Double-dip recession in U.S

This ought to have been a good week for the American economy. The country’s leaders at last ended a ludicrously irresponsible bout of fiscal brinkmanship, removing the threat of global financial Armageddon by agreeing to raise the federal debt ceiling. Yet far from heaving a sigh of relief, investors are nervous. Stockmarkets around the world have tumbled like anything.

It is not all to do with America: the Euro zone is a mess and manufacturing everywhere seems to be slowing. But America’s prospects have suddenly darkened. Statistical revisions and some grim new figures have revealed a weaker-than-assumed recovery that has all but ground to a halt. America’s recovery from a balance-sheet recession was always bound to be sluggish and fragile. If America does manage to avoid recession and slowly begins to pull out of this mire, it will be testimony to its underlying strengths.

Temporary factors have played some role in this. Soaring oil prices crimped consumer spending. The Japanese earthquake disturbed supply chains. In some industries, notably car production, a rebound is plainly under way. But the overall economy is now so weak that it would take a lot to get growth up to a reasonable rate. And there are some signs that the temporary shocks may have left a more lasting dent on the psyche of firms and shoppers.

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Balancing act between 'GROWTH' & 'PROFITABILITY'

The balancing act between growth and profitability is not that easy to come to most businesses, particularly in the context of today’s' competitive business environment. Those that manage to do so for a temporary period often get replicated by their peers and competitors. In the bargain, the fragmented or segmented market leaves almost no room for supernormal profits. This holds very true for the financial sector where any hint of callous growth can take a toll on profitability as recently we have seen in last quarter result for SBI. At times there are players lending at very thin margins. This helps them grab market share from the larger players. But their own profitability takes a dip as margins fail to accommodate rising operational costs.

What does enable profitability and growth to coexist is the extent to which both are rooted in customer benefit. The customer benefit of a product or service is not what it is or what it can do. It is the reward that customers receive through their experience of choosing and using that product or service. It often varies by individual and context: the reward one person gets from chocolate is the pleasure of eating it; for another is it the pleasure of giving it as a gift.

‘GROWTH’ not just as ‘extension of the business’, i.e. increase in sales volume, but as ‘TOPLINE GROWTH’, i.e. increase in sales volume and revenue, and as ‘REAL GROWTH’, i.e. triggered by an increase in ‘CUSTOMER VALUE ADDED’. ‘CUSTOMER VALUE ADDED’ means the difference between the total value of an offering and the price the customer has to pay for it. ‘TOTAL VALUE ADDED’ means the difference between the total value of an offering and the total costs to produce it.

How to balance both the activities??? It is not that easy......but doable.

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Concerns about Nuclear Power

Some natural disasters change history; Japan's tsunami could be one. For the moment, the country is still coming to terms with the scale of the calamity, trying to contain the accident at the damaged nuclear plant and restore normality to suffering people. But in the longer run, it is just possible that some good may come of this catastrophe. Past natural disasters in Japan have been followed by big changes of direction, and the country is sorely in need of change. For the rest of the world, the biggest question Japan's tsunami throws up concerns nuclear power.

Not only are humans fallible and the world troubled by terrorists; nature regularly unleashes disasters that cripple our abilities to keep the nuclear genie safely contained. Whether through human error, terrorism or natural disaster, the outcome — a release of radioactivity in a populated area — is unacceptable.

We should not turn our back on a technology that has so far been much safer than coal, and offers a low-carbon alternative to fossil fuels that is cheaper than most renewables. Before we scream no more nukes, let us examine the whole picture and look at today’s modern, safe facilities.

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Egypt in New Orbit

After an 18-day revolution, the people of Egypt won by peacefully driving President Hosni Mubarak from power. This is a historic moment in this century, and in people's quest for freedom. For this revolution was won not by brute force, nor by violence; but won by the will of the people and their determination to create a better society.

The unity that binds together a broad social alliance against a tyrannical regime inevitably fractures once the immediate focus of rage has been removed. A political or social revolution is not a single act, but a process. The Egyptian upheaval has its own context and will take its own path. But the great popular revolutions all followed a similar initial pattern.

In Egypt, real politics is about to begin as I personally think that the unified movement which we have seen over the past weeks is likely to diverge now. People were in the streets together, but now they have different views of where Egypt should go next.

Different players are watching Egypt for very different reasons...What's next for Egypt? - Wait and watch!

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Petrol price rise hits the common man

The government of India has hiked petrol prices once more, by about Rs2.50 per litre. What must surely hurt the customer is that the latest hike comes a month after the hike in December. The reason is that since June 2010, the state run oil companies are free to set pump prices in tandem with global crude. In the last six months, there have been six price revisions for petrol. As opposed to this, the government has capped prices of diesel and kitchen fuels much below their cost of production owing to inflationary pressures. The government had promised at the time of deregulating petrol prices that it will step in if crude went beyond a point. Can anyone tell what that threshold point as nothing of is as such mentioned specifically by the government?

The government claims it had no choice given that crude prices had touched $92 per barrel. Yet, millions of consumers, who use scooters and motorcycles or drive in small cars to get to work, will feel let down. What makes the government’s statement about rising crude suspect is that it has simply refused to hike the prices of diesel, kerosene, and LPG (liquefied petroleum gas), claiming it will stoke inflation and burden households that use kerosene and LPG. This means that oil marketing companies (OMC) will still incur huge losses because 60% of their products comprise diesel, kerosene, and LPG.

Out of every rupee spent on petrol, much of it goes to the government by way of taxes and levies. Yet, revenue can be earned from other areas rather than hitting the common man where it hurts the most: in his daily commute to office or factory.

Lastly....politics hots up over hike in petrol price.
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Global Roundup

On the global economic and financial front, despite the decrease of jobless claims in America and better spending by the consumers, the overall situation remained negative. In the forefront, the financial woes of Ireland have unsettled the entire banking and fiscal system of Europe with pointers that Portugal and Spain are poised to go down the same slippery path. Therefore from Iceland and Ireland to Greece, Portugal, Spain and other countries in the southern periphery of Europe, sovereign debts accompanied by gross mismanagement, speculation and malfeasance have shaken up the Euro, the so-called single currency. Only Germany seems to be floating high.

However, Chancellor Angela Merkel has opinionated that the private sector also has the duty to chip in and help stabilise a highly wayward financial situation in several Eurozone countries. Merkel's proposal has brought lot of criticism. Thus the fiscal fortunes of Europe continue to wobble interminably leaving little apparent hope for even a modicum of social and economic stability in Europe. Now fears have arisen that economic crises presently prevailing in Europe and indeed around the world are threatening to unravel and undo the very foundations of human civilisation itself.

The dollar went up against most of its major counterparts after North Korea and South Korea exchanged artillery fire, encouraging demand for the greenback as a refuge. Last week, China increased bank-reserve requirements following the fastest rise in consumer prices in two years.

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Stimulus plan raises tensions

G20 leaders gathered in Seoul to discuss rising tensions surrounding global fiscal and currency imbalances. The Federal Reserve’s recent decision to buy US$ 600 billion in Treasury bonds came in for particular criticism from Germany and other export-dependent countries that worry about a weaker dollar. Although the American president usually does not comment on the actions of the Fed, Barack Obama defended the central bank’s move, saying its intention was to help the American economy to grow, not to influence exchange rates.

Even the IMF now favours judicious limits on capital surges, if nothing else works. But some capital controls are more excusable than others. To help distinguish good controls from bad, some dos and don’ts endorsed by the G20 might help. Over time, regulation of the capital account might become as respectable as banking regulation.