Wednesday, August 3, 2011

Robots don’t complain or die : Schumpeter

Business and management

Schumpeter

Foxconn

Robots don’t complain or die

Aug 2nd 2011, 16:19 by T.E. | HONG KONG

OTHER than the People’s Liberation Army, Foxconn may well be China’s largest individual employer, and certainly its most important. The secretive electronics manufacturer, whose prestigious clients include Apple, has a workforce of more than 1m, including over 500,000 in one vast factory in Shenzhen.

Over the past decade Foxconn’s success has epitomised China’s ability to take elegant designs from high-wage countries and turn them out cheaply in huge quantities. Initially applauded for its ability to create vast numbers of jobs, the company’s success has recently come to be seen in a harsher light. Last year there was a spate of employees at the Shenzhen plant committing suicide; in the latest such case, a 21-year-old worker threw himself off a building in late July. In May an explosion at a new factory in Chengdu killed three more employees and, it is believed, caused delays in production of Apple’s iPads.

To pacify its increasingly restive workers, Foxconn has repeatedly bumped up their wages, improved facilities, provided counselling and swathed its factories with nets to catch anyone leaping from a window. All this has resulted in higher costs, and signs that the company’s hitherto hugely successful business model has run its course. At a closed retreat in late July, Terry Gou, the chief executive of the company (which is also known as Hon Hai) unveiled a plan to replace a huge amount of human labour with robots by 2013.

In its public statement on the move, Foxconn talked about moving the more than 1m workers “higher up the value chain beyond basic manufacturing work” and of its “desire to move workers from more routine tasks to more value-added positions in manufacturing such as research and development, innovation and other areas that are equally important to the success of our operations.” But automation on the scale it is talking about would surely mean some of those human workers losing their jobs.

To a large extent, China’s recent economic development has been about reversing the rich-world trend towards automation—that is, using labour to replace capital in the manufacturing chain. Wages are now rising rapidly as a result of the demand for skilled labour (and because of big increases in the legal minimum wage), so one would expect this to make firms adjust their mix of labour and capital.

Many other, smaller, Chinese manufacturers have begun making similar moves, swapping increasingly costly labour with a bit more capital equipment. Foxconn is proposing to do it all (pardon the inevitable pun) in one great leap forward. But it may find this quite a challenge: its expertise has been in quietly running well-regimented armies of people making goods for highly visible companies. It is not known to have any particular skills in creating highly automated production lines; and moving in this direction will put it in direct competition with companies that do.

Still, it may have been an easy decision for Mr Gou. His highly image-conscious customers are bound to have been worried by the spate of horror stories about workers at Foxconn. If he did not change his production methods, the customers might feel obliged to look for another supplier.

Manufacturing experts and economists have been debating for some while now whether China’s rising labour costs and skill shortages might spell an end to the cheap “China price”, leading global consumer-goods companies to shift elsewhere in Asia for their low-cost production—or even bring it back to their home countries. Certainly, some of the West’s strongest (and most highly automated) manufacturers, including Germany's Mittelstand firms, have proved surprisingly resilient to the pressure from cheap Chinese labour.

Others are sceptical: they say that Chinese firms are proving so adept at producing in ever greater quantities with fewer hands that they are set to remain fearsome competitors. Either way, the Chinese authorities will presumably be monitoring all of this very closely, and worrying about the prospect of the country’s industrial progress leading, as it did in the West, to large numbers of relatively well educated and articulate factory workers being thrown on to the streets.

Source

http://www.economist.com/blogs/schumpeter/2011/08/foxconn?fsrc=scn/tw/te/bl/robotsdontcomplainordie

Tuesday, August 2, 2011

China Rating Agency Downgrades US Debt

Published: Tuesday, 2 Aug 2011 | 10:28 PM ET

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By: Deepanshu Bagchee
Supervising Digital Editor, CNBC Asia

China's Dagong Global Credit Rating has cut its credit rating on U.S. sovereign debt to A from A+, Chen Jialin, general manager of the international department at the firm confirmed to CNBC on Wednesday.

The agency has also put the U.S. on negative outlook, China's main news agency Xinhua reported earlier. The decision came despite the U.S. raising the debt ceiling and averting a default, and even as both Fitch and Moody's re-affirmed the U.S.'s Triple-A rating.

According to Xinhua, Dagong's decision was based on "the fact that the U.S. national debt growth had outpaced economic growth and fiscal revenue, hurting the country's debt-paying ability."

China's central bank, on the other hand, welcomed the U.S. debt deal on Wednesday though official media have issued several scathing commentaries in recent days accusing the U.S. of not doing enough to cut its debt. China is the largest holder of U.S. Treasurys and has foreign exchange reserves of $3.2 trillion.

Dagong's ratings cut though is unlikely to have any major implications in the bond market, given that most investors rely on ratings from the big three firms - Moody's, Standard & Poor's and Fitch.

Franklin Templeton, one of the world's biggest fixed income managers, also said Dagong's ratings lacked transparency.

"The challenge with that rating agency out of China is that there's not a lot of transparency and so it's a little difficult to take too much out of that," Michael Hasenstab, senior vice president and portfolio manager of the international bond department at the firm told CNBC on Wednesday.

Hasenstab, however, said Dagong's action raised an important issue that politicians had been unable to deal decisively with the debt issue and the bruising political fight had hurt confidence in the U.S.

"(The) process, I think, has unnerved the markets and unnerved the world," he said.

CDC: Most U.S. Hospitals Don’t Support Breastfeeding

Published August 02, 2011

| FoxNews.com

Studies have long shown the benefits of breastfeeding, but a new study from the Centers for Disease Control and Prevention shows that less than four percent of U.S. hospitals provide the full support that new mothers need to be able to successfully breastfeed.

The report, published in the current issue of the CDC’s Vital Signs, examined data from the National Survey of Maternity Practices in Infant Nutrition and Care, and found that only 14 percent of hospitals actually have a written model of a breastfeeding policy. The report also found that in nearly 80 percent of hospitals, healthy breastfeeding infants were given formula even when there was no medical reason. Experts say this can make it very difficult to learn how to breastfeed and continue at home.

“Hospitals play a vital role in supporting a mother to be able to breastfeed,” said CDC Director Thomas R. Frieden in a press release. “Those first few hours and days that a mom and her baby spend learning to breastfeed are critical. Hospitals need to better support breastfeeding, as this is one of the most important things a mother can do for her newborn. Breastfeeding helps babies grow up healthy and reduces health care costs.”

U.S. mothers are also not getting the breastfeeding support they need after leaving the hospital, according to the study. Almost 75 percent of hospitals don’t schedule a follow-up visit with moms, a phone call, or referrals to lactation consultants.

The CDC survey proves that most U.S. hospitals are not in compliance with the WHO/UNICEF Ten Steps to Successful Breastfeeding, including:

-Not giving healthy, breastfeeding infants food or drink other than breast milk unless there is a medical need for it;

-Encouraging mothers to room in, staying with their baby 24 hours a day;

-Connecting mothers with support groups and other resources to help with breastfeeding after they leave the hospital.

“In the United States most women want to breastfeed, and most women start,” said Ursula Bauer, director of CDC's National Center for Chronic Disease Prevention and Health Promotion. “But without hospital support many women have a hard time continuing to breastfeed, and they stop early. It is critical that hospitals take action to fully support breastfeeding mothers and babies so they can continue to breastfeed long after their hospital stay.”

This study coincides with World Breastfeeding Week, which takes place every year from August 1-7 in more than 170 countries worldwide.

Click here to read the full study.

Norway still facing Islamist threat: head of populist right

By Pierre-Henry Deshayes (AFP) – 44 minutes ago



Siv Jensen , leader of Fremskrittspartiet (Progress party) speaks during an interview with AFP (AFP, Odd Andersen)

OSLO — The deadly twin attacks carried out by a right-wing extremist should not overshadow the fact that Norway still faces a serious Islamist threat, the head of the populist right Progress Party told AFP Tuesday.

"All the debates that we had prior to July 22 will come back. All the challenges that Norway was facing and the challenges that the world was facing are still there. Al-Qaeda is still there," insisted Siv Jensen in an interview at her office in parliament.

"The new thing is that we have been in a horrible way reminded of the fact that terrorism can come in many different forms, with different rhetoric behind it, with different crazy ideas behind it," she said.

In the five years since she took over as head of the anti-immigration party, Jensen has repeatedly cautioned against the "rampant Islamisation" of Norway, and Tuesday she stressed it was important to remain "aware of the threats that we had before July 22, because they are still there."

Jensen, 42, has however been careful to distance herself from the July 22 self-confessed killer, Anders Behring Breivik, who described his murderous rampage as part of a "crusade" against Islam and multiculturalism.

Behring Breivik targeted the ruling Labour Party, which the 32-year-old blamed for its multicultural policies, first bombing government offices before going on an 80-minute shooting spree on the nearby island of Utoeya, where the party was holding a youth summer camp.

The attacks were the deadliest carried out on Norwegian soil since World War II, killing a total of 77 people, many of them teenagers.

"I resent everything that he stands for. I resent his actions and will not be associated with this guy. Really, I will not," Jensen declared, refusing however to say whether she would tone down her negative rhetoric about Islam.

In Nordic neighbour Denmark, Pia Kjaersgaard who heads the far-right Danish People Party (DPP) also on Tuesday said she would not temper her public comments following the killing spree in Norway.

"Under no circumstances do I intend as a politician to be afraid of what I say. I have feelings, I have views and I express them." she told the Politiken newspaper.

She equally rejected suggestions that Behring Breivik's actions can be linked to the anti-immigration policies advanced by some European political parties like the DPP.

"It must be made very clear that the only person responsible for this terrible massacre (in Norway) is the mass murderer, instead of all sorts of people beginning to feel guilt, start soul searching and I don?t know what," she said.

Jensen's Norwegian anti-immigration party has grown over the past decade to become Norway's second largest party and counted Behring Breivik as a member between 1999 and 2006.

"I was really, really sad, sadder than I already was, when I realised that he had for a certain period of time been a member of my party," she said, adding though that she had not managed to find anyone who could remember him.

"He didn't take part in any debate, he didn't make much of himself, he was very quiet and nobody remembers him," she said.

In a message posted on the www.document.no debate forum in 2009, Behring Breivik aired his own grievances with Jensen's Progress Party, which he said "thirsted to satisfy (society's) multicultural expectations and the suicidal ideals of humanism."

"We are facing a guy with a very strange mindset and the ability to do horrible things to society," Jensen said Tuesday.

She also distanced herself from Jean-Marie Le Pen, the former head of France's right-wing National Front party, who wrote last week that the Norwegian government's "naivety" was to blame for the mass killing.

She said she has "always resented everything that Monsieur Le Pen and his party have advocated."

Jensen, who usually never misses an opportunity to butt heads with Prime Minister Jens Stoltenberg, even had rare words of praise for the government chief.

"Prime minister Stoltenberg is someone that I fight verbally every day, but during this period of time, he's also been my prime minister," she said.

But while Stoltenberg has been widely hailed for his handling of the crisis and has seen his Labour Party soar in the polls, Jensen's Progress Party has seen support dwindle for some time.

Opinion "polls go up, they go down and they change," Jensen argued. "The important thing is not polls, the important thing is the election."

Source

http://bit.ly/p6nxg3

Historic Day ... Most exchanges in the red .. debt deal signed

Courtesy : Google Finance

Spending Negotiations And The Upcoming Intra-Party Wars

Megan McArdle, The Atlantic | Aug. 2, 2011, 9:41 AM | 0 |

"No doubt, we'll start to see more and more opposition from conservative defense hawks to slashing the military budget, while the Norquist crowd will continue to push Republicans to accept more defense cuts to avoid any increase in taxes.

This is likely to be the opening of significant debate among conservatives that will likely continue for decades to come, given the increasing pressure posed by entitlements."

I think this is right. But I also think it's true of the Democrats: They are going to face unprecedented conflicts between their constituencies in the decades to come. Fundamentally, we're bumping up against the willingness of the American public to pay more taxes, or accept spending cuts. Some constituencies are going to lose.

Republicans are going to have to decide whether they'd rather have lower taxes, or a stronger military. And Democrats are going to have to decide who they care about more: old people, or poor people.

I know, you want to say the answer is "both"! But those aren't in the solution set. If you want a stronger military, you need to pay for it. And if you want a state that keeps every old person in comfort, you're going to end up paying for it by gutting the parts of the welfare state that provide for people who don't vote much.

If you think that we're going to somehow engineer a world in which we have either a military and welfare system the size of Canada's, or a military the size of the WWII Soviet Union's, with an entitlement system the size of Somalia's, you are not taking into account an American public that likes soldiers, and Medicare.

Me, I'd like a single entitlement system that takes care of people who are actually destitute and unable to work, not this mad scheme whereby America's middle class is supposed to get rich by picking its own pockets. You, dear reader, probably have other ideas. But whatever your ideas, you cannot assume the voters away. They are going to get in the way of your quest for the ideal world. So parties are going to have to start thinking about which constituencies they want to sell out in order to preserve the important core.

This post originally appeared at The Atlantic.

From TheAtlantic - shaping the national debate on the most critical issues of our times, from politics, business, and the economy, to technology, arts, and culture.

Sharp Increase in Central Bank Gold Reserves

Sharp Increase in Central Bank Gold Reserves – South Korea Up 17-Fold & Thailand 15.5% in 2 Months

Aug. 2, 2011, 8:50 AM | 12 |

Gold is higher in all currencies today except for the Swiss franc and is trading at USD 1,629.20 , EUR 1,147.30 , GBP 1,000.20 and CHF 1,270.10 per ounce. Gold’s London AM fix was USD 1624.00, EUR 1145.28, GBP 997.30 (10:41 GMT).

Gold reached new record nominal highs in euros and Canadian dollars yesterday at EUR 1,149.60/oz and CAD 1,566.48/oz yesterday and remains close to these record highs today, and close to record highs in most fiat currencies.

Cross Currency Rates

European indices are lower after Asian indices fell (Nikkei -1.2%, Sensex -1.1%, Shanghai -0.72%, Hang Seng -1.07, STI -1.25% and the South Korea’s Kospi was the worst performer falling 2.35%).

The Italian MIB is down another 0.9% and jitters abound about Italian banks and banking sector.

Gold in Euros – 30-Day (Tick)

Spanish and particularly Italian bonds are under pressure today with the Spanish 10-year rising to 6.37% and the Italian 10-year rising to 6.21%. Spain and Italy’s debt markets are beginning to look like Portugal and Ireland’s prior to their bond yields surged to over 10%.

Gold in GBP– 30-Day (Tick)

Further confirmation in the continuing stealth accumulation of bullion by central banks came overnight with confirmation that South Korea's central bank bought 25 tonnes of gold over the past two months. The gold is worth $1.24 billion and resulted in a 17-fold increase in their gold reserves.

Thailand’s gold reserves rose by 15.5% in the two months and rose to about 4.07 million ounces in June, from about 3.523 million ounces in May, according to figures on the Bank of Thailand’s website accessed by Bloomberg this morning.

South Korea is the world’s seventh-biggest foreign-exchange reserve holder and 64% of its reserves are in U.S. dollars. The bank said that it also holds euros and other assets and the move was about achieving diversification.

The BOK’s reserves, stored in London in the vaults of the Bank of England, increased 25 tonnes to 39.4 tonnes (from 14.4 tonnes) but remain meager when compared to the size of their foreign exchange reserves.

BOK's gold holdings, at today’s market prices, account for 0.7% of its reserves, up from 0.2% prior to the purchase.

The BOK reserves were at a record high of $311.03 billion at the end of July which puts this $1.25 billion gold purchase in perspective.

Their gold reserves and those of other Asian central banks, particularly the People’s Bank of China, remain meager when compared to those of western central banks and the U.S.

Earlier this year, Thailand, whose gold holdings account for only 2.9 percent of reserves, bought 9.3 tonnes of gold. Russia purchased 41.8 tonnes and Mexico bought 99.2 tonnes.

China is the world's sixth largest gold holder and the biggest among Asian banks with 1,054.1 tonnes, equivalent to just 1.6% of their massive currency reserves.

According to the World Gold Council, governments hold an average of 10 per cent of foreign exchange reserves in gold. Larger economies such as the US, France and Germany hold more than 50 per cent.

"As a real safe asset, gold helps us to cope effectively with changes in international financial market," said Jaehyun Joo of the Bank of Korea.

"We expect that gold would serve as a safety net for official foreign reserve and enhance the stability of the Bank Of Korea's foreign reserve management," Mr Joo added.

Mr Joo’s comments reflect the mindset of people and central bankers in Asia who realize gold’s store of value importance and are increasingly concerned about the euro, the dollar and the global financial and monetary system.

The “Asian put” continues to place a very stable floor under the gold market and means that gold is not seeing any meaningful correction.

This is likely to continue for the foreseeable future and means that investors would be advised to allocate to gold sooner rather than later as a meaningful price correction is unlikely.

Some weakness in gold may be seen if we experience another bout of misplaced ‘market euphoria’ and risk appetite once the debt deal is fully completed. However, this will likely be more short term weakness as the medium and long term fundamentals remain sound.

Smart money and official demand for gold remains robust as a very fragile global economic recovery, stubbornly high inflation in many countries and sovereign debt and contagion risks lead to diversification into gold.

மனக்கண்

Wednesday, August 3, 2011