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This report in WSJ takes a detailed look at how the shift to digital payments, and digital badges for covid free designation on smartphones are affecting a part of the population of 60+ years that is notinternet or smartphone savy.  60+ years make up only 10% of the users of internet on age based graph, even though they are a large part of China's rapidly aging population, estimated to be closer to 20% of the population or about 250 million. Elderly people in China are having a hard time with scanning of health codes to access transport and other services. To tackle the covid pandemic China has health codes assigned to citizens which link user national ID and Covid status. These need to be scanned in for access to train and transport facilities and other services, color coded digital badges on smartphones that show one is covid free.  Most elderly cannot handle these smartphone tasks because they lack the skills of young people with smartphones or lack the digital payments having used cash all their life. Other problems are poor eyesight, health problems, but the most severe is a big skills handicap in downloading apps, in typing quickly, and in navigating the internet. The government is taking steps to provide relief for the elderly by prohibiting places of services from refusing to accept cash, and finding ways to make the health codes system work for seniors. ...

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Changing governments and loss of the vision of the labor movement in the early decades after independence has led Israel to this impasse. Benny Gantz of the wartime Unity government calls for new elections in September as demonstrations for a new government take place in Jerusalem and Tel Aviv. US president Biden tells Netanyahu on Thursday that US support hinges on treatment of civilians in Gaza. Biden says he "outraged and heart broken" at the airstrikes on aid workers vehicles in Gaza. Gantz, a former general and prime minister of Israel, said- “This agreed-upon date for elections will leave us time to continue the security effort, and it will allow Israeli citizens to know that we will soon need to renew the trust between us,” he told a news conference. “It will prevent the rupture among the people.”  One of the problems Israel faces is the political fragmentation, many parties and frequent elections leading to changes in government unlike the early decades after independence when the Labor party offered effective leadership. The social Labor and agriculture farms movement is how Israel started and prime ministers till 1980's were from this Labor and farms movement including David Ben-Gurion and Golda Meir. As Israel evolved into a more technology oriented state this aspect was lost leading to a great measure of inequality, and changing governments without a clear vision for the future.   ...

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This condensed adaptation of the book by McNish and Silcoff on the collapse of Blackberry with the launch of the iPhone, tells a story of complacency at Research in Motion. Supreme Court Justice Brandeis once said that complacency was like all the seven sins rolled into one. In the smartphone industry the results were lethal. RIM founders Lazaridis and Balsillie responded to the iPhone launch believing this would not affect Blackberry. The founders rationalized that what would determine success in the business was security, battery life, ability to type, and using less capacity so as not to strain networks, areas in which RIM was strong and on which it had built its market presence. Design, using mobile to offer broad access to internet content, and the touch screen, were not seen as changing the very nature of the phone market. During the summer of 2007 many users shifted to the iPhone, and it cultivated a cult following using strategies Apple had honed on earlier product launches, reaching 1 million in sales. RIM was completely unprepared and could offer Verizon Communications a prototype called the Storm, which was launched hastily with product glitches still remaining. This happened in November 2008 and turned out to be complete disaster- initial sales were great selling 1 million units in 2 months of 2008, but reversed when almost all of the units were returned because the browser was slow and the clickable screen did not respond well. Nokia, another competitor, is also caught unawares sticking to its formula of success, when all the rules were being rewritten by Apple by showing what the new possiblilities were with the right technology in what one could do with a smartphone. Blackberry introduced a smartphone in 2012 by putting together a patchwork of licensed technologies. By this time Apple, Samsung and other competitors had captured significant market share, and the smartphone flopped. The successor Z10 also flopped in 2013. Nokia faced another problem- the inability to convert R&D, at times larger than Google and Apple, into new products, and the failure of management to grasp the potential of new technologies. According to a former employee, Nokia management turned down a internet ready phone with touch screen developed by its engineers in 2004....

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VW is rolling back decades of globalization, with shorter supply chains, less focus on China, more investment in the US. The war in Ukraine has further disrupted already strained supply chains and VW is rethinking its entire manufacturing system in a new way.

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Germany's DW.com says in this report- "However, economists have pointed out that the US benefits from having large trade imbalances with the rest of the world, as the dollar is used in most trade, and offers major tailwind effects to the US economy." Which economists one must ask? Most of these economists had turned their back on the working people in factories in America, on their wages turned into a downward spiral, on their jobs, their factories lost for three decades. Today the American people have a sense of the true cost of this colossal failure to protect American workers and small towns across America depending on manufacturing. The pandemic exposed the risks of supply chain shocks and inflation by overly concentrating manufacturing in China.  The US has 1 trillion in trade deficits each year and it is completing the destruction of manufacturing in the US. Half of this is with China as China exports through Vietnam and Mexico, third countries, in addition to 295 billion dollars of trade imbalance the US has with China. China, Mexico, Canada and Vietnam are the largest offenders. No country can long endure with such a loss of its manufacturing base. The US Navy itself is in danger without the manufacturing to compete with China that has taken up over 50% of shipbuilding, and soon will not be able to protect the free world if these types of economists and self serving German or other foreign interests drive a false narrative. Without the US Navy in the Pacific, Atlantic and Indian Oceans no one is safe, not Germany, not the EU, not India or the rest of the world. ...

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Chinese president Xi's determination to make good on the slogan "Housing is for living, not for speculation," by imposing a property tax on homes in 30 cities, is facing resistance within the Communist party and from local governments. Mr Xi hopes to squeeze out the excesses of the adoption of capitalist market systems in China since 2000. China's government opted to get feedback on this idea and the feedback is largely negative forcing the government to scale it back and look at other alternatives such as affordable housing to make home purchases accessible.  Some reasons for the pushback are that it is becoming a social stability issue and risks alienating officials within the ruling party and homeowners. The fact is that 90% of urban Chinese families own their homes and housing related industry makes up about a third of China's output. Also significant is that 80% of China's wealth is tied up in real estate. What could happen is that if housing prices drop in China urban consumers might cut back on spending because they feel poorer. Party officlals advised against introducing property tax in 30 cities. Now it is scaled back to ten cities, and a new law could take till 2025 to introduce property taxes in the whole of China. Cities that are likely to be used for the property tax now are Shanghai, Chongqing, where an annual charge is levied on second homes since 2011. Cities added to the list would be Shenzen, Hangzhou, China has financed much of its industrialization through land sales by the Communist local governments in a country where land ownership was with the national Communist government after the revolution in 1949.  Mr. Xi wrote in Qiushi party journal that "we should actively and steadily promote the legislation and reform of real estate tax, and do a good job in the pilot work." Local communist governments get about one third of their revenues from selling land to property developers, and they are anxious that a tax on real estate would make demand and price for the land they sell to drop drastically. To get some idea of this- the local governments had $1 trillion in revenues last year. ...

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In a blow to public employee unions the U.S. Supreme court rules that unions cannot collect dues from non members. Doing so would violate worker's free speech rights said the court in 5-4 decision. The addition of Justice Gorsuch has created a Supreme court voting 5-4 on party lines. Justices Alito, Roberts, Kennedy, Thomas, and Gorsuch give Republicans a five vote majority on many issues. 

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Jenkins sees risks to Apple's closed ecosystem and decline in margins of $300 on devices priced at $600.

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The trade deficit with China has led to loss of 3.8 million jobs, 75% of them or 2.9 million in manufacturing. Go back to 1990 and Beijing was a city of bicycles not cars. If Beijing shifted to a open economy and simply imported products from the US and Europe as it had done since 1700 it would have remained a backward agricultural economy. It took 20 years of focused effort after 2000 for China with US technological assistance to excel in manufacturing, as the US had done after 1920. Can or cannot the US excel in Manufacturing with its own focused effort and restore jobs and decent wages to the American people, that is the question. That a $1 trillion deficit that has already destroyed the US manufacturing and its capacity to defend itself by rapidly building up the US Navy, is that not an emergency, then what is, is also the question, and the role, the duty, of the president of the US in such a situation. The federal appeals court has allowed the DJT Tariffs to remain in place till it goes to the US Supreme Court. Today May 30 the WSJ in a front page article shown here says the one California shipyard could assemble a supply ship in 5 days in 1942. China's independence in the fight against Imperial Japan and the Kwantung Army's adventures, and the independence of Europe in the 1940's depended on this vital US capacity. Is this forgotten? FDR acted step by step by 1938 to restore the US lost capacity at that time, what is the role of the president today? ...

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Instead of "ring fencing" bad loans one bank at a time, which is what is being done for Bank of America and Citigroup by the government , Bair, Bernanke and others favor something like the Resolution Trust Corporation, which would contain all bad assets of banks. Bair in an interview said she would like to see them priced at what they would get in today's market, meaning that the steep discounts issue would be faced squarely. What this will need is a lot of government money to restore confidence so that investors are willing to put their private money in the banks. And Senator Schumer says he is hearing the number of $1 trillion or more. This would let banks take these bad assets off their balance sheets, like they did with the Brady bonds for bad Latin American assets and with the Resolution Trust Corporation for bad assets in the savings and loan crisis. It was the original intent of TARP but two things happened, first the pricing of these assets was in limbo, with nobody willing to say how steep the discount should be. The auction process proposed was a vague and shaky one. Second, things deteriorated so quickly that it became urgent to instead do bank recapitalizations for $250 billion. Now the same issue has to be addressed directly by another administration with control of Congress, so that the big bucks funding of $1 trillion can be possible to do. Something like a separate institution that holds all bad bank assets. And the government taking on a big part of the burden, and with it some ownership of the banks that hopefully could payback some of this $ 1 trillion....

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A sanitary health expert Arne Panesar of the German Corporation for International Cooperation says for about six of ten persons in the world there are no sustainable sanitary systems for the waste. It is not enough he says to build toilets, equally important  is how the waste is treated and disposed. Prime minister Modi of India has stated that toilets are more important than temples in India and the goal is set for all Indians to have secure sustainable toilets in 2019.  Panesar says of Dacca, Bangladesh, that for its 16 million only 2% have securely managed sustainable sanitary provisions. Waste that is not treated and correctly disposed off ends up in streams and neighborhoods creating health hazards- diseases like cholera, typhus and polio thriving in such conditions. It is not clear says this report that sanitation needs can be met by even 2030. In India the focus is now not just toilet building but on on safe sanitary provisions to make health a priority, as well as women's education which suffers without adequate toilets. ...

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India has opted out of the Regional Comprehensive Economic Partnership because of concerns that it would be providing relatively unrestricted access to its markets, particularly to China, without being able to capitalize on opportunities for market access in RCEP countries. Indian manufacturing and export capacity is only beginning to be established in a big way. Under Atman Nirbhar initiative India has the potential to increase the manufacturing capabilities of its own firms in all industries using the local market. This could generate a virtuous cycle of capital accumulation, more investment and modernization with acquisition and development of new technologies in the same way as Japan, South Korea and recently China have setup advanced manufacturing capabilities. To do this the government has to work together with private industry for a modernizing drive, and a parallel effort at building advanced infrastructure. 

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The Times has this editorial on the fighting at the border between Ladakh and Aksai Chin region in the Himalayas between Indian and Chinese troops. It says China has occupied 50 square kilometres inside the Indian LAC and India is building its infrastructure to match China's in the region. It also points out that the border has no standing in international law, from the period of British rule and the Sikh Confederacy of Punjab region in the 1840's no real effort was made to demarcate the border, a dangerous situation that also arises from Tibet ceasing to be a buffer that existed for centuries between Indian side of the Himalayas and China's western provinces. This means infrastructure building is the only way India can maintain the Line of Actual Control.

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Steel prices drop by 40% in 2015 for steel supplied to the automobile industry. Chinese producers reduce prices on world markets as China increases exports. ArcelorMittal suffers a loss of $7.9 billion in the fourth quarter of 2015 on its steel business and mining. The mining unit had a$3.5 billion operating loss and the company took a writeoff of $3.4 billion on mines as a result of the collapse in the mining industry prices. For the full year the company expects $4.5 billion in earnings for 2015 before interest, taxes, depreciation and amortization, compared to $5.2 billion in 2014. Its capitalization has declined to about $6.8 billion.

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WSJ reporter Monica Langley provides a glimpse behind the scenes of how Donald Trump comes up with his attacks on rivals, and statements on immigration, terrorism, refugees. Trump pays close attention to what is riling voters on any particular week, but other rival politicians are not willing to say. He looks for what resonates with the public, and in today's environment where politicians are cautious, careful and plodding, this strategy works. Donald usually puts down a few points on his private plane, looks at reports from campaign staff, yet makes all the decisions himself on what and how to say it. His memory helps, he says. And he has a flair for words, sounding uncouth at times, but yet choosing words carefully enough to sound reasoanble to his audience. In Jan 2016 this approach has worked for Trump in the Iowa and New Hampshire primaries, stalling progress by rival Ted Cruz, and holding back other rivals. Yet this approach has its risks as the primary season progresses. One of the changes in the Republican party politics in 2016 is the emergence of two candidates Donald Trump representing the white working class, and Ted Cruz representing evangelicals, who are both strident and willing to take strong positions on issues in striking contrast to leading Democrats. Trump on China, immigration, refugees, and Cruz on taxes, cultural issues for evangelicals, IRS, Affordable Health Care Act, and both candidates on terrorism. ...

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Al Maktoum is prime minister of Dubai. He points out some important facts about the Arab world. About half of the 300 million people in the Arab world are under the age of 25. Unemploment is very high among these 150 million Arab youth. About 50% of the jobless are youth, according to the prime minister. About 65 million of the Arabs are illiterate, and 10 million children under the age of 25 are not enrolled in any school. He points out that with so little education, the Arab youth are especially vulnerable to propaganda that creates extremism and is hostile to the west and the USA. One of his key points is that the Arab world is the most militarized place in the world, and spending on conflicts in the Middle East in the last 60 years is about $3 trillion. And in the last 15 years he says the spending on education which is 20% of what the world's 30 wealthiest countries spend, has dropped to 10% of that amount. And very little is being done to educate girls and give them opportunities. As a result of these convictions, Al Maktoum, who is also the ruler of Dubai and from the royal family, has committed about $3 billion to various initiatives to provide schooling to children, especially girls, and education for young people. This makes him one of the more enlightened leaders in the region pushing for new directions. This also reveals the critical weakness among the Arab peoples and why they tend to be so radicalized. Improvements in education and more opportunities for jobless youth, and creating a peaceful region -with the US and the EU countries committing to policies that lead to much diminished military sales to Mideast countries and reducing hostilities in the region -would do more to reduce anti-American sentiment in the region and improve US security than any other policy actions. As Iran, Pakistan and Afghanistan, and the Muslims of India share the same characteristics as the Arab peoples, and the same cultures, the same is true of this region, actually more so. Education has been even worse neglected in the South Asian Muslim region than among the Arabs. It is the key to peace, does more than troops to ensure the peace. The need is for more schools to be built and run in the region, for essential services like healthcare and development, and financing of job creating industries. ...

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The Economist points out serious problems at India's state owned banks. Following a $21 billion or 1.3 trillion rupee bailout from the government, and a new bankruptcy law to help banks deal with bad loans, the Indian banking sector was seen as recovering. Last week (Feb. 2018) showed new problems at three of the largest state owned banks. PNB, Punjab National Bank, is faced with fradulent transactions for 114 billion rupees, about a third of its market capitalisation. A jeweller, Mr Nirav Modi, had PNB employees issue letters of credit which were then used to borrow overseas, but the credit was not shown in PNB's books. The State Bank of India, SBI, is faced with losses after tackling bad loans. The Reserve Bank of India, India's central bank and bank regulator, has taken action to have banks recognize more bad loans to clean up the banking system.  The Bank of Baroda, the third largest state owned bank, is exiting South Africa after entering that market and lending to the controversial Gupta family that is seen as having undue influence on the government of ex- president Jacob Zuma of South Africa.  These events have battered the reputation of state owned banks in India. One private lender HDFC bank alone now has market capitalization worth more than the entire state owned banks in India. State banks are worth less than net assets in the market, showing a huge credibility gap. The bad loan situation that goes back to previous governments is affecting the growth rate in India's economy and creating new pressures on the government of prime minister Modi as it faces general elections in 2019. ...

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Without a final Brexit agreement Britain has the advantage of being able to use Northern Ireland, which would remain in the EU, as a way to send British goods into the European market including goods from companies subsidized by Britain. This and related reasons on Britain being able to set its own rules on the borders between the two Irelands, and on its trade and movement of goods, is why Boris Johnson says Britain does not absolutely need an agreement on Brexit with the EU.

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Sri Lanka has an inflation rate of 26%. Government spending on the war against Tamil separatist movement in the east and north makes things more difficult. Central bank is squeezing credit to control inflation. And there is a need to spend more to rebuild the wwar ravaged eastern province. And the war has taken a toll on human rights and on the free press as the country became increasingly polarized. The Rajapakse brothers won the last election to as Maninda Rajapakse, the president says to have peace and development by defeating the Tamil separatists who have created a continuous conflict on the island for decades sapping government resources and attention from development.

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Business investment has been extremely weak since the global financial crisis of 2008-2009. This covers spending on investment goods - on equipment, software, inventory accumulation, residential and nonresidential construction. Compared to the 1982 recession non residential fixed investment has staged a weak recovery. In the 2 years after the 1982 recession nonresidential fixed investment went up by 27%, whereas in the last 2 years it is up only 12%. Spending on business equipment and software declined twice as much in this recession as in the recession of 1982, according to Mankiw. The comparison with 1982 is because the U.S. experienced 10% unemployment during that downturn.

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Who is Nandalal Weerasinghe? This report in The Daily News gives some idea about the man chosen to help Sri Lanka negotiate a deal with the IMF.  Dr. Nandalal Weerasinghe was an alternate executive director at the International Monetary Fund before being appointed deputy governor of the Ceylon Central Bank in 2012. Before this he managed several macroeconomic departments at the central bank and was assistant governor of the central bank from 2007 to 2009, He has spent the large part of his career in economic positions at the Central Bank of Ceylon after getting his PhD in economics from the Australian National University. Weerasinghe is the leading expert in macroeconomics from Sri Lanka who has IMF experience. He says "things will get worse before they get better." He retired early from the central bank with a change in government in 2019. He was reappointed as Sri Lanka faced a debt crisis in March 2022 following the two year long pandemic, and the Ukraine war in 2022 that was bad for emerging market economies. Weerasinghe says about the crisis facing Sri Lanka- Recent decisons followed Modern Monetary Theory. This has dire consequences. In recent times the savings brought about by the low tax and interest rate regime passed savings on to the corporate sector and took away spending power from savers and pensioners. Surging inflation made things even worse for the lower income middle class and older parts of society. Years of accumulated debt have brought Ceylon to this point. In Ceylon one is seeing the effects of savings being passed on to the corporate sector in an economy dependent on tourism and remittances from overseas workers, both hit by the two year long pandemic. This is part of  a trend that has hurt emerging market economies from Argentina and Pakistan which also turned to the IMF to Turkey.  In other countries in the European Union savings also passed on to the corporate sector with low tax and low interest rate regime. With high inflation resulting in the cost of living crisis seen today in France and Germany. This type of policy that Weerasinghe calls 'Modern Monetary Theory' is not healthy for the European Union and the US, as these policies led to the neglect of much needed and vital investments in infrastructure, health and education. Only now are these effects being corrected by new administrations of Biden in the US and Scholz in Germany, with Biden's 2 trillion plan for workers and families, and a similar plan from chancellor Scholz. With this come needed investments to tackle climate change, all of which was neglected before. India has taken a different approach. By following good governance, managing vaccination effectively during the pandemic, social emphasis for food, water, electricity, cooking gas, medicine for the vast population of 1.2 billion, and a Master plan for building Made in India manufacturing,  India has avoided such crises and maintained strong economic growth. In this sense it is a model for South Asian, South East Asian, African, and Latin American emerging market economies that face a difficult situation today. Good governance is critical.   ...

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This editorial in the Economist magazine says the banks have paid large fines for wrongdoing but individual accountability has not been achieved. Only one individual conviction has been achieved related to market rigging in Britain. The penalties paid by banks between 2009 to 2014 worldwide add up to $245 billion, according to CCP, a research group. The problem says the editorial is that without individual accountability this is likely to be seen just as a cost of doing business. For the culture at banks to change individual acountability has to be established, and only now are banking regulators realizing that the public's disillusionment with the political parties in power during the last decade in Europe and the U.S. has its roots also in the way accountability has been tackled. Editorials in the WSJ and the NYT have addressed the same theme and expressed the same concern. The May 21, 2014 editorial on the U.S. Justice Department's legal settlement with Credit Suisse. "Holder convicts Switzerland," was critical of the Justice Department because this settlement did not bring accountability or justice. Columnists Eavis and Reilly in the WSJ, Protess and Greenberg in the NYT, were also critical of the settlement. Other legal settlements followed the same pattern throughout 2012-2015. Another aspect of this and a larger problem is that the same management has remained in place in some places. Shareholders expressed their feelings at the recent Deutsche Bank meeting in June 2015 when one shareholder association asked the question: "Mr. Jain are you the solution to the problem or part of it?" questioning how the same management that created the problems was going to fix the problems. A week later the two co-CEO's departure was announced and a new CEO appointed. BaFin, Germany's regulatory authority was described as not providing effective oversight on management at Deutsche Bank, by Eyk Henning in the WSJ March 28, 2014. It is too early to say if the public's frustration with the slow pace of establishing accountability and generating culture change is at long last registering with regulators and the political parties running the government. Prime minister Cameron and chancellor George Osborne's decision to put $1 billion into communities throughout Britain from the fines, described in the WSJ May 31, 2015, and an additional $227 million pounds from a legal settlement with Deutsche Bank in April 2015 for creating 50,000 apprenticeships, is the first sign of a conviction developing in political parties that instincts of fairness and the compact between the people and their government handed down over many, many years and generations, need to be respected. In the U.S. communities devastated by the recession and foreclosure crisis, especially inner cities, could benefit from Cameron and Osborne's exceptional idea. For the political parties and the political elites in Europe and the U.S. it is a way to restore some of the trust lost in the last decade. For banks a change of management, cultural change, will benefit the employees and shareholders, and improve relationships with customers, restoring trust over the next decade....

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Mr. Pascal Soriot of Astra Zeneca says his company has signed agreements for production of 2 billion doses of the coronavirus vaccine being developed by Oxford University. He says manufacturing is starting now because "we want it to be as fast as possible." One of the deals is with Serum Institute of India, the other is with Bill Gates of the Bill and Melinda Gates Foundation for $750 million for CEPI and GAVI organizations which he supports. Mr. Soriot says the licensing agreement with Serum Institute is to supply one billion doses for low and middle income countries, with 400 million doses ready by end of 2020. He says Astra Zeneca is building supply chains across the world and so far has secured manufacturing capacity for 2 billion doses of the vaccine. Mr Soriot tells BBC that manufacturing vaccines on this scale is not an easy thing to do. He says that Astra Zeneca will not make a profit in production of these Oxford University developed vaccines. The U.S. has secured 300 million doses of the Oxford vaccine, and the UK 100 million doses.   ...

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Turkey's inflation rate continues to rise even after a government effort in December to stabilize the economy by stabilizing the lira. Annual inflation jumped from 21% in November to 36% in December, according to the Turkey Statistical Institute. The true inflation rate could be much higher. The ENAGrup estimate after assessing thousands of prices is that true annual inflation is 82%. Ordinary Turks have difficulty affording essential food supplies, says this WSJ report. Turkey has overdependence on the US dollar in its government and bank borrowings which has intensified the impact of the cost increases world wide with the supply chain problems and higher energy prices. Food imports now are much costlier. Depreciation of the lira currency by about 50% added to the impact of the overall global inflation. The lira has come back a bit to 40% loss of value after an unorthodox government plan, yet inflation continues to rise. Deeper problems within the economy that were hidden when the economy was in high growth years are now apparent as the world sees an inflationary surge during the second year of the pandemic. ...