India and China are still behind

Sure India and China did'nt feel the impact of the global recession as did the US and the rest of the developed economy. Economists have been touting this as the decoupling effect. India's economic fortunes have been decoupled from those of the US.

But what this really indicates is that India and China to a lesser extent are less connected internationally and far less developed than their western counterparts. They dont have the same e degree of sophistication that the international economies have. They also wont benefit to the same degree by an expansion in the US market.

The economy is hitting the ordinary people - is the stimulus working?

I flew from San Francisco to Boston last night. The cabbie who took me to the SFO airport was a person of Egyptian origin. She had an undergrad degree in Philosophy from Egypt. She migrated to the US about 10 years ago. She had two school going daughters. But she couldnt get a job as a teacher in the US. So she decided to drive a cab. She took a class, passed the exam and has been a cabbie for close to three years now. And she said that her business was down by around 30%. I asked her how much she made now and how much it cost to run the cab - let's start with her cost - she pay $350 a week to keep her medallion and another 150 a month to the San Jose airport to pick up passengers. Her average revenue before the downturn was about $200-$300 per day. rental, gas and maintenance took out about 125-175. She made about 75 -150 a day. so about 4K per month. Enough to live in a one bedroom. and now she makes 30% less.

Because Airtraffic is down, less number of people are flying - the are car pooling - they are taking public transport. In fact, the long term parking in SFO is less crowded than it used to be earlier.

The cabbie who picked me up in Boston had a smilar story - lesser number of people flying now. His income was down by 20-30%. none of these are accurate numbers, but they give a sense of the scale of the downturn. we need to continue to wear seat belts tight.

Does this the mean the stimulus is not working? I think its too early to teel. even though jobless rates in May were higher than expected, the trickle down effect of a stimulus plan takes time. Let's see how the story is in August. My sense is an additional stimulus will be needed.

Shareholder Value - is that what companies exist for?

No said Dave Packard - They exist to create profits no doubt - but not just to create profit - but for cause that is beyond creating profits - to give the people who work in that a company a sense of self esteem, to make good products that consumers like and so that the company is a good citizen in the community. - Not exactly in the same words, but in many ways clearly implied in the words he chose. And when said that at a conference of other companies - not a single CEO took him seriously then. But I guess he knew what he was talking about.

I wonder why most CEOs and managers keep forgetting that a company exists for reasons beyond making a profit. and why the still worry about earnings calls. and why they worry about analysts. and why they worry only about quarterly reports only. The most successful ones are the those who dont fall in this trap.