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Globalization created the opportunity to capitalize on cheap labor in developing countries. Although China remains the primary source of apparel manufacturing for many developed nations, the country’s demand for increasing wages has lead to the search for new labor markets. A new sources of cheap labor is Bangladesh—one of the poorest countries in the world, located in South Asia. Bangladesh has a population of approximately 160 million, and remains plagued by corruption, massive poverty and political instability. A Deathly Shortcoming: The cheap labor in Bangladesh has made it the second biggest apparel exporter—an industry worth $19 billion. The wages for the workers in Bangladesh are a meager $0. 18-$0.26 an hour, while China’s workers average $1.34 an hour. This motivated many manufacturers, like Wal-Mart and Sears to shift its production to the country, allowing them to squeeze out a slightly higher margin. However, the working conditions for Bangladeshi workers include an a...

The GDP announcement this morning for the first quarter of 2013 was 2.5 percent, well below the 3 plus estimates that economists were expecting.    This will not be the first disappointment.  Folks like Jim Cramer on CNBC can't understand why businessmen are reluctant to expand capital equipment and hire employees.  That's because Cramer is a media celebrity not a businessman. If Cramer were even remotely aware of the actual business climate that ordinary folks have to contend with, he would know what the problem is -- over regulation, absurd tax levels, Obamacare, EPA regulations, Dodd-Frank.  It is almost as if the Obama Administration has declared war on the US economy.  Anything that smacks of business success is viewed suspiciously by the Administration (and by Jim Cramer, I might note). The talking heads can't figure it out, but the economics are simple.  If hiring an employee at a $ 35,000 salary means it costs you $ 75,000 per year, you ar...

Eduardo Porter, an "economics" columnist with the NY Times, has penned an article this morning in the NY Times that purports to address the lack of solutions to today's economic stagnation.  Porter reports on a recent IMF sponsored conference of economists that was supposed to address problems posed by the "financial crisis of 2008." According to Porter, the 2008 collapse discredited policies of lower taxes and de-regulation.  You have to wonder what world Porter lives in.  Was Sarbanes-Oxley an example of the deregulation?  Were the Congressionally-imposed strengthening and rule-making for Fannie and Freddie examples of de-regulation?  Exactly what is Porter referring to?  Or do facts matter anymore when you have a convenient agenda ready? Here is an example of the absurd conclusions that Porter draws in his article: "One lesson from the crisis -- first learned in the 1930s and corroborated in several contemporary analyses -- is that when interest rates lo...

In conjunction with the NEW tax relief available from YA2012, many Private Retirement Scheme (PRS) contributors are wondering how can they get the tax statement for income tax filling. To address your concern, here you go... (If you don't know what are we talking about, please find out " What is Private Retirement Scheme? ") To recap, contributions into a PRS scheme can enjoy a tax relief of up to RM3,000 from YA2012 - YA2021. If you did contribute some money into a PRS scheme in 2012, congratulations, you're entitled for PRS tax relief for YA2012. If you haven't, no worry, you still got time to start contributing before end of this year. Back to the topic, please follow these few easy steps to get it: Please surf www.ppa.my and click log in. I believe you already get your PIN from PPA when you made your first contribution. If not, please contact PPA and request again. After log in, you will arrive at the following page. Supposedly, you can download the tax reli...

Finance Malaysia hopes this article doesn't come late to give you some info on Personal Income Tax filling for year of assessment 2012. Maybe due to the general election, which had diverts our attention lately. Lol. Anyway, do remember to file your income tax before 30th April oh!!! Well, here is the list of Personal Tax Relief for YA2012. And, I would like to highlight to you, in RED color words , some changes/differences from previous year. Personal Tax Relief for YA2012 Item No.11: This would replace Item 10 from YA2012-YA2017 with higher amount of RM6,000 Item No.23: Private Retirement Scheme (PRS) is the NEW item which can help you reduce tax further with additional RM3,000 tax relief from YA2012-YA2021. As such, Item No.22 would be replaced until after YA2021. All other items remained the same. Do reduce your tax payable by maximizing the tax relief amount. Remember to keep a record and file it properly. Happy tax filling. Thanks. Blue color: Tax relief that we can adjust e...

David Wessel has a lengthy article in this morning's Wall Street Journal about the future direction of the world's economies.  He begins with Europe and then walks the reader through the US, Japan, China, and the rest of the world.  In every case, Wessel's discussion is about government policy. The overall theme is that economic recovery depends upon government policy, discretionary policy at that.  He discusses the twists and turns of policymakers as they, according to his story line, attempt to guide their economies to the promised land. But, that is exactly the problem.  Once government policy becomes the determinant of the economy's future, the economy no longer has a future.  The proper role of government in a free market is to lay down the rules of the road and then to get out of the way.  Increasingly, a government of rules is not to be found. Instead we watch daily as policy makers, who frequently have a very limited knowledge of economics, move thi...

When an economy collapses, usually with the financial sector leading the way, everyone fears that it will not soon recover.  But, history tells us otherwise.  The numerous financial and economic collapses from the end of the civil war in the US up to the start of World War I took place during the fastest spurt of economic growth in US history.  The US economy had no central bank during this period and the government was so tiny that fiscal policy was largely non-existent.  Absent modern policy tools, what happened? What happens, when government is not around to step in, is that economies recover on their own.  That's what the period from 1865 to 1914 teaches us.  It was during that period that the US overtook other economic power houses to become, by the end of the first World War, the most powerful economic engine in the world.  That is the outcome one can expect if the central bank is non-existent and if government fiscal policy is non-existent. But ...

Credit cards have become a part of life in Malaysia. But as much as they make life a lot more convenient; credit cards can also lead to an unmanageable amount of debt. In some cases, credit cards have even led to bankruptcies. If you have a credit card debt that seems to be spiralling of control, it may be the right time to consider debt consolidation. In Malaysia, there are two common debt consolidation methods that are highly workable. 1) Credit Card Balance Transfer Credit Card Balance Transfers involve the transferring of money that you owe on your current credit card account to a new credit card. Balance transfers offer a number of different benefits, including lower interest rate and the ability to simplify your credit card debt payment process.  How Credit Card Balance Transfers Can Work for Debt Consolidation: ●      If you have accumulated a significant amount of credit card debt, there is a good chance you are currently being charged the maximum inte...

The American dream was, once upon a time, the idea that if you worked hard, postponed consumption, saved your money and invested it, you could live whatever lifestyle that you wanted.  The flip side was that if you failed, you paid the price for that failure.  That idea fueled the economic engine that made American the wealthiest country in the world.  Millions of people came to America, because of the freedom that the American dream represented -- the freedom to be who you wanted to be without the heavy hand of the government telling you what you could or could not dream. We are now embarked, along with our friends in Europe, upon the journey to the American nightmare.  Political struggles, both in Europe and the US, are degenerating into class warfare, pitting higher incomes against lower incomes, and producing economies that no longer grow.  Massive unemployment is becoming accepted and commonplace.  The Eurozone unemployment rate exceeds 12 percent and ...

I nominate Simon Johnson for an award as an economist who has managed to reach the remarkable conclusion that economic incentives do not matter.  He joins a long list of politicians who seem to think that government policies that take money from one group of Americans to give it to another have no effect on behavior. Save and save and save and then find out that the government will take the proceeds of your savings away from you.  That's the message of the recent Obama message and Simon Johnson's column today in the New York Times.  Obama's new war on the IRA promises to slap the hands of any American who decided to forego that extra TV or car or who bought a house that they could afford, putting the money into an IRA account instead. The new crime is saving, investing and accumulating assets.  According to Obama, that is un-American and he proposes bringing it to an end.  Somehow eliminating what paltry private savings the American economy generates doesn't see...

Sanofi is a drug company with a research facility in Toulouse, France.  The facility needs to be closed.  It is a research facility that hasn't produced a new drug in twenty years and costs are prohibitively high in any event.  600 workers are employed there. So, what happens when Sanofi decides to close the plant?  Mass demonstrations and a protracted legal battle.  In the end, Sanofi will be refused by the government and the plant will stay open, regardless of what Sanofi shareholders want. So, what happens when another company is considering opening a plant anywhere in France?  They will think about Sanofi's troubles and look elsewhere.  Markets work and learn -- which is bad news for France, a country with a declining GDP and absurd economic programs. Obama thinks that they are on the right track.  I guess it depends on what destination you are shooting for.

Austerity is not the answer.  Austerity just means lower standards of living in the future and political chaos.  Does anyone think things look bright for Cyprus, Greece, Portugal, Spain or Italy?  These unpayable debts should have been moved into default negotiations.  That is the only answer.  Increasing sovereign debt in all of these countries is madness and brings Germany and France into the same boat. Bureaucrats and naive politicians (think Obama) always believe that there is some simple "political" solution to every problem.  There isn't.  They are wrong.  The only way to deal with too much debt is to reduce it.  Period.  Nothing else helps. The ECB is on the wrong track.  It is long past time for "workouts," but better late than never. Otherwise the center-right and center-left political parties will be completely discredited and radical alternatives, already emerging, will move into prominence. Politicians never learn. ...

If you want people to save less, increase the tax on their savings.  So, the President now threatens to pull the rug out from under IRAs.  The President's defenders say that he is only going after very wealthy IRA users, but we know where it ends -- the average American will find his savings threatened by this increasingly autocratic regime in Washington. How do you help poor people?  Increase their taxes.  So, the President proposes to increase the tax on cigarettes.  Who are the smokers amongst us?  The country club set?  Or those without jobs and working at the lowest paid jobs in the country?  Everyone knows the answer to that, including the President.  He knows that smoking is mainly a habit indulged in by the poor, so he wacks the poor with one more tax hike.  Smoking is almost unheard of among upper middle income folks.  Obama has his sights set on socking it to the poorest demographic in the country. What about entitlements?...

Promised 78 billion Euros by the ECB, Portugal had agreed to limit it's budget deficit to 3 percent of GDP.  Forget that promise.  It won't happen. The high court in Portugal said "no" yesterday to a plan to trim government employees compensation and that is the end of the 3 percent plan.  Back to plan B.  Portugal now says 5 percent is doable.  Not that it matters. Portugal's debt was 124 percent of GDP before the ECB stepped in.  It will be 150 percent within two more years on its way, no doubt, to over 200 percent within a decade.  This, of course, assumes there is someone out there willing to buy this worthless stuff. All the other Eurozone countries are on a similar trajectory, including France and Germany.  The US is on a similar path, perhaps as a sympathetic show of unity. The ECB magic elixir is that the cure for too much debt is more debt.  Austerity is thrown into the mix, one supposes, for comic relief. Ridiculous economic policie...

The Wall Street Journal reports today that the Obama Administration is now planning on major new taxes on: 1) cigarettes; and 2) IRA accounts. Increasing the taxes on cigarettes goes after the poorest demographic in America.  In his continuing war on the lower middle income Americans, Obama plans to raise what is probably the most regressive tax in existence -- the cigarette tax. For balance, one supposes, Obama intends to break the long standing promises of IRA accounts.  IRA accounts are a special target of the Obama Administration, because IRA's are the main avenue that individuals use to provide savings for their retirement.  Not content to let social security run out of money in the next generation, Obama now plans to steal the private savings that individuals have accumulated by abstaining from consumption and saving for their future. There are no limits to the duplicity and meanness that characterizes the Obama Administration.  These proposals are just more of...

This morning's job report was notable mainly for the number of Americans who have simply given up any hope of employment and have exited from the workforce.  Another half a million Americans quit looking for work in March.  The percentage of American adults that now make any effort at all to find work is at the lowest point since 1979 (when Jimmy Carter was president). If more people continue to quit looking for work, the unemployment rate will continue to fall.  Eventually, if everyone out of work just gives up looking, America's unemployment rate can fall to zero.  That seems to be the only way to get the unemployment rate down in the new Obama world. In a culture that is becoming increasingly a "where's mine?" culture, it is hard to see how the American economy that we used to know (in the bad old days) is ever going to return. How many private sector jobs were created in March?  A laughable 85,000.  That's almost a rounding error to the Reagan era 1.2 m...

After excoriating the banking community for the past five years for making loans to Americans with less than stellar credit, Obama has now reversed course.  This week, Obama has now called for banks to return to the bad old days -- lending to people of modest means. What has been considered a crime by the Obama folks for the last five years is now their latest policy initiative.  With the taxpayer, of course and as usual, as the guarantor. Instead of letting the free market decide who gets to borrow and at what rates, which would avoid the booms and busts of the past, Obama is following his tried and true instincts.  Only he knows what is best -- not the markets. But banks have learned their lesson.  Why loan to folks that might not pay you back, regardless of who the guarantor is?  The banks now know that they will be accused of predatory lending when these loans go sour.  By that time, Obama will be resting comfortably with his millions in Hawaii.  W...