Former Malaysian Prime Minister Mahathir Mohamad called for boycotting the US dollar and US made products, including Coca-Cola, in protest over Washington's backing of Israel.
The former premier said while governments might not be able to support the move as many were “scared stiff” of the superpower, the people could play their part to “save Palestine.” It does sound like a good idea but practically boycotting US products will not measurably hurt and bring the US economy crashing down or otherwise, the devastating effects are great.
Let's take a look at the plan of the US chipmaker Intel Corporation which suggest closing two its existing assembly test facilities in Bayan Lepas, Penang. The closure of the Intel PG6 and PG7 plants in Penang would affect over 1,000 of employees but the company would not lay off any workers, instead offering the effected workers comparable job positions in its other Malaysian plants.
Intel has a total of six plants in Malaysia running manufacturing, research and development and other services. With three plants in Penang and another three in Kulim, Kedah, Intel Corp in Malaysia have about 10,000 employees.
The question remains: Should Intel pull out their investment in Malaysia resulted from boycotting, can anyone responsible taking care of the 10,000 direct affected employees?
The global financial crisis spark the economic instability and dampen the sustainable growth to both the growing and established economy. The devastating long-run effects and consequences on economy are unpredictable but certainly cause great damage to the global economy.
PC shipments and IT expenditures were adversely affected and suffered biggest drop as consumers reined in spending. It is one of the adverse effects of the economy recession. Ironically, Microsoft are not immune to the effects of the economy. The realities of the deteriorating economy forced Microsoft to take important steps to realign the business.
Microsoft said that it would layoff up to 5,000 employees, or about 5 percent of its work force - the first significant cuts in the company’s 34-year history. Of that amount, 1,400 are losing their jobs. Microsoft also says that it will continue to hire and that the net headcount reduction over the next 18 months should amount to between 2,000 and 3,000. The layoffs, along with salary freezes, the elimination of contract workers, lower marketing spending, and other measures are expected to reduce operating expenditures by $1.5 billion this fiscal year. The layoffs follow a rare decline in sales of Microsoft’s Windows operating system for personal and business computers in the second fiscal quarter. Net income for the period, which ended Dec. 31, fell 11 percent to $4.17 billion. Other major players in the personal computer industry are reporting similar drops in demand and paring their work forces to adjust.
Intel, the leading maker of chips for PCs, said it would layoff 5,000 to 6,000 workers and shut production at some plants after revenue dropped 23 percent and net income fell 90 percent in the fourth quarter.
Advanced Micro Devices, also a large supplier of PC chips, reported a 33 percent decline in fourth-quarter revenue to $1.16 billion, while posting a $1.42 billion loss. Earlier this month, A.M.D. said it would reduce its work force by close to 9 percent.
The question remains: How seriousness is the negative impact of the layoff to the global economy as well as the Malaysian economy?
Japan, the world’s second biggest economy, is struggling with rising unemployment as its economic recession deepens.
The nation’s export business continues to crumble against the rising Yen and analysts predict that the Japanese economy is set for its longest ever contraction. It had shrunk at an annual rate of 1.8% in the quarter, down from its previous estimate of 0.4%.
Japan’s Sony Corp., the maker of the Walkman portable player, PlayStation 3 game console, movie, video game and financial businesses, is slashing 8,000 jobs, or 5 per cent of its global work force despite shutting 10% of its manufacturing sites.
Aiming to cut costs by US$1.1 billion a year as a global downturn, Sony Corp, which has 185,000 employees worldwide will complete the layoffs by the end of March 2010.
Sony did not give a country breakdown for the job cuts but said they will come from its electronics business, which has 160,000 workers.
The Bush administration has almost certainly presided over the most egregious run of mis-governance and bad government especially the policies on economy as it resulted the economy tipped into deep recession.
The unemployment rate rose to a 15-year high of 6.7% from 6.5% in October in the world's largest economy. Payrolls were cut by 533,000, much worse than the forecast for a reduction of 340,000 jobs as weakening consumer and business demand prompted companies to cut jobs to reduce costs. Dramatically, it’s very clear that the US is in a pretty deep recession as the figures showed the employment market is deteriorating at an alarmingly rapid pace. Its economy suffered the worst monthly job losses since 1974; employers shed, underscoring the depth of the global financial crisis which prompted a slew of interest rate cuts worldwide.
President-elect Barack Obama said each of the job losses represent a "personal crisis" for an American family.
Subprime mortgages were one of the biggest root causes of the financial crisis and unemployment, with 20 percent of those mortgages in delinquency. It further push the Big Three, General Motors, Chrysler and Ford appear before Congress to appeal for federal aid.
Companies are cutting jobs to maintain profits or minimize losses at a time when consumer demand is abruptly drying up and banks are tightening lending standards.
Job losses will exacerbate mortgage delinquencies and foreclosures in the near future. The dollar fell against major currencies, and US light crude dived $1.31 to $42.31 a barrel after the November jobless figures were unveiled. It sinks further to $40.81 a barrel on the New York Mercantile Exchange.
The number of job losses was the largest in 34 years and much higher than the 325,000 expected by private forecasters, suggesting the recession in the world's largest economy would be longer and deeper than feared.
The worsening situation in the economy were widespread, hitting factories, building companies, financial firms, retailers, leisure and hospitality and other industries. Employers are slashing costs to the bone as they try to cope with falling demand. The few places where gains were logged included the government, education and health services.
America is paying the price, how about the rest of the world?
Stock around the world took another heavy beating Monday, with shares in Japan falling to their lowest level in 26 years, as fears of a global recession continued to sweep markets.
US futures, which offer an indication of how Wall Street may open when trading begins in New York, was sharply lower. European shares tumbled and Britain's FTSE 100 down 3.7%. The CAC-40 in Paris was down 5.6% and Germany's DAX fell 3.3% Hong Kong shares plunge 13% as fears of global recession sweep markets. Nikkei closes at 26-year low.
Tokyo shares were hit hard as the yen fluctuated near a record high against the dollar. A rising yen makes Japanese exports relatively more expensive.
The yen's appreciation spurred financial ministers and central bank presidents of the world's seven leading industrialized nations to issue a statement Monday expressing their worries about the situation.
"We are concerned about the recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability," the Group of Seven said in a statement.
Elsewhere in Asia, the KOSPI in Seoul, South Korea, was the lone bright spot, closing up nearly 1%.
More than 80% of states in US reported jobs disappearing in September, with Michigan suffering the highest losses, according to a government report.
Michigan lost 28,300 jobs in September and has lost 77,900 jobs in the past year. Georgia lost the second greatest number of jobs - 22,300 - down 61,100 over the past year. Louisiana shed 17,500 jobs in September, a figure not 'substantially' affected by Hurricane Ike, according to the report. Michigan, home to the country's auto industry, has reported job losses as auto manufacturing plants close and automakers discuss mergers. Just last week, General Motors (GM, Fortune 500) announced that it would close a metal stamping plant near Grand Rapids, Mich., by the end of next year, costing about 1,340 hourly jobs.
Earlier this month, the Labor Department reported that net payrolls nationwide declined by 159,000 in September, the ninth straight month the US economy has lost jobs. The unemployment rate remained unchanged from the prior month at 6.1%.
Eleven states reported jobless rates higher than the national average. Rhode Island posted the highest at 8.8%, an increase from 8.5% in August. Michigan had the second highest rate, 8.7%, which fell from 8.9% the month before.
The global financial meltdown and uncertainties dampen the growth of Malaysia's export sector and affected the economy.
Traditionally Malaysia's growth has been export dependent but increasingly over the years, domestic demand has been a pillar of growth.
Undeniably, when the world's biggest consumer tightens the belt, everyone feels the pressure and the economy is heading towards recession. The degree of recession is yet to be known.
Interestingly, what are recession, depression and economic collapse?
A recession is a decline in a country’s Gross Domestic Product or a negative real economic growth for two or more successive quarters in a year.
Depression
A depression is a severe or long recession and economic collapse is a devastating breakdown of an economy, essentially, a severe depression, or a hyperinflation, depending on the circumstances.
Economic Collapse Recessions are caused by increase in interest rates, decline in consumer confidence; firms reduce output and lay-off workers, which further decreases demand, and deepening economic slowdown that have an economy-wide impact.
During a recession, there is a greatly reduced job opportunities. While there would be more people in the market looking for employment, the demand for recruiting people is far lesser.
The general trend of rising unemployment rates can cause decreasing overall output and income growth would be stalled. When incomes are reduced, purchasing and spending power decreases proportionately.
Businesses are limited in their ability to pass along any increases in expenses in the form of higher prices. In order to move goods off the shelves, businesses are more likely to reduce prices. This eventually causes deflation.
With prices drifting downward and commodities becoming more affordable, consumer spending will once again increase. The increase in consumer spending leads to an increase in production. This in turn improves corporate profits leading to increased employment and improved earnings. This is the economic cycle.
During a recession, people turn to fiscal conservatism. When the levels of unemployment increase during a recession, it causes affected homeowners to sell their home to accommodate changing job demands. As higher supply of houses on sale as compared to the low demand, an economic recession will forcefully reduce the selling prices of homes.
Europe is nearing recession and its banking system faces "extraordinary financial stress" that will not ease quickly, the IMF said as the Benelux countries agreed Thursday to absorb flailing bank Dexia's toxic assets.
Economic growth in the 15 countries using the euro is facing a slump, decreasing from an average 1.3 percent this year to 0.2 percent in 2009; unemployment will increase from 7.6 percent to 8.3 percent, an IMF report said Wednesday, Oct. 8.
IMF analysts also predicted that Germany, Europe's largest economy, will stall in 2009 and France's will grow by a marginal 0.2 percent. Italy and Spain will see their economies shrink by 0.2 percent, according to the semi-annual World Economic Outlook.
With European nations "moving close to or into recession," the IMF urged forceful action by policymakers to combat the crisis with measures such as lower interest rates.
