Thursday, July 23, 2009

Jobless economic recovery in the US

The Federal Reserve Board's Chairman has to go to Congress and report about the nation's economic health every six months.

As usual, the Fed chairman Ben Bernanke presented the same testimony to both the House Financial Service Committee and the Senate Banking Committee on July 18-19th, a ritual required in legislation written by the late lawmakers Hubert Humphrey and Augustus Hawkins, the Humphrey-hawkins Act (27th October 1977).

The Humphrey Hawkins Law intended to implement the Employment Act's (1946) assumption of Federal responsibility for achieving full employment and price stability.

Bernanke who has extensively studied the Great Depression knows the risk of braking too soon. That's what happened in 1937, which fiscal and monetary policies both tightened, in part of misplaced fear of inflation. That set the stage of the second leg of the Great Depression that followed growth from 1933 to 1936 that averaged over 9%, but still left unemployment well in double digits.

With the US unemployment expected to range between 9.8% and 10.1% in 2010, up from the current 9.5% jobless rate, the world's largest economy appears to have turned the corner but only to a path of tepid recovery.


Sunday, July 12, 2009

Worries over greying Asia

According to an AFP article, Asia is facing an ageing crisis with weak and inadequate pension systems and family-based support dwindling, an ADB report revealed Saturday.

"A young continent reaping the demographic dividend of a large youthful workforce is giving way to a greying continent where the ratio of retirees to workers is on the rise," senior Asian Development Bank economist Park Donghyun said in a study released by the Manila-based lender.

Improved female education and better medical care is inducing Asians to have fewer children, allowing them to live longer and causing a "seismic" demographic shift, Park said.

The median age of China, Indonesia, South Korea, Malaysia, Singapore, Thailand and Vietnam "will exceed the world average by 2050" which spells trouble for their pension systems along with that of the Philippines, the study said.

The greying phenomenon is more pronounced in East and Southeast Asia than in South Asia, it added.

"In contrast to industrialised countries, most Asian countries do not yet have mature, well-functioning pension systems," Park said.

"As a result, they are ill-prepared to provide economic security for the large number of retirees who loom on the horizon."

In the past, experts have warned that unless action is taken now to meet the changing population trends, the South East Asian countries could face long-term social and political implications.

The problem is different from country to country and the policy makers of each country will need to work out the solution that suits them best considering the pace of the number of elderly that is increasing.

The older workers who face big challenges in a fast changing environment can remain employable only if they upgrade themselves constantly by embracing new skills and technology.

The value of the experience of the older workers in any country will diminish fast unless they can adept to the fast changing conditions of a society that can count on a globally mobile workforce to fill the gaps by relocating from one country to another.