Interview of the Week: Surjit Mohapatra, Sr. Economist

 

It gives us immense pleasure in announcing another new feature on Businessviewsreviews.

In an exclusive interview with Businessviewsreviews, Surjit Mohapatra, Sr. Economist, discusses about the causes that led to the downgrading of the US credit rating by rating agency S&P, and its possible consequences. 

What triggered the US debt rating downgrade by S&P?

USA is the largest economy in the world with $14.56 trillion in 2010. The US Gross National Debt reached $14.58 trillion by August 2011. This is 100% of its GDP of 2010. The gross national debt has increased from 57% of GDP in 2000 to 100% of GDP in 2011 and does not seem to be decreasing in near future.

 

USA economy is still under recovery stage from the last economic slowdown. To improve the situation USA economy needs more government expenditure which will raise its total debt. USA is having a system of debt ceiling which was set after World War I to limit the government expenditure. Though the ceiling has increased several times, USA parliament increased the debt ceiling by $ 2.1 trillion on August 1, 2011 to raise it to $ 16.4 trillion approximately to avoid sovereign debt default. The parliament has cut the federal deficit by as much as $2.5 trillion over a decade. 

How will it impact the US Economy?

S&P, which has given the USA a top AAA ranking since 1941 has cut its grade to AA+ in 2011 after USA government striking the deal. The USA government may have to pay higher interest rate for its treasury bonds or public debt which will aggravate the debt situation. Mortgage rate will rise following higher Treasury bond rate which will impact real estate market. 

Do you think that the US will resort to third quantitative easing measures to combat the ongoing fiscal deficit crisis which has let it to lose its pristine triple-A rating?

 

With immediate effect, reduction in USA expenditure may further slowdown the USA economy. However, for fiscal 2012, there will be only $21 billion cut from expected spending of up to $3.7 trillion which is very small amount in a $15 trillion economy. Even the $2.5 trillion deficit cut in one decade is negligible for the US economy. In the next 10 years, if USA government does not raise revenue and reduce expenditure, the total debt may increase to 150 % of GDP which will be a big problem for the economy. The debt is accelerating in the present situation while the economy is moving slow. 

What impact do you foresee the unfolding US crisis on the rest of the global economy?

 

Looking at the exposure to USA Treasury bond, China holds largest USA bond worth $ 1.2 trillion followed by Japan with $ 0.9 trillion. In case of debt default by USA, these countries will have higher impact. Cutting of bond rating from AAA to AA+ will increase interest rate which will reduce the price of old bond. That will impact negatively on interest income of the above countries. On the other hand, government expenditure cut will directly impact on exporting countries. China is the largest exporter for USA, any cut in public expenditure will directly impact its GDP growth. This does affect Indian economy as well. However, the impact may not be so deep.  If the crisis persists, there may be problem in world currency market. However, with the debt crisis in European countries, USA Treasury bond is still an attractive option for investment.  

What are the options before the US Government to tide over the present crisis?

Being the largest economy and dollar being the major world reserve currency, USA is left with very few options in dealing with this situation. It will difficult to reduce its import significantly at the same time it has to maintain its dollar supremacy. The main option with USA right now is to reduce its expenditure and increase tax revenue. USA government can increase revenue in the future if it opts to allow tax cuts (enacted under George W. Bush) to expire as scheduled in 2013. 

What lessons it offers for India? 

India’s $229 billion external debt (22% of GDP), recorded at the end of March 2009, increased to US $297.5 billion by the end of December 2010, and went further up to US $305.9 billion (17.3 % of GDP) at end of March 2011, which is a sharp increase of 2.8% in three months. Total debt by March 2011 is approximately US $905.9, which is a sharp increase of 20.6% over the same period of 2010 (US $751.1). The gross public debt to GDP ratio is about 66.2% in 2011 which is highest in Asia region.

 

Looking at the debt structure, internal debt is higher in India than external debt and most part of the internal debt is held by banks. Hence India government does not have much problem in this area. However, taking higher risk in public debt may attract downgrading of its bonds by rating agencies. Being a developing country, where economy is growing at 8%+ per annum, India should not take the risk which will have significant impact on its economic growth.

Apple dethrones Nokia, becomes No.1 Smartphone Maker

Even as Apple gets crowned as the new global no.1 Smartphone maker it leaves many wondering as to how the once-mighty Nokia capitulated so meekly, and also so early!

Didn’t Nokia see the Apple hurricane coming its way? Was the Finnish mobile phone giant too occupied with its internal troubles that it got blindsided by the coming external shock (read: Apple iPhone)? Or, did it simply overlook the writings on the wall?

Indeed, Nokia’s shockingly spectacular slide has left many questions than answers in the minds of millions or perhaps billions of mobile phone users and analysts alike across the globe.

According to the latest data from the International Data Corporation (IDC), Apple shipped 20.3 million handsets compared to 16.7 million handsets sold by Nokia, during the second quarter ending June 30, 2011. In fact, not only Apple dislodged Nokia from the no.1 ranking, but even the South Korean electronics major Samsung too made the merry by shipping more handsets than Nokia during the said quarter, thereby further rubbing salt on the Finnish major’s wound. Samsung, riding high on the huge success of its flagship Galaxy S Smartphones, shipped 17.3 million handsets, during the June quarter. “The smartphone market crowned a new leader in 2Q11, and its name is Apple,” said Ramon Llamas, senior research analyst with IDC's Mobile Phone Technology and Trends team. He added, “Ever since the first iPhone launched in 2007, Apple has made market-setting strides in hardware, software, and channel development to grab mindshare and market share.” He further quipped, “Demand has been so strong that even models that have been out for one or two years are still being sought out. With an expected refresh later this year, volumes are set to reach higher levels.”

It was inevitable though. Ever since Apple hit the market with the revolutionary iPhone, which can easily be termed as the most innovative Smartphone the world has seen, it has just raised the bar so high that rivals have struggled to scale it till date. Surprisingly, on its part, instead of cranking up its own innovation machine, Nokia chose to rest on its past laurels and relied on its hunch of challenging rivals in the low-cost yet fast growing emerging markets such as India and China.

Awfully, and perhaps expectedly too, Nokia’s strategy seems to have doomed, at least for now. In the last few of years since iPhone debuted in 2007 while the Finnish phone maker continued to wrestle with its own internal troubles, in the Smartphone segment, top foes Apple and Samsung were attacking its turf in the US and Europe, it has been ceding ground to nimble-footed rivals like Micromax and Gfive in low-end handset segment in its traditionally strongholds like India and China.

While the iconic iPhone has driven fans crazy, the credit for soaring sales also goes to meticulous distribution strategy by Apple as it allowed the maverick Steve Jobs-led firm to lock in subscribers for long term. According to IDC, “Apple’s success can be directly attributed to its distribution (more than 200 carriers in more than 200 countries), increased manufacturing capacity, and solid demand within emerging and developed markets from both consumers and business users.”  

It’s not over, yet

However, the battle for the supremacy of the global handset market is far from being over. Given the strong demand for Smartphones worldwide, driven by rising disposable incomes and changing lifestyles fueled by new, much more powerful Smartphones, which double up as an entertainment and gaming device. Nokia still stands a chance to bounce back, provided it comes up with an equally compelling Smartphone model as iPhone or Samsung Galaxy or at least something near to that. “The Smartphone market leadership change signifies the parity that comes with a fast-growing market such as Smartphones,” said Kevin Restivo, senior research analyst with IDC’s Worldwide Mobile Phone Tracker. He added, “There is no runaway leader in the market, which means there could easily be further Top 5 vendor changes to come.”

While no one is writing off Nokia for now, it’s surely celebration time at Apple and for iPhone fans.

Apple: The New Smartphone King

Top Five Worldwide Smartphone Vendors, Shipment Volumes, Market Share, and Year-Over-Year Growth, 2Q11 (shipments in millions) 

Vendor	2Q11 Shipments	2Q11 Market Share	2Q10 Shipments	2Q10 Market Share	2Q11/2Q10 Change
Apple	20.3	19.1%	8.4	13.0%	141.7%
Samsung	17.3	16.2%	3.6	5.6%	380.6%
Nokia	16.7	15.7%	24.0	37.3%	-30.4%
Research In Motion	12.4	11.6%	11.2	17.4%	10.7%
HTC	11.7	11.0%	4.4	6.8%	165.9%
Others	28.1	26.4%	12.8	19.9%	119.5%
Total	106.5	100.0%	64.4	100.0%	65.4%

Note: Vendor shipments are branded shipments and exclude OEM sales for all vendors

(Source: IDC Worldwide Mobile Phone Tracker, August 4, 2011)

Image Source: Apple, Inc

Amit

Chief Editor

www.addonviews.com; www.businessviewsreviews.blogspot.com

LG Optimus Black: Life’s Good, Finally!

After having failed to cause any ripples in rivals’ camps so far, LG finally hits the right chord with its Optimus Black smartphone model. Yet the crown is still far, far away.

“Try harder because you’re not the no.1,” this old maxim seems to be the new driving force at South Korean Chaebol, LG, which despite making several attempts has so far struggled hard to find its place in the fast growing global Smartphone market. But LG now stands a good chance to pose some serious challenge to rivals with the sleek and refurbished Optimus Black Smartphone model.

The new LG Optimus Black is undoubtedly LG’s best effort so far in presenting any significant threat to incumbent Apple and compatriot Samsung; does any one care about Nokia at least for as the erstwhile market leader is wrestling with its own internal troubles. The Optimus Black is packed with loads of new features, which makes it irresistible and wins hands down on both external and internal features fronts.

The phone is shielded in black clamshell with edgy curvature as less as 6mm and has a thickness of just 9.2 mm, incidentally beating Apple’s iPhone by a millimeter and weighs just 109 gms.

Coming to the display, the LG Optimus Black features a 4 Inch capacitive NOVA display screen, better than the AMOLED, which is featured in most of the smartphones. The advantage of this screen is that it is less battery hungry than AMOLED, and also scores high on performance, either indoors or outdoors, the pictures are razor sharp bright and clear, even when exposed to direct sunlight, thanks again to its innovative and superior quality screen.

Our focus now shifts to its heart: the mighty 1GHz processor which runs Android 2.2 Froyo operating system, which by now, almost all the android fans would be familiar with, though upgrading to Gingerbread might have been a best option. The phone also features PowerVR SGX 530 graphics, for pumping the adrenaline of gaming lovers. It also supports OpenGL 2.0 and Microsoft Shader Model 3, which makes 2D and 3D gaming ready device. On top of it is the phone’s mighty battery of 1500 mAh that clocks 375 hours of standby time and up to 6 hours of talk time.

It seems for sure, with Optimus Black LG is not only gets 100% battle-ready but will also give tough time to Samsung, which comes with only 1200 mAh for its smartphones.

Finally, with its impressive looks, the LG Optimus Black comes with dual cameras: 2MP front-facing camera plus a 5MP auto-focus-tons-of-toggling-fun camera with LED flash on the back.

So guys wish you a happy smartphoning; a new jargon you might say!

LG Optimus Black P970 Specs:

Operating System: Android 2.2 Froyo, Upgradable to 2.3 Gingerbread

Processor: 1GHz Single Core Cortex-A8 processor.

RAM: 512MB

Graphics Card: PowerVR SGX 530 graphics

Memory Option: Internal Memory is 2Gb and microSD up to 32GB

Display Option: 4.0inch 480×800 pixels NOVA feathers multi touch (touchscreen)

Connectivity: GSM/GPRS/EDGE/HSDPA,Wi-Fi802.11b/g/n, Bluetooth 2.1, A-GPS,Micro USB, Audio

Output: 3.5mm headphones

Camera: 5 megapixel with LED Flash, Auto-Focus, Geo-tagging, Multi-shot, Smile Detector, Video recording

Video playback: MPEG4, H263, H.264, DivX, XVid, WMV

Radio: Stereo Radio FM with RDS option.

Battery Life: Li-ion 1500 mAh [375 hours of standy time and Up to 6 hours talk time]

Size: 122x64x9.2mm

Weight: 111g

Additional Features include: Call Recording Option, Java MIDP Emulator, Unlimited phonebook Entry, Digital compass.

(Images: LG) 

For priceS and features of the phone, log on to www.lg.com

Until, then its Ramana Pemmaraju, Signing Off!

Ramana Pemmaraju, is contributing author at Addonviews.com and businessviewsreviews.blogspot.com. He covers the latest from Technology and WorldWideWeb space.

Google+ Games: Raising the Heat for Facebook

Google seems more determined than ever now to pose a potent challenge to supremacy of Facebook in the social network space. The move to add search engine giant adds games to Google+, its new social network, is a further affirmation.

If ever Google needed a tagline nothing could be as better as – Google Never Sleeps (or shall we say, Google Never Slips!). It definitely looks like that the search engine giant is greatly inspired by the famous byline of a large US bank as ever since it came into existence it has continued to mesmerize surfers with one innovative product after another at regular intervals. The doggedness with which it has pursued its foray into online social network space despite past failures including the latest disaster Buzz, yet the Mountain view, California-based company has continued to push through its social network initiative.

And by adding games to Google+, the search major is taking the game one more step closer to the social network leader Facebook with a massive userbase of over 750 million users; games are among the most popular features on the world’s top social network. “With the Google+ project, we want to bring the nuance and richness of real-life sharing to the web. But sharing is about more than just conversations. The experiences we have together are just as important to our relationships. We want to make playing games online just as fun, and just as meaningful, as playing in real life,” the company says on its official blog. Some of the games available currently on Google+ include Diamond Dash, City of Wonder, Bubble Island and of course, the hugely popular Angry Birds. A member of Google+ has greater control over with whom to play and how to play. Another feature is that, the games will not appear if a user does not want them at any time. The Internet giant has begun rolling out the games in a gradual manner and they will be available to all the members soon.

By July 14^th, Google+ had already signed up 10 million users within less than a month of its launch in late June 10^th. And if estimates by Paul Allen of Ancestry.com are to be believed, Google+ had garnered an eye-popping number of eight million users in the very next week i.e., by July 20^th. Now according to an estimate by The Christian Post, if the average daily addition of 763,000 new users as noticed last month to be considered, it would take just 4-5 months for Google+ to reach the 100-million user mark.

While numbers surely matter, for Google and Google+ more than the numbers it is much more than the users’ affirmation that would come as a moral victory and push it further to launch that final assault to grab the social network crown. But for now, that seems a long way away.  

(Images source: Google; gamesreviews2010)

Amit
Chief Editor
www.addonviews.com; www.businessviewsreviews.blogspot.com

SBI’s Q1FY12 Consolidated PAT falls 25%

State Bank of India’s consolidated net profit registered a decline of over 25% y-o-y during Q1FY12, hit by higher provisions.

       

State Bank of India, the country’s largest commercial bank in terms of profits and assets, continues to be plagued by rising provisions as it posted a decline of 25.3% in its consolidated net profit to Rs. 2,512.47 crore during first quarter ended June 30, 2011, compared to Rs. 3,365.26 crore in the corresponding quarter of the previous financial year. Higher provisioning had nearly wiped out the banking behemoth’s net profit in the preceding quarter ending March 31, 2011 when a sharp erosion of 99% led the bank post its lowest net profit in the last 12 years at Rs. 20.88 crore, from Rs 1,866 crore in Jan-March quarter of FY 2010.

The bank’s total provisions grew at a hefty 168% to Rs. 4,157 crore, during the April-June quarter of FY 2011-12. The provisions for NPAs (Non-Performing Assets) formed a large chunk of the overall provisions at Rs. 2,782 crore, jumping sharply from Rs. 1,733 crore in the same quarter last year. The sharp rise in provision was led by new provisioning norms issued by the RBI in April’11 which require banks to raise provisioning norms to 15% from 10% earlier on all sub-standard assets (an asset is classified as sub-standard where the repayment is due for more than 60 days), besides the apex bank also hiked the standard asset provisioning requirement on teaser loans by 5 times to 2%; SBI, which withdrew its teaser loan schemes on housing and auto loans some time back still had an exposure of nearly Rs. 25,000 crore at the April-end. The bank’s NPAs stood at 1.61% in the June quarter, against 1.63% in the preceding March quarter of the previous fiscal year, while its Capital Adequacy Ratio (CAR) stood at 11.6%. 

The PSB behemoth’s consolidated total income grew by 19.25% to Rs. 39,126 crore from Rs. 32,808 crore, during the said period. Also, its consolidated Net Interest Income (NII) surged about 33% to Rs 9,699 crore.

The consolidated result of India’s largest lender also includes results of its five associate banks viz. State Bank of Mysore, State Bank of Patiala, State Bank of Hyderabad, State Bank of Bikaner and Jaipur (SBBJ) and State Bank of Travancore (SBT), besides other subsidiaries.

On a standalone basis, the bank posted a decline of 45.7% in its net profit to Rs. 1583.6 crore in the April-June 2011 quarter, against Rs. 2914.2 crore in the same quarter a year ago. Its total income, however, grew by 25.24% to Rs. 27,731.67 crore from Rs. 22,142 crore, during the period under review.

The bank’s shares, which closed at Rs. 2,197 on August 12, are hovering near their 52-week low of Rs. 2,120 touched on June 20 this year.

Amit
Chief Editor
www.addonviews.com, www.businessviewsreviews.blogspot.com

Beware Couples: Demographic Time-bomb is ticking

Amidst the falling fertility rates, mitigating the negative effects of demographic changes is one of the major concerns that nations are facing. In fact, there is little that they can do to reverse or even slow the ageing population over the coming decades.

The structural changes that took place over the last 50 years combined with remarkable advances in health care and family-planning technology have led to lower fertility in most populated countries. In fact, as economies grow richer, falling birth rates are common phenomena. Accordingly, many European nations are experiencing below the level needed to keep population a stable. Amidst 30-year-old one-child policy, the world’s most populated country (a fifth of the world’s population lives in China) which is near its peak is also ticking demographic time bomb with armies of young rural workers congregating to its factories.

Japan, Asia’s forerunner of ageing and sinking population where almost a quarter of people is over 65 while children make up just 13%. Against these troublesome figures, National Institute of Population and Social Security Research warns that Japan’s population of 127 million will by 2055 shrivel to 90 million, its level when it kicked off its post-war boom in 1955. Even Russia is facing broader demographic challenges as Russian statistics paint a horrifying picture on this subject against the present population of 140 million. Similarly, most Asian countries are experiencing falling birth rates. China now has 1.6 births per woman, Singapore has 1.2 and South Korea has slightly less than 1.1. Taiwan has just 1.03 births per woman. On the other hand, the adverse affects of demographic imbalance in the Middle East are also worrisome.

Unintended Consequences

The ever changing demographic trends causing growing social welfare burden, especially the economies which are facing a debt-to-GDP ratio nearing 200% the rich world’s highest. Experts warn that exclusive of structural changes in old-age related government spending, a rapidly greying society will lift expenditures. This, in turn, frightens to weaken the sovereign ratings on Japan in the long term.

To counter the upcoming societal doom, experts suggest that nations need to allow more immigration. However, governments from Singapore to Tokyo have been reluctant to do so. Singapore’s government moved a step ahead and put on match-making events for university graduates on the basis that best and brightest could be cajoled into producing a generation of brainy offspring, but hardly ever with great success. With the model in social engineering has failed to bring a baby boom in many nations, bureaucrats across the Asia have sought to squeeze policies and tax codes to get more couples in the mood. However, experts say the crux of the problem have been gender attitudes steeped in Confucian traditions -with men still expecting their wives to handle the childcare and household chores that may not top a modern woman’s wish list.

Outlook

Prima facie, there is no solution for the demographic bomb at least in near future as women make difficult choices between careers and motherhood. Although most people are aware of the threat that silent playgrounds and empty classrooms bother for their greying societies, but they remain improbable to rush to their bedrooms to help avoid societal doom. Are policy makers are watching ticking demographic bomb?

Jany, Chief Economist.

Tags: Demographic Time-bomb: Societal Doom, Aging Population

Now Compose through gestures in Gmail Motion!

If you are a computer junkie, then you might be worried about the extra kilos that you have managed to get over the years by sitting hours before your PC.

Thanks to Google, now you can communicate with Gmail through your body gestures, without ever using a mouse or keyboard!

Gmail Motion Beta uses its new spatial tracking technology to detect movements and then capture using webcam and then translate into characters and commands.

"No longer will people be required bend to the will of technology. Instead, technology will now bend to our will." said Lorraine Klayman, Environmental Movement Specialist, Nevada Polytechnic College.

 So before you start using this new exercise-cum-communication device, just make sure you are familiar with these gestures below:

One more product from the most innovative company…..Making Effort Effortlessly!

That’s Google!

For more news and updates, keep coming to  http://businessviewsreviews.blogspot.com/

Venky, Signing Off!

For more information, log on to: http://mail.google.com/mail/help/motion.html

New Apple iPhone 5 Phots & Specs: Coming soon in October 2011

Even as Samsung, LG, HTC and other players make their entry into the touch-screen smartphones world, pioneered by Apple's iPhone, the latter has been facing stiff competition from new entrants like Google's Android which is new pumping millions of dollars with the handset makers to popularize its Android Operating System. Still the ubiquitous iPhone is the darling for millions of Americans. Now Apple is planning for a heavy upgrade right from its hardware processor to giving aesthetic looks for its new iPhone 5, which is slated for October 2011 Release.

Catch the leaked images of the new iPhone and specifications below.

Specifications: [Subject to Change]

Processor: Dual Core A5 chip processor

Look: New Sleek body and design with shiny glass back piece

Size: 9.3 mm thick

Security Addon: Face Recognition

Compatibility: 4G  Face Time (Video Chat) access on 3G AND 4G

Screen Type: OLED screen with Scratch proof and shatter proof

Wireless sync with iTunes

Memory: 32G and 64G of memory

Extended battery life = 14 hours talk time on 3G and 7 hours on 4G. Standby 600 hours.

Output:  HD Audio/ Video

Image Gallery: [Thanks to Gizmodo for Images]

Venky, Signing Off!

Robots to mimic iRobot in Real life!

What seems to be a major initiative to standardize all future generation robotics, scientists are vying for a common platform where all the robots can exchange, store and discover the world in their language.

No, it isn’t a Sci-Fi movie script, According to BBC, European Scientists are currently developing a project codenamed – RoboEarth, the bible for robots. Wherein robots can upload information from a common source and share how they executed a particular task, enabling new robots to master these sequences via RoboEarth.

“The idea behind RoboEarth is to develop methods that help robots encode, exchange and re-use knowledge”, quoted Markus Waibel from the Swiss Federal Institute of Technology in Zurich in BBC. He further added, “Most current robots see the world their own way and there's very little standardisation going on.”

Further, maintaining a common bible via RoboEarth for all the robots, will mean quicker upgradation and implementation of tasks along with availability of information in the form of maps, descriptions of objects and instructions as to how to execute certain tasks.

“Wikipedia is something that humans use to share knowledge, that everyone can edit, contribute knowledge to and access. Something like that does not exist for robots, stated Waibel and added, “It would be great if a robot could enter a location that it had never visited before, consult RoboEarth to learn about that place and the objects and tasks in it and then quickly get to work.”

This project is currently handled by around 35 researchers and is funded by The European Union, which believes that more and more service and domestic robots are going to be placed in homes, a la iRobot style.

Let’s see how it works!

For more refreshing news and insights, keep watching this space.

Until then, its Venky …..Shutting down…Robot style..|