wagoner and others arguing that their options are under water is really rubbing the salt on the wound. If they returned every penny that they took from GM, perhaps then there would be some escape valve for the moral obligations.

Stimulus Package- Stimulating thoughts

My students in the Global Business course debated the issue of fiscal policy and the idea of the U.S. administration borrowing upwards of $2 trillion to finance a spending spree. These students, mostly in their first year, presented some interesting arguments. One student, CB, wrote a thoughtful, reasoned essay on the topic, which is being reproduced here. It highlights the feelings of a majority of students. It is really stimulating to engage with these folks.
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I have a tough time taking a position on this. I feel that certainly an economic stimulus is needed, but I fear that by supporting a stimulus package of this magnitude suggests a lack of accountability and responsibility. Who can possibly ensure that every dollar of the nearly 2 trillion is spent honestly? I suppose that the main concern that I have is that the money that is borrowed won’t be applied in the most economically efficient manner. Perhaps my head is not able to comprehend 2 trillion dollars, therefore I feel that a “loan” of that size is abstract and can easily be spent to the disadvantage of the future.

I would say that I am skeptical that such a package is going to provide the solution for which it is intended. However, as a college student needing loans to continue my education, I feel it necessary to proceed with funding to the educational institutions at least. For educational purposes I can justify, in my mind, the need for a stimulus package. With that said, I also can be persuaded to understand the need for “softening the housing crisis” (as put by an article in BBC) but I question the method of doing so. It is my opinion that it is not a good idea to lend money to the banks that made risky decisions in the first place that led to where we are now. So I question, is borrowing a good idea?

I would only condone borrowing what can be paid back, and who can predict that? Currently we are digging a financial hole that will be left to future generations to fill in with their salaries and taxes. But who is to say that without digging the hole that future generations would reach the day that they can pay back the debt? It may be a necessary evil, with the intent that it will serve good in the future. With that said, I still remain skeptical, and considering all things, am not sure that I want to see nearly 2 trillion dollars borrowed indefinitely.

On the other side, if for certain 2 trillion dollars was to be borrowed as an economic stimulus package, I would like to see the monies being invested in institutions of education. I come from a perspective that “grass roots” is the best form of development. With that said, education, and health services would be my priorities. Furthermore, I would consider a plan that reevaluates the banking system in terms of loans and interest rates. However; given my lack of knowledge in the complexity of the situation, I fear that I wouldn’t know where to begin. I would like to think that education is the most promising investment. Another thought that is crossing my mind, is that although it is vitally important to consider the economic recovery and stability of the United States, we are not an island, therefore, there is no way to assure our own economic stability without also ensuring the economic stability of the global market and other countries. There is a significant dependence between nations that must be considered to also be part of the economic stimulus recovery plan.

Creativity...

One of my students who is majoring in Business and in Music and is graduating this Spring created the following flyer for his Senior Voice Recital.

JULIUS CAESAR AGREES…BEWARE THE IDES OF MARCH!

Senior Voice Recital

John Bratincevic, bass-baritone

~Also Featuring~
John Robert Matz, tenor
Elizabeth Popa, soprano
Kimberly Joy Widmer, piano

March 15th – 7:30 PM
Buik Recital Hall

Not a Debt Crisis or a Liquidity Crisis but an Ethics Crisis

Apparently, Microsoft Corp sent 1,400 collection letters out to employees hoping they would return overpayments in their severance pay. Former employees received the letter which gave them 14 days to refund portions of their severance payments. It has become a real embarrassing public relations matter for the world's largest software maker which has a problem accounting for payroll. "This letter is to inform you that an inadvertent administrative error occurred that resulted in an overpayment in severance pay by Microsoft," the letter said. "As it turns out, the Microsoft accounting department overpaid their severance to former employees who were laid off last month. Several blogs on the Web are having a field day by asking if Microsoft Windows Vista was the culprit. Another Web user posted "I bet it was the latest Microsoft Excel upgrade!" While it is unknown if it was Vista or Excel, you can bet that the humor about the payroll error will be around for a long time. When asked if the former Microsoft employee will return the money, she said "Yes. It's not mine to keep."Some workers will not return the overpayments. They feel that it's the fault of the company, and they need the extra severance to survive. They feel that it's a Microsoft mistake, and therefore, they will not pay it back. Other workers are just down on their luck, out of work, and need the cash to survive.

The statistics are alarming: Nearly 2 million people have lost their jobs in the last three months, almost 600,000 in January alone. The national unemployment rate has reached 7.6%. In California it's 9.3%.

But the numbers are only half the story.

The other half is what happens to people and families when a job disappears. The psychological and emotional toll can be devastating.

"Our culture is based on what people do and how much they make," said Sharon Tucker, an L.A. psychologist who says an increasing number of her clients are dealing with layoff-related issues. "For a lot of people, being laid off means your identity has been taken away."

Dorothea Braginsky, a psychology professor at Fairfield University in Connecticut who has spent decades studying how layoffs affect people, said the link between people's jobs and their sense of self-worth is established at an early age -- and reinforced throughout our lives.

"One of the first things we ask little children is what they want to be when they grow up," she said. "When we meet people at a party, one of the first things we ask is what they do. It really becomes an essential part of self-definition."

Beginning in the 1970s, Braginsky started following a group of 50 men who'd lost their jobs.

She found that the trauma of the experience could be long-lasting, for both the men and their loved ones.

"The men who found new jobs eventually recovered their self-esteem, but it never got back to the point of men who had not lost their jobs," Braginsky said.

At the same time, she saw cynicism and distrust rise among those who'd been laid off. These feelings affected relationships with spouses and were passed on to children.

That dynamic, Braginsky predicted, will play out again in the current downturn, resulting in a generation of young people who will approach jobs and relationships with a sense of wariness instilled early on.

We'll see the ramifications of this for many years, she said. "Things are going to be different for people after this, and it's not going to be good."

Undoing Bush's financially engineered budgets

Any analytical citizen would be distraught at the financial engineering during Bush's administration- especially in the cooking up of federal budgets.
Now it is Obama who has to present his first budget. A report in NYT outlines the proposed budget, which will be revealed on Thursday.

List of key items:

• Mr. Obama will propose cutting a variety of programs, including the Medicare Advantage subsidies for insurance companies that cover seniors who can otherwise acquire health coverage directly from the government.
  
• Another target is spending on private contractors, especially for defense, which spiked during the Bush administration. GWB just privatized the war, showering huge amounts of federal money on private firms. This is one of the most unethical acts of the previous administration.
• Obama will scale back some promises, including his proposal to double money for foreign aid.
• Obama will include war costs in the budget; Mr. Bush did not, and instead sought supplemental money from Congress each year. GWB went around the accounting system by seeking supplemental money that was not part of the regular budget, thus making his budget deficit appear smaller than it really was.
  
• Mr. Obama also will not count savings from laws that establish lower Medicare payments for doctors and expand the alternative minimum tax to hit more taxpayers — both of which Mr. Bush and Congress routinely took credit for, while knowing they would later waive the laws to raise doctors’ payments and limit the reach of the tax.
  
• “The president believes there are essentially three areas that have to move forward even as we pare back elsewhere — health care, energy and education,” said David Axelrod, his senior adviser. “These are the bulwark of a strong economy moving forward.” While some people have predicted that Mr. Obama would have to shelve his priorities given rising deficits, his determination to proceed, especially on health care, reflects his economic advisers’ conviction that the government cannot control its finances without reforming health care. The ballooning cost of health care, and thus Medicare and Medicaid, is the biggest factor behind projections of unsustainable deficits in coming decades.
• Mr. Obama will suggest in his budget that expanding health coverage to the more than 46 million uninsured can be done without adding to the deficit, both by making cost-saving changes in the delivery of care and by raising revenues. Advisers declined to identify the tax source.

While there is a LONG way to go in reforming the grossly unethical culture in Washington, this is a step in the right direction. I hope Obama keeps pushing the envelope in the reform process.

"Mess" age getting lost...but "Goodwill" to all

I was talking to a student yesterday about the economy and she mentioned that her own household was cutting back- her mother's business was slowing down. I told her my experience over the weekend when I went to drop off a chandelier at a local Goodwill store and found many "apparently well-heeled" people in their SUVs shopping there.
Today the news made the newspapers...
Sales jump at Goodwill stores as non-profit takes commercial approach Secondhand clothes growing as cash-strapped shoppers' first choice

A really sick story...There is apparently no goodwill to spare at the Health Insurance Companies, as Costs for individual health plans soar...Among this year's large rate increases on the individual market: • Anthem Blue Cross in California has notified about 80% of its 800,000 individual policyholders of double-digit increases, many above 30%. Spokesman Ben Singer says rising medical costs are prompting the increases. • Blue Cross of Michigan is seeking state approval for a 56% increase in individual premiums. Spokesman Andy Hetzel says the company needs to offset losses stemming from state rules making it the sole insurer required to take all applicants. • Regence Blue Cross Blue Shield of Oregon will raise rates for approximately 10,000 Washington state customers by 27.1% on March 1. Another Washington insurer, LifeWise, raised rates 17.6% on Jan. 1, according to the Office of the Insurance Commissioner in Washington state.

U.S. Bureau of Reclamation officials said parched reservoirs and patchy rainfall this year were forcing them to completely stop surface water deliveries for at least a two-week period beginning March 1. Authorities said they haven't had to take such a drastic move for more than 15 years.

Banking and Ethics? It is akin to expecting hydrophobic materials to love hydrophilic materials. Story in the Tribune reveals that "More pain for unemployed as banks turn profit on new debit card jobless benefits." The article follows..
For hundreds of thousands of workers losing their jobs during the recession, there's a new twist to their financial pain: Even as they're collecting unemployment benefits, they're paying bank fees just to get access to their money.

Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JPMorgan Chase and US Bancorp, an Associated Press review of the agreements found. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards. Some banks even charge overdraft fees of up to $20 — even though they could decline charges for more than what's on the card.

"It's a racket. It's a scam," said Rachel Davis, a 38-year-old dental technician from St. Louis who was laid off in October. Davis was given a MasterCard issued through Central Bank of Jefferson City and recently paid $6 to make two $40 withdrawals.

The banks say their programs offer convenience. They also provide at least one way to tap the money at no charge, such as using a single free withdrawal to get all the cash at once from a bank teller. But the banks benefit from human nature, as people end up treating the cards like all the other plastic in their wallets.

The fees are raising questions from lawmakers who just recently voted to infuse banks with taxpayer money to keep them afloat.

Reacting to the AP story, Sen. Robert Menendez, D-N.J., said that as a member of the Senate Banking Committee he'll look into what can be done to help people drawing unemployment benefits avoid the fees.

"Nickel-and-diming people who have been laid off and are already facing financial hardship is more than just a bad-neighbor policy; it's bad for our economic well-being," Menendez said. "This is an extension of some of the tricks and traps that credit card companies have used — only these practices are squeezing the families who most literally cannot afford it."

Steven Adamske, spokesman for the House Financial Services Committee, said he wasn't aware of the debit card programs before he was contacted by the AP but said he is concerned about card holder fees.

"Our hope ... would be that banks who are getting federal assistance would forgo these kinds of fees as we're trying to help everyone in society deal with this recession," Adamske said.

Some banks, depending on the agreement negotiated with each state, also make money on the interest they earn after the state deposits the money and before it's spent. The banks and credit card companies also get roughly 1 to 3 percent off the top of each transaction made with the cards.

Neither banks nor credit card companies will say how much money they are making off the programs, or what proportion of the revenue comes from user versus merchant fees or interest. It's difficult to estimate the profits because they depend on how often recipients use their cards and where they use them.

But the potential is clear.

In Missouri, for instance, 94,883 people claimed unemployment benefits through debit cards from Central Bank. Analysts say a recipient uses a card an average of six to 10 times a month. If each cardholder makes three withdrawals at an out-of-network ATM, at a fee of $1.75, the bank would collect nearly $500,000. If half of the cardholders also dial customer service three times in any given week (the first time is free; after that, it's 25 cents a call), the bank's revenue would jump to more than $521,000. That would yield $6.3 million a year.

Rachel Storch, a Democratic state representative, received a wave of complaints about the fees from autoworkers laid off from a suburban St. Louis Chrysler plant. She recently urged Gov. Jay Nixon to review the state's contract with Central Bank with an eye toward reducing the fees.

"I think the contract is unfair and potentially illegal to unemployment recipients," she said.

Central Bank did not return two messages seeking comment.

Glenn Campbell, a spokesman for Rep. Russ Carnahan, D-Mo., said the congressman would support a review of the debit card programs nationwide.

Another 10 states — including the unemployment hot spots of California, Florida and South Carolina — are considering such programs or have signed contracts. The remainder still use traditional checks or direct deposit.

With the national unemployment rate now at 7.6 percent, the market for bank-issued unemployment cards is booming. In 2003, states paid only $4 million of unemployment insurance through debit cards. By 2007, it had ballooned to $2.8 billion, and by 2010 it will likely rise to $10.5 billion, according to a study conducted by Mercator Advisory Group, a financial industry consulting firm.

The economic stimulus plan signed by President Barack Obama this week will increase federal unemployment benefits by $40 billion this year. Subsequently, there will be more money from which banks can collect fees. The U.S. Department of Labor allows the fees as long as states create a way for recipients to get their money for free, spokeswoman Suzy Bohnert said.

"Beyond that, the individual decides how to manage his drawdowns using the debit card," she said in an e-mail.

A typical contract looks like the agreement between Citigroup and the state of Kansas, which took effect in November. The state expects to save $300,000 a year by wiring payments to Citigroup instead of printing and mailing checks.

Citigroup's bill to the state: zero. The bank collects its revenue from fees paid by merchants and the unemployed.

"If you use your card the right way, you're not going to pay fees at all," said Paul Simpson, Citigroup's global head of public sector, health care and wholesale cards.

But that's not always practical.

Arthur Santa-Maria, a laid-off engineer who lives just outside Albuquerque, N.M., said he didn't pay any fees the first time he was laid off, for several months in 2007. His unemployment benefits were paid by paper checks. He found a new job last year but was laid off again last fall.

This time, he was issued a Bank of America debit card — a "prepaid" card in industry lingo — but he was surprised to learn he had to pay fees to get his money. He asked the bank to waive them. It said no. That's when Santa-Maria called back to ask how to check his account online. He logged on and saw that the call cost him a half dollar. To avoid more fees, Santa-Maria found a Bank of America ATM at a strip mall and withdrew $80 at no charge. When he got back to his car, he decided to take out the rest of his money — $250 — and deposit it in his bank account.

Afterward, Santa-Maria logged on to his account and saw a charge of $1.50 for two withdrawals in one day.

"They're trying to use my money to make money," Stanta-Maria said. "I just see banks trying to make that 50 cents or a buck and a half when I should be given the service for free."

New Mexico authorities bargained with Bank of America to get lower fees for unemployment recipients, said Carrie Moritomo, a spokeswoman for the state Department of Workforce Solutions. The state saves up to $1.5 million annually by switching from checks to debit cards.

Bank of America spokeswoman Britney Sheehan pointed out that the fees charged in New Mexico are similar to those charged in the 29 other states with unemployment debit cards. The bank believes "the fee schedule is reasonable and consistent with similar programs," she said.

Banks could issue unemployment debit cards with no fees for cardholders, but that would likely mean that states would have to pay more of the administrative costs, said Mark Harrington, director of marketing for Citigroup's prepaid card services. If a state demanded no cardholder fees and could pay the difference, Citigroup might enter such a contract.

"We would be open to that," Harrington said. "We're not looking to structure any programs where we would lose money, but we're definitely flexible."

Simpson noted that the cards can save money for jobless workers who have no bank accounts. In the past, these people had to use corner check-cashing shops that charged fees as high as 2 percent, or $6 for a $300 check. Now, they can swipe their cards at McDonald's, Wal-Mart or elsewhere for free.

Kenna Gortler, a laid-off paper mill worker in Oregon, said her union is advising members to avoid the debit cards and sign up to get their benefits through direct deposit. More than 300 of her fellow workers have lost their jobs at the mill in the last three months, and horror stories about ATM fees and overdraft charges are starting to filter back to others who are just now signing up for their benefits.

"It's discouraging," Gortler said. "People have limited funds and they don't need to be giving money to the banks. They need to be keeping that money to feed their families and pay bills."

Feeling Sappy - Sad & Happy

Yesterday one of my students got an internship and another appeared to have a potential full-time job after graduation. However, a former student just lost her job.
A bittersweet day.

Getting Hosed...

Obama Pledges $275 Billion to Stem U.S. Foreclosures

The Federal Reserve warned Wednesday that the nation's crippled economy is even worse than thought and predicted it would deteriorate throughout 2009, with no sign that the housing market will stabilize...The Fed's latest forecast says the unemployment rate will climb to between 8.5 and 8.8 percent this year. The old prediction, issued in mid-November, estimated that the jobless rate would rise to between 7.1 and 7.6 percent. Many private economists believe the current 7.6 percent jobless rate -- the highest in more than 16 years -- will hit at least 9 percent by early next year even with the $787 billion stimulus package signed into law Tuesday by Obama. The Fed also believes the economy will contract this year between 0.5 and 1.3 percent. The old forecast said the economy could shrink by 0.2 percent or expand by 1.1 percent....BUT, The Fed forecast calls for the jobless rate to dip to between 8 and 8.3 percent next year, and to between 7.5 and 6.7 percent in 2011......Under the Fed's new projections, the economy should grow between 2.5 and 3.3 percent next year and by as much as 5 percent in 2011, which would be considered robust."
And these folks are running the biggest bank in the world...

To tap it all off,
With a recent flurry of winter storms doing little to dampen California's latest drought, the nation's biggest public utility voted on Tuesday to impose water rationing in Los Angeles for the first time in nearly two decades.
And my students thought that only India had water shortages...

Deficit of Ethics and Attitudes among Denizens (DEAD)---Need a jolt to Ethics, not to the Economy

CNBC right now has a bunch of people arguing about Obama's 'stimulus' package. Some crooks are arguing that this bill just runs up debt without any benefits, while others say that this will jolt a nearly dead economy.
The problem is this....Chuck Prince of Citi, Mack of MS, Thain, Raines, and a whole lot more folks literally robbed the country and the tax payers of hundreds of millions of dollars while causing enormous damage...and not one of them is in jail. We have institutions like Stanford and Harvard resorting to drastic cost cutting measures despite having vast endowments. We have idiots who oppose the idea of providing health care to every citizen in the country or in the world.

We do have fiscal deficits, individual budget deficits, trade deficits, and other deficits...but the biggest and costliest is a Deficit of Ethics and Attitudes among Denizens (DEAD)

Rather taxing...

Bankruptcies of retailers => Lower sales revenues & Mall Operators under pressure => lower sales tax dollars

Higher foreclosures => lower real estate taxes

The dough that funds local K-12 education and public works projects is getting short...States are under pressure, which is why even Republican Governors are supporting Obama's FiSt (Fiscal Stimulus) plan. Real estate tax rates are likely to go up for those who have not lost their homes...

The question- how long can "local" taxes pay for education and other services, before massive borrowing occurs? And it was massive borrowing that brought about the current mess.

Super-Packaging by Supermarkets

Interesting news story on BBC..

Pay recycling costs, stores told

UK supermarkets produce too much packaging, almost 40% of which is non-recyclable, local councils say.

The Local Government Association survey says supermarkets should pay towards the collection of their packaging as an incentive to cut back.

In a basket of 29 common grocery items, the survey found Waitrose had the most wrapping while Tesco had the least.

Plenty of "Good-will"

Over the past year, we have donated a lot of stuff- clothing, lighting fixtures, electronics and other items to a neighborhood Goodwill store. We went today to donate a Chandelier we had replaced, and after dropping it off, decided to go into the store and take a look. We were surprised to find the number and type of customers in the store. The parking lot had many SUVs and some nice cars, store was busy, and many people who appeared to be well-dressed and well-heeled were shopping. An interesting insight into the current economy.

India Trip 2009_Recollections_Part VII_ Delhi and Agra

Saturday January 24th: Got up at 3:00 AM in Chennai to get ready to leave. After farewells, took the bus to the airport at 4:30. Jet Airways was nice. Had an excellent conversation on the flight with flight attendants Rebecca and Prakash. The former liked romantic movies while the latter preferred serious thoughtful movies. They talked about how Jet Airways was doing well by its employees. Rebecca was from Mumbai but now she is based in Chennai, and likes it because here boyfriend is in Chennai. She likes to take the Brussels-Toronto leg because it meant that after five days of travel she got a week off. Prakash preferred domestic travel because he could get home every day. Arrived in Delhi at around 9AM. The planes taxi for a long time at the IG International Airport.
Got out of the airport, met our TCI rep and then boarded the bus. Went near Gandhi Marg and waited for our guide Rahi Jha to meet us. Went near Gandhi Marg but Rahi determined that it was closed due to the Independence day preparations. Lots of policemen on the streets. Then went to the Kutub Minar. This was an interesting site, and we met some college students who explained a bit of the history of the pillar to us. We saw the defacing of the idols of Hindu gods on the pillars by the muslims. After Kutub Minar we went to the Hotel for Lunch. Checked in, changed clothing and then left for Lodhi road and IILM. We were received by Perna and then welcomed by the Deans. It was quite heartening to see that the Deans who were running the school were women and the faculty who talked to us were women. We met the IILM MBA students in a classroom and I talked to them for a few minutes. It was a great group, and our students interacted with the IILM students very well. Then we had a little tea get-together and we left. The IILM faculty treated us really well- it was delightful.
We then left for Delhi Haat- this is an Arts and Crafts bazaar with shops representing every state of India. After getting money from the ATM, students went on a shopping spree, while I looked around. It was an interesting site, with many folks in Jeans and not many in Salwar Kameezes. We met outside at 6:45 and then got on the bus and returned to the Hotel.

Sunday January 25th: After breakfast, left for Agra. On the way we found that one of the students had left his passport at the Hotel, but our Agent was good enough to pick it up for us. The traffic was horrendous, and it was a painful drive. The Republic Day being on Monday, many folks in Delhi and nearby places were heading for Agra. The situation was further compunded by a strike en route. Stopped at a couple of places for restrooms. Rahi got a bunch of bananas to help stave off hunger. Reached Agra around 3:30, went to the hotel for a quick bite and then left for the Taj Mahal. the crowd at the Taj was just huge. Our guide Rahi took us around to the West entrance. While the Taj Mahal is impressive, I was not blown away by it like I was with the Mysore Palace. Rahi bought shoe covers for us- I was saddened to see the sheer amount of plastic being used. BF and I waited in line for a long time to go up to the upper level of the Taj and saw the Yamuna. It was dusk and we came back towards the entrance and found that one student BG had lost his wallet. he had committed the sacrilege of taking a picture of Mumtaz's tomb, and his pocket was picked. Rahi was very gracious and let BG call home on his phone to cancel the credit card. We then returned to the hotel for dinner.
Monday January 26th: We had early breakkfast and left for a few sights. Saw Fatehpur Sikhri, the palace of Akbar, and the Agra Fort. All of these were beautiful and impressive. Students had a lot of fun with the autorickshaws. Then we had lunch and left Agra for Delhi. The return trip was quite smooth. We made a stop for tea, and as I was having mine, a student pulled me away to give her advice about a particular idol she wanted to buy. By the time I came back the waiter had taken the tea cup. I made a light comment about the incident and the server actually came back with a full cup of tea. Great service in a small place. We came to Delhi by evening. Went to Birla Mandir, which is a beautiful place. AM, our agent, came and met us. We stopped for dinner and a TCI person came with the passport. After dinner went to the airport, but had nearly three hours to kill before boarding the flight.

Dots and Deeds

Sad but funny.......

Back during the Greenspan/Bernanke heydays, these bozos, along with Kudlow and other characters, used to crow about the balance sheet of Americans. Whenever anyone raised the issue of the lack of savings and excessive spending of Americans, these idiots put them down with the argument that the "savings data" does not represent the huge increase in the assets of Americans, especially the increase in housing prices and stock prices. To these crooks, the "excessive" spending was actually very reasonable when the Americans had such robust balance sheets. Now,
the blighted Fed has released a report that, ummm, says that the "Gain in Family Wealth" was "a Mirage." According to the NYT report, "The leap in wealth that Americans thought they were enjoying over the last several years has already turned out to be a mirage, according to new estimates by the Federal Reserve. In its triennial survey of consumer finances, released Thursday, the Fed found that the median net worth of American households increased by a seemingly healthy 17 percent between the end of 2004 and the end of 2007. But the gains were wiped out by the collapse in housing and stock prices last year. Adjusting for those declines, Fed officials estimated that the median family was 3.2 percent poorer as of October 2008 than it was at the end of 2004. The new survey offers one of the first glimpses of how American families were positioned financially as the roof fell in on the economy, and it provides some sense of how much wealth has been destroyed since then. Indeed, the destruction of wealth is still in full swing: housing prices are still falling, more than two years after the bubble peaked."

Another report from NYT reveals that "Rise in Jobless Poses Threat to Stability Worldwide." The report states that "lawyers in Paris to factory workers in China and bodyguards in Colombia, the ranks of the jobless are swelling rapidly across the globe. Worldwide job losses from the recession that started in the United States in December 2007 could hit a staggering 50 million by the end of 2009, according to the International Labor Organization, a United Nations agency. The slowdown has already claimed 3.6 million American jobs. High unemployment rates, especially among young workers, have led to protests in countries as varied as Latvia, Chile, Greece, Bulgaria and Iceland and contributed to strikes in Britain and France. Last month, the government of Iceland, whose economy is expected to contract 10 percent this year, collapsed and the prime minister moved up national elections after weeks of protests by Icelanders angered by soaring unemployment and rising prices..." Job losses in India are estimated to have exceeded 500,000 during the last quarter of 2008.

This global effect follows many local choices- people in the U.S. bingeing, people in Iceland, Japan, China, and other countries feeding the binge through easy credit terms, and tech people in India and other countries relying on outsourcing that clearly deprives quite a few people of a high-wage salary that was driving binge buying. The collective deeds of all dotting the landscape.

Learning the fundamentals

My students discussed the general concept of the current fiscal stimulus package in class. Some students favored the debt while many opposed it.

Japan is often cited as an example of a case where big fiscal stimulus did not help the economy significantly. Further, according the Washington Post, "Japan's economy likely contracted at an annual pace of more than 10 percent in the fourth quarter, analysts predict, reflecting the collapse in global demand that is battering the world's second-biggest economy. The Cabinet Office is expected to reveal Monday that gross domestic product in the October-December period plunged an annualized 11.7 percent, according to a consensus of market forecasts. That would mark the steepest drop for Japan since the oil shock of 1974 and far outpaces declines of 3.8 percent in the U.S. and an estimated 1.2 percent in the euro-zone."

Will the fiscal stimulus help in the U.S.? It is difficult to say with a high degree of confidence, mainly because of the lack of high ethical standards among the people in charge of executing the programs. One argument that cannot be contradicted is that the situation would become much worse if not for the intervention.

However, smart investors will pay attention to the fundamentals, which is that a fake house built on fake cards is going to crumble. The public is slowly realizing that there is a downside to borrowing. Further the high productivity gains due to technology has reduced the need for labor significantly in some industries. Over time, people will have to bear down and work hard for lower wages, and hope that the import of low priced goods will help them maintain a decent standard of living.
Now, that's a standard that is worth living up to.

'Wage"ing a war on standard of living

A couple of days ago, students in one of my classes discussed the potential for a lower standard of living for their generation. While this is a distinct possibility, the students' argument is that wages in the U.S. will come down due to global competition. However, this does not take into account deflationary pressures on certain goods and inflationary pressures on others, not to mention the policies of the governments. If, in the aggregate, prices come down at a rate that is faster than the drop in income, standard of living might not be unduly affected.
Another consideration is that the U.S. enjoys a standard of living that is not commensurate with the underlying education, skill level and work ethics of the current generation. Like a pendulum that overshoots, the standard of living, often supported by wild credit and binge borrowing, has far out-shot the limit supported by underlying income generation, for the masses. A correction is underway, and it is likely that the pendulum will go the other way. The key question is whether the current young generation has learnt lessons from the past, and whether it is willing to buckle down and work hard and get a solid education. Some of us are trying- we have to wait for more evidence.

India Trip 2009_Recollections_Part VI_ Chennai & IIT Madras

Wednesday January 21st: Arrived at 5:00 AM at Tambaram. Dr. CV made sure we were ready to jump out of the train as soon as arrived at the station. Some students had an interesting experience getting out of a moving train. Took a coach and arrived at the campus IGH in a few minutes.
After the usual Yoga, we had classes in the morning, followed by a visit to the Visteon plant. The facility was quite impressive. We saw the production of compressors and climate controls. The plant used natural lighting as much as possible. The managers emphasize the philosophy of 4M - Man, Machine, Material, and Methods. Turnover was cited as a key management issue.
On the way back we stopped at the Zoo, but it was too late to take the safari. Returned to MCC campus for dinner.
Thursday January 22nd: After classes in the morning and lunch, students left for the Christ Faith Home. I took two students, SZ and ZJ and went to IIT Madras, my Alma Mater. The "Saarang" festival was underway, and as we drove to Gajendra Circle, the streets were covered with ads selling Vodaphone, Bosch, and a bunch of other firms. IIT is an impressive institution. We went to the DoMS and our hosts were very gracious. After talking to a number of faculty, Mr. Kunal, an MBA student, took us on a tour. We saw a number of interesting competitions, went to my hostel, Narmada, the Mega Mess, the new hostels. Kunal took us by the swimming pool which was very impressive. We also saw the OAT. Around 4:30 we left the IIT campus and headed back to IGH. It was a very impressive visit, and I felt like I was back home. The intellectual vibrancy of the place is infectious.
Friday January 23rd: In the morning there was a closing ceremony with the Principal and other faculty. It was a nice closing touch. Students went shopping or relaxed. I went back to IIT Madras to spend time with my good friend SN who is a HOD. SN and his wife JN fed me a good lunch and I had a wonderful time with them. Unfortunately the kids were in school at the time and I missed seeing them. Friday night was a long one, spent chatting with colleagues, and we have to get up early to catch the flight to Delhi.

The Bad and The Ugly- For a Few (Trillion) Dollars More...

President Obama (POB), Congress, the Fed, the Bank CEOs, and the rest of the bunch have put up some staggering numbers this week. The stimulus package of $790 billion has been passed. This gem of a bill is a sight to read. According to AP, "The president's signature tax cut was preserved -- a break for millions of lower- and middle-income taxpayers of $400 per individual and $800 per couple. That's less than the $500 and $1,000 the White House originally sought, although officials said it would mean an estimated $13 per week extra per paycheck.Wage-earners who don't earn enough to pay income taxes would get a reduction in the Social Security and Medicare taxes they pay. Another provision will mean a one-time payment of $250 for millions of beneficiaries who receive Social Security, Supplemental Security Income and veterans pensions and disability, according to officials. They added that the measure will include $46 billion for transportation projects such as highway, bridge and mass transit construction....The agreement would allow taxpayers to deduct the sales tax paid on new car purchases, but not the interest on loans for the same vehicles.....Not every decision was driven by concern about job creation, though.The bill includes $70 billion to shelter wealthier taxpayers from the alternative minimum tax, originally passed a generation ago to make sure the super-rich didn't avoid taxes. The Congressional Budget Office estimates that provision will have relatively little impact on the economy." $70 Billion to avoid AMT, $46 billion for transportation projects...No wonder the country is sinking.

On a second front, the administration is putting $2,000,000,000,000 dollars more into the banking system. The plan proposes using Federal Reserve loans and private capital to leverage up the remaining $250bn or so in the troubled asset relief programme to create roughly $2,000bn in buying power. The administration will create a Public Private Investment Fund to buy $500bn to $1,000bn of toxic assets at prices established by private co-investors. Meanwhile, the Federal Reserve is to provide up to $1,000bn in financing for securitised credit markets. The Treasury will set aside another $80bn in risk capital to absorb losses on the Fed loans, and spend $50bn on anti-foreclosure programmes.The Treasury said any bank receiving injections would be prevented from paying dividends of more than 1 cent per quarter, repurchasing shares and making cash acquisitions of healthy companies without approval.

The "Metric" Obama

Last night, President Obama was quite analytical in his answers to the questions from the press. One of the reporters asked if Obama would measure the success of the fiscal stimulus efforts by the performance of Wall Street. Obama, in a thoughtful response, stated that job creation, bank lending, and housing market stabilization were the metrics he was focusing on. He did not mention Wall Street, and he is on the money. The markets should be the consequence, not the target of actions. Now, if only Obama could convert the U.S.A. to the metric system and get rid of the pounds and meter the feet! We could all lose a few pounds and de-feet the distance."

"Kindling"an interest in books

A big news story today..Amazon in Big Push for New Kindle Model.

Setting up an obvious battle with Google and another possible one with Apple in the fast-growing electronic-book business, Amazon.com on Monday introduced the Kindle 2, a new version of its popular e-book reader. The announcement strengthens the bid by Amazon for control of the e-book market and the devices consumers use to read them. Amazon hopes that the Kindle becomes the iPod of the literary world, challenging the printed book. The Kindle 2 has several incremental improvements over its predecessor, which went on sale in 2007. Amazon said the upgraded device has seven times the memory of the original version, turns pages faster and has a sharper display. It also features a new design with round keys and a short, joysticklike controller — a departure from the earlier design, which some buyers had criticized as awkward. The device will ship Feb. 24. The price remains at $359. For $3.99, all Kindle users can buy a short story by Stephen King that will be exclusive to the Kindle for a limited time. “Our vision is every book, ever printed, in any language, all available in less than 60 seconds,” said Jeffrey P. Bezos, Amazon’s founder and chief executive. Perhaps most significant, Amazon said it would start selling e-books that can be read on mobile phones and other devices, although Amazon did not say when it would do so or which devices would be compatible. It also announced a new feature, Whispersync, which would allow readers to begin a book on one Kindle and continue, at the same point in the text, on another Kindle or a mobile phone. Analysts say the move is aimed at establishing Amazon as the dominant e-commerce platform for books, a position similar to the one Apple has assumed in music with its iTunes Store.

Amazon had been phenomenally successful in this economic mess. Let's hope this product is a home run.

India Trip 2009_Recollections_Part V_ Cochin, Munnar, and Madurai

Saturday January 17th: This was an enjoyable train ride. Early in the morning Mr. Brewart joined us and brought breakfast. Kerala is very scenic, and we enjoyed the lush beauty. After we arrived at the station, we took the coach to our hotel. It was a beautiful place, and overlooked the shipbuilding yard where a navy aircraft carrier was being built. After lunch we saw the Chinese fishing nets, the Dutch Museum, and the island itself. We went to a performance of Kathakali dance in the evening, and returned for dinner at the hotel.
Sunday January 18th: Left at 9:00 AM for Allepey. Got on a houseboat for a three hour journey to Kumarokom. The houseboat ride was very enjoyable, with lush scenery, even though the water was dirty. Had lunch on the boat, and once we got off the boat the coach was ready to take us to Munnar. It was a long bus ride, and as darkness fell, the climb up the Western Ghats appeared increasingly treacherous. It was a difficult drive, and the driver did an excellent job navigating the steep turns and tight traffic. We finally arrived at Munnar and checked into the hotel quite late and had dinner.
Monday January 19th: Some students got up early in the morning and took a walk up the hill. I got up around 6 AM, had coffee, and took a stroll. It was cool, and the morning fog clouded the lush landscape. After breakfast, we left the hotel and took the coach to a tea plantation. Stopped by the roadside for some pictures. Went further and stopped at an elephant-ride place. Everyone took turns riding the elephant, and some fed it too. I stood back and actually did some hiking up the hill. The principal of a nearby school came by to join us. Next, we went to a dam nearby. Did some picture taking. We also stopped at a spice store- I went in and quickly logged into the Net, and also called a friend VN. Next we stopped at a spice garden and looked at some interesting plants, including the black pepper vine. Then we headed for Madurai. It was a long bus ride, and we got into Madurai around 7 PM. Checked into the hotel and had dinner.
Tuesday January 20th: Went to Madurai Meenakshi temple. It is a spectacular temple- unfortunately it was under renovation and the exterior was covered. Interestingly our tour guide was a muslim gentleman. I went to the main part of the temple and saw the deities. We then went to the Naikar mahal which was also beautiful, though rather empty. We then returned to the hotel for lunch and came back to the temple. Wandered around the temple, took some pictures, made a call to Shiva, and then returned to the hotel. We celebrated the birthday of one of the students. We then left for the train station to catch the train to Chennai. This time I got to sleep in the lower berth.

Globalization of Talent and Globalization of Capital - The Lift and Drag of Forces of Globalization

By now, the avalanche/flood of layoffs, benefit cuts, and reduced work hours U.S. corporations has been wrecking nearly every state in the Union. Layer on the crash in home prices, the disappearance of one's house as an "ATM," and the rise in prices of essentials, the folks in the middle and lower classes are shell-shocked by what is hitting them.

Globalization has been a tremendous tidal wave engulfing the world, especially over the past twenty years. There are plenty of textbooks, Charles Hill's Global Business Today for example, that talk about the Globalization of Markets (GOM) and Globalization of Production (GOP). The former alludes to the development of markets in different countries and how firms can now sell their products to a global customer base. The latter refers to a firm's ability to lower production costs by finding cheaper sources of labor, material, and other production factors around the world.

I would like to introduce two other forces of globalization which, along with GOM and GOP, will shape the next century.
Globalization of Capital: This refers to the ease with which money moves around the world. Aided by technology, deregulation of financial markets, and lowering of trade barriers, the force of globalization of capital accelerates the flow of money into investments anywhere in the world that provide higher yields. This movement has contributed significantly to the current financial crises engulfing the world, as money from Europe and Asia flowed into the U.S. However, developing countries are liberalizing their financial regimes, and investment opportunities there still are more attractive than those in developed countries. This force will shape the physical infrastructure in many countries this century.
Globalization of Talent: Many firms have taken advantage of lower costs of labor in developing countries- outsourcing of manufacturing, call centers, etc. to Asia are examples. Increasingly, however, companies are hiring talent across the world to drive innovation. Technology companies are willing to pay U.S. wages to the best engineers in Asia, those who can create the future products. As schools in Asia, South America, and other regions get more recognized and students see the opportunity, more firms are going to be searching for talent and finding it in various parts of the world. This force is perhaps greater than any of the other three globalization forces, as the force of the global talent pool will usher in changes in every aspect of our lives.
There is an interesting video on this topic by World Business.

Globalization- May the Forces be With Us!

Oh, What a feeling!

Oh, What a feeling! ...a famous Toyota tag line in the 1980s Toyota commercials.

Toyota reported today that it expects a net loss of 350 billion yen ($3.85 billion) for the fiscal year through March -- a stunning reversal from the record 1.72 trillion yen profit it posted the previous year. (AP)

Sharp, one of Japan’s largest electronics companies, said it will make its first operating loss as a listed company in the year to March.The company cut its forecast from an operating profit of Y130bn to an operating loss of Y30bn, and also expects a net loss of Y100bn.The forecast figures highlight the depth of the downturn that has hit Japan’s electronics companies. Sony, Panasonic, Toshiba, NEC and Hitachi have all said that they will lose hundreds of billions of yen this fiscal year.

Key sectors of the Indian economy shed half a million jobs in the final three months of last year as the global slowdown took its toll on one of the world’s fastest growing big economies.A survey of employment across seven sectors by the Ministry of Labour showed job losses in mining, textiles, carmaking, transport, metals, gems and jewellery and back office process outsourcing. Employment of contract workers in the motor industry alone fell 12.5 per cent during the period as demand slowed and the liquidity crisis shortcircuited demand in the global economy. But the report showed that the gems and jewellery sector, a usually strong export performer, was the hardest hit with a total fall of 9 per cent.Many additional jobs among contract and temporary staff, particularly in textiles, are likely to have gone unrecorded. Workers in many industries are being encouraged to take pay cuts and work longer hours to save their jobs.

More than 20m rural migrant workers in China have lost their jobs and returned to their home villages or towns as a result of the global economic crisis, government figures revealed on Monday.By the start of the Chinese new year festival on January 25, 15.3 per cent of China’s 130m migrant workers had lost their jobs and left coastal manufacturing centres to return home, said officials quoting a survey from the agriculture ministry.The job losses were a direct result of the global economic crisis and its impact on export-oriented manufacturers, said Chen Xiwen, director of the Office of Central Rural Work Leading Group. He warned that the flood of unemployed migrants would pose challenges to social stability in the countryside.The figure of 20m unemployed migrants does not include those who have stayed in cities to look for work after being made redundant and is substantially higher than the figure of 12m that Wen Jiabao, premier, gave to the Financial Times in an interview on Sunday. Speaking on a visit to the UK on Monday, Mr Wen said there had been signs at the end of last year the Chinese economy might be starting to recover.

Moral of the story: When irresponsible behavior spreads like a contagion, and the sane people do not protest, everyone suffers.

Banks play games with TARP money...."gold"en rule still golden

Bloomberg reports that "Citigroup Inc., targeted by lawmakers for paying $400 million to put its name on the New York Mets’ new ballpark, and seven other banks that received government funds may face questioning by Congress for spending $845 million on stadium sponsorships. Bank of America Corp., which like Citigroup received $45 billion in government funds, is paying $140 million to have its name on football’s Carolina Panthers stadium. JPMorgan Chase & Co., which received $25 billion from the Troubled Asset Relief Program, is spending $66 million for branding Chase Field in Phoenix, home to baseball’s Arizona Diamondbacks. Ohio Democratic Representative Dennis Kucinich, who last week urged the Treasury department to cancel Citibank’s deal, called spending by banks for naming rights “frivolous” and said Feb. 3 that he plans to hold hearings. Companies that received TARP funds are under scrutiny as President Barack Obama and lawmakers respond to public outcry over executive bonuses and questionable expenditures."

Gold rose the most this week on speculation the global recession will boost demand for precious metals as a store of value. Silver also gained. Goldman Sachs Group Inc. said yesterday gold will rise to $1,000 an ounce within three months, up 43 percent from the bank’s previous forecast. Investment in the SPDR Gold Trust, the biggest exchange-traded fund backed by bullion, rose to a record 859.5 metric tons yesterday. Gold has rallied 34 percent after touching a 13-month low on Oct. 24. “Gold is telling you that all paper assets are suspect,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “As the recession deepens, there’s significant flows into gold as an asset class or a currency that cannot vanish overnight.”...Bloomberg.

Keeping the Faith...and Shedding Science

NYT reports that "President Obama signed an executive order Thursday to create a revamped White House office for religion-based and neighborhood programs, expanding an initiative started by the Bush administration that provides government support — and financing — to religious and charitable organizations that deliver social services. “No matter how much money we invest or how sensibly we design our policies, the change that Americans are looking for will not come from government alone,” Mr. Obama said. “There is a force for good greater than government.” In announcing the expansion of the religion office, Mr. Obama did not settle the biggest question: Can religious groups that receive federal money for social service programs hire only those who share their faith? The Bush administration said yes. But many religious groups and others that are concerned about employment discrimination and protecting the separation of church and state had pushed hard for Mr. Obama to repeal the Bush policies. Meanwhile, other religious groups were lobbying to preserve their right to use religion as a criterion in hiring. Some religious social service providers warned they might stop working with the government if they were forced to change policies.

Obama's government has proposed some curbs on exec compensation. "The new rules would set a $500,000 cap on cash compensation for the most senior executives, curtail severance pay when top executives left a company, restrict cashing in on stock incentives until government assistance was repaid and prod corporate boards to closely scrutinize luxury perquisites like private jets and country club memberships."...(NYT. ) But this is being criticized by Dimon of Chase, Immelt of GE, and a bunch of guests on CNBC. The sheer greed of these crooks is astounding.

FT reports that "US credit card delinquencies hit a record high in January, and further deterioration is likely as the economy slows down and unemployment rises, Fitch Ratings says. Payments at least 60 days late rose almost half a percentage point last month to a record 3.75 per cent, said Fitch. Credit card lenders also wrote off loans to delinquent borrowers at close to record levels, and such “charge-offs” were expected to breach records in the coming months. Michael Dean, managing director at Fitch, said: “US consumers continue to struggle in the face of mounting pressures on multiple fronts from employment to housing to net worth.”Late payments on credit cards crept higher throughout 2008, said Fitch, but signs of borrower stress rose in the fourth quarter as late payments surged by 18 per cent. Charge-off rates in January were 40 per cent higher than a year ago at 7.5 per cent and were expected to approach 9 per cent during the second half of 2009..... Credit card lenders have also suffered as consumers rein in their spending. Fourth-quarter earnings reports from JPMorgan, Citigroup and Bank of America showed a steeper-than-expected drop in card volumes: down 8 per cent, 15 per cent and 13 per cent, year on year, respectively."

Bloomberg reports that "Initial jobless claims increased by 35,000 to 626,000 in the week ended Jan. 31, the highest level since October 1982, the Labor Department said today in Washington. The total number of people collecting benefits jumped to a record 4.788 million a week earlier, today’s report showed. Companies from Macy’s Inc. to PNC Financial Services Group Inc. are announcing job cuts as consumers and businesses rein in spending, and that’s likely to prompt even further pullbacks in coming weeks. The government is forecast to report tomorrow that the U.S. lost 540,000 jobs in January. “It’s astonishing how quickly American businesses are laying people off,” Roger Kubarych, chief U.S. economist at Unicredit Global Research in New York, said in an interview with Bloomberg Radio. “They’ve learned that they have probably had too much staff for the kind of economy they foresee and they’re laying people off left and right.”