Thick Skin, Thin Ethics

Immelt backs tax-free GE, calls for reform | Chicago Breaking Business: "The chief of General Electric on Thursday defended the conglomerate’s zero tax rate in 2010 and called for reform of the U.S. tax code.

In his first public speaking engagement since a barrage of criticism about not having to pay taxes in 2010, GE Chief Executive Jeff Immelt told the Economic Club in Washington that his company did nothing wrong.

“At GE, we do like to keep our tax rate low, but we do it in a compliant way, and there are no exceptions,” Immelt said. “Our tax rate will be much higher in 2011 as GE Capital recovers.”

But Immelt added that he, along with many other corporate leaders, wants the federal government to reform the U.S. tax code, which he called “old, complex and uncompetitive.”

The company is particularly in the spotlight because Immelt is the chief of President Barack Obama’s innovation and jobs council.

Immelt added later that he understands why his company is taking heat in the media.

“I don’t fault this type of reporting,” Immelt said. “It is what it is. You can’t do any job like this unless you have a thick skin.” "

Health in Health Care

India to create 1.6 million jobs in 2011: Survey - The Economic Times: "According to the survey, around 1.6 million new jobs will be created in 2011 on the back of capacity expansion by companies.

As per the survey conducted amongst 650 companies across 13 industry sectors in eight major cities, the healthcare sector is expected to create 248,500 new jobs. Sectors like real estate, hospitality and manufacturing of non-machinery products together would create 223,400 new jobs.

'The estimated wage bill hike across the sectors will be in the narrow band as most companies are under margin pressure,' Ma Foi Randstad's managing director and CEO E.Balaji told reporters here."

Upward Mobility, Downward Morality

Census 2011 India: Shocking gender bias among 17.5% humanity - The Economic Times: "NEW DELHI: India is now home to 17.5% of humanity, as the population touched 1.21 billion, up 17.4% from 2001, according to the provisional figures of the 2011 Census. The rate of growth of population showed a sharp downward trend, and fell 3.9 percentage points from 2001.

The country posted its worst child sex ratio since independence, as the ugly preference for the male child in many parts of the country zoomed alongside India's much-feted economic growth.

According to the provisional census figures released on Thursday, the sex ratio (the number of females per 1,000 males) for the 0-6 age group, has dramatically dropped to 914 in 2011, from 927 in 2001. This means in a decade when the country enjoyed unprecedented economic growth, it also became a terrifyingly hostile place to be conceived or born as a girl."

Prostate Payoffs, Teacher Layoffs

An interesting societal choice between paying for the education of the youth or paying to extend the lives of prostate cancer patients.

Medicare to pay for $93,000 prostate cancer drug - Yahoo! Finance: "Medicare officials said Wednesday that the program will pay the $93,000 cost of prostate cancer drug Provenge, an innovative therapy that typically gives men suffering from an incurable stage of the disease an extra four months to live.

The Centers for Medicare and Medicaid said the biotech drug made by Dendreon Corp. is a 'reasonable and necessary' medicine. The decision ensures that millions of men would be able to afford the drug through the government-backed health care coverage. With government reimbursement, analysts estimate Provenge could rack up $1 billion in sales next year. The decision, which will be finalized by June 30, is important for Dendreon because most prostate cancer patients are 65 or older.

Medicare is legally prohibited from considering price when deciding whether to pay for a new treatment. The Food and Drug Administration approved Provenge last April and in most cases Medicare automatically covers drugs cleared by the agency. But Medicare's decision to review Provenge last year prompted outrage from some patients and doctors who said the government was looking for a reason to avoid reimbursing for the pricey drug."

Teacher Layoffs May Cause Turmoil in Schools - NYTimes.com: "School authorities across the nation are warning thousands of teachers that they could lose their jobs in June, raising the possibility that America’s public schools may see the most extensive layoffs of their teaching staffs in decades.

Though many of the warnings may not be acted upon — school systems, their budget outlook unclear, routinely overstate their likely layoffs at this time of year — when layoffs do occur, they cause a chaotic annual reshuffling of staff members.

Thousands of teachers are forced to change schools, grade levels or subjects, creating a chronic instability that educators call “teacher churn.”

“Most districts have not done layoffs for years, so they have no idea how bad this is going to be when it hits,” said Timothy Daly, president of the New Teacher Project, a nonprofit group that has studied the effects of teacher layoffs.

Much of the public debate over teacher layoffs has concerned the question of how layoffs are decided, with sharp divisions between politicians and union leaders over the seniority-based layoff methods stipulated in union contracts.

Many argue that the rules rob schools of the talented young teachers who are the first to be let go. Union officials say that without such protections, more senior teachers would be let go first to save money.

But school superintendents say that the consequences of sweeping teacher layoffs are often overlooked in the policy debate. Layoffs, they say, hurt school cohesion, undermine student achievement and rupture ties with parents...."

Indian GEMS - Gross Excess of MillionaireS

In a country where a few hundred million still suffer from acute poverty...

India Pakistan semi final: Traffic jam over Mohali as honchos fly in on pvt jets - The Economic Times: "ndia Inc's scramble to fly to Chandigarh in their fancy jets and be counted on the tarmac of the otherwise sleepy airport in Chandigarh will make it as busy as the Delhi or Mumbai airports on Wednesday. At last count, 96 aircraft would be flying in India's who's who for the high-voltage semis. Of these, just 20 would be commercial aircraft (scheduled flights plus special flights for the semifinal) and the remaining 76 VVIP IAF flights, private jets and charters!
Only the aircraft carrying Sonia Gandhi , her family and entourage and the prime ministers of India and Pakistan will land and take off in a jiffy. The rest, which includes likes of Sharad Pawar, Praful Patel , Jyotiraditya Scindia , the Ambani brothers, the Mittals, the Hindujas, and Bollywood glitterati, might come in Hawkers and Bombardiers but will have to wait for landing at the crowded airport and takeoff.

Those who have obtained permission to fly in their planes are the lucky ones, for, the airport has conveyed that it's up to its gills and can't take any more planes. Hence, even those with private aircraft are now seeking to hitch a flight with their friends.

All incoming flights will land between 6am and 1pm and after the match is over, these charters would take off after 11.30pm onward. The last one could get the clearance to fly as late as 1-1.30 pm.

The Air Force, which controls the aiport, has permitted private jets to operate at night as a one-off exception. Air Officer Commanding Air Commodore Rajeev Sachdeva said landing of charters was permitted but only VVIP planes of PM Manmohan Singh and his counterpart Yousaf Raza Gilani will be parked at the airport. The rest would have to park at Amritsar, Dehradun and even go back to New Delhi.

To deal with the rush, the Airports Authority of India has sent air traffic controllers and navigation experts to help IAF officers coordinate with nearby airports.

Given the squeeze, liquor baron Vijay Mallya, who owns Kingfisher , will fly in Sharad Pawar on his ultra luxurious Airbus A-319 and bring up to 23 other biggies.

Abhishek and Aishwarya Rai Bachchan, Sunil Shetty will fly in Anil Ambani's jet that will have wife Tina Munim and kids. Raymond's Gautam Singhania, industrialist Anil Aggarwal and Religare group heads will travel in their fancy planes."

Aldi and Wal-Mart

An interesting comparison.

Where Wal-Mart Failed, Aldi Succeeds - NYTimes.com: "After decades spent fleeing cities for the strip malls and boulevards of the suburbs, grocers and discount retailers are doing an about-face. Target plans to open its first smaller, city-size store in Seattle next year, and Wal-Mart announced recently that it would build “hundreds” of smaller, mostly urban stores in the coming years.

Meanwhile, Aldi has quietly been setting up its shops in cities around the country.

“They’re not only doing the small format more rapidly, but they’re getting into the urban areas more rapidly than either Wal-Mart Express or the city Targets,” said Craig Johnson, president of the consulting firm Customer Growth Partners. “Even though the company’s headquartered in Germany, they’ve opened up a New York store quicker than Wal-Mart has.”

Even though Aldi, like Wal-Mart, is nonunion, it has faced little resistance, compared with the heated opposition often headed by unions and politicians that Wal-Marts have encountered in larger markets."

Lula rejects the IMF noose

Brazil's Lula to Portugal: Don't take bailout - Yahoo! Finance: "razil's enormously popular ex-president says Portugal should never accept a bailout to solve its severe debt problems because outside help could cause more problems than it would solve.

Luiz Inacio Lula da Silva said Portuguese politicians have correctly tried to avoid getting help from institutions like the International Monetary Fund -- and should continue doing so even though the nation is on the verge of financial collapse.

Silva made the comments late Monday as he began a three-day visit to Portugal along with his hand-picked successor, Brazilian President Dilma Rousseff.

Silva, who left office in January, said: 'The IMF won't resolve Portugal's problem, like it didn't solve Brazil's.'

Brazil took a $41.5 billion IMF loan in 1998, but like many emerging markets has enjoyed an economic boom in recent years."

Stealth Downsizing, Blatant Inflation

Only question is- how does the "stealth inflation" get reflected in the Bernanke/BLS BS on Inflation data.

A Stealth Downsizing, as Shoppers Pay More for Less Food - NYTimes.com: "n every economic downturn in the last few decades, companies have reduced the size of some products, disguising price increases and avoiding comparisons on same-size packages, before and after an increase. Each time, the marketing campaigns are coy; this time, the smaller versions are “greener” (packages good for the environment) or more “portable” (little carry bags for the takeout lifestyle) or “healthier” (fewer calories).

Where companies cannot change sizes — as in clothing or appliances — they have warned that prices will be going up, as the costs of cotton, energy, grain and other raw materials are rising.

“Consumers are generally more sensitive to changes in prices than to changes in quantity,” John T. Gourville, a marketing professor at Harvard Business School, said. “And companies try to do it in such a way that you don’t notice, maybe keeping the height and width the same, but changing the depth so the silhouette of the package on the shelf looks the same. Or sometimes they add more air to the chips bag or a scoop in the bottom of the peanut butter jar so it looks the same size.”

Thomas J. Alexander, a finance professor at Northwood University, said that businesses had little choice these days when faced with increases in the costs of their raw goods. “Companies only have pricing power when wages are also increasing, and we’re not seeing that right now because of the high unemployment,” he said.

Most companies reduce products quietly, hoping consumers are not reading labels too closely.

But the downsizing keeps occurring. A can of Chicken of the Sea albacore tuna is now packed at 5 ounces, instead of the 6-ounce version still on some shelves, and in some cases, the 5-ounce can costs more than the larger one. Bags of Doritos, Tostitos and Fritos now hold 20 percent fewer chips than in 2009, though a spokesman said those extra chips were just a “limited time” offer.

Trying to keep customers from feeling cheated, some companies are introducing new containers that, they say, have terrific advantages — and just happen to contain less product.

Kraft is introducing “Fresh Stacks” packages for its Nabisco Premium saltines and Honey Maid graham crackers. Each has about 15 percent fewer crackers than the standard boxes, but the price has not changed. Kraft says that because the Fresh Stacks include more sleeves of crackers, they are more portable and “the packaging format offers the benefit of added freshness,” said Basil T. Maglaris, a Kraft spokesman, in an e-mail.

And Procter & Gamble is expanding its “Future Friendly” products, which it promotes as using at least 15 percent less energy, water or packaging than the standard ones.

“They are more environmentally friendly, that’s true — but they’re also smaller,” said Paula Rosenblum, managing partner for retail systems research at Focus.com, an online specialist network. “They announce it as great new packaging, and in fact what it is is smaller packaging, smaller amounts of the product,” she said.

Or marketers design a new shape and size altogether, complicating any effort to comparison shop. The unwrapped Reese’s Minis, which were introduced in February, are smaller than the foil-wrapped Miniatures. They are also more expensive — $0.57 an ounce at FreshDirect, versus $0.37 an ounce for the individually wrapped.

At H. J. Heinz, prices on ketchup, condiments, sauces and Ore-Ida products have already gone up, and the company is selling smaller-than-usual versions of condiments, like 5-ounce bottles of items like Heinz 57 Sauce sold at places like Dollar General.

“I have never regretted raising prices in the face of significant cost pressures, since we can always course-correct if the outcome is not as we expected,” Heinz’s chairman and chief executive, William R. Johnson, said last month.

While companies have long adjusted package sizes to appeal to changing tastes, from supersizes to 100-calorie packs, the recession drove a lot of corporations to think small. The standard size for Edy’sice cream went from 2 liters to 1.5 in 2008. And Tropicana shifted to a 59-ounce carton rather than a 64-ounce one last year, after the cost of oranges rose.

With prices for energy and for raw materials like corn, cotton and sugar creeping up and expected to surge later this year, companies are barely bothering to cover up the shrinking packs.

“Typically, the product manufacturers are doing this slightly ahead of the perceived inflationary issues,” Ms. Rosenblum said. “Lately, it hasn’t been subtle — I mean, they’ve been shrinking by noticeable amounts.”

That can work to a company’s benefit. In the culture of thinness, smaller may be a selling point. It lets retailers honestly claim, for example, that a snack package contains fewer calories — without having to change the ingredients a smidge.

“For indulgences like ice cream, chocolate and potato chips, consumers may say ‘I don’t mind getting a little bit less because I shouldn’t be consuming so much anyway,’ ” said Professor Gourville. “That’s a harder argument to make with something like diapers or orange juice.”

But even while companies blame the recession for smaller packages, they rarely increase sizes in good times, he said.

He traced the shrinking package trends to the late 1980s, when companies like Chock full o’ Nuts downsized the one-pound tin of ground coffee to 13 ounces. That shocked consumers, for whom a pound of coffee had been as standard a purchase unit as a dozen eggs or a six-pack of beer, he said.

Once the economy rebounds, he said, a new “jumbo” size product typically emerges, at an even higher cost per ounce. Then the gradual shrinking process of all package sizes begins anew, he said.

“It’s a continuous cycle, where at some point the smallest package offered becomes so small that perhaps they’re phased out and replaced by the medium-size package, which has been shrunk down,” he said.

Studying abroad

Undergraduate courses: Younger Indians head abroad - The Economic Times: "Sahil, Drishti and Nakul represent a trend - Indians heading abroad to study are younger than ever before. Typically, they are 18 and fresh out of school. And Indian parents seem increasingly willing to shell out a few lakhs and more for the phoren tag.

Why is this happening? A major reason is the flexibility offered by foreign universities, especially those in the US. The young Indian headed abroad after class XII does not want an ordinary Indian BA degree or the stress of IIT or medical college entrance exams. Piyush Aggarwal, director of Abroad Education Consultants (ABE), says there are other reasons for this trend - it is hard to get admission to India's few good professional institutes; disposable incomes are rising and educational bank loans are easy to secure. Aggarwal says there has been a 15-20 % increase year on year in undergraduate student applications for foreign courses. Favoured destinations are the US, UK, Australia , Canada and now Singapore.
Shakuntala Rao, professor of communication and journalism at State University of New York, says "the most important factor is the emergence of a wealthy Indian middle class which can now afford to send their children abroad for education."

Sunil Pillai, Drishti's father, has dispatched his other daughter, Disha, to the US as well. He says it is expensive - Rs 8.5 lakh per quarter. "I can afford it and they get to do things that they want. Drishti can do medicine with astrophysics if she wants. Disha is doing risk management with finance," he says.

Dr Nandini Rastogi in Kanpur decided on Nanyang Technological University (NTU), Singapore for her son Raghav, because it was relatively close to India. "The cost (around Rs 3.5 lakh a year) is almost half of what it would be in the US or UK. The university also offers student loans at 0% interest. Also, it's Asian culture and relatively safe." Raghav, who is pursuing a Bachelor's degree in computer science at NTU, says it was ideal for him. "To get admission into the top colleges in India is really difficult because the entrance exams are fiercely contested. "

Ranked last in customer service? Buy your competitor and reduce its service.

T-Mobile Customers Outraged Their Wireless Carrier Selling Out to AT&T - Mobile and Wireless - News & Reviews - eWeek.com - eWeek Mobile: "T-Mobile customers do not appear to be happy about the company's proposed sale to AT&T. In statements to me here at eWEEK, and elsewhere on the Internet, the last company that these people want to see handling their wireless service is the struggling and much-maligned AT&T.

Many of those people suggest that their only refuge in the coming storm is Verizon Wireless, which seems to offer an island of peace and stability as well as a network with broad reach and excellent coverage.

In fact, many of the T-Mobile customers I've been hearing from point out, some stridently, that they went to T-Mobile specifically to get away from AT&T. The reasons they mention are many, but the primary reasons are poor signal coverage and quality along with really lousy customer service. In a recent article in Consumers Reports, AT&T was rated dead last in the U.S. for customer service, while T-Mobile finished much better.

Unfortunately for many of these outraged T-Mobile customers, there isn't a choice. It may be that they have a two-year contract that will need to be fulfilled and that means that it'll be fulfilled with AT&T if this merger goes through. Others need a GSM phone because of their travel or in a few cases (me included) the only carrier that serves their area is T-Mobile.

In a way, I'm lucky. I don't have a contract with any carrier and all of my T-Mobile phones are unlocked. If I travel to Europe I can take one of my unlocked GSM phones with me and just get a SIM card when I get to my final destination. While I'm in the United States, I don't need to use AT&T. Of course, in one sense, I'm not lucky. If I don't use T-Mobile or eventually AT&T, then I don't get wireless service. While most smartphones also work with WiFi, only T-Mobile supports WiFi calling.

So short of convincing Verizon Wireless or Sprint to build a cell tower somewhere in this part of the Washington D.C., suburbs, I'll be stuck with AT&T once the merger goes through. That's assuming that they don't decide to take out the cell site that serves my area. And, remember, I'm one of the lucky ones since I have options. Many T-Mobile customers do not. In a year or so, they're going to be forcibly moved from the company with the best customer service and reliable signals, to the company that has the worst of both. It's no surprise they're enraged..."

Styrofoam Stymied

Something to be proud of! But yet another "progressive" event where young girls are taking the lead; the boys are not to be found.

Girls just say ‘No’ to Styrofoam trays — Elmhurst news, photos and events — TribLocal.com: "Two 5th-graders from Elmhurst have carried those crumbly, white disposable foam trays for their lunches long enough. Now, they are taking matters into their own hands to try to rid their school of the trays that are tossed into the garbage and end up clogging landfills.

Jessica Hain and Samantha Barton, both 11, recently started a petition drive to get Emerson School to stop using Styrofoam trays in the cafeteria. They have become more aware of the impact some products have on the environment through various efforts at the school including Waste Free Wednesdays when students are encouraged to bring their lunches in lunch boxes and use metal utensils and cloth napkins."

Thanks to Bob Herbert of the NYT for serving the country

He has represented the conscience of America, its high ideals and the corrupt reality very starkly over the years. His voice will be missed.

Losing Our Way - NYTimes.com: "The U.S. has not just misplaced its priorities. When the most powerful country ever to inhabit the earth finds it so easy to plunge into the horror of warfare but almost impossible to find adequate work for its people or to properly educate its young, it has lost its way entirely."

Ms. Ferraro- an inspiration to many

It was very impressive to see Ms. Ferraro navigate the 1984 election. The fact that she and Mondale lost shows the short-term thinking of the voting public.

Geraldine A. Ferraro, First Woman on Major Party Ticket, Dies at 75 - NYTimes.com: "Geraldine A. Ferraro, the former Queens congresswoman who strode onto a podium in 1984 to accept the Democratic nomination for vice president and to take her place in American history as the first woman nominated for national office by a major party, died Saturday in Boston."

iPhone + iGoogle = iPain

The corporate "tax holiday" is getting a lot of attention, both from the media and the politicians.

But the discussions never get to the heart of the matter.

The marginal return on a potential employee has to exceed a specified threshold for a firm to hire. The ROI calculations involve the the return (numerator) and the investment (denominator). In the current climate, the return is significantly lower for a number of reasons. One is lower aggregate demand. The low hanging fruit is gone, and the current generation of students are spending more time on Facebook and Twitter and less time developing critical technical and analytical skills. The employee's potential to innovate is less, hence the return to the firm is decreased. Labor arbitrage using the large college educated youth in emerging markets can decrease the "denominator" even if the foreign labor is only as skilled as the domestic labor. The lower labor costs can compensate for the lower "return" and produce an acceptable ROI. Domestically, in the absence of a significant "return" effect, the denominator has to come down dramatically. If the salaries of the workers are reduced by half, and if the companies do not have to pay FICA, health insurance or other benefits, a a potential worker who costs $80,000 today fully loaded might cost only $30 K-$40K, which is less than the cost of a good engineer in India. This can enable the ROI to exceed the threshold for hiring. Having more cash on the balance sheet when a firm is already sitting on billions of cash does not change the ROI calculations.

Apple, Google May Profit on a Tax Holiday - BusinessWeek: "Google (GOOG) Ireland is not a branch office of the U.S.-based search giant. It's a separate corporation, and the IRS can't touch a dime that Google Ireland earns from its core business until it sends profits back home to the mother ship. The term of art for bringing the money back is repatriation—the same as for a soldier captured abroad.

U.S. multinationals have more than $1 trillion in profits stashed in overseas subsidiaries. Some of the companies with the most money squirreled away say they're prepared to bring a big chunk of it home. All they want in return is a temporary tax break that wouldn't cost the U.S. Treasury anything, since it's money that would otherwise be kept abroad and not taxed at all. The tax break would actually raise billions of dollars from applying the reduced tax rate to the money that's been repatriated.

What's not to like? John T. Chambers, Cisco's (CSCO) chief executive officer, told securities analysts in February that "you're now seeing political leaders at all levels understand" the case for a tax holiday on repatriated foreign profits. "I think this one has well over a 60 percent probability of being resolved in a positive way," he said. Although a lobbying campaign is just getting under way, Representative Brian P. Bilbray (R-Calif.) has already introduced a bill that would let companies bring home money tax-free if they used it for research and development or facilities expansion.

Aside from Cisco, the growing coalition for repatriation relief includes Adobe (ADBE), Apple, CA Technologies (CA), Duke Energy (DUK), Google, Microsoft (MSFT), Oracle (ORCL), Pfizer (PFE), and Qualcomm (QCOM)—powerhouses all. The group is seeking fundamental changes in tax law, but if it can't get them right away, it still wants the tax holiday. Its opening position is that there should be no conditions on how the money is used. Chambers argued in a Wall Street Journal op-ed last October that a repatriation might create as many as 2 million jobs.

It's a seductive argument—reap billions in tax revenue from money that's currently untaxed and generate economic growth to boot. On closer inspection, though, the coalition's argument has some logical loopholes. A nearly identical holiday passed by Congress in 2004 and taken mostly in 2005 did little to boost jobs or investment, according to several independent economic studies. Some economists say a holiday today might be even less effective because cash isn't a constraint in 2011—it's bountiful, thanks to the Federal Reserve's loose-money policy. U.S. nonfinancial corporations have $1.9 trillion in liquid assets, the Fed says. No more than half of that—probably significantly less—is offshore. (An unknown portion of the $1 trillion-plus in foreign-held profits isn't cash. It's tied up in foreign factories, offices, and the like and can't easily be repatriated.)

"The problem is lack of demand or lack of investment opportunities" in the U.S., says Dhammika Dharmapala, an economist and law professor at the University of Illinois. Plus, granting another holiday so soon might induce companies to stash even more money abroad, convinced that if they wait long enough another holiday will arrive, says Thomas J. Brennan, a professor at Northwestern University School of Law...."

Dodging Repatriation Tax Lets U.S. Companies Bring Home Cash - Businessweek: Dec. 29 (Bloomberg) -- At the White House on Dec. 15, business executives asked President Obama for a tax holiday that would help them tap more than $1 trillion of offshore earnings, much of it sitting in island tax havens.

The money -- including hundreds of billions in profits that U.S. companies attribute to overseas subsidiaries to avoid taxes -- is supposed to be taxed at up to 35 percent when it’s brought home, or “repatriated.” Executives including John T. Chambers of Cisco Systems Inc. say a tax break would return a flood of cash and boost the economy.

What nobody’s saying publicly is that U.S. multinationals are already finding legal ways to avoid that tax. Over the years, they’ve brought cash home, tax-free, employing strategies with nicknames worthy of 1970s conspiracy thrillers -- including “the Killer B” and “the Deadly D.”

Merck & Co Inc., the second-largest drugmaker in the U.S., last year brought more than $9 billion from abroad without paying any U.S. tax to help finance its acquisition of Schering- Plough Corp., securities filings show. Merck is also appealing a federal judge’s 2009 finding that Schering-Plough owed taxes on $690 million it had earlier brought home from overseas tax-free.

The largest drugmaker, Pfizer Inc., imported more than $30 billion from offshore in connection with its acquisition of Wyeth last year, while taking steps to minimize the tax hit on its publicly reported profit.

Disclosures in Switzerland and Delaware by Eli Lilly & Co. show the Indianapolis-based pharmaceutical company carried out many of the steps for a tax-free importation of foreign cash after its roughly $6 billion purchase of ImClone Systems Inc. in 2008.

‘Trivially Small Taxes’

“Sophisticated U.S. companies are routinely repatriating hundreds of billions of dollars in foreign earnings and paying trivially small U.S. taxes on those repatriations,” said Edward D. Kleinbard, a law professor at the University of Southern California in Los Angeles. “They devote enormous resources first to moving income to tax havens, and then to bringing those profits back to the U.S. at the lowest possible tax cost.”

Fed Loose, 26 Banks in the Noose

Small Illinois bank fails; 26th shuttered in 2011 - Yahoo! Finance: "WASHINGTON (AP) -- Regulators on Friday shut down a small bank in Illinois, boosting to 26 the number of U.S. bank failures this year after 157 succumbed in 2010 to the sputtering economy and piles of soured loans.

The Federal Deposit Insurance Corp. seized Bank of Commerce, with one office in Wood Dale, Ill., $163.1 million in assets and $161.4 million in deposits. Advantage National Bank Group, based in Elk Grove Village, Ill., agreed to assume the assets and deposits of the failed bank."

GE(E) WHIZ- A primer on tax avoidance

President Obama wants to "reform" corporate tax code and effectively reduce corporate taxes. The logic? This will apparently provide an incentive for corporations to create jobs.

When a company like GE, sitting on current assets totaling nearly $162 BILLION and cash/cash eq./Short-term investments of nearly $123 Billion does not find a sufficient ROI when hiring employees in the U.S., how will the reduction in taxes increase the ROI? History shows that it does not. The excellent NYT article on GE reveals the reduction in GE's U.S. workforce even as it kept paying lesser taxes over time.

G.E.’s Strategies Let It Avoid Taxes Altogether - NYTimes.com: "General Electric, the nation’s largest corporation, had a very good year in 2010.

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

That may be hard to fathom for the millions of American business owners and households now preparing their own returns, but low taxes are nothing new for G.E. The company has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than at most multinational companies.

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan “Imagination at Work” fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

While General Electric is one of the most skilled at reducing its tax burden, many other companies have become better at this as well. Although the top corporate tax rate in the United States is 35 percent, one of the highest in the world, companies have been increasingly using a maze of shelters, tax credits and subsidies to pay far less.

In a regulatory filing just a week before the Japanese disaster put a spotlight on the company’s nuclear reactor business, G.E. reported that its tax burden was 7.4 percent of its American profits, about a third of the average reported by other American multinationals. Even those figures are overstated, because they include taxes that will be paid only if the company brings its overseas profits back to the United States. With those profits still offshore, G.E. is effectively getting money back.

Such strategies, as well as changes in tax laws that encouraged some businesses and professionals to file as individuals, have pushed down the corporate share of the nation’s tax receipts — from 30 percent of all federal revenue in the mid-1950s to 6.6 percent in 2009.

Yet many companies say the current level is so high it hobbles them in competing with foreign rivals. Even as the government faces a mounting budget deficit, the talk in Washington is about lower rates. President Obama has said he is considering an overhaul of the corporate tax system, with an eye to lowering the top rate, ending some tax subsidies and loopholes and generating the same amount of revenue. He has designated G.E.’s chief executive, Jeffrey R. Immelt, as his liaison to the business community and as the chairman of the President’s Council on Jobs and Competitiveness, and it is expected to discuss corporate taxes.

“He understands what it takes for America to compete in the global economy,” Mr. Obama said of Mr. Immelt, on his appointment in January, after touring a G.E. factory in upstate New York that makes turbines and generators for sale around the world.

A review of company filings and Congressional records shows that one of the most striking advantages of General Electric is its ability to lobby for, win and take advantage of tax breaks.

Over the last decade, G.E. has spent tens of millions of dollars to push for changes in tax law, from more generous depreciation schedules on jet engines to “green energy” credits for its wind turbines. But the most lucrative of these measures allows G.E. to operate a vast leasing and lending business abroad with profits that face little foreign taxes and no American taxes as long as the money remains overseas.

Company officials say that these measures are necessary for G.E. to compete against global rivals and that they are acting as responsible citizens. “G.E. is committed to acting with integrity in relation to our tax obligations,” said Anne Eisele, a spokeswoman. “We are committed to complying with tax rules and paying all legally obliged taxes. At the same time, we have a responsibility to our shareholders to legally minimize our costs.”

The assortment of tax breaks G.E. has won in Washington has provided a significant short-term gain for the company’s executives and shareholders. While the financial crisis led G.E. to post a loss in the United States in 2009, regulatory filings show that in the last five years, G.E. has accumulated $26 billion in American profits, and received a net tax benefit from the I.R.S. of $4.1 billion.

But critics say the use of so many shelters amounts to corporate welfare, allowing G.E. not just to avoid taxes on profitable overseas lending but also to amass tax credits and write-offs that can be used to reduce taxes on billions of dollars of profit from domestic manufacturing. They say that the assertive tax avoidance of multinationals like G.E. not only shortchanges the Treasury, but also harms the economy by discouraging investment and hiring in the United States.

“In a rational system, a corporation’s tax department would be there to make sure a company complied with the law,” said Len Burman, a former Treasury official who now is a scholar at the nonpartisan Tax Policy Center. “But in our system, there are corporations that view their tax departments as a profit center, and the effects on public policy can be negative.”

The shelters are so crucial to G.E.’s bottom line that when Congress threatened to let the most lucrative one expire in 2008, the company came out in full force. G.E. officials worked with dozens of financial companies to send letters to Congress and hired a bevy of outside lobbyists.

...

Value to Americans?

While G.E.’s declining tax rates have bolstered profits and helped the company continue paying dividends to shareholders during the economic downturn, some tax experts question what taxpayers are getting in return. Since 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment. In that time, G.E.’s accumulated offshore profits have risen to $92 billion from $15 billion.

Another data point indicating a slide towards a lower standard of living

The "secure" government jobs which paid pensions and where workers never got fired- they are rapidly becoming extinct. People who relied on the government to provide services will have to get those from the private sector- which means some people may choose to forgo services because they cannot afford them.

Costa Mesa, Calif., Laying Off Hundreds - NYTimes.com: "Nearly half of this city’s workers were told late last week that, come September, they would probably be out of a job. Nearly every city department will be eliminated. More than a dozen tasks will be outsourced, including graffiti removal, firefighting, building maintenance and street cleaning."

Training Customers in Self-Service

Airlines have saved a lot of money by eliminating nearly all of the check-in counter personnel by getting customers to service themselves. Perhaps the grocery stores will follow suit and make every line a self-serve line.

Expect fewer bags at Jewel-Osco | Chicago Breaking Business: "We’re in a very competitive industry. Anything we can do to lower our expenses will help us keep our prices as fair as possible,” says Supervalu spokesman Mike Siemienas.

Plastic bags cost about two cents apiece and paper bags cost five. The Eden Prairie, Minn., operator of Albertsons, Acme Markets and Jewel-Osco stores uses more than 1.5 billion plastic and paper bags a year at about 1,100 stores, not counting its Save-A-Lot discount stores, where customers bring or pay for their own bags.

Other grocers have long taught bagging techniques and sought to cut bag use, but Supervalu’s program is unusually rigorous, says Burt Flickinger III, a retailing consultant with Strategic Resource Group Inc.

Some of the Supervalu guidelines reinforce familiar bagging rules, such as starting the packing at the corners and moving from the outside in. But others break with common practices: No double-bagging. No bags for large items or items with handles, like one-gallon orange-juice containers. Never ask, “Paper or plastic?” — just use plastic bags. The rules can be broken, but only on request."

Amazonian Apple

Report: Apple Sues Amazon Over Use of 'App Store' | News & Opinion | PCMag.com: "Apple has sued Amazon.com, trying to block the latter company's use of 'App Store,' according to a report.
Bloomberg News reported Monday that Apple had filed the suit on March 18 in a California court. The suit was not available on PACER, the site which archives federal court documents."

Miserly Philanthropy

Apparently the wealthy Indian CEOs need examples of philanthropy before they learn to part with a little bit of their money. This is pathetically ironic, coming from the homeland of Gandhi, Buddha, Rama, and many other giants of humankind.

Philanthropy should not be made a rule for cos: Infy CEO - The Economic Times: "Software major Infosys' CEO S Gopalakrishnan today said philanthropy should not be made mandatory for Indian corporates, and instead called for great examples to encourage people to follow this path.

'I don't think it should be made mandatory. I think we should encourage people to do it (philanthropy),' added Gopalakrishnan, who was one of the guests at the lunch of legendary investor Warren Buffett .

The India IT bellwether CEO also attended an interactive session with Buffett, organised by the Confederation of Indian Industry.

'We should talk about examples, we should talk about stories (about philanthropic activities)', he said, adding, Buffett and Bill Gates are 'great examples' in this context.

'There are great examples in India also. So, I think we need to talk about these examples and people will follow (with philanthropic activities). I don't think it should be made mandatory (for companies)' Gopalakrishnan said."

Nothing on Net(flix)

Netflix service restored | Chicago Breaking Business: "Netflix Inc. suffered a service outage Tuesday night that left customers unable to view movies or television shows through its online streaming service or through devices such as Roku. The California-based content provider said Wednesday that the service was fully restored.

“Netflix is up and on as usual,” said Netflix spokesman Steve Swasey, via email. “Last night we had an unanticipated and rare technical issue that interrupted the service for about four hours, since fixed.”

This is the second time that Netflix has gone dark during the last six months as its Internet subscription service rapidly becomes a leading source of programming."

Woes that are not watered down

An excellent piece on water woes

The Hindu : Opinion / Editorial : Water woes: "Despite rapid technological progress and economic growth, close to 900 million people the world over do not use drinking water from improved sources and over 2.6 billion lack access to decent sanitation facilities. This indefensible public failing, which is conspicuous in the developing world, comes with tremendous economic and social costs.

Safe drinking water and basic sanitation, as United Nations organisations have often emphasised, help prevent water-related diseases. Specifically when it comes to diarrhoea, which kills 1.6 million annually, improved water supply reduces morbidity by 20 per cent while improved sanitation cuts it by 37.5 per cent. The indirect benefits of providing access to drinking water to households, such as the time saved by women and children — who are often carriers of this precious commodity from source — are reflected, for example, in better school attendance. The debilitating effect of the lack of sanitation facilities is seldom appreciated. A World Bank study placed the total economic impact of inadequate sanitation in India at Rs.2.44 trillion (6.4 per cent of India's GDP in 2006). Three ongoing UN initiatives spotlight the importance of water and sanitation: the Millennium Development Goals, the Water for Life Decade (2005-2015), and the annual World Water Day (March 22) which had “Water for Cities” as the theme this year.

India, its urban areas included, is a laggard, especially in sanitation. More than 37 per cent of urban India's human excreta is unsafely disposed of, posing significant health hazards. The country is also home to the world's largest number of persons who defecate in the open (665 million persons of a global total of 1.1 billion). Shockingly, 4,66,853 elementary schools did not have toilet facilities, going by the data for 2009. The crisis looming over urban India is best revealed by a central government survey between December 2009 and March 2010. In this exercise, which ranked the 423 class-I cities according to metrics set by the National Urban Sanitation Policy, not a single one was eligible to be in the top slot of a “green city” (which needed to score at least 90 per cent) and only four were “blue cities” (67 per cent to 90 per cent). With 189 cities categorised as “red” (less than 33 per cent), and the remaining 230 in the “black” zone, it is evident that India has a long way to go in providing this basic infrastructure, which not only offers minimum dignity to life but is the elementary requirement for a healthy society. High economic growth rates, even if they are sustained, do not such a society make.

P/E of Ergonomics

P/E = Politics/ Economics

Ergonomics forms a key part of any Industrial Engineering course, and I incorporate it into my own courses. Whether to pressure managers to ensure ergonomic work conditions or to let the "free market" dictate ergonomics is a debated issue, one which has been decided in favor of the latter in Michigan.

Governor signs bill banning Mich. ergonomics rules - Yahoo! Finance: "LANSING, Mich. (AP) -- Michigan Gov. Rick Snyder has signed a bill preventing state regulators from issuing mandatory workplace ergonomic rules.

The rules were aimed at limiting injuries caused by lifting, repetitive motion and awkward work positions. Although they were worked on by regulators while Democrat Jennifer Granholm was governor, they were never enacted.

The new Republican governor said before signing the bill Tuesday that the regulations would have placed on "undue burden" on businesses, many of which Snyder said already have good ergonomics practices.

Businesses had said meeting the mandatory regulations could have been costly. The new law ensures Michigan can't have stricter ergonomics rules than the federal government.

Opponents, including many Democrats, say the new law limits the state's ability to protect workers."

Bridging the Great Divide

Study shows bridges in Illinois are deteriorating - Yahoo! Finance: "CHICAGO (AP) -- Nearly 2,300 bridges in Illinois are 'structurally deficient' and in need immediate repair, a transportation advocacy group announced Tuesday.

Transportation for America said in its report that the bridges in need of repairs are crossed more than 8.1 million times a year and include five -- three that cross Chicago's famed Lake Shore Drive -- that see more than 100,000 vehicles cross a day.

"Drivers in Illinois are regularly traveling across heavily traveled bridges with 'poor' ratings -- bridges that could become dangerous or closed without repair," according to the report.

The group found that at least one in five bridges in three rural counties -- Wabash, Shelby and White -- were deemed structurally deficient, and that more than 17 percent of the bridges in Christian and Hancock counties received the same rating.

More than 7,000 of the state's 26,000 bridges at least 50 years old -- a number that will climb to 14,000 in 2030, the report said. However, it does not identify any dangerous bridges now open to the public in Illinois.

"We don't want to be alarmist but it is imperative we stay on top of these bridges as they age," said David Goldberg, spokesman for the group, which based its report on Federal Highway Administration data.

The state of the nation's bridges have come under greater scrutiny ever since 2007 when a Minneapolis bridge collapsed, killing 13 people. In Illinois, for example, The Associated Press followed that tragedy with its own study that found that more than 1,500 of the state's bridges carried worse structural ratings than the bridge in Minneapolis...

A few hundred metres and quite a few thousand bucks...what stands between the dinner of the rich and the plate of the poor

Dining in India getting a chic makeover - The Economic Times: Dining is going places, from the backdrop of the Taj Mahal and to 30 storeys up a skyscraper. A growing number of discerning Indians willing to spend-in one case, up to `1.5 lakh-are keeping pace.

Dinner at the Oberoi Amarvilas, Agra, is offered at a poolside pavilion or in a suite. Nothing unusual except that you would be dining just 600 metres away from the Taj Mahal. One can dine on a balcony overlooking the Taj Mahal, says a spokesperson of Oberoi Group. The Royal Mughal Dinner costs `6,500 a person.

At ITC Grand Central's 'Point of View' in Mumbai, the dinner is accompanied by the view of Mumbai's sprawling skyline from the 30th floor. At Delhi's Kylin Premier, there is a private Teppanyaki (Japanese cuisine) room where teppanyaki chefs cook and help customers prepare a dish for family or friends.

A growing number of hotels and restaurants in India are offering upscale and exclusive dining. At the Point of View, a dinner costs a whopping `1,50,000 a couple. The restaurant offers a bespoke menu and personal butler.

"We had organised this on Valentine's Day. This is an exclusive open air setting nestled in the rooftop offering a luxuriant retreat with a breathtaking 360 degree view of the city and the sea," says Anil Malik, GM, food and beverage, ITC hotels.

By offering such a fare, Indian restaurants have taken a cue from their foreign counterparts. The Sky Jazz, for example, shows an enchanting view of Dubai's skyline. The Al Mahara restaurant is visually delightful with the journey starting through a mock submarine ride. A wide selection of seafood is offered with seating around a huge aquarium.

"Customers want more privacy and customised choices to keep it varied. The guests like new and different experiences," says celebrity chef Marut Sikka, who owns Magique, a pan-Asian restaurant in Delhi. Magique has a customized private dining area accompanied by a butler, exclusive menu and barbeque.

"Privacy and exclusivity are always appreciated," says Sikka.

With a rapidly rising number of Indians traveling abroad and experiencing extravagant dining, restaurants in India know they have a clientele, though a demanding one, in place. "People consistently have asked us for stylised options and bespoke events," says Sikka, adding that the guests are constantly challenging his restaurant with new ideas and demands.

The Kylin Premier has open counters at the restaurant with chefs juggling across tables while preparing meals. And the demand for such experiences has not been a let down. "People always come back if there is something exclusive that is being offered," says Saurabh Khanijo, CEO, Kylin Premier - The Teppanyaki Grill. "It is important to give a very different and innovative experience that will make them come back."

At Sikka's other restaurant Kainoosh, guests can enter through a separate entrance, enjoy a view of the entire restaurant as well as a customised menu. Bespoke dishes here include Doll'Churchuree (lentil dish), Saffron & Onion Pilaf (combination of saffron, onions and Basmati rice), Railway Mutton Curry (boned lamb curry). Prices at Magique and Izaara can vary between `2,500-25,000 per person depending on the choices.

Now AT&T&T...the Tyranno-Corp that rules the world

The world will be at the beck and call of the favored few- the Mega-Corporations that will rule the world.

The airline industry has consolidated

- Delta/NW

- US Air / America West

- United/Continental

- SW / Air Trans

The cell phone industry has seen Cingular, Nextel, At&T Wireless, Alltel, and a few others disappear, and looks like T-Mobile may be extinct like T. Rex.

AT&T Rises on $39 Billion Bid for T-Mobile, Wireless Lead - Businessweek: "March 21 (Bloomberg) -- AT&T Inc. rose after agreeing to buy T-Mobile USA from Deutsche Telekom AG for $39 billion in cash and stock to create America’s largest mobile-phone company.

The deal would allow AT&T, now the second-largest U.S. wireless operator, to add about 34 million customers and surpass Verizon Wireless. The acquisition may face government scrutiny because it combines the second- and fourth-largest wireless providers, reducing consumer choice. Though regulatory approval may take a year, cost savings and revenue gains could total $3 billion a year, Dallas-based AT&T said."

Putting money above everything else...how to make enemies and become hated

When President Bush was in power, he encouraged trade with Libya for the benefit of U.S. companies, like that of Cheney's Halliburton.

Now, President Obama is bombing Libya, creating opportunities for American munition and defense companies, many of which arm nearly all countries in the world, including Libya and Afghanistan.

Bush administration seeks Libya waiver - USATODAY.com: The Bush administration is asking Congress to exempt Libya from a law allowing terrorism victims to seize the U.S. assets of state sponsors of the attacks.
President Bush signed the law in January.

Its passage was held up over Bush's objections to a provision letting victims of state-sponsored terrorism sue responsible foreign governments and collect judgments by seizing their assets in the United States. Bush was concerned the provision would be applied to Iraq, so Democrats gave ground by giving the president permission to waive it for that country. He did so immediately upon signing the legislation.

Now, the administration has asked lawmakers to quickly grant Bush waiver authority for Libya.

Gordon Johndroe, Bush's national security spokesman, said the law's provision could discourage nations like Libya that have renounced the export of terrorism from now helping the United States to fight terrorism. There is potential for billions in investment by U.S. firms in Libya's oil sector, as well as in other areas.

"Commercial relationships ... provide important continuing incentives for them to cooperate with us on counterterrorism," he said. "This will deprive the U.S. of investments helpful to our economy, deny U.S. companies international business opportunities, and reduce the opportunities for us to engage with these states on a wide range of issues including claims."

Small drops of hope for the Yamuna

Movement to save the Yamuna gains momentum - The Economic Times: "A movement launched by the ascetics and Sri Krishna devotees of the Braj Mandal to save the Yamuna river from pollution is now gaining momentum.

Hundreds of ascetics and activists have reached Sangam (confluence) at Allahabad from where a long march to New Delhi is to start Wednesday.

Chief organisers Radha Krishan Shastri and Jai Krishan Das told IANS the march will reach the capital around April 15.

They said they will not withdraw till their demands are met and will talk only with Prime Minister Manmohan Singh, President Pratibha Patil or UPA chairperson Sonia Gandhi.

For the next 45 days, river Yamuna will remain in the focus as the march moves towards New Delhi via smaller towns and villages. By the time it reaches Agra, the organisers hope it will gain sufficient momentum.

This is the first time that the alarming pollution in the Yamuna has attracted so many people who look determined to set things right, said eco-activist Ravi Singh in Agra.

The Supreme Court, meanwhile has directed the Central Pollution Control Board (CPCB) to submit within three weeks reports of samples collected from the river, close to the drains, to get a clearer picture of the quality of water in the river.

"This could have serious repercussions and even put the Delhi government in the dock for failing to effectively tap the drains and discharge of industrial effluents in the river," D.K. Joshi, a member of the Supreme Court monitoring committee in Agra told IANS.

Water samples analysed by The Energy and Resources Institute ( TERI )) researcher Swabha Takshak in Agra paint an extremely dismal picture.

"All the parameters, including turbidity and hardness are wrong," she said.

The results of samples she tested over a 30-day period pointed to an alarming level of pollutants.

Swabha Takshak, who carried out the study in May 2010, said: "The river is dead for all practical purposes. It is extremely polluted with every kind of pollutant imaginable, including toxins and carcinogens."

Poor Indians will become thirsty Indians

The Hindu : Arts / Magazine : Wars over water: "As World Water Day (March 22) draws near, an analysis of how water will become the next source of global hegemony.

Senior executives of 16 North American companies are descending on Bengaluru in a “Water Trade Mission” initiated by the U.S. government's commercial service arm. Their purpose is to “tap the $50 billion Indian Water Market.” To attract American companies, the mission projects “tremendous” figures in the Indian water sector, from water treatment to taking over water supply services and waste water management.

For the $3000 that these companies pay for the trip, the potential water business in India comes as a bounty. They will stay in a five-star Bangalore hotel, where they will be visited by policy makers, key state and municipal government officials and private water companies with whom they will have “one-on-one” meetings. The U.S. government is leaving no stone unturned to ‘ initiate or expand' the companies' involvement in India's emerging global water market.

Secret mission

The mission is cloaked in secrecy. The U.S. Commercial Services office in Bangalore has told us that Indian citizens are not allowed to have any information pertaining to the mission. Those details are reserved by the U.S. government solely for U.S. citizens and U.S. companies. But it is India's water that is up for sale. Though the objectives of the visit were put on the U.S. commercial services website more than three months ago, the chief Engineer of the Bangalore Water Supply and Sewerage Board learnt about them only when the Americans walked into his office last week.

If the privatisation of water is good for India, why is it being done so secretively? In Mysore, bureaucrats waited for seven months for the elected council to be dissolved before giving away the Mysore Water Board to a private company. Elected representatives have become subservient to senior bureaucrats and business contracts more sacrosanct than public opinion, deliberation, and democracy.

Control over water has always been a source of power and discrimination but the economic implications of this are only now becoming obvious. A recent Bloomberg Water Index showed annual returns over the last three years of 35 per cent, eclipsing the 29 per cent for oil and gas stocks and 27 per cent for the World Basic Materials Index. At a time when we are about to reach the stage of ‘peak oil' - a time when the maximum rate of global petroleum extraction is reached after which the rate of production enters terminal decline - water is the next natural resource for private companies to rule the world. From overt colonisation to organising coups, from waging war to planting tyrannical rulers and militarised globalisation, colonisers have terrorised the world for centuries with the primary intention of capturing and controlling natural resources. Land, gold, minerals, coal, petrol and every other natural resource have been pillaged at will. Water, because of its cultural, political and religious connotations, is still largely outside corporate control on a global scale, but it may not be for much longer.

The U.S. has targeted Karnataka particularly because the state is internationally recognised as a leader in dismantling public systems for water distribution. In 2002 the Karnataka Urban Infrastructure Development and Finance Corporation (KUIDFC), a parastatal body unaccountable to elected representatives, worked closely with the World Bank to draft the State Urban Drinking Water and Sanitation Policy; this set the future path for urban water reform in the state. With a policy that commodified water, removed subsidies and institutionalised full cost recovery, the World Bank loan is paying for the transfer of public water to corporates.

The legal framework for water services would have prevented such arbitrary shifts, so the laws were changed almost overnight. In 2005 the Karnataka Municipal Corporations Act was amended to allow for privatisation of water services. Aside from the people involved, very few know about this. There was no public consultation, and no documented debate in the legislature. What was the rationale for such an opaque process and what was the justification for such a fundamental shift in water governance?

Different experience

The standard arguments for privatising water services usually follow the assumptions that the private sector will bring in investment, competition, efficiency and equity. The experience in Karnataka tells quite a different story.

In four North Karnataka cities — Hubli, Dharwad, Belguam, and Gulbarga — about 30,000 households have had their water handed over to a French water corporation on World Bank orders; in Mysore, under the Jawaharlal Nehru National Urban Renewal Mission the entire water supply has been contracted to JUSCO, a TATA company. These private firms have made no investment; the state is paying the companies many times more than it ever spent when it managed these services. That apart, the state is contractually obliged to provide brand new infrastructure, purified bulk water, fill up overhead tanks, and depute its staff to work under the private company and pay them too. The actual contracts are as absurd as the doctrine of lapse, which the East Indian Company used as a deadly weapon to conquer India.

Questions of equity and universal access to water also disappear under the new regime; public taps that service the poor and vulnerable are removed because they do not generate a profit. Water tariffs are increased; irrespective of capacity to pay.

The American mission is also culturally significant. The deliberate use of terms like ‘water market' and ‘water trade' underlines the intention of transforming our traditional idea of water as a natural resource to that of a commodity to which your access depends on your ability to pay. The judgments of communities about water are swept away by the brash arrogance of the business model. The idea that the state is an institution people elect for their own well being is disappearing.

Record of failure

Private water companies have a long record of failure. In U.S. cities in the mid-19th century, they failed to maintain quality water services, and also neglected poorer citizens. These market failures have not changed since then, and are directly linked to the profiteering character of private enterprise. This was proven again the world over during the enforced neoliberal water privatisation experiments of the 1990s.

The visit of the Water Trade Mission changes the Indian situation completely. U.S. corporations clearly want to establish control over our water and to override those in India who want to uphold the character of water as a common good. Successful resistance to this will need the widest possible public knowledge so that water is prevented from being exploited for private profits at the cost of equity, ecological justice, and the rights of all peoples - present and future.

Kshithij Urs is the Regional Manager of Action Aid in Karnataka, a member of the peoples' campaign for right to water and the author of Resisting Reform: Water Profits and Democracy, published by Sage International.

What Yogurt Lovers can expect....

Innovative yogurt products, from the country where yogurt is a mainstay of the menu.

Coffee, tea, or yogurt?:

Big players are repositioning packaged yogurt as stand-alone breakfast option or health dessert Just a week ago, the Gujarat Co-operative Milk Marketing Federation (GCMMF), owners of Amul, launched what it called an “all-natural probiotic vitamins fortified flavoured yogurt” under the brand name ‘Flaavyo’. The product, Amul says, has all natural ingredients such as fruit pulp, natural flavour, live probiotic bacteria and essential vitamins. Initially, Amul Flaavyo yogurt is being introduced in five flavours – Mango, Strawberry, Pineapple, Vanilla and Misti Doi. Amul is only the latest in a series of such launches by yogurt makers who are all trying to reposition their products from just a “meal accompaniment” to a stand-alone breakfast option or a health dessert. The results of all these efforts are showing. The packaged yogurt market in India is around 60, 000 tonnes and growing at a healthy rate of 15-20 per cent annually. Amul’s MD RS Sodhi says, “Our yogurt drinks in one litre packs (family packs) have become very popular in modern retail formats and are witnessing huge demand. In India, packed fruit yogurt market is still in a nascent stage, but is growing very fast.” If Amul represents one end of the spectrum, relatively smaller players in the yogurt market are also moving in fast. For example, Cocoberry, a frozen yogurt chain, recently introduced an innovative product called ‘Parfait’, which is frozen and clubbed with cereals and has been positioned as a healthy breakfast option. This came close on the heels of ‘Blackberry’ yogurt. Encouraged by the response, Cocoberry, which started its operations two years ago, now plans to launch another exotic flavour – Tiramissu – very soon. Cocoberry CEO GS Bhalla says the market is witnessing a huge shift from conventional products to yogurt drinks and functional foods, specifically targeted at children. Innovative and premium products such as bio yogurts, or yogurt enriched with juice and fruits are finding favour among consumers. The company is expecting 400 per cent growth this year. Others such as Nestle, Danon, Parag Milk Foods and Mother Dairy are also not far behind in grabbing the latest opportunity in the health and wellness space. Sanjay Sinha, Head-Milk and Dairy Products business, Mother Dairy Fruit and Vegetable, says the company will strengthen its yogurt-based drinks portfolio this season with differentiated products and format offerings. Mother Dairy is present in the Delhi and Mumbai markets with plain and probiotic curd –’b-Activ’, yogurt drinks like lassi, chach in the Delhi NCR market and a probiotic drink under the ‘Nutrifit’ brand. Sinha says the organized part of the yogurt industry is less than 10 per cent of the potential and is growing at about 20 per cent. Last year, the world’s no 1 dairy company Danon also arrived in India with its wide range of plain and flavored yogurts – ‘Danon Dahi’ across super marts and grocery stores in Mumbai and Pune, affordably priced at Rs 27 for 400 gm and Rs 14 for 150 gm. Apart from its latest fruit-flavoured yogurts, Amul recently launched 200 ml pouch of Amul probiotic lassi priced at Rs 6 in the Gujarat markets. Sodhi adds, “We now plan to launch it all across India in foil covered plastic glasses at Rs 10.” Amul’s portfolio also contains misti dahi, probiotic dahi and light low-fat dahi. Competing in the same space, Nestle’s basket offers ‘Milkmaid fruit yogurts’ range in strawberry and mango variants along with its ‘fresh ‘n’ natural dahi’ as well as ‘slim dahi’, ‘jeera raita’ and ‘Nesvita dahi’. Nestlé claims its fruit yogurts are 98 per cent fat free. Some of the players are already looking at the international markets. Cocoberry, for example, is in advanced stages of discussions to finalise locations in some south east Asian countries as well as in West Asia. Parag Milk Foods is doing the same. Rahul Akkara, VP-Marketing, Parag Milk Foods, says, “yogurt contains natural bacteria and is a healthy eating option. As we scale up our business, we will look at spreading our operations to more diversified markets in India as well internationally. We need to cater to a larger section of the Indian diaspora who are deeply rooted to their traditional Indian cuisine.”