Who is Responsible for US financial Crisis?

Pakistan Economy Watch has said that the irresponsible role of International Monetary Fund and Federal Reserve is responsible for the US financial crisis. The US authorities are still living in a cloud of self-deception that is influencing situation adversely.

The US oil and power companies, Arab petro dollars and credit rating agencies also paved the way for crisis and it seems that America will drown itself in Asian cash, said Dr. Murtaza Mughal, President, Pakistan Economy Watch.

He said the basic task of IMF was to force majority of the 185-member countries to knee down to US policies which was delivered successfully.

Many countries tried to escape the disastrous policies of IMF by accumulating dollars. Presently known reserves with Asian economies stands at 4000 trillion dollars.

After having plenty of dollars these countries naturally desired to invest money. Their natural selection was the world’s No. 1 economy. US oil and power companies and Arabs who were enjoying oil bonanza also diverted their liquidity towards US.

At this juncture the controversial American credit rating agencies awarded triple A rating to some institutions which they never deserved. This paved the way for heavy investments in the US firms which was not capable of handling it and their affairs were not transparent.

At this juncture, the US Federal Reserve and other regulators not only preferred to remain silent but neglected the opposition, said Dr. Murtaza Mughal adding that its amazing that they are still heard.

These government institutions believed in market forces which paved the way for a crisis which has now engulfed whole globe.

He said that for the first time the epicenter of crisis is in west and east is gaining a dominant positioning. Earlier the countries outside US ’enjoyed’ crisis and Americans use to be concerned about its impact on their homeland. Now Americans are facing the music and whole world is concerned about impact on their economies.

"US has simply lost all moral authority and it cannot deliver lectures any more."

"Whole world would not have been feeling the pain of US mistakes if slogans like globalization, free market economy and deregulation etc were not followed so religiously," said Dr. Murtaza Mughal.

The world will never be same and the financial health of west may not get as better as it was due to wrong policies in the wake of crisis.

The popularity of President Bush and 533-member Congress is at all times low and mistrust in plaguing the society. Top government officials are still deceiving themselves and masses. Even the presidential candidates are no exception.

Dr. Murtaza Mughal said that demise of capitalism, which is a probability will not hurt the world as much as portrayed as a single system isn’t workable enough to be trusted to run the whole world. Other options are available.

Developing the CEO within you

Harvard Business Review Publishing

Google Friend Connect Gadget

Twitter eyes foray into TV

26 May 2009

LOS ANGELES – How’s this for a tweet? Twitter is coming to a television near you. The social-networking and micro-blogging service is developing the first TV series that incorporates Twitter into the action of the show.

Created by novelist Amy Ephron, sister of Nora and Delia Ephron, the untitled show will feature ordinary people competing while on the trail of celebrities.

Twitter has partnered on the project with production companies Reveille (“The Office”) and Brillstein Entertainment Partners (“Samantha Who?”).

Google Increasing battles Facebook in Search

26 May 2009

Google has long been the king of search, dominating rivals including Yahoo Inc. and Microsoft Corp. But it increasingly sees social networks such as Facebook as challengers to its search engine, a Google official said.

As people search out advice online for everyday, personal decisions, the standard list of links served up by Google is not seen as intimate or trustworthy, Google Group Product Manager Ken Tokusei said Monday. For decisions such as choosing a restaurant or a day care provider, social networking sites or known review sites have an advantage, he said.

Such sites offer information from friends or acquaintances, and Tokusei said users tend to trust that information more. This puts Google’s results at a disadvantage.

“We haven’t gotten to the point where results are seen as if they come from someone you know,” he said.

The search giant has begun to offer tools for users to rate results and delete unrelated links, but it still has work to do, he said.

As Internet users gain savvy and experience, they also expect better-honed answers to queries. Sites such as WolframAlpha, launched earlier this month, comb the Internet for data, and analyze it to provide specific answers to queries, rather than a list of sites.

Google Inc. does something similar for some searches, providing price quotes for “Sony stock” or an answer for “Tunisia capital.” But it also provides the familiar list of sites to dig further, a strategy it is unlikely to change.

“It’s a matter of determining what kind of information the user is looking for. But we will always serve some links to pages with our results,” said Tokusei.

He spoke to reporters at Google’s Japanese headquarters in Tokyo, where he gave an overview of the company’s basic search tools.

Google has developed a host of expanding tools and services, from a mobile operating system to an online word processor, but it devotes 70 percent of its employees and resources to search.

The company still faces fresh competition from its traditional rivals, which are regrouping in an attempt to take back market share.

Microsoft has failed to make much headway in repeated Internet ventures. But the deep-pocketed company, which has poured hundreds of millions of dollars into improving its search engine, continues to develop a new search technology, part of which is called “Kumo” internally.

Yahoo, which has seen its share of total online searches conducted plummet to Google, is tweaking its search results, cutting out some links and emphasizing images and video.

Microsoft Chief Executive Steve Ballmer has said he is still interested in buying part of Yahoo after a proposed deal was turned down last year.

Microsoft to launch New Zune later this year

27 May 2009

Microsoft Corp plans to launch a new version of its Zune portable media player later this year in the United States, incorporating high-definition video, touch screen technology and Wi-Fi connection.

Microsoft said on Tuesday the new Zune, its answer to Apple Inc’s popular iPod digital music player, will also come with an Internet browser and a built-in HD radio receiver that offers higher-quality sound than traditional radio.

It did not give a price or a specific date except to say it was due in the fall.

The company added new features to Zune’s music service last year, enabling users to download music wirelessly and buy songs they hear on the device’s built-in FM radio.

Microsoft restore search engine, dubbed "Bing"

29 May 2009

Microsoft Corp is revamping its search engine to counter the dominance of Google Inc in the Web search and related advertising business.The world’s largest software company, which is still in talks with Yahoo Inc over a potential partnership, has long been determined to play a major role in the lucrative Web search market after watching upstart Google take a stranglehold.

Microsoft, which has been testing the search engine internally under the name Kumo for several months, plans to introduce the new service, re-christened “Bing,” over the next few days, with a full launch next Wednesday. The service will be available at www.bing.com.

Advertising Age reported earlier this week that Microsoft was planning a $80 million to $100 million ad campaign to promote Bing. Microsoft declined to comment on the report.

“We’ll have what I would call a big budget—big enough that I had to gulp when I approved the budget,” said Microsoft Chief Executive Steve Ballmer, who unveiled Bing at a technology conference in Carlsbad, California, run by the All Things Digital tech blog.

The Redmond, Washington-based firm has lots of ground to make up. Last month Google took 64.2 percent of U.S. Internet searches—up half a percentage point from the month before—handling 9.5 billion out of a total of 14.8 billion searches.

Yahoo was a distant second with 20.4 percent of searches and Microsoft third with 8.2 percent, both down slightly from the month before, according to data firm comScore.

Ballmer offered no quick turnaround in those numbers. “My timeframe is lots of years,” he said at the conference. “I don’t have a specific forecast, but this is lots of years.”

The new name, Bing, is short, universal and can be “verbed-up,” said Ballmer, a clear reference to the fact that ‘to Google’ has become the generic verb for searching the Internet for information.

New features

Both Google and Yahoo have recently introduced new features in their search engines to attract users, making Microsoft’s task even harder.

Microsoft is calling its new product a “decision engine,” promising to make things like buying a digital camera, booking a flight or searching for a restaurant easier by serving up results based on similar previous searches.

A search on a make of car, for example, will bring up clickable categories on the left-hand sidebar, such as ‘problems,’ ‘reviews’ and ‘dealers,’ which Microsoft has calculated are the most likely places a Web user will want to go from the initial search.

Bing also incorporates the increasingly popular Farecast service in its flight booking section—making use of the company it bought last year—which predicts whether fares will rise or fall.

Other new features include getting directions to locations with only one mouse click, and the ability to hover over a search result to see more information, without having to open a new link.
Microsoft’s shares rose 36 cents to $20.49 on Nasdaq at mid-afternoon. Google edged up 1.1 percent to $409.96 and Yahoo shares rose 1 percent to $15.09.

Sony to Launch, lighter PSP-Game Websites

1 June 2009

TOKYO - Japan’s Sony Corp plans to sell a smaller and lighter PlayStation Portable (PSP) handheld game machine later this year, according to video game web sites which cite what they say is Sony’s own promotional video clip.

The video clip, which game web sites including IGN say was first distributed through Sony’s online game information distribution service for paying U.S. subscribers, has been posted on Youtube.

The new device, dubbed the PSP Go, is 43 percent lighter than the current model and comes with a 3.8-inch display, compared with a 4.3 inch screen now, according to the video clip on Youtube.

A spokesman for Sony’s game unit, Sony Computer Entertainment declined to comment on the video clip, saying that any announcement on the PSP will be made at the E3 video game trade show that starts on Tuesday in Los Angeles.

According to the video clip, the PSP Go will go on sale this autumn, although the current model, the PSP 3000 will remain in the market.

The newer model’s key pad slides out from below the screen, the clip shows. With the PSP 3000, the keys are placed on either side of the screen.

Sony aims to sell 15 million units of the PSP in the financial year to March, up from 14.1 million units a year earlier. The PSP competes with Nintendo Co Ltd’s DS.

Shares in Sony rose 2.6 percent to 2,560 yen, outperforming the Nikkei average, which gained 1.6 percent.

Reasons for the General Motors Bankruptcy

Just about everyone—from management and the UAW to government, consumers, the competition and the media.............writes Wiliam J. Holstein

First of all, Management

For most of its existence, GM was not really a centrally unified company in the modern sense. Founder Billy Durant smashed together different companies—Chevrolet, Pontiac, Buick, Cadillac—and allowed them to compete with each other with only the thinnest level of oversight. Alfred P. Sloan, who took over the company in the 1920s, imposed a measure of discipline on these rival fiefdoms by creating more financial controls and a more rational positioning of each brand, with Chevrolet being the car for the masses and Cadillac being the car of the elite. But the company was still very decentralized.

Following World War II, this lumbering GM dominated the American automotive landscape, reaching 50.7% of the market in 1962. It didn't matter if GM was late to market with a feature or a design because "we had such enormous power that we could always steamroller everybody else," recalls Bob Lutz, the just retired product development chief who first joined GM in 1963.

Not Ready for Toyota

Then there was labor, and management's decision over the decades to grant the United Auto Workers higher wages, medical benefits, and pensions with each contract negotiation. This helped to elevate the standard of living for many blue-collar Americans, but health-care costs would emerge as a major burden on GM, as would a confrontational standoff between management and labor.

Then there was overseas competition. GM simply was not ready to respond to Toyota Motor (TM) and other Japanese manufacturers when they began to gain serious ground in the early 1980s. Toyota, in particular, had developed a lean manufacturing system that was completely different from the mass-assembly-line techniques GM was still using, many decades after Henry Ford perfected them. GM's fractured structure meant that each division had its own manufacturing processes, its own parts, its own engineering, and its own stamping plants.

Hungry for jobs, U.S. states began to encourage Japanese manufacturers to locate plants, or so-called transplants, in their states. The Big Three figured that would saddle the Japanese with the same labor costs and the same labor problems they had. But they were wrong. The Japanese located in mostly southern and border states that were solidly anti-union. They hired younger, less expensive workers, and they created an entirely new relationship between management and labor. This led to an entirely new auto industry. The net effect was to rachet up the competitive pressures on Detroit, not ease them.

Government Wasn't an Issue

But GM had to respond to the Japanese challenge without the help of the federal government. The Clinton Administration, as many before it, simply could not figure out how to force the Japanese to open their auto market, so in 1995 after a bout of highly publicized negotiations, it declared victory, even in the obvious face of failure. And the Clinton Administration was also unable to address the absence of a national health-care system. These two failures were huge, seen in retrospect.

In the ethos of the time, however, government did not matter. Rick Wagoner; as my book chronicled, encouraged the company to absorb Toyota's methods, which it did almost entirely. Wagoner's decision to hire Lutz in 2001 resulted in dramatically improved styling and design. Wagoner invested in innovation once again—again with Lutz egging on the whole organization—as GM decided to attempt to leapfrog Toyota's Prius hybrid with a brand new lithium-ion battery-powered Chevrolet Volt. Wagoner integrated the far-flung global operations. He centralized management into one Automotive Strategy Board and he persuaded the UAW to assume responsibility for its own medical costs. By early 2008, it was credible to argue that GM was on the way to a successful transformation, one of the most impressive in U.S. economic history.

But then there was the one-two punch of high gas prices and the global economic downturn. Detroit was caught off guard when gasoline prices reached $4 a gallon in the second quarter of 2008. The U.S. consumer, after years of inattention and disbelief, flocked to more fuel-efficient, largely nondomestic vehicles. But at least people were still buying cars. When the economy collapsed, so did car sales.

A White House Band-Aid

That was followed by yet another rude awakening last November when the then-CEOs of GM, Ford (F), and Chrysler came to testify in Washington, D.C., and found out that the government wouldn't be bailing them out. Southern Republicans, many of whom represented states with nonunion auto factories, chewed the CEOs up before the cameras. Newly powerful California environmentalists assaulted them. The center of the national consensus regarding the importance of the domestically owned auto industry had shifted, and American media coverage was also thoroughly hostile.

The Bush Administration gave a Band-Aid to GM and Chrysler in the form of a bridge loan to get them through to the early days of the Obama Administration. But then came the final surprise. Industry observers widely assumed that Obama, a Democrat from Chicago, understood the manufacturing base of the Midwest and would help it. The fact that the UAW had helped deliver five states in the Midwest to Obama deepened that assumption.

But Obama turned to other members of his political alliance for answers. From New York, he brought in investment banker Steve Rattner, a major fundraiser, to head the government's automotive task force. Rattner arrived on the job with the assumption that Chapter 11 bankruptcy was the right course for GM, and promptly sacked Wagoner when he demonstrated signs of resistance. Wagoner's heir apparent, Fritz Henderson, was elevated into the CEO position. Meanwhile, Obama tilted toward the California environmentalists by pushing through new fuel-efficiency standards, which would add another layer of cost to production.

And so the mighty General Motors, now nicknamed Government Motors, was pushed into bankruptcy. Rattner and his allies in the investment banking and bankruptcy-law industries insisted it could unfold in 60 days and that a new GM would rise from the ashes, phoenix-style. But the odds were against it working. U.S. bankruptcy law had never applied to a global corporation, one with thousands of suppliers and dealers.

Yet it wasn't Rattner's fault, nor that of the Obama Adminstration, high oil prices, Toyota, fickle consumers, the recession, or high labor costs. Whose fault was it? The answer: everyone's.

General Motors to file for bankruptcy

General Motors, the humbled auto giant that has been part of American life for more than 100 years, will file for bankruptcy protection on Monday in a deal that will give taxpayers a 60 percent ownership stake and expand the government's reach into big business.
It would be the largest industrial bankruptcy in U.S. history, and the fourth-largest overall. In addition, a GM bankruptcy would be unprecedented as the federal government would pump billions more into the company.

Underscoring the government's extraordinary role, President Barack Obama planned to announce his support for GM's restructuring strategy at a midday appearance at the White House, much as he did in April when Chrysler sought court protection.

GM president and CEO Fritz Henderson planned to hold a news conference in New York immediately following Obama's announcement.

Administration officials said late Sunday the federal government would pump $30 billion dollars into GM as it makes its way through bankruptcy court. That's besides the $20 billion in taxpayers' money that the Treasury already lent to the automaker.

The $30 billion is to help GM through the Chapter 11 proceeding and move it through its restructuring plan. It doesn't have the money to run the business right now. The money would come from what remains of the $700 billion rescue fund for the financial sector.

The officials, speaking on condition of anonymity in advance of Obama's public remarks, said the administration expects the court process to last 60 to 90 days. If successful, GM will emerge as a leaner company with a smaller work force, fewer plants and a trimmed dealership force. The company will stick with its four core brands — Chevrolet, Cadillac, Buick and GMC — and jettison four others.

The company plans to cut 21,000 employees, about 34 percent of its work force, and reduce the number of dealers by 2,600.

"There is still plenty of pain to go around, but I'm confident this is far better than the alternative," Sen. Carl Levin, D-Mich., said Sunday after being briefed about the developments by the president. "It's a new beginning, it's a rebirth, it's a new General Motors."

The government's ownership stake and huge financial injection represents yet another remarkable intervention into the American private sector. The Treasury has stepped in to help banks, it has taken majority ownership in insurance conglomerate American International Group and it has guided Chrysler through bankruptcy protection proceedings.

Despite its sizable ownership, administration officials said the government intends to stay out of day-to-day management decisions. It says it intends to shed its ownership stakes "as soon as practicable."

The day to day operations will be carried out by GM's management. But a majority of the board of directors will change and the administration will have a hand in helping select them.
"Our goal is to promote strong and viable companies that can quickly be profitable and contribute to economic growth and jobs without government involvement," a fact sheet issued by the White House and the Treasury Department said.

Still, it was Obama who ordered the firing of former GM CEO Richard Wagoner a month ago. And it was the Obama administration that instructed GM to trim itself to a point that it could break even by selling 10 million cars a year. It's current break even point is 16 million cars.

Even as the White House stressed that it would run the day-to-day operation of the car company, the arrangement was fraught with potential conflicts. The Obama administration has proposed tougher fuel efficiency requirements that GM will need to abide by and has pumped billions into the auto company's lending arm and assured consumers that it will backstop GM warranties.

GM plans to name turnaround executive Al Koch to serve as its chief restructuring officer to help the company through bankruptcy protection, said a person familiar with the matter. The person, who spoke on condition of anonymity, was not authorized to speak about the appointment publicly.

Koch, a managing director with AlixPartners LLP, is a veteran turnaround specialist who helped Kmart Corp. through its Chapter 11 reorganization. He will lead the separation of the automaker's assets into a "New GM" and the remaining parts of the company that will form "Old GM." Koch will lead the management team that winds down the "Old GM" company once the automaker emerges from bankruptcy.

A majority of the Detroit automaker's unsecured bondholders have accepted a deal viewed as crucial to reorganization, and Germany agreed to loan $2 billion to GM's German unit, Opel, as part of its acquisition by a Canadian auto parts supplier.

The moves don't change much for GM, but better prepare it for a bankruptcy protection filing, said Rebecca Lindland, an auto analyst for the consulting firm IHS Global Insight.

"The more agreements GM has with its interests, the better the bankruptcy is going to go," she said. "It's not a game changer at all."

On Sunday a group of large, institutional bondholders, representing 54 percent of GM bondholders, agreed to exchange their unsecured bonds for a 10 percent stake in a newly restructured company, plus warrants to purchase a greater share later. They had balked at an earlier offer, that gave them 10 percent of the company without the warrants.

Beyond the bankruptcy announcement Monday, GM is expected to reveal 14 plants it intends to close and name the buyer of its Hummer division. One of those plants, however, will reopen as a new small car factory. The decision to build the new car in the United States appears to address previous labor and congressional concerns that GM was considering importing a small car from its plants in China.

By building the car in the U.S., the share of U.S. produced cars for U.S. sale will increase from 66 percent to more than 70 percent.

In Germany on Sunday, the government agreed to loan GM's Opel unit $2.1 billion, a move necessary for Magna International Inc. to acquire the company.

The Canadian auto parts supplier Magna will take a 20 percent stake in Opel and Russian-owned Sberbank will take a 35 percent, giving the two businesses a majority. GM retains 35 percent of Opel, with the remaining 10 percent going to employees.

The German funds are available to Opel immediately, as it attempts to shield itself from cuts if GM files for bankruptcy protection. Opel employs 25,000 people in Germany, nearly half of GM Europe's work force. Under the deal, four factories in Germany would stay open saving jobs.

Treasury Secretary Timothy Geithner, who was traveling to China, followed the developments closely. The Treasury on Thursday offered bondholders 10 percent of a newly formed GM's stock, plus warrants to buy 15 percent more to erase the debt. Last week, GM withdrew an offer of 10 percent equity after only 15 percent of the thousands of bondholders signed up.

The current 54 percent acceptance represents only $14.6 billion, but by lining up support in advance of a bankruptcy protection filing, GM is likely to find it easier to persuade a judge to apply terms of the sweetened offer to the rest of its unsecured debt.

It could also help the automaker get through the court process more quickly, said Robert Gordon, head of the corporate restructuring and bankruptcy group at Clark Hill PLC in Detroit.
The company made a huge stride toward restructuring Friday when the United Auto Workers union agreed to a cost-cutting deal.

GM's fate and the federal government's intervention was scrutinized on several Sunday morning talk shows.

"I think the government auto bailout was a big mistake," said Sen. Mitch McConnell, R-Ky., on CNN's "State of the Union" program. "We could have let these companies go through the bankruptcy process much earlier."

In a typical Chapter 11 bankruptcy case, the company files a plan of reorganization that must be voted on by creditors. In each class of creditors, the plan would have to be approved by holders of two-thirds of the claims and a majority of the number of individual creditors who vote.

But the GM case is anything but ordinary, and it appears the company will sell some or all of its assets to a new entity that would become the new GM, rather than submit a plan to reorganize the old company.

GM's stock tumbled to the lowest price in the company's 100-year history on Friday, closing at just 75 cents after trading as low as 74 cents. In a Chapter 11 bankruptcy reorganization, the shares would become virtually worthless.