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Novartis is taking a new approach to drug research and drug discovery. The old one which was popular in the drug industry was to go directly for blockbuster drugs for large numbers of users, with a long time in the research pipeline because the area of research was largely an unknown. This was costly and becoming less and less productive. Dan Vasella who heads Novartis, is taking a different approach which comes from his understanding of medical science as a physician, in an industry run by accountants, lawyers and business people. This is to go after wellknown molecular pathways identified by Dr Fishman at Harvard in his research, and do this by taking on problems in diseases that afflict small numbers of people. These drugs have some established medical science to work with, and the research work takes a shorter period. Once the drug proves its effectiveness in one illness, it is tested for other illnesses that afflict a large number of people but which shares some of the same underlying phenomena that cause the disease in the two situations. Dr Vasella stumbled on this approach after the development of the drug Gleevec by Novartis. Gleevec was originally approved for a rare blood cancer, but has now shown to be effective against six other dieases. Gleevec brought 3.7 billion in revenues in 2008 for Novartis. In 2002 Vasella made a bold move to discard the old drug development model. The basis of this approach was to go after new drugs that were desperately needed and where the genetics of the illness were well understood. Whereas pursuing rare dieases is considered foolhardy by most drug company leaders, Vasella's idea is to use the common genetic underlying arrangements for that drug to go after other diseases that would be good prospects for the now proven drug. The known genetics makes it possible to complete the research in a shorter time. In 2009 Novartis has 93 drug candidates in the pipeline, 40% more than 3 years ago and 80% of Novartis' drugs last year made it from early testing to late stage development. This was a 60% improvement over 2005. The new approach fits the current regulatory climate, with regulators concerned more about safety, and Medicare and Medicaid and other payor less willing to pay for treatment with modest benefits or with uncertain outcomes. The approach had to be executed in terms of organization and staffing. Vasella moved the R&D global research operation from Basel to Cambridge, Massachusetts, and spent $4 billion on the move. He recruited a renowed researcher and cardiologist at Harvard University, Dr Mark Fishman, who had done research on the genetic mutations in the cardiovascular systems, to run the center and set the new direction for global research. Fishman convinced Vasella that medical research should focus on a small number of molecular pathways- the complex suquences of interactions among chemicals, proteins, and larger cell structures in the body that are behind all illnesses. Says Fishman, there are 24,000 genes in the genome, but only a few dozen pathways conserved through evolution. Fishman's theory is that you find all the links in a pathway and then locate the signals that can turn the genes on or off to develop medicines for illnesses. Bercause disease after disease share a common pathway, the knowledge gathered can then be applied across that region with more accuracy and directly, to address a range of illnesses. Fishman's approach means marketing and sales no longer make the decisions. There is a new method for doing things. Fishman focusses on clinical data and insists that commercial analysis comes after sufficient clinical data. A major restructuring in 2007 led to shedding 1260 sales and marketing jobs, as clinical science now takes precedence and medically trained scientists take senior leadership positions. The new approach is being used for a drug developed for Muckle-Wells syndrome. Computer simulations are shortening the time to late stage trials. The drug has applications for Type 2 diabetes and severe arthritis. The whole process will take many years, as its a sea change for the industry and for Novartis, a fresh approach when the approach used by the pharmaceutical industry for so long is failing. An oral drug treatment for multiple sclerosis is being developed along these lines. Afinitor. approved by the FDA for kidney cancer in March shows potential in six other diseases, including lymphoma where Afintor shrank tumors by 50% in one third of the patients in a trial. ...

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 This message from Pope Francis is especially relevant today during coronavirus. Francis says of the mistaken priorities of today away from healthcare, education, infrastructure and "coherence" in society and the pain and hardship this is causing in society, there is much that can give people thought to reflect on. Francis  new book, "Let us Dream: The Path To a Better Future" will be out December 1. "If we are to come out of this crisis less selfish than when we went in, we have to let ourselves be touched by others’ pain." He cites a line in Friedrich Hölderlin’s “Hyperion” that speaks to him, about how the danger that threatens in a crisis is never total; there’s always a way out, that where the danger is, also God plants the saving power, a way out. And not simply a way out, God also gives human beings a chance to grasp for and hold onto renewal if only one makes the endeavour. As it says in the Bhagavad Gita God gives man a chance to warm himself near the fire, only those who make the effort to go to the fire can feel the warmth, it is a choice man has to make. And again God says in the Bhagavad Gita that he is not partial to any man. Ever since the global financial crisis hurt working families in the middle and lower classes hard in 2009 because of banks misbehaviour and greed, Pope Francis has called for countries in the western world to heed his warnings about the dangers of greed and corruption to us all. Even George Washington warned of this in his inaugural address, so the warnings are not new. Reminding people once again he says "we cannot return to the false securities of the political and economic systems we had before the pandemic. We need economies that give to all access to the fruits of creation, to the basic needs of life: to land, lodging and labor. We need a politics that can integrate and dialogue with the poor, the excluded and the vulnerable, that gives people a say in the decisions that affect their lives. We need to slow down, take stock and design better ways of living together on this earth." The pandemic has exposed the paradox that while we are more connected, we are also more divided. Francis is never tired of warning that the present political and economic structures and people who staff them have not felt others pain, so he reminds us it is hard to build a culture of encounter in which we meet as people with a shared dignity, within a throwaway culture that regards the well-being of the elderly, the unemployed, the disabled and the unborn as peripheral to our own well-being. Where only self preservation counts. Francis reminds us of the Christian concept that no one is saved alone. This is not just an abstract concept. When Francis was only 18 years and a second year student he was admitted to a Buenos Aires hospital for a severe respiratory disease, so severe that he lost a part of his lungs. He remembers the day August 13, 1957. He understands this pandemic from personal experience. He knows what it is like to be on a ventilator. Surgeons removed the upper right lobe of his lung. Francis struggled to breathe. He was  saved Francis says not even by the doctors, but by a Dominican sister, a senior ward matron, who had been a teacher in Athens before being sent to Buenos Aires. She understood that Francis was dying and after the doctors left asked the nurse to double the prescription dose of penicillin and streptomycin. Sister Cornelia Caraglio, knew better than the doctors from her regular contacts with sick people what they needed, and she had the courage to act on that knowledge.      ...

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One of the opportunities of this pandemic is that it offers a chance to think anew and act anew. Where in Lincoln's words "the dogmas of the past are inadequate for the stormy present, as our case is new we must think anew and act anew." Here Vladimir Putin offers his assessment of how the pandemic calls for a fresh approach to reviving De Gaulle and other postwar European leaders vision of Europe that spanned the entire continent culturally including Russia. He accepts mistakes have been made by all sides and the title of the article by Putin is "Be Open, Despite the Past." The Russian Embassy in Germany contacted De Zeit for publication of an article by Putin, and it can be seen as part of the Russian response to president Biden's effort to build a new cooperative relationship with Russia that is in the best interests of the US, Russia, Germany, the European Union and also of India which has a cooperative relationship with Russia. There is the danger that it could be seen as reported in The Times of London and comments posted seeing it against distrust built around Ukraine and Eastern Europe. The 670 Comments in Germany on De Zeit site on the article reflect a more German perspective of being a close neighbor that suffered so much from the war that left millions dead on both sides. One German commenter says his father and grandfather were forcibly recruited to fight in France and Russia and suffered much in wartime. The occasion is the 80th anniversary of the German invasion of Russia in World War II. Some of what Putin has to say- "We hoped that the end of the Cold War would mean victory for all of Europe. It would not be long before Charles De Gaulle's vision of a unified continent would become a reality, more culturally and civilizationally from Lisbon to Vladivostock." Russia has changed, Russians see themselves as European, as part of the larger European Union, culturally and civilizationally. This is not the old Russia of the Cold War or of the Soviet period. "NATO itself a relic of the Cold War, created out of a confrontation from that time." Not objecting to NATO but to the expansion of NATO to Russia's borders. But saying this has not got us anywhere where our heart not our brain says we ought to go. Lets try again to draw different conclusions from what we have seen. Its important to think anew because "we are all confronted with the common challenges of the pandemic and its extremely serious social and economic consequences." "The entire prosperity and security of our common continent are only possible through the combined efforts of all our countries, including Russia because Russia is one of the largest European states. Wed feel our inseparable cultural and economic ties to Europe." "We simply cannot afford to carry around the burden of previous misunderstandings, hurts, conflicts and mistakes. A burden that prevents us from solving current problems. We are convinced that we all have to admit and correct these mistakes. Our common and undisputed goal is to ensure the security of the continent without dividing lines. And to create a unified space for equal cooperation and collective development in the interests of the prosperity of Europe and of the whole world." President Biden was right to think anew and act anew in Geneva, and to "disenthrall ourselves" from old ways of thinking, and for rising to the occasion. Jill Biden said of president Biden's preparation for the meeting in Geneva- "Hell, he was overprepared," and it showed Biden's genuine feeling and effort that he owed it "in the interests of Europe and the world."       ...

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This report in the WSJ makes the America centric thinking mistake of forgetting where China started from in assessing progress and China's new priorities. In 1960 the World Bank shows China per capita at $90 which does not change much till 1990 when it was $300, the Deng opening to western technology and capital pushed it up to $3000 the year 2000 (US $36,000) and $4500 in 2010 (US $50,000) when the global financial crisis hit. Since 2010 the Chinese economy was burdened by high local government debt and struggled to get to $10,000 in 2020 under Xi Jinping's first two terms as president. Yet it paid a huge price for this -the chance of Bo Xilai (2014) upsetting the twin banners of Science and Modernization of the May 4th 1919 movement that set the course of China for 100 years uninterrupted through the Nationalists, the Japanese occupation, the Maoist CCP, the Deng CCP opening and Jinping CCP pullback. The huge inequality was seen as an opportunity for Bo Xi Lai or some other leader to capitalize on moving China in an unknown direction that posed risks for the future of China. Even then the first preference of Xi would be to carry on with what had worked after Deng. Yet it was clear that working class votes were shifting the dynamics of elections after the Trump election and closing the doors to open access to western capital, technology, and investment. With Trump in erratic and uncertain ways, with Biden after the elections of 2020 consistent and with single minded determination to limit flows. Not just Xi, any other Chinese leader would have had to have the internal discussions about the need to shift back to a model China was familiar with and one that worked before- that of state intervention in the economy, that of reducing the inequalities that posed risks for the CCP's survival as forging a path for stability to carry out the twin banners of the May 4, 1919 Movement - Science and Modernization as China's salvation. Unlike the hysteria about China posing a challenge to the US these internal debates of Xi and the party may have concluded that the US with about half the population of China's as it grows with immigration in the future and multiple times the per capita GDP was a country that no other country was going to come close to. In this sense the supply chains are deceptive as these are likely to be completely redone under the Biden administration to bring most important manufacturing back to China. It is in this context that Xi had limited room to manoeuvre and decided to focus on stability for the long term to fulfill China's dream of the May 4, 1919 Movement of the last 100 years for Science and Modernization casting aside the risks associated for instability of the inequality that comes with more of the western type of growth, and with the climate change risks also associated with it. Lower growth gives China a chance to correct some of the flaws of the hyper growth that was partly of its own making and partly thrust upon it by investors from the outside, so that the new climate would best serve the goals of the May 4, 1919 Movement of keeping high the banners of Science and Modernization. This kind of rethinking is also going on in the US in the same manner about inequalities and hardships for workers and families, with some of the anger directed at China as internal political sentiment- hence the trillions of dollars moved by the Biden administration to address the flaws of growth under free markets and intervene in the economy where needed as in climate change to give firm sense of direction. In a sense the direction taken in different contexts the American and the Chinese are the same - address the problems of workers and families, of the people, as Lincoln had pointed out and striven so hard for, so that Labor is the more important than Capital, and workers and families vital to the nation.   ...

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900 million eligible voters in India means this is the largest election ever. The election will take place in 7 phases in April and May from April 11 to May 19. Votes will be counted on May 23. The election is for 543 seats in parliament, the Lok Sabha. Turnouts are high with 66% turning out in the last election that brought Mr. Modi and the BJP to power.  Unlike elections in Britain a lot is spent in each election, about $5 billion in the last election and double that this time. The U.S. elections in 2016 had spending of $6.5 billion as a comparison. Women vote at about the same rate as men and more women than men are expected to vote this time. Prime minister Modi won the last election with promises of development and infrastructure. He is delivering on infrastructure but building manufacturing and generating jobs in the formal sector remains a tougher task for any administration in 4 years. During the first term Mr. Modi made needed changes including introducing the GST tax to integrate India's fragmented market and get rid of a patchwork of regional state taxes. He introduced a whole range of projects and yojanas which are setting the stage for widening the middle class, and improving living conditions. Some of the problems such as the bad loans in the banking system date back to previous administrations and the government has taken steps to clean up this problem by refinancing banks and introducing a bankruptcy law. This has slowed GDP growth to about 7%. However this would have happened under any administration.  The brief war with Pakistan in February 2019 has added another dimension to this election with questions about whether this may help Mr. Modi because of his strong stand against terrorism camps in Pakistan.  In the end it all comes down to whether the public still believes the BJP party under Modi is best qualified to develop the infrastructure to modernize the country and improve services, and whether it can create enough of the manufacturing capabilities to generate jobs needed. It may not be that the BJP under Modi has  not made mistakes in the process of learning how best to tackle development, but whether a patchwork of regional parties led by the opposition Congress party is in a position to provide the strong decisive direction to make quick decisions on development. Getting the agreement of a number of regional parties such as the party in West Bengal state or the Uttar Pradesh state when it was under a previous administration of Mrs Mayawati means an even slower rate of decision making as it leads to lack of speedy decision making. Whether voters have short memories and forget the slow rate of infrastructure development under previous administrations or have a willingness to give the BJP a chance to show what it can do under Modi for development can eventually decide this election. An example of what this means is in how the Mumbai Metro is being pushed through to timely delivery- Metro Rail's head Mrs. Ashwini Bhide simply says she feels for the people of Mumbai who have suffered from delays in development of needed infrastructure for so long, with millions doing appalling rides in a creaky old rail system. In her view it should have been done yesterday. It is this attitude that can make or break the current administration, and whether it can get this message through to voters one more time. Most who have this attitude are aware that China is now laying enough concrete every two years than America did in the whole 20th century, as reported in the Guardian newspaper, and are equally passionate about delivery of services and rapid development of badly needed infrastructure.         ...

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The Guardian provides this first account of what happened in the Galwan Valley border between India and China at the Line of Actual Control. It is described as the worst fighting in 60 years. On the high steep ridge lines above the rapidly moving Galwan River a patrol of Indian soldiers encountered Chinese troops in a steep section of a high mountainous region. They believed the PLA Chinese Army had withdrawn from the ridge in line with a June 6 disengagement agreement. The Indian government says that what happened afterwards was pre-meditated ambush by the PLA forces. In the fighting that ensued the Indian commanding officer was pushed from the narrow ridge falling to the gorge below. Reinforcements from the Indian side were called from a post 2 miles away and about 600 men were fighting in near total darkness in high mountain ridge with stones iron rods for upto 6 hours. Following a decades long tradition to avoid escalation of hostilities because of nuclear weapons of both countries the two sides have not used other weapons. Most deaths on both sides were from soldiers falling or being knocked from mountain ridges. The main problem in the conflict is the Line of Actual Control exists but since China's takeover of Tibet in 1950 there is no agreement that has set the official border. The British Simla agreement in 1912 set the border with Tibet in an agreement between Tibet and the British Empire in India, when Tibet was an independent country. China claims that historically going back to Ming and Qing dynasty Tibet was part of its region. For most of its history Tibet was an autonomous region with closer contacts with India because it is close to Nepal and Nepal is very near the Indian Bihar state border.  A new rail link from Raxaul, Bihar in India to Kathmandu is only 137 kilometres, and from Kathmandu to the Tibet border is only 205 kilometres. Fast rail or road links would put Tibet within a few hours by rail or road to Tibet from India. For the entire period the US exists as a nation about 250 years and from the first landing of the colonists on American shores about 1607 Tibet was a mountainous region that was so remote that few people even knew about the country's existence. Beijing and Shanghai are four thousand kilometres away, India much closer to Tibet through Kathmandu, Nepal and India sharing a common culture, and no one thought much about the mountainous borders at 15000- 20,000 feet in the western Himalayas, till China's takeover of Tibet in 1950. India had no clear idea what this meant in 1950- no clear border except for what was agreed between the Tibetan independent government  and the British in 1912 which was set under the British Empire- resulting in a fluid border. And China had no clear idea that this would put in a place it would not want to be thousands of miles from the Yangtse valley region home to most of China's population, in a remote mountain region at heights of 15,000 -20,000 feet, with little to gain. Throughout history since 1000 and earlier Tibet remained a region that acted as a buffer between China's western provinces and India, the high mountains at 15,000- 20,000 feet making it inaccessible. Which is why the Ganges plains and the Yangtse river valley plains contact was made more through the oceans than by land, and the areas developing distinctly different language and cultures. All this changed after 1954 when the Qinghai Tibet highway was built, the closest city on the Chinese side is Xining. Xining to Tibet is a distance of about 2000 kilometres at an average height of 4500 metres or about 14,000 feet.  ...

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The government of Theresa May and the EU appear to be on a collision course with the release of the EU draft legal agreement that says Northern Ireland must remain in the customs union and future arbitration or appeal would be under the European Court of Justice.

Ireland favors the EU draft and sees it as a default solution to avoiding a hard border with Northern Ireland if it becomes necessary. Theresa May and the DUP party of Ireland on whom the prime minister depends for her coalition government's thin majority support in parliament, both reject the EU solution. 

The Labor Party says it would solve the Irish border issue by entering into a new customs union with the EU, so that no checks are needed at the border for people and goods. The Labor party sees it as vital to prevent any effort to undermine the Good Friday Agreement that forms the basis of the peace in Northern Ireland.

 

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New rules for foreign direct investment in India will allow foreign multibrand retailers to own upto 51% of joint ventures in India. Rules set earlier allowed foreign retailers like Wal-Mart to only setup wholesale joint ventures. The move by the Indian government lets Wal-Mart, Carrefour, Metro Group and other retailers open supermarkets. The rules were also changed to allow 100% ownership for single brand retailers such as Nike stores. Prior rules limited single brand retailers to 51% ownership. This is a major step because of the growth in the Indian retail market, and the small portion of the overall market that is occupied by large retail chains with well developed supply chain management. Technopak Advisors Pvt. Ltd, a consulting firm in New Delhi, estimates that the Indian retail market has sales of about $470 billion a year, with only about 5% of this or $27 billion in modern organized retail operations. In the five year period 2012-2016 sales are expected to grow to $675 billion, with $85 billion coming from organized retail. Companies with operations in India that are expected to expand operations include Bharti Wal-Mart, Tesco which has a agreement with Tata Group's Star Bazaar stores, Germany's Metro Group AG. according to these numbers, even with competition from the organized large stores, smaller stores will still occupy 88% compared to 95% of the retail space in 2016. And the growth in the overall market means that the smaller mom and pop type stores will still have growth from $443 billion today to $590 billion in 2016. A government backed study by ICRIER shows that smaller stores lose about 23% of sales in the first year, but recover quickly in following years because of growth in the overall market. The introduction of modern supply chain management, modern refrigeration methods, and large investments by leading global retailers is likely to change the way food and other products are stored and marketed, a revolutionary change for India where these methods and investments lag far behind the developed world. For this reason this may give major impetus to modernizing the Indian economy....

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Spain provides 14 public holidays that are mostly Catholic holidays, and an additional 22 vacation days, which is similiar to the the EU average. Unlike the practice in the U.S. and Britain to have these holidays fall mostly on Fridays and Mondays, in Spain many of these holidays fall in the middle of the week. This disrupts productivity as Spaniards use bridge days or puentes to create long weekends during which many offices and factories are empty, disrupting productivity. Most companies cannot plan for meetings and work because counterparts may be using the bridge days during these holidays, and working with international clients is difficult and hard to explain. Spain's new prime minister is determined to increase Spain's competitiveness, and bring Spain to the level of competitiveness of countries that do well in this measure, including other European and Asian economies. He describes this in his book "En confianza. Mi vida y mi proyecto de cambio para Espana." ("In confidence. My life and project of change for Spain") In his inauguration address he said Spain should correct "the work calendar to make the rights of workers compatible with the competitiveness of our companies." Vacations are a sensitive issue in Spain because tourism generates 10% of GDP and employs 10% of the workers. Alberto Nadal, who addresses labor issues at the main business association in Spain, says a change of mentality is needed in Spain, and doing away with bridges shows Spain is grasping the idea that things should be done differently for the eurozone community of nations. This also shows some of the differences in the Iberian peninsula countries of Spain and Portugal, where the countries are embracing the change and there is less unrest even with high unemployment, as compared to Greece. In Greece the changes are being resisted by politically connected groups, where political parties enjoy little support and there is much unrest, making the project difficult. Mariana Rajoy, Sarkozy and Merkel are from centre right parties in Spain, France and Germany, and have had a close association for years before Rajoy was elected- during EU meetings of centre right parties, as is evident in Rajoy's book. They also share a similiar business and political orientation. ...

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The Wall Street Journal's editorial columns have followed closely the working of Fannie Mae and Freddie Mac over the years. Especially during the last decade, when most of the excesses, missteps and failures in the operations of the two companies occurred at huge cost to the US economy and to taxpayers. The Journal quotes from the recent Treasury report on the planned winding down of the two agencies. And focusses attention on the question of what will replace Fannie and Freddie. Only the first of three options looks viable considering the goals of reducing misallocation of national resources, and winding down the federal government's role in housing, says the Journal. With this Option the federal government guarantees are limited to Federal Housing Administration (FHA) loans to low income buyers and VA assistance for veterans and farm programs- narrow segments that limits the guarantee strictly to 10-15% of the mortgage market. The Journal says that the conclusions of the Treasury report are what WSJ has been saying for 20 years: " The strength of this option is that it would minimize distortions in capital allocation across sectors, reduce moral hazard in mortgage lending and drastically reduce direct taxpayer exposure to private lender's losses." And the points about the benefits: " With less incentive to invest in housing, more capital will flow into other areas of the economy, potentially leading to more long-run economic growth and reducing the inflationary pressure on housing assets. Risk throughout the system may also be reduced, as private actors will not be as inclined to take on excessive risk without the assurance of a government guarantee behind them. And finally, direct taxpayer risk exposure to private losses in the mortgage market would be limited to the loans guaranteed by FHA and other narrowly targeted government loan programs: no longer would taxpayers be at direct risk for guarantees covering most of the nation's mortgages." This bit of wisdom is especially significant, as misallocation of capital that went on in housing for the better part of the last decade has hurt America and the American people. It makes sense to have explicit money allocated by Congress for housing help to the poor and have no housing guarantees that have hurt the economy....

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The Chinese market for mobile phones has seen Chinese companies use their advantages of knowing local requirements and better distribution systems, especially in the rural areas and second tier cities, to establish a presence. By 2004 companies such as Bird and TCL made significant gains. Bird planned to take on overseas markets and take 8% of the global market. Ningbo Bird and TCL then had half the Chinese market. According to analysts this effort fizzled out and these two companies had sales decreasing as larger companies like Nokia started going into the smaller cities and rural areas. Now another company is using its knowledge of the special features desired by Chinese buyers and its distribution system in rural areas and smaller cities to establish a presence. Tianyu, better known by its K-Touch product introduced in 2005, started as a handset contract manufacturing company. Tianyu offers locally desired features not offered by makers like Nokia and Samsung- dual SIM card option popular because it allows keeping second generation phone numbers and accounts while keeping open the option for a 3-G line, bigger text for older users, text messages read aloud, touch screens, receiving phone calls for two numbers, and so on. And Tianyu does this for less than $200, a price that Nokia and Samsung can't match for features like touch screen. Comparison of the K-Touch E62 with a Taiwanese handset called HTC Magic using Android, both touch screen, showed a price for HTC Magic three times the K-Touch E62. The K-Touch E62 cost 798 yuan or $117. Does Tianyu rely too much on the cultural aspect of today's China which is described as "shanzai"? The meaning of this term "mountain stronghold" and has a defiant tone of local culture and tendencies fighting centralized control. It is often used to refer to the cheap knockoffs of imported products that are readily available in China. In the long run analysts believe that the larger Chinese players in telecom, Huawei and ZTE, which have smartphones appealing to Chinese consumers and 3-G technology, are more likely to have a sustained presence. ...

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Problems facing India as it searches for a way to modernize the country, build infrastructure, and create strong jobs growth. Glaring weaknesses are evident in a number of areas which have not been addressed: a weak public education system, food poverty for people at the lower end worsening with today's 10% food inflation, child malnutrition, weak infrastructure building capabilities, growth in services but not enough in manufacturing to create jobs, a growing black economy, and a general acceptance of illegal behaviour that has increased with the increase in opportunities for corruption and bribes in a growing economy. The political governance is weak. The dependence on smaller regional parties in ruling coalition governments weakens initiative at the federal government level. The general lack of new political leadership, and the failure to develop new leaders in the Congress party because of the six decades long presence of the Nehru family. Some striking facts- the role of the black or underground economy has actually increased over the years. Arun Kumar, chairman of the Center for Economc Studies and Planning at Jawaharlal Nehru University in New Delhi, says his estimates show it was 40% of GDP by 1996, and 50% by 2006. This means more business activity evades direct taxes, and less money is available for investments in education, infrastructure and healthcare. It also indicates a widespread tolerance of illegal activity and corruption. The other striking facts are that the calorie consumption by the bottom of the 50% of the population has been declining since 1987, according to a 2009-10 economic survey by India's Ministry of Finance. The modernization of the country appears not to be following the path taken in East Asia- by Japan, S. Korea and now China- where people moved in large migrations from farms and rural areas to cities and manufacturing jobs, resulting in gradual urbanization. Manufacturing in India is only 16% of GDP in 2009, the same as in 1991, according to the World Bank. Certain regions are doing better than others- Gujarat and the Punjab in the north, Tamilnadu, Karnataka in the south- with large population areas in Uttar Pradesh and Bihar lagging behind badly. ...

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The WSJ's Troianovski and Benoit's interview with German foreign minister Frank-Walter Steinmeier. Steinmeier served as foreign minister eight years ago in a prior four year term. Steinmeier says he does not know whether he would have taken such an active role 8 years ago in diplomacy and talks with other countries, given the German public's reluctance to take an active role in world affairs. He and chancellor Merkel are much more active and the chancellor has been vocal about Germany's position in a way that Germans are not accustomed to. This has led to criticism inside Germany about Germany's role. A poll by TNS Infratest Policy Research in spring 2014 shows that only 37% of Germans say they want to see Germany more engaged in international crises. The same poll conducted recently showed the results were still the same, little change in how Germans see their post World War II role. Steinmeier says this is the difficulty he faces, to do what is needed as crises happen and call for a German role, presenting no real alternatives. He has on his desk at the foreign ministry a color lithograph of Social Democratic Chancellor, and Mayor of Berlin during the Cold War, Willy Brandt, with Brandt's words from 1969- "We want to be and to become a nation of good neighbors, internally and outwardly." Steinmeier expresses disappointment with the recurring crises in Ukraine, and says he can only guess Russian intentions, that Russia is looking for international respect and recognition. German business critics point to lower exports to Russia. And most Germans prefer that Germany maintain a peaceful role without foreign engagements. Sanctions that hurt the Russian economy are not seen as part of the German role, but Steinmeier who headed the chancellery during Gerhard Schroeder's term as chancellor from 1998-2005, says in the long term Germany has to support a world with rules. It should be mentioned that Willy Brandt as Mayor of Berlin 1957-1966 during the Eisenhower and Kennedy administrations was internationally engaged in a way that goes even beyond Steinmeier's engagement today....

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A new sense of optimism pervades Athens with the new government's standoff with international creditors. After governments from the centre left Pasok party and the centre right New Democracy Party from the country's elite, a new government led mostly by academics from Greece's universities and a fresh young face of Tsipras, has created a new spirit in Athens following 5 years of austerity and protests. Tsipras's Coalition of the Radical Left won 36% of the vote in the recent parliamentary elections of Jan. 2015, a month later polls show public support has increased to 70%. Even New Democracy supporters says the young Tsipras provides a breath of fresh air to Athens and Greece as he negotiates for an easing of the strict austerity measures leading to 25% unemployment. Signs of the change are everywhere. The riot police have been pulled back, and there is less security around parliament, 2000 bodyguards for senior politicians will be disbanded. Coffeshops in downtown Athens are filled till by young office workers and students as Greeks discuss the changes taking place. The ECB and the EU are taking a tough line in negotiations as the new government develops its negotiating stance, with much public posturing but deeper down a sense that a resolution needs to be reached that gives Greece the opportunity to return to growth. One aspect of the new government is a welcome change both for the EU, the ECB and Germany, as well as for the Greek people. As in Italy with Matteo Renzi following Berlusconi, leadership has passed to a younger generation better able to tackle the problems facing Southern Europe. In Italy Merkel personally intervened at one point calling Italy's president and creating momentum for the resignation of Berlusconi, followed by the shift to pro-EU Monti and Letta, and then to Matteo Renzi. Renzi received 40% of the vote in Italy's elections. In Greece a series of parliamentary elections shifted administrations from Papandreou to Samaras, and now to Alexis Tsipras. With fewer ties to the old governing elite the new administration can better deliver on prudent economic management in the long run to meet the concerns of Germany, Netherlands, the UK and other countries....

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Jeb Bush sees many who come to the U.S. looking for a better life as similiar to people who arrived here in earlier waves of immigrants all the way back to 1800. He described the actions of many who come to the U.S. illegally as an "act of love," and "act of committment to family," in a talk at College Station Texas, on the 25th anniversary celebration of the presidency of his father, George H.W. Bush. Its breaking the law, he says, but different, not a felony. Benjamin Franklin describes German immigrants to Pennsylvania in his writings at a time when immigrants were what made this country. They were different in some ways then but long since became part of the fabric of America, as have new immigrants in the different periods of the 19th and 20th century. Here is what Benjamin Franklin says about the German immigrants whom he praises for habitual "Industry and Frugality they bring with them," in a letter to Peter Collinson, May 19th 1753, addressing the fears as well as what they could bring to the new country, which throws light on todays immigration debates in a new light. "In short unless the stream of their importation could be turned from this to other colonies, as you very judiciously propose, they will soon so out number us, that all the advantages we have will not in My Opinion be able to preserve our language, and even our government will become precarious." And then saying in the same letter-"Yet I am not for refusing entirely to admit them into our Colonies: all that seems to be necessary, is, to distribute them more equally, mix them with the English, establish English Schools where they are now too thick settled, and take some care to prevent the practice lately fallen into by some of the Ship Owners, of sweeping the German Goals to make up the number of their passengers. I say I am not against the Admission of Germans in general, for they have their Virtues, their industry and frugality is exemplary; They are excellent husbandmen and contribute greatly to the improvement of a Country." ...

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Political activism and grassroots efforts- other than street protests - are increasing in eurozone countries facing high unemployment and austerity cuts. The focus is on cleaning up the political system rife with cronyism, corruption and wasteful spending. Brat and Bjork describe one such effort in the town of Torrelodones, Spain, 18 miles from Madrid. Criminal investigations in many Spanish cities have increased public awareness and participation in local government. European Social Survey based in London, reports political activity of this kind in Spain jumped from 27% in 2008 to 39% in 2010. There is an increasing sense that the political elites of the two main parties, the Partido Popular and the Socialists have failed to bring clean government and transparency to Spain. As a result progressives are joining conservatives in an effort to clean up years of wasteful spending, cronyism and corruption in government. The Union for Progress and Democracy, representing an alliance of such groups would win 13% of the vote in a national election, and the ruling conservative Partido Popular would lose half of its support and get only 22.5%, according to independent Spanish polling firm Metroscopia. The new push for transparency is one of the welcome changes at a time of austerity cuts and 27% unemployment in Spain. Many of the perks of public officials such as chaeuffer driven cars and police escorts, contracts for favored few at higher prices, are out in many cities, and accounts made public for scrutiny and change. Transparency International's transparency index shows 33 out of 110 of Spain's biggest cities scoring top grades on the 2012 index, jumping from only one. Following the example of the regional government in Navarra, the central government is drafting the first open-records law. Castilla-La Mancha, the area around Toledo, run by a clean government advocate Maria Dolores de Cospedal from the Partido Popular has taken aggressive steps to clean up the local government and wasteful spending- see the link to Castilla La Mancha. Her long term approach is to clean up government spending and accounts with the idea of preserving spending where it is most needed, in education, healthcare and vital services hit by cuts, an approach being taken in other Spanish cities. ...

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The merger between U.S. based Omnicom Group and France based Publicis Groupe SA, two of the largest ad agencies. The merger is a response to the increasing shift to digital advertising, the shift to advertising being sold in automated trading, and data driven analysis. In all these shifts digital companies such as Google and Facebook have strong advantages. Around 22% of global ad spending is now digital, according to emarketer, with forecasts showing this going up to 27% by 2017. Automated buying of ad space is taking off. U.S. advertisers are expected to spend $3.4 billion on real-time bidding. Omnicom's CEO, John Wren tells analysts: "Digital buying of media is done by machines, as if you are standing on the floor of the Nasdaq as opposed to traditional media shop. I hold the long term belief that eventually traditional media, or a lot of traditional media is going to be purchased that way." Just as computers have upended the environment for traditional players such as the NYSE creating new opportunities for Intercontinental Exchange (ICE), computers and the internet are changing the advertising environment. CEO Levy of Publicis Groupe SA says the data explosion, Big Data, is also creating a new playing field in which companies such as Google and Facebook have advantages. In a statement about the deal he says: "the communication and marketing landscape has undergone dramatic changes in recent years, including the exponential development of new media giants, the explosion of Big Data, blurring of roles of all players and profound changes in consumer behaviour." The merger will provide the new company the scale to develop these resources to compete with digital companies like Google and new entrants such as Salesforce.com and Adobe Systems. Omnicom has agencies BBDO, TBWA Worldwide, media buyer OMD. Publicis has Leo Burnett and Saatchi & Saatchi, media buyer Starcom MediaVest and digital agency Razorfish. The new Publicis Omnicom Group will have combined revenue of about $23 billion for 2012, and passes WPP Group PLC's $15.95 billion revenue. It will still be much smaller than Google with about 3 times WPP's revenue, and Google's advantage in storing trillions of pieces of data about user behaviour....

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Haruhiko Kuroda, 68 years old, a senior finance ministry expert who ran the ministry's currency policy as vice finance minister for 4 years in the early 2000's, is prime minister Abe's nominee for central bank chief. He lectured at Hitoshibashi University for two years before becoming the head of the Asian Development Bank. His book "Success and Failure in Fiscal and Monetary Policy," is critical of the Bank of Japan for mistakes in being first too accomodative in monetary policy to set up the 1987 crash, and then tightening too quickly leading to the deflation and recessions of the last two decades. By choosing an expert with a long experience in the field of monetary policy and a vigorous advocate of getting things right to shake off the deflationary trends, Abe is sending a strong signal to financial markets. Kuroda says he is looking at a shorter time frame to achieve a 2% target for inflation- about two years. In essence Kuroda is taking a page from the policy book of a small group of MIT trained economists, Bernanke at the U.S. Federal Reserve, Draghi at the European Central Bank, and Mervyn King at the Bank of England to boost domestic economies in the context of increasing global growth. The yen weakened to 94.77 to the dollar on Feb 25, 2013, after the announcement. Abe's nominee for one of two deputy governor appointments is Kikuo Iwata, a 70 year old economist who was also critical of Bank of Japan monetary policy since the 1990's. The Abe administration has also carefully communicated this message. Speaking at the Centre for Strategic and International Studies in Washington D.C. Abe said Japan's goal was to increase exports, but at the same time it will increase imports which should benefit the U.S., China, India and other countries. He described a recovery in Middle America from the Dakotas to the Carolinas and sees something like this happening also in Japan. Even the appeals to nationalist sentiment are also coupled with the message to China and S. Korea of not climbing up the escalation ladder and seeking good relations to promote mutually beneficial development. Abe's focus is on building the U.S.- Japan relationship....

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How Elizabeth Warren, a Professor at Harvard Law School, influenced economic advisor Summers and President Obama in their decision to form a Consumer Financial Protection Agency. She met with Summers recently and they have known each other for a long time at Harvard University. Warren has spoken up for consumers, and written several books and articles on the subject of protecting consumers, credit and economic stress. She was the chief advisor to the National Bankruptcy Review Commission and chairwoman of the Congressional Oversight Panel which acted as a watchdog over the TARP program. Ms. Warren says she first got the idea of a financial products agency while researching a 2003 book about middle class families who did well on one income, but now were having a difficult time coping with two incomes. She made the point that it wasn't overspending by many families that was to blame but poorly designed financial products. In 2007 she wrote an article in the journal Democracy about this idea of an agency to protect consumers of financial products. She says overhauling the regulation of financial products is necessary not only to help consumers make good decisions, but also help "make the market work." And she adds that the market "has been badly regulated" through a system of seven federal agencies, each of which has jurisdiction over some aspect of consumer financial products. See the other link in the WSJ of June 20, 2009, by Jason Zweig, which talks about the influence of a friend of Obama at University of Chicago Law School, Prof Sunstein, on the formation of a Consumer Protection Agency. Sunstein, and Thaler, a Professor of Economics at the University of Chicago, wrote a book "Nudge" which shows the impact of psychology and the behavioural element in decisions made by consumers. Sunstein and Thaler express the idea that there are advantages in having standard products that cannot lie to consumers, and are based on the "fair-dealing, openness and transparency" the President emphasized. They act as an anchor for all other products, which are compared to these products. ...

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Mark Landler of the NYT intervews Ben Bernanke at his office overlooking the Washington Mall, and Secretary Paulson in his Treasury office. Both men look back at events that led to Chinese savings financing excessive American consumption, and currency and other policies on both sides perpetuating the dependence of America on lowpriced Chinese products, and of China on the American export market. Now that this export market is collapsing it presents China with serious problems with unemployment in the export sector, and pesents America with the hangover from a consumption binge that now must be paid for with years of low or negative growth. Could this have been foreseen and if foreseen could things either have been mitigated or prevented. In March 2005, Prof. Bernanke at Princeton was not at the Fed (his Fed job started in 2006), and cautioned about the imbalances presented by Chinese savings finacing American consumption. But Bernanke saw this as a market phenomenon that would take years, even a decade to work itself out in a global economy. He said "for now, we have little choice except to be patient." The prevailing opinion among Greenspan, Bernanke and others was that the global economy worked in ways that were ultimately benign and regulation was not a good thing. After all the situation benefitted American consumers and kept inflation low while also providing China as an additional engine for global economic growth. The American economy it was believed was large and resilient, and it would not be adversely affected in the long run by such a large dependence on foreign savings. Only the positive effects were visible and the adverse effects were simply talked away as not serious for now. Zoellick, who was deputy secretary of state says that successful models are very hard to change, and Paulson says that without some kind of crisis its hard to get changes made once asituation gets entrenched. For China efforts to strengthen the currency that would slow exports and improve internal consumption were stymied by a reluctance to disturb the status quo, and Americans were lulled into complacency as years of low priced imports provided the best of both worlds, high growth and low inflation. ...

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The first budget of the Obama government makes a sharp swing away from decades of earlier policy, and puts America on a new direction focussed on priorities in education, health care for all, and energy. The 134 page doocument on the budget defines the governing principles and priorities of the new government. "This is the legacy that we inherit- a legacy of mismanagement and misplaced priorities, of missed opportunities and of deep, strutural problems ignored for too long," the document says. It declares that "government must lead" in contrast to Reagan's "government is not the solution, government is the problem." In contrast to "trickle down" policies of Reagan it proposes "trickle up" policies- shifting income from rich to the poor. It creates a $630 billion fund towards a national health insurance program built with the help of savings and cuts elsewhere. Government takes over most student lending, and dramatically expands Pell grants for poor college bound strudents, transforming it into something like Medicare that is automatic rather than approved each year by Congress. Businesses that emit carbon and heat trapping gases will have to purchase permits to do so starting in 2012. Hundreds of billions of dollars from these permits will pay for clean-energy technology and for tax credits for working couples. Income tax rates will rise for couples earning more than $250,000 beginning in 2011 and will have lower personal exemptions, lower itemized deductions, and higher capital gains tax rates. The estate tax will be preserved. Hedge fund and private equity managers wil have to pay income tax rates for that compensation as high as 39.6% after 2010, not the low 15% capital gains rate they pay now. The Defense Department would see a $20.4 billion boost or a 4% increase in 2010 over 2009, it will request an additional $75.5 billion in 2009 for the wars in Iraq and Afghanistan, and an additional $130 billion for 2010. The budget is for $3.6 trillion for 2009, and projects a deficit of $1.75 trillion for 2009, or 12.3% of GDP- a level see in 1942 when the US entered World War II. Under optimistic White House assumptions for a strong economic rebound, the deficit would drop to $533 billion by 2013....

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Citing the drop in oil prices (with housing having to hit bottom at some point) and the stimulus package, Alan Blinder, says the recession should end by the 4th quarter of 2009. This is in sharp contrast to Ferguson's, Spence's, Roach's and Reinhart's view on the editorial pages of the NYT. The difference is whats striking. Ferguson, Roach and Reinhart say 3-4 years, Spence, is of a similiar view, if actions taken don't work the way they are expected to, and they don't put any dates down because too much is happening in the economy, with so much uncertainty. The titles of these three economist's pieces are also instructive, Beware of False Dawn by Roach, Rule of Four by Reinhart, and Spence's A Long Goodbye. Here is Blinder not only saying there won't be any surprises from now on (who knows for sure?) but also puts down an approximate time. He also ventures an exact impact of the stimulus, of 5% impact on real GDP in 2 years. With all that has gone wrong under Greenspan's leadership, one wonders about the credibility of being Vice Chairman of the Federal Reserve during Greenspan's time at the Fed. And as if to ridicule his own forecast he says without any hesitation: "But here's the rub. My forecast assumes that no other (big) shoes will drop. Sad to say, shoes have been dropping like rain." Whats the use of a forecast that has a remark like that tagged on to it, and how responsible is a statement that doesn't suggest caution, when businesses and jobs have been destroyed through overoptimistic forecasts and lack of decisive action. A case in point being General Motors, and the government and the American people are being asked to put $100 billion into General Motors. This is no time for reckless forecasts or for any but the most carefully thought through analysis. Lives and livelihood depend on it. Is this what the President means, when he talks about an era with a lack of responsibility in government and in companies, and those in leadership positions in the country, for their statements and their actions....

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The failure of the economics profession to produce any red flags for this economic crisis, and the failure of economists to come to any consensus on what works to come out of this crisis, along with the huge confidence with which the economics profession displayed as the economy sailed along in most of the post war years, is one of the very noticeable things as one reflects on what has happened. Journalists like Peter Coy at BW who wrote this report followed the housing market for BW and raised red flags long before the crisis hit, just by looking at the facts. So its clear that looking at the facts through the lens of a particular theory of economics, or the lens of some ideological bias, or the lens of triumphalism, can handicap economists. There are economists who believe in the stimulus, and economists who don't believe in a stimulus, and others who think the economy reaches equilibrium of itself if left alone, and economists who believe in tax cuts. Were it not for the fact that the risks in a time like this are really great in depending on one or the other for advice if things don't work out the way they think, this would not be such a big issue. But a lot hangs inthe balance. Which is why decisions are based on what is actually happening on the ground, and by getting a good sense of that, and a grasp of real conditions, and getting agood sense of what will work in that particular situation, and not just hoping that things will work out according to some theory or conviction in the mind. And those who execute or manage the economy instead of teaching a class, have to be aware of the great responsibility for the lives of millions of people here and in poor countries around the globe, whose lives and the lives of their children, nutrition, health and education depend on their decisions, not just when they are in office but years after they have left. And for this reason exercize needed caution....