Nokia Siemens to cut 5,800 jobs

HELSINKI: Struggling telecom equipment maker Nokia Siemens Networks aims to cut up to 5,800 jobs and save more than 1 billion euros ($1.48 billion) to stay competitive in the cut-throat market.

The company will revamp its operations hoping to benefit from its stronger position in offering services to operators.

Telecom gear makers have been hit hard by the recession, which crimped operator spending, and by tough competition from China's Huawei and ZTE.

"To match the commercial flexibility demonstrated by Chinese vendors, NSN had to cut back its production, R&D and overhead costs," said Pal Zarandy, partner at telecoms consultancy Rewheel.

Last month market leader Ericsson reported third-quarter earnings below expectations and declined to forecast an upturn. .

NSN, a joint venture of Nokia and Siemens, said it aimed to cut 500 million euros in annual fixed costs by the end of 2011, putting up to 5,800 of the firm's 64,000 staff at risk.

Workers in Germany and Finland protested against the plan. "Shrinking more than the market is no honour for the top management," said Georg Nassauer, the head of works council of Nokia Siemens in Munich.

"With this kind of restructuring we are not gaining any customer or order. It takes the power out of the company," he said in a statement.

Nokia shares were little changed, off 0.9 percent at 8.64 euros at 1431 GMT.

More casualties ahead
Nokia Siemens said the programme, something analysts have expected given the persistently tough market conditions, could bring total charges of some 550 million euros in 2010-11.

The venture has reached some quarterly operating profits, but has mostly lost money to its owners -- just like its rival Alcatel-Lucent who has posted losses for 12 straight quarters.

"They could be making money again in 2011," said SEB analyst Mats Nystrom.

"They have had catastrophic sales, but with cuts they could reach mid-single-digit margins from 2011. For higher margins, the market needs to turn to the better," he said.

NSN also said it aimed for savings "substantially larger" than 500 million euros by lowering procurement costs to meet ongoing customer requirements for competitive pricing.

"The recent consolidation among operators and moves towards network-sharing agreements will place greater pressure on equipment manufacturers such as Nokia Siemens to secure new business," said CCS Insight analyst Paolo Pescatore.

"We are bound to see further casualties in the network infrastructure space as operators rethink their business models and reconsider additional network investments," he said.

Canada's Nortel Networks, which filed for bankruptcy earlier this year, was the first major victim in the sector.

Another tough blow
The cuts are the latest blow for the joint venture, which started operations in April 2007 and then unveiled a 1.5 billion euro cost-savings programme the following month -- later bumped to two billion -- including some 9,000 job cuts.
"Changes in the global economy and competitive environment make further cost reductions necessary," Nokia Siemens said.

Last month, parent Nokia booked a 908 million euro charge for the third quarter due to NSN. It said NSN's markets would fall by five percent in euro terms in 2009 versus 2008, and the venture would lose more market share than expected.

NSN said that it would shrink its five business units to three as part of the shake-up, and would consider partnerships and acquisitions to boost growth. The company made last summer an offer for Nortel's CDMA and LTE businesses, but lost the auction to Ericsson.

Rajeev Suri, new chief executive of NSN, said the revamp was focusing mostly on providing more services to operators who are increasingly looking at outsourcing also in emerging markets.

"I think Latin America, Africa and Eastern Europe play an important role in managed services," Suri said. So far only a few operators in these regions have started to outsource operations.

Serving It Hot

"Where were you on New Year’s Eve, Siddhartha,” I asked the boyishly handsome man who serves a million cups of coffee a day, as he sat down in my study.

“I was in Calcutta,” he said. An unusual place for the man from Chikmagalur whose money could buy him a holiday in Bali, Big Island, New York or someplace on the French Riviera. Why Calcutta? Turned out that he prays at the Dakshineswar Temple. For two generations, the family has believed in the Ramkrishna Mission order.

But he wasn’t at the temple until the morning of the New Year. He was actually at the Café Coffee Day (CCD) outlet near Calcutta’s Woodburn Street. “How could I be partying while 10,000 of my own people were working that night? I decided to join them and the only job I could do well in an outlet was not that of the manager but of the server at the table.”

So there he was, wearing the CCD uniform, all the way from the 31st evening until close to 3 a.m. of the New Year; running in and out, cleaning tables, greeting unsuspecting customers, seating them, taking their orders, serving the frothy cups and settling their cheques.

Image: Mallikarjun Katakol for Forbes India

The Self Made Man: VG Siddhartha in conversation with Subroto Bagchi

What was the biggest lesson for him in all this?
“I was simply amazed how indifferent people are to those who serve. Three rich women came, ordered their drinks, did not once look at me, and settled the cheque, did not care to tip me, but worse, did not say a ‘thank you’ before leaving for someplace else where revelry awaited them. It shocked me because it was New Year’s Eve. I thought people would be nice to others because they themselves were in such a joyous state of mind.”

It was time to change the subject. I wanted to know about his beginnings.

“Tell me how you started your life.”
“I was just 21. I told my father that I wanted to learn about financial investing. That I wanted to start something on my own. Ancestrally, we are farmers — we have only grown coffee in Chikmagalur. My father did not quite see where I was heading. Left to the family, making money was not a priority: 350 acres of coffee gave us enough annuity — you could make 10 lakh a year growing coffee.”
He paused.

“My father really had two sons — myself and a cousin. My uncle, a doctorate in mathematics from Zurich had died young, his son was my age. While he wanted to be a wildlife photographer, I wanted to go to Bombay to know what the investment world was like, make money on my own. So, father called us both and gave us Rs. 5 lakh each. He told me that I could start my investment business with that and if I ever failed, to come back.”

“You put that money to stock market?”
“No. I thought I should not do two things: Invest even before I learnt the world of investing. Second, put my father’s grant to risk. So, I bought a piece of land for about three lakh and kept the rest in a bank. Then, I took a bus to Belgaum and then another to Bombay. I got off near the Fort. I had never stepped into the city before. I walked into a dabba hotel that rented rooms with a shared toilet for Rs. 120 a day. Next day, I went to meet Mahendra Kampani of JM Financials — I had only heard the name. I had no appointment. I went to his office and the first thing was that I felt intimidated by the two elevators. I had never taken an elevator in my life. So, I climbed up the six floors. I met his secretary, a man named Mohan. I told him that I wanted to meet Mahendra Kampani; that I wanted to work with him. Mohan was a Bangalore guy. The man somehow felt sympathetic. He said that I could gatecrash just when he would be coming out of Mahendra Bhai’s room. I did exactly that. Mahendra Bhai was perplexed with me. He asked me who I was. I told him that I had come all the way from Bangalore and I wanted to work for him. He made me sit down; he fetched me a glass of water. I had never seen an office as large as his. Then he spoke to me, he called someone to show me the research department and asked me to come back at 3 p.m. to see him again.”

Siddhartha paused. He was in a trance.

“I met him at 3 p.m. He said he would take me in but he had no idea who I was. He asked me to get him at least a letter of introduction. That is how it all started."

“Then what happened, Siddhartha?”
“I spent all my waking hours to learn about the trade. Every single day, I showed up at 7 a.m. at the office and Mahendra Bhai and I were invariably the last to leave well past nine in the night. I would tell the office boys to pack up and it was I who took Mahendra Bhai’s dabba to load it in his car as the last item of work. In the process, he taught me all about the world of investing. He trusted me. He let me handle the accounts of some really big business houses. After a year-and-a-half with him, I was ready to come back to start on my own. I told Mahendra Bhai that. I told him how grateful I was to him, what a lot I owed him.”

“What did he say to that?”
“Oh, he told me that the Universe is connected in a web of timeless relationships. He had merely paid me back for past debt of a previous life — that I owed him nothing.”

So, Siddhartha returned and even though he bought over a stock trading firm called Sivan Securities (later renamed Global Technology Ventures), he really put his heart and soul into the coffee business. He bought out estate after failing estate in the wake of unviable coffee pricing and poor margins dictated by an international cartel. Then one day he decided to be his own master. He realised that the real value addition was in converting the beans into the coffee drinking experience and the rest is history.

I look at the man across the table. With 10,000 acres of coffee under cultivation, today, he is India’s No.1 exporter. Shorn of personal glamour, he looks like someone you would notice, only briefly, ahead of yourself in the airport security queue. In a world busy with the idea of success and failure, Siddhartha is a picture of equanimity.


I look at him one more time and think to myself: Probably it is in the name!

TCS, Wipro eye $400 mn Target outsourcing deal

BANGALORE: India’s top tech firms Tata Consultancy Services (TCS), Wipro and several others are pursuing Target’s captive technology centre for a potential acquisition, in what could be a transaction bundled with a long-term outsourcing contract worth $300-400 million. America’s second-biggest discount retailer Target has around 1,500 staff employed at its Bangalore centre, currently doing software development and maintenance work.

“We have been in discussions with them for the past few months and the dialogue is still open,” a senior executive at one of the tech firms exploring this transaction told ET on conditions of anonymity. “There is no conclusion yet about how this transaction can be structured, and it’s very early days,” he added. Both TCS and Wipro count Target as one of their top retail customers.

Some of the world’s top retailers, including UK’s Tesco and America’s speciality retailer Home Depot, have been outsourcing projects to Indian third-party service providers, including TCS and Infosys, apart from their own captive centres in order to support their existing IT systems and also develop newer applications. Tesco, for instance, saves over $100 million every year by outsourcing its IT projects to India, and primarily drives projects from its own captive in Bangalore.

“Target’s India centre could be doing at least $100 million worth of projects (revenues) every year,” another person familiar with the retailer’s India operations told ET on conditions of anonymity. Officials at Target did not reply to an email query sent by ET. TCS, Infosys and Wipro also declined to comment. Few years ago, many retailers started with an Indian captive operation as there were not many service providers who could understand their core operations better. Target entered India in 2004 through a JV with ANSRSource, a Texas-based BPO outsourcing company.

“There is a certain equity in building up the operations (captive) initially, but over the course of time, there is the objective of monetising the operations,” said Avinash Vashistha, CEO, Tholons, an offshore advisory firm.

“Once a particular process becomes commoditised, then any adding of additional resources is not justified as it adds up to the costs.”

TCS, one of Target’s Indian suppliers, supports the retailer’s operations from its delivery centres in Uruguay and Chile, apart from India. Target, which competes with Walmart Stores, reported quarterly revenues of $14.6 billion for the second quarter ended August this year.

Over the past few months, many companies have sold their technology captives in India. Divesting non-core captive operations is a strategy adopted by banks such as Citigroup and UBS for focusing better on their core operations, and also gain better outsourcing rates by bundling such transactions with a multi-year contract. An upfront payment also helps them unlock value from non-core assets. Citibank sold its Indian back-office business to TCS for around $505 million in October last year, and Citi Technology Services for around $127 million to Wipro in December last year. Both these transactions came with assured outsourcing business of around $3 billion together for these vendors.

Capgemini to expand India headcount

NEW DELHI: Outsourcing firm Capgemini is all set to add more staff in India with the opening of a new business information centre in Bangalore, according to a report in a business daily.

The Bangalore centre will take the company's India headcount beyond 21,000, an increase from its employee strength of 20,000 in home country France.

According to the company, the new centre in Bangalore would start with a workforce of 1,000, which would scale up to 3,000 in about 18 months.

Paul Nannetti, general manager of Capgemini's global business information service line, said, "Bangalore provides plenty of application and technical skills in information management." He added, "The company can scale-up there much more quickly than in onshore locations."

India is among the most attractive outsourcing destination for global MNCs including IBM, Accenture and Microsoft, giving tough competition to domestic players TCS, Wipro and Infosys. The country offers large pool of skilled and low-cost talent for business information management services that help companies improve their collection, use and analysis of data.

CJI declares assets - owns Santro

Chief Justice of India K G Balakrishnan owns a Santro Car and 20 sovereigns of gold jewellery as moveable property and three houses and two plots as immovable assets as he along with 20 other judges of the Supreme Court today made public details of their assets.

While he has no no investment in shares and fixed deposits, the assets declared by the CJI on the apex court's official website shows that he has immoveable property worth over Rs 18.08 lakh which excludes the house on 15 cents of land in Thrikkakara south village, Kanayanur Taluk in Kerala, whose valuation was not mentioned in the declaration.

The declaration of the CJI and others climaxed months of controversy triggered by right to information petitions seeking transparency about the assets of judges of higher judiciary that culminated in a battle in the Delhi High Court.

The Supreme Court adopted a strident stand in the High Court saying the judges were not not covered by such a provision but later relented under mounting public and media pressure.

The CJI owns a two bedroom flat in Mamangalam, Edipally, Ernakulam, costing Rs 5,75 lakhs and a family property of Rs 3.5 lakh in Najeezhoor Kaduthurty village, Vaikom Taluk.

IBM Says Business Analytics Will Outpace ERP Plus CRM

Vowing to continue acquiring vendors of analytics and BI software, the head of IBM's business analytics group said he believes "information-driven transformation" will become bigger and more important than the ERP and CRM categories combined.

IBM general manager for business analytics Ambuj Goyal said surging client demand is driving IBM's intention to continue adding new technologies and capabilities that help customers make better decisions by being able to predict future outcomes, according to an itpro.com article:

"Our investment in this particular space will continue and we will build by partner," [Goyal] said. "There's so much demand. It's an investment trend. Not only IBM is behind it. When we went to Wall Street, we said this is our growth strategy."

And that demand, Goyal said, is only beginning:

"Information-led transformation has just begun," said Goyal. "We are way ahead, but to me we are just beginning, because everybody is going to follow us. I say this is bigger than ERP and CRM combined."

He added: " . . . . Every day, clients are telling us what kind of problems they can’t solve."

IBM had around 15,000 new clients in the business intelligence space, and Goyal said that it was looking ahead with a huge research department doing first of a kind projects.

Goyal's comments underscore a broad trend in the IT business whereby CIOs are realizing that while they must have strong internal IT operations, the real business value they need to unlock lies outside their enterprise in the marketplace of customers and prospects and new products and services.

The leading ERP vendors—SAP and Oracle—have begun stepping into the traditional BI space, but IBM is pushing out beyond that with a strong emphasis on predictive analytics and the ability to help clients see what's coming and take the steps to capitalize on those opportunities.

South Koreans Struggle With Race

Jean Chung for the International Herald Tribune

Hahm Ji-seon and her friend, Bonogit Hussain, were riding a bus near Seoul when insults were hurled at them.

By CHOE SANG-HUN

Published: November 1, 2009

SEOUL — On the evening of July 10, Bonogit Hussain, a 29-year-old Indian man, and Hahn Ji-seon, a female Korean friend, were riding a bus near Seoul when a man in the back began hurling racial and sexist slurs at them.

The situation would be a familiar one to many Korean women who have dated or even — as in Ms. Hahn’s case — simply traveled in the company of a foreign man.

What was different this time, however, was that, once it was reported in the South Korean media, prosecutors sprang into action, charging the man they have identified only as a 31-year-old Mr. Park with contempt, the first time such charges had been applied to an alleged racist offense. Spurred by the case, which is pending in court, rival political parties in Parliament have begun drafting legislation that for the first time would provide a detailed definition of discrimination by race and ethnicity and impose criminal penalties.

For Mr. Hussain, subtle discrimination has been part of daily life for the two and half years he has lived here as a student and then research professor at Sungkonghoe University in Seoul. He says that, even in crowded subways, people tend not sit next to him. In June, he said, he fell asleep on a bus and when it reached the terminal, the driver woke him up by poking him in the thigh with his foot, an extremely offensive gesture in South Korea.

“Things got worse for me this time, because I was with a Korean woman,” Mr. Hussain said in an interview. “Whenever I’ve walked with Ms. Hahn or other Korean women, most of the time I felt hostilities, especially from middle-aged men.”

South Korea, a country where until recently people were taught to take pride in their nation’s “ethnic homogeneity” and where the words “skin color” and “peach” are synonymous, is struggling to embrace a new reality. In just the past seven years, the number of foreign residents has doubled, to 1.2 million, even as the country’s population of 48.7 million is expected to drop sharply in coming decades because of its low birth rate.

Many of the foreigners come here to toil at sea or on farms or in factories, providing cheap labor in jobs shunned by South Koreans. Southeast Asian women marry rural farmers who cannot find South Korean brides. People from English-speaking countries find jobs teaching English in a society obsessed with learning the language from native speakers.

For most South Koreans, globalization has largely meant increasing exports or going abroad to study. But now that it is also bringing an influx of foreigners into a society where 42 percent of respondents in a 2008 survey said they had never once spoken with a foreigner, South Koreans are learning to adjust — often uncomfortably.

In a report issued Oct. 21, Amnesty International criticized discrimination in South Korea against migrant workers, who mostly are from poor Asian countries, citing sexual abuse, racial slurs, inadequate safety training and the mandatory disclosure of H.I.V. status, a requirement not imposed on South Koreans in the same jobs. Citing local news media and rights advocates, it said that following last year’s financial downturn, “incidents of xenophobia are on the rise.”

Ms. Hahn said, “Even a friend of mine confided to me that when he sees a Korean woman walking with a foreign man, he feels as if his own mother betrayed him.”

In South Korea, a country repeatedly invaded and subjugated by its bigger neighbors, people’s racial outlooks have been colored by “pure-blood” nationalism as well as traditional patriarchal mores, said Seol Dong-hoon, a sociologist at Chonbuk National University.

Centuries ago, when Korean women who had been taken to China as war prizes and forced into sexual slavery managed to return home, their communities ostracized them as tainted. In the last century, Korean “comfort women,” who worked as sex slaves for the Japanese Imperial Army, faced a similar stigma. Later, women who sold sex to American G.I.’s in the years following the 1950-53 Korean War were despised even more. Their children were shunned as “twigi,” a term once reserved for animal hybrids, said Bae Gee-cheol, 53, whose mother was expelled from her family after she gave birth to him following her rape by an American soldier.

Even today, the North Korean authorities often force abortion on women who return home pregnant after going to China to find food, according to defectors and human rights groups.

“When I travel with my husband, we avoid buses and subways,” said Jung Hye-sil, 42, who married a Pakistani man in 1994. “They glance at me as if I have done something incredible. There is a tendency here to control women and who they can date or marry,in the name of the nation.”

For many Koreans, the first encounter with non-Asians came during the Korean War, when American troops fought on the South Korean side. That experience has complicated South Koreans’ racial perceptions, Mr. Seol said. Today, the mix of envy and loathing of the West, especially of white Americans, is apparent in daily life.

The government and media obsess over each new report from the Organization for Economic Cooperation and Development, to see how the country ranks against other developed economies. A hugely popular television program is “Chit Chat of Beautiful Ladies” — a show where young, attractive, mostly Caucasian women who are fluent in Korean discuss South Korea. Yet, when South Koreans refer to Americans in private conversations, they nearly always attach the same suffix as when they talk about the Japanese and Chinese, their historical masters: “nom,” which means “bastards.” Tammy Chu, 34, a Korean-born film director who was adopted by Americans and grew up in New York State, said she had been “scolded and yelled at” in Seoul subways for speaking in English and thus “not being Korean enough.” Then, she said, her applications for a job as an English teacher were rejected on the grounds that she was “not white enough.”

Ms. Hahn said that after the incident in the bus last July, her family was “turned upside down.” Her father and other relatives grilled her as to whether she was dating Mr. Hussain. But when a cousin recently married a German, “all my relatives envied her, as if her marriage was a boon to our family,” she said.

The Foreign Ministry supports an anti-discrimination law, said Kim Se-won, a ministry official. In 2007, the U.N. Committee on the Elimination of Racial Discrimination recommended that South Korea adopt such a law, deploring the widespread use of terms like “pure blood” and “mixed blood.” It urged public education to overcome the notion that South Korea was “ethnically homogenous,” which, it said, “no longer corresponds to the actual situation.”

But a recent forum to discuss proposed legislation against racial discrimination turned into a shouting match when several critics who had networked through the Internet showed up. They charged that such a law would only encourage even more migrant workers to come to South Korea, pushing native workers out of jobs and creating crime-infested slums. They also said it was too difficult to define what was racially or culturally offensive.

“Our ethnic homogeneity is a blessing,” said one of the critics, Lee Sung-bok, a bricklayer who said his job was threatened by migrant workers. “If they keep flooding in, who can guarantee our country won’t be torn apart by ethnic war as in Sri Lanka?”

RBS to get virtually nationalised; Govt to hike stake to 84 pc

LONDON: The British government is planning to pump in an additional capital of up to 19 bn pound into the Royal Bank of Scotland and hike its stake to as much as 84 per cent, a move that would virtually nationalise the bank.

"Alistair Darling is preparing to plough billions more of taxpayers' money into Royal Bank of Scotland to take the government stake in the bank from 70 per cent to as high as 84 per cent," the Sunday Times said.

As part of the deal, the government would pour up to 19 billion pound of additional capital into RBS.

"The subsequent increase in the taxpayers' stake will leave the bank (RBS) virtually nationalised, with a small portion of shares left in the hands of private investors," the daily said.

The daily added that the Treasury this week would confirm that RBS is signing up to a controversial deal to pump 270 billion pound of problematic loans into a state-backed insurance scheme.

The outcome of the state hiking its stake is harsher than the bank expected. The bank was already committed to reducing its balance sheet by 40 per cent and selling off a slew of international businesses.

RBS would now be expected to shoulder an additional 20 billion pound of losses on its own balance sheet before it lay claims on the government insurance.

In India, riches breed birthday excess

NEW DELHI
REMEMBER BIRTHDAY parties when you were little? There was a cake - one of reasonable size, slightly lopsided because Mom hadn’t lined the layers up perfectly before applying the chocolate fudge frosting. There were balloons and party hats and a couple kids from the neighborhood, who gave you the standard gifts: a book or a Barbie or a Matchbox car. And that was about it.

Fast-forward to 2009. You and your spouse live in the city, yuppie careers in high gear. You have two cute kids. November rolls around and it’s time to plan little Parker’s fifth birthday bash. Before you know it, you’ve rented the community room at the golf club you just joined. You’ve had invitations printed up. Now you’ve got to hire the caterer and track down that live animal guy who your neighbor had at her kid’s party last month. Then there’s the piñata, the party favors, and the cake that Parker insists must be in the shape of the Millennium Falcon shooting through outer space . . .

Isn’t there a recession going on, people? Then why are kiddy birthday parties so out of control? And this isn’t just an American phenomenon. It’s a global crisis.

A few months ago, we up and moved the family to India. The American economy was tanking, and my husband was offered a dynamic new job in Delhi. India! How radically different that would be! And how wonderful for our two daughters, who would finally understand that there is a vast world outside the calm, tree-lined streets of Boston’s Back Bay.

The culture shock turned out to be underwhelming. Sure, every morning, we dodge the cows that stand in the busiest intersections. A few weeks ago, a beggar thrust a snake into our auto rickshaw, hoping for a few spare coins. People stop us regularly when we’re out, asking to take photos of our fair-skinned, curly-haired 3-year-old.

Still, there’s a lot of the familiar, too. Delhi is a vibrant international city. At our local grocery store, I can find just about anything the girls might miss: Kraft Mac n’ Cheese, Rice Krispies, Oreos.

But at the least, I thought, I had escaped excessive toddler birthday parties.

Oh, how naive.

In the three months we’ve lived here, we have attended seven or eight birthdays for the children of upwardly mobile Indians. Toddler birthday party inflation has Delhi firmly in its grip. In fact, the parties of Boston and Newton can’t hold a candle to the epic extravaganzas of Vasant Vihar, New Delhi. Once you enter past the guards and the ushers, through the arcade of balloons, you are greeted by a buffet of Bar Mitzvah-like largess: dim sum, sushi, pasta, salad, Indian food, kiddy junk galore. There are cakes that rise on remote-controlled elevators, lit by rings of sparklers. There are chocolate fondue fountains, ice cream sundae stations, and endless Indian sweets. As for entertainment, the more, the better: elephant, horse, and camel rides; magic shows; face painters; temporary tattoo artists; train rides; fireworks. When you leave, you are handed not just a goodie bag, but also a wrapped present that will outshine the gift that you had brought for the birthday boy.

Each child attends with an entourage: One mother, clad in designer jeans, heels, and shades, her make-up heavy. She makes a beeline for the lounge area where she’ll air-kiss her girlfriends, then gossip for the remainder of the evening. The occasional dad shows up, still in his business suit. He heads for the opposite corner from his wife, where he’ll talk cricket scores and Sensex prices till it’s time to go. Besides the children, it’s the ayahs who constitute the largest segment of the birthday population. These nannies are usually slight young women who shadow their charges a half-step behind, spoon-feeding them. The nannies themselves are not allowed to eat from the buffet, but receive small boxed dinners to take away.

When I envisioned my life in India, I never dreamed of this.

Over the last decade, as India’s economy has boomed, Indian society has seen the emergence of a new entrepreneurial flashy-class. This Mercedes-driving, world-traveling segment is garishly replicating the worst excesses of yuppie life in America: designer T-shirts, SUVs, expensive private schools, elaborate spa treatments, and, of course, extravagant birthday bashes. Their money is fresh, and they flaunt it.

When you leave one of these birthday bashes, everyday India assaults your senses: the darkness, the haze, the stench of burning garbage and cow dung. You get in your car, side-stepping a family of squatters by the side of the road. Though they live side-by-side in their slums and mansions, the garbage-picker and the businessman will never exchange “Namastes.’’

We came to India hoping to expand our children’s worldview. So far, however, the view seems pretty much the same: the rich are getting richer; and the poor, well, they’re still dirt poor. And the birthday parties, they’re extreme.

Kate Darnton is a writer and editor living in New Delhi.

Stiglitz Says U.S. Recession ‘Nowhere Near’ End After GDP Jump

By Bob Willis

Oct. 31 (Bloomberg) -- Nobel Prize-winning economist Joseph E. Stiglitz said the U.S. recession is “nowhere near” an end and the economy’s third-quarter growth rate of 3.5 percent, the first expansion in more than a year, won’t carry into 2010.

While this week’s figures on gross domestic product are “very good,” the numbers would be “miserable” without stimulus measures enacted by the Obama administration, Stiglitz said today at a forum in Shanghai. He urged the U.S. and other countries not to pull back on efforts to shore up economies.

“When we look at if workers can get jobs, if they can work full time, if businesses are able to sell goods they produce, in those terms, we are nowhere near the end of recession” in the U.S., said Stiglitz, 66, the former chief economist at the World Bank. The U.S. job market is still “in very bad shape.”

Federal assistance to the housing and auto industries helped propel growth in the July-September quarter. President Barack Obama, in his weekly radio address to the nation, today called the Oct. 29 report on GDP a “good sign” and said an expanding economy is the first step to job creation.

While most economists estimate the recession has ended, the National Bureau of Economic Research is responsible for determining when contractions begin and end. The Cambridge, Massachusetts, organization usually makes its recession pronouncement as long as a year and a half after the fact. The group defines a recession as a “significant” decrease in activity over a sustained period of time. The declines it measures would be visible in gross domestic product, payrolls, production, sales and incomes.

Surging Unemployment

The U.S. unemployment rate reached a 26-year high of 9.8 percent in September and economists project it will exceed 10 percent by early 2010.

“The unemployment rate is likely to go up,” Stiglitz told reporters two days earlier in Beijing. “Growth won’t be fast enough to bring down the unemployment rate.”

Stiglitz, a professor of economics at Columbia University in New York, said the growth rate of 3 percent to 3.5 percent needed to create enough jobs for new U.S. labor market entrants was unlikely to be sustained into next year.

It is too early for the U.S. and other countries to begin easing stimulus measures put in place a year ago to avert a financial market meltdown, Stiglitz said.

“For the world as a whole, it’s premature to think about exiting stimulus,” he said today in Shanghai. Stiglitz became a Nobel laureate in 2001, sharing the prize with George A. Akerlof and A. Michael Spence, both of the U.S., for their analysis of how markets function when buyers and sellers have different information about a product or service.

Curbing Stimulus

Around the world, central banks are paring emergency measures taken at the height of the financial crisis. The record $1.4 trillion budget deficit limits Obama’s options for more aid, Obama’s options for more aid, while Federal Reserve officials try to convince investors that the central bank will exit emergency programs in time to prevent a pickup in inflation.

Japan’s central bank said Oct. 30 that it will stop buying corporate debt at the end of the year. Australia this month became the first Group of 20 nation to raise rates since the height of the crisis, and Norway’s central bank followed.

In China, the State Council pledged Oct. 21 to continue monetary and fiscal stimulus even after the economy exceeded officials’ expectations for the first nine months of the year. Growth is likely to top the government’s 8 percent target for 2009, the central bank said this week.

U.S. economy’s third-quarter growth at a 3.5 percent annual rate followed four quarters of contraction that marked the worst performance in seven decades.

Obama, in his remarks, said “economic growth is no substitute for job growth.”

To contact the reporters on this story: Bob Willis in Washington bwillis@bloomberg.net;