Archive for the ‘Unemployment’ Category

Recession is Official: Could Last Into, Past 2010

December 2, 2008

The economy’s yearlong downturn, officially declared a recession Monday, could last well into next year or even beyond, challenging the government to devise new responses as traditional methods show limited results.

The National Bureau of Economic Research, the private body charged with determining the onset of a recession as well as its endpoint, said Monday that the current downturn met its definition of a recession: “a significant decline in economic activity spread across the economy, lasting more than a few months.”

By the Los Angeles Times

Read the rest:
http://www.latimes.com/business
/la-fi-econ2-2008dec02,0,25
87872.story

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Santa Won’t Visit China’s Toymakers Much This Year

December 1, 2008

Dongguan, China, produces a vast amount of the toys that will end up under Christmas trees around the world. Or it did, until all the factories there started to close because of the global economy….. leaving thousands of workers out of work and out of luck….

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At about six o’clock Thursday evening, around what used to be quitting time for the day shift at the He Jun toy factory in Dongguan, China, 40-year-old Wei Dong Li made his way to the factory’s front entrance, his three-year-old son Qian Jie tugging at his sleeve. The factory is now closed; a few security guards stand inside the locked gate. Posted each evening at the front entrance is a sheaf of documents: the latest rulings from a local court on compensation claims filed by many of He Jun’s 4,000 workers, Wei included. “They process a few of them a day, so I come back every other day to check and see if my case is on the list,” Wei says. He has no luck again. “I’ll just wait some more,” he says. “I have nothing else to do at this point.”

By Bill Powell
Time Magazine

Dongguan, along with a handful of similar, nearby towns, is the real Santa’s factory at the North Pole. A sprawling, charmless city of 7.5 million that sits 80 km southeast of Guangzhou, the provincial capital of Guangdong in southern China, Dongguan produces a vast amount of the toys that will end up under Christmas trees around the world. Toys were one of the critical, low-wage, low-tech industries on which China built its economic ascent over the past 30 years. But as workers such as Wei know better than anyone, 2008 is the year that that part of China’s miracle has come to an end.

It’s been six weeks since He Jun, a Hong Kong-listed company, shuttered two of its biggest factories in China — suddenly and without any warning, former workers say. They were among the latest and largest factory closures in China’s battered low-end industries: toy manufacturers, textile companies and shoe makers most prominent among them. China’s steadily appreciating renminbi currency — which makes Chinese goods more expensive in key exports markets like the U.S. — as well as higher costs embedded in a new labor law enacted last year were already wreaking havoc with companies that survived even in the best of times on the thinnest of profit margins. Now, with a global recession gathering pace, the best of times are gone, and the pain in what had been booming areas in southern China is spreading quickly. Fully half of China’s toy exporters, which sent nearly $8 billion worth of Barbies and Thomas the Tank Engines to export markets in 2007, were driven out of business in the first seven months of this year, Beijing’s General Administration of Customs said in a recent report. In the city of Shenzhen, the other major manufacturing center in Guangdong province, 50,000 people have already lost their jobs this year. And in Beijing last week, Zhang Ping, chairman of the National Development and Reform Commission, the nation’s key economic policy-making body, bluntly warned that “excessive production cuts and business closures will cause massive unemployment and that will lead to instability.”

In Dongguan, it already has. Earlier last week, on the evening of November 25, another large toy manufacturer here, Kai Da Manufacturing, laid off more than 600 of its workers because of slowing production. According to participants and eyewitnesses to what followed, a large group of the workers gathered in the front courtyard of the factory demanding to know what compensation they would receive. At first, a company manager told them that anyone with a good work record and less than five years service would receive less than 10,000 RMB—less than $1,500 at today’s exchange rates. Anyone with over seven years on the line and a good record would get 12,300 RMB or about $1,800.

Read the rest:
http://www.time.com/time/world/article/0,8599,
1862717,00.html?xid=rss-topstories

China: Economy Protests Worry Beijing

November 28, 2008

A string of strikes and violent protests is unnerving China’s Communist Party leadership as it struggles to contain the fallout from the global economic slowdown that appears likely to sharply increase unemployment.

By Chris O’Brien
The Washington Times

In the latest instance of unrest, hundreds of protesters stormed the gates of a toy factory in southern China that supplies U.S. toy maker Hasbro Inc. on Tuesday and Wednesday, smashing police vehicles, wrestling with security guards and breaking into management offices to destroy computer equipment.

The incident occurred as the World Bank announced that it was cutting its forecast for China´s 2009 growth rate to 7.5 percent from 9.2 percent — further evidence that a slump in demand for Chinese exports is hitting the country hard.

Only a week ago, a crowd of about 2,000 demonstrators used axes, chains and iron bars to attack police in Longnan, a city in the northwestern province of Gansu, after a protest over an unpopular urban redevelopment program spiraled out of control.

But the act of rebellion that is likely to cause the greatest anxiety among the party´s top ranks is a series of strikes by taxi drivers that have rippled across the country since the beginning of November.

Read the rest:
http://www.washingtontimes.com/news/2008/no
v/28/economy-protests-worry-beijing/

China moves to stem mass layoffs

November 18, 2008

When China’s President Hu Jintao made his first official visit to Washington in April of 2006, President Bush asked his counterpart which of the numerous challenges China faced was the most serious — which one kept Hu awake at night worrying. “Unemployment,” Hu reportedly answered without hesitating.
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China's President Hu Jintao speaks at a celebration meeting ... 
China’s President Hu Jintao speaks at a celebration meeting at the Great Hall of the People in Beijing.  REUTERS/Jason Lee (CHINA)
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From the BBC

Companies in two Chinese provinces, Shandong and Hubei, have been told they must seek official consent if they want to lay off more than 40 people.

The order highlights the Chinese authorities’ concern over mounting job losses.

As China’s main external markets plunge into recession and export orders shrink, layoffs have multiplied in the country’s big manufacturing regions.

In Shandong alone, nearly 700,000 people have lost their jobs this year.

In southern Guangdong, tens of thousands of firms have closed, sparking off reverse migration to the countryside by redundant workers.

China’s economic growth has slowed sharply this year to around 8 percent – high by world standards, but much less than the double-digit figures seen for years.

Read the rest:
http://news.bbc.co.uk/2/hi/asia-pacific/7735205.stm

 

 

Chinese police officers stand guard as hundreds of workers gather outside a government building after a large toy factory closed in Guangdong province, southern China, on 17 October 2008
China fears fast-rising unemployment could trigger social unrest

 

 

Russia’s high-tech sector reels

November 17, 2008

After the first round of layoffs, the staff members of MeshNetics filtered in as usual, taking their positions inside powder-blue cubicles and making the ritual run to the cafeteria for coffee. On one level, they felt relief: The cuts had been made, and they were all still here. It made them especially glad to see one another.

But there were thoughts they kept to themselves. It was hard not to stare at the vacant desks, the stray objects one programmer described as the “signs of lost people.” On the wall, a flat-screen monitor with the caption “MeshNetics Confidential” flashed snapshots from the summer, when this start-up company seemed to have harnessed the best ambitions of a new Russia. Now, anxiety was disturbing the employees’ sleep. The smokers were smoking more often.

Above: The main office of MeshNetics in Moscow, which produces wireless networking systems and is facing a money crunch. (James Hill for The New York Times)

By Ellen Barry
International Herald Tribune

The tale of this young company, which produces innovative wireless networking systems, offers a glimpse of how the financial crisis has swept through Russia’s budding entrepreneurial culture and crashed like cold water onto young workers who had come to see the boom times as normal.

Last month, as Russia’s stock market swooned and the credit crunch took hold around the world, Russian companies spooked by memories of previous bank collapses scrambled to protect what cash they had. Venture capital dried up virtually overnight, including at MeshNetics’ parent company.

At MeshNetics, a gingerly layoff was followed by a second cut, and a third. By late October, the options had dwindled: it had to find a new source of capital or suspend operations. “It’s going to be tough letting go of this period of growth,” Ilya Bagrak, the company’s software product manager, said last month. He was still in shock from the experience of firing one of his employees hours after they had shared their morning coffee.

Read the rest:
http://www.iht.com/articles/2008/11/17/europe/17russia.php

Japan Slides Into Recession; Obama Presidency Seen as No Help

November 17, 2008

Japan’s economy slid into a recession for the first time since 2001, the government said Monday, as companies sharply cut back on spending in the third quarter amid the unfolding global financial crisis.

The world’s second-largest economy contracted at an annual pace of 0.4 percent in the July-September period after a declining an annualized 3.7 percent in the second quarter. That means Japan, along with the 15-nation euro-zone, is now technically in a recession, defined as two straight quarters of contraction.

The result was worse than expected. Economists surveyed by Kyodo News agency had predicted gross domestic product would gain an annualized 0.1 percent.

Japan’s Economy Minister Kaoru Yosano said following the data’s release that “the economy is in a recessionary phase.”

But the worst may be yet to come, especially with dramatic declines in demand from consumers overseas for Japan’s autos and electronics gadgets. Hurt also by a strengthening yen, a growing number of exporters big and small are slashing their profit, sales and spending projections for the full fiscal year through March.

Toyota Motor Corp., for example, has cut net profit full-year profit forecast to 550 billion yen ($5.5 billion) — about a third of last year’s earnings. And Sony Corp., whose July-September profit plunged 72 percent, expects to make 59 percent less this fiscal year than last year.

“What we’re starting to see is the extent of deterioration in external demand start to weigh more heavily on the Japanese economy,” said Glen Maguire, chief Asia economist at Societe Generale. “And I think looking forward, there’s every indication that dynamic is going to continue.”

Read the rest:
http://news.yahoo.com/s/ap/20081117/ap_on_bi_ge/as_jap
an_economy;_ylt=ApHIyzOiyEFeB_wFtelfrris0NUE

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For Japan, Obama Signals A Shift Closer to China, Away From “Traditional” Asian Allies
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The Japanese do not share the jubilation seen almost everywhere following the election of Barack Obama. 

Economically, Japan sees an Obama White House funding the American Big Three Automakers: GM, Chrysler and Ford.  And that’s bad for Japan’s automakers.

Japan, for one nation, prefers to allow the “system” to work without more government intervention.

On the foreign policy level, Japan fears North Korea’s erratic behavior and nuclear capability.  It also fears China as a tradition enemy of immense wealth, population and size which can easily overwhelm the economy of Japan.

Japan fears the presidency of Barack Obama.  “So far, no good,” one senior diplomat told Peace and Freedom.

John E. Carey
Wakefield Chapal, Virginia

Related:
Obama Not Such A Hero In Japan

Top Republican senators oppose automaker bailout

November 16, 2008

Top Republican senators said Sunday they will oppose a Democratic plan to bail out Detroit automakers, calling the U.S. industry a “dinosaur” whose “day of reckoning” is coming. Their opposition raises serious doubts about whether the plan will pass in this week’s postelection session.

Democratic leaders want to use $25 billion of the $700 billion financial industry bailout to help General Motors Corp., Ford Motor Co. and Chrysler LLC.

By Stephen Ohlemacher, Associated Press Writer

Sens. Richard Shelby of Alabama and Jon Kyl of Arizona said it would be a mistake to use any of the Wall Street rescue money to prop up the automakers. They said an auto bailout would only postpone the industry’s demise.
Richard Shelby
Senator Shelby

“Companies fail every day and others take their place. I think this is a road we should not go down,” said Shelby, the senior Republican on the Senate Banking, Housing and Urban Affairs Committee.

General Motors headquarters is seen October 26, 2008 in Detroit, ... 
General Motors headquarters is seen October 26, 2008 in Detroit, Michigan. Picture taken October 26, 2008.(Rebecca Cook/Reuters)

“They’re not building the right products,” he said. “They’ve got good workers but I don’t believe they’ve got good management. They don’t innovate. They’re a dinosaur in a sense.”

Added Kyl, the Senate’s second-ranking Republican: “Just giving them $25 billion doesn’t change anything. It just puts off for six months or so the day of reckoning.”

House Speaker Nancy Pelosi, D-Calif., said over the weekend that the House would provide aid to the ailing industry, though she did not put a price on her plan.

“The House is ready to do it,” said Democratic Rep. Barney Frank of Massachusetts, chairman of the House Financial Services Committee. “There’s no downside to trying.”
Rep. Barney Frank, Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi and Sen. Christopher J. Dodd were among the congressional Democrats negotiating the bailout settlement on Sunday. (Joseph Silverman/The Washington Times)

Above: Ready to bail, from L to R: Rep. Barney Frank, Senate Majority Leader Harry Reid, House Speaker Nancy Pelosi and Sen. Christopher J. Dodd. Photo by Joseph Silverman

Read the rest:
http://news.yahoo.com/s/ap/20081116/ap_on_go
_co/auto_bailout;_ylt=AmAt77VLR57r0Uq41kBoeYWs0NUE

Global Financial Crisis, Intertwined Economies, Too Much Debt: Now What?

November 16, 2008

Barack Obama surely has one of the toughest leadership challenges any incoming president has ever faced. We’re in the midst of a terrible economic meltdown, the current administration has lost all credibility, the House of Representatives is full of knuckle-dragging Neanderthals, and the public is being whipsawed between free-market fundamentalists preaching the virtues of just letting the market rip and left-wingers who think we can punish Wall Street while protecting Main Street. It feels like a mess with no one in charge.
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Now is when we need a president who has the skill, the vision and the courage to cut through this cacophony, pull us together as one nation and inspire and enable us to do the one thing we can and must do right now:

Go shopping.

Obama can’t wait until Jan. 20 to weigh in on this. If we don’t stimulate the global economy fast enough and big enough, some of Obama’s inaugural balls might be held in soup kitchens.

When President Bush told us to go shopping after 9/11, he was right. We needed to stimulate the economy then. The problem was that the Bush economic team never turned off the green light and told people to “go saving.” So with easy credit seemingly endlessly available, American consumers saved virtually nothing and bid up housing prices to record levels. Retailers expanded stores and China expanded factories to accommodate all the shopping. It was quite a party. We had banks in America giving mortgages to people whose only qualification “was that they could fog up a knife,” one mortgage broker told me.

By Thomas Friedman
The New York Times

But when something seems too good to be true, it usually is. When these reckless mortgages eventually blew up, it led to a credit crisis. Banks stopped lending. That soon morphed into an equity crisis, as worried investors liquidated stock portfolios. The equity crisis made people feel poor and metastasized into a consumption crisis, which is why purchases of cars, appliances, electronics, homes and clothing have just fallen off a cliff. This, in turn, has sparked more company defaults, exacerbated the credit crisis and metastasized into an unemployment crisis, as companies rush to shed workers.

Governments are having a problem arresting this deflationary downward spiral — maybe because this financial crisis combines four chemicals we have never seen combined to this degree before, and we don’t fully grasp how damaging their interactions have been, and may still be….

Read the rest:
http://www.nytimes.com/2008/11/16/
opinion/16friedman.html?scp=1&sq=jaws&st=nyt


“You’re gonna need a bigger boat.”

GM failure: The shockwave

November 14, 2008

If General Motors really does run out of money by the end of the year, as it predicted was possible, the impact would be felt far and wide – to hundreds of suppliers, rival automakers and ultimately dealers across the nation.

“Once the first domino falls, it rapidly takes out all the other dominoes,” said Dennis Virag, president of the Automotive Consulting Group.

Suppliers would be among the first to feel those effects since GM only manufactures the body, the engine and the transmission used in its cars.

In the United States alone, GM spends $31 billion on parts from 2,100 different suppliers. These include the “direct suppliers” involved in producing a vehicle – those that provide everything from steering wheels and seatbelts to brakes and airbags – as well as “indirect suppliers” – those that make things such as gloves, protective eyewear, shop rags and lightbulbs.

By Peter Valdes-Dapena, CNNMoney.com senior writer

Read the rest:
http://money.cnn.com/2008/11/14/autos/auto_failure_
ripple_effect/index.htm?postversion=2008111412

China’s Economy: Weak Sister or Strong in Fundamentals?

November 14, 2008

Weakness in China’s economy is worsening and the government faces a severe challenge as it tries to avert a sharp downturn, an official said Friday, as new data showed investment growth cooling.

“The downturn trend in our economy is more obvious, especially since September. We hope a rapid downturn in growth will not occur,” Mu Hong, a deputy chairman of the nation’s main planning agency, said at a news conference.

Mu expressed confidence Beijing’s multibillion-dollar stimulus package would help the country weather the global downturn. But he said, “This international financial crisis is a new challenge for us. It is a severe challenge.”

Beijing is moving quickly to launch the package and will distribute most of a planned 100 billion yuan ($15 billion) in additional government spending within the next two weeks, Mu said. He said the money will be spent on housing, rural development, highways, public health and environmental protection.

Read the rest from CNN:
http://www.cnn.com/2008/BUSINESS/11/14/china.economy.a
p/index.html?section=cnn_latest

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China’s Economic Fundamentals Are Strong

BEIJING (AFP) – China said Friday the fundamentals of its economy remained strong amid the global financial crisis and it was confident of maintaining fast growth.

Following a slew of figures released this week showing growth in the world’s fourth largest economy was continuing to slow, senior government officials insisted the country was weathering the international storm.

A woman shops for vegetables in Beijing. The fundamentals of ... 
A woman shops for vegetables in Beijing. The fundamentals of China’s economy remain good despite the global financial crisis, with the government confident of maintaining fast growth, a senior official said(AFP/File/Frederic J. Brown)

“The origin of the financial crisis is outside the country and its impact on our financial system is limited. The fundamentals of our economy are still good,” National Development and Reform Commission vice chairman Mu Hong said.

Mu pointed to a stimulus package worth four trillion yuan (586 billion dollars) announced over the weekend as proof of the government’s ability and commitment to keeping the economy growing swiftly.

“I think the central government‘s decision to make significant changes to economic policy … showed its firm determination and confidence in stabilising the economy and maintaining fast growth,” he said.

“This determination and confidence are not baseless. They are based on the judgements of the domestic and international economic environment and the situation in China.”

Speaking at the same briefing on the financial crisis and China’s response, central bank vice governor Yi Gang said the nation’s banking system had plenty of money, indicating no concerns about a US-style credit crunch.

Read the rest:
http://news.yahoo.com/s/afp/20081114/bs_afp/finance
economychina_081114065615