ALERT: February 2012

S&P Warned Japan Rating

Standard & Poor's warned on Monday it could lower Japan's sovereign rating if the economy expands less than expected or if public debt continues to grow, as the country's unpopular government struggles to win support for higher taxes.

The ratings agency affirmed its AA- rating on All three agencies rate Japan three notches below the top AAA rating.

Japan's rating could fall if real gross domestic product growth per capita drops below S&P's forecast of 1.2 percent, according to the statement.

Late last year the ruling Democratic Party agreed a timetable on rises in the sales tax to pay for welfare spending. It said it would increase the 5 percent sales tax to 8 percent in April 2014 and then to 10 percent in October 2015.

Prime Minister Yoshihiko Noda needs opposition votes to pass the tax hike in a divided parliament, but his public approval ratings are sinking and the opposition are refusing to cooperate as they look to force an election.

Higher taxes could help reduce revenue shortfalls, but that wouldn't change Japan's ageing population, which continuously pushes up welfare costs, S&P said.

Japan's sovereign ratings are also constrained by the government's weak policy foundations, the ratings agency said.

Even if the sales tax rises to 10 percent, that would not be enough to lower the ratio of public debt to gross domestic product, which is the worst among industrialised nations and almost twice the size of its $5 trillion economy, government estimates show, but also warned that higher taxes wouldn't solve the structural problems that push up Japan's welfare spending and increasingly pressure state coffers.

Japan's debt burden is the worst among industrialised economies, and it may not be able to postpone drastic spending cuts and aggressive tax hikes much longer as Europe's debt crisis threatens the global economy.

"We would also consider lowering the long- and short-term ratings if the government's debt trajectory remains on its current course or begins to erode the nation's external position," S&P said in a statement.

"On the other hand, we may revise the outlook to stable if the government were to implement robust and sustainable fiscal consolidation."

S&P and Fitch both rate Japan AA- with a negative outlook. Moody's Investors Service ranks Japan at the same level, at Aa3, but has a stable outlook.

All three agencies rate Japan three notches below the top AAA rating.

Japan's rating could fall if real gross domestic product growth per capita drops below S&P's forecast of 1.2 percent, according to the statement.

Higher taxes could help reduce revenue shortfalls, but that wouldn't change Japan's ageing population, which continuously pushes up welfare costs, S&P said.

Japan's sovereign ratings are also constrained by the government's weak policy foundations, the ratings agency said.

Valentine Week- Romance and Emotions at Top

Day 1: Rose Day (7th Feb)

Day 2: Propose Day (8th Feb)

Day 3: Chocolate Day (9th Feb)

Day 4: Teddy Day (10th Feb)

Day 5: Promise Day (11th Feb)

Day 6: Kiss Day (12th Feb)

Day 7: Hug Day (13th Feb)

Day 8: Valentine Day (14th Feb)

By ------ DHARMESH KUMAR

Valentine Special - From A Friend

You might be best friends one year,

Pretty good friends the next year,

Don't talk that often the next year,

And don't want to talk at all the year

after that. So, I just wanted to say,

Even if I never talk to you again in my life,

You are special to me and you have

made a difference in my life,

I look up to you, respect you, and

truly cherish you.

I Send this to my friend,

Or how close you are,

No matter how often you talk,

Let old friends know you haven't forgotten them,

And tell new friends you never will.

Remember, everyone needs a friend,

Someday you might feel like you

have NO FRIENDS at all,

Just remember this text

And take comfort in knowing

Somebody out there cares about you

and always will

Unemployment rate Highest Level Since 1999

The EU’s statistics office, yesterday said the 10.4 percent unemployment rate in December was unchanged at its highest level since the euro was launched in 1999, as November’s was revised upward from a previous estimate of 10.3 percent.

Unemployment has been steadily rising over the past year in December 2010, it stood at 10 percent largely because of Europe’s debt crisis, and compares badly with the US, where unemployment stands at 8.5 percent.

There are huge disparities across the eurozone, however, with those countries at the front line of Europe’s current financial turmoil, such as What even those figures mask is that unemployment among the young is much, much higher. Latest figures from Spain show unemployment among people aged under 25 was 48.7 percent, prompting concerns that an entire generation of people could fail to accumulate the necessary skills and experience for a prosperous life.

At the other end of the scale, some countries like Austria are operating not far off what is considered to be the natural rate of unemployment in an economy of 4.1 percent, while Germany’s rate at a post-unification low of 5.5 percent.

Since Europe’s debt crisis exploded around two years ago, the focus has been on austerity, with governments getting their houses in order with big, often-savage spending cuts, and tax increases.

However, there are growing signs that Europe is changing tack, and that measures to boost growth and jobs are now central to the crisis resolution effort.

On Monday, at a summit in Brussels designed to shore up the euro’s budgetary defenses against debt, EU leaders promised to stimulate growth and create jobs across the region.

The leaders pledged to offer more training for young people to ease their transition into the work force, to deploy unused development funds to create jobs, to reduce barriers to doing business across the EU’s 27 countries and ensure that small businesses have access to credit. and Spain, suffering record rates of unemployment that are stoking concerns about the social fabric of their societies. Spain’s unemployment stands at a staggering 22.9 per cent and Greece‘s is not far behind at 19.2 percent.

What even those figures mask is that unemployment among the young is much, much higher. Latest figures from Spain show unemployment among people aged under 25 was 48.7 percent, prompting concerns that an entire generation of people could fail to accumulate the necessary skills and experience for a prosperous life.

Since Europe’s debt crisis exploded around two years ago, the focus has been on austerity, with governments getting their houses in order with big, often-savage spending cuts, and tax increases.

However, there are growing signs that Europe is changing tack, and that measures to boost growth and jobs are now central to the crisis resolution effort.

On Monday, at a summit in Brussels designed to shore up the euro’s budgetary defenses against debt, EU leaders promised to stimulate growth and create jobs across the region.

The result: lower economic activity, lower consumer demand, higher unemployment

No matter what deal politicians and policy makers reach on Greece current focus the continent’s economic future seems doomed in the medium term.

The just-concluded European Summit, ostensibly, sought to find ways to balance austerity with growth. Predictably, it ended focusing primarily on finding a deal to cut Greek debt.

In other words, the focus remains very, very short term. A deal on Greece might cheer the financial markets for now but will do very little for Europe in the long term.

Why? Because European policy makers have been focusing on all the wrong things, such as tightening government spending and reining in budget deficits at a time when economies are swooning. Yes, the region needs those belt-tightening cuts over the long term, but what it desperately needs right now is growth — and there is absolutely no plan for that.

For most of last year, Europe was on overdrive to enforce fiscal austerity plans. “Cut spending, raise taxes and bring government budgets into balance” was the constant refrain among European leaders, led by Germany’s Chancellor Angela Merkel.

One year on, those austerity cuts, especially by troubled countries such as Spain and Italy, have done precious little to boost growth— or rein in high public debt, which is what started the region’s crisis in the first place.

The focus, so far, has been on lowering that dreaded “debt-to-GDP” ratio. Debt-stricken governments, under duress, have slashed government spending and raised taxes. The result: lower economic activity, lower consumer demand, higher unemployment and rising discontent among businesses and households alike. In addition, with lower tax revenues, the ability of governments to repay their debts also decreases.

It’s also important to note that when gross domestic product (GDP), shrinks, the debt-to-GDP ratio also increases automatically because of a lower denominator. To bring the ratio down, more austerity is required, which further shrinks the economy, requiring more austerity ……you get the picture.

“Last year was one for fiscal hawks to celebrate as fiscal consolidation proceeded apace,” theEconomist noted recently. “In the eurozone, Germany, France, Spain and Italy all managed to reduce their structural budget deficits, the latter three thanks to austerity. All three are expected to reduce those deficits further this year.”

But it has come at a terrible price. Unemployment across the 17 nations that use the euro hit a euro-era high of 10.4 percent in 2011, even as recession fears grow across the region.

Several experts have been warning about exactly this situation since last year. Prominent among them was Nobel Prize-winning economist Paul Krugman who, in a recent blog post, noted that what is happening in Europe was “completely unnecessary”.

“Half a century ago, any economist — or for that matter, any undergraduate who had read Paul Samuelson’s textbook “Economics” could have told you that austerity in the face of depression was a very bad idea. But policy makers, pundits and I’m sorry to say, many economists decided, largely for political reasons, to forget what they used to know. And millions of workers are paying the price for their willful amnesia.”

Now, the voices against further spending cuts are gaining traction. At the World Economic Forum in Davos, Switzerland, even the International Monetary Fund, which until recently had been advocating the need to cut debts, issued a warning that inappropriate spending cuts could strangle growth prospects in Europe.

At the same event, US Treasury Secretary Timothy Geithner also warned of the risk of a “recessionary” cycle. “There is a risk that every disappointment in growth will be met with an austerity that will feed the decline, and that is a cycle you have to arrest to solve financial crisis,” he said, according to a BBC report.

Finally, European leaders seem to be waking up to the problem. The recent EU summit at least introduced growth into the agenda for the first time— so far, the focus has only been on austerity.

Unfortunately, given their snail’s pace of reacting to the sovereign debt crisis, it seems highly unlikely they’ll do anything quickly on the growth front.

They may have started talking about growth but so far, that’s all it remains — talk. Clearly, sovereign debt crisis nothwithstanding, Europe has a much bigger problem on its hands