Tag Archives: Economy

The U.S. Downgrade Is A Deserved Wakeup Call

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The S&P downgraded the United States credit rating from AAA to AA+ on Friday with a warning of potential future downgrades. The downgrade was unprecedented but certainly necessary. America has over the years built up its 14 trillion dollar debt and cannot repay it. America has simply printed money in order to maintain its cash flow, without investing in new development.

The S&P credit rating is supposed to reflect America’s ability to pay its debts. China, Japan and other countries are heavily invested In America and suddenly the value of their investment has dropped. Why is this important to the American economy? Because the economy is based on borrowing money and other nations will stop lending because it is a poor credit risk. Indeed, US debtors are likely to call in their debts rather than to wait and watch the value of the American currency deflate and loose its value.

The economy is slowing down and entering a recession. The usual treatment for recession is government stimulus spending. However, government spending is not stimulating the economy. America’s unemployment rate is officially over 9 % and the GDP is under 2% and in reality is probably much worse than those figures. The government has provided no stimulus measures such as jobs programs or stimulus to business. All it has done is agreed to raise the debt ceiling and print more money. Currently, America pays $250 billion interest per year on its debt.

The weakening of America’s economy is something that people with financial and economic backgrounds could have seen coming if they were willing to face it. Now it is becoming clear to everyone that America will be forced to make difficult concessions to repay its debts and to repair its economy.

Japan Rethinks Marketing Models

Consumerism, Economy, , , ,

Japan Business Post-Disaster

Since Japan’s disaster a few months ago, while the main aim is for the country to recover as painlessly as possible, on the sidelines it seems there has been a lot of rethinking taking place vis-à-vis marketing directions. It seems like – perhaps in the aftermath and because of the tsunami – people’s perceptions (and thus desires) are changing and so marketing techniques need to adapt to this. In a study entitled ‘Fukkatsu: Japan Rebuilds,’ by the end of last month, 77 percent of Japanese claimed they were “actively seeking out brands they believe are helping recovery of the country and personal stability.” In addition, the study showed how the Japanese are becoming more eco-conscious following the disaster with 75 percent using less electricity; 72 percent making greater attempts at water conservation and 68 percent in general seeking out “greener alternatives to everyday consumption.”

Bigger Japanese Picture

There is generally more contemplation going on it seems. Individuals and the private sector are taking more responsibility for the country’s recovery, as opposed to just relying on a “government that is increasingly seen as not showing leadership.” 93 percent of respondents said that they “just want a more stable life” so it seems that is the motivating factor. There are more bikers now as people become concerned about shortages in gas and price escalations with potential power shortages.

Better Booming Business

On the other hand there has been some good news for businesses following the disaster. Since the Japanese are a big nation of train commuters, businesses are now honing in on this and using the platform for a way to go shopping. Until recently, there were just some eateries around, but it now appears that “post-earthquake, we have seen that all shopping trips are shorter and more directed, and these ‘railway malls’ make that so much easier.”

Brick and Virtual Shopping

This has led to increase in brick and virtual shopping as a way of comparing prices due also to the increased use of mobile phones as shopping aids. The Japanese are also engaging now more in “embarrassment shopping” which is when you check out products to determine their social acceptability levels through mobile services and then decide whether or not to purchase them in the “brick.” Since early March, Japan has seen an increase of around 20 percent of online shopping.

Direct Consumer Involvement

It also seems from the article that in general the Japanese average man on the street wants to be more involved with 60 percent of respondents claiming they want “to be part of a shared process n product and service development.” They are also more aware of “corporate statements and are digging deeper into what goods and services offer.”

Diamond De Beers Deplete?

Consumerism, Economy, , , , , ,

De Beers – the world’s largest miner and diamond supplier – may be heading for a depletion in sales this year. According to its marketing arm Diamond Trading Company (DTC) a “slowdown” is expected in the second quarter,” but there is hope that the industry in India will increase by 20 percent, according to Varda Shine, the company’s CEO. That would be good news if not being compared to the growth there last year which reached 31 percent. India is the world’s largest diamond exporter so this fact of course will impact a company like De Beers.

Of course, this data is only just estimates and forecasts and thus not even close to 100 percent accurate. Shine is still hoping for “a double digit growth in this industry in India and China as well every year.” In addition, DTC prices have increased significantly – more than 300 percent following the 2008 economic crisis. One diamond trader who chose to remain anonymous pointed out that “it has increased by an average by 15 per cent to 20 per cent during the first quarter, following a rise of 27 per cent through the whole of 2010, while sales increased by 10 per cent to approximately $1.75 billion during the three months.”

So perhaps after all despite some figures pointing somewhat to the contrary, diamonds will remain a girl’s best friend in the future. In addition, since there are so many different figures and opinions, it is almost impossible to predict the future of the industry.

NZ: Marketing and Markets

Consumerism, Economy, Japan, ,

It’s not always the case that the more money spent on marketing, the better your product will well.  That’s what energy-Drink Manufacturer Red Bull New Zealand just found out.  Although the company netted 7.5 percent gain in 2010 sales (its second best since it first launched more than ten years ago), other factors have been at play.  Still, the company can celebrate a tad since a staggering $30.3 million of the caffeine-infused energy drinks were purchased by New Zealanders last year, that is made with taurine (an amino acid that was originally located in bull bile; hence Red Bull).

But it didn’t come cheap.  The company paid for this with larger marketing and administration costs which “wiped out most of its net profit” that plummeted to $888,171 from $10.7 million.  It’s not always in the sales pitch.

New Zealand Market Recovers Following Japan’s Disaster

V – an energy drink produced by Frucor – is in direct competition with Red Bull.  The latter drink has a hold on around 60 percent of the market share, selling approximately $90m of the drink annually.Good news on the horizon for New Zealanders as its dollar just now jumped ahead “recovering the more than US2c lost in the last week in the wake of Japan’s catastrophic earthquake and tsunami, followed by a nuclear crisis in the world’s third-largest economy.”

According to HiFX Daniel Bell, “Investors have shrugged off concerns in Japan and the Middle East for now to give risk assets a boost with equities, commodities and high yielding growth currencies all benefiting.”

So things are looking up for New Zealanders and manufacturing companies like Red Bull and V are likely to continue making good profits; so long as they’re careful with their expenses and make the right marketing decisions.

Crunchy New Apple?

Economy, Tech News, , ,


There’s new and then there’s new.  If something is new but doesn’t offer anything particularly original, is it really considered new?  Well, Apple marketers seem to be able to convince their groupies that it is.  Last week the company released the second version of the iPad but to all those who aren’t obsessed with every single breath the Apple takes, the bottom line is, it’s not really offering much new.  Yes, the gadget is thinner (and lighter) than its original one and faster too but if you’re not someone who needs the additional camera it comes with (and why would you?) you may as well save a few bucks and continue enjoying your “old” one. 


True it has a self-cleaner to counter any smudge marks and a cover that turns the iPad off when you lay it on top.  But if you can live without that, let your “old” iPad remain the apple of your eye.