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The Economist points out that a third of the output of Japanese companies is made overseas. Japanese firms are increasing profits with the weaker yen but not sharply reducing prices. South Korean companies have also moved production overseas. As a result the Economist says concerns about the weaker yen leading to depreciation by other countries are not realistic.

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The lessons from the British auto industry which ran through $16.5 billion in rescue money in the 70's and 80's before collapsing as German and Japanese automakers took over its markets. One of the problems was the failure of labor relations, the other was shoddy quality just when the Germans and Japanese were improving theirs aggressively. The labor relations are a problem at the Detroit automakers and quality has also been an issue with Detroit playing catchup again and again for three decades. Management's lack of vision and leadership in fuel efficiency may have struck a fatal blow, and the concentration on overseas markets at GM without foresight and vision for the American market may now be called a failed strategy. British auto experts say that Leyland controlled 36% of the British market even in the 70's before gradually going out of business and its start was even before General Motors.

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This NYT piece suggests that 9 new members for the 30 member board have already been named and none of them are non Japanese. So the similiar WSJ piece stands corrected as these new members have already been named. With 2.54 million cars sold in the US and about half imported from Japan this does not reflect internationalization by any stretch of the imagination, as the NYT puts it the rest are all "graying salarymen". Toyota still reflects its narrow parochial centre in Aichi prefecture around Nagoya and growth has not changed the outlook. Compare this with Sony. There are advantages for Toyota in its hometown centred way of doing things so as not to be distracted by the latest management fad, and maintain focus on quality and efficiency but considering the expansion in overseas markets its amazing that the Board should be so underrepresented with other nationalities.

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Only 13% of mothers in the workforce have access to paid leave in the U.S., according to the Bureau of Labor Statistics. 25% of working mothers in the U.S. return to work in 2 weeks.

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The huge risks the misallocated stimulus capital from real estate speculation poses for the Chinese economy. China's government rapidly expanded lending after the 2008 global financial crisis. One estimate is that about 10 trillion yuan in new loans were made in 2009, over twice the amount of 2008, expanding the loan portfolio and money supply by one third. A major problem is vacant homes as Chinese put their money in second homes as an investment. Chinese are not investing in the stock market because of the volatility, and with the low yields in bonds and banks money is going into real estate. According to a Morgan Stanley economist, about 25-30% of private commercial and housing space is vacant. This happens just as middle class Chinese are being priced out of the housing market. Prices went up by 12% in the housing market this year according to the China National Bureau of Statistics. Couples wanting to leave their parent's homes find it difficult to do so. It was the topic for a Chinese TV series "Dwelling Narrowness." ...

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EIA figures show U.S. stockpiles of crude oil, refined fuels and other petroleum products increasing to 1.149 billion barrels in the week ending Jan 2, 2015, excluding the strategic petroleum reserve. This is the highest ever since 1990, except for June 2013. Brent crude drops below $50 a barrel.

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With the strong positions taken by Clinton and Trump on China in the 2016 election campaign, U.S. relations with China enter a new phase. The strident tone in the campaign on China on trade deficit, women's issues, human rights, comes with the issues relating to China's role in the South China Sea and cyber espionage already in the background.

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Bernanke's defense of the action of the Fed's monetary policy making committee, on November 3, 2010, (with a vote of 10-1) to buy an additional $600 billion of Treasury securities over the next 8 months. His defense focusses on the prospects of deflation- how low inflation can morph into deflation (falling prices and wages), that can create a long period of economic stagnation. In addition, with low and falling inflation, Bernanke sees spare capacity in the US that can be utilized to reduce the number of jobless people. He points to the rise in stock prices and fall in long term interest rates in anticipation of the Fed's action, as evidence that this Fed move would improve financial conditions. Lower mortgage rates would make housing more affordable, higher stock prices would increase consumer wealth, confidence and spending. Spending would lead to higher incomes and profits for economic expansion, from this viewpoint. The situation in November 2010, was a deepening housing slump anticipated for 2011, gridlock after the 2010 midterm elections and no agreement on additional stimulus for 2011, the need to rebalance the global economy lacking cooperation from China (with China increasing imports and reducing exports and the US increasing exports and reducing imports). Fed's Bernanke does not mention these factors, and only hints at the gridlock towards the end of the statement. This Fed action will push the dollar lower, just as efforts to improve exports and the trade balance are underway. The Fed's committee sees the risks of commodities inflation as an acceptable risk in the current situation, and the use of a cautious approach assessing the purchase program regularly as sufficient measure of safety. As to difficulties of the unwinding of these policies, the Fed sees present danger outweighing the risks of no action. For emerging markets such as Turkey, India, Australia and other countries seeing even more inflows of capital, the risks are left to these countries to manage. The central banks of India and Australia moved to increase interest rates at the same time that the Fed made its move....

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Federal Reserve chairman Bernanke's move in January 2012 to announce detailed projections for interest rates for each of the 17 Fed Governors participating in policy meetings, is an effort to show that he operates by consensus. Names of the Fed Governors are not stated.This is a change from the Greenspan years at the Fed. Hilsenrath points to the research done by Alan Blinder of Princeton University, former Fed vice chairman, which shows group consensus based action works bettter. Another reason for this is the Fed's damaged credibility after the Greenspan years and the financial crisis of 2008, when the Fed operated under one dominant figure. An additional step taken by Bernanke is to move from the ad hoc type of policy decisions of the past decade to a longer term plan for unemployment and inflation goals. The Fed has set a 2% goal for inflation with some flexibility to reduce unemployment if it is too high. This gives businesses more information to plan ahead and improves Fed credibility....

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The situation in nursing homes and eldercare is a huge black eye says this report from Canada. The situation is poor also in the U.S. and Britain. All the Anglo-Saxon countries appear to have the same problem of neglect of eldercare and homes for older citizens compared to say Japan, Germany or France with different healthcare systems and more invested in these areas of health and older citizens.Look at the numbers- in Canada 80% of deaths from coronavirus among older people in nursing homes. Next Ireland at 62%, and the U.S. at 40%. This report says these elder care facilities in Canada are run down, poorly equipped and understaffed. Canada's armed forces sent medics to the nursing homes in Quebec and Ontario and their reports are described as distruging and worrisome by prime minister Trudeau. In these countries lawmakers and policymakers have failed, and the culture of investing in areas other than health and public services and infrastructure, has failed the people. A poor scorecard for this generation of politicians, lawmakers, and leaders both in business and the government. ...

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U.S. president Trump meets with president Moon of South Korea in June 2017 at the White House. South Korea's new leader president Moon tells congressional leaders that he will not reverse the deployment of the THADD missile defense system aimed at blocking a threat from North Korean missiles. President Trump says the renegotiation of the trade treaty with South Korea is taking place, with discussions on South Korean steel exports "dumped" in the U.S. and barriers in the auto exports from the U.S. The U.S. trade deficit with South Korea jumped from $13 billion in 2011 to $27 billion in 2016, leading to charges of unfair trade. 

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Feldstein wants to see a stronger dollar, that is less inflation eroding the value or purchasing power of the dollar at home. Abroad he wants to see a weaker dollar in relation to Europe, Japan and Canada where about half of US imports originate. And a weaker dollar in relation to lower wage Asian countries to improve America's trade balance. Better to do this now than to wait a few years when the adjustments needed would be greater. America needs to export more and import less to improve the trade balance. A competitive dollar in relation to trading partners in Europe and Asia would provide the improvement in the trade balance that the U.S. needs for keeping economic growth. With the risks to the economy from declining housing prices improving the trade balance becomes important. During the 1985-1988 period the dollar declined in value significantly, falling 37%, but the inflation rate averaged 3.1%,says Feldstein. This is what he means by having astrong dollar at home, which is to say not eroding its purchasing value, while at the same time increasing exports and reducing imports. During this period merchandise exports increased by 40% while imports increased at half that pace. A repeat of that experience is possible and necessary to maintain growth, according to Feldstein. See the link to McKinnon, at Stanford, The Yuan and the Greenback, WSJ, August 29, 2006, which cautions against anything but a very gradual and carefully managed appreciation of the yuan, giving importance to inflation and interest rate differentials between the US and China. One point to note narrowing of interest rate differentials between the US and China is seen as backdrop for dollar weakening on exchange rate basis. McKinnon appears to consider a smaller interest rate differential as a cue for an even lower appreciation of the yuan, see his example of 2% inflation in the US and 3% interest rates. Interestingly the two approaches may complement each other. Offering a perspective of China maintaining its growth and not risking deflation or slowdown, and of the US maintaining its growth and not risking a slowdown from the housing market collapse, by strong domestic investment and exports. How to keep both economies going may be the policymakers challenge for strong global economic growth....

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Samuelson points to the risks to the American economic growth from excessive health care costs. This is hurting take home pay and shows up in consumer spending. It is hurting government spending in other areas such as needed infrastructure spending and efforts to reduce the deficit. This hurts private capital investment to create jobs because of lower demand from constricted consumer spending. The U.S. budget has as its largest single expense 27% on health care compared to 20% on defense the next largest expense, with growth in health care spending taking this to one third of the budget in coming years. Without addressing health care, says Samuelson, the Supercommitte in Congress even if successful at deficit reduction will basically have failed to do its job, and it did not have the time, resources or conviction to do this. According to a new study from the Organization for Economic Cooperation and Development (OECD), U.S. healthcare spending per person is $7,960 per person in 2009. This compares with Norway $5,352, Britain $3,487, France $3, 978, an OECD average of $3,233. Life expectancy in the U.S. is 78.2 years, compared to Japan 83 years, OECD average of 79.5 years. Chile and the Czech Republic have life expectancy equal to the U.S. Except for cancer care where the five year survival rate is 89.3% in the U.S. and the OECD average is 83.5%, the U.S. lags far behind in much needed critical areas such as diabetes and asthma. Rates of emergency hospitalization for asthma are 3 times that in France and 6 times that in Germany and Italy. The U.S. has fewer doctors per thousand population and higher cost per medical procedure- with more frequent use of the costliest procedures- creating a supply shortage that induces higher prices, and less preventive and early action care through physician visits. The number of practicing U.S. doctors is 2.4 per thousand population in the U.S. compared to 3.1 per thousand for the OECD average; and number of annual doctor consultations 3.9 per capita in the U.S. versus 6.5 for the OECD average. Appendectomy cost $7,962 in the U.S., $5,004 in Canada and $2,943 in Germany. Coronary angioplasty cost $14,378 in the U.S., compared to $9,296 in Sweden, and $7,027 in France. Knee replacement cost $14,946 in the U.S., $12,424 in France, and $9,910 in Canada. Knee replacements, angioplasties and MRI exams are twice as common in the U.S. compared to the OECD countries. ...

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T.S.R.Subramanium, India's most senior civil servant and his thoughts about Indian development, the civil service politicians and the judiciary, expressed in abook titled GovernMint in India. He was Cabinet Secretary under three prime ministers. He is interviewed here by the WSJ New Delhi Bureau chief, Paul Beckett. He talks about the timidity of the civil service in the face of political ineptitude and the political class using government to benefit themselves without the checks on them. He says the politicians have come to dominate the civil service , have no checks on what theydo, and are twisting the civil service for their own gain. He knows of three cabinet level ministers in the last government that made money from their positions, with nothing done about them. Proble here could be that the framers of the constitution had some tough problems to deal with. If they made the civil service all powerful, could it turn out that the civil service like in Japan would not bend to the wishes of the people? And if they made the civil service subject to the wishes of the people the politicians could use it for their own narrow purposes and affect the task of delivering essential services and progress to the people. They chose the latter. Its true that the British civil service was disciplined and honest but they did not have to respond to the wishes of the people. The only safety valve left by the framers was in the electoral process and the wisdom of the people in throwing out politicians who did not deliver. The problem of dignity and national purpose in politics had to be left to the people themselves, their leaders and the thinking public in the society. He sees the judiciary as having failed too, in controlling the politicians. And he sees part of the problem in that the judiciary stems from the same English educated class as the bureaucrats. Says T.S. R. Subramanium, the political class is the only one that is not constrained by checks and balances, follws no effective code of conduct, and considers itself king. Subramanium's solution of a messiah type figure, is quickly disapproved of by all his colleagues, and he takes pains to clarify that what he means is someone who can get the public backing to cleanse it. ...

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The dollars situation may not be as bad as it looks. There are signs that the dollar is strengthening against the British pound and the Australian dollar and other important currencies. And the weaker dollar is already working to reduce imbalances in America's trade deficit. There are two aspects of the dollar's role, one is as a means of international exchange and the other as a store of value. For the first reserves of any country need to be highly convertible and America offers highly liquid markets and this has not changed. As a store of value the dollar has lost some of it value especially against the euro. But the reason that the dollar should not see a sudden drop in value is because the largest holders of dollar reserves China with $1.4 trillion and Japan with $1 trillion would stand to lose by shifting out of dollars significantly at atime when the dollar was so undervalued besides hurting their export markets if it affected the US economy. And though the euro looks good in the short term, over the longer term Europe's aging societies may see lower growth and the future may look different once the USA has corrected some of it imbalances which is precisely what the weaker dollar accomplishes as the US exports start humming. Seen against the historical background the USA has periodically gone through this situation with dollar weakness in 1977-79, 1985-88, 1993-95. In 1985 the dollar went to 81 Japanese yen and there was concern about its reserve currency status at the time. However the dollar has weathered these storms. And there is always the option for a country to peg its currency not to one currency alone but to a combination of the dollar and the euro. This was the case before 1914 when 3 currencies the British Pound, the French Franc and the German Mark were used. In the post 1918 environment the dollar replaced the German mark alongside the Pound and the Franc. The Persian Gulf countries have this option so they can use their own monetary policy to control inflation by pegging not just to the dollar but to a basket of currencies as Kuwait has done. See the link to the Persian Gulf countries handling of this currency issue in WSJ, November 20th and Nov 1, 2007....