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Hon Hai chairman Terry Gou told corporate employees that Hon Hai plans to increase the number of robotic arms in its manufacturing plants from 10,000 to one million by 2013. He says the move will "improve working conditions and provide a better career path to employees." The improvement of working conditions is a major concern after a number of suicides. The plans to automate dangerous and monotonous tasks is intended to migrate workers to other work. Hon Hai has about 1 million employees in China. It is moving plants to the less costly interor of China where wages are lower- to Chengdu, Wuhan and Zhengzhou from the coastal areas.

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This editorial in the WSJ tells readers not to confuse the spirit of a pro-growth initiative in the CEO statement of Oct. 2012 with a simple tax increase. The CEO's are doing this as a part of a larger effort for a strong recovery in the U.S. economy and not simply to increase taxes. For the first time CEO's are backing tax increases to break the influence of what the Journal calls Republican deadenders who flatly oppose any tax increases period leading to unacceptable deadlock and uncertainty that prevents business from investing and hiring. This is part of a broader set of tax reforms to lower rates overall, reduce tax expenditures and support the Simpson-Bowles commission recommendations framework to reduce the deficit.

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Friedman describes the lack of decisionmaking, initiative and courage in the Eurozone, India and China to tackle difficult problems. During his visit to India he describes the problems India faces. A serious problem with lack of good governance within the democratic framework. India also has a growing population that will soon surpass China's population, which makes the task of development that much harder, with the small steps India is taking to move forward not making a serious impact. Azim Premji, chairman of Wipro, described it this way: "There is a complete lack of decision-making among leaders in the government. If prompt action is not taken, the country will face a setback. You must appreciate how serious it is." Friedman sees a similiar situation in the eurozone countries as new governments are being formed in Greece and Italy by Papademos and Mario Monti, both technocrats from the European Union. This has the added complication because these experts have not been elected. The fact that they have support and goodwill is because of the failure of the political class in Greece and Italy. The failure of the political class in the U.S. is evident from the stymied negotiations over the deficit, and the lack of leadership from President Obama....

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Jackson Diehl, deputy editorial page editor of the Washington Post, says its hard not to conclude that Obama is really not engaged with the struggle for democracy and democratic process in the countries of the Middle East and the Arab World. His voice is only heard sporadically, and is missing altogether at crucial times, as the people of Egypt, Libya, and other countries express their democratic aspirations. This has been the case from the beginning of this struggle and continues today. He cites an Arab opinion poll, from Shibley Telhami of the University of Maryland with Zogby International, which shows a positive view of Obama at 34%, compared with 39% in 2009. When asked which countries have played a positive role, France and Turkey are given first place and the U.S. is close to China. This is because France's Sarkozy and Turkey have been actively engaged, and Obama has been silent for most of the time. Diehl says most Egyptians he talked to in Cairo in a recent visit, think that Obama's focus is on going along with the military and Israel. ...

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The European Commission is making efforts to reduce the influence of the ratings of credit ratings agencies. ECB president Mario Draghi says- "We should'nt make too much of these ratings changes by the ratings agencies." With the poor performance of the ratings agencies in putting warning flags on the credit boom in Greece- leaving it to the IMF's Dutch official Bob Traa to sound the warning in mid-2009- there is considerable concern about the reliability of ratings in correctly evaluating risk.

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In Bagour, Egypt, in the crowded Nile delta, the old order was represented by Kamal-al-Shazli, a member of Parliament from the ruling party for 46 years. This means he entered Parliament in 1964, eight years after the Suez Crisis of 1956, when Egypt under a young military officer Gamal Abdel Nasser confronted the British and the French over the Suez Canal. Everything here in this town was done through Mr Shazli, the ultimate system of paronage was in place, and everything was named after him. Only the slogans of the anti-colonialism days, the days of hope of improving the living conditions of the people, remain. Everything else has stayed much the same for the vast majority of people. Now the task of changing things requires people to think for themselves and learn to work together to guide their own affairs under a democratic system of government and free expression. And this is quite different from the system in place for over 50 years, just as happened in the old Soviet Union. The old system was held together through a patronage system, bribes, enforced by the ruling party and its state security, and one in which individuals had to trust in the state to do their thinking for them about running the country....

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One of the severe problems noted in the recall disaster of 2010 was that practically all important quality and safety decisions are made in Japan. Without key American decisionmakers in the process this leaves Toyota exposed to all sorts of errors like the errors that ocurred in stalling the National Highway and Traffic Safety investigations into acceleration and braking accidents in Toyota vehicles. To compound theses errors managment at Toyota focussed on the $100 million in savings that avoiding or minimizing the recalls would generate, as revealed in internal documents. Early warning signs of similiar problems in Europe were not linked to problems in the U.S.. All this was ocurring against the backdrop of a change in management at Toyota- with the Toyota family once again regaining control of the company- and the failure of the management under Watanabe and previous CEO's to put quality before rapid expansion. The new changes are to have 2 new senior executive positions in the U.S. to focus on quality and safety. A chief safety executive will focus on safety and recalls, and a chief quality officer coming from the top ranks of the American operation will now sit on a special committee for Global Quality led by CEO Akio Toyoda. The commitee for Global Quality will address the global quality issues around one table with the highest ranking executives at Toyota right at the table to talk things out. ...

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The yuan has risen 14.5% against the yuan in the last 4 months, according to the Chinese Commerce ministry. Loosening the Chinese currency's peg to the dollar will increase the value of the renminbi even further. And with further declines in the euro expected this would seriously affect Chinese exporters to Europe. This also makes European goods more competitive than American goods in the Chinese market putting the Obama's administration's goal of doubling exports further at risk. The Shanghai stock index declined by 5.1% on Monday May 17, 2010, reflecting these concerns. The Chinese government continues to intervene in currency markets and the renminbi is now at 6.827 renminbi to the dollar.

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China's exports were able to show year over year growth of 7.6% in the first quarter of 2012, a sharp decline from 20.3% in 2011. As a result IMF estimates of China's long term current account surplus which were about 7% of GDP in the World Economic Outlook in Sept. 2011 may now be lowered to about 5%. This would reduce the strength of arguments that the yen is undervalued. The IMF is now engaged in making estimates for current account balances till 2017. China's current account surplus peaked at 10.1% of GDP in 2007 and the IMF forecasts in 2008 were for this to remain at 10% for the long term. The situation is rapidly changing because the most recent estimates from China's State Administration for Foreign Exchange show the actual current account surplus for 2011 at 2.8% of GDP. Since the 2010 Group of 20 nations summit meeting when China was pressured to reduce its trade surplus and let the yuan appreciate, the yuan has appreciated by 8.3%.

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The FDIC chairman, Mr. Gruenberg has defined the agency's strategy under the "orderly liquidation authority" given by the Dodd-Frank legislation to deal with financial firm failures. The Lehman Brothers collapse ruffled fianncial markets worldwide because of the lack of such authority and a organzed well defined plan to deal with bank failures. Gruenberg described the plans to the WSJ. Once the Treasury Department and federal agencies agree that a financial institution has to be taken over, the FDIC would first unwind the parent holding compay of the firm by putting it in receivership and revoking its charter. Unlike the situation for Lehman, the firm's subsidiaries can continue to operate, with financial support from the FDIC held parent company provided by the U.S. government under Dodd-Frank legislation. The next step would be for FDIC to create a "bridge company," with most of the firm's assets going into it. At that point equity holders would be wiped out and a debt for equity swap would be made with creditors. The firm would come out of this process as with a Chapter 11 bankrupcy, as a new recapitalized private firm. The FDIC is trying to build credibility in the markets that it has the ability to do this smoothly, and Gruenberg admits that till it happens its hard to convince markets in a decisive way. Another problem is that 85% of the international assets and derivatives of top U.S. banks are in the UK. Former Fed chairman Volcker is guiding the FDIC, and he sees the FDIC's efforts to work closely with the UK very favorably. These efforts are significant and vital to avoid the worldwide disruption in financial markets that ocurred after the Lehman collapse, and provide a well planned action plan in place of an ad hoc day by day response....

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Nikos Voutsis, Greece's interior minister, says Greece lacks the money to make debt repayments of 1.6 billion euros to the IMF in June 2015. A proposal by the Left Platform, a faction within Syriza party led by energy minister Lafazanis, which has support of 30 of the 149 Syriza representatives in the Greek parliament, calls for not making debt repayments and looking for an alternate plan. It was defeated by the central committee of the Syriza party on May 24, 2015, with the vote 95 to 75 showing intense opposition within Syriza. Instead Syriza voted for a proposal to call for mutually beneficial negotiations and a deal that would preserve its core goals- a low target for the primary budget surplus, avoid more cuts to pensions, and restructuring Greece's debt to include an investment plan for economic recovery. Both sides in the negotiations, the EU/IMF and Syriza government in Greece, reached an impasse as the negotiating tactics of finance minister Varoufakis led to German finance minister Schauble also taking a tougher stance, saying he could not rule out Greece defaulting on its debt. ...

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Hauslohner describes the situation in Egypt after the ouster of president Morsi by the military in July 2013- the old order from the Mubarak regime is back. Gen. Sissi is deputy prime minister and controls the government and the military plays a critical role as before the elections.

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The SEC requirement that companies disclose the ratio between median worker pay and the pay of senior executives. The SEC says it is putting out the rule as part of implementing Dodd-Frank legislation to control excessive executive pay. Companies will be allowed to survey a fraction of their workforce as appropriate for companies with global operations. Executive pay will include pension benefits and stock options under the new rule. A WSJ chart using information from the University of Southern California and the Bureau of Labor Statistics, shows the ratio between what CEO's on average make and rank and file workers make remained at about 30 times in the post war period till about 1970, a period of rapid growth in the U.S. economy. By 1980 this climbed to about 60 times and exceeded 100 times by 1990. The period of stratospheric growth for CEO pay and extreme widening of the gap then occurs between 1990 and 2000. By 2000 the dot com boom- telecom boom and the internet- creates a surge in executive pay reaching over 500 times. This drops to about 280 times in 2008 and picks up again to reach about 320 times in 2011. Many of the poor business practices, the excessive leveraging and risktaking in the financial industry, take place against this background of excessive pay for senior executives. Some of that risk was passed on to others through such methods as securitization in the period leading to the 2008 financial crisis, so that executives were compensated with higher pay for taking excessive risk that they personally or their companies did not assume. Dodd-Frank legislation following the 2008 financial crisis sought to correct this imbalance by having pay information disclosed. The excessive pay has also coincided with an increase in the frequency of boom-bust cycles in the economy. The busts prompted the needs for intervention by the U.S. central bank, the Federal Reserve, to drop interest rates more than would otherwise have happened during this decade, culminating in the huge bond purchases and monetary easing by the Bernanke Fed. The SEC under Mary Jo White is mindful of these distortions in the economy as a result of misallocation of resources based on excessive executive pay, and the need to take action before the next crisis. ...

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A Peking University economics professor who believes that China should take the best of western institutions not just its technologies and management makes his views public on the internet. He will be removed form his teaching position at Peking University by the end of this year. He is offered a teaching position at Wellesley College in Massachusetts in the U.S. Other Amercan Universities with ties to Chinese Universities have remained silent on his situation, says Xia Yeliang. His wife continues to work in accounting at the University. China's leaders see it as acceptable to work within the system to make improvements but not make the views public in the western media because this creates a bad impression of the party and the country, as Xia Yeliang is told by the party chief at Peking University.

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This WSJ editorial says opposition to the military rule and suppression of liberties in Egypt will only grow as the Egyptian military government of Gen. Sissi cracks down on the secular liberal opposition. Meanwhile all sorts of xenophobic theories about the western influences are growing in Egypt similiar to the period under Mubarak. The editorial points out that the Muslim Brotherhood should have been voted out of office not pushed out by the military taking over in a repeat of previous decades of military rule.

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Richard Fisher, president of the Dallas Federal Reserve Bank, has a three part proposal for tackling the "too big to fail" problem and concentration of 70% of the U.S. banking assets in a few banks. It calls for Market Discipline to be exercized in a way that the Dodd-Frank legislation fails to do. This is to be accomplished by having deposit insurance and the Fed's discount window apply only to traditional commercial banks, not the nonbank affiliates and parent holding companies. Customers, creditors and counterparties of all nonbank affiliates and the parent holding companies would be asked to sign a disclosure accepting that there is no government guarantee. In addition the largest financial holding companies would be restructured so that all their corporate entities would fall under a speedy bankruptcy process. Fisher does not clarify how he would do this restructuring. The Fisher idea come after changes in the banking industry through internal management restructuring following trading losses, legal settlements and the passage of a Swiss referendum called the Minder Initiative on compensation. Fisher suggests the U.S. Fed and regulatory authorites in other countries should push for further restructuring and calls for action beyond the limited results from 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. He is critical of Dodd-Frank's often ambiguous and lengthy worded legislation- 849 pages for the law and 9000 pages for the regulations written to implement the law. Fisher emphasizes the point that its hard to implement a law and enforce rules when its not clear and is difficult to understand....

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Brinksmanship on both sides as Greece's Syriza government continues negotiations with the EU in June 2015. Syriza's Tsipras attends the St. Petersburg Economic Forum as the IMF's Lagarde calls for restoring dialogue "with some adults in the room." The German media describes Greece's finance minister Yannis Varoufakis as "amateurish." Germany says a Greek exit from the eurozone is an option. Creditors are pushing for changes to the pension system before releasing $7 billion, including $1.6 billion owed to the IMF on June 30, 2015.