Sunday, January 29, 2012

Which emerging economies have the most monetary and fiscal wiggle-room?

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Shake it all about

Which emerging economies have the most monetary and fiscal wiggle-room?

THE downturn in the euro area and the wobbly recovery in America have already taken their toll on the emerging world. Setting China’s still-bouncy economy to one side, the average growth rate in other developing countries is estimated to have slumped to an annual rate of less than 3% in the fourth quarter of 2011, from 6.5% in the first quarter. Some of that slowdown was the result of policy tightening to cool overheating economies and curb inflation, but it also reflects weaker exports and reduced capital inflows. If the euro-area debt crisis worsens, things will get nastier for emerging economies.
The good news is that whereas most rich countries have little or no room to cut interest rates or to increase public borrowing, emerging markets as a group still have lots of monetary and fiscal firepower at their disposal. That room for manoeuvre served developing countries well during the downturn of 2008-09: monetary and fiscal easing was more effective in boosting demand than it was in the rich world, thanks to healthier private-sector balance-sheets. Although the emerging markets have less room for easing now than they did in 2008, when they collectively ran a small surplus on their budgets, their average budget deficit last year was only 2% of GDP, against 8% in the G7 economies. And their general-government debt amounts on average to only 36% of GDP, compared with 119% of GDP in the rich world.
A healthy aggregate picture masks some big differences, however. Some governments have much more scope to loosen policy than others. An analysis by The Economist ranks 27 emerging economies according to their monetary and fiscal wiggle-room.
We began by using five indicators to assess each country’s ability to ease monetary policy. The first was inflation, which ranges from 2% in Taiwan to 20% or more in Argentina and Venezuela (using private-sector estimates for the former rather than the government’s dubious figure). Lower food prices have reduced inflation in many countries, but it remains above 5% in half of them. Our second measure is excess credit: the gap between the growth rate in bank credit and nominal GDP over the past year. This looks most alarming in Argentina, Brazil, Hong Kong and Turkey. In contrast, Chinese bank lending is now rising more slowly than GDP.
The third monetary indicator is the real interest rate. This is negative in about half of the economies, but is over 2% in Brazil and China. Fourth, we look at currency movements against the dollar since mid-2011. Nine countries, including Brazil, Hungary, India and Poland, have seen double-digit depreciations, with the risk that higher import prices could push up inflation. Our final gauge is the current-account balance. If global financial conditions tighten, it would be harder to finance a large current-account deficit, and so harder to cut interest rates. Turkey is the most vulnerable country on this measure, with a deficit of 9% of GDP forecast for 2012. India, Poland and South Africa are tipped to have deficits of around 4% or more.
We graded each country on all five indicators. We then added up the scores to produce an overall measure of monetary manoeuvrability (rankings for the individual indicators can be found here).
Next we devised a fiscal-flexibility index, combining government debt and the structural (ie, cyclically adjusted) budget deficit as a percentage of GDP. The most profligate governments, by emerging-market standards, are those of Brazil, Hungary, Egypt, India, Pakistan and Poland, with debts close to 60% or more of GDP. The last four countries also have huge structural budget deficits of 6-9% of GDP, leaving governments little room to respond to another downturn. In contrast, Russia, Singapore and South Korea have ample scope for a fiscal stimulus.
 Our interactive index ranks these 27 emerging economies across all six individual indicators
Some economists argue that China could not be saved by a big fiscal stimulus like that in 2009. Although its official government debt is only 27% of GDP, this excludes bank lending to local governments, which could push the total above 60% of GDP. But the Chinese government also has vast assets, notably its shares in state-owned enterprises, so its net fiscal position remains healthy.
The average of these monetary and fiscal measures produces our overall “wiggle-room index”. Countries are coloured in the chart according to our assessment of their ability to ease: “green” means it is safe to let out the throttle; “red” means the brakes need to stay on. The index offers a rough ranking of which economies are best placed to withstand another global downturn. It suggests that China, Indonesia and Saudi Arabia have the greatest capacity to use monetary and fiscal policies to support growth. Chile, Peru, Russia, Singapore and South Korea also get the green light.
Red alert
At the other extreme, Egypt, India and Poland have the least room for a stimulus. Argentina, Brazil, Hungary, Turkey, Pakistan and Vietnam are also in the red zone. Unfortunately, this suggests a mismatch. Some of the really big economies where growth has slowed quite sharply, such as Brazil and India, have less monetary and fiscal firepower than China, say, which has less urgent need to bolster growth. India’s Achilles heel is an overly lax fiscal policy and an uncomfortably high rate of inflation. The Reserve Bank of India has sensibly not yet reduced interest rates despite a weakening economy. In contrast, Brazil’s central bank has ignored the red light and reduced interest rates four times since last August. In its latest move on January 18th, the bank signalled more cuts ahead. That will support growth this year but at the risk of reigniting inflation in 2013. Desirable as it is to keep moving, ignoring red lights is risky.

Friday, January 6, 2012

IBM Acquisition of Emptoris Bolsters Smarter Commerce Initiative, Helps Reduce Procurement Costs and Risks

IBM Acquisition of Emptoris Bolsters Smarter Commerce Initiative, Helps Reduce Procurement Costs and Risks

ARMONK, N.Y., - 15 Dec 2011: IBM (NYSE: IBM) today announced a definitive agreement to acquire Emptoris Inc., a leading provider of cloud and on-premise analytics software that brings more intelligence to procurement and supply chain operations with spend, supplier and contract management for Smarter Commerce. Financial terms were not disclosed.
With more than 350 customers in 75 countries, Emptoris is based in Burlington, Mass. with offices in the U.S., U.K., France, Germany, Australia, India, Brazil and China. Emptoris' global clients span multiple industries including consumer products, financial services, healthcare, telecommunications, chemical/oil/gas, utilities, construction and industrial manufacturing.
The acquisition is the latest addition to IBM's Smarter Commerce initiative, launched in March 2011, which is aimed at helping companies respond to shifting customer buying patterns. Emptoris brings to IBM Smarter Commerce a set of new, flexible and integrated solutions that orchestrate and manage the sourcing and procurement of goods and materials as part of supply chain management. Supply chain intelligence using these solutions enables better inventory management and can create large savings opportunities.
For example, a large global oil and gas company established a centralized sourcing network across its entire enterprise operating in more than 80 countries, which enabled them to focus on the most strategic, highest cost, frequently-purchased items. This brought speed, transparency and simplification to the sourcing process. As a result, the company runs thousands of sourcing events per year managing more than 15,000 suppliers in 10 languages, achieving more than 9 percent reduction on managed categories of goods.

Thursday, January 5, 2012

Is Ubuntu's Bleeding Edge Hurting Linux? By Matt Hartley January 3, 2012

Problems occur with newer Linux enthusiasts who don't realize that installing the latest Linux release isn't always the best way forward.

Is Ubuntu's Bleeding Edge Hurting Linux?
By Matt Hartley
January 3, 2012

Like most computer enthusiasts, I find myself seeking out Linux distributions that offer a bleeding edge experience. That said, I'm also careful not to place bleeding edge operating systems onto a desktop machine I rely on for daily use.

After all, why put my daily productivity at risk only to discover possible bugs with a cutting edge OS! Therefore, my bleeding edge Linux experiences tend to be used on my notebook only, thus leaving my desktop free of any surprises.

Unfortunately for many Linux enthusiasts, the above approach isn't always something that's considered. While we do see most IT pros choosing stability over a bleeding edge experience for the workplace, many people outside of the IT realm tend to install the latest Linux releases without a single thought as to stability.

This approach presents a problem, especially with newer Linux enthusiasts who don't realize that installing the latest Linux release isn't always the best way forward.

In this article, I'll explore the disconnect with newer users and distribution development teams. I’ll talk about why I feel both parties contribute to the ongoing confusion as to whether it's best to select stability over a bleeding edge Linux experience.

The end user to developer communication breakdown

It's not a secret to advanced Linux enthusiasts that running the latest release of their preferred distribution is likely going to lead to some bugs along the way. It's the nature of working the kinks out of new software.

Unfortunately, newer users are often under the impression that if a Linux distribution has come out of its beta stage, it's going to be perfectly stable to use. The fact of the matter is that this simply isn't always the case.

I don't believe there is any question that distribution development teams have done everything they can to handle software bugs. However, it's rare that they can get to all of them before the new version is released to the public. Expecting anything else is simply unrealistic. This is why many experienced Linux enthusiasts will opt for an older, more stable release of the same Linux distribution.

Now the problem with this is that most distribution maintainers do a lousy job at explaining the differences between stable vs non-stable releases, and when end users should update and when not to. The only distribution I've ever seen really make a concerted effort to keep people from updating their Linux distributions and software unnecessarily is Linux Mint. There may be others that do a fair job here as well, but none of them are using Ubuntu as a base distribution from which to build from (to my knowledge).

A logical solution to this problem is to make it clear on distribution download pages which releases are bleeding edge, then provide a link that explains how that affects stability, known bugs, etc. Taking this approach would not only prevent the ongoing misunderstandings on various Linux forums, it would also save time for everyone involved.

The attraction of bleeding edge software

So why do some Linux enthusiasts feel the need to jump onto the latest distribution releases in the first place? If you were to ask these users directly, they would say that they want access to the latest software releases available. And when using distributions such as Ubuntu, often you must run a newer release of the distribution in order to get the latest features available.

Let me say this again: Some Linux distributions rely on you upgrading everything to get access to the latest software. This is not to imply that this is the case with rolling releases or other Linux distributions that allow you to manually craft your own Linux experience.

Now in some instances, even with Ubuntu, a motivated enthusiast can get around the need to upgrade their distribution just to enjoy the latest software. Depending on the application in question, sometimes adding an Ubuntu PPA archive is enough to bring a target application to its more recent release. But when it comes to desktop environments, along with various frameworks like MLT, using a supported distribution release is often the best route to take.

If you're an advanced user, this would be a moot issue for you as you've likely customized your distribution to meet your specific needs. For other Linux users, however, this issue presents a bit of a paradox. This is especially true when the affected user finds there's a bug in the software that's resolved in a newer release of the same application.

Does that user chance an upgrade to the potentially less stable newer release of the Linux distribution? Perhaps instead, it's best to just wait awhile and make do with things as they are.

Bleeding edge software consequences and solutions

The answer to this problem is right there in front of us. We need to advocate heavy testing with Linux LiveCDs before actually installing the distribution.

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Is Ubuntu's Bleeding Edge Hurting Linux? : Page 2
By Matt Hartley
January 3, 2012
I realize this sounds painfully obvious, however for countless users out there, the message isn't being conveyed effectively. Newer users need to do heavy testing with networking and resolution settings, among other common issues they might run into. Nothing frustrates me more than reading about a newer user who blindly upgraded to the next "big release," only to break their wireless connection or create an unstable desktop experience. This sort of nonsense is avoidable and we need to stop expecting people to just "know" this stuff.

New users aren't mind-readers and they certainly aren't going to spend weeks reading through random forum posts or poorly marked help pages before upgrading. It's time for distributions wanting a larger market share to step up to the plate and deal with this problem head on.

Do you think I'm overstating the issue? Fine, visit this Ubuntu download page and show me where any sort of warning or disclaimer is posted? The best we have is the offer of "long term support" without really explaining why this is important. While Ubuntu is certainly not the only distribution guilty of this lax effort on release details, they are the most popular.

Use a Wizard, Harry!

Why in the world isn't there a "Linux Release Wizard" posted on the download pages of popular Linux distros? I realize it might seem like a lot of work, but clearly, it's a needed feature.

The goal of such a wizard wouldn't be to help individuals select one distribution of Linux over another. No, instead the goal would be to help Linux users select the best currently supported release to best match their specific expectations.

Keep in mind that most new Linux users don't have the slightest idea which release of a Linux distribution is best matched for their needs. They do, however, have a firm grasp on how certain software titles are to be used in the first place.

Are any of these issues going to topple the current successes for Linux on the desktop? Of course not, as experienced Linux enthusiasts are already aware of the status quo in this space. But as new users find their way over to the Linux platform, some important decisions about disclaimers will have to be made. Because eventually it all comes down to what kind of reception we're interested in getting back from new Linux users.

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