Debt-consolidation plans vital

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MAKING A POINT By JAGDEV SINGH SIDHU

IT'S easy to picture the worst when the news around us is not savoury at all.

The platter for such troubles will include the second-quarter slowdown induced by the earthquake and tsunami in Japan. Output around the world has been shaken by the ramifications of the supply shock from Japan.

Then there is the report card on the US Federal Reserve's second round of quantitative easing (QE2). For many, QE2 really did not help the foundation of the economy. Unemployment is still sticky and there is still weakness in the housing sector but the stock market and commodities boomed with cheap liquidity flooding the market.

Inflation jumped as raw material prices surged and that, in effect, robbed a lot of people of purchasing power.

Looking at Greece, one has to assume a default is a certainty and is just a question of time. In fact, the CEO of Pimco, the world's largest bond fund, expects that to happen and many, too, agree looking at the economic structure of Greece.

Despite the gloom, the prognosis for the global economy really has not changed much.

The International Monetary Fund (IMF) expects the world economy to grow by 4.3% for 2011, which is 0.1% lower than previously estimated.

It has cut its growth forecast for the United States to 2.5% in 2011 from an earlier estimate of 2.8% in April.

IMF's Olivier Blanchard, who is its economic counsellor and the director of the research department, said predicting the economic direction for the US was too early but felt the slowdown of the US economy was more of a bump on the road than something worse.



“But assuming that oil prices are going to stay roughly stable, which is what the markets seem to predict at this point, we think that spending by consumers and firms should remain steady in what is, however, very clearly a very weak recovery. This has been a longstanding forecast of ours. The recovery in the US is a very weak one,” said Blanchard last week.

The outlook for Japan saw the biggest change as the earthquake and tsunami are expected to see that economy contracting by 0.7% this year from an earlier forecast of a 1.4% growth made in April.

The IMF has stuck to its projections for the two most populous countries, estimating growth for China and India to register 9.6% and 8.2% respectively this year. Those estimates were unchanged from April.

With troubles in Greece hogging international financial news and people wondering about the repercussions of a default by Greece on financial institutions in Europe and the US, the IMF said the risk of contagion was real and could derail European recovery and even that of the world but thought advanced economies, in which Europe features prominently, was forecast to grow at 2.2% for 2011, down 0.2 percentage points from earlier thought.

Its forecast for emerging and developing economies is 6.6% for 2011, which is up 0.1 percentage points since April.
While forecasts are relatively flat, the IMF did say risks were visible and highlighted the debt issue not only in Europe to be one of the hazard points for the global economy.

It feels debt-consolidation plans, even in the US, needs to be in place for the medium term to avoid higher borrowing costs and slower economic growth in the future.

In Asia, asset and price inflation are seen as the key risks and it feels countries with large current account surpluses should allow their currencies to appreciate.

“All countries must choose the right combination of instruments at their disposal fiscal, monetary, macro prudential to slow their economies in time and avoid costly boom-bust cycles,” said Blanchard.

Whether the bad news translates to most people's economic nightmare is something most businesses and investors are keeping an eye out for. It would appear that, for now at least, prospects and risks are balanced.

Deputy news editor Jagdev Singh Sidhu has filled nearly every large container at home with water to prepare for a dry couple of days but water is still flowing strongly from the main pipe.

The Secrets to Mastering Facebook, Get Ready For F-Commerce!

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Dan Schawbel

 With over 700 million users now, Facebook is growing rapidly and becoming more entrenched in our society. In order to learn more about Facebook, and how we should and shouldn’t be using it, I caught up with Mikal E. Belicove, who is a business strategist, author, and writer for Entrepreneur Magazine. He  specializes in content development, market analysis, and messaging/positioning for a select group of individuals and businesses. Mikal’s latest book is The Complete Idiot’s Guide to Facebook. I asked him if Facebook can hurt your career or business, to reveal some Facebook secrets, what the true value of Facebook is, and more.

Could it hurt your career and/or business if you’re not active on Facebook?

Having a strong Facebook presence is more important for businesses than it is for advancing one’s career (in fact, you could easily argue that Facebook has hurt more careers as a result of user naivety than it has helped). In the current marketplace, where discretionary spending is anything but discretionary, and where anyone can attempt to sell anything, businesses must prove why

 

Mikal E. Belicove

they’re special, and one of the best ways to do that is to leverage engagement and word-of-mouth. Facebook now reaches nearly 75 percent of the total U.S. Internet population each month. Businesses that fail to include the world’s largest social utility in their business-aligned communication strategy do so at their own risk.

What are a few Facebook secrets that most people don’t know about?

The Privacy page is deceptively simple; it doesn’t show all privacy settings on one screen. I encourage users to go to their Privacy page and then check the settings for Connecting on Facebook (click View Settings), Sharing on Facebook (click Customize settings), and Apps and Websites (click Edit your settings).

Also, Facebook is in the process of rolling out Check-in Deals. If you’re a consumer, you can check in at a business location using a smartphone or other mobile device to obtain promotional offers. If you’re a business owner, you can use Check-in Deals to promote and drive repeat business. But really, not much is secret on Facebook, because if a feature is cool enough to use, everyone’s talking about it.

Do you think that Facebook is worth $100 billion dollars? Why or why not?

Placing a value on a private company while it’s experiencing exponential growth is an inexact science. That said, Facebook appears to be on track to earn around $4 billion in FY11, which is slightly more than double what I conjecture it earned in FY10. While revenue growth won’t maintain its current pace, the company could earn around $10 billion in 2015. At that rate, with net margins of 15-20 percent and a growth multiple of 20-25x, I peg Facebook today to be worth something more along the lines of $30-$35 billion. And while competition for consumers’ time and discretionary dollars is fierce — and the fact that more people are spending more time on Facebook gives it an incredible potential to generate revenue — unless SMBs realize unmatched ROI and ROE (return on engagement) from the site, I feel $100 billion is nothing more than unbridled enthusiasm.

If you make your entire profile private, can people still access your pictures and updates?

The Complete Idiot's Guide to Facebook

Your name and profile picture don’t have privacy settings, so even if you make your entire profile private, people can still find your name and profile image on Facebook by searching for you by name. As for other pictures you upload and status updates, you can choose to have all of them accessible to only yourself, friends, friends of friends, everyone, or only certain friends. In addition, whenever you post something on Facebook, you can click the lock icon and choose who can see it.

What do you think is the future for Facebook? Will they consume all other social networks?

Certainly not all networks, and “consume” is too strong a word. I suspect Facebook will command the lion’s share of the most popular social networking features. For example, Facebook hasn’t completely replaced photo-sharing networks including Flickr and Photobucket, but it did rise very quickly to become the number one place for sharing photos on the Web. YouTube remains top dog in the video-sharing arena, and I don’t see Facebook ever taking that over. Bottom line… Facebook does an excellent job of incorporating the best of what other more specialized social utilities and platforms offer. You can see this with Facebook’s Groupon clone – Deals. This could make Facebook a one-stop-shop for users and businesses, giving Facebook a huge competitive edge in many social categories.

Dan Schawbel, recognized as a “personal branding guru” by The New York Times, is the Managing Partner of Millennial Branding, LLC, a full-service personal branding agency. Dan is the author of Me 2.0: 4 Steps to Building Your Future, the founder of the Personal Branding Blog, and publisher of Personal Branding Magazine. He has worked with companies such as Google, Time Warner, Symantec, IBM, EMC, and CitiGroup.

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Attention Facebook Shoppers: Get Ready For F-Commerce

Written by Tim McMullen

Tim McMullen: Shopping Facebook.

Ready or not, we’re approaching the age of F-commerce: Facebook-based retailing.

It’s time for retailers around the world to prepare for the rise of the Facebook consumer, a new breed in convenience-seeking online shoppers. From shoes to plane tickets, it’s all right there on the social network.

Facebook now offers options for retailers to tailor their Facebook page layout to look less like the familiar profile page and more like a Web page. The simple click-and-pay option seems to be attracting more shoppers. And where shoppers flock, retailers follow.

One thing in particular that’s encouraging businesses to participate in F-commerce is the fact that the platform is completely free. There are no hosting or domain fees (yet), and Facebook isn’t keeping portions of your profits. As more and more people adopt social media, F-commerce will only grow and take on more retailers.

Facebook has more than 600 million members, a fat slice of the world’s online population. People want to be social, and shopping is a social act in itself. And retailers are paying attention to the changes taking place within the online shopping world.

When businesses post news or updates to their Facebook account, they hope that users “like” what they have to say. Now, instead of sharing thoughts, people can share discounts and products. “Sally now likes Delta and has purchased two tickets to Hawaii,” could show up in your news feed anytime. Delta, Coca-Cola and Barneys New York are just a few of the major brands that have added a Facebook shop to their fan page.

Best Buy is one retailer that wanted to offer more options for their customers, so they created a Facebook page that has a shop-and-share option. This is in addition to their e-commerce site; savvy sites are not switching but rather adding channels to their arsenal of outlets.

Now, disregard the fake profiles for newborns and people’s cats and go straight for the fastest growing demographic on Facebook: Women over 55. I’m thinking online shopping has a great deal to do with their interest in Facebook. And I couldn’t be more… right.

According to a survey conducted for Kirkland’s, a home decor specialty store with brick-and-mortar and online stores, that’s exactly what this growing audience wants. It’s important for retailers to recognize that they must prepare for F-commerce by engaging their Facebook audience first. With Kirkland’s specifically, coupons and discounts are their game.

s was a virtually unknown retailer in the social commerce space that blew everyone away when they became the sixth-fastest growing fan page on Facebook. Just four days after launching their Cha-Ching! interactive game promotion, Kirkland’s went from 43,000 fans to 140,000. They have since surpassed their goal of 200,000 fans. Now, this is all without actually selling merchandise on their Facebook page. They are still in the engagement stage, working with their customers to make their Facebook site more fun and trustworthy at the same time.

The promotion included a $25,000 cash prize and a chance to win Kirkland’s merchandise in a swap game where people trade virtual merchandise with other players. And everyone who plays the game receives a coupon for future purchases.

This is a positive step into the direction of F-commerce. Interactive games will keep an audience interested, and will solidify pages in terms of getting sales. In the survey, Kirkland’s found a majority of their Facebook customers wanted to save money, and to see merchandise and prices alongside content such as decorating ideas.

After conducting the survey, they saw a purpose and direction for their Facebook page that was different from their online community, mykirklands.com, and they went for it. The survey clearly showed that more and more Facebook users want to engage on Facebook. Campaigns such as the Cha-Ching! promotion are driving users to the social media hub and retailers must quickly follow to meet the demands of the users.

With the Kirkland’s campaign, we saw that 36-45 year old females were more involved with the online community, and that 46-55 year olds were more engaged with the Facebook page (which squashes the belief that F-commerce is limited to young and hip brands). Another interesting find was that the online community members were generally not interested in Facebook. They went online for different reasons.

The critics of F-commerce have begged the question, if Facebook starts to overlap with more traditional means of online shopping, why have two touch points? As we learned from the success of Kirkland’s, it seems that it would be best practice to have multiple touch points because the consumers have the option of how they do their online shopping. There was little crossover between the online users at mykirklands.com and the Facebook users, which shows that there isn’t that universal preference just yet.

It’s no secret that people spend hours on their Facebook pages weekly or even daily, whether it’s on their smart phone, tablet or computer. This sort of accessibility is what’s driving retailers to set up shop on the social network. F-commerce is still in its early stages, but judging by the consumer response so far, many more retailers are sure to begin exploring it within the next few months.

Tim McMullen is President and partner at redpepper, an  integrated marketing agency with offices in Atlanta and Nashville.

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US Financial sector layoffs rise, more cuts ahead

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By Lauren Tara LaCapra

NEW YORK | Tue Jun 21, 2011 4:48pm EDT
 

(Reuters) - U.S. financial firms have been cutting staff dramatically this year, with more layoffs expected to come from Wall Street, according to a report on Tuesday.

Unlike the widespread layoffs stemming from the financial crisis of 2008 that was followed by hiring when markets recovered, the 2011 reductions appear to be more permanent.

Challenger, Gray & Christmas, an employment consulting firm, said the financial sector has outlined 21 percent more job cuts so far this year than it did in 2010. Banks, insurance firms and brokers have outlined plans to eliminate 11,413 positions through May, according to publicly available information cited by Challenger, compared with 9,431 during the same period a year ago.

Wall Street has long been characterized by fickle hiring patterns, but John Challenger, head of the consulting group, said new cuts reflect fundamental changes in the business structure and returns of financial firms.

"They will not be as profitable in the future as they were in the past," he said. "That means they're just not going to be able to afford the workforce levels that they had when they were more profitable."

Most cuts to date have occurred in retail banking operations, reflecting subdued economic activity and loan growth. Mergers have also led to headcount reductions as smaller regional banks combine forces.

However, Challenger expects layoffs at large investment and commercial banks to accelerate through the rest of 2011.



Regulatory restrictions and declines in trading volume have challenged the business models and profitability of large investment banks such as Goldman Sachs Group Inc and Morgan Stanley.

Goldman reported an annualized return on shareholders equity of 15 percent during the first quarter, adjusted for special items, compared with more than 30 percent before the crisis erupted. Morgan Stanley, which now has a 20 percent return-on-equity target, delivered an annualized ROE of 6.2 percent in the first quarter.

Wall Street stocks have fallen along with profits in recent months. Goldman shares are down 19 percent so far this year, and Morgan Stanley's are off 17 percent. The KBW Bank Index of large-cap financials is down a more moderate 8.8 percent.

(Reporting by Lauren Tara LaCapra; editing by Andre Grenon)Newscribe : get free news in real time