Thursday, December 26, 2013

The Indian mother-in-law and what women have never done?

Veena Venugopal, author of "The mother-in-law: The other woman in your marriage," explains to The Economist why Indian women are increasingly treading on each other's toes.

An elderly woman in north India, laughing ruefully, recalls how, after her rural wedding, it took “three days to work out which man in the new family was my husband”. Even today, some honeymooning couples take along the saas. A woman in Delhi says that, when her Bengali mother-in-law visits, she insists on sleeping in the marital bed with her son; the wife budges over, or decamps to a sofa... Last year over 8,200 women were murdered over the non-payment of a dowry (which has been legally abolished), over half of them in three northern states: Bihar, Uttar Pradesh and Madhya Pradesh. In May this year India’s Supreme Court warned of “an emotional numbness in society,” whereby daughters-in-law are kept as near slaves or attacked out of “insatiable greed”. Brothers, cousins, even the husbands themselves, sometimes carry out the attacks. But the mother-in-law is often held responsible.]

Indian mothers-in-law: Curse of the mummyji

Mary Barra's appointment to lead General Motors is a milestone for women everywhere, but here are five jobs that a woman has never held.

Friday, December 20, 2013

A changed New Year outlook for Ireland

The improved Irish economic outlook for 2014 is a welcome change from grim past New Year forecasts.

SEE Ireland: GDP or GNP? Which is the better measure of economic performance?

On the use of GDP or GNP, since companies such as Accenture, the US management consultants, began switching their headquarters to Ireland in 2009, the GNP metric has become a less reliable metric. This tax-avoidance move makes these firms become Irish companies.

John FitzGerald of the ESRI estimated that in 2012 [pdf], these companies accounted for €7.4bn in retained profits or 5.5% of GNP. Incremental undistributed earnings boosted GNP growth by 1%. These earnings also pollute the balance of payments. 

This year the big entrant is Eaton, a US power manufacturer, with retained earnings of €4bn. So the boost could be over 4%.

As for the drugs patent cliff, which has cut industrial production and goods exports, it will resume in 2005 with several expirations.

Eli Lilly is taking a big hit this month with Cymbalta, its anti-depression drug, which accounts for about a quarter of revenues.

Amgen's white blood cell booster Neupogen, which had sales to Sept 2013 of $1.1bn also lost its patent protection in December.

The biotech drugs are more difficult to clone but Amgen, the leading firm, made a defensive move last year with the acquisition of a Turkish drugs firm for $700m.

The problem for the drugs industry is that sales of some of the recent launches have disappointed because the benefits compared with existing products have not convinced players such as insurers and governments.

Pfizer's Lipitor peaked at $13bn in 2006 and sales in the period 1996-2012 amounted to $141bn.

As for biotech, most firms never make a profit and the industry posted its first profit in 40 years in 2008, only because of the performance of a small number of firms including Amgen.

Tuesday, December 17, 2013

Irish Economic Crash 2008: Bubble and bust home-made

Irish Times columnist Fintan O'Toole's claim  in this film that German banks provided funding for the property bubble, has been shown to be wrong. Throughout the 2000s, the interbank market in the UK was the predominant creditor to the Irish bank-ing system.


There were several factors that contributed to the Irish economic crash of 2008 and the overreaction of ratings agencies and bond investors (as claimed by Swiss-based economists) came after the main event. Whatever other issues that can be invoked such as low euro interest rates, the simple fact is that the bubble and inevitable bust were home-made.

The 3-year international bailout ended on Sunday and DPFOC, a Cork-based online marketing firm, has produced an infographic on the bailout (place cursor over image and maximise).

Enda Kenny, taoiseach, addressed the nation on Sunday night and it's a case of some work done and a lot to do: Kenny and Ireland's dead cat bounce

In a time of international crisis, small economies that are dependent on foreign investors to fund most of their debt sales are particularly vulnerable as the potential buyers may have limited knowledge about such economies.

In 2007 when the US subprime crisis and credit crunch signalled that the global financial sector was in trouble, Ireland and Finland, two small economies that had experienced economic crises over the previous two decades, were in sharply different positions in respect of vulnerability to an international shock.

Ireland's net public debt was 10.5% of GDP compared with Finland's minus -72.5%; household debt was at 210% of gross disposable income compared with Finland's 110%.

Both countries sharply cut public debt in the 1990s with the benefit of rising exports.

For a number of years, Ireland with less than 1% of Europe's population was getting over a quarter of US greenfield investment; there was a huge increase in labour participation with the number of dependants that every 100 workers had to support cut from 230 to 115.

FDI (foreign direct investment) peaked as a job creator in 2000 and during the 2001-2007 property bubble fuelled by tax cuts and bizarrely a raft of property tax breaks, credit growth, low euro interest rates and a large inflow of migrants from Eastern Europe, there was NO net jobs growth in the internationally tradebale sectors.

In 2007, DKM Economic Consultants estimated that Irish construction output represented 22.6% of GNP and 19% of GDP, when measured in gross output terms. The construction to GDP ratio was the second highest proportion (after Spain) and ranged from less than 8% in Sweden to over 21% in Spain and with an average ratio of around 12% in Western Europe and less than 11% in the UK.

By mid 2008, almost two-thirds of outstanding domestic Irish private bank credit of €416bn was property-related.

Icelandic and Irish banks had the highest loan-to-deposit ratios in Europe; loan to deposit ratio rose very sharply, from 136% in January 2003 to a peak of more than 193% in October 2008. PermanentTSB peaked at 277%.

One of the factors that increased market jitters was the uncertainty about the extent of bank losses.

In February 2009, exactly 2 years after the subprime crisis broke out in the US, the Irish unit of Pricewaterhouse Coopers (PwC), the biggest of the Big 4 accounting firms, delivered a report on Anglo Irish Bank to the minister of finance.

It said:

These annual impairment charges were €2.3bn and €3.0bn respectively per annum under the two scenarios for the years ended 30 September 2009 and 2010. The two PwC impairment loss scenarios exceeded Anglo’s worst case impairment loss scenario.”

Jones Lang LaSalle valued a sample of 160 properties held as security in relation to the top 20 land & development exposures on Anglo’s books.

Anglo Irish Bank reported a loss of €12.7bn for the 15 months to the end of December 2009 - the largest loss in Irish corporate history - after charging €15bn to cover bad debts.

The main Irish story was that a massive bubble was followed by a massive bust. Ratings agencies and bond investors were among the extras in the cast of villains.

The Irish banks were not only exposed to the local property market, they enabled Irish investors to become the second biggest investors in commercial property in Europe after the Germans.

About 80% of Anglo Irish Bank’s €68bn loan book was secured against Irish and British property. Bank of Ireland’s loan book in 2008 at €135bn, had 71% or €95bn secured against property. AIB’s loan book was at €150bn, and 60% was secured against property.

Irish investment of €13.9bn was put into European property deals in 2007.  In contrast, the Irish business sector did not even get a total of €200m in venture capital investment.

VOX: Whatever happened to Ireland? - Prof Morgan Kelly 2010

Friday, December 06, 2013

Nelson Mandela remembered through a collection of photographs

Nelson Mandela who passed away December 5th 2013 is remembered through a collection of photographs in this video created with The Economist. The images were captured by South African photographer J├╝rgen Schadeberg who first met Nelson Mandela in December 1951. They formed a lifelong friendship and over the next 60 years.

Monday, December 02, 2013

Europe living in world increasingly dominated by Asia

Craig Willy, an EU affairs writer and a journalist with the German Press Agency (DPA), writes in a blog post that Economic development in China and other Asian countries has an impact on the role of European states in global affairs.

He argues that with the rise of Asian economies, the world is increasingly moving away from the model of free trade championed by Europe and other states in the West.

Unless Europe becomes a more cohesive actor which is capable of convincing other nations to respect Western legal and commercial principles, it will find itself forced to adapt to the East Asian development model.