US headed for recession: Morgan Stanley

Stephen Roach, chairman of Morgan Stanley’s Asian arm says the US economy is headed towards recession – and Asia should be concerned.

“What is interesting, and potentially disturbing, is that the rest of the world doesn’t seem to think this is a big deal any more. There is a view that that the world is somehow decoupled from the American growth engine. I think that view will turn out to be dead wrong, and this is a global event with consequences for Asia and Australia,” he said.

Roach said the US was the world’s biggest consumer economy at US$9.5 trillion, compared to China at US$1 trillion and India at US$650 billion.

He said the key issue for economies outside the US was to determine how much internal demand of their own did they have to offset any shortfall from US consumers.

“My conclusion is: not nearly as much as you would like.” He said growth in Asia was vigorous but was export-led, and the end game of the Asian growth machine was directed at US consumers.

The new consumers in China and India would not be able to offset falls in US consumption.

The Federal Reserve is widely expected to cut interest rates again this week.


Three multimedia stories well told

[via Bloggers]

Three treatments via audio slideshow (Free and Uneasy), video+photos+great text (The boy in the moon), and a great story accompanied by some video (Pearls before breakfast).

Free and Uneasy by the New York Times describes the uneasy year in the life of Jeffrey Deskovic after he was exonerated for a crime that put him behind bars for 16 years.

The Globe and Mail’s Ian Brown shares the pain and joy of bringing up a severely handicapped child:

“I hurry after him. For all this nightly nightmare — eight years of desperate worry and illness and chronic sleep deprivation, the havoc he has caused in our lives, threatening our marriage and our finances and our sanity — I long for the moment when he lets his crazy formless body fall asleep against me. For a short while, I feel like a regular little boy’s father. Sometimes I think this is his gift to me — but parcelled out, to show me how rare and valuable the gift is. Walker, my teacher, my sweet, sweet, lost and broken boy.”

In the Washington Post Magazine’s Pearls before breakfast, a world-renowned violinist busks as a social experiment playing complex classical pieces on his Stradivarius. Will anyone notice?

Online ad revs 2008: US vs China

The predictions for 2008 are starting to come in.

China’s online advertising market is projected to exceed 10 billion yuan (US$1.3 billion) in 2007, a 114.6 per cent rise over last year, according to Nielsen.

Online advertising revenues touched 870 million yuan, expanding the market size to 7.5 billion yuan in the first 10 months and is expected to accelerate in the coming months as the 2008 Beijing Olympics nears.

China’s online advertising is said to have grown “higher than that of broadcasting advertising and magazine advertising.”


– Sina, Netease, QQ, and Sohu, China’s four largest Internet portals, were big gainers with their total advertising incomes exceeding US$100 million for the first time in the third quarter of the year.

– Entertainment and fast consumable products makers overtook financial and property firms as the largest spenders on web advertising.

– Apart from brand logo advertising and pay-per-click search engine, new ways being explored are video ads, game ads and blog ads, among others.

– US online ad spend in 2007 is expected to reach US$20 billion, up 26 per cent in the first three quarters, according to an Interactive Advertising Bureau (IAB) report.

In an earlier prediction (Aug, 2005), WPP’s Martin Sorrell told the Times, that China China will overtake all advertising markets save the US within three years.

He said the rise of the Chinese market reflects the “two-paced”nature of the advertising industry, with slower growth in mature markets and rapid expansion in the Far East, Central Europe and Latin America. At the time, China was ranked the sixth, after the US, Japan, Britain, Germany and France.

On the news front,’s Philip Stone sums it up:

“The basic view for the newspaper industry in 2008 (as given at UBS Media week presentations Tuesday) is that newspaper print advertising revenue will continue to fall, that newspaper internet revenue will continue to climb, that combined the total revenue will still continue to decrease, and the only real question is by how much?

“Even the Newspaper Association of America (NAA), the trade group for US newspapers, admitted in its presentation that 2008 will continue to be a down print year. It conservatively forecasted that total US newspaper revenues would drop 1.2% next year, but it got to that figure by estimating that print revenues would fall by 2.9% while digital revenues would increase by 22% giving the net effect of down 1.2%.

“Trouble with that, of course, is that based on what has happened so far this year, and the NAA’s own outlook for the economy for next year, that print down of just 2.9% does not really seem to be in the ball park, let alone off a bit.”

Stone cited Belo’s chairman Robert W. Deckherd who stated that although TV revs were up (2.2%) for the first nine months of 2007, news revs were down 9%. But the two divisions did have one thing in common – very strong and increasing digital revenues.

“At television the Internet revenues were up 40% over a year before and now represent 3.5% of television’s total revenue compared to the 2.6% a year before. And at the newspaper division, Internet revenue was up 21% over the year before and made up 8.9% of total newspaper revenue through the nine months compared to 6.6% for last year. And digital seems to be on a roll making up 9.4% of Q3 revenue.”

“And what’s driving digital? Deckherd said that in the first nine months of 2006, there were 145,000 video streaming requests versus 2.2 million video requests for the same period this year.”

Other woes for 2008: Even assuming no recession, consumers will continue to be challenged by housing, the credit crunch and energy prices which will translate to poorer ad numbers.

Gannett, McClatchy and Washington Post all reported a poor 2007, with some hope in broadcast revs from the 2008 elections. The Post has gone so far as to re-define itself as an education company first rather than a media company, due to its higher revs from its Kaplan unit.

MORE on UBS Media Week event.

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