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Monday, 25 June, 2012
Couple’s counseling for the US & China Page 02
Euro in good shape despite Spain’s woes: Nowotny The euro will survive even if Spain were cut off from capital markets, European Central Bank policymaker Ewald Nowotny said, adding the currency was in solid shape despite financial problems in some member countries VIENNA
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N an interview aired by Austria radio on Saturday, Nowotny also supported the idea of having a limited number of European countries start a financial transactions tax and said there was no alternative to closer European Union economic integration. Nowotny, also head of Austria’s central bank, often says the euro is a smoothly functioning currency despite
debt woes at some of the 17 countries that share it. Euro zone leaders have agreed to provide up to 100 billion euros ($125 billion) to prop up Spain’s banking sector, which an audit released on Thursday found would need up to 62 billion extra capital to weather adverse circumstances. Asked if the euro would survive if Spain itself were frozen out of markets, Nowotny said: “We have to prevent this situation. But even if Spain could not finance itself it would not automatically
mean that it would exit the euro. There is no nervousness about the euro itself, just about individual countries”. He took a dig at International Monetary Fund managing director Christine Lagarde for suggesting on Thursday the euro’s viability was at stake. “This is exactly an example of what I see as an inadmissible simplification,” he said. Nowotny said there was no getting around greater EU economic integration if the bloc wanted to avoid splintering and a loss of power that would eventually de-
grade people’s quality of life and freedoms. He played down the prospects of next week’s EU summit coming up with a detailed way forward, and said that in the longer term it made sense to have a more centralized fiscal policy and a sort of EU finance minister. “I think it is sensible to have someone who, let us assume as a European commissar, is placed to have concrete influence on national budgets”, much as the EU competition commissioner can intervene when needed, he said. He supported the idea of a limited
Gold posts 3.5 peRcent weekly drop on deflation fear NEW YORK AGENCIES
In early trade, gold briefly crossed into negative territory for 2012, extending Thursday’s 2.5 percent drop. Investors were frustrated by the Fed’s decision this week to lengthen its “Operation Twist” program aimed at lowering long-term interest rates instead of a new outright bond purchase program. Inflation fears have helped fuel several years of strong gains for gold, but investors are starting to worry about deflation after reports this week showed signs of slowing economic activity around the world. “There is zero inflation out there. With gold being well received as a risk asset, the price is deflated because of the rising dollar,” said Phillip Streible, senior commodities broker at futures brokerage R.J. O’Brien. Streible said investors may rebuild gold positions after the latest price
pullback, and might rethink the flow of funds into U.S. Treasuries because they have reached a “saturation point.” Spot gold was up 0.2 percent at $1,568.70 an ounce by 2:59 PM EDT (1859 GMT), just $5 above the closing price of $1,563.80 for 2011. The metal noted a 3.5 percent this week for its second-largest weekly decline of the year. U.S. gold futures for August delivery settled up $1.40 at $1,566.90, with trading volume at about 35 percent below its 30-day average, preliminary Reuters data showed. Silver was up 10 cents at $26.85 an ounce. The metal, widely used in industry, posted a 6.5 percent drop for the week, its biggest weekly decline for the year. Demand for physical gold in key Asian markets remained lackluster. Indian gold buying has been hurt by a bad monsoon season and a record low in the rupee, which pushed local g o l d prices to an all-time high. India’s government’s decision to double import duty on gold to 4 percent also weighed heavily. Gold imports to India, historically the world’s largest buyer, fell by $6.2 billion in the first two months of the fiscal year that began in April, compared with a year before, the country’s finance secretary said on Friday.
Gold rebounded after the last session’s sell-off, but the precious metal was virtually flat for the year to date and posted a weekly drop of nearly 4 percent on deflation worries and a lack of aggressive Federal Reserve stimulus GOOD BUY AFTER PULLBACK?: Gold prices appeared underpinned a day after Moody’s downgraded 15 of the credit ratings of world’s biggest banks to reflect the risk of losses from volatile capital markets. Worries about the euro-zone debt crisis also supported gold. LGT Capital Management analyst Bayram Dincer said investors will retain interest in gold as long as the metal can hold strong support near $1,530 an ounce. “We believe the slide in gold prices may create an attractive entry point for emerging markets buyers and long-term investors such as the official sector and pension funds, who may be looking to diversify away from the U.S. dollars and into a quality hard asset such as bullion,” HSBC said in a note. Among platinum group metals, platinum was down 0.3 percent at $1,426.65 an ounce, while palladium edged up 0.2 percent at $604.35 an ounce.
ICCI joins hands with RAKIA team ISLAMABAD INP
Islamabad Chamber of Commerce and Industry (ICCI) organized an interactive secession in collaboration with Ras Al Khaimah Investment Authority (RAKIA) to explore investment opportunities, advantages and facilities offered by RAKIA for local and foreign investors. RAKIA could explore possibilities to expand bilateral trade with Pakistan as private sector has been playing the leading role in flourishing real estate sector of the country, Vice President ICCI, Mr.Shahid Zaman Shinwari said this, while exchanging views with a visiting delegation of RAKIA of the United Arab Emirates at Chamber House. Vice President ICCI expressed hope that RAKIA would help set off a new growth trend in the region, marking the beginning of a revival of the real estate sector. During a presentation, the General Manager of RAK Offshore of UAE, Mr.Peter Schuster highlighted the available investment opportunities and advantages of investing in different areas
and said that his delegation was here to join hands with Pakistan in all sectors of the economy and was looking for joint ventures with corporate companies. He said they wanted to make a long-term strategy plan with Pakistan for enhancing trade. He said that Ras Al Khaimah is characterized by an attractive investment environment and enjoys socio-economic stability, referring to the quality of infrastructure and the ease procedures for manpower. Mr.Peter also hailed the good economic performance of the emirate, which includes sizeable volumes of energy and oil as well as the privileged position of the emirate and the encouraging investment policies. Responding to the questions, General Manager of RAK Offshore of UAE said that the free trade zone is an area of a country where some normal Trade such as Tariffs and quota shares are eliminated. He said that RAKIA offers a highly attractive economic package to foreign investors, which include 100 per cent income and corporate tax exemptions, full repatriation of capital and profit, readily available labor, hassle-free licensing procedures, excellent infrastructure and logistic support.
number of European countries pressing ahead with a tax on financial transactions because some countries, such as Britain, will not join in for fear of harming its financial services industry. “It is senseless to wait a long time for everyone to go along. It is probably reasonable to start at least with a certain group. One country alone cannot do it,” he said. He said the tax should have a simple model that basically freed long-term transactions from the levy and focused on short-term and, thus, more speculative deals.
Judge blocks Apple in Google smartphone war NEW YORK AGENCIES
A US judge ruled that Apple Inc cannot pursue an injunction against Google’s Motorola Mobility unit, effectively ending a key case for the iPhone maker in the smartphone patent wars. The ruling came from Judge Richard Posner in Chicago federal court. He dismissed the litigation between Apple and Motorola Mobility with prejudice, meaning it can’t be refiled. The ruling is a blow for Apple, which had hoped a decisive ruling against Motorola would help it gain an upper hand in the smartphone market against Android. “Apple is complaining that Motorola’s phones as a whole ripped off the iPhone as a whole,” Posner wrote. “But Motorola’s desire to sell products that compete with the iPhone is a separate harm -— and a perfectly legal one -— from any harm caused by patent infringement.” Apple spokeswoman Kristin Huguet declined to comment on the ruling. Motorola Mobility spokeswoman Jennifer Erickson said the company was pleased that Posner dismissed Apple’s case. Both parties have the option to appeal Posner’s ruling. Motorola sued Apple in October 2010, a move that was widely seen as a pre-emptive strike against an imminent Apple lawsuit. Apple filed its own claims against Motorola the same month. Posner issued a series of pre-trial rulings that eliminated nearly all of Motorola’s patent claims against Apple from the prospective trial, while maintaining more of Apple’s claims against Motorola. That meant Apple had more to gain in the trial, which had been set to start last week. However, Posner canceled the trial earlier this month. Apple had sought an injunction barring the sale of Motorola products using Apple’s patented technology. But in Friday’s ruling, Posner wrote that neither party is entitled to an injunction. Since Motorola could design around the minor technological features covered by Apple’s patents, an injunction would be an inappropriate windfall for Apple, Posner wrote. Posner also said that Apple had not clearly demonstrated that Motorola phones caused a loss of consumer goodwill significant enough for an injunction. “To suggest that it has suffered loss of market share, brand recognition, or customer goodwill as a result of Motorola’s alleged infringement of the patent claims still in play in this case is wild conjecture,” Posner wrote. In a bright spot for the iPhone maker, Posner also ruled that Motorola could not seek an injunction based on the one patent in the case that it was still asserting against Apple. Motorola had pledged to license that patent - which covers an aspect of wireless communication - on fair and reasonable terms to other companies in exchange for having the technology adopted as an industry standard. “How could it be permitted to enjoin Apple from using an invention that it contends Apple must use if it wants to make a cell phone,” Posner wrote. At a hearing earlier this week, Apple had argued that it would be satisfied with an injunction forcing Motorola to remove Apple’s patented features within three months. But Posner found that proposal unworkable, in part because of the hardship in administering such an order. “Because of the potential costs to Motorola and the federal judiciary I could not responsibly order injunctive relief in favor of Apple,” he wrote in his ruling. The case is Apple Inc. and NeXT Software Inc. V. Motorola Inc. and Motorola Mobility Inc., in the U.S. District Court for the Northern District of Illinois, no. 11-08540.
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Monday, 25 June, 2012
Couple’s counseling for the US & China
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YAO YANG
HINA has undoubtedly benefited from the world system created and supported by the United States. Indeed, Richard Nixon’s journey to China in 1972 opened the door for China’s return to the international community. Most of the next two decades were a honeymoon for Sino-American relations. On the economic front, the US not only granted China most-favored-nation trade status, but also tolerated China’s mercantilist approach to international trade and finance, notably its dual-track exchange-rate regime. In the 1990’s, bilateral economic ties continued to expand. American support for China’s integration into the world system culminated with the country’s accession to the World Trade Organization in 2001. Since then, China’s exports have grown five-fold. Of course, China’s inadequate intellectual-property protection has damaged relations (a shortcoming that may be harming Chinese firms more than US firms by deterring American – and other advanced country – companies from deploying new technologies in China). And the role of China’s state-owned enterprises and official Chinese support for technological “national champions” (privileged companies that almost certainly use government money carelessly) has also hurt relations. In fact, China’s approach is akin to gambling against the odds. Successful hi-tech innovations are random events that follow the law of large numbers. When left to the market, many firms and individuals try to innovate, so the overall probability of success can increase dramatically. The market allows the law of large numbers to work, whereas concentrated government support for a few favored firms undermines it. But neither of these flaws, nor the exchange rate, is at the root of today’s global imbalances. Consider the exchange rate. The United Kingdom maintained a currentaccount surplus for the century before World War I, and the US did the same for about 80 years before 1980. But
neither country, apparently, did so by manipulating its exchange rate. Moreover, the economies that managed to narrow their external gaps with the US substantially after World War II, notably Germany, Japan, South Korea, Singapore, and Taiwan, ran current-account surpluses throughout their rapid-growth periods. This contradicts American economists’ conventional wisdom that fast-growing countries should borrow today against their larger future shares in the world economy. One possible explanation is that the relationship between GDP growth rates and a country’s current-account position is not linear. Compared to countries with very slow growth rates, countries with reasonably high growth rates should borrow. But when a country’s growth rate continues to increase, its saving rate would increase faster than its investment rate, so it is more likely to run a current-account surplus. For “catch-up” countries, like China, rapid growth is often accompanied by brisk structural change that moves factors of production, especially labor, from lowproductivity activities to economic sectors with much higher productivity. This adds to the surplus by increasing firms’ profitability. China’s exchange-rate policy is problematic not because it promotes exports, but because it has forced the country to accumulate a huge pile of wasteful foreign reserves. The Chinese government’s reluctance to allow faster exchange-rate appreciation may reflect its aversion to large, unforeseeable fluctuations, particularly given its determination to make the renminbi an international reserve currency. While China’s economy is hampered by structural difficulties, the US is not free of similar challenges. Frankly, I am always struck by US economists’ reluctance to discuss the structural problems that caused the current crisis, and that hinder America’s recovery. Most seem to believe that the crisis result from bad monetary policy and lax financial-sector regulation; some even blame the savings accumulated by Asian countries, especially China. That may be true of the immediate causes of the
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crisis. But its eruption was far more deeply rooted in the American version of capitalism, which aims at high levels of competition, innovation, returns, and compensation. While this model has, of course, helped the US to become the world’s leading economy, it has also delivered severe structural problems. For example, to sustain high innovation, the US has maintained the most flexible labor market among mature economies. But this does not come without costs. Companies often lay off a whole department of scientists to shift to a new product, destroying not only human capital, but also human lives. Moreover, flexible labor markets imply adversarial labor relations, particularly when compared to northern European countries. These countries are less innovative than is the US, but their economies and societies may be more resilient. Meanwhile, the jewel of American capitalism, the financial sector, caused the crisis and is underpinning the US current-account deficit. Oil exporters aside, countries running current-account surpluses, such as China, Germany, and Japan, have stronger manufacturing sectors relative to their financial sectors, while the relationship is reversed for countries running external deficits, such as the US and the United Kingdom. Finally, America’s global hegemony has proven to be a curse as well as a blessing. The US dollar accounts for 60% of world trade, and the US has the strongest military in the world, making it a safe haven for global investors. But, while large capital inflows reduce borrowing costs, they also tend to cause current-account deficits: lower costs of capital boost asset prices, with the wealth effect then prompting people to consume more than they earn. The policies adopted or discussed by American policymakers and scholars nowadays – quantitative easing, fiscal-stimulus packages, government-deficit reduction – seek to cure only the symptoms of a deeper malaise. As a first step to recovery, the US must undertake serious financial-sector reforms. As Lenin pointed out, financial capitalism is the highest form of capitalism – that is, it is the end of capitalism. Lenin may have gotten the underlying analysis wrong, but today we know that his conclusion may have been right for another reason: financial capitalism forces a country into unsustainable indebtedness. Unfortunately, America’s financial reforms have been half-baked at best. For three decades, “reform” was a word reserved for the Chinese side of the Sino-American relationship. The US, one hopes, will grow to like the sound of it. Courtesy: Project Syndicate
Regimes chase to rule the Internet HINA SARfARAz
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NTERNET has once more become an eyesore for governments that are being threatened by dissidents and newly emerging “net-activism” and/or more recently “hack-activism” which has taken to streets globally. A proposal has been tabled by Russia and China at the United Nations regulatory body; the “International Telecommunication Union” to negotiate on a proposal that would ultimately lead to regulating the internet; which has so far been a decentralized network for free flow of information and communication. A treaty is to be negotiated in a meeting of 193 nations in Dubai; this December at the 2012 World Conference on International Telecommunications (WCIT-12). Such an outlandish proposal is not only problematic for the cause of “political freedoms” but also that would defeat the very nature of connectivity, interoperability of the networks functions and so a consumer in Pakistan may only have partial access to information that the state authorises, controls and manipulates; resembling an autocracy or a tyrannical democracy. A recent incident of such a nature was observed in Thailand where the “webmaster” was held accountable for hosting libel on her website against the monarch, which is in violation of international legal principles; where the au-
thor should be held liable as the actual offender rather than the host of the network. Moreover, if regulatory bodies such as ITU are given authority to regulate internet - it may not remain the same, since various regimes will try to customize and tailor it to their own specific and at times horrendous ends. For instance, the Pakistan Telecom Authority: a regulatory authority which operates under the auspices of the Ministry of Information and Technology in Pakistan banned a micro-blogging website - Twitter last month that reeled no positive benefits for which the service was blocked, albeit for a few unfruitful hours. Political freedoms are pinned against socio-economic benefits which are the effectual victims of free-speech or freedom of expression on the internet, if the regimes choose to regulate the use of the various services online. The losers here are the users at home or across the digital divide or in commerce: the innovators in the internet commerce virtualization world, also known as cloud computing. One can foresee an economic cost imposed on customer for services rendered such as “drip pricing” to compensate to meet the requirements and standards of the regulatory body. Even though the ITU will not be able to control the governance of the systems, it will layout the rules, regulations and standards to which the telecom and serv-
Plum Quinqqi Dalang Motors Limited, Managing Director Wang Xi Hai and National Sales Manager ,Imran Warraich distribute car keys to the buyers on the opening ceremony of the Dalang 15-seater commercial van.
ice providers would be subjected to; and eventually the consumer will have to pay for the cost. On a positive note if restrictive trade practices along with restrictive approach to network accessibility is discouraged we can witness a bridging of the gap of the digital divide and the regimes within the ITU that find a multi-stakeholder approach more friendly may sway towards less control and more open standards come the December negotiations. On the contrary if that doesn’t happen we may see that the under-served areas and/or the tyrannical democracies may restrict their web users access to minimum results and usage of customized location based services, for instance a user in Thailand may not be able to search for certain “terms” on “google.” Russia, China, Tajisktan and Uzbekistan have proposed through the United Nation General Assembly to lay out an “International code of conduct” that would formulate a guide for countries to establish norms and rules for internet oversight. Meanwhile, some Arab states are looking to seeking to gain compensation for the flow of internet traffic which shall be a huge blow to free flow of information. Moreover, privacy and freedom of expression remain bone of contention against cyber-security at a micro-scale, sedition and national security at a macro-level, for the purposes of law enforcement. The European Union and
some Arab states seek to protect privacy of its citizens bearing all costs. This December will determine: whether the 1988 treaty negotiations are lethal to a free internet where permission-less innovation fostered global economic growth and granted political freedoms, or, will wisdom prevail over the intergovernment negotiations and, finally, will the non-binding regulations proliferate and assure growth and freedoms over the internet – our global village! The writer is a researcher and consultant in the field of information communication technology and anti-trust law
CORPORATE CORNER
Indus Motor embraces Euro II standards KARACHI: Indus Motor Company (IMC) is committed to producing safer and environment-friendly cars with minimum impact on the environment. Keeping in line with its environmental commitments, IMC has embraced Euro II emission standards in all Corolla variants. In this respect, IMC welcomes the government’s decision to implement Euro-II emission standards as the main aim of this policy is to decrease the amount of hazardous vehicle exhaust emissions. To fully adopt Euro II emission standards, IMC has installed catalytic convertor in its vehicles which is basically a device that converts the engine exhaust gases into less harmful substances. When used with low sulfur Euro II compliant fuel, the catalytic converter will reduce the levels of CO2 and HC+NOx emissions substantially. The revised prices of vehicles will be Rs. 1,534,000 Corolla (XLi), Rs. 1,669,000 Corolla (GLi), Rs. 1,824,000 Corolla GLi (AT) , Rs. 1,654,000 Corolla (2.0D), Rs. 1,899,000 Corolla Altis (MT) , Rs.1,994,000 Corolla Altis (MT/SR), Rs.1,994,000 Corolla Altis (AT), Rs. 2,084,000 Corolla Altis (AT/SR), Rs. 1,759,000 Hilux 4x2 (STD), Rs. 1,799,000 Hilux 4x2 (UPSpec), Rs. 1,779,000 Hilux 4x2 (Police), Rs. 2,874,000 Hilux 4x4 (Std MT),Rs. 3,174,000 Vigo Champ (MT), Rs. 3,374,000 Vigo Champ (AT).
McDonald’s honours best achievers KARACHI: McDonald’s Pakistan held an impressive ceremony at Corniche Park on June 8 here to honour the 100% Achievers under its “Beat the Peak” Competition. Renowned television and film actor Shabbir Jan was the Guest of Honour at the recognition ceremony. McDonald’s restaurants at Airport, Corniche, Najeeb Centre and Park Towers were declared as the 100% Achievers in April 2012 in the competition. The ceremony was held in honour of both crew and management staff of the four winning restaurants. Shabbir Jan awarded Certificates of Appreciation to all the members of crew and management staff of the concerned restaurants.
KARACHI: Executive Officer of CBC Mr. Muhammad Hayat Mahr brief to DG ML&C Major General Tahir Masood on visited of CBC. DG ML&C Karachi region Mrs. Zeenat Ahmed, President CBC Brig. Anis Ahmed station Commander Karachi and DHA administrator Amir Raza Qureshi also present at the moment.
KARACHI: Junior Chamber International’s President Farasat Ali Khan and Youth Parliament’s Rizwan Jaffery, aymen Saleem along with Dr. Azhar Ahmed sign a memorandum during a ceremony at a local hotel.
KARACHI: Faisal Tanoli, Manager Corporate Services at Ufone receives the ‘Best GSM Award’ on behalf of Ufone at the recent PIFFA awards.