What If Companies Don’t Hire People Back?

It is normal for businesses to hire people back after a recession. The improvement in employment usually lags GDP recovery, but the trend is part of a normal cycle that comes at the end of an economic downturn.

The current recession has been so brutal that a number of normal trends may not apply.

The Wall Street Journal reports “According to a new survey, 52% of companies expect to employ fewer people in three to five years than they did before the recession began.” The study was conducted by Watson Wyatt this month and covered 179 companies.

The economy will suffer two body blows if the information is accurate. Unemployment is supposed to top 10% by the end of this year and could remain in double digits for much of 2010. Economists hope that the stimulus package and the normal rebound in business and consumer spending that cause a rebound help drive improved employment. The damage from this downturn may be great enough that many businesses elect to get by with less while they take what may be years to rebuild their fortunes. That, in turn, may lead to a permanent elimination of some jobs.

There are a number of reasons that this recession will not end as quickly as optimists expect or that a recovery will be nothing more than a 1% to 2% GDP improvement that goes on for the next few years. That would be quite different from the 4% to 5% GDP improvement that the Administration is forecasting for 2010 and the years beyond. It would almost certainly cause a widening deficit because there will be fewer and fewer people to tax as a way to offset government spending, much of it being done in the name of rebuilding the job base.

A lack of sharp GDP increases and an unemployment rate that could stay above 9% for a number of quarters may be labeled a recovery, but it is simply stagnation which is no recovery at all.

by Douglas A. McIntyre

US Stocks Down In Early Trading After Grim World Bank Report

A grim economic forecast from the World Bank put pressure on stocks and commodities prices on Monday and increased demand for Treasurys and the dollar.

Shortly after the opening bell, the Dow Jones Industrial Average was lower by about 97 points. The S&P 500-stock index fell 1.6% and the Nasdaq Composite Index declined 1.6%.

The World Bank added to the market's unease about the economic outlook as it said that the global economy will shrink by 2.9% this year. That is worse than the body's previous forecast for a 1.7% contraction.

Commodities prices, which have risen sharply in recent months on hopes for an economic turnaround, declined. The front-month crude-oil futures contract sank more than $1 to under $68 a barrel in recent trading.

Treasury yields declined as investors snapped up government debt despite an upcoming meeting of the Federal Reserve and the expected sale of $104 billion in notes this week. The benchmark 10-year note climbed 16/32 to yield 3.71%. The dollar gained against the euro but declined against the yen, in a pattern that has frequently emerged when traders grow nervous about the outlook.

The Fed is expected to leave interest rates unchanged, but traders are looking for any indication that the central bank intends to rein in some of its monetary stimulus. Fed-fund futures are pricing in at least four quarter-point increases in a year's time, though many economists view an increase in the Fed's target rate as unlikely before the central bank has reined in other extraordinary measures it took to boost the economy and financial markets during the worst of the credit crisis.

Among stocks to watch, U.K. mining company Anglo American jumped 5% on reports that it received a merger offer from Xstrata in a deal that, if accepted, would create the world's No. 3 miner. Peers Rio Tinto and BHP Billiton fell 6% and 3% respectively.

Apple gained 1% after The Wall Street Journal reported that Steve Jobs, who has been on medical leave since January, received a liver transplant two months ago. The company said that it sold more than one million of its new iPhone 3G S handsets over the device's debut weekend.

Markets in Asia were generally stronger, with the Nikkei 225 closing 0.4% higher in Tokyo. Markets in Europe were weaker

翁詩傑：限制車速‧不規定長巴旅巴鎖油門

（吉隆坡）交通部長拿督斯里翁詩傑表示，政府未打算規定所有長途巴士及旅遊巴士須鎖上油門，以限制車速。

“政府已通過商用車輛執照局（LPKP），自去年8月18日起規定所有新長巴安裝地理位置定位系統（GPS）。有關系統讓長巴業者監督及控制巴士司機是否超速。”

他在國會下議院回答公正黨雙溪大年區國會議員佐哈里阿都的提問時指出，在2000至2008年涉及長巴和旅遊巴士的死亡意外，分別是661宗及97宗。

他指出，商用車輛執照局目前正在探討長巴是否適合安裝“車速限制儀器”（Speed limiter device），因為交通業者須承擔安裝儀器的成本。

他說，長巴及旅遊巴士在高速公路的最高車速分別是每小時90及80公里，違例者將被罰款不超過300令吉。

佐哈里在提出附加問題時指出，一輛長巴在凌晨12時零3分從雙溪大年駛往吉隆坡只是用了3小時45分；根據每小時110公里的車速，從雙溪大年駛往吉隆坡其實須要4小時30分。

他建議交通部規定所有長途巴士及旅遊巴士須鎖上油門，及進行巴士打卡制，以監督巴士的行駛速度。

林冠英：發揮孝親敬老‧養育父母或有獎勵

（檳城）檳州政府為鼓勵子女養育父母，有意發出至少1000令吉獎勵子女，但這筆款項只在父母過世後才會發給他們指定的子女。

檳州首席部長林冠英指出，州政府推展的回饋樂齡人士計劃中，在表格上要求樂齡人士填上受益人，以便州政府把上述款項交給他們指定的人士。

不過，林冠英強調，州政府只在財力許可的情況下發出上述款項。

他週日（6月21日）晚上出席檳城慧音社主辦的“第29屆敬老慈幼慈善晚會”時，在致詞中宣佈上述新措施。

視州政府財力而定

當記者詢問州政府是否已經成立基金會，以及是否已在州行政議會通過上述建議時，林冠英強調，這項獎勵措施視州政府的財務狀況而定。

他說：“我是以首席部長身份提出這項建議。就像推選州秘書的人選，首席部長可以提出建議。”

他表示，州政府這項措施是鼓勵子女養育父母，發揮孝親敬老的精神。如果有關樂齡人士沒有填上受益人的名字，他們逝世後，這筆款項將交給樂齡人士曾經寄宿的養老院或看護中心。

他也強調，所有在明年3月8日之前填妥表格的樂齡人士會有其他方式的回饋，作為感謝樂齡人士為檳州的貢獻。

他無法提出具體的回饋方式，只表示州政府還在研究回饋樂齡人士的方法。

除懸賞1萬‧或擢升揭發者

檳州首席部長林冠英週日（6月21日）晚上出席喬治市獅子會308B2區所舉辦的慈善宴會時宣佈，經過州政府的確認之後，首個“廉潔獎”的得主名單將於6月24日正式公佈。不過，他並沒有在會場上透露該得主是因何事獲獎。

“這位揭弊的公務員，貫徹了我們的‘貓´原則，樹立了廉潔的良好榜樣，因此，我們決定將這個獎項頒發給他。”

這項由檳州政府在6月2日為州內公務員設下的“廉潔獎”，主要是鼓吹廉潔風氣，只要有公務員檢舉政府部門內涉及貪污、賄賂或舞弊的1員，經查證後屬實，就能立刻獲得懸賞1萬令吉；而且，州政府也會就此事考慮擢升這名揭發者。

為州政府節省資源林冠英也強調，這項“廉潔獎”志在提昇公務員的表現，同時也為州政府節省資源。

他以“陳合裕土地案”

為例，若是公務員能夠及時揭穿這起案件，州政府就不用賠償那麼多錢了。

“無論是之前的‘創意革新獎´或是現在‘廉潔獎´，這都是檳州政府領先全國、首設對公務員的獎掖。我希望所有的公務員都能好好珍惜這個機會，努力表現自己。”

林冠英亦補充，“廉潔獎”的額度並沒有所謂的上限，簡言之，今年若有20宗投報，州政府就會賞出20萬令吉；若1宗也沒有，州政府則一分錢也不必撥出來。

“中央撥款是國陣的錢”‧農長拒反對黨參與農理會

（吉隆坡）農業及農基工業部長拿督諾奧馬以“中央撥款是國陣的錢，應全由國陣議員來執行大選承諾”為由，拒絕讓反對黨議員參與國會農業理事會會議，引起行動黨華都牙也議員馮寶君強烈不滿，與諾奧馬展開罵戰。

諾奧馬在總結2008年動物食物法案二讀辯論時表示，由於國會農業理事會主要是負責農業行政和執行政策的事務，因此他只會委任國陣議員參與該理事會。

“因為中央撥款是國陣的錢，國陣必須履行大選時所許下的承諾，所以只有國陣議員才能加入！”

諾奧馬的言論引起馮寶君不滿，並反駁諾奧馬將課題政治化，因為前任農業及農基工業部長拿督慕斯達法邀請反對黨議員參與該理事會，並一起交流及解決問題，但是諾奧馬上任後卻馬上指示官員制止反對黨議員參與。

馮寶君：這是納稅人的錢

“而且這不是國陣的錢！這是納稅人的錢！慕斯達法可以邀請我們參與，但是新部長上任後卻把理事會政治化。”

諾奧馬回應時否認有關指責，並說他的做法是以人民為先。

不過，他的回應引起馮寶君反彈。她強調：“這不是國陣的錢！這是人民的錢！不要用人民的錢來政治化課題！

如果我的選區（華都牙也）的選民拒絕了國陣候選人，就應該將撥款交由我們處理惠及人民。”

諾奧馬這時馬上回應：“所謂國陣的錢，就是政府的錢！而且民聯在執政霹靂時，也一樣撤換國陣支持者擔任官職！”

Asian Markets Rise on Optimism About China

LONDON (AP) -- European stock markets fell Monday despite gains in Asia as investors remained cautious about the U.S. economic outlook ahead of a key policy decision and statement from the U.S. Federal Reserve later in the week.

The FTSE 100 index of leading British shares was down 49.51 points, or 1.1 percent, at 4,296.42 even though shares of mining company Anglo American PLC surged more than 6 percent after Xstrata PLC's merger approach, which at current market prices would value a merged company at just over 40 billion pounds.

The biggest loser in London was British Airways PLC, which fell more than 7 percent, after Richard Branson, the boss of bitter rival Virgin Atlantic, suggested that the flag carrier was worthless.

Germany's DAX fell 63.67 points, or 1.3 percent, to 4,775.79 while the CAC-40 in France was 19.51 points, or 0.6 percent, lower at 3,201.76.

Investors have been in a cautious mood for most of June amid mounting concerns that the recent economic news has not been quite good enough to justify the share rally in stock markets since the middle of March. The FTSE ended last week down 2 percent, while the CAC closed 3 percent lower and the DAX 4 percent down. In the U.S., the Dow Jones industrial average lost 3 percent, while the broader Standard & Poor's 500 index sank 2.6 percent

The stock market rally around the world since March had been fueled by hopes that the U.S. economy will recover from recession sooner than anticipated. As equities usually start rising 6 to 9 months before actual recovery emerges in the official data, this suggests investors believed the massive sell-off in markets during the most acute phase of the financial crisis was overdone. Some of the world's major equity indexes are now in positive territory for 2009.

That optimism has dissipated somewhat despite some encouraging data at the end of last week. Analysts say investors need clearer evidence that the world economy and company earnings are recovering to make sense of stock valuations. In March, many investors saw valuations around the world as particularly cheap and started buying into the market.

Interest rates, particularly on U.S. government bonds have been rising steadily over recent weeks on expectations that the U.S. Federal Reserve will raise borrowing costs sooner than previously anticipated. Meanwhile, oil prices have more than doubled over the past couple of months on hopes that a global economic rebound will boost demand for crude.

''Until now markets have been able to find support from the fact that the global economy was not about to fall off a cliff and financial markets were not going to implode. Now markets need more,'' said Mitul Kotecha, an analyst at Calyon Credit Agricole.

The highlight this week will the U.S. Federal Reserve's rate-setting meeting on Wednesday. Though the benchmark rate is widely expected to be kept in the range of zero to 0.25 percent, investors will be interested to see what the Fed says about current economic prospects and how long it expects to keep monetary policy as accommodating as it is.

Most analysts think the Fed has a difficult balancing act -- expressing the view that the worst of the recession is over at the same time as not spooking investors into thinking that interest rates will rise any time soon.

''I think that with the real economy stabilizing at best and with the consumer still cautious, the best line for the Fed to take this week is simply to say that it will keep interest rates low for as long as it takes,'' said Neil Mackinnon, chief economist at ECU Group.

The unsettled tone was expected to continue at the U.S. open later, with Dow futures down 47 points, or 0.6 percent, at 8,429 and the S&P 500 futures 6.2 points, or 0.7 percent, lower at 909.50.

Earlier in Asia, optimism about China's economic outlook helped shares advance, with Japan's Nikkei 225 stock average closing up 40.01 points, or 0.4 percent, to 9,826.27, and Hong Kong's ending 138.62 points, or 0.8 percent, higher at 18,059.55.

Premier Wen Jiabao was quoted by state media over the weekend as saying China's economy was beginning to recover steadily and that Beijing will maintain an easy credit policy to support growth.

Elsewhere in Asia, South Korea's Kospi climbed 1.2 percent to 1,399.71 and Australia's benchmark added 0.5 percent to 3,918.2.

Oil slipped further below $70 a barrel, with benchmark crude for July delivery down $1.37 at $69.18 a barrel. On Friday, it fell $1.82 to $69.55.

In currencies, the dollar fell 0.4 percent to 95.92 yen while the euro declined 0.7 percent to $1.3844.

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AP Business Writer Joe MacDonald in Beijing contributed to this report.

World Bank Cuts Forecast for Developed Economies

HONG KONG — Companies in Japan and Germany may have become less gloomy about their prospects in recent months, as surveys showed Monday, but neither they nor businesses elsewhere have much to cheer about as the world economy remains mired in a recession that could see it shrink by about 2.9 percent this year.

Forecasts from the World Bank on Monday highlighted just how painful the recessions will be in various regions, despite mounting signs that the very worst of the downturn may be over.

The bank earlier this month said it expected a deeper global recession, forecasting a 2.9 percent contraction in gross domestic product for this year, rather than 1.7 percent, as it projected as recently as March.

More detailed forecasts released Monday showed that much of this pain will be in high-income areas like the euro zone, the United States and Japan. The bank said that it expected economies in high-income nations to contract a total of 4.2 percent this year.

It expects the U.S. economy to shrink 3 percent and the euro zone 4.5 percent, rather than the 2.4 percent and 2.7 percent it forecast in March. For Japan, the World Bank now projects contraction of as much as 6.8 percent this year — significantly higher than the 5.3 percent it forecast three months ago.

A survey of big Japanese manufacturers released by the government Monday showed sentiment improving in the April-to-June period, to minus 13.2, from minus 66.0 during the previous quarter. And in Germany, the closely watched Ifo business confidence index rose for the third consecutive month in June, to 85.9 from 84.3 in May.

Both readings echoed other encouraging data from around the world in recent weeks that show the pace of decline is at least slowing, but they fall well short of showing actual recovery at this stage, economists caution.

The World Bank’s forecasts Monday echoed this caution: “While the global economy is projected to begin expanding once again in the second half of 2009, the recovery is expected to be much more subdued than might normally be the case,” the bank said in its report. “Unemployment is on the rise, and poverty is set to increase in developing economies, bringing with it a substantial deterioration in conditions for the world’s poor.”

Likewise, the chief economist of the International Monetary Fund, Olivier Blanchard, said Monday that the U.S. economy would see a sustainable recovery only if exports rose substantially, and that this might require an adjustment in the dollar’s exchange rate.

Developing nations will still see growth in 2009, the World Bank said, but this will be slim — 1.2 percent overall, after 8.1 percent in 2007 and 5.9 percent in 2008 — mainly because of the dynamic economies of China and India. Stripping out those two countries, where growth is expected to be 7.2 percent and 5.1 percent in 2009, developing nations will contract 1.6 percent, the bank projects.

Economies in Brazil and Russia — the other two nations in the so-called BRIC quartet of large, and once fast-growing, developing nations — are expected to shrink by 1.1 and 7.5 percent, respectively. The bank had previously expected Brazil to eke out 0.5 percent growth this year, and Russia to shrink by 4.5 percent.

Developing nations have been hit hard by plummeting demand for their exports in the United States and Europe. The recession and financial-market fragility also has caused private capital inflows to developing countries to fall drastically, to $707 billion in 2008, from a peak of $1.2 trillion in 2007, the World Bank said Monday.

Emerging Europe and central Asia have been hit hardest by the crisis, as many countries there had large current account deficits and were especially vulnerable to the abrupt drop-off in capital flows and exports the crisis brought.

GDP in these regions is projected to fall by 4.7 percent in 2009, recovering to grow by about 1.6 percent in 2010.

Many parts of developing Asia suffered mainly because of collapsing exports, but South Asia and the East Asia and Pacific regions are forecast to grow 4.6 percent and 5 percent, respectively.

The World Bank expects global growth to rebound to 2 percent next year and 3.2 percent by 2011. In developing countries, growth is expected to be higher, at 4.4 percent in 2010 and 5.7 percent in 2011.