The international monetary system is in chaos trying to establish order to avert currency war and trade protectionism. China with the highest growth rate and surplus and massive forex reserve has emerged as the new global financial super power and she is resisting pressure to assume its global financial responsibility.

Forex buyers are turning to gold as dollar’s fate is uncertain and Yuan is not freely available. American dollar is expected to drop as part of U.S. strategy of “Quantitative Easing” to enhance exports. U.S. manufacturers are asking to devalue dollar by 40% to make American products globally competitive.

Iran’s foreign exchange reserves have increased by billions of dollars because Iran imported tons of gold when the price of gold was $656 per ounce and now gold price has risen to $1,230 dollars per ounce.

World Bank president Robert Zoellick has suggested a gold standard in view of the uncertainty of the fate of currencies in the global financial market. Others foresee the ascendancy of two or three reserve currencies in the world besides dollars.

G20 summit in Seoul merely endorsed the agenda agreed upon in G20 ministerial meeting in Gyeongju to move toward a market determined exchange rate, to restrain from competitive devaluation of national currencies, to implement IMF reform, and to introduce guidelines on current account balance.

G20 head of states meeting failed to persuade China to accept the leading role as the global financial leader substituting United States. The global financial market is left without a captain as United States has relinquished its captaincy and China refuses to accept it.

Developed western economies with very low growth rate are facing the challenges of high unemployment and massive deficits. Emerging economies with high growth rate presently need western markets for their exports.

G20 Ministerial meeting couple of weeks ago has put trade imbalances and forex exchange rates on top of the agenda of the two days G20 head of states summit beginning tomorrow.

United States has been pushing China to quickly increase the value of yuan by 20-40% and to decrease the trade imbalance by 4%. China has refused US demand to drastically appreciate yuan by 20-40% calling it a “shock therapy” that will lead to social and economic unrest in the country.

Higher yuan and lower dollar can bridge the gap in trade imbalance between United States and China as it will enhance Chinese buyers’ purchasing power and make American products competitive.

The second round of United States policy of “quantitative easing” has intensified the currency row and it is criticized by Germany and China for weakening the value of dollar.

A weaker dollar to enhance U.S. exports will result in depreciation of forex reserves traditionally kept in dollars in all the countries, and it will also lower U.S. national debt.

Drop in the value of U.S. dollar will adversely affect China the most being the leading lender to United States and having US $2.65 trillion in forex reserve.

Japan and Brazil had intervened in forex markets earlier to limit the appreciation of their currencies.

China has refused to accede to pressures from western developed countries with dwindling economies especially from USA.

After G20 ministerial summit US treasury secretary visited China. British premiere David Cameroon visited China before heading for G20 head of states meeting. German finance minister visited China and criticized US tactics to bog down China. Germany is expecting to have $100 billion trade with China.

All the western countries are wooing China to partake in its massive and growing economy.

China is leading the emerging economies because they are facing the same economic challenges from within and from the western world as China.

The G20 summit is fraught with challenges for developed western countries and emerging economies. A positive outcome of the meeting is not expected and a negative conclusion can lead to further national economic protectionism.

On the eve of the summit, World Bank president Robert Zoellick said the largest economies “need pro-growth policies, structural reforms, open trade and an anti-protectionist agenda”.

Global economy is a fact and without cooperation every other way leads to loss for all the western economies and emerging economic nations including United States and China.

United States and China have to stand up to the global historic moment of shifting economic power from western developed nations to the massively populated nations with emerging economies and learn cooperation and co-existence. Paranoia will only lead to protectionism.

America has lost its financial canine teeth and China has newly acquired financial canine teeth. Both United States and China have to settle down from gnashing false teeth and grinding baby teeth, as it will hurt the newly lost teeth just as much as it will hurt the newly acquired baby teeth.

The Fed said in a statement “The pace of recovery in output and employment continues to be slow”. The Fed has already spent 1.7 trillion dollars on buying U.S. government debt and mortgage-linked bonds to boost the sluggish economy without much success so far.

The central bank’s Federal Open Market Committee said that it will “purchase a further 600 billion dollars of longer-term Treasury securities by the end of the second quarter of 2011, at a pace of about 75 billion dollars per month.” The Fed has kept the target range for the funds rate at a historic low level of zero to 0.25%.

Justifying their policy the Fed said, “Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in non residential structures continues to be weak”.

The policy of second round of quantitative easing raised domestic and global concern for the uncertainty of its effectiveness. Thomas Hoenig, Kansas City Fed President, had expressed concern on October 25 that quantitative easing may lead to another boom and bust cycle calling the proposal “a bargain … with the devil”.

Pointing to double-digit unemployment rate and Fed’s expressed concern of deflation Bernanke criticizes Feds for their failure to keep unemployment and inflation on sustainable levels. Bernanke also points out that Feds have no other tools to boost economic growth.

Martin Feldstein, Harvard University economist, wrote in the Financial Times article published on Wednesday, “The Federal Reserve’s proposed policy of quantitative easing is a dangerous gamble with only a small potential upside benefit and substantial risks of creating asset bubbles that could destabilize the global economy”.

Second round of quantitative easing can further lower the value of the U.S. dollar against other currencies resulting in boost for U.S. exports. Decline of U.S. dollar will also reduce the value of China’s forex reserves of 2.65 trillion dollars.

United States needs to invest more in research, development and capacity building to create new jobs for Americans, while cutting its defense spending to stall its exponentially growing deficit. Criticizing China for United States economic woes will not help republican and democrat politicians in earnestly focusing on the challenges and resolving them.

US defense spending accounts for 46% of world’s total defense expenses. Two wars in Afghanistan and Iraq have added more than a trillion dollars to American deficit and neither war has yielded any financial dividends for American people.

China can neither be blamed for extraordinary US consumption of 70% of the GDP, nor for providing cheaper labour for US manufacturers. The consumption spree worked for US during 1950s economic downturn and later, transforming US into world’s largest market. US spending on research and development and ‘ease of business’ helped it in becoming the top producer of advanced technology and the biggest manufacturer of industrial goods.

Global communication and global economy today has evolved emerging markets with cheaper skilled labour attracting enterprises to shift their manufacturing base from US to Mexico or China for instance.

Shifting manufacturing bases from US has caused job loss for US skilled workers. When GM motors can pay $7 an hour to Mexican workers for the same job that they have to pay $14 to a US workers, then it makes less economic sense not to move their plants from US to Mexico.

Fareed Zakaria recently published an incising analysis to restore the American dream in Times magazine. He mentions that the American dream is no longer the only dream in the world today. Emerging economies have given birth to new dreams.

Fareed suggests a multi-pronged approach to United States to overcome economic challenges of high un-employment and alarming national debt to restore the American dream.

He recommends a shift from consumption to investment, investing more in research, technology, development and training by controlling health care costs, and pensions at the state level.

Fareed writes “My proposals are inherently difficult because they ask the left and right to come together, cut some spending, pare down entitlements, open up immigration for knowledge workers, rationalize the tax code — and then make large investments in education and training, research and technology, innovation and infrastructure.”

Like all other leading journalists of US mainstream media, Fareed avoids mentioning US defense budget that has ballooned over the years adding exponentially to US deficit.
Democrat and Republican politicians are not discussing curtailment of US defense budget either.

US president Dwight Eisenhower had warned American public of the dangers of developing a huge military industrial complex in his speech in 1961 and his words still resonate. He said, “We annually spend on military security more than the net income of all United States corporations. In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”

The premiere blamed resource and environment bottleneck, enlarging income gap, poor technological innovation, unbalanced industrial structure, and uneven urban and rural development for China’s unbalanced, uncoordinated and unsustainable development.

He said that to boost domestic consumption turning potential demand into actual buying power in the next five years China has to further encourage urbanization, improve income distribution, expand social security network, augment basic public services, and upgrade consumption structure.

Wen said that hastening the transformation of the economic growth would move the country’s economic and social development to a new. He called the move “a profound reform in the country’s economic and social development”.

Wen emphasized a balance approach to guarantee firm and fairly rapid economic development, adjustment of economic structure and avoidance of possible inflation.

Recounting the achievements of the last five years, Wen mentioned that the thousand year old agricultural tax was eliminated, free nine-year compulsory education was attained throughout the country, and a social security system was established in both urban and rural areas in past five years.

He considered it a main assignment of Chinese government during next five years to consolidate and expand upon China’s accomplishment to deal with the adverse effects of the global financial crisis.

The Chinese government released complete transcript of Premier Wen Jiabao’s justification of five year economic and social development plan for the country on Thursday, which was adopted earlier at the Fifth Plenary Session of the 17th CPC Central Committee.

The state Council will draft the new five-year program and it is likely to be reviewed at the fourth session of the eleventh National People’s Congress next year in March.

Market analysts forecast a stronger dollar if the G20 finance minister meeting developed a consensus not to devalue their currencies. A stronger dollar turns buyers using foreign currency away from commodities since they are priced in dollars.

Investors are watchful while they wait for Federal Reserve decision next month as how to fuel the economy. Majority of investors are expecting Policy makers to start buying bonds in November that will exert more pressure on the US dollars.

Metals, grains, energy contracts all dropped on Thursday. Gold shed US$18.60 settling at US$1,325.60 an ounce.

In contracts for December, Crude lost US$1.98 to US$80.56 a barrel, Silver dropped 72.5 cents to US$23.139 an ounce, copper lost 1.2 cents to settle at US$3.7815 a pound, and palladium shed US$4.35 to US$586.30 an ounce, wheat dropped 14.25 cents to US$6.6875 a bushel, and corn fell 9.25 cents to US$5.6425 a bushel.

Report claims that pushing teenagers to excel in academics will do more than just help them into a better college or university. It will lower their auto insurance premiums as well.

It all goes back to those actuarial tables. These tables, based on with rather complex mathematical formulas, help underwriters in determining how likely a certain type of driver with x number of years of experience, having y number of moving violations/accidents on his/her record, driving a z make and model vehicle in a particular geographic region is to have an accident – and what that accident is likely to cost the company if a claim is filed.

Decades of actuarial evidence, dating from the 1920s when teenagers began operating motor vehicles, show that (A) teens are the most likely to have a serious accident (arguably, most of these are single-car accidents, but still result in considerable property damage and serious injuries), and (B) teens who are serious about academics have a much lower rate of such accidents.

This is why auto insurers offer the best car insurance deals to teens that have a higher academic standing.

How Much?

Of course, even good student car insurance is going to be substantially higher than rates for drivers over the age of 25. However, by maintaining a grade point average of 3.0 or higher, teenagers can cut their auto insurance bills by as much as 20% or more.

This can also apply when a teen driver is added to an existing policy – which may be a less expensive alternative, particularly when the teen in question will be driving the family car instead of his/her own.

What Else Can Be Done?

It goes without saying that keeping a clean driving record and avoiding even minor accidents will go a long way toward maintaining lower-cost car insurance for young drivers. Even a minor infraction can cause any discounts to disappear.

Another way to lower insurance costs for young drivers is to enroll in an approved defensive driving course – above and beyond the regular driver’s education courses taught in high school. Aside from learning more about how to stay safe while on the highway, teens receive a certification that will make your insurer much more inclined to offer further discounts on their auto insurance premiums

http://www.thenews.com.pk/daily_detail.asp?id=251448

When I talk to my nieces and nephews, Pakistan’s millennial generation, I feel rejuvenated and perplexed, at the same time. I get excited because these young children are so creative and worldly. The minute I log into Skype, Gmail, or Facbook, my young buddies tell me about some technological experience or an epiphany they had on how to change Pakistan. I am invigorated listening to their ideas.

I am at a loss, however, when these bright young kids tell me how they struggle to find a job. I am baffled because they are looking for job the same way I did. Trust me it was a long time ago.

In 1985-86 when I was entering the job market with my peers, we had a routine. We would review all the vacancies announced in the daily ‘Dawn’ every week and mail our resume (we used to call it bio-data) to prospects. And, we waited. Like other struggling middle class families we did not know ‘people’ at the right places. But we applied for positions and prayed for an interview and all of us finally found work. Not necessarily doing what we wanted to do, but jobs that paid enough to make us get up in the morning.

That was 25 years ago. Men and women in India, Bangladesh and other developing countries were looking for work in the same way as we were in Pakistan. There was parity.

Now when I talk to people in India and the Philippines, Ukraine and Russia, Brazil and Poland, I find that unlike Pakistan, a growing number of employable youth in these countries are not looking for a job. They are interested in gigs. And that reflects the structural change in the post-modern job market across the globe.

The millennial generation across the world prefer being self-employed instead of becoming an employee. They can do that because of advances in computer and telecommunications technology. But these successful service providers (individuals) at portals such as eLance, Guru, oDesk, iFreelance had to change their attitude towards work.

Taking advantage of the rapid pace of technological change, a globalised market place and a boom and bust economy, millions of workers have found security in the idea of free agency. And, this spirit of enterprise has produced workers around the world that are more resilient, adaptable and entrepreneurial than their predecessors.

I personally know hundreds of successful individuals around the world who have traded in careers for gigs.

In the US this trend is pretty established. According to the Online Talent Report, more than 100,000 businesses listed 300,000 new jobs last year. Last month alone, the number of jobs posted grew by 30 percent from the previous month. And that trend isn’t exclusive to the United States and Europe. Data shows that there are online and self-employed workers all around the world with India leading the curve.

Demand for certain types of jobs such as mobile application programmers and social media management is far outstripping supply. So far, small businesses are the first to look for talent online. But larger enterprises are following, as well. AT&T, IBM, Cisco, Novartis, P&G and Kimberly Clarke are among a few that you will find posting transactional opportunities through their contractors or directly. Many more are expected to follow the suit.

Test this: go to craigslist.org for Pakistan and look for jobs/services offered and than go to any of the large Indian city and you will find that entire country of Pakistan has less than 10 percent postings compared to any Indian city. I am always told not to compare us with India because we are ‘special’. OK, just compare Pakistan and the Philippines and there is a difference in order of magnitude.

After speaking to several people in Pakistan, I realise that there are some real challenges that make it rather difficult to work from home. I will address that below. But I want to first dispel some established myths about the online marketplace first:

MYTH No 1: All jobs are posted by American and European employers and they don’t want to hire Pakistanis for several reasons.

Reality: Online hiring is not asymmetrical. It is a misnomer that service providers are from low-cost destinations and all buyers are from the United States and Europe. Some basic research will show that employers from across the world are taking advantage of a flexible workforce. With the Internet, the search for talented employees is no longer limited by geography. And, the same tool allows professionals to find work from anywhere, as well. I live in New York and I have provided services to employers in Indonesia, the Philippines and Brazil. And, I am just an individual.

Also, I have yet to find an American who will refuse a talented resource from any part of the world. Money transcends national boundaries and religion. Any Indian and Israeli employer will be happy to hire someone from Pakistan if the service is good and priced competitively. It is all about adding value.

MYTH No 2: Online jobs are for programmers only.

Reality: You don’t need to be a programmer to work online. Whether you are skilled for sales and marketing, finance and management; administrative or legal; engineering or manufacturing, you can work remotely. A majority of jobs today can be outsourced except those require a physical presence. Many of us have a full time administrative assistant (Executive Secretary, as they are called in Pakistan) sitting thousands of miles away.

There are several MBAs from leading institutions who provide management or marketing or sales-related services. Project Management work is pretty much done remotely. My brother works for IBM and he could be sitting anywhere in the world to do his job, and do it well.

I know several individuals in India and the Philippines who provide writing services to employers all around the world. And, you don’t need to be Mark Twain to find online gigs for writing. On an average, an individual who works eight hours a day can easily earn $600 to $2,500 per month, depending on their skills.

Accounting and legal services are also quickly emerging. I know several bookkeepers in Brazil and Argentina who provide accounting services to small businesses around the world. I know several lawyers who have paralegals sitting in India to do research and prepare court papers. The opportunities are endless.

Now let’s talk about some real challenges that an individual from Pakistan will have compared to their peers from across the border.

Challenge No 1: Many young middle class men and women do not have a credit or debit card and, thus, cannot sign up for services such as eLance, Facebook, iFreelance. There are at least two ways to address this; open a checking account with a global bank that has branch near you and make sure they will issue a debit card that can be used internationally. Or open accounts where you don’t need a credit card such as oDesk or post your services in places like Craigslist.

Challenge No 2: There is so much power outages that even if we get work (which is easy to find) we can’t deliver on time and, therefore, get negative feedback from employers.

I know this is real. We have more power outages than India, for example. I have no magic wand, but I will tell you if my livelihood was dependant on electricity, I would make secondary and tertiary plans to have minimum power to run a computer. I get a push back that we don’t have enough money to buy a UPS or generator. What about setting up small cooperatives with your friends and neighbours? Why don’t four or five of you get together and make it happen? The return on investment is so rapid and it will change your life. So what are you waiting for?

Challenge No 3: How will I get paid? Open a bank account or PayPal account (or other similar services). Of course, there may be a time when you put in several hours, and may not get paid, but there are ways to mitigate that risk. When you work with an established service you are pretty much guaranteed about the payment. These services charge a couple of points to cover your risk. But you will get paid.

Here is a challenge that many learn after they start offering services online: not everyone can work from home. You need lots of discipline because there are plenty of distractions when you are working from home. But I know several individuals in Pakistan, as well who do it really well. Setting up a place of work at home is a serious matter and requires careful planning. You must be comfortable to produce good quality work. You must be able to get up, take a shower (or not) and go through the routine as if you were going to work outside. Once you get to your desk you must be able to tune out your family and surrounding.

It is not that there are no Pakistanis. I see a few firms as top tier providers on oDesk, eLance and Guru. But there are a very small number of independent Pakistani individuals.

Here is my challenge to you: if you are educated and unemployed (BA, BCom, BSc at minimum) establish your practice online and make your first $100 and post a comment to let us know that you are on your way to making millions.

Federal Minister of Commerce Makhdoom Amin Fahim informed Pakistan’s parliament that Pakistan has lost about $40 billion in war against terrorism as a front line state and Pakistani government is making every effort to acquire free access to United States and European Market to generate revenue by exporting Pakistani products to offset the loss and over turn the national economic crises.

He told the assembly that the process to acquire consent for free access to European Union market is time consuming because each EU state follows its own constitution.

Minister also informed the assembly that presently there is no shortage of sugar in country as 80,000 metric tons of the commodity is available and more sugar is expected to arrive in the market shortly. He said government is strictly following protocols and well defined best practices to float international tenders for importing sugar and to select the firms.

Every commodity is to be laboratory tested before import and on the arrival in the local market, Amin Fahim explained.

Why is it that Muslims from Qatar or Oman: Muslims from India, Bangladesh, Malaysia or Indonesia not under scrutiny? Why is it that a Pakistani has to go through “enhanced” security measures at American airports while Muslims of many other countries walk with their heads high? If we are judged by the company we keep ask yourself why you are in the company of Afghanistan, Somalia, Sudan, Nigeria, Libya and Syria? Ask yourself what is common between these nations?

In my opinion these countries are defined by the absence of mature governance model and corrupt, uneducated, greedy leadership.
Why is that we don’t have highly educated Pakistanis in parliament and cabinets? Where are our PhDs hiding? Why isn’t Proferssor Manzoor Ahmad, Pervez Hoodbhoy or Ayesha Siddiqui running the management of country?

I believe in past six decades we have nourished a culture that protects and respects illiterate thieves- not only in politics but also business. A handful of privileged and filthy rich Pakistanis collude to artificially raise prices of important commodities like sugar and cotton.

I always wonder how a nation in the throes of one war and a half on two fronts, an undernourished, calamity stricken nation like Pakistan condones such behavior on the part of a few rich, self-interested people. These people are the real terrorists of the land; they deserve to be caught, imprisoned and punished for the way in which they are corroding the economy of Pakistan, and by their ill devised foreign policy diluting our brand in the world.

Look closer at these robbers and you will find them in military uniforms, parliament, senate and cabinets. These corrupt elite of Pakistan are responsible for not only destroying economy but their adventurism has put us in harms way.

Why is it that Pakistanis are under microscope in the US and Europe? It is because our military leaders with modest IQ and strong muscles can twist arms (or abduct or kill or both) anyone who does not agree with them.

Pakistani entrepreneurs have learned that they can make crazy profit by playing by the rules of army bosses. And, Pakistani journalists realize that their job security comes from perpetrating the propaganda of men in uniforms.

Last September, a largely unknown raid at the premises of the Pakistan Sugar Mills Association revealed that a number of sugar mill owners had formed a cartel like structure and were engaged in “extensive institutionalization of collusive behavior.”

The agency, which has been struggling to make a foothold for its antitrust laws in Pakistan’s largely feudal economic climate, established how the affluent owners of the 82 sugar mills planned to raise the price of sugar by unfair pricing practices.

Guess who owns these sugar mills? 35% are owned by retired Pakistan army officials and another 40% are owned by the leaders of two major political parties.

Why Pakistani nation is not outraged?

While Pakistan was still struggling through the sugar crisis, unscrupulous parties and untoward economic conditions seem to have come together to create another commodity crisis in Pakistan, this time, of cotton.

Cotton prices rose to Rs 7000 per maund in April. The new crop is yet to arrive, and various international bans and embargos have produced a big deficit in the available amount of cotton. People with old stocks of cotton are taking advantage of the situation to make a killing, knowing that they are killing the economy itself. In just a short week last month, there was a Rs 1000 appreciation in the price of prime stock cotton while the textile industry pitted against peers to buy as much of the previous year’s stock as they could.

And, guess who owned majority of the old stocks? Three retired Major Generals in Punjab- had hoarded a large lot. Several well wishers of Mian family and a very close ally of Mr. Gillani.

The country has been most hit by a ban on import from India, Pakistan’s principal supplier of cotton. Pakistan has had to buy cotton at high rates from expensive sellers of other countries.

Pakistan’s textile industry has to supply pending orders from foreign buyers in the developed world, and cotton bought at very high prices kills their margin. And, this calamity has also raised the price of cotton domestically, and that does not bode well for the ordinary Pakistani, who now has to shell out more than twice as much as the old price of cotton. Prices of garment in Pakistani markets have become unbearable for a middle class family to even purchase uniforms for their school going children.

Why are Pakistani people not outraged? Why are Pakistani journalists not talking about this?

Overall Pakistan need to import at least 1.5 million bales of cotton to contain the crisis. The deficit is a shock, because India, with very similar climactic and soil conditions, has a record surplus this year.

The Karachi Cotton Association has fixed the official spot rate, or base price of Grade 3 cotton, at Rs 7180 per maund. At such prices, ordinary citizens of Pakistan will find it very hard to buy and wear cotton this year.

With severe economic crisis at hand, Pakistani leaders go around the world to beg and borrow, while they continue to steal from their own people.

And, guess what is your favorite TV anchor doing right now? Preparing a show that will ask the same question: why does America hate Muslims? Please remind them it is not religion – it is their policies.