The Sino-US bilateral ties reached a new low recently when the US Senate introduced a bill that aims to put pressure on China to let its currency appreciate. Some members of the US congress even threatened to impose duties on some of Chinese exports, if Beijing fails to revalue its currency. US lawmakers as well as economists argue that the Yuan is at least 20-40% undervalued and is thus affecting the competitiveness of US trade.
Dubai, as I said when the specter of default loomed large, was symptomatic of a bigger global problem of a sovereign debt crisis. Greece is symptomatic of the problem that the Eurozone (and, by default the Euro) currently faces. Success of Eurozone depended on strict internal discipline by the members. Problem was the different stages of economic growth in different countries. Fact is, many of those nations who aspired to be a member of the much avowed group of countries, did not really care for the discipline expected out of them. The problem was exacerbated by the fact that there was a uniform monetary policy across members as was the uniform deficit target. Sure France and Germany sent out wrong message by violating the deficit targets without inviting sanctions, thanks to the clout they enjoyed. The smaller economies thought that they would continue to enjoy the benefits of being a member without being disciplined. The credit fuelled growth enjoyed by them without the adequate checks and balances meant that, when the global environment turned around for the worst, they paid a heavy price for their lack of discipline. And they did not have ammunition to fight given the centralized policies.
Continue reading "US unemployment – lower rate is a chimera" »
The US economy is in a very sticky wicket indeed, notwithstanding the above expected growth recorded during Q4’09. The recovery is mainly technical as inventory draw down is coming to a close and the inventories have gone to such levels that some restocking is essential. Question is, will the inventory stocking finally lead to production cranking up and economy starting to move up? No, because the consumer sentiments are terribly scythed.
Continue reading "US initial jobless claims – economy on a sticky wicket" »
As I have been mentioning over the last few months, the Indian stock markets were highly overvalued and not supported by economic fundamentals. It was quite clear that the run up was mainly driven by the deluge of external funds flowing into India. The events of the last few days, when the stocks took real beating as the fund flow dried up and even reversed (on the back of some stringent measures that the US regulators are contemplating), finally exposed the fragile nature of the run up.
Decision making today is more oriented towards data, metrics, predictability models and controls. Risk department forecasts their numbers using heavy duty econometric models. Many of these models are based on absolute precision. Recall the phrase ‘show me the data’ before making any argument. The point is organizations are heavily depending on science today to run the business. We are not challenging science here; it is the way it is being used to make decisions. Why are we consistently getting our numbers wrong? Now there is news about China’s real estate bubble and rise in US foreclosures. Why we make wrong decisions based on certain system and do not learn from them? Why we go back to the same system after failing? Using sophisticated financial models, CEO’s make next quarter guidance only to get them wrong again and later get criticized for not delivering on their promise.
Continue reading "Right-mixing Science and Art for better Decision Making" »
Continue reading "US economy - the last decade was a lost decade" »
We live in an unpredictable world, where change is seemingly constant. Businesses that are unable to anticipate and manage change will inevitably pay a price in losing out on competition, lost revenues, lost time, and lost investments. A proactive firm who would do its homework well would score over reactive firms who choose to take it as it comes. The ability to manage change is critical to success for every business in every location. Country Risk Analysis (CRA) enables businesses to anticipate change and taking measures to control it.
Continue reading "Country Risk Analysis – A key to outperform others" »
