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Gustav's possible economic hit is widespread
Sunday August 31, 6:00 pm

Gustav's possible economic hit could be widespread; will evacuees return to region?

HAMMOND, La. -- Although attention is focused on the petroleum industry as Hurricane Gustav takes aim at the Gulf Coast, billions of dollars are at stake in other economic sectors: New Orleans' trademark tourism industry, the shipping business, sugar harvesting -- and even such niche products as red-hot Tabasco sauce.
And, the affected states face another wild card ---- depending upon the storm's damage, some of the current crop of thousands of storm evacuees may decide twice is enough, aggravating the region's labor problem by never coming back.

For many this weekend, it was simply a matter of preparing as much as possible -- then waiting for Monday's expected arrival of Gustav.

The Port of New Orleans shut down as the Coast Guard closed the lower Mississippi River. The French Quarter was emptied of visitors as most hotels closed. Coastal casinos, a dozen of which were destroyed three years ago by Hurricane Katrina, closed their doors.

"After a certain point, though, Mother Nature's going to have her say," said spokesman Mark Crowley of Crowley Maritime Corp., which operates container ships, tugs and barges in the Gulf Coast region.

Shipping companies have been making preparations for the last several days, diverting cargo and sending ships away from the storm's path while also evacuating equipment from the Gulf Coast.

The New Orleans port sustained $260 million in damage from Katrina on Aug. 29, 2005, but was able to take its first ship a week later. On Sunday, the port had locked down cranes and secured all floating equipment. Several vessels were remaining until the storm passed. The last vessel departed Saturday night, well before the Coast Guard closed the lower Mississippi River on Sunday.

Gustav's projected storm surge stood to cut through the heart of Louisiana's sugar industry in southern Louisiana, which includes 600 growers, 11 processing mills and an estimated $500 million annual crop value, according to the American Sugar Cane League.

The storm came on top of such problems as high fuel and fertilizer prices, sagging prices caused by imported sugar and a rainy summer that has delayed crops. Many growers have supplemented their sugar crops by growing soybeans, which also stand to get flooded, said the group's general manager, Jim Simon.

Simon said the sugar business in Louisiana, in a good year, can carry a total economic impact of up to $2 billion.

"When we take a hit like this, it not only affects the growers, but it can trickle through the entire sugar economy," Simon said.

The manufacturer of Tabasco -- Avery Island, La.-based McIlhenny Co. -- indicated that hot sauce lovers wouldn't be cut off for long, if at all. Since Hurricanes Katrina and Rita disrupted its operations in 2005, McIlhenny has built a flood-control levee and installed a pumping system around its complex that it believes can withstand a major storm.

But not everyone is as confident.

For the New Orleans tourism industry, the question is how long luck can last. Before Katrina, tourism was the city's chief economic driver, pushing $9.6 billion annually into the economy, with about $6 billion coming from conventions.

In what some called a miracle, the French Quarter and the city's giant convention center were spared post-Katrina flooding. Since then, the city has resumed its host role to Mardi Gras and the New Orleans Jazz & Heritage Festival and, just this year, entertained the national college football championship game and the NBA All-Star Game.

A recent study by the University of New Orleans said the New Orleans metropolitan area's tourism industry showed signs of recovery in 2007, with 7.1 million visitors compared with 3.7 million in 2006.

The Gulf Coast casino industry, which was torn apart by Katrina and Rita in 2005, braced itself for another storm. By Sunday, Harrah's and Isle of Capri casinos Inc. were among those closing casino doors in Lake Charles, New Orleans and along the Mississippi Coast.

The 12 casinos operating along the Mississippi coast a few years ago were wiped out by Katrina's winds and storm surge on Aug. 29, 2005. At the time, state law required the gambling portion of the resorts to be located on barges in the water.

In a special session called quickly after the storm, the Mississippi Legislature decided to let coastal casinos build onshore. Eleven have since rebuilt, much faster than their surrounding communities. So far, casino companies have spent more than $1.7 billion rebuilding along the coast, according to the Gulf Coast Business Council, a corporate executives group.

In 2007, gamblers left behind $2.9 billion in Mississippi casinos, including $1.3 billion along the coast. The take translated into $332.3 million in tax revenue for state and local governments.

The Louisiana Chemical Association said Sunday that most of the 40 to 50 chemical plants in hurricane-vulnerable areas had shut down before the storm's arrival. Edward Flynn, the trade association's safety-security director, said 20 to 25 percent of domestic chemicals are manufactured in Louisiana.

As for the long-term effect of a storm: "One of the things we found out after Katrina and Rita was that the plants came back faster than the surrounding communities," Flynn said.

One factor blamed for slowing Louisiana's economic recovery since Katrina and Rita has been a shortage of skilled labor, particularly those acute in shipbuilding and the construction of offshore structures used by the petroleum industry. The state also needs workers to attract new industry, such as steelmaker Nucor Corp., which has narrowed its sites for a new plant to St. James Parish in southeastern Louisiana and Brazil.

But now, thousands of workers have again fled a major storm and, like following Katrina and Rita, an unknown number are bound to decide never to return permanently, said Loren Scott, an economist with Louisiana State University. Scott said some businesses might simply give up and move out of Louisiana -- or decide not to locate in the state.

"Where the workers are and getting them back is going to be tricky thing," Scott said.

But some think the economic impact of Gustav might not live up to the images of thousands fleeing its wrath. While a short-term hiccup in oil and gas prices is possible, economist Glenn MacDonald said the storm is very unlikely to produce a long-term impact or important consequences for the nation's economy as a whole.

"It's awful when you're in one, but the fact is the U.S. economy is so big that these things just don't matter that much economically," said MacDonald, a professor of economics at Washington University in St. Louis. "Katrina was a real mess and caused something like $25 billion in damage. But if you lose $20 billion or $25 billion in the context of a $10 trillion economy, it's not really a very big deal."

But LSU's Scott warns that a second round of destruction -- and another push for the billions of dollars in federal help which have helped fuel coastal rebuilding since 2005 -- might not be received well.

"How many times are the other 49 states going to be willing?" Scott said. "There was talk the first time around about whether it was worth it. Those kinds of comments might be better received this time."

AP Business Writer Dave Carpenter in Chicago contributed to this report.

BSNL to launch 3G services by year-end

Chennai, Aug 30: State-run telecom major BSNL Saturday announced that it would launch 3G services across the country by the end of this year.

"We will be commencing the operations by the end of December starting from North and Eastern parts of the country and then South and West by March, 2009, so that within six months we will be able to roll out the 3G operations," BSNL Chairman and MD Kuldeep Goyal told reporters here.

"Mostly we will try to cover the state capitals in the first phase and then taking it to major cities and other towns," Goyal said.

On the demand for the services, he said, "The demand will pick up once 3G handsets are affordable. Applications suiting the people especially rural areas should be available in local language. Initially, we don't expect the demand to be very high," he said.

"Initially, we are talking to content providers for developing suitable applications, like video conferencing, video telephony, video streaming. A trial was carried out in Pune recently," Goyal said.

Talking about the company's business, he said BSNL was hoping to increase the revenue by more than 10 percent as compared to last year.

"We are aiming to record 10 percent growth next year", he said adding that last year the company recorded a turnover of Rs 38,000 crore.

He also hoped that the revenue would reach USD 45 billion by 2010.

On the expansion plans, Goyal said BSNL was aiming at increasing the subscriber base from the present 73.2 million (which include wireline and wireless) across the country to 600 million by 2012.

"We are hoping to take the subscriber base of broadband users to 20 million by 2012 and 200 million wireline and wireless subscribers in rural areas."

Out of the 77.18 million internet customers in the country, BSNL had 4.57 million users, Goyal said.

On the poor patronage to landline connections, he said still the trend was there but that the company hoped to arrest the trend with the broadband spreading into different parts and new tariff plans set to be introduced from September 1.

"We have come out with plans where a subscriber just needs to pay Rs 250 for two years and thereafter he does not have to pay any rent for wireline or WLL phone. Another offers connection at Rs 20 per month with 20 free calls. With these plans we hope that the trend would be reversed".

As part of mobile expansion plans, Goyal said BSNL had planned to provide five million connections each in the North, East and South zones and nine million in West.

"This 24 million lines expansion is for our requirement for 2008-09. We have also come out with a tender for 93 million lines for next three to four years," he said.

Out of the 93 million connections, 25 million lines will be provided each in North, South and West and 18 million lines in the East Zone, he said.

Goyal said that the company had increased its market share of broadband services from 42 percent at the beginning of last year to more than 50 percent in the end of the year.

"We have planned to cover 30,000 plus villages. Out of this, broadband had been extended to 23,000 exchanges in the rural areas and the remaining would be covered next year, so that every rural telephone exchange would become broadband enabled," he said.

The company had a overall share of 22 percent in the country he said, adding out of the 335 million phones in the country BSNL had 73 million connections, including mobile and fixed. Out of the 290 million plus mobile connections in the country, the company had 38 million, he said.

Referring to the company's entry into Internet Protocol Television services, Goyal said," we have already started services in Pune, Bangalore, Kolkata and Jaipur".

It was much better than the normal cable television as it provided normal cable channels along with various other facilities like storing the programme content for a minimum of three days and one can watch (it) anytime as per their choice.

"We have identified about 100 cities to roll out IPTV during the current financial year," he said but declined to comment on the investments.

On the tariffs for IPTV he said,” It would be quite affordable".

Inflation eases at 12.34% for Aug 23

New Delhi, Sept 04: The wholesale price index data released by the government on Thursday showed the inflation rate drop further to 12.34 percent for the week ended August 23 as compared to previous week’s 12.4 percent on August 16, amid the Finance Ministry's assertion that the rate of price rise declined to 6.9 percent in 30 essential commodities from 7.24 percent during the period under review.

"There is movement downward," said Commerce and Industry Minister Kamal Nath even as Prime Minister Manmohan Singh took a review of price and availability of food commodities at a meeting of Cabinet Committee on Prices (CCP).

However, the Reserve Bank of India (RBI) did not show any complacency on the price front and indicated that it would continue with required monetary policy to bring down inflation to 7 percent by the end of current fiscal.

The ease in inflation is being attributed to the fall in prices of primary articles, fruits and vegetables. While the slight increase in the cost of manufacturing goods remained a matter of concern for the government, the significant decline in fuel and power index came as a big pop up.

Inflation has almost tripled this year to reach its highest mark of 12.4 percent amid higher fuel and food prices, forcing the central bank to raise interest rates three times since June and making it harder for consumers to purchase cars, motorcycles and homes. Economic growth is still almost double the average pace since India's independence in 1947.

According to an estimate released by the World Bank, India may lose its position as the world's fastest-growing major economy after China this year, whereas Russia's economy may grow 7.1 percent in 2008, while China may increase 9.4 percent this year, the bank forecast in June.

Last week, first-quarter economic growth slowed to 7.9 percent, the weakest in three-and-a-half years, as successive interest rate hikes hit demand.

The growth figure for the three months to June was far below the 9.2 percent expansion recorded in the same quarter a year earlier.

World`s richest got even richer last year: Report

New York, Sept 05: The old saying holds true: The rich do get richer.

Even as world financial markets broke down last year, personal wealth around the world grew 5 percent to USD 109.5 trillion, according to a global wealth report released on Thursday by Boston Consulting Group.

It was the sixth consecutive year of expanding wealth. The fastest growth was among households in developing regions, such as China and the Gulf States and among families who were already rich.

That wealth also is increasingly concentrated among the richest.

The top 1 percent of all households owned 35 percent of the world's wealth last year. Meanwhile, the top 0.001 percent, ultra-rich households holding at least USD 5 million in assets, commanded USD 21 trillion -- a fifth of the world's wealth.

The planet also continues to mint new millionaires rapidly. The biggest jumps in 2007 came from emerging countries in Asia and Latin America. Overall, the number of millionaire households grew 11 percent to 10.7 million last year.

BCG notes that, while the rich are still rich, they have been making some adjustments as a result of the financial crisis.

This year, assets are being shifted to more conservative investments, more money is being kept onshore in home markets and some individuals have curtailed new investment.

Yet BCG cautioned the outlook for wealth markets and the banks who serve them, is dimmed by the current financial crisis.

North American personal wealth growth slowed to 3.8 percent last year, compared with 9 percent in 2006, reflecting the the mortgage crisis and the onset of the credit crunch last summer.

"The financial crisis continue to cast a pall over established wealth markets," said Victor Aerni, a Zurich based partner who coauthored the report.

BCG, which advises banks and wealth managers, forecasts personal wealth will continue growing, but at a slower pace. This year, with Wall Street suffering through one of its worst slumps in decades, growth in assets is expected to rise less than 1 percent.

Things will improve over the next five years, BCG said, with personal wealth growing more than 3 percent annually -- well off the 8.5 percent set between 2002 and 2007.

Wealth is growing at much faster rates among the rest of the world. Households in Asia, the Pacific Rim excluding Japan and Latin America saw the greatest growth, with wealth rising 14 percent. That growth was fueled by manufacturing in Asia and commodities in Latin America and the Middle East, as well as more currency and political stability.

BCG observed that banks, brokerages and money managers will have little choice, but to expand their presence in these fast growing centers. Dubai and Singapore, the firm said, are becoming regional private banking centers offering greater competition to traditional havens such as Switzerland.

Lakhs of VAIO laptops recalled due to burn hazard

New York, Sept 04: Technology giant Sony on Thursday recalled over four lakh units of its successful VAIO brand laptops due to potential burn hazards from overheating and short circuits.

While the company is recalling 73,000 units sold in the US market over the past one year, the number of potentially faulty models across the world is said to be over four lakh.

It could not be immediately ascertained whether the models sold in India are also being recalled.

In a statement, the US Consumer Product Safety Commission (CPSC) said that consumers should immediately stop using products being recalled by Sony.

"Irregularly positioned wires near the computers hinge and/or a dislodged screw inside the hinge can cause a short circuit and overheating. This poses a burn hazard to consumers," CPSC said.

Sony has received 15 reports of overheating, including from one consumer who suffered a minor burn, it added.

The recalled notebook models are the VAIO VGN-TZ100 series, VGN-TZ200 series, VGN-TZ300 series and VGN-TZ2000 series. The computer screen size is about 11.1 measured diagonally. Not all units are affected and consumers should contact Sony to determine if their unit is included in the recall, CPSC said.

The models were sold by the SonyStyle stores and its web site, authorized electronics retailers, and authorized business-to-business dealers across US from July 2007 through August 2008 for between 1,700 and 4,000 dollars.

These models were manufactured in Japan and the US.

DEAL DONE: INDIA GETS WAIVER AT NSG FOR N-DEAL

Vienna, Sept 06: India’s attempt to end its nuclear isolation finally found triumph on Saturday, as the NSG gave a clean waiver for the nuclear deal. An official statement confirming the end of India’s nuclear apartheid came after hard bargaining with the four major opponents China, Austria, New Zealand and Ireland.

Congratulate PM»

The negotiations went down to the wire as the four countries looked set to scuttle India’s aspirations to join the high table with major nuclear powers. Till last night the opposing parties had stood their ground.

In what is a victory for India and the US, the prime movers of the deal, there were no "major changes" in the draft. The language and wordings worked on by the US were acceptable to all the NSG members.

The US had earlier consulted India on the changes brought about in the wordings of the draft, and put it before the NSG members, only after New Delhi's approval.

A formal announcement will be made shortly in Vienna by Germany, the chairman of the 45-member powerful cartel that controls the global supply of nuclear fuel and technologies.

It is believed that the decision finally to give India the go ahead was decided at the highest level. The US, expectedly, welcomed the waiver for India.

A visibly happy US Under Secretary John Rood said, “It is a historic moment for India. It will help in improving the ties between India and the US.”

The first country to buy the Indian argument was Austria, which always spearheads the non-proliferation lobby. Once Austria was convinced, the others fell in line.

On D-Day today, several countries including China did not attend the meeting.

It is believed that External Affairs Minister’s Pranab Mukherjee’s statement on voluntary moratorium on nuclear testing clinched the deal.

“Austria felt reassured on its concerns after the statement last night by Indian External Affairs Minister Pranab Mukherjee,” said Austrian Foreign Ministry Press Head Peter Launsky when asked the make or break point.

“Also the fact that India has agreed to open 14 of its civilian nuclear reactors for inspection has helped,” Launsky added.

We wanted there to be net gain to international community in so far as non proliferation was concerned, along with it being acceptable to all parties including India which has growing energy needs, Launsky concluded.

The Congress Party hailed the NSG waiver for India as "historic" and said it was a significant victory not only for the UPA but for all Indians.

"It is a historic day for India. It is a red letter day," party spokesman Manish Tiwari said moments after reports from Vienna spoke of India getting the waiver by consensus.

He said it was indeed a significant victory not only the UPA but for all Indians.

As far as the Indo-US nuke deal is concerned, today’s victory is the penultimate step as it will now be presented to the US Congress for an up and down vote and hopeful clearance.

Power generation to grow at 9% in 11th Plan period`

New Delhi, Sept 05: The government is taking concrete for increasing the power generation capacity at a rate of nine percent during the 11th Plan period (2007-2012), Central Electricity Authority Chairman Rakesh Nath said on Friday.

Addressing a PHD Chamber conference on power, Nath said: "The projects are already underway to achieve the target of 78,500 MW additional generation capacities by the end of 11th Plan."

He said that the planning canvass for power projects should be extended to 10 years from six to seven years as of now.

"Within the next fifteen days, a discussion paper on the Power Sector in the 12th Plan (2012-2017) would be circulated to get the responses and comments of the stakeholders including industry," Nath added.

Speaking at the event, PTC India Ltd Chairman and MD T N Thakur said, "In order to attract more investment it is critically important to move from fixed rates to market determined rates."

Infy, Wipro, Satyam among Buffett-fit stocks: S&P

New Delhi, Sept 07: India is yet to make its debut on legendary investor Warren Buffett's portfolio, but there are at least three companies from the country -- technology majors Infosys, Wipro and Satyam -- that are fit to make the grade, according to Standard and Poor's.

The world's leading rating agency and investment services provider compiles a list of stocks meeting Buffett's investment criteria twice a year and the latest such portfolio includes the names of the three US-listed Indian IT firms.

Infosys, Wipro and Satyam have been named alongside global giants such as healthcare products major Johnson & Johnson, fast-food restaurant chain McDonald's, IT behemoths Microsoft, Oracle, Qualcomm and SAP as well as BlackBerry- maker Research in Motion in September update of S&P's Buffett Stock Screen.

In the previous edition of this portfolio, released in February, there were a total of 60 stocks, which has declined to 49 in the latest list.

While Satyam has made a comeback after exiting this portfolio in February, a number of big names such as technology major Apple, soft drink giants PepsiCo and Coca- Cola, industrial conglomerate 3M, tobacco major Altria Group, British American Tobacco, China Mobile, Cisco Systems, Diageo and GlaxoSmithKline have made an exit this time around.

Besides, Latin American telecom major America Movil, led by Mexican billionaire Carlos Slim who is ranked as second richest in the world after Buffett, has also moved out of S&P's Buffett screen.

The portfolio includes only those companies listed in the US market and Infosys, Wipro and Satyam have made to the list because of their listings in the country.

The list published in August 2007 has a total 55 stocks including three Indian names -- Infosys, Satyam and Wipro, while the February 2007 list had 56 stocks including two Indian names Infosys and Satyam.

S&P has been updating this Buffett portfolio on semi- annual basis -- in February and August/September -- since 1995 and it includes stocks meeting the criteria that Buffett has emphasised in the past, although these are not necessarily stocks that Buffett has bought or ever plans to buy.

"This screen, developed by Standard & Poor's, is based on criteria the legendary investor has emphasised over his long career. Only stocks with a market capitalisation of at least USD 500 million are included," S&P said.

Ambani fight affecting eco, reflects on biz ethics: Think-tank

London, Sept 07: Moving beyond loss of a few business contracts, the rivalry between two billionaire Ambani siblings - Mukesh and Anil - has begun to affect India's economic development and to reflect on business ethics, an influential British think-tank has said.

Oxford Analytica, an independent consulting firm, has said in a recent country note on India that Mukesh and Anil Ambani figure among the world's richest men and their empire of Reliance companies "spans the Indian economy".

While noting that the two have prospered since 2005 in India's fast growing economy, it said that "division of the family estate has not resolved their rivalry, which goes very deep and reflects fundamental questions of business ethics".

"The struggle between the Ambani brothers threatens to exert a serious impact on the economy, notably (in the short term) by introducing uncertainty into energy regulation and delaying investment in the gas sector.

"While Anil's political links may strengthen his position against his brother at present, his business interests will be vulnerable if the opposition BJP returns to power," it said.

"The struggle for supremacy between the brothers, who were joint heirs to the vast fortune of their father Dhirubhai Ambani, is beginning to have significant implications for Indian economic development and to spill over into political affairs," Oxford Analytica noted.

It said that younger brother Anil has "taken the family into politics by becoming a key financial backer of SP, which has the fourth-largest delegation in Lok Sabha, and has mounted a push to expand from its base in UP -- the most populous state - to become a national party."

Views of Oxford Analytica is said to have significance given its network of over 1,000 faculty members at Oxford and other major universities and institutions around the world.

Talking about Ambanis, Oxford Analytica said, "the rivalry between the brothers has moved well beyond sports sponsorship and loss of a few contracts. It has begun to affect national politics, too, and billions of dollars in potential investment."

About elder sibling Mukesh Ambani, the report said that earlier this year he "intervened on a technical legal point to prevent his brother from participating in a merger between Reliance Telecom and MTN of South Africa, which would have created the fifth-largest telecom company in the world".

"However, Mukesh does not hold the upper hand. The SP has now become a key ally of Congress-led national government."

"When four Marxist parties forced a confidence vote (held on July 22) by withdrawing their support over the issue of a nuclear energy deal with the US, Anil played an important role in securing the requisite backing to keep the government intact - at a cost estimated at some three million dollars per vote," it added.

"Where the SP's rapprochement with the ruling Congress party will leave Mukesh and the older Reliance Industries is now a matter of open conjecture."

Oxford Analytica regularly comes out with analysis of implications of national and international developments facing corporations, banks and governments across the world.

The report further said that "SP leader Amar Singh is believed to have demanded from the government, as the price of its support, a windfall tax on private energy companies and a ban on the export of refined petroleum products - both of which would devastate Mukesh's interests."

"While the government has yet to respond to these demands, which would hit many more companies than Reliance, they have a populist appeal and could be enacted," Oxford Analytica said.

RIL among 100 most respected cos

New York, Sept 06: PepsiCo, headed by India-born Indra Nooyi, is the ninth most respected company in the world, NRI Lakshmi Mittal led ArcelorMittal is ranked 60th and Reliance Industries, India's largest corporate, makes it at no. 83 in the Wall Street Journal's respectability ranking of the world's 100 largest publicly traded companies.

The top five in the list are Johnson & Johnson, Procter and Gamble, Toyota, Berkshire Hathaway and Apple.

Search engine Google has jumped from 22nd spot last year to the sixth, its rise is matched by the fall for software giant Microsoft, which has slipped from sixth spot to 21st this year.

In its fourth annual survey released online Saturday, the reputed business daily asked money managers the degree to which they respect - or don't - the world' 100 largest companies (as measured by total market value). The mean score was arrived at by assigning point value to each of the four categories - Highly Respect, Respect, Respect Somewhat and Don't Respect.

ArcelorMittal's mean score is 1.90 and Mukesh Ambani led RIL's 1.36, contrasted with the mean score of around 4 for the top five companies in the world.

Listed in France, ArcelorMital had 10 percent money mangers saying Highly Respect, 29 percent Respect, 37 percent Respect Somewhat and 10 percent Don't Respect to it. The steel maker has, however, improved its standing from last year when it was ranked 93.

RIL has much catching up to do - only four percent said Highly Respect, 17 percent Respect, 46 percent Somewhat Respect and 11 percent Don't Respect to the diversified group.

PepsiCo has come up three spots from last year's 12th rank, but is still behind soft drinks rival Coca-Cola which is ranked eighth.

Vodafone, the world's biggest mobile company (by revenue), which was headed by India-born Arun Sarin till June this year, is at 66th spot in the list, an improvement from the 80th rank last year.