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Afghanistan, says aUN report, s seeing the development of narco-catels similiar to Columbia, where drug profits are seen as more imortant than insurgent ideology. The interdiction of opium crops says the UN office on Drugs and Crime has reduced production by 10% with 22% less land being cultivated. But this does not mean that the flow of opium has beeen affected. A stockpile of 10,000 tons of opium has been built up and is in the hands of narco-gangs, which is about 2 years supply for world demand. This also suggests that the efforts to cut financing of the insurgency are being dwarfed by the access for terrorists to this large source of financing. It also raises other questions about the billions of dollars that can be used for terrorist purposes. As the war situation deteriorates this financing suggests two ways in which the situation becomes intractable, first through the financing of the insurgency, and second through the corruption in the government of Afghanistan that this engenders. with the complete loss of confidence among ordinary people in the government. In these circumstances a democratic election does not have anywhere near the kind of credibility that for example the Iraqi elections had. Quite the reverse....

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The countries that would be affected the most from a slowdown in China are the commodity producer countries- Australia, Brazil, S. Africa, Chile. Other countries include Thailand, Indonesia and Vietnam. Currencies such as the Australian dollar, the South African Rand, the Brazilian Real and the Chilean peso would decline in value. South Korea, Taiwan and Japan which supply large machinery for construction and manufacturing would be affected. Oversupply of steel and other products in China would mean higher exports causing a drop in steel prices and prices of other items. There would be a decline in commodity prices. Germany which provides the high tech machinery for China's industrialization will be affected. Exports growth to China from Germany increased by 44% in 2010. It has been pointed out that China is the seventh largest export market for Germany, coming after France, the U.S., the Netherlands, the U.K., Italy and Austria, exports to EU countries being the largest market for Germany. A global economic slowdown, with the Chinese slowdown as a part of this would impact German exports, leading to a slower growth in Germany. The U.S. would be affected also because exports were picking up in 2010-2011, and remain the one bright spot for the U.S. economy's recovery....

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After heated debate Governor Christie and leaders of the democratic party in the legislature agree on changes to New Jersey's public employee retirement and health benefits and pension system. New Jersey's pension system has unfunded liabilities of $54 billon and some estimates forecast that it will run out of money to pay pensions by 2018. The retirement age for new workers is now set at 65 not 62, pension contributions go up to 7.5% from 5.5% for state workers and to 10% from 8.5% for public safety officers. A major change is to delay annual cost of living adjustments till the pension fund returns to a stable financial footing. The absence of this change would have meant reducing retirees pension value by 30% in the next ten years. After the plan is 80% funded a new employee-employer pension governing board will modify the contribution rates and pension rules based on advice from actuaries. On health benefits the changes are for workers earning more to pay a larger share of premiums- so that a worker earning $60,000 would pay 27%, and a worker earning $95,000 would pay 35%. This particular change is phased in over 4 years and saves $300 million....

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This Journal editorial says Germany and France will have to pay for preserving the Eurozone one way or another. It suggests a direct approach of the German and French governments injecting capital for recapitalizing German and French banks that would take losses on bad loans to Greece, Ireland, Portugal, and Spain; combining this with bondholder haircuts for creditors, and reforms that include spreading the burden for Irish bank debt and cleaning up the cajas savings banks mess in Spain. This would mean exactly the opposite of what is taking place now, including the abandoning of individual country rescues and bailouts; which the Journal calls extending loans and pretending the problem is not with German and French banks that would have losses on the bad loans. The problem is that this places the entire burden on austerity measures in each bailout country which reduces growth and raises unemployment to levels that make the problem much worse than before. This is not happening because of a serious failure to reach agreement on the shared sacrifice and cooperation between the governments, creditor banks, the ECB and other parties in the eurozone, on a serious debt restructuring across the eurozone that would put the euro back to stability with some mechanism for serious financial discipline in eurozone states....

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Allan Meltzer says a Fed QE III woud be bad monetary policy. He puts several questions to Bernanke- how the Fed and Ben Bernanke can know now what is the right interest rate policy in mid 2013, and what reason can the Fed give for adding excess reserves when U.S. banks have $1.6 trillion in idle reserves at the Fed. Meltzer cautions the Fed and other policymakers not to pay attention only to short term forecasts, which can be susceptible to large errors. And calls for attention to the long term consequences of their actions. One point he emphasizes is that the unemployment problem cannot be resolved with short term policy actions nor can it be resolved in a short time. It will take population growth, falling housing prices and rising rents to create opportunities for new construction. Another change is the transition to a less consumption driven and more export oriented economy. This transition which has started will also take time. He urges the Congress and the administration to focus on: reducing corporate tax rates by closing loopholes, long-term reductions in entitlement spending, a 5 year moratatorium on new regulations, and the Fed adopting an explicit inflation target between 0% and 2%....

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This Wall Street Journal editorial on August 18, 2011, says Texas Governor and U.S. presidential candidate Rick Perry made a poor choice of words when he called the Fed chairman's policies "treacherous or treasonous." While admonishing Rick Perry for the use of the wrong words, it says Perry has done a public service to draw public attention to Fed policies. These policies of the U.S. Federal Reserve- Bernanke's and Greenspan's- which allowed the tech and mortgage bubbles to develop and then engaged in loose monetary policies to correct its errors over a ten year period since 2000, should be the subject of debate. Current monetary easing has also added a large element of inflation, and some experts such as Kenneth Rogoff are calling for inflationary levels of 4-6%. Critics of Fed policy such as Allan Meltzer and some Fed governors of regional banks, including Hoenig of the Kansas City Fed, say the Fed has not given enough thought to the long term consequences of its actions. The U.S. needs to address these major changes in policy as serious issues with the public and presidential candidates engaged in the debate. They have everything to do with a vision of a future America....

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Egyptian president Morsi appoints a new defense minister and two leading generals are asked to retire and continue as advisers. Because Gen. Tantawi was 76, and the new defense minister who comes from the military body the SCAF is 58, it appears to observers that this is a shift to a new generation within the military. In the background is the situation in Syria with the Assad military regime at risk of falling in a civil war, and the focus of Sunni nations in the Middle East and the U.S. on Iran, which could have led to a U.S. effort led by Secretary of State Panetta during his recent visit to mediate between the different factions for a rapprochement. The rapprochement would benefit the retired generals and the military to continue operating businesses that constitute about 25% of the economy, a younger generation in the military better able to adapt to the changes in the Middle East to assume control under civilian leadership, for the Muslim Brotherhood and other political parties the reversing of military decrees subverting the election results, and for the U.S., Sunni nations in the Middle East and European allies better able to focus on the situation with Iran. For all side a win-win negotiation through efforts by Leon Panetta....

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The Chinese car market is changing fast, with domestic brands making up a larger share of the local market. In 2000 these domestic brands made up 18% of total sales, whereas in 2010 forecasts show this to be about 32%, with the share increasing in future years. In a rapidly growing market this did not make much difference, but with the market growth moderating to 7-8% in the next ten years from the heady 33% of recent years, the foreign brands such as GM and VW will not see the growth of recent years. J.D. Powers projects passenger vehicle sales in China at 19.2 million by 2017, with Chinese brands taking 45% of the share, in one scenario. Under this scenario foreign brands like GM and VW would see sales growth of only 5% in the next 7 years. The foreign brands are not allowed to own more than 50% of local operations. And their partners are making their own domestic brands. If Japan is a useful example, China's automobile companies will like Nisssan, Toyota, and Honda, proceed to penetrate global markets and become a dominant player in their local market. This has implications for GM, VW and Daimler....

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New Sony CEO, Kazuo Hirai, plans to cut 10,000 jobs, about 6% of its total employees, over the next 2 fiscal years ending March 2014. Sony's television business has faced 8 years of losses, and the entire electronics business has faced 4 consecutive years of losses. The price competition and the high price of the yen has hurt Sony's sales and margins. This has affected the entire Japanese electronics industry, which has suffered consecutive years of losses, including Toshiba and Panasonic. Hirai is changing Sony's strategy in the television business. Instead of targeting a goal of 40 million in sales for television sets, he is cutting this in half to 20 million and reducing the size of its television sales operations. Sony's plan appears to be to focus on its strengths in new technologies and maufacturing, including the new 4 K technology, which would have to be adapted to mass market from its current specialized application. By doing this Sony would not have to compete on price in the manner it does today with Samsung and other Asian brands which have closed the gap in conventional technologies. Hirai's employee cuts follow the 16,000 job cuts made by Howard Stringer in 2008, during the global financial crisis. During March 2011 Sony had 168,200 employees....

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Hamdi Ulukaya on how he started the Chobani brand of yogurt and the company from an idea and a postcard about a Kraft yogurt plant put up for sale in Columbus, New York. Here Hamdi is interviewed by the WSJ's Sarah Needleman. He describes how he developed the recipe with a master yogurt maker from his home country of Turkey, knowing that he had only one shot to get it right. That included pricing because Greek yogurt is costlier to make. The idea came from the postcard which made Hamdi think about the fact that always astonished him- that there was no quality yogurt in the U.S. He hired five people in the plant, had the walls painted, and the master yogurt maker as the sixth employee. The yogurt was introduced in 2007. The pricing had to be right- costing betwen $1.00 and $1.30, not too high. He decided on giving out free samples to get people introduced to the product and had a sampling truck go around the country, similiar to what Ben & Jerry's did with their ice cream in the early days. To avoid costly ad campaigns Chobani was introduced using bloggers, Facebook and Twitter to reach consumers directly....

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Kozo Yamamoto joined the Finance Ministry in 1971, and is serving his sixth term as member of Japan's parliament. Since 2011 Yamamoto has convinced Abe, a colleague in parliament, about the need for reflationist policies now called Abenomics. This helped Abe make a comeback win for the prime minister's position for a second time. Yamamoto led the study group that convinced Abe of the need to delay the second increase in the consumption tax to 2017, and a 3 trillion yen stimulus package to encourage household spending, following the economy's fallback into a recession in Nov. 2014. He says it was important to not add to the headwinds the economy is facing. Yamamoto does not fall into the conservative mold of people from the Finance Ministry, as he takes tango lessons, is interested in fine pottery, and in Italian cooking. He has called bureaucrats in the ministry and central bankers "feckless" and "defiant," after years of questioning them in parliament and demanding reflationist policies. With the snap election in December 2014 the Abe led LDP is taking on the conservative Finance Ministry officials, who have insisted on sticking with the old timetable for the tax increase, regardless of the headwinds and slowing exports....

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Airbus CEO Fabrice Bregier, says Airbus is set to double its profit margin by 2015 through improvements in efficiency and management. In 2012 EADS Airbus unit showed an operating profit margin of about 4% on sales of 39 billon euros, compared to Boeing commercial airplane division operating margin of 9.6% on sales of $49 billion. Under the 51 year old French engineer Airbus is redoing the way it makes planes, giving factory managers more freedom to make decisions, and bringing an "entrepreneurial spirit" to the company. Each plant is treated as a small business, and Bregier says the fact that the planes are complex does not mean that one needs to be complex in doing things. Airbus parent company EADS stock has risen by 50% in the past year with shares at 42.84 euros on June 14, 2013. The reduced stakes of the French government and Daimler AG in EADS has increased the amount of freely traded shares to 72% from 54%, increasing pressure from investors for better performance. Airbus has 150,000 employees and subcontractors and changing the culture in the organization is a difficult task. Bregier was chief operating officer for 5 years before assuming the CEO position in June 2012. ...

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Ford and GM employ 120,000 workers in Europe and sell roughly 4 million cars there. GM sold nearly a fourth of the 9.37 million cars it made worldwide in Europe in 2007. And 60% of these cars are small cars like theFocus and Fiesta in Europe for Ford and the Corsa and Astra in Europe for GM. The presence of a gas tax may be what makes Europeans choose smaller cars as gasoline is expensive in Europe. What makes them profitable in Europe is they are generally sold with all the features of bigger quality cars and command higher prices so that small does not mean cheap. But is there any reason that given the experience of Americans with gas prices, and a culture of energy conservation among younger and newer customers. apossible gas tax that funds public transportation projects, and the poor state of household finances, that the better appointed smaller cars that are popular in Europe cannot make their way into American homes. With all the experience with small cars in Europe are GM and Ford simply lacking both the vision and the courage to try something new with these cars when their bets with larger cars have failed....

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"Who are the Taliban? They are the local people," says one Afghan from Marja. Another man Hamza says he will not let foreign forces raid his house. Their is fear and resentment of night raids for antinarcotics purposes. A local leader in Panjwai, west of Kandahar, says people lay mines for the Taliban only to feed their families, and says 80% of insurgents are local people driven to fight out of poverty and despair. Offered another way to lead their lives only 2% would support the Taliban. A leader in the provincial council at Helmand says people do not trust the government as it has not kept its promises in the past, so that even if they are defeated militarily and security is 100% it will take time to restore trust. This confirms earlier reports of the deep unpopularity of the Karzai government. All this reporter Carlotta Gall of the NYT finds out on the ground, in the southern provinces of Helmand and Kandahar, as the USA launches an offensive to push the Taliban back towards Pakistan. In recent years the Taliban has established control over most of Helmand and Kandahar provinces , and many villagers prefer to be left alone without foreign forces causing bombing and fighting. ...

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Is there a lesson in this for the Detroit automakers who have too many dealerships. See related article on the dealership numbers for the Big Three vs. the like of Toyota and Honda. Deere has gone from 3400 dealerships to 2984 dealerships, down 12% in ten years since 1996, so it appears to be a gradual decline, and dealerships are consolidating with stronger partners, or selling out to stronger partners. The number of owners has shrunk at a much faster pace. (Why are auto dealerships able to take this to the courts and not Deere dealerships, as is mentioned in the related auto dealership article? ) Much of this reflects search for improved profitability and stability in a very cyclical industry. Fewer distribution outlets owners and better management of inventory, better parts service with better techically trained staff, and bringing new technology and designs to improve the revenue generating capacity of each machine by reducing demand for expensive labor, is a shrewd way of managing this business. A $100 million dealer organization can better service what is becoming a high tech product, a better hire technically trained people, and better manage inventory. With this setup Deere probably can better manage production to match demand and not let inventory clutter the dealer lots for discounted clearence. ...

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Toyota is reducing its dependence on the US market by growing in China, Russia and the Miidle East and with plans for growth in India with a lowcost car. The market in China and Russia has grown by 40% for example and this should mean there is room for overall global growth even with the slowdown in the US. In China Toyota is falling short of demand as its consistently underestimated the growth in the market. When Toyota thought the Chinese market would hit 8 million vehicles by mid 2007 it actually hit 8.5 million. So in many countries like China, Russia and the Middle East and India Toyota may be scrambling to meet demand in the future which suggests that in the long term Toyota may be less affected by the ups and downs in the US market. The US manufacturers like GM are following a similiar strategy. Competing with Toyota overseas the US makers have none ofthe liabilities they face in the US market, years of sloppy service and image, pension and health liabilities, union rules and restrictions, and they are moving some of the best technology and design into overseas markets so the competition there should be on more even ground....

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The auto parts industry is seeing a huge transformation as American Axle, Visteon and other companies look to Europe, Asia and other countries for growth and shift to a lower cost manufacturing base overseas. Costs are in many cases about 5 times in the USA than in other countries in Asia. And health care costs are a major part of the costs the auto parts makers face in the USA. To get an idea of how fundamental a change is going on American Axle which in 1995 did not have a plant overseas now expects 75% of its $1.3 billion in product orders to be met by plants overseas. And it is planning to build plants in India and Thailand. Visteon which used to be part of Ford Motor and made parts like heating and cooling systems mainly for Ford, will by 2010 according to Visteon's CEO, have sales to Hyundai and Kia of 28% of sales, making the Korean company its largest buyer. Ford's North American operations will only account for 6% of sales from 15% today. That is a dramatic change and involves closing plants in the US. For Visteon this means $635 million in cost reduction mainly through plant closings in 2008-2010....

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Ma's big margin 58% of the vote to Hsieh's 42% plus his large majority in legislature elections in January as leader of the Nationalist party and his independent stand on issues creates an opportunity for Taiwan to start a new era of peaceful relations with Mainland China as an independent country. It means direct flights from Taiwan and direct postal and shipping routes are now likely. The vote reflects Taiwan's reliance on China for its growth and as growth slows and markets in US and Europe see a slowdown Taiwan's main hope for reviving is economy is in closer ties with the mainland. Taiwan's growth rate in 2007 at 5.7% is much lower than earlier decades of fast growth an much of the manufacturing industry in Taiwan has moved to the mainland and with it a lot of Taiwanese managers are working in China. At the same thime there are restrictions on direct contacts and investments in the mainland. What Ma's policies will do is open up a new era of economic relations with China to increase growth in Taiwan. Both Taiwan and Japan have depended on China for a large part of their economic growth in the last ten years....

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Key members of Congress like Barney Frank, Treasury Secretary Paulson and key officials at the Fed had discussions over the weekend in advance of a critical auction of debt by Freddie that could affect confidence in the company and unsettle financial markets. As part of the confidence building process Treasury announced that it plans to seek approval from Congress for a temporary increase in a longstanding Treasury line of credit for Freddie Mac and Fannie Mae. Treasury also said that it would seek temporary authority to buy equity in either company to ensure that both companies have sufficient capital. The plan also has a provision giving the Fed a "consultative role" in the process of setting capital requirement for the two companies and other "prudential standards". Meantime the Fed's Board of Governors met Sunday in Washington and voted to grant the New York Fed authority to lend to Fannie and Freddie. This effectively gives the two companies access to the Fed's discount window if there were to be a short term funding crisis at the two companies. In this process Treasury's plan is to expand the Fed's authority and supervisory role in the financial markets to prevent any future financial crisis in which the Fed would have to intervene. ...

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After OPEC says in a joint decision that it will stick to strictly followin quotas set earlier this year which would mean a modest drop in production, Saudi officials spread the word that they will continue to pump out as much oil as the world needs. So what is the end result? The Saudis are saying they went along yet they will continue to pump oil like before. Part of the reason is the Saudi belief in their own argument that with high prices the world economy would be further affected resuklting in a possible collapse of demand and of prices something it seeks to avoid and is in everybody's interest. This makes sense if one looks at the deep financial crisis facing the US and which has ripples around the world, most recently in financial mmarkets the collapse of Fannie Mae and Freddie and the possible collapse or sale of Lehman Brothers. And as U.S. elections are up in a few weeks the Saudis do not want to anything that can be interpreted one way or the other, and also a wait and see attitude because a lot of information about the US and world economy is not yet in....

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The Fed's efforts so far to revive lending have done little to create confidence even though the rate cuts have lowered the federal funds rate to 1.5%. Bernanke's efforts to randomly spread liquidity across the economy is not helping frozen credit markets and jumpstarting lending. Business Week's Coy and Reed call it "helicopter money" that is spread all over the landscape and remin readers that Bernanke was referred to "Helicopter Ben" after one of his speeches citing Milton Friedman in 2002. Friedman coined that metaphor. Paul Welfens, president of the European Institute of International Economic Relations in Wuppertal, Germany says "its very dangerous not to have a strategy, as the situation is worsening because no one is doing a program to restore confidence." Gordon Brown's plan in the UK to jumpstart lending by injecting capital into the banks for equity stakes is supported by Business Week's Coy and Reed. Coy and Reed suggest a targeted approach including not wasting money on weak banks that may be consolidated or allowed to disappear. They cite Robert Diamond, President of Barclays bank who says that "as the tide goes out the weak models and the weak managements are revealed, we are goiing to see significant consolidation in banking across Europe."...

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What is theaverage income of a Ohio plumber and how many have health insurance? Is he a working class man? Well it turns out that Joe the Plumber Republican candidate for President 2008 refers to could be an exception but the average plumber makes $47,930 according to the Bureau of Labor Statistics occupational earnings report for May 2007 for plumbers in Ohio. And the Ohio plumbers income was only 15% higher than in the 2000 report when the consumer prices in midwest rose by 17%. According to the Kaiser Family Foundation in 2007 only 45% of companies with fewer than 10 employees offered health benefits, down from 57% in 2000. And 2007 was a good year, the statistics for 2008 and 2009 would look much worse as the downturn takes shape. As Chapman another Nobel prize winning economist wrote in the WSJ oped pages the stimulus checks were spent on more purchase of consumer goods merely continuing a high debt low savings spendthrift pattern of consumer behaviour and delayed the economic crisis for 6-12 months. Underlying incomepatterns like the one above where working class Americans were actually more and more worse off in an accelerating pattern may have become glossed over in consumer debt and housing boom behaviour....

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The React-1 study from the Imperial College of London acts as an early warning system for the UK on coronavirus. The latest study has raised alarm about spread of the virus that is not related to testing and is across all age groups leading to the new rule of six by prime minister Johnson. This bans gatherings of more than six as Christmas approaches. During the  period in July to August the virus was taking 17 days to double now this is at 7 days.  The React-1 study for Aug 22 to Sept 2 shows 13 per ten thousand being infected and compares to 4 per ten thousand July 24 to Aug 11. It is a robust study with swabs sent in for tests from 300,000 volunteers in Britiain. Prof. Eliott the director of the study at Imperial College, London, says that "there is an epidemic in the community and there is no room for complacency." The R rate is measured at 1.7 in this study which is taken seriously by the government as an early warning of what could happen. ...

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The Guardian sends its reporters along with UN special envoy on poverty Australian Prof. Alston as he spends two weeks in the world's richest country looking at poverty in urban areas.  They look at some of the 55,000 homeless people in Los Angeles, homelessness exacerbated by the tech boom in California that has sent housing costs skyrocketing. LA saw homeless people increase by 25% in 2017. The safety net is not being reinforced as the Trump administration cuts many social safety net programs. Next they visit the Tenderloin district in San Francisco where homeless people can be found at St Boniface Church sleeping in the pews. As the Guardian points out the cuts to social programs disproportionately hurt people of color who make up 39% of the homeless in the U.S. This report looks at the incongruity between the tax cuts that are likely to hurt poor whites who supported the Trump administration, as well as hurt the social protections that are part of today's democracies across the western world. This is most evident when one looks at the European Union. They were put in there in Europe for a reason- fairness is good for all classes, and most of all it protects democracies. Authoritarian regimes arise out of social dislocation from wars, or from lack of social protections and ineptitude of elites. Which is why a Lincoln or a Theodore Roosevelt from the Republican party supported fairness and social protections as much as FDR and Truman from the Democratic Party. The view expressed in this report in the Guardian is that the U.S. may have moved in the wrong direction under the Reagan and Clinton administrations creating the "me first" culture that prevails in the U.S. today. ...