On Planet Greece, some civil servants get a bonus for turning up to work on time. Foresters get a bonus for working outdoors. At least they show up.

There are civil servants called ghost workers because they never go into the office, head to a second job and still claim a state salary. They can’t get sacked, because a civil service post is for life. Unless the incumbent decides to retire in his or her forties, with a pension.

And the government can continue paying for the afterlife. Unmarried and divorced daughters of civil servants are entitled to collect their dead parents pensions. Another lucrative sinecure is to belong to a state committee. The government has no idea how many there are.

It has been estimated that they have 10,000 employees and cost nearly £200m a year, and that includes the committee to manage a lake that dried up 80 years ago.

Federal Reserve and Treasury officials are scrambling to prevent the commercial-real-estate sector from delivering a roundhouse punch to the U.S. economy just as it struggles to get up off the mat.

Their efforts could be undermined by a surge in foreclosures of commercial property carrying mortgages that were packaged and sold by Wall Street as bonds. Similar mortgage-backed securities created out of home loans played a big role in undoing that sector and triggering the global economic recession. Now the $700 billion of commercial-mortgage-backed securities outstanding are being tested for the first time by a massive downturn, and the outcome so far hasn’t been pretty.

The CMBS sector is suffering two kinds of pain, which, according to credit rater Realpoint LLC, sent its delinquency rate to 3.14% in July, more than six times the level a year earlier. One is simply the result of bad underwriting. In the era of looser credit, Wall Street’s CMBS machine lent owners money on the assumption that occupancy and rents of their office buildings, hotels, stores or other commercial property would keep rising. In fact, the opposite has happened. The result is that a growing number of properties aren’t generating enough cash to make principal and interest payments.

The other kind of hurt is coming from the inability of property owners to refinance loans bundled into CMBS when these loans mature. By the end of 2012, some $153 billion in loans that make up CMBS are coming due, and close to $100 billion of that will face difficulty getting refinanced, according to Deutsche Bank. Even though the cash flows of these properties are enough to pay interest and principal on the debt, their values have fallen so far that borrowers won’t be able to extend existing mortgages or replace them with new debt. That means losses not only to the property owners but also to those who bought CMBS — including hedge funds, pension funds, mutual funds and other financial institutions — thus exacerbating the economic downturn.

A typical CMBS is stuffed with mortgages on a diverse group of properties, often fewer than 100, with loans ranging from a couple of million dollars to more than $100 million. A CMBS servicer, usually a big financial institution like Wachovia and Wells Fargo, collects monthly payments from the borrowers and passes the money on to the institutional investors that buy the securities.

CMBS, of course, aren’t the only kind of commercial-real-estate debt suffering higher defaults. Banks hold $1.7 trillion of commercial mortgages and construction loans, and delinquencies on this debt already have played a role in the increase in bank failures this year.

But banks’ losses from commercial mortgages have the potential to mount sharply, and the high foreclosure rate in the CMBS market could play a role in this. Until now, banks have been able to keep a lid on commercial-real-estate losses by extending debt when it has matured as long as the underlying properties are generating enough cash to pay debt service. Banks have had a strong incentive to refinance because relaxed accounting standards have enabled them to avoid marking the value of the loans down.

“There is no incentive for banks to realize losses” on their commercial-real-estate loans, says Jack Foster, head of real estate at Franklin Templeton Real Estate Advisors.

CMBS are held by scores of investors, and the servicers of CMBS loans have limited flexibility to extend or restructure troubled loans like banks do. Earlier this month, it was no coincidence that CMBS mortgages accounted for the debt on six of the seven Southern California office buildings that Maguire Properties Inc. said it was giving up. “During most of the evolution [of CMBS] no one ever thought all these loans would go into default,” says Nelson Rising, Maguire’s chief executive.

Indeed, many property developers and investors complain there is no way to identify the investors that hold their debt and that it is difficult to negotiate with CMBS servicers. In light of the complaints, the Treasury is considering guidance that would allow servicers to start talking about ways to avoid defaults and foreclosures sooner, according to people familiar with the matter. But investors in CMBS bonds argue that the servicers are ultimately bound contractually to the bondholders.

So Maguire will soon have a lot of company. In a study for The Wall Street Journal, Realpoint found that 281 CMBS loans valued at $6.3 billion weren’t able to refinance when they matured in the past three month, even though 173 such loans worth $5.1 billion were throwing off more than enough cash to service their debt.

Mounting foreclosures in the CMBS sector would likely depress values even further as property is dumped on the market. And this would put pressure on banks to write down loans. “What’s going on in the CMBS world is a precursor for what might be seen in banks’ books,” predicts Frank Innaurato, managing director at Realpoint.

The commercial-real-estate market could yet be salvaged by an improving economy and bailout programs coming out of Washington. In addition, capital markets are starting to ease for publicly traded real-estate investment trusts. Since March, more than two dozen REITs have managed to raise more than $13 billion by selling shares.

Still, most of the $6.7 trillion in commercial real estate is privately owned. Also, it is unlikely commercial real estate will benefit much from an early stage of an economic recovery. What landlords need is occupancy and rents to rise, and that means employers have to start hiring and consumers need to shop more. So far, there are few signs this is happening.

The colorful foam clogs appeared in 2002, just as the country was recovering from a recession. Brash and bright, they were a cheap investment (about $30) that felt good and promised to last forever. Former president George W. Bush wore them. Aerosmith lead singer Steven Tyler wore them. Your grandma wore them. They roared along with the economy, mocked by the fashion world but selling 100 million pairs in seven years.

Then the boom times went bust, and Crocs went to the back of the closet.

The company had expanded to meet demand, but financially pressed customers cut back. Last year the company lost $185.1 million, slashed roughly 2,000 jobs and scrambled to find money to pay down millions in debt. Now it’s stuck with a surplus of shoes, and its auditors have wondered if it can stay afloat. It has until the end of September to pay off its debt.

“The company’s toast,” said Damon Vickers, who manages an investment fund at Nine Points Capital Partners in Seattle. “They’re zombie-ish. They’re dead and they don’t know it.”

The story of Crocs mirrors the country’s tale of economic expansion and contraction. At the height of the real estate market, in 2006, the company sold shares to the public, raising more than $200 million in the biggest stock offering in shoe history. It ramped up manufacturing to keep up with demand, only to then find that shoppers were snapping their wallets shut.

Rachel Weingarten, a trend and marketing expert, has relegated Crocs to the wasteland of the comfort-shoe aisle. Maybe in a decade nostalgia will set in, said Weingarten, author of “Career and Corporate Cool.” Then a pair of hot-pink Crocs dug from the back of the closet might inspire misty-eyed memories: “Remember when we had ugly, Flintstone-looking feet?”

Crocs not only had a look, they had a story. In 2002, three longtime friends from Boulder, Colo., got hold of technology developed in a Canadian laboratory in 1999 that created a lightweight, antimicrobial foam. They called it Croslite and molded it into a boating and water-sports shoe they named “Beach.”

The shoes quickly developed a following among landlubbers as well. Gardeners touted their stability, runners enjoyed their light feel, and the chairman of the company’s board wore them with his tuxedo.

The company used money from its public stock offering to diversify and acquire new businesses, such as Jibbitz, which makes charms designed to fit Crocs’ ventilating holes, and Fury Hockey, which used Croslite to make sports gear. It built manufacturing plants in Mexico and China, operated distribution centers in the Netherlands and Japan, and forged into the global marketplace. More than half of Crocs were sold outside the United States.

Then, chief executive John Duerden wrote in an e-mail: “the industry was taken by surprise by the severity of the downturn. It affected us more than most because the brand had been gearing up for a continuation of the extraordinary growth in the prior years.” 

But the shoes were hitting a saturation point; the problem with a nearly indestructible product is that shoppers rarely need to replace it. 

“They had added a huge amount of infrastructure to meet this demand going forward,” said Jeff Mintz, an analyst with Wedbush. “Demand fell off, and they had way too much capacity and way too much supply of product.”

Who needs a second pair of Crocs in a recession, particularly when the first pair is holding up just fine?

The company swung from a profit of $168.2 million in fiscal year 2007 to a loss of $185.1 million last year. In its annual report, Crocs said that an independent auditor expressed concerns about “conditions that raise substantial doubt about our ability to continue.” Its stock price has plummeted 76 percent.

Five months ago, the company announced that it was replacing chief executive Ron Snyder, who went to college with the company’s founders, with Duerden, an industry veteran who ran a consulting firm focused on brand renewal. Duerden believes there is life yet in Crocs and plans to market them to caterers, medical workers and people with foot problems. Actor George Clooney has promised to work with the company, Duerden told analysts. Maybe he could wear a red pair.

“The bottom line is, people talk about Crocs,” he said at a conference with analysts. “They either love them or hate them, but it’s in the vernacular.” 

Here is the story:

LONDON, June 30 — Greedy bankers are routinely blamed for the credit crisis but one British-based poll of – well, financiers – spreads the blame more widely.

Gary Jenkins, Head of Fixed Income Research at Evolution Securities, wanted a more specific scapegoat and ran a poll of about 200 mostly fund managers and investors asking them to pick their credit crisis culprit.

Former US Federal Reserve Chairman Alan Greenspan was the clear winner, picking up 35 per cent of the votes. Once considered one of the world’s greatest central bankers, he has been widely criticized over the past year for low interest rate policies that helped fuel the credit boom.

Former US president Bill Clinton figured quite prominently with about 10 per cent of votes, and British prime minister Gordon Brown also got quite a few.

Some bankers were singled out, including Fred Goodwin, former chief executive of Royal Bank of Scotland and Richard Fuld, the head of Lehman Brothers, the US investment bank which filed for bankruptcy protection last September.

There were a few more unusual choices: Adam Smith, the 18th century economist, the legendary King Midas, who turned everything he touched into gold, Sarah Beeny, who hosts property TV shows in Britain and Robert Peston, the BBC’s business editor.

One vote went to “the Belgians” and another to Ray Wilkins, an assistant team coach at Chelsea, the football club.

Jenkins himself suggested Microsoft founder Bill Gates take some blame for putting together the technology – spreadsheets and presentation software – that made it easy to create and sell the complex credit products that played a key role.

“That’s a bit tongue-in-cheek,” he said. “If I had to choose one person I would choose Greenspan,” adding that of course it was unfair to blame one person.

He said Greenspan’s reputation had rapidly switched from being one of the world’s leading economic thinkers to someone who helped cause the credit binge and bust.

“He’s like a sporting star who’s gone from hero to zero,” said Jenkins. “He’s the Ronan O’Gara of central banking,” referring to an Irish rugby star who has recently upset fans for bungling a tackle.– Reuters

The US Labor Department said that US employers cut 345,000 jobs in May, the fewest since September and far less than economists had forecast. They cut 504,000 jobs in April. However, the unemployment rate raced to 9.4 per cent (highest since July 1983) from 8.9 per cent in April, partly because people who had given up looking for work re-entered the labour market, a sign of returning economic confidence.

“It keeps hopes alive for a full recovery in the US economy by the second half. It’s a step in the right direction,” said John Canally, investment strategist and economist for LPL Financial in Boston.

The relatively small decline in payrolls fell far shy of the 520,000 drop expected by financial markets, sparking market rumours that the government had published incorrect figures, speculation dismissed by Labor Department officials.Some market participants said the department’s adjustments to a model estimating the creation of new ventures and the destruction of old ones had led to an overstatement in employment. But economists said this argument was flawed.

The US recession, now in its 18th month, is the longest since the Great Depression and has wiped out six million jobs, although March and April’s data were revised to show 82,000 fewer jobs were lost in those months than previously reported. Job losses had previously averaged 643,000 a month.

“The light at the end of the tunnel just got a lot brighter. May’s … report brings clear evidence the labour market is beginning to stabilise,” said Nigel Gault, chief US economist at IHS Global Insight in Lexington, Massachusetts.

A raft of recent data — from gains in home sales to rising consumer confidence — had already fuelled optimism that economic growth would resume in the second half of the year.

High unemployment, coupled with falling home values, is forcing Americans to change their spending habits. Fed data on Friday showed consumer borrowing dived US$15.68 billion (RM54.88 billion) in April after plunging a record US$16.57 billion in March.

While the job losses in May were spread across almost all sectors, the pace of layoffs was slower than in prior months.

Construction jobs fell 59,000 after dropping 108,000 in April, likely as a result of the government’s US$787 billion stimulus package.

The service-providing side of the economy shed 120,000 positions after eliminating 230,000 in April. Manufacturing purged 156,000 jobs in May, possibly reflecting auto plant shutdowns in the wake of Chrysler’s bankruptcy filing. The sector had shed 154,000 positions in April.

Analysts said firms had aggressively cut jobs in response to sagging demand and were now finding less fat to trim.

Education and health services payrolls rose by 44,000 after increasing 13,000 the prior month. The leisure and hospitality industry, which had been shrinking consistently, added 3,000 jobs.

Government, which in April added 92,000 jobs mostly related to preparations for the 2010 census, cut 7,000 in May.

Analysts said they expect the payrolls contraction to keep easing in the months ahead. The jobless rate, however, is not expected to peak until it hits about 10 per cent next year.

Also in May, a surge in new labour force entrants combined with a drop in employment to push the jobless rate up a sharper-than-expected half-percentage point.

“This is a reminder that getting the unemployment rate down will be a long, drawn-out task, as workers who had previously given up their job search return to the labour force,” said Gault. “But the worst news is behind us, and job declines should progressively soften as the year proceeds.”

In a reminder of the labour market’s weakness, the length of the average work week eased to 33.1 hours from 33.2 in April.

Average hourly earnings climbed to US$18.54 from US$18.52, putting earnings 3.1 per cent above their year-ago level, but still the smallest 12-month gain since the period ended November 2005.

A gauge of labour market slack that measures both the unemployed, people working part-time for economic reasons and those only marginally attached to the labour force hit a record high of 16.4 per cent in May from 15.8 per cent in April. — Reuters

Here is an interesting story that appeared in today’s issue of The Business Times in Singapore. It’s saying that owing to the global financial crisis Malaysians appear to be the most averse among Asians to higher risk investment products. They have become more conservative in their choice of financial instruments.

According to the Life Outlook Index released by AXA, 67 percent of Malaysians indicated a preference for insurance products that offer protection as well as savings. It’s a ‘dramatic shift’ from aggressive to conservative strategies, and this is reflected in a big jump from 26 percent in 2007 to 45 percent of those planning to purchase life insurance.

The response rate for dual protection-savings products ranged between 40 and 60 percent for the other seven markets AXA had surveyed, namely, China, Hongkong, India, Indonesia, the Philippines, Singapore and Thailand.

AXA Affin Life Insurance chief marketing officer Nicholas Kua said the switch from high-risk, high-return investment products to options combining life protection and long-term savings was quite consistent with the firm’s observations. “The financial crisis has made Malaysians and Asians more conservative,” he said, which was surprising because unlike Hongkong and Singapore, Malaysian investors were spared much of the pain associated with structured products and investments tied to the now defunct Lehman Brothers.

Here’s the rest of the Business Time story:

Even so, Kua said it was evident Malaysians are shaken up by the global economic gloom and more willing now to plan for their retirement. Instead of starting at an average age of 37 as was the indication in 2007, they now plan to begin at 34 — earlier than the regional average of 36.

Nearly a quarter or 23 per cent plan to increase savings for retirement while 43 per cent would maintain the current pace.

But most are still far from ready for retirement with only 38 per cent having a plan (36 per cent previously). More than a quarter or 27 per cent are “thinking seriously” but unsure how to go about saving while 7 per cent are non-planners — admittedly an improvement from 12 per cent in 2007.

According to the Employees Provident Fund — the country’s biggest pension fund and main source of savings for most workers — the average savings for a 54 year old member last year amounted to RM132,500.

Given that 70 per cent of retirees who take out their EPF savings in a lump sum exhaust it within 3-10 years, the concerns and fear are very real.

Indeed the AXA survey showed only 29 per cent of Malaysians think they can maintain their health post-retirement, most believing their funds would be insufficient.

The respondents also desired to retire at an average age of 54 — one year before the retirement age — but believe 57 to be more likely given the current economic conditions.

Kua said unlike the Indians who are “very realistic” and willing to either work longer or compromise their present living standards to save for their retirement age, the survey revealed Malaysians want to enjoy their golden years but not at the expense of their luxuries.

One area they were willing to trade-off current living standards is to provide their children a better education (57 per cent).

Although only 57 per cent still see opportunities in the future compared to 64 per cent previously, 60 per cent still plan to have kids, with half of them planning to have at least three.

The survey covered 2,400 respondents regionally, those in Malaysia having an income of RM4,000 to RM5,000.

This is an article from The Malaysian Insider, itself reproduced from a report from The Straits Times in Singapore. It talks about the effects of the global economic crisis on Malaysia and how it has hurt the common man in the country. The fears expressed by the people interviewed in this report are very real and though the setting of this story is localised mainly in Penang, the opinions are very representative of Malaysians every where. But particularly painful is the comment that the stimulus package by the new Prime Minister, najib Razak, is unlikely to remodel the economy.

KUALA LUMPUR, April 10 — Even as new Prime Minister Datuk Seri Najib Razak announces the formation of his new Cabinet, he must also worry about the weakened state of the economy, which has been hit by the global crisis. The Straits Times looks at the issues, including its fallout on the two major economic sectors: manufacturing and commodities.

Sipping black coffee at a noodle stall along Penang’s famous clan jetties, Ooi Hock Tik laments how jobs are becoming scarce on the island, which has long been Malaysia’s most established hub for multinational manufacturing companies.

“Even before the crisis struck, jobs for our children were going to foreign workers ready to accept cheap wages. Now, the islanders and foreigners are fighting for the same jobs,” says the 58-year-old former tugboat operator. He has lived on this collection of villages built on stilts within the city limits for the past five decades.

Penang, like the rest of Malaysia, has been hit hard by the global recession.

Job losses are common and retail operators — including joss-stick sellers and fresh-noodle makers — dotting the maze of narrow streets in the island’s capital of Georgetown complain of sharp drops in business.

The economic despair is not going away any time soon and stretches beyond Penang to the rural towns of Peninsular Malaysia.

Mohd Noh Baki, who owns a 4ha oil palm plantation on the fringes of the increasingly quiet Kuala Lumpur International Airport, says plunging commodity prices have forced smallholders like himself to supplement their incomes by planting other crops like yam and sweet potatoes.

“It is too difficult for us village folk to bear,” says the 64-year-old farmer.

Najib has unveiled a RM60 billion stimulus package to inject vigour into an economy that many private economists say will slip into a recession this year.

A large chunk of the stimulus package is in the form of subsidies and government guarantees, and just over RM20 billion will flow directly into the economy.

“The contraction that Malaysia will face this year won’t be as severe as Singapore’s as a result of the stimulus package,” says Manu Bhaskaran, the senior partner of global consultancy firm Centennial Group, who has tracked regional economies for more than two decades.

But like many other private analysts, Bhaskaran says that Najib’s first policy initiative is bereft of any clues about how the country’s planners intend to tackle the serious structural issues that plague its export-dependent economy.

Even before the crisis, private economists have argued that Malaysia was fast losing its competitive edge in the battle to attract foreign portfolio capital and direct investments, both key components of its economic development.

Once a key rival of Singapore’s, Malaysia has over the past decade dropped several notches on the list of the region’s top destinations for foreign capital.

One reason is the rise of other investment centres, such as Indonesia, Thailand and Vietnam, which offer investors cheaper labour and a bigger domestic market.

Economists also say that the government has failed to remodel the economy.

“You can’t move up the value chain by clinging on to a weak currency and cheap imported labour. It is not sustainable in the long term,” says Bhaskaran.

But for workers such as technician Lee Li Lin, who had her pay cut recently, the long term is the furthest thing on her mind right now.

Her employer, a large electronics manufacturer in Penang, implemented a four-day work week last December. The cost-cutting move slashed Lee’s pay by RM200 each month to RM1,500.

More than half of the money goes towards car loan repayments and her home mortgage. Together with the RM2,000 that her repairman husband takes home, she says their situation is “still okay”. But she fears she may lose her job.

“It’s last-in, first-out at the company — and I’ve been there less than a year,” says the mother of a four-year-old girl who has just started pre-school classes.

“We try to cut back on our expenses and buy only what we need,” she says. “But the most important thing is that my salary doesn’t go down any more.”

But some bosses say pay cuts and layoffs appear inevitable.

Rameli Musa, who owns auto-component manufacturing concern Ingress, which has factories in Malaysia, Indonesia and Thailand, says that difficulty in raising new financing makes it tough for companies like his to keep their employees.

“Banks are reluctant to lend and that is hurting our plans to put in place new equipment to handle orders,” he says.

Still, there are a few bright spots.

Zouk KL, one of the hottest nightspots in town, reopened after more than three months of renovation late last year and has seen the number of weekend clubbers double from 3,000 to 6,000.

“I believe that people always need something to look forward to. They need some relief even during these bad times,” Zouk KL’s executive director Cher Ng said, while not discounting the possibility that the numbers may dip in future.

The bigger picture for some economists and analysts is that Malaysia’s economic despair could further stoke disenchantment with the ruling Barisan Nasional government, which suffered its worst election setback in March last year.

Malaysians were relatively unscathed by the recession in the mid-1980s because their economy recovered swiftly on the back of a sharp rebound in foreign investment.

When the Asian financial crisis swept the region in the late 1990s, the people were again spared major economic hardship because of the government’s decision to impose capital controls.

Many believe Malaysians may not be so lucky this time.

Says a chief executive of a large state-controlled commercial bank: “This crisis is going to be more severe and the tools available to the government are limited.” — The Straits Times

‘t be as severe as Singapore’s as a result of the stimulus package,” says Manu Bhaskaran, the senior partner of global consultancy firm Centennial Group, who has tracked regional economies for more than two decades.

But like many other private analysts, Bhaskaran says that Najib’s first policy initiative is bereft of any clues about how the country’s planners intend to tackle the serious structural issues that plague its export-dependent economy.

Even before the crisis, private economists have argued that Malaysia was fast losing its competitive edge in the battle to attract foreign portfolio capital and direct investments, both key components of its economic development.

Once a key rival of Singapore’s, Malaysia has over the past decade dropped several notches on the list of the region’s top destinations for foreign capital.

One reason is the rise of other investment centres, such as Indonesia, Thailand and Vietnam, which offer investors cheaper labour and a bigger domestic market.

Economists also say that the government has failed to remodel the economy.

“You can’t move up the value chain by clinging on to a weak currency and cheap imported labour. It is not sustainable in the long term,” says Bhaskaran.

But for workers such as technician Lee Li Lin, who had her pay cut recently, the long term is the furthest thing on her mind right now.

Her employer, a large electronics manufacturer in Penang, implemented a four-day work week last December. The cost-cutting move slashed Lee’s pay by RM200 each month to RM1,500.

More than half of the money goes towards car loan repayments and her home mortgage. Together with the RM2,000 that her repairman husband takes home, she says their situation is “still okay”. But she fears she may lose her job.

“It’s last-in, first-out at the company — and I’ve been there less than a year,” says the mother of a four-year-old girl who has just started pre-school classes.

“We try to cut back on our expenses and buy only what we need,” she says. “But the most important thing is that my salary doesn’t go down any more.”

But some bosses say pay cuts and layoffs appear inevitable.

Rameli Musa, who owns auto-component manufacturing concern Ingress, which has factories in Malaysia, Indonesia and Thailand, says that difficulty in raising new financing makes it tough for companies like his to keep their employees.

“Banks are reluctant to lend and that is hurting our plans to put in place new equipment to handle orders,” he says.

Still, there are a few bright spots.

Zouk KL, one of the hottest nightspots in town, reopened after more than three months of renovation late last year and has seen the number of weekend clubbers double from 3,000 to 6,000.

“I believe that people always need something to look forward to. They need some relief even during these bad times,” Zouk KL’s executive director Cher Ng said, while not discounting the possibility that the numbers may dip in future.

The bigger picture for some economists and analysts is that Malaysia’s economic despair could further stoke disenchantment with the ruling Barisan Nasional government, which suffered its worst election setback in March last year.

Malaysians were relatively unscathed by the recession in the mid-1980s because their economy recovered swiftly on the back of a sharp rebound in foreign investment.

When the Asian financial crisis swept the region in the late 1990s, the people were again spared major economic hardship because of the government’s decision to impose capital controls.

Many believe Malaysians may not be so lucky this time.

Says a chief executive of a large state-controlled commercial bank: “This crisis is going to be more severe and the tools available to the government are limited.” — The Straits Times

“We’re seeing unprecedented levels of divorce,” Vanessa Lloyd-Platt, a leading divorce lawyer, said. “This recession has been a staggering leveller that has forced people to really look at their lives and ask themselves what’s important.”

And according to Francine Kaye, a divorce therapist: “Many people who want to divorce simply can’t afford to because they can’t sell their properties. I have one client trapped in a £1m house in Chelsea with her husband because they can’t get the right price for it. They’ve even marked which rooms they can use and have specific times for using the communal areas so they don’t have to see each other. It’s terribly tragic.”

Read the full article here.

Meanwhile on the other side of the Atlantic, USA Today reported an increase in people visiting therapists as signs abound that the battered economy in the United States is causing serious damage to the mental health and family lives of a growing number of Americans. They are stressed out, domestic violence has increased, and so has fears of suicide.

The demand for therapists surged 40 percent from June to December — driven largely by money-related fears — at ComPsych, which runs the nation’s largest employee-assistance mental-health programme. Nearly half of Americans said they were more stressed than a year ago, and about one-third rated their stress level as “extreme” in surveys out in September from the American Psychological Association. That was before the stock-market dive.

John Jones, a financial planner at ComPsych, says he’s referring many more workers to counselors. “They start crying. They tell me they’re not eating or sleeping. One even said about his family, ‘They’d be better off without me,’ ” Jones says. Many colleagues around the USA are having the same experience, he adds.

Read the full article here.

• China’s economy slowed sharply in the final quarter of 2008 to 6.8 percent as thousands of factories that sold to overseas markets shut, pulling the full-year growth figure down to 9.0 per cent.
• South Korea’s economy was in the worst shape since the East Asian financial crisis a decade ago, following a 5.6 percent contraction quarter-on-quarter in the final three months of last year.
• Japan announced a 35 percent plunge in exports in December as consumers worldwide tightened their belts even more, driving Asia’s biggest economy further into recession. “Exports tumbled so much that you cannot believe your eyes,” said Naoki Murakami, chief economist at Monex Securities in Japan.

The three nations have the biggest economies in Asia, and the data reflected similar gloom across the rest of the region:

• National Australia Bank group chief economist Alan Oster described Asia’s economic health as “in a word, poor – and decelerating quickly. One of the big problems is when we look at industrial production and GDP across the region, we see quite rapid declines. Many of the region’s national economies were ‘trade-exposed’ and faced growing problems as global fortunes declined. We broadly see the global economy as going into a period where 2009 looks like its going to be the worst year since World War II.”
• Singapore reported on Wednesday it was facing its worst-ever recession after the economy contracted by 16.9 percent in the final quarter, its biggest fall on record.

What’s happening in China: as many as six million people from the countryside have lost their jobs in the cities. Many of these rural migrants worked in factories that sold products overseas and the problem is growing as China’s export markets evaporate. Chinese Premier Wen Jiabao had already warned that 2009 would be ‘the most difficult year for China’s economic development so far this century’. Economists said it would be extremely difficult for China’s economy to grow this year by 8.0 percent.

In South Korea, the government could not hide its shock at how quickly its economy was falling apart. “We have forecast a bleak economic outlook but things are getting worse faster than has been expected,” Vice Finance Minister Hur Kyung-Wook said. Year-on-year, the economy shrank 3.4 percent in the fourth quarter compared with 3.8 percent growth in the third. The annualised figure showed the biggest fall since the fourth quarter of 1998 when it contracted six percent. For 2008, South Korea’s economy grew 2.5 percent, sharply down from a five percent expansion in 2007.

The trade data out of Japan led analysts to predict that the economy there would suffer its worst performance since 1974 in the fourth quarter of 2008. “It’s inevitable that we will see a 10 percent or steeper drop,’ said Hiroshi Watanabe, an economist at Daiwa Institute of Research.

Freight rates for containers shipped from Asia to Europe have fallen to zero for the first time since records began, underscoring the dramatic collapse in trade since the world economy buckled in October.

The cost of shipping goods from Asia to Europe has tumbled

“They have already hit zero,” said Charles de Trenck, a broker at Transport Trackers in Hong Kong. “We have seen trade activity fall off a cliff. Asia-Europe is an unmit­igated disaster.”

Shipping journal Lloyd’s List said brokers in Singapore are now waiving fees for containers travelling from South China, charging only for the minimal “bunker” costs. Container fees from North Asia have dropped $200, taking them below operating cost.

Industry sources said they have never seen rates fall so low. “This is a whole new ball game,” said one trader.

Click here for the full story.