Gang of 5

Mobile Phone Users Tend to Group in Gangs of 5

Despite a long list of contacts stored in a mobile phone, people actually keep in touch with a very limited number of people.A recent survey by SK Telecom revealed that 62 percent of calls made by customers were concentrated on no more than five numbers per person. Out of the five most frequently contacted numbers, in turn, about 29 percent of calls were directed to just one number, and 51 percent went to the top three numbers. More women than men, and more people in their teens and 20s or those aged over 50 tended to have a smaller personal network. The trend is spawning packages like SK Telecom’s “Pajama Five” service launched in August, where a user designates four people on the screen whom he or she joins in a group, making it easy to make a call or send a text message to group members. The service attracted more than 350,000 subscribers in just three months. “MyFaves,” a monthly fixed-rate plan by U.S. network provider T Mobile that offered unlimited calls and text messages to the five most frequently called numbers, was also hugely popular. Mobile phone makers are taking note of the trend. Samsung Electronics’ Anycall Haptic 2 features a “Top Five” function, with which a user can connect to the five most frequently called numbers from the screen instantly. ” It seems people tend to prefer communication with close friends rather than keeping contact with people in scattered networks,” said Ahn Hoe-kyun, an executive from SK Telecom’s roaming and data business division. As the world gets more and more complicated, it seems people tend to put more emphasis on maintaining close emotional bonds with a few rather than keeping wide but superficial relationships. This article has been taken from some newspaper.

Global Economy

Global Economy

 

General Overview – The Global economy overall is showing good signs of recovery with one side being pulled up by recovery of Japan and Europe and on the other side of BRIC nations and South Africa have created a New Global Economic force ready to Challenge the Mighty OECD nations .

 

The BRICs Clout is also rising in issues such as global trade negotiations, energy security, commodity markets and M&A.

 

The VISTA nations have also emerged as the main contender propelling growth in Venezuela, Indonesia, South Africa, Taiwan and Argentina.

 

The Estimated targets for global growth has been estimated to be around 4.8 – 5.2 % for 2007-2008.

 

North America

 

United States of America –

 

The latest worries for US center around the collapse of the housing market, the inversion of the yield curve in the Treasury market, the size of the trade deficits and the health of consumer finances.

 

                                       

 

US Trade Deficit Chart

 

 

Crisis in Sub-Prime Mortgage Market – The crisis in the American subprime-mortgage market was clearly visible months ago. Too many homebuyers with a poor or non-existent payment record were lent too much money. It is important to pay particular attention to negative effects of bad debts of housing loans (sub-prime loans) intended for customers with low creditworthiness.But when the rating agencies on July 10^th 2007 finally got round to acknowledging the problem, investors were clobbered. Shares briefly wobbled and the dollar sank.

 

Most of the American Home Mortgage companies had already filed for Chapter 11 bankruptcy and distressed assets have been valued to the tune of 220 Billion US $

 

The US mortgage Crisis immediately impacted major stock markets where the I-bankers pulled money out of the market creating ripples in Major stock Exchanges.

 

Fed rates – Use of Fed Rates by Central bank to regulate Inflation and Unemployment in the Economy .After a continuous increase of Fed Rates from 2000 , this year it is expected some constraints by Federal bank to not to use Open Market Instruments to regulate.

 

 

 

Since the financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing.

 

In light of all these changing scenarios, US economy is expected to grow around 2.7 – 3 %.

 

Global Crude Oil Prices

 

With the fear of Supply cut by OPEC nations and political tensions in Venezuela, Crude oil prices are expected to move north.

 

Probable Reasons for Increase in Crude Oil Prices –

 

1. Political tensions in Venezuela.

2. Threat by OPEC nations on reduction of dependence on Crude oil by Developed nation laying more stress on Bio-Energy Fuels.

3. The Downstream activities related to crude oil refining have still not kept pace with the production, there is still a wide mismatch between them, putting strain on refined supplies and increasing prices of Petroleum Products.

 

 

 

CANADA – The Canadian Economy is mostly dominated by the Service sector with an increase in Focus on Health and Education sector.

 

Canada exports are expected to surge to new heights with Crude Oil from domestic fields to generate the Maximum revenues and same growth is expected to be offset by the Grey populations increasing dependence.

 

With the overall consumption pattern decreasing in terms of consumer spending and Government expenditure, it is expected that the GDP may come down to 2.6 – 2.8 %.

 

Since the consumer spending and government expenditure is expected to remain at the same level, the Unemployment Rate would remain stagnant at 6.2 %.

 

 

 

Emerging Markets – BRIC & VISTA Nations.

 

Over the next 50 years, Brazil, Russia, India and China—the BRIC economies—could become a much larger force in the world economy.

 

 

                                                 

 

Contribution of BRIC nations to World GDP -2004

     

Brazil

COUNTRY PROFILE –

 

Brazil has the best infrastructure of all the BRIC countries (Brazil, Russia, India and China), considered the 4 developing countries with the highest potential for development in the next 50 years.

Brazil possesses specific key factors for sustained growth:

 

• GDP over US$ 600 billion;

• Population over 150 million;
• 180 million consumers  & 90 million economically active populations

 

KEY Factors Determining Brazilian Economy

 

v     Brazil is also the worlds:

• largest producer of coffee, orange juice, sugar and ethanol

• largest producer of regional jets

• largest exporter of soy, beef and chicken

• fourth largest exporter of steel largest consumer of alternative fuels

• largest producer of electric power.

 

v     Brazil has a highly diversified and competitive industrial base

 

 

Factors influencing the economy of Brazil positively:

 

v     Volume sales of consumer packaging in Brazil experienced substantial 16% growth over the 2002-2007 period.

 

v     Heavy Oil Contributes to Brazil’s Energy Self-Sufficiency

 

v     Much of Brazil’s GDP is driven by booming exports – especially to China – and healthy profits by Brazilian companies.

 

 

Factors influencing the economy of Brazil negatively:

 

v     The economic downturn and the corporate scandals of the recent years have drawn renewed attention to financial fraud in public and private organization.

v     Crimes has  Sparked Tourism Concerns in Brazil

v     Rigid labor market and high business costs.

 

 

 

BRAZIL is also on the radar of Financial Service companies and the Telecommunication Industry. Both groups had previously ranked Brazil below their top 25 markets in 2005.

 

 

 

 

 

 

RUSSIA

 

Russia with a population of just 146 million and that too decreasing steadily, Russia is all set to emerge out of long hiatus of slow growth and poor economic development.

 

 

Factors having positive effects on Russian economy:

v     Domestic household investment activities to grow by 11 %.

v     Fixed Investment showing good signs of growth.

v     Economy highly reliant on Energy Exports.

 

 

Factors having negative effects on Russian economy:

v     Heavy dependence on commodity exports

 

Key Important Features:

v     Russia has experienced a recent surge of pro-Asian sentiments (with an especially strong orientation toward China), together with the rise of hard-line nationalists who conceal their inferiority complex over Russia’s loss of superpower status with ideas to the effect that the country is “self-sufficient” and should remain an independent “center of force” in international relations.

v     Russia is interested in promoting neighborly relations, trade and mutually advantageous cooperation with all of its neighbors. It is not clear, however, how the deepening of contacts with the EU could prevent it from trading with, for example, its partners in Asia. Yet this does not only refer to trade and cooperation, but to the choice of a model for the country’s political and socio-economic development in the future.

v     Russia’s experience shows that the Chinese model (i.e. authoritarianism mixed with a ‘New Economic Policy’) has failed to produce the desired result in a different national environment. Furthermore, an unbalanced, excessive rapprochement with China could lead to a situation in which Russia loses its Far Eastern and Siberian regions to Chinese demographic expansion, thus becoming China’s raw-materials adjunct and waste-disposal grounds for its dynamic economy.

 

 

 

 

 

The time series perspective, i.e. an extrapolation of historical GDP data suggests that Russia’s current growth momentum is strong. However, a number of factors such as structural breaks and the need for a further restructuring of the Russian economy suggest that inferences from past historical data should be treated with caution.

 

From a cross-country perspective, maintaining the current high growth rates would appear to be a considerable challenge. While Russia’s high level of human capital suggests that the country may have brighter growth prospects than other emerging market economies, other factors – such as the country’s low investment rate and the fact that its natural resource endowment may become a curse rather than a blessing in the longer-term – point to a more challenging growth outlook.

 

 

 

 

Russia’s dependence on natural resource extraction may be aggravated in the future by what has become known as the:

“Dutch disease”, i.e. a situation in which real appreciation – triggered by surging commodity prices – crowds out manufacturing and other non-oil exports. In addition to the Dutch disease\concerns, most assessments of Russia’s medium- and long-term growth potential point to structural challenges such as capacity constraints due to insufficient investment, banking sector weaknesses, negative demographic trends and health issues.

 

 

Crude oil is currently Russia’s most important export commodity. The massive growth in oil export revenues, however, is mainly due to the sharp spikes in oil prices.

 

 

Almost half of Russia’s GDP is accounted for by the services sector. Both transport and communications and real estate each make up about one-quarter of total services.

The industrial sector generates slightly more than 40% of GDP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Empirical studies indicate that oil prices have a considerable impact on GDP growth

 

 

 

 

 

Empirical studies have found that the oil price has a significant impact on Russian GDP growth with long-run elasticities ranging from 0.15 to 0.2%.7 According to these estimates a permanent 10% increase in oil prices would, in the long run, lead to a 1.5-2% increase in Russian GDP.

 

Dutch Disease –

 

The prominent role of raw materials in Russia’s exports and the significant real appreciation of the Russian Rouble, may lead to concerns about the competitiveness of the non-oil industrial sector. The high importance of mineral extraction for Russia’s economy makes the country susceptible to the Dutch disease phenomenon. The term “Dutch disease” refers to a situation in which new discoveries of natural resources or, as in the case of Russia, sharp rises in commodity prices lead to an increase in the equilibrium real exchange rate, thus undermining the competitiveness of the other tradable sectors in the economy.

 

 

 

Standard statistical filtering techniques suggest that Russia’s potential growth rate could be 4-6% per annum, depending on the time-span taken into consideration.

 

 

 

 

CHINA

 

China has been the fastest growing economy in the world over almost three decades, expanding at 10 percent per year in real terms.

 

 

China’s economic expansion remains disproportionately dependent on rising investment expenditures and an expanding trade surplus

 

 

Rising investment has been fueled by a rise in the national saving rate, which reached an unprecedented 50 percent of GDP in 2005.4 Rising investment was particularly important in 2001–2005, when it contributed just over half of China’s economic growth.

 

 

 

This Graph shows generally high rate of capital formation in China as compared to other nations ,fuelled by foreign Investment and High rate of domestic saving .

 

For each country the time period is when the average rate of capital formation was the highest.

 

 

 

Government consumption in China as a share of GDP has been more stable, averaging around 14 percent of GDP throughout the reform period.

 

 

The main concern for Chinese The second reason underlying the leadership decision to rebalance the sources of economic growth is to increase personal consumption and alleviate or at least slow the pace of increasing income inequality.

 

 

China’s leadership to seek a transition to a more consumption-driven growth pattern is less obvious but still important. Excessive reliance on investment and net exports to drive growth in recent years threatens to undo some of the progress China has made over the past six years in developing a commercially oriented banking system. A critical component of this process has been the injection of almost RMB4 trillion ($500 billion) to cover past loan losses and to raise capital adequacy to meet prudential standards.

 

 

Chinese Current Account Surplus Issue –

 

China’s current account surplus has soared in recent years. In 2006, China decisively surpassed Japan for the first time to become far and away the world’s largest global current account surplus country. China now is a major contributor to global economic

imbalances, along with the United States, which has the world’s largest current

account deficit. The successful transition to a pattern of growth driven more by

domestic consumption demand necessarily entails a reduction of China’s national

saving rate relative to its investment rate. That, in turn, would reduce China’s

current account surplus. This adjustment should be facilitated by an appreciation

of the Chinese currency, which would mitigate inflationary pressures that would

otherwise emerge from the increase in consumption demand

 

 

 

 

 

 

Policies to promote consumption can be based on cutting personal income taxes or increasing government consumption expenditures (i.e., government non investment outlays). Shifting to a more consumption-driven growth path in China also will require significant changes in its exchange rate policy.

 

Increased government expenditures on these programs raises the consumption share of GDP above the level it would otherwise attain, thus helping to rebalance the sources of economic growth. Moreover, if the rapid pace of government spending on these programs is sustained over a period of years, eventually households are likely to reduce their precautionary saving and increase consumption. That adjustment would further enhance the consumption share of GDP and, equally important, contribute to a moderation of China’s large external imbalance as well.

 

Chinese economy has the following problems constituting risk factors: excess liquidity; excess investment; and excess production.

 

 

VISTA NATIONS

 

VENEZUELA

 

Country Overview

Venezuela has experienced very rapid growth since the bottom of the recession in 2003, and grew by 10.3 percent in the year 2006. The most commonly held view of the current economic expansion is that it is an “oil boom” driven by high oil prices, as in the past, and is headed for a “bust.” There is much evidence to contradict this conventional wisdom.

 

Factors affecting the Venezuelan economy positively

 

Ü    Venezuela has a large cushion of reserves to draw upon before an oil price decline would begin to squeeze its finances. A decline in oil prices of 20 percent or more could be absorbed from official international reserves, which at $25.2 billion are enough to pay off almost all of Venezuela’s foreign debt.

 

Ü    The poverty rate has decreased rapidly from its peak of 55.1 percent in 2003 to 30.4 percent at end of 2006, as would be expected in the face of the very rapid economic growth during these last three years

 

Ü    Measured unemployment has also dropped substantially to 8.3 percent for June 2007, its lowest level in more than a decade; as compared to 15 percent in June 1999 and 18.4 percent in June 2003 (coming out of the recession).

 

Factors affecting the Venezuelan economy negatively

 

Ü    The Venezuelan currency is substantially overvalued. The government is reluctant to devalue because this would raise inflation, which is currently running at 19.3 percent and exceeds their target.

 

Ü    Inflation is itself a problem which reached at the level of 13.6 % in the year 2006.

 

Key Features

 

Ü     The declining public debt (as a percentage of GDP), the large current account surplus, and the accumulation of reserves have given the government considerable insurance against a decline in oil prices.

 

Ü     Venezuela has taken advantage of the current expansion and increased oil revenues to reduce its public debt, and especially foreign public debt. Total public debt increased quite substantially through the crisis of 2002-2003, reaching a peak of 47.7 percent of GDP in 2003. But by 2006 it was down to a modest 23.8 percent of GDP.

 

Ü     The non oil revenue has been steadily rising since the year 2003 from 9.8% of GDP to 12.0% of GDP.

 

 

 

 

 

SOUTH AFRICA

 

Country Overview

 

THE MOST RECENT HISTORY OF SOUTH AFRICA highlights both the buoyancy of its economic performance and the increasingly risky environment with which it is confronted. By South African standards, the country experienced high real GDP growth in 2005 and 2006 at around 5 per cent, fuelled mainly by booming consumption and vigorous investment.

 

Factors affecting the South African economy positively:

Ü     Restructuring of the mining sector by govt. is likely to being good growth in this sector.

 

Ü     Huge domestic investment by Govt. and local pvt. Companies.

 

Ü     Reduced foreign debt (18%).

 

Factors affecting the South African economy negatively

Ü     Current account deficit

 

Ü     Political instability

 

Ü     Poor infrastructure

 

Key Features

 

Ü     The South African Govt. is trying to give a big push for the upliftment of  the rising black middle class with its Black Economic Empowerment measures (BEE).

 

Ü     Some six major new investments worth a total ZAR 45 billion, notably in the retail, financial services and transportation sectors, are in the pipeline.

 

 

Ü     The financial system remains sound and regulation is improving. At the end of June 2006, the capital adequacy ratio of the banks (regulatory capital over risk-weighted assets) stood at 12.4 per cent, well above the required 10 per cent. Asset quality also improved with non performing loans at 1.2 per cent of total loans compared to 1.5 per cent end of 2005.

 

Ü     The South African govt. is making huge infrastructural investments in line with the 2010 world cup to keep up the growth.

 

 

 

 

TAIWAN

Country Overview

 

Located across the Taiwan Strait from mainland China, Taiwan is an important economic and trading center, with one of the busiest ports in the world (Kaohsiung). As Taiwan lacks sufficient domestic energy sources, it is almost totally dependent on energy imports.

 

Factors affecting the Taiwanese economy positively

 

Ü     Strong US economy and robust Chinese growth and demand.

 

Ü     Reduced current account deficit and increased forex reserves.

 

Ü     Export momentum has picked up

 

Factors affecting the Taiwanese economy negatively

 

Ü     Huge dependence on the exports (particularly consumer electronics)

 

Ü     Political threat from China

 

Ü     Almost a total dependence on imports for oil requirements

 

Key Features

 

Ü     Unlike China, Taiwan was admitted to the WTO as a “developed country,” which imposes more stringent requirements for reducing barriers to foreign competition. Taiwan recently has lifted some restrictions on direct trade with and investment in mainland China, which is expected to increase cross-strait commercial ties.

 

Ü     With respect to inbound investment, the government wants to attract investment in research- intensive, high value-added industries such as biotechnology and optical electronics. However, many of the bureaucratic regulations that have historically impeded business dealings remain even though the government enacted numerous ‘business-friendly’ reforms in conjunction with Taiwan’s 2002 accession to the World Trade Organization (WTO).

 

Ü     The PRC threat to Taiwan is reaffirmed in its Anti-Secession Law. The law, which was passed in March 2005, obliges China to employ “non-peaceful means” against “Taiwan independence forces” should they “act [to cause] Taiwan’s secession from China.”

 

 

 

 

 

ARGENTINA

 

Country Overview

Argentina’s economic health will continue to be closely watched as the country heads into an election year. Despite forecasts for substantial economic growth this year, new challenges are on the horizon. Not least among them are sustaining long-term growth and turning speculative investment into productive long-term investment.

 

Factors affecting the Argentinean economy positively

 

Ü     Consumption by the private sector continues to drive economic growth, contributing 5.1 percentage points to economic expansion in the last year.

 

Ü     Consumption by the private sector continues to drive economic growth, contributing 5.1 percentage points to economic expansion in the last year.

 

Ü     Record surplus in trade balance; investment has currently reached 23% of the GDP, more than twice the 2002 share of 11%.

 

Ü     Construction activity index is at a level of 136% indicating a boom in a range of sectors.

 

Factors affecting the Argentinean economy negatively

 

Ü     It has to be pointed out that in 2007, a new President will be elected. The increase in public spending that is generally associated with election years could put more pressure on prices.

 

Ü     Strong aggregate demand growth that reduces the output gap, pending relative price adjustments after devaluation (wages and non tradable sectors, which includes public services tariffs) and the influence of high international prices in some tradable sectors (imported inflation) have all lead to a slight increase in inflation.

 

Key Features

 

Ü     Domestic investment continues to increase, driven by higher profits in most areas of economic activity. This trend is in part a consequence of a favorable international context, but is also due to the strong recovery by the domestic economy over the last four years.

 

Ü     The Government still needs to undertake long-delayed reforms to encourage the level of investment, the determinant factor to satisfy growing demand and maintain sustainable growth of the economy.

 

 

 

JAPAN

 

Can Womenization help Japan?

 

Increased female participation implies a new stream of  income and consumption growth which we estimate could lift trend GDP growth by 0.3 pp to 1.5% from 1.2% and boost per-capita income by 5.8% over the next 20 years. Higher disposable income growth among females could lead to greater consumption of certain services and goods, as well as more investments in real estate and financial products.

 

 

The result of this simulation is that this would add as many as 2.6 mn females to Japan’s workforce population, which would, in turn, lift Japan’s long-term trend GDP growth rate from our base case scenario of 1.2% to 1.5%

 

If, in addition to increased female participation, Japan also raises the retirement age for men, this would lift GDP growth even further to 1.6%.

 

 

 

 

 

Exports driving the growth in Economy, contributed to 0.4 growth in 1^st quarter of 2007.

 

Japanese Economy is expected to rise from 1.9 – 2.1 % on grounds of stable domestic consumption which is expected to rise by 2.2 %.

 

 

Japan can make better use of its most underutilized resource: its women.

if Japanese female participation rates rose to levels currently seen in the US, this would add 2.6 mn people to the workforce, raising Japan’s trend GDP growth rate from 1.2% to 1.5% over the next two decades.

 

 

The economic implications of Womenomics are very significant. Increased female participation could lift Japan’s trend GDP growth to 1.5% from 1.2% over the next

20 years.

 

 

 

  

 

EUROPE

 

Capital investment, private consumption and exports made favorable progress all together, on the basis of which domestic and external demand made well-balanced contributions to the high growth. It is expected that the EU economy will temporality slow down in 2007, partly because exports will become sluggish due to Euro appreciation and to the US economic downturn, and consumer expenditures will be limited in the wake of the added-value tax hike in Germany. However, the EU economy will be underpinned by favorable corporate activities, strong demand within the EU area,

expansion of exports to oil producing countries and emerging countries, and other factors, and so it will not slide into any large drop. It is foreseen that the EU economy will rebound after the middle of 2007, when the reactionary decline in private consumption in Germany will weaken, and will achieve strong growth of about 2.5 percent, slightly exceeding its potential growth rate.

 

 

PaIn – Only in One’s Mind !!!

DURING my days of parivrajaka, wandering as a sanyasi, I was traveling in Amarkand in Madhya Pradesh, doing a parikrama, circumambulation of the sacred river Narmada.
   For a while I lived with the tribal people in that area. They were very simple, honest and sweet people, extremely hospitable. One day in front of the hut I was staying in, across their temple, they erected a new hut. When I enquired they said that this was for a festival.
   Later that day, a pregnant woman walked into that hut. Ten minutes later, she walked out smiling, a baby in her arms. No one went in with her. There was not a squeal when she was in that hut. Soon after, they dismantled the hut.
   I asked a village elder about the festival that was to take place. He simply said that the birth of that child was the festival. Next week the same exercise was repeated. Another hut, another pregnant lady, another child and another festival!
   This time I could not contain my curiosity. I asked the elder: “I am amazed at the simplicity with which the ladies deliver their babies; no doctors, no midwife even and no pain. How is this possible?” In my experience I had never seen something like this. Mothers have so many examinations, check in to hospitals, and scream in pain at delivery; but here it is so different.
   The old man said: “Pain, what pain? Why should there be pain while delivering a child? Yes, there is pain if an animal attacks and hurts you or you break an arm or leg; but, at child birth, why?“
   In their language there was no word for pain. They had no concept of pain during child birth. They asked: “Animals deliver their offsprings naturally and do not cry, why should humans?” I had no answer. I could not comprehend what I was seeing.
   It was only after meditating upon these incidents I understood that pain is a result of our verbalisation. These words such as pain, hurt, and suffering create the feeling of pain in us.
   Our mind drives our body. Our mind creates thoughts and concepts and embeds them as verbalised and visualised realities within us.
   Pain has no reality outside of our mind. The neuro sensors that evoke the pain response cannot create the pain unless our mind accepts the fact that there can be pain. Pain is a matter of conditioning; and you can decondition your mind away from pain.

Article From : Economic Times( Cosmic Link )