In this issue
ASaP
Auxiliary Services and Programs
Budget & Planning
Business Services
Also this month
Meet this highly-skilled KSU alum, people-person and artist, Student Accounts Manager Cathleen Kiss
Get to know the ASaP Wunderkind, KSU alum and musician, Meal Plan Manager Rob Nolen
Guest Columns
On a Lighter Note...
Need more info?
Contact a member of your Financial Services Leadership Team
Pass it on
If you know someone who may be interested in receiving this newsletter, please forward to a friend!
|
From the desk of Dr. Ashok Roy
"In recent weeks we have seen consumer confidence improve, housing turnover show signs of a bottom in certain markets, and home prices slow their decline." - Robert Niblock, CEO of Lowe's
"Sooner than we think, the dollar may be challenged by other currencies, most likely the Chinese Renminbi." - Dr. Nouriel Roubini, New York University
"After 1989 capitalism saved China. After 2009 China saved capitalism." - David Miliband, Britain’s foreign secretary at the G20 in April
"We are starting to see some initial signs of improvement." - Treasury Secretary Tim Geithner at Peking University on June 1, 2009
The worst is likely over. In the March edition of this Newsletter, I made the prognosis, based on a reading of some macro-economic indicators, that the current economic recession will end by the end of this calendar year. It is gratifying to note that on May 27, the National Association for Business Economics outlook report (a panel of 45 economists) came to the same prognosis as mine. Additionally, Douglas Elmendorf, the director of the Congressional Budget Office, opined on May 21 that the economy should resume growth this year although the loss in employment, income and output will be felt for the next few years. Realistically, it will take years to recover the $13 trillion abrupt decline in the net worth of U.S. households. Most importantly, the financial markets feel confident that the Obama administration is prepared to take aggressive action. As a housing turnaround is crucial to economic recovery, the observation by the CEO of Lowe's (cited above) is important. Both monetary and fiscal easing should stimulate demand. We are in an extraordinary situation (lack of liquidity, solvency, consumption, residential investment, capital spending, construction, unemployment... currently 9.4%, etc) all the indicators are down...and so, unconventional steps (including massive fiscal spending by government adding trillions to the public debt) have to be taken. With revenue collections down, Georgia’s projected shortfalls for FY09 is $500 million and for FY10 is $725 million. A new forecast on June 2 by Moody’s Economy predicts that Georgia will be in the "second wave" (of seven states) to see job growth in first quarter of 2010.
There are predictions by the IMF, Barclays Capital and others that Asia will pull out of this global recession first, mainly because of the size of their fiscal stimulus (it is 4% or more of GDP in China, Japan, Malaysia, South Korea, and Singapore, while it is only 2% of GDP in the USA) and a more stable banking system as well as less household debts than the USA or Europe. Economists now forecast that China’s GDP growth this year may be 8%. The 19th century was the British century, the 20th century was the American century, and it looks, more and more likely, that the 21st century could be the Asian century dominated by China (it has solid growth, $2 trillion in foreign reserves (82% of which are in dollars), and a small budget deficit). At the G20 meeting last April, when China spoke, everyone listened. Such is the shift in the economic balance of power! The growing number of R & D laboratories in India and China (300 + multinationals have centers in China alone) means many, if not most, of the cost-cutting innovations will come from there. Interestingly, even in this global recession, Indian (e.g., on May 25, Bharti Airtel announced a tie-up with MTN of South Africa to create a $60 billion mobile phone giant) and Chinese (e.g., on May 24, PetroChina paid $1 billion for a 45% stake in Singapore Petroleum) companies are shopping around!
As I mentioned in the April edition of the Newsletter, one key to the future is health-care costs as it drives up the cost of Medicare and Medicaid. Currently, health-care costs impact household budgets, state budgets, employers, and of course the 47 million who are un-insured. Americans will spend an astonishing $2.5 trillion on health-care this calendar year alone. Europe spends $4,000 per person per year less than Americans on health-care, and yet produces better outcomes in all measures, such as: universal coverage, life expectancy, infant mortality, preventable deaths, etc. Therefore, the Obama administration’s efforts to transform/reform health-care is definitely a step in the right direction.
Best Regards,
Dr. Ashok Roy, Ph.D., CIA, CBA
Assistant Vice President for Financial Services &
Associate Professor of Asian Studies
The opinions expressed here are the views of the author and do not necessarily reflect the views and opinions of the Financial Services division of Kennesaw State University.
|