Somewhere between a fifth to a third of the million students graduating out of India's engineering colleges run the risk of being unemployed. Others will take jobs well below their technical qualifications in a market where there are few jobs for India's overflowing technical talent pool. Beset by a flood of institutes (offering a varying degree of education) and a shrinking market for their skills, India's engineers are struggling to subsist in an extremely challenging market.
According to multiple estimates, India trains around 1.5 million engineers, which is more than the US and China combined. However, two key industries hiring these engineers -- information technology and manufacturing -- are actually hiring fewer people than before.
For example, India's IT industry, a sponge for 50-75% of these engineers will hire 50,000 fewer people this year, according to Nasscom. Manufacturing, too, is facing a similar stasis, say HR consultants and skills evaluation firms.
According to data from AICTE, the regulator for technical education in India, there were 1,511 engineering colleges across India, graduating over 550,000 students back in 2006-07. Fuelled by fast growth, especially in the $110 billion outsourcing market, a raft of new colleges sprung up -- since then, the number of colleges and graduates have doubled.
Engineers Churned Out in Spades
So what does India do with those excess engineers?
Some end up in the US on work visas because the US citizens purportedly do not have the right skills. In reality, there are plenty of skills here, but foreign workers will work for a lot less. Since companies can hire a programmer from India or Russia for 1/3 the cost of a US worker, that's what happens.
Training more engineers, here, or in China, or in India will not help. There is a glut of high-tech talent.
The article was about a glut of graduates in China with no job, but it could just as easily been about India or the US. This is what I said:
How is [the situation in China] different than the average liberal arts major in the US expecting the world at their doorstep just because they have a useless degree that prepares them to do nothing more than work as a part-time retail clerk, 25 hours a week, dumped into the Obamacare system?
Yet, we are told education is the answer, without ever addressing the questions "for who? at what cost? in what field?"
These articles were purportedly about China. Change the names and faces and the stories are not much different than you can find right here in the US, in Italy, in France, or anywhere else in a slow-grow global economy.
After growing at an astronomical rate for years, the cost of education is going to plunge. Job statistics will force that outcome.
If education was the answer, there would not be millions of engineers looking for jobs.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
Marc Faber, publisher of the Gloom, Boom and Doom Report, told Bloomberg Television's Trish Regan and Tom Keene on "Street Smart" today that believing in Ben Bernanke is like believing in Father Christmas.
Faber said, "If you say that if he means what he says, then you believe in Father Christmas… As I said already three years ago, we are going to go with the Fed to QE99."
Faber said, "I think the market is on the high side, corporate profits are inflated and we could easily, from the recent high, May 22 at 1687 on the S&P, drop by 20% to 30%, easily."
Faber is correct. Of course I said the same thing two years ago, and so did Faber. Yes, believing in Bernanke is like believing in Santa (or the tooth fairy), but those believers have fared well to this point (at least from a cherry-picked starting point of March 2009).
Will the believers all suddenly become disbelievers? Hardly. It's never happened before and will not happen this time either.
People who rode the fairy tale up will ride it back down again.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
President Obama discusses the bipartisan legislation in the United States Senate that would take important steps towards fixing our broken immigration system, while growing our economy and reducing the deficit.
Father’s Day: President Obama celebrated an early Father’s Day last Friday with high school students from Chicago’s Becoming a Man program. During a lunch in the East Room of the White House, the President spoke of the importance of fatherhood and mentorship. President Obama met with students in the program, which is based in low-income public schools, earlier this year to reaffirm the importance of education.
“From the start, no one was naïve enough to believe that peace would be anything but a long journey. Yeats once wrote ‘Peace comes dropping slow.’ But that doesn’t mean our efforts to forge a real and lasting peace should come dropping slow. This work is as urgent now as it has ever been, because there’s more to lose now than there has ever been.”
“[T]he U.S.-EU relationship is the largest in the world. It makes up nearly half of global GDP. We trade about $1 trillion in goods and services each year. We invest nearly $4 trillion in each other’s economies. And all that supports around 13 million jobs on both sides of the Atlantic. And this potentially groundbreaking partnership would deepen those ties. It would increase exports, decrease barriers to trade and investment. As part of broader growth strategies in both our economies, it would support hundreds of thousands of jobs on both sides of the ocean.”
In his speech, President Obama announced new measurements to reduce our deployed strategic nuclear weapons by up to one-third. He also praised the Germans for their progress since the fall of the Berlin Wall, he acknowledged that the struggle for freedom, security, and human dignity still persists.
“When Europe and America lead with our hopes instead of our fears, we do things that no other nations can do, no other nations will do. So we have to lift up our eyes today and consider the day of peace with justice that our generation wants for this world.”
At the lab, the pressure is to keep searching for a breakthrough, a new way to do things. And it's accepted that the cost of this insight is failure, finding out what doesn't work on your way to figuring out what does. The lab doesn't worry so much about exploiting all the value of what it produces--they're too busy working on the next thing.
To work in the lab is to embrace the idea that what you're working on might not work. Not to merely tolerate this feeling, but to seek it out.
The factory, on the other hand, prizes reliability and productivity. The factory wants no surprises, it wants what it did yesterday, but faster and cheaper.
Some charities are labs, in search of the new thing, while others are factories, grinding out what's needed today. AT&T is a billing factory, in search of lower costs, while Bell Labs was the classic lab, in search of the insight that could change everything.
Hard, really hard, to do both simultaneously. Anyone who says failure is not an option has also ruled out innovation.
Small business owners' fear of the effect of the new health-care reform law on their bottom line is prompting many to hold off on hiring and even to shed jobs in some cases, a recent poll found.
"We were startled because we know that employers were concerned about the Affordable Care Act and the effects it would have on their business, but we didn't realize the extent they were concerned, or that the businesses were being proactive to make sure the effects of the ACA actually were minimized," said attorney Steven Friedman of Littler Mendelson. His firm, which specializes in employment law, commissioned the Gallup poll.
Forty-one percent of the businesses surveyed have frozen hiring because of the health-care law known as Obamacare. And almost one-fifth—19 percent— answered "yes" when asked if they had "reduced the number of employees you have in your business as a specific result of the Affordable Care Act."
The poll was taken by 603 owners whose businesses have under $20 million in annual sales. The poll supported that anecdotal data with the finding that 48 percent of owners think the law will be bad for their bottom line.
Just 9 percent of the small employers surveyed agreed that Obamacare would be "good for your business," while another 39 percent saw "no impact."
The prevalent pessimism tracks other answers in the poll, which showed that 55 percent of small business owners believe that the ACA will lead to higher health-care costs. By contrast, about 5 percent said the law would lead to lower costs.
When Regal Entertainment Group (RGC) in April blamed ObamaCare for the fact that it was cutting some of its workers' hours, backers of the law mounted a furious backlash against the theater chain, among other things filling its Facebook page with boycott threats.
"Greed and selfishness make me sick," one of them said.
Darden Restaurants (DRI) felt this intense heat last year after suggesting it might shift to more part-time work to minimize the cost of the law's mandate that companies offer coverage to all their full-time workers. CEO Clarence Otis even blamed its lowered outlook for 2013 in part on "recent negative media coverage" over "how we might accommodate health care reform."
Yet while private companies are getting all this unwelcome and hostile attention, local governments across the country have been quietly doing exactly the same thing — cutting part-time hours specifically so they can skirt ObamaCare's costly employer mandate, while complaining about the law in some of the harshest terms anyone has uttered in public.
The Unfordable Healthcare Act
IBD lists 13 examples of local government layoffs resulting from Obamacare. Here are a few of them
Allegheny County, Pa.: "There's frustration and anger and sadness and resentment, you know, but you don't have a voice," said adjunct English professor Clint Benjamin in the wake of the Community College of Allegheny County's decision to cut hours for about 400 adjunct faculty and other employees so it wouldn't have to pay $6 million in ObamaCare-related fees next year.
Medina, Ohio: "We feel bad as a city administration and as a council in having to cut hours from 35 to 29," Medina Mayor Dennis Hanwell said. "We have the budget to pay the people, but we do not have the budget to pay for the health care." If they hadn't made that cut, the city faced up to $1 million in new health costs courtesy of ObamaCare.
Birmingham, Mich. Commissioner Gordon Rinschler may have summed up best the reaction that countless businesses and governments are having to ObamaCare, saying: "We simply can't afford the Affordable Care Act."
Obamacare Pushing Indiana Schools To Cut Hours Of Coaches, Bus Drivers, Cafeteria Workers
Schools throughout much of Indiana are cutting the hours of coaches, teachers aides, bus drivers, cafeteria workers and other support staff in an attempt to avoid having to offer them health insurance under the 2010 Affordable Care Act, the Louisville Courier-Journal reports.
Under the law, also known as Obamacare, employers with more than 50 workers will be required to provide coverage for all official full-time employees. Some employers plan to try and skirt the law by pushing full-time employees into part-time work.
"We cannot go out and raise the price of our product to assist us covering this," Les Huddle, superintendent of the Lafayette School Corporation, told the Courier-Journal.
Temp Staffing Jobs Hit Record as Firms Dodge ObamaCare Costs
Temporary staffing jobs hit a record 2.68 million in May as employers look to lighten the burden of ObamaCare's regulations and fines for failing to provide full-time workers health coverage.
Temp employment grew by 25,600, eclipsing the previous high seen in April 2000. In the past four months, the temp industry has added 99,000 jobs, a spurt that has outpaced the gains in every other sector, except the restaurant industry.
The boom in temp employment is no surprise because the industry offers ways to minimize ObamaCare's fines for firms with at least 50 full-time-equivalent workers.
One way temp firms can help is by helping employers to stay below that 50-worker threshold and free from ObamaCare's regulations. Firms above that level who don't provide health coverage will face a $2,000 per-worker fine (minus 30 workers), so the 50th employee could mean a $40,000 fine under ObamaCare.
Consider an employer who needs to hire a full-time worker for a six-month project. If the firm hired this worker directly, it would have to provide health coverage within 90 days of hiring, under ObamaCare rules.
But if an employer hires workers for a six-month stint through a temp agency, the rules are more favorable. Because virtually all temp-agency employment is for less than a year, such workers can still qualify as part-time under ObamaCare, even if they work full-time for up to six months (and perhaps longer).
"Most temporary or contract workers will be considered 'variable' and not eligible for insurance coverage," wrote PACE Staffing Network CEO Jeanne Knutzen in a message to clients last month.
This provision of ObamaCare "creates considerable opportunity for companies like PACE to offer our clients 'variable' workers at significantly less cost than would be required for the client to hire an employee directly."
Mayor Rahm Emanuel plans to start reducing health insurance coverage next year for more than 30,000 retired city workers and begin shifting them to President Barack Obama's new federal system.
The move is aimed at saving the city money and comes as the Emanuel administration has been trying to wrangle significant pension cost concessions from employee unions.
Police officers and firefighters who retired between the ages of 55 and 64 and are not yet eligible for Medicare but whose coverage is guaranteed under union contracts, as well as workers who retired before August 1989 and are protected by a legal settlement.
Cut out as of Jan. 1 will be the rest. That's when the city will begin a three-year phaseout of the coverage, according to the letter signed by Comptroller Amer Ahmad. During that period, premiums, deductibles and benefits could change, the letter states.
Once the phaseout is complete, those retired workers would have to pay for their own health insurance or get subsidies under the Affordable Care Act.
The ill-effects of Obamacare mount every month.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
Brazil's swelling street rebellion claimed its second fatality in the largest and most violent protests yet, as 1 million demonstrators rallied for better public services and an end to corruption.
President Dilma Rousseff, who has been struggling to get in front of the mass movement, will meet with cabinet members today to discuss emergency measures to help quell violence and prepare proposals on education, health and other demands of protesters, a government official aware of her agenda said.
The movement triggered by an increase in bus fares this month has spread amid a groundswell of discontent among Brazil's middle classes.
Brazil's annual inflation through mid-June accelerated to 6.67 percent, its fastest pace since November 2011. Urban bus fares rose 1.83 percent in the month through mid-June and made the greatest impact on inflation of all components.
Almost 1 million people marched in 27 capital cities, Folha reported, citing police estimates in each state. That's four times the estimated turnout on June 18, which was the previous record for the growing movement.
The biggest demonstration was in Rio, where O Globo newspaper estimates 300,000 people turned out. While the demonstrations there were largely peaceful, a group of stone-throwing protesters who set upon Rio's city hall were met by cavalry and foot soldiers firing rubber bullets. More than 60 people were injured, including eight police officers, Mayor Eduardo Paes said to reporters today.
Brazilian Real Monthly Chart
click on chart for sharper image
How Currency Wars End
Brazil bitched an moaned about having a currency that was too strong. Finance minister Guido Mantega declared a "fresh currency war" in March of 2012 after having already used the term in 2010.
"When the real appreciates, it reduces our competitiveness. Exports are more expensive, imports are cheaper and it creates unfair competition for businesses in Brazil," said Mantega
The Keynesian and Monetarist fools in Brazil got what they asked, a weakening currency. Now they don't like the end results. Hot money is fleeing, the Real is sinking, inflation is soaring, and Brazil has no idea how to stem the tide (or the protests).
A similar fate awaits Japan's Abenomics as well as the Shadow Banking System in China.
As I said earlier, "Problems are easy to overlook in a seemingly good economy when jobs are plentiful. It's much different when the boom ends and the corruption becomes obvious."
Ford Motor Co. (F) Chief Executive Officer Alan Mulally called Japan a currency manipulator that's giving local exporters an unfair edge as the weaker yen threatens to undermine U.S. automakers' profits.
Japan is "absolutely" manipulating its currency, the CEO of the second-biggest U.S. automaker said in a Bloomberg TV interview today. "With the currency manipulation, we just have to get back to the place where the currencies are set by the markets and the free trade agreements really are free trade agreements."
Mulally, who's expressed concerns about the yen throughout this year, illustrates how the currency-led boon for Japanese exporters is drawing mounting international criticism. Bank of Korea Governor Kim Choong Soo this week urged Asian countries to work together to defend themselves against the side-effects of Prime Minister Shinzo Abe's reflation campaign.
What Country Isn't a Manipulator?
Currency manipulation is everywhere you look: China, Brazil, Japan, Switzerland, the US, and every country actually.
Some countries intervene directly. Japan, Brazil, China, and Switzerland are in that list. The rest do it via interest rate manipulation (holding rates too low) and/or various Quantitative Easing schemes which act indirectly to weaken a currency.
Brazil holds the distinction of intervening to both weaken and strengthen its currency within the same year. For more on Brazil intervention madness, please see ...
It's easy enough to stop the manipulation, at least in theory: Get rid of the central banks and their bubble-blowing currency debasement policies, end fractional reserve lending, and return to a gold standard.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
It's always impossible to know what the trigger for a mass reaction will be in advance. In Brazil, hundreds of thousands of people have been in protest over corruption, bad services, and even the cost of hosting the World Cup.
The trigger was a mere 10-20 cent hike in transportation fares. Cities have rolled back the price hikes but the protests continue.
Hundreds of thousands of people have rallied across Brazil as part of a protest movement over the quality of public services and the high cost of staging the World Cup.
About 800,000 people marched on Thursday in rallies across the country of 194 million people, according to an AFP news agency tally - an intensification of the movement which started two weeks ago by public anger about an increase in public transport fares.
Police fired tear gas in Rio de Janeiro, scene of the biggest protest where 300,000 people demonstrated near City Hall, to disperse a small group of stone-throwing protesters.
In the capital Brasilia, security forces blocked protesters trying to break into the foreign ministry and throwing burning objects.
The military police finally threw a security cordon around the building.
In Sao Paulo, an estimated 110,000 people flooded the main avenida Paulista to celebrate the fare rollback and keep the pressure on Rousseff's leftist government to increase social spending.
The protests have escalated into a wider call for an end to government corruption in the world's seventh largest economy, a call prompted by resentment over the $15bn cost of hosting the Confederations Cup and the World Cup
Leaderless Movement
Interestingly, the protests were not organized by any person or leader the government can deal with or arrest.
Brazilian authorities are bracing for a new wave of protests as hundreds of thousands of people across 80 cities have responded to social media posts, calling for them to rally in the streets.
In an attempt to cool anti-government sentiment, authorities in Sao Paulo and Rio on Wednesday cancelled the proposed transit fare hikes, but the crowds have continued to gather, despite the government climb-down.
Al Jazeera's Adam Raney, reporting from Rio de Janeiro, said the government was yet to establish how to calm the tensions.
"It is overall a leaderless movement, what we're seeing is the government, not just trying to spin the story, but also trying to understand what it is the protesters want, what [they] can deliver," he said.
The protest fed on widespread resentment at the billions of dollars the government is spending on the Confederations Cup, the World Cup and the 2016 Summer Olympics, with demonstrators saying they want increased education and health funding and a cut in wages for public officials.
In announcing the reversal of the fare hike, Sao Paulo Mayor Fernando Haddad said it "will represent a big sacrifice and we will have to reduce investments in other areas".
Military Police Officers Join Protesters In Brazil
The Huffington Post comments on the above video that has gone viral.
With an international soccer tournament as a backdrop, demonstrators are also denouncing the more than $26 billion of public money that will be spent on the 2014 World Cup and 2016 Olympics, two events meant to showcase a modern, developed Brazil.
The unrest comes six months before an election year and at a time when Brazil, after nearly a decade-long economic boom in which the country's profile soared on the global stage, enters a period of uncertainty. Economic growth of less than 1 percent last year, annual inflation of 6.5 percent and a loss of appetite for Brazilian assets among international investors have clouded what had been a feel-good era for Brazil.
Brazil's currency, the real, dropped to a four-year low on Thursday, trading as weak as 2.275 per U.S. dollar. The country's benchmark stock market index, the Bovespa, also hit a four-year low.
Inflation, Corruption, as Boom Comes to an End
What's the protest really about? Inflation and corruption is the answer. Fare hikes are a symptom.
Inflation is a reported 6.5%, but no doubt much higher in practice.
Problems are easy to overlook in a seemingly good economy when jobs are plentiful. It's much different when the boom ends and the corruption becomes obvious.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
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This week, the President marked Father's Day, honored the WNBA Champion Indiana Fever at the White House, and embarked on a four-day trip to the G8 Summit in Northern Ireland and to Berlin.
This week, we got some great news: The Congressional Budget Office, the nonpartisan experts who analyze the financial impact of legislation, believes that Senate immigration bill will reduce the deficit by almost $1 trillion over the next two decades.
You've probably heard of "merit badges" -- used by the Boy Scouts and Girl Scouts -- to demonstrate achievement. But more and more groups are using "digital badges" -- a 21st century resume-builder that students and workers can use to showcase their skills, encourage their peers, and find meaningful educational and employment opportunities. Learn more in this Week the Geeks Hangout.
Across the country, Democratic and Republican state and local officials are speaking out about the need for commonsense immigration reform. This week, we’ll share thoughts from governors, mayors, county executives, state legislators, attorneys general, treasurers and more about why they support immigration reform and how fixing the broken immigration system would impact their communities.
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