Economy Live

Increasing oil prices and threat of global warning has spurred the need of alternative energy. President Bush has already ordered to curtail gasoline use by 20 percent. US government is funding lavishly in the program.

Growing need and federal initiatives have made it special for investors as they are taking interest to invest in it.

Investors are hopeful for the return, as survey conducted by Calvert Group Ltd. that coincided with the establishment of an alternative energy fund asserts that about 85 percent investors firmly believe for huge profit from investing in areas such as solar power and wind power, whereas 20 percent investors have sought advice from the financial adviser.

Government’s promise to invest in alternative energy has invigorated the spirit of investors, as more seekers are showing their interest to invest in it. Calvert (Socially Responsible Investing) is hoping that with government initiative, new investors will get aware about it and will subsequently boost investment in the Calvert Global Alternative Energy Fund.

Global warming has become a matter of concern for all. International institutions like IMF and WB has already advocated for pollution free environment, green lobbies are pressing government to take possible initiative and in the middle of all these Calvert has maintained its integrity of development with pollution check.

Calvert’s director of social investment strategy, Paul Hilton said:

There have been a lot of people coming to us because of concerns about climate change. The No. 1 reason why investors are with us is because they care about environmental issues

The success of alternative energy is in our hand, we are expecting hefty returns out of it, but pitfalls are also noted alongside.

At a present time, gasoline prices are soaring incessantly, which arose the possibility of its success, natural sources are limited as OPEC claims that oil will be viable on earth, only for coming 30 to 40 years down the line and than we have to look for other energy sources. This theory also strengthens the success of timely investment in it.

There might be some doubt in the mind of investors, but it’s apparent that it will be a biggest profitable sector in the coming time.

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Finally, China acknowledges that its food items contained toxic substances, as country’s nationwide survey discloses.

Government led survey conveys that nearly one in five of the food and consumer products were found to be substandard or tainted, which now could have more pressure from overseas.

China is under scrutiny for its tainted food and drug items. U.S. and other nations have imposed ban on Chinese food and toothpaste. Now, china’s seafood is placed under the regulations of ‘Food and Drug Administration’. China initially ruled out the allegations, but now it seems that government has weighed the problem and seems to co-ordinate with the affected nations.

Chinese regulators asserts that authority unleashes the conclusion after studying country’s foods, agricultural tools, clothing, women and children’s products, thoroughly and find that sizable quantity of substance failed in the safety standard.

Survey shows that canned and preserved fruit and dried fish contained excessive bacteria; that 20 percent of the fruit and vegetable juice surveyed was deemed substandard, and that some children’s products were defective or laced with harmful chemicals.

The announcement came in the midst of a growing scandal over the quality and safety of Chinese-made exports and follows a series of international recalls.

Chinese products were known for its economical rates, but American apprehension over quality and safety failures has put country’s export on limbo.

To combat with the problem effectively, Chinese authority had carried a nationwide survey and also shut about 180 food factories nationwide, which failed to clear country’s food safety standard.

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Via: NYTimes

Africa is still off-track to meet the world’s shared goals for fighting poverty in all its forms, the United Nations report unleashes.

UN has constituted Millennium Development Goals to eradicate extreme poverty and hunger and to provide good health to all people. Seven year ago, it has set a target to eradicate African poverty and improve their medical facility by 2015, but in its latest progress report, UN said that the program is far away from its specified goals.

U.N has introduced several plans to improve poverty-ridden Africa. Although the plan has achieved exceptional growth, however, it needs more international support to meet its proposed target in the continent.

UN secretary-general Ban Ki-Moon said:

The results presented in this report suggest that there have been some gains and that success is still possible in most parts of the world, but they also point to how much remains to be done.

Under Millennium Development Goals, UN set a target to send all children to school by 2015, but the total percent of dropouts have increases by 30 percent in the sub-Saharan Africa. In health, the number of people living with Aids had raised six fold to 40 million since 2001, while sub-Saharan Africa was the only region in the world to see a rise in tuberculosis.

Health degradation has turned out to be a biggest threat to UN. Despite hefty investment in health related programs, water born diseases are hampering its approach.

To make MDG program more viable, British charity WaterAid suggests that UN needs to concentrate on clean water and proper sanitation to curtail half of health problems.

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Via: Guardian

The United State and South Korea have signed a free-trade agreement, but the uncertainty over its approval looms high as Congress has indicated to vote against it.

Democrats argue that the present deal could cost jobs in the US auto industry as South Korea has yet to clear its stance on non-tariff barriers. Democrats are pressurizing government to amend the proposal as they complained that the deal is unfair to US carmakers.

They criticizes and raised their apprehension that the agreement will open the US market to more South Korean cars while failing to tear down non-tariff trade barriers that they blame for a huge imbalance in automotive trade between the two countries.

South Korea is American seventh largest trading partner; their two-way trade annually touched $80 billion. Despite democrats’ aversion, US Trade Representative Susan Schwab made it clear that the signed FTA ‘will stand on its own, without amendment,’ saying the Democrat-controlled Congress ‘will come to understand the details and learn just how compelling a deal it is.’

As the voice, against the deal raised high, Bush urges Congress to ratify the agreement and assert that deal would bring considerable benefit to Americans and boost the US-South Korea partnership.

The pact is the biggest since the North America free trade agreement 15 years ago. It took long 10 months of tough negotiating phases. If the deal succeeds to get the congress’ nod than it will immediately eliminate duties on more than half of US farm exports to South Korea and will expand business opportunities for US service providers in sectors ranging from banking to telecommunications and express delivery.

Top Democrats including House of Representatives speaker Nancy Pelosi of California and leading presidential candidate Senator Hillary Clinton of New York have denounced the deal because of its auto provisions.

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Russia is a country of strong economy. Its resources and landmass differentiates it from the other nations. Opportunity has no dearth in Russian soil. Base of richest oil reserve, which satiates almost one fourth European gasoline demand, proves its worth and its hefty inflow of foreign currency.

Once a strongest challenger of America - Russia is endow with natural and mechanical availability. Based on empowering nation theory, country is sarcastically loosing its sheen, in the mist of corruption and red-tapism.

Although, Russia has best possible counter attack against any powerful invasion yet country has failed altogether to provide proper medical facility to its countrymen. No doubt, Russian government has signed an official paper to provide free medical assistance to Russians, but the truth is merely based on false pretensions.

Russian medical colleges are considered among the best colleges in the world, to trained best doctors, but Russian medical staff can leave you unattended in the hospital, if you didn’t deposit the hefty money in their bank account.

Russian government has announced to spend billions to improve the health care system, but till now everything is obscure on the ground level.

In retrospect, we amazed to know that in the soviet era, its medical facility were considered the best among the other leading nations, but after its division corruption sore to its highest level and inundates its glory and uprightness.

WHO report shows its dilapidating medical services, as in 2000’s WHO report ranked Russia’s health system 130th out of 191 countries, on a par with such nations as Peru and Honduras. Report pushes Russia among the nations, who experiences shapely decline in the life expectancy in the past 15 years. The average Russian can expect to live only to age 66 - at least a decade less than in most Western democracies, according to a 2005 World Bank report.

Russia’s population has dropped sharply in the past 15 years; to below 143 million in what President Vladimir Putin calls “the most acute problem of contemporary Russia.”

Organization for Economic Cooperation and Development asserts that Russia spent $441 per capita on health care, however, over the past two years government has doubled its spending on health services to some $7 billion, but that still not accounted enough to tackle the problem.

Critics alleged that Russian bureaucracy is hollowed with corruption and there is no use to increase the funds unless the corruption is not dealt firmly.

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One after another, China is facing stiff criticism from the US Food and Drug Administration (FDA) as farmed seafood has now joined tires, toothpaste and toy trains on the list of tainted products from China that could be harmful to a person’s health.

The Food and Drug Administration has put a hold on five species of farmed Chinese seafood import, including the catfish, basa, shrimp, dace and eel, after repeated testing has turned up contamination with drugs unapproved in the United States for use in farmed seafood. Therefore regulators, because of possible contamination with unsafe drugs, will detain some seafood imported to the U.S. from China.

The FDA discloses that Chinese seafood is under suspicion of possible contaminants of hazardous malachite green and gentian violet, used to prevent fungal infections in fish, and fluoroquinolones and nitrofurans, which are antibiotics.

Some of the chemicals have been shown to cause cancer in laboratory animals, and the use of fluoroquinolones in animals may increase resistance to these ‘critically important’ types of antibiotics.

Nitrofurans and malachite green is already banned in China for seafood production, but Fluoroquinolones is permitted for use.

America receives about 18 percent of the 5.11 billion pounds of seafood imported from China and such type of possible contamination can debar it in the future. U.S. authorities have decided to take severe action against Chinese import as in the recent months they’ve received an army of tainted food allegations.

Democrat Senator from New York, Charles Schumer, asserts:

We need stricter standards, more thorough inspections, and harsher penalties for Chinese companies and American shippers that turn a blind eye to safety

Over the decade, America has impeached China many a times for contaminated food and drugs. FDA directly intervened in 2001, when America shortlisted Chinese seafood that contained outlawed drugs and handled the imports on a case-by-case basis until the recent testing showed widespread contamination.

Mississippi and Alabama restricted sales this year of some catfish from China after finding traces of antibiotics banned in the U.S.

China, meanwhile, insisted that the safety of its products is ‘guaranteed’, but didn’t come up with any clear idea how they’ll be implementing it and at what degree.

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The U.S. Federal Reserve once again left its key interest rate unchanged amid economists’ warning to keep vigil on inflation.

Fed officials in a unanimous move left their target for short-term interest rates at 5.25 percent, the highest in 61/2 years, following the conclusion of their two-day meeting. The Fed has not changed rates since June 2006 after raising them 17 times over two years.

Core inflation mounts 2 percent over the 12 months ending in April, compared with March’s 2.1 percent annual increase.

Inflation has moderated in recent months but still remains on the high side of what some Fed officials have deemed their comfort zone of 1 percent to 2 percent. The Fed’s preferred inflation measure, based on spending excluding food and energy was 2 percent in April, down from 2.4 percent in February.

Gyrating energy prices are a wild card to the inflation outlook. Economists worries that there is always a risk that higher energy prices could affect other prices, which would boost underlying inflation. Dilemma of oil prices are creating commotion in the economy as it is mounting regularly. In trading Thursday, oil prices briefly topped $70 a barrel for the first time since Sept. 1, but then settled back to $69.57 a barrel. Nationally, gasoline prices have eased in recent weeks.

Policymakers are satisfied with the “core” inflation, but stressed to keep vigil on the fluctuating energy and food prices.

However, fed still remains doubtful and it is anticipated that on the scheduled meeting in August, Fed will keep rates steady on existing mark.

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The world has not gotten quite over what happened at the World Bank recently, and to make things even more interesting, it seems that IMF is also on the verge of witnessing a change at its helm.

Rodrigo de Rato the managing director of the IMF has announced that he will step down come this October due to some ‘personal reasons.’ In a shock-announcement, Rato said:

I have taken this decision for personal reasons. My family circumstances and responsibilities, particularly with regard to the education of my children, are the reason for relinquishing earlier than expected my responsibilities at the Fund.

Rato, now 58, a former Spanish finance minister was appointed at the top of the IMF in 2004 and was to hold office till 2009. But his decision to resign midway through his term, needless to say, has caused a great turmoil at the institution by taking everyone by surprise.

IMF - struggling to find relevance

Gone are the days of the Asian and Latin American economic crisis. Then (early nineties) IMF was every bit relevant and instrumental in averting economic meltdown in various parts of the world. A decade later, Asian economies have grown manifold and IMF has been struggling to determine its role in global ’surveillance’ of currencies.

Its pleas to overhaul and improve the system have fallen on deaf ears. Earlier this month, however, it had announced a set of new guidelines to regulate the foreign currency policies of the countries around the world. A move apparently directed towards China, whose foreign exchange coffers are burgeoning. Of course, IMF’s largest contributor, America, would be pleased too.

The IMF remains cautious of the spectacular failures of its policies in Argentina in 2001. Recent successes Turkey and Brazil have done little to assuage those wounds.
Another bone of contention has been the lack of input from the growing economies like china, India, and Brazil. Their voices have been virtually insignificant in the workings of the Fund. Under the present circumstances, it is anything but fair.

Old controversy revisited

The next obvious question is who will succeed Rato? More than likely it will be a European. In a tradition that goes to the founding days of the International Monetary Fund and the World Bank in Bretton Woods, the heads of the institutions are handpicked from Europe and US respectively.

Only recently we had seen a great furor over the appointment of a successor of Paul Wolfowitz at the WB. People called for scrapping the ancient practice but George Bush stuck to his guns and appointed Robert Zoellick at the top.

There are reasons to expect that IMF will break this ritual. For one, Rato had himself called for a ‘transparent procedure for the selection of the managing director.‘ Another reason to expect a change is the fact that the European countries were the first ones to demand an open election to the post of the President at the WB. Their recent stance puts pressure on them to follow-up.

Rato had been successful during his time at the top. His resignation has, however, rejuvenated a dying debate. Coming months will be very interesting as the European torch-bearer struggles to come up with a suitable name which would define it over the next few years.

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EADS, the parent company of airbus plane maker, might soon overhaul its management as France has forced Germany to take direct stake in EADS to guarantee its interests in the company.

EADS is regulated from both France and Germany. Company’s shareholders are criticizing management from a long time and after loosing its acme position to only rival Boeing, shareholders intensified the pressure.

France and Germany have begun to discuss changes to the management structure of The European aerospace and defense group. France has asserted that country will do their best to solve the EADS fiasco, but also warned that it could sell its shares if no conclusion is reached.

Germany charged that France is imposing unnecessary pressure to change the balance of the shareholders’ pact, under which both sides have equal say.

German Chancellor Angela Merkel and Sarkozy will discuss the woe in their schedule meeting in Toulouse on July 16 and hopefully will come up with a consensus.

Shareholders hope that both leaders will examine the issues of future financing for the group, which is facing medium-term financial pressure on the development of the new aircraft, as well as possible changes to the Franco-German shareholder pact. The leaders might even address its reconstructing plan viz. Power 8.

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American market is a center of attraction for the all investors from century. Its policy and norms makes it different from the other advanced economy. All booming business including IT flourishes there and expands in the all over the world. Investor found America as a haven to start and run any business. To secure hefty and constant growth investor wants to foray into American shore.

American promising political support is one factor to allure investors and other main reason is its solid infrastructure, which distinguishes it from the other economies as once late president J F Kennedy said that American economy is because of its roads. But recently the American biggest strength is loosing its sheen as its infrastructure is aging and raising fear to mighty America to forgoing its markets to the other growing nations like China and India.

In almost every area - from waterworks to bridges and dams, highways to mass transit - America is lagging behind. Deteriorating conditions of highways, bridges and its dams have been proven to be very costly to country’s economic growth. The poor condition of roads, the engineers estimated, costs $120 billion a year in repairs, operating costs and time wasted in traffic - that’s equivalent to a full percentage point of the economy.

To maintain its deteriorating infrastructure, the United States would have to spend about $160 billion a year over five years. Instead of taking early initiatives, American government is busy to conquest oil war in Iraq, where it’s funding about $800 billion unnecessarily. Presidential election is round the corner, but ironically neither party even ready to talk about it.

Politicians are busy in taking more on foreign policy, green world and solving others dispute, but issue like investments in basic research and higher education, which may not pay off for decades, spending on infrastructure are seems elope from the politicians sight.

Whereas in this respect, authoritarian regimes like China’s, if sufficiently farsighted, could have an advantage. With a stranglehold on power in Beijing, the Chinese government can make decisions centrally and with a view towards the long term.

BRIC nations has already snatched energy dominance from U.S. Country is battling for growing energy prices, its big business adventures are losing their market to its Asian rivals as GM and Ford. Electricity has become a big problem for America. The White House’s National Energy Policy has acknowledges that country drastically needs 1,300 to 1,900 new power plants in the next two decades.

So let’s hope that American government will implement all preventive measure as early as possible.

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Via: IHT