April 2009 – Page 2

OneMint — Economy and Your Finances Carnival April 19 2009

I was overwhelmed with the entries to this edition of the carnival. I want to thank everyone for participating and hope they keep coming back.

Here are the entries from this week’s carnival.

Cody Butler presents How Do Mutual Funds work? posted at Investment-For-Beginners Blog, saying, “A basic overview of the way in which mutual funds work and who they are for.”

Handy Saputra presents How Does A Home Mortgage Loan Work? posted at Home Loan and Mortgage Info, saying, “A mortgage is commonly obtained by a home owner who has an outstanding debt or is getting a loan out from a bank or other government operate establishment. The mortgage transfers the interest of the property as a form of collateral to the lender. The home owner will then have a set stop of time in which they must pay back the overall of the borrowed money. If they fail to pay back the money they will end trailing their mortgaged property and assets!”

Diego Cervantes presents Top 50 Economics Blogs posted at Bankling.

Destroy Debt presents Good Til The Last Drop: Use it Before You Throw it In the Trash posted at Destroy Debt.

CreditCardAssist.com presents Ever Look at Your Credit Card Closely? posted at Credit Card Assist.

Apply4-credit presents Are Credit Card Protection Plans Worth the Money? posted at Apply4-Credit.

Matthew Paulson presents The Credit Ratings Credit Card Companies Prefer You Did Not Know posted at American Consumer News.

Debt Freedom Fighter presents Looking for a Way to Repair a Bad Credit Score posted at Discover Debt Freedom!.

Ben presents Eight Ways to Beat Bad Customer Service posted at Money Smart Life.

Debt Free Destiny presents 7 Basic Reminders to Help You Handle Your Personal Finances Successfully posted at Debt Free Destiny.

Leave Debt Behind presents Are Pay As You Go Cell Phones Worth It? posted at Leave Debt Behind.

The Smarter Wallet presents Job Hunting Tips: How To Deal With Losing Your Job posted at The Smarter Wallet,

Verna Morris presents Five Experts Agree: You Need a TIPS ETF In Your Retirement Portfolio posted at ETFdb.

Lavender presents Peter Schiff Vlog Report posted at News for Freedom Daily, saying, “Peter Schiff, an economic advisor, gives a report about what to do in this economy and whether or not the worst is behind us”

Debt

Silicon Valley Blogger presents Discover More Card Offers $50 Cash Back Bonus posted at The Digerati Life

Brian McKay presents 30 Year Mortgage posted at MonitorBankRates.com, saying, “30 year mortgage rates are at historic lows. One can find rates from most banks under 5 percent. Last weekâ€™s Primary Mortgage Market Survey released by Freddie Mac has 30 year rates at 4.78 percent”

Economics

Bank Savings Review presents Four Banks Give Back TARP Already posted at Bank Savings Review, saying, “We’ve got to hand it to the banks that’s already been able to hand back the TARP. Hopefully, only responsible banks will survive after this crisis so we promote responsibility.”

Beno Varghese presents An Average Person?s Tax Dollars posted at Beno Varghese dot-com.

Investments

Patrick @ Cash Money Life presents Pertuity Direct Peer to Peer Lending Review posted at Cash Money Life, saying, “Reiew of a new P2P lending platform that invests in a mutual fund comprised of peer to peer loans – paying out around 10% interest. This gives investors the chance to “be the bank.””

Michael presents How Much Car Insurance Do You Need? posted at Vital Motion, saying, “When shopping for car insurance, it is important to know how much insurance you really need.”

Walter W. Fouse presents 7 Ways to Pick the Best Noload Mutual Funds and ETFs posted at Best No Load Funds, saying, “The vast body of investment research studies show that there really are better approaches to buying and owning mutual funds and ETFs. You do not need to frantically chase fund performance. Performance chasing simply does not work.”

Richard M. Rothschild presents The Top 14 Low Cost Taxable United States Bond Mutual Funds (Low Minimum Deposit) posted at Bond Market Index Funds, saying, “The top 14 low cost taxable US fixed income funds with a $10,000 or lower initial deposit. Low investment management fees are very important with fixed income funds. Simply put, if you pay higher bond mutual fund fees, then these bond management expenses tend just to be a deadweight loss to you. When you pay more in bond mutual fund fees, you are just wasting your money.”

Stock Trading Brokers presents SEC Considers Proposal for Uptick Rule posted at Stock Trading Brokers, saying, “Bring back the uptick rule. There was actually no harm done when it was there. When it’s not broken, don’t fix it. Now that people have shed light on it, of course there are criticisms.”

Ripe Trade presents Ripe Trade: Leveraged and inverse ETF pitfalls posted at Ripe Trade, saying, “This post explains the underperformance of leveraged and inverse ETFs because they are designed to track the underlying index based on a 1 day performance, these ETFâ€™s wont track well over longer periods of time.”

Silicon Valley Blogger presents Zecco vs TradeKing: Which Online Stock Brokerage Account To Choose? posted at The Digerati Life,

Tallahassee Real Estate presents How To Make An Offer In Todayâ€™s Real Estate Market posted at Tallahassee Real Estate Blog, saying, “I was talking with a Tallahassee REALTORÂ® yesterday and we were discussing an offer he had just made on a foreclosure offering in Tallahassee. We discussed strategy for making an offer to a bank (the home had been foreclosed upon and was for sale by the bank that held the financing on the home) and how the strategy had to be different than when making an offer to a typical homeowner.”

Summer Munyon presents How To Construct A Well-Written Real Estate Offer posted at Really Better Real Estate, saying, “This weekend I received a text from a friend whose Tallahassee home I recently sold. She plans to place an offer on a home in TX this weekend and wanted to know the binder amount that she should place on the home. Literally, the text states that the list price is $350,000. She plans to make an offer of $300,000, and how much binder should she offer? Unfortunately, itâ€™s far more complicated than a numeric reply with the â€œsendâ€ button.”

VC presents When Will The Economy Turn? posted at The Penny Daily, saying, “Has the stock market turned for the better? This article discusses what to look for in the upcoming weeks that will tell us if it is safe to start investing in the market again.”

PicktheBrain presents Investing in Stocks for Beginners posted at Beginner Investing.

FIRE Getters presents What is the Rule of 72? posted at FIRE Finance.

MoneyNing presents Ins and Outs of a Stock Exchange posted at Investing School, saying, “Stock exchanges perform a critical function in the world of trading. Find out what they do by going through the article.”

Darwin presents Advanta High Yield Notes: 8.5% – 11% Yield Worth the Risk? posted at Darwin’s Finance, saying, “This article highlights the risks and benefits of extreme high yield investment notes at 8-11%.”

Dan at Everydayfinance presents High Yield Bond ETF – 12% Yield + Share Gains Looking Attractive posted at Everyday Finance, saying, “This article highlights a small but strong performer you’ve never heard of that has increased dividends for 24 consecutive quarters.”

Personal Finance

KCLau presents 5 Ways To Take Charge Of Our Finances posted at KCLau’s Money Tips, saying, “Are we doing the right things when it comes to managing our finances? Ask yourself five questions to know if youâ€™re on the right track.”

Nancy Muller presents French Toast Club posted at Recession Depression Therapy, saying, “Learn the step-by-step process to never paying full price again.”

Khan presents The Economics of Education posted at Higher Education and Career Blog, saying, “A breakdown of non-traditional education options for businesses.”

Frank Vertin presents Just Buy Index Funds Directly posted at NO LOAD INDEX FUND, saying, “Buying an S&P 500 index fund through an investment counselor can substantially increase your initial purchasing costs and and drive up your annual management expense fees. Unfortunately, the vast majority of individual investors buy mutual funds and ETFs through brokers and investment advisers. Rarely do financial advisors recommend that you buy index funds with low fees. This is because low cost, no load mutual funds do not pay them as well as loaded, high fee mutual funds.”

Cap presents Is It a FICO or FICA Credit Score? posted at StopBuyingCrap.com, saying, “Clearing up the financial acronym confusion.”

Buck Weber presents 10 Interesting Ways to Make Some Side Cash posted at THE BUCK LIST, saying, “These days many of us are VERY interested in finding supplemental income. The following is a list of 10 interesting possibilities to make some side cash.”

Peak Personal Finance presents 3 Smart Personal Finance Tasks You Are Probably Putting Off posted at Peak Personal Finance.

Ralph Jean-Paul presents Building Self-Discipline posted at Potential 2 Success, saying, “The most disciplined business people are usually the most organized, efficient and successful. They are also the people that make the most money. Learn to build self-discipline in your personal and professional life and see the difference it will make.”

MoneyNing presents Everbank Review posted at Money Ning, saying, “EverBank is one of the best banks and it offers a very high rate with its money market account and even checking account. You should check it out.”

PFCreditCards presents Cost of Wells Fargo Business Checking vs EverBank posted at PF Credit Cards, saying, “I’m done with Wells Fargo. No fees, high interest rates, same hassle free as traditional banking. EverBank is for me.”

Marjorie presents Free Accounts Make All the Difference posted at Wealth Junkies, saying, “Any checking account you have to pay for is a raw deal: banks make their real income off of money deposited, by lending it out. That means that any fees you pay for your personal checking account are just icing on the cake. Itâ€™s pretty likely that youâ€™ll have an account for your entire life and even five bucks a month for the rest of your life adds up.”

JC presents Want to Save Money? Bring Benjamin Franklin posted at 6Bubbles – Grad School, Money, Life.

Kim Staudenraus presents When Frugal Costs You Money | Tranquility Financial Visioning posted at Tranquility Financial Visioning, saying, “There is a fine line in the sand between frugal and cheap. Cheap can cost you money, while frugal can save you money. Do you know the difference?”

Steve Faber presents Auto Theft Statistics â€“ Where is the Best and Worst Place for Car Theft? | Secrets to Cheap Car Insurance posted at Cheap Car Insurance.

Credit Shout presents Amazon Credit Card Review posted at CreditShout.

MoneyNing presents 25 Debt Reduction Tips For Your Immediate Action Plan posted at Money Ning, saying, “There’s no time to waste. Get your act together and fix your debt right away.”

Stocks

Larry Russell presents Most Individual Investors Are Poor Personal Portfolio Managers | Personal Investment Management posted at THE SKILLED INVESTOR Blog, saying, “Investors more easily understand investment costs that are directly measurable, such as fees deducted on investment statements. However, many investors ignore or are unaware of the opportunity costs of their sub-optimal investment behaviors. Opportunity costs are usually much more difficult to measure directly, but these investment costs can be even higher than more visible investment fees.”

Investing School presents Etrade vs Tradeking vs Zecco – Trading Commissions Comparison posted at Investing School, saying, “Have you written Etrade off just because the commissions are higher? Is Zecco or TradeKing better? This takes a look at these three stock brokers on a fees comparison.”

Jae Jun presents Best Small Companies Fair Value Estimates posted at Old School Value, saying, “Fair value estimates of 42 good stocks. No day trading or speculation involved.”

Nesher presents Global Watch List to monitor your trades from around the globe posted at Internet Stock Trading for Beginners.

That concludes this edition. Submit your blog article to the next edition of OneMint – Economy and your Finances using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

I Love Economists

In a strange co-incidence — I spent about two and a half minutes laughing at this great Dilbert strip thinking whether Scott Adams really does read Nouriel Roubini’s stuff and then I stumbled upon this article from Roubini.

Source: Dilbert

“Mild signs that the rate of economic contraction is slowing in the United States, China and other parts of the world have led many economists to forecast that positive growth will return to the US in the second half of the year, and that a similar recovery will occur in other advanced economies.

The emerging consensus among economists is that growth next year will be close to the trend rate of 2.5 per cent.

Investors are talking of ‘green shoots’ of recovery and of positive ‘second derivatives of economic activity’ (continuing economic contraction is the first, negative, derivative, but the slower rate suggests that the bottom is near).

As a result, stock markets have started to rally in the US and around the world. Markets seem to believe that there is light at the end of the tunnel for the economy and for the battered profits of corporations and financial firms.

This consensus optimism is, I believe, not supported by the facts. Indeed, I expect that while the rate of US contraction will slow from -6 per cent in the last two quarters, US growth will still be negative (around -1.5 to -2 per cent) in the second half of the year (compared to the bullish consensus of +2 per cent).

Moreover, growth next year will be so weak (0.5 to 1 per cent, as opposed to the consensus of 2 per cent or more) and unemployment so high (above 10 per cent) that it will still feel like a recession.

In the euro zone and Japan, the outlook for 2009 and 2010 is even worse, with growth close to zero even next year. China will have a more rapid recovery later this year, but growth will reach only 5 per cent this year and 7 per cent in 2010, well below the average of 10 per cent over the last decade.”

Roubini has been right all this time and so it won’t be a surprise if he gets it right this time as well. I like to look at the bright side so even if he is right, the global economy should be alright in about an year and a half.

No News is Good News

I have created Google Alerts for all the stocks that I own. If there is news about them somewhere on the web – I want to read it. Usually, no news is good news and when I get an email about a stock I own — it is often bad news.

I have always felt that sad and depressing news does better than good news. That’s the reason newspapers are covered with news articles about accidents, scams, robberies etc.

I think that this is true for stocks as well and I have seen that this influences people in a certain fashion. I know a lot of people who bought AIG, Citigroup, Goldman and other financial stocks — right at the time when they were doing badly.

Since these companies were doing badly — they got quite a lot of media attention — and that led to many people thinking about these companies and wondering whether they should buy their stock.

Eventually,Â a lot of these people did end up buying these stocks because they thought they were trading cheap relative to the bad news surrounding it.

Most people don’t subscribe to investing and business magazines to discover stock ideas, so the way they discover stocks are through newspapers and TV. Newspapers and TV usually lean towards coveringÂ bad news and hence a lot of people get into stocks that are surrounded by bad news. This may just be reinstating — any publicity is good publicity, but I think it works in stocks.

Have you seen such a thing happen with stocks?

ThinkSoft Global Services IPO

Thinksoft Global Services has recently posted its draft prospectus for filing an IPO. Here is an overview of Thinksoft Global IPO.

Thinksoft Global: Business of the Company

Thinksoft Global is an IT player that operates in the niche area of software testing in the Banking, Financial Services and Insurance (BFSI) vertical. Thinksoft is an early entrant in the field of software testing and has about 10 years of experience in the BFSI domain in testing.

They have 508 employees as on February 8, 2009. It is also ISO 27001:2005 and 9001:2005 certified.Â IT service providers generate their revenue by charging customers for the consultants working on their projects. Such consultants can be located offshore or onsite. Presently, the company generates 59.41% of its revenues from its onsite activities and it expects this to go to 55% in the future.

The company provides the following services to its customers:

1. Functional Testing

2. Performance Testing

3. Test Automation

4. Requirements Documentation

The company also offers the New Testing Quadrant tool that enables financial executives evaluate software testing alternatives. This tool gives a two dimensional view and measures software testing vendors on the following two measures:

Methodology of Testing
Orientation to Executing Software Testing

thinksoft-testing-vendor-landscape1

The top customers of Thinksoft include the following companies:

Citigroup
ABN AMRO
Morgan Stanley
Deutsche Bank
Metlife
Bank of Muscat
State Bank of India
ICICI Bank

EurIndia: a Gibraltar based fund, owns 31.2% of Thinksoft and invested in it in 2000.

Thinksoft Global: Key Risks

Thinksoft is heavily dependent on European customers with as much as 58% of its revenues for 2008 coming from European based clients.

Thinksoft is also quite heavily dependent on a few customers with the top customer making up as much as 25% of its revenues for 2008 and the top 10 customers accounting for 94.85% of its revenues for 2008.

Thinksoft plans to incur substantial capital expenditure to the tune of Rs.1609.34 lakhs in Fiscal 2009 and 2010. This expenditure is planned with the expectation of growing business and if the business doesn’t grow as expected, then this will be a drag on profitability.

The company is a relatively smaller player in a market which is filled with older, more established and much bigger players than Thinksoft itself.

Thinksoft Financials

For the year ended March 2008, the turnover of the company was Rs.6,997.38 lakhs which rose from Rs. 5,300.22 lakhs in 2007 and Rs.3,463.12 in the year before. The net profit for 2008 was Rs. 934.07 lakhs which rose from Rs.807.55 lakhs in 2007 and Rs.368.35 lakhs in the year before.Â The net profit margin for the latest year is 13.34%

The diluted EPS for the last three years has been Rs.12.55, Rs.11.28 and Rs.5.21.

Thinksoft generated 87% of its revenue on the basis of Time and Material contracts for the half year ended September 30, 2008. The remaining came from Fixed Price Contracts. Time and Material Contracts are contracts in which a customer agrees to pay the vendor for the number of days the project runs and this protects the vendor from project slippages and delays.

This is just a draft filing and the price band at which the company wishes to sell its stock is not disclosed yet.

Roulette: House Edge

This weekend, I was on vacation in Vegas, and had a lot of fun on the Roulette Table. Roulette is a very easy game to understand, so it draws me towards it, despite the house edges.

There are two types of Roulette — the European and the American. The American Roulette has a “0” and a “00” on the table, while the European Roulette only has a “0” on the table.

You will find the American Roulette on most tables in Vegas. This is probably because the odds of the house winning any bet are higher in the American Roulette than they are in the European Roulette. This has to do with the two zeroes. If you see a table with higher minimum bets than the other tables, then it probably has the European version going on it.

The way in which your bets are placed is loaded against you and the zeroes help the house in this. Let’s take a look at the several ways in which you can bet:

1. Red or Black: You can bet on the black or red numbers. If the ball ends up on your color, you get double the money back. But the zeroes are green in color, so they give the house an edge.

2. First, Second or Third Twelve: You can bet on the first, second or third set of twelve numbers. If the ball ends up in your number, you triple the money. Again, the zeroes are not part of any twelve.

3. Odds or Even: You can bet on odd or even numbers too, and if the ball lands on your number, you get double the money back. The zeroes don’t belong to you even in this case.

4. Choose a Single Number: You can choose a single number – say 0, 00 or 13. If the ball lands on this number — you get 36 times your bet. However, the odds of any one number coming is 1/38, so here again, there is a house edge.

You can split your bets among adjacent numbers and bet in a few different other ways as well, but, whichever way you see it, the house always has the edge.

I saw some very interesting things on various tables, which I am going to talk about now.

Give Me Kobe

One guy on my table was a Kobe Bryant fan and bet on the number 24 at every roll. Eventually, 24 did come and he made a lot of money. So, on the next roll, he didn’t place a bet on 24. He said: “what are the chances of two 24s coming one after the other? And the dealer replied: “One in 38, just as they were before”.

Double or Nothing

A guy came to the table and placed a hundred dollar bet on red. This was quite a huge bet for the table and no one made any bets of more than 25 dollars on that particular table. He lost that bet and then took out 200 dollars from his wallet and put them on red again. He said “it has to come eventually”, this time the ball did end up on red, and he took his 400 and was off in a second.

What Are My Odds?

One guy was constantly placing his chips on a few numbers, splitting them and betting on odds and evens at the same time, asking the dealer: “what are my odds?” No matter what the dealer said, he never changed his bets, soÂ I wonder why he was asking about the odds. He lost a lot of money, very fast.

All Over the Place

I encountered this type quite frequently; there were a lot of people who just bet on a lot of single numbers all the time. Because they bet on so many single numbers — when they won — they get a huge load of chips, but, when they lost, they lost a huge load of chips as well. Looking at the general reaction of the crowd — the kick of winning a big load of chips is much more than the remorse of losing a big load of chips.

Smooth Talking Dealers

Dealers who are talkative and good looking have people stick around their tables longer than the other ones. Since, the house has an edge on every bet you make — the longer you stay — the more likely you are to lose. So I’d say stay away from such dealers.

Vegas was a lot of fun, even if, the house always wins.

Different Types of Commodity Funds

A lot of people invest in commodity mutual funds and ETFs because of the convenience these funds offer. A large number of investors use these funds as a proxy for holding the commodity itself. After all, how many of you want to hold barrels of oil in your backyard?

If you own a commodity fund and expect that fund to hold the underlying physical asset — this may not always be true. There are different type of Commodity ETFs that track the price of the underlying assets in different ways.

Funds that Own the Physical Assets

ETFs like iShares SLV own the physical quantity of silver that the fund represents. These type of funds actually own physical silver, gold, oil etc. and then issue units against those.

If you are buying a commodity fund only because you don’t want to directly own the underlying asset — these type of funds offer you the closest proxy.

Funds that Own Futures Contracts

ETFs like the Power Shares DB Funds don’t own the physical underlying commodity at all. These funds enter into Futures Contracts and create strategies such that the price of the fund behaves in sync with the price of the underlying asset. Normally, such funds track the movement of an underlying Index, which in turn is designed to track the movement of the prices of the underlying asset itself.

These funds hold short term credit instruments and US Treasury units in addition to the futures contracts. Such instruments enable them to earn interest income which can be then used to cover their expenses.

Funds that Own Mining Stocks

Then there are ETFs that hold stocks of companies that deal in the underlying assets. These are funds that own stocks of gold mining companies or steel mills etc. They don’t own any physical asset at all and are purely invested in stocks of the underlying companies.

Exchange Traded Notes

ETNs are often mis-understood to be an equity instrument, these are really debt instruments and depend on the solvency of the bank or financial institution that issues them.

Proxy for Physical Assets

If you are just looking at buying a fund that holds the physical quantity of the underlying asset for you — then you should get into the first category of funds described here.

Personally, those are the only funds that I prefer. Why pay someone else for a futures contract that I myself can enter into and why pay someone else for owning a stock that I can buy directly? As for ETNs, they are not an equity instrument at all, so the question of being a proxy for physical assets is really remote.

Hedge Fund ETF: IndexIQ (QAI)

The IQ Hedge Multi Strategy Tracker ETF (QAI) or as it is being commonly referred to — the shiny new Hedge Fund ETF has generated a lot of interest lately.

I think this has more to do with the branding of the fund, than the fund itself. This fund seeks to generate returns that are similar to a Hedge Fund.

This doesn’t mean that QAI invests in hedge funds directly. Only that it uses strategies that will generate hedge fund like returns.

What are Hedge Fund Like Returns?

Index IQ has created a — IQ Hedge Multi Strategy Index – which tracks third party index showing hedge fund returns.

This index has been created with underlying funds that look to replicate six major hedge fund strategies:

Long Short Equity
Global Macro
Market Neutral
Event Driven
Fixed Income Arbitrage
Emerging Markets

The fund will replicate the hedge fund returns by investing in several ETFs and other financial instruments. QAI is passive in nature and comes with a relatively low expense ratio of 0.75%.

Fund of Funds

QAI is like a fund of funds and it will invest 80% of its net assets plus any amount it borrows for investing in its underlying index funds.

This basically boils down to investing 80% of QAI’s net assets in pre-determined ETFs. These investments will include ETFs, Inverse ETFs and Ultra Inverse ETFs.

The remaining 20% will be invested in assets that don’t fall under the underlying index. This can be other ETFs, ETNs, Publicly Traded Commodity Pools or directly in the components of its underlying index funds. In addition to these, QAI can also invest in the following type of financial instruments:

Future Contracts
Swap Agreements
Forward Contracts
Reverse Repos
Options

Top Holdings

QAI holds about 77% of its assets in 6 funds and the remaining 23% are spread across other funds. Here is a break – up of the top holdings of QAI.

qai-weight

As at 03/27/2009

QAI will balance its portfolio at the end of every month and will re-allocate assets based on the market conditions.

Conclusion

The thing that jumped out at me was that they were really bent towards debt instruments. If a large part of their portfolio is invested in debt and continues to be like that — then why not buy the underlying debt instruments instead?

If on the other hand, they change their asset allocation in a few months and even then show a favorable result — this fund might become interesting. For now, it is too early to make a call or or even contemplate investing in this for me.

Disclosure: I am not invested in this at the time of writing.

India Can Contribute To IMF Based on its IMF Quota

The Indian Prime Minister – Dr. Manmohan Singh, said last week that India can consider contributing to the IMF, based on its quota. India has come a long way since the 1991 crisis, when it had to go to the IMF because, basically — it had run out of money.

The liberalization process thatÂ started around that time combined with the giant leaps the Indian IT sector made — ensured that India is in a reasonable position in the worst recession since the second world war. India has forex reserves of about $250 billion dollars and that acts as a cushion against the current downturn.

I was interested to see what India’s quota in IMF is, and how much it could contribute. IMF Quotas are assigned to each country based on their relative size to the global economy. The IMF Quota of a country decides its voting power in IMF. The US has the highest quota of about 16.77% and Palau has the lowest quote of 0.01%.

India has got an IMF quota of 1.89%, which translates into about 4,158.2 millions of SDRs or 6.23 billion dollars.

IMQ Quotas Of The Biggest Countries

I was interested to see a comparison of GDPs of big countries and their respective quotas. GDP figures are nominal GDP as a percentage of the global economy and IMF Quotas are based on the latest allocations available at the IMF website.

imf-quota

This comparison would look quite different if instead of nominal GDPs — PPP (Purchasing Price Parity) GDP,Â Debt to GDP Ratio or Forex Reserves was used.

It will be interesting to see how this ratio evolves over time and which countries emerge strongest, once the recession ends.

Shoe Throwing School for Journalists

A journalist hurled his shoe at the Indian Home Minister — Dr. P Chidambaram as a mark of protest yesterday. Not surprisingly, he missed.

Along with running ponzi schemes, show throwing is the “in thing” these days and everyone seems to be getting in the act.

It started with President Bush in Iraq and then next was the Chinese Premier Wen Jiabao, when he was delivering a speech in Cambridge University.

Then in February this year, Israel’s ambassador to Sweden — Benny Dagan became the victim, while giving a speech at Stockholm University. He was the only one who actually got hit.

Reading the comments on the papers that reported these news stories, it seems that the general public is rather disappointed that most of these journalists miss their target. If the trend continues — very soon there will be a finishing school for journalists that teaches them to hurl shoes.

If that happens and the school goes for an IPO, I’d be really interested.

Unemployment Numbers

US Department of Labor announced an unemployment rate of 8.5% for March 2009 last week. There are six different types of unemployment rates that are up on their website and then two numbers for each of these rates — one seasonally adjusted and one which isn’t adjusted. The official number is seasonally adjusted and is called U3.

Here is a brief description of each of the six measures along with their seasonally adjusted rates for March 2009.

1. U-1: Persons unemployed for 15 weeks or longer. This stands at 3.7%

2. U-2: Job losers and persons who completed temporary jobs. This stands at 5.4%

3. U-3: Total unemployed. This stands at 8.5%

4. U-4: Total unemployed plus discouraged workers. Discouraged workers are defined as workers who are not looking for job because of a job-market related reason. This stands at 8.9%

5. U-5: Total unemployed plus discouraged plus marginally attached workers. Marginally attached workers are described as workers who don’t have a job and are not looking for one either. They want a job, are available for one and have looked for a job in the past. This stands at 9.8%

6. U -6: Total unemployed plus discouraged plus marginally attached plus total employed part time for economic reason. People employed part time for economic reason are those who want and are available for full time work, but couldn’t find one and hadÂ to settle for a part time job. This stands at 15.6%

All these numbers are a percentage, but they are not a percentage of the total population. The first three are a percentage of the civilian labor force. The next three numbers are a percentage of the civilian labor force plus discouraged, discouraged and marginal, discouraged, marginal and part – time for U4, U5 and U6 respectively.

So, a 8.5% unemployment rate doesn’t imply a 91.5% employment rate. Rather, 8.5% of all those who were part of the labor pool are unemployed.

Heather Boushey writes about the real number:

“The share of the U.S. population with a job is now at 59.9 percent, which is lower than any time since 1985.”

These numbers reveal the worsening economic situation and probably U6 really highlights the full extent of the problems of the economy. While these are US numbers — I suspect that the situation will be same globally. I looked up Indian numbers, but, India doesn’t report unemployment numbers like this.

Do you have links to unemployment numbers of other countries and how do they compare to the numbers here?