Thursday, December 20, 2007

Free Trade? When Pigs fly in China !

Seems like there is a major shortage of pork the staple meat of China .

Free-traders would say that China could (and should) import more pork under these market circumstances. You'll need to read a bit into the article to see that China will respond with protectionism . And how come they never call it protectionism unless the U.S. does it ? For developing countries, they are doing it to 'protect peasants and reduce poverty' .

The government said Thursday it would double subsidies for pig farmers to boost production of pork, the country's staple meat.

Isn't this anti-Free Trade AND anti-Globalization ?

China to hike interest rates

Central bank to raise benchmark interest rates for sixth time this year in bid to cool inflation.

BEIJING (AP) -- China said Thursday it will raise interest rates for a sixth time this year as it tries to cool a price surge that has pushed inflation to its highest level in a decade.

On top of repeated rate hikes, Beijing has imposed investment curbs to slow spending on new factories, office buildings and other assets. It worries that a glut of unneeded projects could lead to defaults on bank loans, causing a debt crisis.

The interest charged on a one-year loan will rise by 0.18 percentage points to 7.47 percent, effective Friday, the central bank said on its Web site. It said rates on bank deposits will rise by 0.27 percentage points to 4.14 percent.

Analysts had expected a rate hike, and pressure built after consumer prices jumped by 6.9 percent in November over the same month last year. It was the highest inflation rate since 1996 and was driven by an 18.2 percent jump in politically sensitive food costs.

Economists blame the latest inflation spike largely on shortages of pork and other food items and said they expected it to ease once a new grain crop was harvested. But inflation has stayed stubbornly high despite official measures to increase food supplies.

"The apparent recent acceleration of non-pig food inflation and higher producer prices might have unnerved the authorities," Standard Chartered economist Stephen Green said in a report to clients.

"Sentiment in Beijing is changing" and the government is likely to get more aggressive in early 2008 about controlling inflation, Green said.

"The problem, though, is that food inflation may be with us for a while yet, and most of it will be fairly immune to tightening moves, at least over the next six months," he said.

The government said Thursday it would double subsidies for pig farmers to boost production of pork, the country's staple meat.

Chinese leaders want to maintain fast growth to reduce poverty, and the economy is expected to expand by more than 11 percent this year. But they have steadily nudged up interest rates to keep surging growth from setting off runaway inflation.

Driven by booming exports, the economy has powered ahead despite the repeated rate hikes, investment curbs and measures to shrink credit, as well as worries about the U.S. economy.

The government is struggling to contain pressure for prices to rise as a flood of cash from China's yawning trade surplus courses through the economy. The central bank drains billions of dollars a month from the economy through bond sales.

U.S. officials cite inflation fears as a key reason for Beijing to ease controls that they say keep its currency, the yuan, undervalued and give Chinese exporters an unfair price advantage, adding to its trade surpluses.

Treasury Secretary Henry Paulson and others argue that if China let its yuan rise faster against the dollar, its trade gap with the United States would narrow and inflation pressure would ease.

In other moves to contain price increases, the Cabinet agreed Wednesday to pay farmers a subsidy of $13 for each fertile sow next year, double this year's rate, the official Xinhua News Agency said.

The move is meant to "ensure adequate market supply and stabilize food prices," Xinhua said.

The Cabinet also promised to spend $300 million next year to help breeders build "standardized, large-scale" pig farms, the report said.

China's pork production fell sharply this summer due to high feed costs and an outbreak of blue-ear disease that prompted the government to destroy thousands of animals.

Beijing earlier promised pig farmers free vaccinations and other aid, and ordered banks to extend them credit.

On Wednesday, the government said it would end rebates of export taxes on wheat, corn and other grains. The step appeared to be intended to push producers to sell more grain at home, reducing pressure on prices.

The government plans to release part of its corn reserves onto the market to curb rising prices, Xinhua said. To top of page

It Labor Shortage, or just low wages ?

You have to make it almost to the end of the article to realize that there really is no 'IT skills shortage' in Germany .... but rather a 'brain drain' problem caused by uncompetitive wages and high taxes ....

Many highly trained Germans seek employment abroad for lower tax rates, higher pay or better opportunities, while non-European Union citizens seeking work in Germany generally must command a salary more than double the national average to be allowed in.

So people gravitate to larger take-home compensation (surprise!!) ... seems to me that the easiest way to fix this is to offer their home-grown people more money so that they don't go abroad ....

But they'll wind up loosening immigration to keep wages low, which is their real purpose , just like in the US ...

The other interesting unasked question --> What countries are these skilled German IT workers going to, that pay more and have lower taxes ? Obviously these higher-paying countries are not seeking lower-paid IT workers from less developed countries .... why not ?

Inquiring minds want to know !

German IT skills shortage seen worst since 2001
347 words
19 December 2007
11:26 am GMT
Reuters News
(c) 2007 Reuters Limited
FRANKFURT, Dec 19 (Reuters) - Two-thirds of German high-tech companies say their business operations are being hampered by a lack of IT experts, the worst perceived skills shortage in six years, according to a survey by industry association Bitkom.
In a statement published on Wednesday, Bitkom said the 64 percent of firms saying they were affected was the highest score since it began its survey of business confidence in the sector in 2001.
"The themes of education and immigration will accompany us in 2008," Bitkom President August-Wilhelm Scheer said.
Bitkom added it had received positive signals for an adjustment of Germany's immigration rules from an IT summit hosted by German Chancellor Angela Merkel earlier this month.
Merkel said during the summit the government would try to persuade more people in Germany to take up jobs in the IT industry before easing regulation for foreigners.
Bitkom -- whose more than 1,000 members include Deutsche Telekom , Microsoft Germany and SAP -- says the German IT and telecoms sector has 43,000 vacancies for skilled workers.
Many highly trained Germans seek employment abroad for lower tax rates, higher pay or better opportunities, while non-European Union citizens seeking work in Germany generally must command a salary more than double the national average to be allowed in.
Germany agreed in August to relax immigration rules for engineers from eastern Europe but has rejected a European Union plan to encourage migration of skilled workers into Europe to ease labour shortages caused by a declining, ageing population.
Bitkom added that 70 percent of the companies it surveyed expected Christmas holiday sales this month to be on the same high level as last year's, helped by demand for flat-screen TVs, multimedia phones and digital cameras.
Seventy-eight percent of companies in the survey expected higher sales in 2008, 16 percent expected stable revenues and 6 percent foresaw a drop, Bitkom said.

Wednesday, December 12, 2007

What is a 'US' firm , part 2

The newest market and fastest growing opportunities have been deemed to be overseas for the last ten years, continuing into the future.

The the best, hardest working, talented and least expensive employees were deemed to be found overseas .

Now the best, hardest-working (but not least expensive!) executives are deemed to be found only overseas.

So we have this critical quote, with the REAL big question :

“Even though they’re based in the United States, companies are less and less thinking of themselves as American companies,” said Michael Useem, a management professor at the Wharton School at the University of Pennsylvania.

At what point does a 'US' firm morph and become some sort of pan-national economic and political entity?

That comes when companies start to incorporate in countries overseas due to tax issues . If a corporation has a minority of employees in the US, a minority of it's revenues from the US and these prospects are on a downward trend , why pay the taxes and costs of doing business in the US (or Europe for that matter).

Stanley toolworks tried this a few short years ago, they tried changing their Connecticut base and US corporation status to 'move' to a base in a Caribbean island. Political and public outcry prevented it then, but will not in the future .

So the next grand idea/trend in corporate America :

The the best, hardest working, talented, cooperative and least tax-expensive corporate headquarters/bases will be deemed to be found overseas .

December 12, 2007

Seeking Leaders, U.S. Companies Think Globally

The corner offices of corporate America are increasingly being filled from every corner of the world.

Citigroup, the world’s largest bank, named Vikram S. Pandit, a native of Nagpur, India, as its chief executive on Tuesday. Mr. Pandit joins 14 other foreign-born chiefs who are running Fortune 100 companies.

The head of the Altria Group was born in Egypt, for example. PepsiCo’s is from India, the Liberty Mutual Group’s is a native of Ireland and Alcoa’s was born in Morocco.

Their numbers have jumped from roughly a decade ago; there were nine foreign-born chief executives on Fortune’s list of the 100 largest companies in 1996. But the size of the new group does not reflect a noteworthy change — they come from more far-flung countries now than then, when they were more likely to hail from Canada or Europe.

The shift reflects, in part, the focus that companies place on foreign markets for growth. For the first time, for example, the companies in the Standard & Poor’s 500-stock index are expected to achieve more than half their sales from abroad next year, on average.

By contrast, six years ago, large American companies that disclosed their foreign earnings earned about a third of their revenue from foreign sales, according to Standard & Poor’s.

Many of these foreign-born chief executives were recruited by companies like General Electric and Procter & Gamble in the 1970s and 1980s for their overseas operations. Now they hold top positions at companies that also include Chiquita Brands International, the Eastman Kodak Company and the Kellogg Company. Chief executives at Dow Chemical, Altria and Alcoa started in foreign units of their companies.

“Even though they’re based in the United States, companies are less and less thinking of themselves as American companies,” said Michael Useem, a management professor at the Wharton School at the University of Pennsylvania.

The ranks of top executives will probably become more international, as many business schools now fill their classes with 40 percent or more foreign students, and more companies recruit worldwide.

“It’s just a numbers game,” said S. P. Kothari, deputy dean of the Sloan School of Management at the Massachusetts Institute of Technology. “It’s absolutely nothing wrong with the United States, but our population here is only 300 million. Imagine two billion people from the outside start getting a decent education and going through the pipeline. Well, we are going to encounter more of them who rise to the top.”

Mr. Kothari, who grew up in India and attended business school there, has seen the trend firsthand. Some of his M.B.A. classmates from the early 1980s were recruited by Citigroup, Goldman Sachs and Nike, he said, and now they are in line for top positions.

Marijn E. Dekkers, 50, the Dutch chief executive of Thermo Fisher Scientific, based in Waltham, Mass., came to the United States in 1985 through a General Electric program that required new hires to work their first stint in a continent far from their own.

“You’re not intimidated doing business with people who are different than you,” Mr. Dekkers said. “I’m more open to exploring Asian alliances and comfortable doing business in Asia, even though I’m from Europe.”

Executive recruiters at firms like Korn/Ferry International say that corporate boards are asking more for leaders with experience outside the United States. And American-born executives increasingly are spending part of their careers in different countries.

“As you move through the company and you’re looked at for a promotion, one of the things we’re going to look at is, do you have international experience?” said Susan Bishop, a spokeswoman for General Electric.

Some companies have long track records of appointing chief executives with foreign roots. Coca-Cola last week named Muhtar Kent, the company’s president and chief operating officer, to succeed E. Neville Isdell as chief executive. Mr. Isdell was born in Northern Ireland but moved to Zambia as a child. Mr. Kent was born in the United States but grew up in Turkey. (Previous chief executives included Roberto C. Goizueta and Douglas N. Daft, who were also born abroad.)

M. Farooq Kathwari, chief executive at Ethan Allen Interiors, said he had been shaped by his experience moving on his own at age 21 from the Kashmir region of India to the United States.

“A foreign-born person is by nature an entrepreneur,” Mr. Kathwari said. “When you leave your home, leave your family and come to a different country, you have had the instincts of an entrepreneur.”

Mr. Kathwari said his childhood in Kashmir, hiking up mountains, taught him the importance of pacing himself. The political conflict there, he said, taught him the importance of fairness. “Justice” is now a leadership principle at Ethan Allen.

Some chief executives, like Mr. Pandit at Citigroup, moved to the United States for their education. Indra K. Nooyi, the chief executive of PepsiCo, attended the Yale School of Management, and Sidney Taurel, the chief of Eli Lilly who was born in Morocco, attended Columbia Business School. Mr. Pandit earned undergraduate, master’s and doctorate degrees at Columbia.

Howard M. Anderson, a professor of entrepreneurship at the Sloan School at M.I.T., said change in the executive suite has come more slowly than companies’ sales growth abroad. He said that some corporate boards may still not be comfortable with foreign-born chief executives because they feel they have more in common with another American.

“It’s prejudice, but remember, when you’re picking a C.E.O., it’s not an equal opportunity job,” Mr. Anderson said.

But Ramani Ayer, the chief executive of the Hartford Financial Services Group, said he thought that because boards were accountable to shareholders who care about returns above all else, they would pick the best candidate, regardless of race or country of origin.

Mr. Ayer grew up in India, but moved to the United States to attend graduate school at Drexel University. He credits his bosses at the Hartford with helping guide him in his rise to the top, but he also said he had acquired a strong work ethic in India.

“I’ve benefited from my Indian background,” Mr. Ayer said. “Growing up in a very simple family with a real passion for hard work. In other words, you never stopped working. You just worked. Work was liberating and work was part of what defined who you were.”

Monday, December 10, 2007

The Common Construct

The Common Construct within the current, corporate-driven, usage of all working people was summed up succintly :

“I think if they could do this business without us, they would, and so making our task as mechanical and simple and low-paying and unartistic as possible,” Mr. Verrone said.

This is exactly what is happening in all spheres of employment and is being particularly noticed by many because all the forces that allow and encourage globalization now have jobs moving not just to your smarter/faster/cheaper neighbor across the street or in a different state, but around the world.

It's interesting to note that in the entertainment industry there was a boom in demand for graphics and cartooning people several years back with an explosion of Disney blockbusters. Then CGI-animation caught up (and surpassed?) hand-drawn animation. Along with this , the large entertainment companies outsourced hand-animation overseas so that most animation is no longer done here, e.g The Simpsons is done in Korea . Disney itself cut most of it's animation staff a couple years back and now relies on CGI graphics (which can be done anywhere in the world) and lower-cost hand-drawn animation overseas .

The real question is 'what job CANNOT be done , and done cheaper, outside the U.S.? ' .

December 10, 2007
News Analysis

Screenwriters Dig In for an Extended Brawl

LOS ANGELES, Dec. 9 — Eight months ago, in a contemplative moment, Patric M. Verrone, president of the Writers Guild of America West, sketched out what could have been a script for the collision that wrecked talks between Hollywood’s producers and striking writers on Friday.

During an interview in his office here, Mr. Verrone described the looming negotiations with employers as a confrontation much grander than a simple fight over pay formulas. This battle would be about respect.

Writers, he said, were looking to restore a sense of leverage and status that had been lost as ever-larger corporations took control of the entertainment business. He described Hollywood as teetering on the brink of a dark age, as far as creative types were concerned. “I think if they could do this business without us, they would, and so making our task as mechanical and simple and low-paying and unartistic as possible,” Mr. Verrone said.

The solution, he added, was to squeeze the corporations that own the studios, in an effort to represent the legion of writers on reality and animated shows that the guild had not organized through sign-up drives.

“There are things we can ask for in bargaining that will allow you to reach up to the mother ship and then back down into the nonunion company,” he said.

On Friday night, five weeks into a strike that now promises to drag on well into the new year, seriously complicating plans for this television season and the next, and opening the door to a tube filled with reality shows and other substitutes, it suddenly became clear to all involved that Mr. Verrone and the other guild leaders were serious about their writers’ revolution.

After days of haggling over complicated formulas for Internet pay, the latest round of talks blew up over the deeper issues that had been buried inside the writers’ contract proposals.

Accusing guild leaders of pursuing “an ideological mission far removed from the interests of their members,” representatives of the Alliance of Motion Picture and Television Producers expressed outrage over continuing demands of the writers that were not strictly related to pay.

These include requests for jurisdiction over those who write for reality TV shows and animated movies; for oversight of the fair-market value of intracompany transactions that might affect writer pay; and the elimination of a no-strike clause that prevents guild members from honoring the picket lines of other unions once a contract is reached.

The tone of shock in the producers’ statement seemed a bit artificial, as Mr. Verrone has for months laid out his plan to elevate the writers’ industry status. Yet their anger is genuine. Executives know that to concede the writers’ noneconomic demands would lead to a radical shift in industry power. Only a death wish, for instance, would prod companies to let one union walk out in support of another, particularly on the eve of negotiations with both the Directors Guild of America and the Screen Actors Guild, whose contracts expire in June. “It’s kind of like saying ‘Oh, while we’re in the middle of this knife fight, I demand the right to have a gun next time,’ a comment on a screenwriters’ blog, The Artful Writer, said.

Similarly, company negotiators know that to grant jurisdiction over workers not currently represented by the guild would bring up against legal questions — can they impose union membership on a unit whose members have not signed up? And it would lead to a collision with other unions.

That matter provoked a blast on Friday night. Thomas C. Short, president of the International Alliance of Theatrical Stage Employees, which already represents some reality and animation writers, compared the writers’ guild leadership to “a huge clown car that’s only missing the hats and horns.”

As the strike drags on, it appears increasingly likely that the television business, which is more sensitive than the movie industry to short-term dislocations, may be in for some deep changes. One possibility is that networks will use the walkout as an opportunity to end their costly practice of presenting new programs to prospective advertisers in an elaborate spring road show known as the upfronts. Instead, they might opt for simple visits to the main advertising agencies.

Networks could also use the strike to end a television development cycle that has them all chasing the same stars at the same time for fall programs that make their debuts en masse. Instead, they might develop new offerings throughout the year.

More narrowly, Friday night’s breakdown marked the failure of an effort by the companies to reboot the talks as a more tightly focused negotiation, despite earlier bad blood. The companies’ strategy, more or less, had tried to close a gap on issues related to electronic delivery of movies and television shows, holding back a sweetened offer for Internet downloads as a closer that would be added at the last minute, giving Mr. Verrone something on which to claim victory.

For that to work, however, Mr. Verrone and his colleagues would have had to abandon the quest for not just a bigger share, but a bigger place in the business.

In a Sunday interview, Mr. Verrone said nothing was nonnegotiable. Union leaders, he said, were thinking “we were in a negotiation, where they would talk about these things.”

And anyone who thought that they would simply surrender just was not listening.

Friday, December 7, 2007

Not guilty

The SEC said McGuire did not admit or deny guilt.

Voluntarily agrees to give up over $400 million but doesn't actually admit guilt?

Well just like trying to legally define what the meaning of the word 'is', is , we can legally haggle over the meaning of guilt . But paying $400 million in lieu of hard time seems to define the word for me .

UnitedHealth former CEO to forfeit $400M

William McGuire, the insurance company's former chief executive, agrees to surrender the funds as part of a settlement of a stock-options backdating lawsuit.

MINNEAPOLIS (AP) -- Former UnitedHealth Group Inc. Chairman and CEO William McGuire has agreed to surrender more than $400 million to settle a lawsuit related to a stock-options backdating scandal, the company and the Securities and Exchange Commission announced Thursday.

McGuire, who stepped down a year ago as the highest-profile corporate chief caught in the probe, will give up $320 million in stock options and forego more than $99 million in other retirement and executive savings benefits, the company said.

In a statement, the Securities and Exchange Commission valued the settlement at $468 million. The SEC said McGuire did not admit or deny guilt.

The SEC said it includes a $7 million civil penalty and reimbursement to the Minnetonka-based insurer for all incentive- and equity-based compensation he received from 2003 through 2006.