Unemployment on the Rise in the US

A Reuters report of a survey on July 2 has suggested that the US economy will likely shed a further 355,000 jobs in June as the unemployment rate hit a 26-year high. For for a nation mired in its deepest recession since at least World War Two, that may be good news.

The US Labour Department’s report due today is expected to depict an economy still wallowing in recession but confirming that the pace of job loss has slowed. This is positive news to indicate the 18-month-old recession is easing its grip.

The report is expected to show that the unemployment rate rose to 9.6 per cent — its highest since June 1983 — from 9.4 per cent in May.

It is also expected to show employers has cut apparently 355,000 non-farm jobs.

While still severe, that would be in line with the 345,000 positions already eliminated in May. This indicate a sharp slowing in job losses for an economy that shed an average of 691,000 jobs a month in the first quarter.

Although employers will have shed workers for 18 straight months, the trend has been moderating since job losses totalled 741,000 in January.

IHS Global Insight is of the view that the improvement should all come in the private sector. Meanwhile, they expect to see government jobs declining, as temporary jobs related to the preparations for the 2010 Census begin to disappear.

The pace of job cuts in the hard-hit manufacturing sector likely slowed to 148,000 in June from a 156,000 loss the previous month, the Reuters poll found.

“Auto layoffs should slow from May, which was exaggerated by Chrysler shutting down production, while job losses elsewhere should resume a trend for improvement,” 4CAST wrote in its preview of the data.

If it comes in close to the median forecast, or if job losses are even smaller, the report will likely be viewed as the latest sign the recession, the longest since the Great Depression, was winding down.

Heartened by a spate of relatively upbeat reports, economists have become increasingly convinced the recession will lift in the second half of the year.

Last week, reports covering the month of May showed a stronger-than-expected rise in orders for US-made durable goods, an increase in consumer spending and the second straight monthly rise in existing home sales.

However, individual job-loss forecasts among the economists surveyed varied widely. Some expected as many as 500,000 jobs were cut in June, while others thought as few as 200,000 positions would be lost.

Even if the economy is close to a turn, the unemployment rate is expected to continue to march higher, with many economists expecting it to peak around 10 per cent.

“I think it’s pretty clear now that unemployment will end up going over 10 per cent,” President Barack Obama told reporters last week.

Since the start of the recession in December 2007, the economy had lost 6 million jobs through May and the jobless rate had increased by 4.5 percentage points.

The New Economy of the 21st Century

This is the scenario.

It is a slow day in the east Texas town of Longview. It is raining, and
the little town looks totally deserted.

Times are tough, everybody is in debt and everybody lives on credit.

On this particular day, a rich tourist from the East is driving through
town.

He enters the only hotel in the sleepy town and lays a hundred dollar
bill on the desk stating he wants to inspect the rooms upstairs in order
to pick one to spend the night.

As soon as the man walks up the stairs, the hotel proprietor takes the
hundred dollar bill and runs next door to pay his debt to the butcher.

The butcher takes the $100 and runs down the street to pay his debt to
the pig farmer.

The pig farmer then takes the $100 and heads off to pay his debt to the
supplier of feed and fuel.

The guy at the farmer's co-op takes the $100 and runs to pay his debt to
the local prostitute, who has also been facing hard times and has lately
had to offer her "services" on credit.

The hooker runs to the hotel and pays off her debt with the $100 to the
hotel proprietor, paying for the rooms that she had rented when she
brought clients to that establishment. The hotel proprietor then lays
the $100 bill back on the counter so the rich traveler will not suspect
anything.

At that moment, the traveler from the East walks back down the stairs
after inspecting the rooms.

He picks up the $100 bill and states that the rooms are not
satisfactory, pockets the money and walks out the door and leaves town.

No one earned anything. However the whole town is now out of debt and
looks to the future with a lot of optimism.

That, my readers, is how the United States Government is
conducting business today.

Malaysia is no longer an FDI destination

Trade Minister Mustapa Mohamed said today that foreign investment in Malaysia has plummeted.

He told reporters that foreign direct investment for 2008 was RM46 billion but for the months of January to May this year, Malaysia has only been able to attract RM4.2 billion. With seven more months to go, it will certainly be an exhausting uphill effort to even get half of the FDI of 2008.

Will all the liberalisation moves announced recently by PM Najib really work?.

So far,laymen have not been able to reap any of the tangible benefits.

The cancellation of the second portion of the Malaysian bond for pensioners was the unkindest cut of all. What a shame!

Are all the measures announced thus far going to be another of those 'too little too late' cases?

Buggered by Bugs

A revisit to one of the ore successful film of yesteryear- Starship Troopers.

As usual, expect the unusual from the great producer, Paul Verhoeven. Remember the classics from Verhoeven such as Basic Instinct, Showgirls,Hollowman, Robocop and Total Recall? This is another of them. They stand out, even if some failed at the box-office.


Plot-wise, nothing unusual except the star troopers fought with the bugs-mostly terrifying land crawlers with pincers and deadly flying bugs.

The Research Unit of the Global Federation finally won the battle by capturing a brainy bug which was behind all the smart defence and aggressive offence.

The film as usual concentrated a large portion to the training period for the star-troopers,quandrangular love affairs and valour in the battlefield.

This movie has a slew of great stars from Michael Ironside, Casper Van Diem, Neil Patrick Henry,Dina Meyer to Denise Richards.


My sixth sense tells me that Paul actually intended the movie to showcase the verve, youthfulness and beauty of Denise Richards. It undoubtedly, launched her film career after her center-fold spread in Playboy and got her into some movies such as Wild Things,Valentine and The World is Not Enough where she became a Bond girl. Except for the James Bond movie, her other movies were not well received at the box-office.

Great afternoon matinee for me,though.

Nature's Best Photos

These are super shots from the Great International Photography Competition. Enjoy!

Marginally More Spending

The Straits times today reported that the latest MasterCard Worldwide survey on the purchasing priorities of 401 consumers in Singapore has found that 41 per cent would cut back on discretionary spending in the next six months.

This was in contrast to the previous survey conducted in September last year — when the world financial system began its plunge — which found 64 per cent were going to spend less over a one-year period.

This is indicative that Singaporeans are getting more optimistic about the future, with fewer planning to cut back on their spending this tiem around.

Priorities have shifted a little too.

Top priority spending continues to be on dining and entertainment
In second place is fashion and accessories (a positive effect of retailer discounting), replacing fitness and wellness.

Personal travel remained in third place.

With more comfortable economic data coming in recently from the Department of Statistics, Singaporeans have started spending more on smaller-ticket items such as food and clothes.

Retail sales, when excluding motor vehicle sales which make up about a third of spending, showed a 3.3 per cent and 1.1 per cent month-on-month increase in March and April, respectively.

MasterCard's economic adviser, Yuwa Hedrick-Wong, believes most of the contraction in the economy has impacted foreign workers and foreign professionals.

“The government also moved fast on income support in the beginning of the year, so that helped in consumer confidence,” he added.

Other economists have their own theories.

Alvin Liew of Standard Chartered said it could be due to Singaporeans' “very significant” savings tiding them over, while Action Economics' David Cohen noted that the labour market was not as badly hit as compared to the contraction in gross domestic product (GDP).

“People are not quite as fearful compared to September. We've probably seen the worst already,” said Cohen.

Hedrick-Wong believes that smaller-ticket spending will continue to rise well into next year, while Liew says positive GDP growth will be seen by year's end.

But while consumer confidence is likely to inch upwards, it remains to be seen just when the economy and consumer spending will be buoyant again, say analysts.

So,hopefully, we will continue to see more optimism as Christmas arrives at our door-steps in the last week of 2009.

Arnold Schwarzenegger under Siege

Imagine strongman Arnie under siege. Bulging muscles are no match for fiscal innovativeness as California buckles under the threat of going to the poor house.

California Governor Arnold Schwarzenegger has just declared a fiscal emergency on July 1st. This will literary force lawmakers into having to tackle a budget gap or else face the prospects of drastic cut-back measures to keep the state working.

Lawmakers debated late into the night but disagreed on a plan to balance California's budget — a yawning deficit of US$26.3 billion (RM92 billion) — in time for the new fiscal year, which began yesterday.

State officials has now no choice but to suspend payments to vendors and local agencies,substituting it with debt papers-"IOU" notes promising payment.

The most populous US state — the eighth-largest economy in the world in 2006—with coffers stretching to breaking point,now risks further cuts to its credit ratings, which would increase its borrowing costs.


Schwarzenegger,in his usual Terminator stance promised the people that he will run with the problem until it is solved. Is Salvation in sight?

As a norm, California lawmakers struggle with budget deadlines nearly every year. This time it is more pricky;as the state experienced its worst drop in revenues from personal income taxes since the Great Depression. The state is in recession and joblessness is on the rise.

Democrats, who control the legislature, and Republicans agree on the need for spending cuts but are split over whether to raise taxes to help fill the gap.

Republican lawmakers and Schwarzenegger, also a Republican, have ruled out tax increases. They want deep spending cuts to balance the budget. Democrats say that would slash the state's safety net for the needy to the bone.

The White House said it was keeping a close eye on California's woes even though federal coffers are already overstretched with massive bailouts of the US financial sector and automakers. It did not hold out an offer of help.

California risks being unable to pay all of its bills this month. State Controller Chiang plans to issue IOUs by today to state vendors, some local agencies and to the elderly, disabled and college students who receive state aid.

Bank of America said it would accept IOUs from customers through July 10, becoming one of the first major commercial banks to jump on board the programme.

Chiang plans to send US$3.36 billion in IOUs this month to help the state make US$10.9 billion in other payments, including money owed to investors holding California's debt.

"California has never defaulted on its debt obligation and we don't plan to do so," he told Reuters.

California needs to reassure Wall Street it can pay its debts because state officials need to sell US$7 billion to US$9 billion of short-term debt once there is a budget agreement.

So,that's high finance for you.