February 26, 2010
Posted: 1228 GMT
New York - This week’s "Profitable Moment" is being written in New York where I am on assignment. It is interesting to see how those who live in the world’s financial capital are dealing with coming out of a recession. Much of what I report to you now is observational and anecdotal; often the best way to gauge the real economy and what is going on.
My initial impression was of a city still going through the economic grinder. A ride on the subway showed me passengers that were glum. Faces looked tired. The dark clothes of winter are still being worn and for good reason. Winter has made its ferocity felt in recent weeks, with the city digging out of record-breaking levels of snow. And temperatures still are cold, even if the sun shines. There is a muted air about New York. Chatting to friends and contacts and it is clear there is more going on than just winter.
Just this past weekend the New York Times lead its Sunday edition with the headline :“Despite Signs of Recovery, Chronic Joblessness Rises,” which wrote about how “the unemployed face years without jobs, exhausting savings and benefits.” According to the Bureau of Labour statistics, quoted in the article, 6.3 million Americans have been unemployed for more than six months – the highest number since records began. It’s not surprising people are still looking glum.
People feel economically battered and bruised and can see no real light at the end of the tunnel. Across the city, stores that closed early in the recession remain shut and have yet to find new tenants.
In a city which likes to boast that it welcomes the world, many international tourists are thinking twice before coming here, especially those from the Euro zone. The Euro has fallen 5 percent against the dollar since the start of 2010. Even that old-standby - the UK tourist – isn’t offering much succour. Cheap hotels and bargain fares can only go so far against a falling pound, higher taxes at home and worries about jobs.
My hotelier told me his aim was keep the hotel as full as possible, even if that meant heavily reducing the rate. January and February are traditionally slow months, but this year he said business from Europe was down around 40 per cent. Only Fashion Week and a few conventions have saved the months.
Some may wonder when it will get better, for others it already has. The bankers of the city are clearly feeling the benefits of a stock market volatility and bonus time. I had coffee with an overseas banker who was also visiting New York. His business was getting back to pre-recession levels. Deals are being done, fees are being earned. It left me realising the gap between the beneficiaries and sufferers is getting larger.
To test my theory I went to the shops on Fifth Avenue. At the flagship Diesel store there were T-shirts costing more than $100 each and cardigans at $150. Lovely clothes but clearly expensive in troubled times. Perhaps some can still pay these prices.
A trip to the more modestly priced H&M also on Fifth Avenue revealed a different picture: colourful T-shirts selling at $5, long-sleeved shirts at $19 and a store doing brisk business. Guess where I spent my dollars converted from pounds?
None of this is should surprise anyone. The global economy is still recovering from the drastic surgery of the last 18 months. Like any patient it is going to take time to recover. My overriding impression from the Big Apple is that the recovery is not here just yet. Next, I am visiting the mothership of my television network; the headquarters of CNN in Atlanta. It will give me a chance to report back to you whether the glumness of New York is unique to the United States.
Whatever you may be up to in the week ahead, I hope it’s profitable.
February 25, 2010
Posted: 2312 GMT
We follow fashion designer Osman Yousefzada as he prepares his line during London's fashion week.
February 23, 2010
Posted: 1320 GMT
Lufthansa pilots may have reported back to work at midnight, but labor unrest continues to roll across Europe Tuesday as French air traffic controllers are expected to go on strike.
Half of Tuesday's flights at Orly Airport in Paris, France, were expected to be canceled, along with 25 percent of flights at Charles de Gaulle Airport, as a result of a planned strike by four civil aircraft staff, including air traffic controllers, for Tuesday through Saturday.
The action comes a day after German-based Lufthansa and its pilot's union agreed to suspend its standoff and return to the bargaining table. The suspension will expire on March 8, barring an agreement before then, both sides said in a Frankfurt labor court.
The industrial action has plunged much of the continent into chaos and it doesn't look like it will end soon.
We want to know what you think?
Do you think that Europeans have an outdated work ethic that makes them less competitive?
February 22, 2010
Posted: 1321 GMT
British Prime Minister Gordon Brown did not scream or swear at a political consultant who worked for him, the speechwriter told CNN, rejecting allegations published by a top British political journalist Sunday.
"The Prime Minister did not 'scream' at me, blame me or direct a profanity at me. The author who has now written this made no effort to check it with me. I would have told him it was false," American political operative Bob Shrum said in an e-mail late Sunday.
He was responding to claims in a forthcoming book by Andrew Rawnsley published by the Observer newspaper.
The Observer charges that Brown engaged in "abusive behavior" and "volcanic eruptions of foul temper."
Brown and his allies denied the allegations.
"These malicious allegations are totally without foundation," Brown's official spokesman said in a statement Saturday. The spokesman is traditionally not quoted by name.
The Observer claimed that Brown's behavior upset staff at his office, 10 Downing Street, so much so that the head of the civil service launched an investigation and "ordered" the prime minister "to change his behavior."
The allegations raise important questions over the issue of bullying in the workplace.
We want to know what you think.
Have you ever been a victim of bullying at work? How have you dealt with the situation? Do you think there are enough opportunities to make your complaint known?
February 19, 2010
Posted: 1534 GMT
Many Europeans were quick to blame America for starting the global recession. It's true that too many US homeowners over borrowed from overzealous banks, but we've since discovered that whole countries in Europe could be accused of doing a similar thing.
To get through the financial crisis, many governments borrowed more. Some may have gone too far. Greece is now struggling to keep up with its debts, and that's shocking to investors who didn't expect to hear that from a Eurozone country.
They would normally be more than happy to lend to a country like Greece by buying bonds. Now investors are thinking twice because they see a risk in getting their money back. Not only that, they are wondering if other countries are just as risky.
You don't have to go far to see that Portugal, Ireland and Spain all have very high deficits. Even the UK, a major world economy, may have been cavalier with its finances.
So far, the Greek debt crisis is just that – Greek. But if neighbouring countries go the same way, it will be a huge test of the Eurozone.
How do you set one interest rate across a zone where one part is sinking into recession whilst the other is trying to recover?
Eurosceptics have long argued that if you are going to have one interest rate you also need to set one central budget. In the Eurozone you have one interest rate and many budgets. That's why a single currency works in the US and why it doesn't in Europe, as Greece is proving.
We want to know what you think.
Do you think the Euro was a bad idea?
Posted: 1448 GMT
February 18, 2010
Posted: 2356 GMT
“Euro area member states will take determined and coordinated action, if needed, to safeguard financial stability in the euro area as a whole.” The clear message from the European Union statement left no one in any doubt. When it comes to Greece, and other Eurozone members, we will deal with the problem, thank you.
Then tucked away, in the middle of the statement, the acknowledgement that the European Commission would draw on the experience of the IMF in monitoring the position. Which left me wondering…why didn’t the IMF just deal with the whole sorry mess in the first place?
The IMF’s very raison d’etre is to help countries re-build economies after years of mis-management. It has decades of experience of sorting out these problems.
There's hardly a continent in the world that hasn’t felt the lash of the IMF’s reform programs, usually imposed under threat of withholding vitally needed funds.
The Fund’s own Web site admits it lends to “countries in severe financial trouble...helping a member country avoid sovereign default…something that would be extremely costly both for the country and possibly for other countries through economic and financial ripple effects.”
Have you ever read a better definition of the situation facing Greece and the Eurozone?
Indeed, the IMF has been monitoring Greece for years through the regular Article IV process, with a prescient warning of events that have now happened.
In 2006 it warned: “The current account deficit has widened to an unsustainable level.” Then in 2007: “Private sector credit has risen very rapidly and inflationary pressures have continued, resulting in a gradual but steady erosion of competitiveness."
This was an accident everyone knew was going to happen.
So why not let the fund dig deep and do the dirty work? Politics pure and simple.
It would be embarrassing for the EU and Eurozone to admit that it could not run economies in its own backyard. Greece has been allowed to run Olympic sized rings round the strict rules of Euro membership thus vitiating the Eurozone and creating the current crisis.
For the IMF to ride to the rescue would be a stunning admission of failure, even though EU countries are members of the Fund and are entitled to its assistance.
There is also the heavy involvement of French presidential politics. IMF Managing Director Dominique Strauss-Khan might well stand as the socialist presidential candidate against Nicolas Sarkozy in 2012.
The last thing President Sarkozy wants is for Strauss-Khan to be seen as the savior of the Eurozone. So the IMF is relegated to the role of “technical assistance” in helping the European Central Bank and European Commission “monitor” the situation.
In the past two decades the IMF has lent money to Russia, Argentina and Brazil. It has defused financial crises from Asia to Latin America and Africa. The Fund is now the G20’s preferred group to coordinate member countries’ strategies post-recession.
In recent years it has even reformed its bad cop image to be the more friendly face of international lending.
With its vast experience of implementing macro-economic reform the IMF is uniquely suited to whipping Greece and any other euro-miscreants into shape, without worrying too much about intra-continental rivalries. But it won’t be allowed to.
The EU, with a Panglossian view of its own abilities and an inability to recognize its practical limitations, remains stubbornly firm in saying 'non'. It should let the IMF get on with the job before any more damage is done.
Posted: 1852 GMT
Posted: 1321 GMT
Pilots at Lufthansa, one of of the world's largest airlines, went on strike Monday, grounding hundreds of flights per day.
Thousands could be affected by a four-day strike.
The four-day walkout by Vereinigung Cockpit, the pilots' union, came after a last-ditch effort at negotiations over pay and job security failed, the company said.
The strike threatened to disrupt travel on more than two dozen partner airlines, including United, U.S Airways and Continental, later on Monday. About 800 of 1,800 scheduled flights per day through Thursday have been canceled, the company said.
Cockpit said strike action had been supported by about 94 per cent of those who had taken part in a ballot.
Are you scheduled to fly next week with Lufthansa?
Are you worried your plans might be put on hold? Would you be angry if a strike happened?
We want to hear your stories of how a strike might affect you - please leave your comment below.
Lufthansa has also been responding to some of your questions and complaints directly via this blog, so there's a strong possibility that what you submit will get a response.
Posted: 526 GMT
February 17, 2010
Posted: 1509 GMT
Posted: 1424 GMT
Toyota President Akio Toyoda said he has no plans to appear before a U.S. Congressional committee next week, despite pleas for him to show.
His comments came during a news conference where Toyoda addressed reporters for the third time in two weeks about the massive global recall.
Toyota has recalled more than 8.1 million vehicles worldwide for problems related to sudden acceleration and unresponsive brake pedals, among other things.
The company has apologized for the safety lapses and pledged to repair the recalled vehicles quickly.
Still, U.S. lawmakers and consumer groups are furious with the automaker and have already launched dozens of class action lawsuits against the company.
We want to know what you think.
Are we being too tough on Toyota? Do you think there's a sense that consumers are ganging up on the automaker?