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How the swine flu is affecting Mexico city, which is about 30% of national GDP. Mexico City is operating at only about 30-40% of capacity and the streets are silent, with schools and businesses remaining closed or working at low capacity. GDP was expected by Moody's Economy.com to decline by 4.5% for 2009, now the estimate is closer to 6.2%. The first quarter of 2009 saw Mexico's GDP drop by 8% according to Mexico's cental bank.

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This Washington Post editorial says vice president Biden's comments that "I guarantee you, flat guarantee you, there will be no changes to Social Security. I flat guarantee you," made to a voter in Southern Virginia, is downright disheartening. It points out that this is not the conclusion of the trustees of the Social Security Fund, which includes the secretaries of Treasury, labor and health and human services of the Obama administration. The April annual report of the trustees says that the disability portion of the trust fund "becomes exhausted in 2016," and the overall fund "becomes exhausted and unable to pay scheduled benefits in full on a timely basis in 2033." Actions suggested by the trustees include: raising the payroll tax, tweaking the inflation calculator, reducing benefits, or some combination of this. It is clear from polls that the U.S. voter does not want either party to touch Social Security, but the reality is something different. The idea of a flat guarantee in the light of facts that all can see is seen by the Post as going too far, trying to win votes at the cost of postponing necessary decisions which will become harder and costlier if not addressed early....

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Martin Feldstein supports cutting "tax expenditures," -the special purpose deductions such as the deductions for mortgage interest, charitable deductions, state and local government taxes and other such exemptions- as Bowles-Simpson Deficit proposals have recommended. Bowles-Simpson would use this money to reduce tax rates and only $80 billion of this to reduce the deficit. Here Feldstein suggests capping the individual's benefits from such deductions at 2% of adjusted gross income. Research by Feenberg and Feldstein on the use of such a cap shows that this would reduce the federal deficit in 2011 by $262 billion or 1.7% of gross domestic product. The list of deductions used by Feenberg and Feldstein for these figures are: deductions for mortgage interest, state and local income and property taxes, charitable contributions, credits for dependent care, children and certain education costs, and the exclusion of employer payments for health insurance. Sunc a cap would not affect the 46% of taxpayers who use the standard deduction and would induce others to shift to the standard deduction. By doing so this will simplify the tax system and reduce economic inefficiency. Feldstein advises that Congress should include and individual cap on total benefits from tax expenditures in any program to tackle the deficit....

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Clarence Cammers, 64, one of Paul Ryan's constituents back home in Wisconsin, has a question for Ryan at one of his townhall meetings. Clarence is worried about what would happen to his son Tim, 32, if Medicare cuts went through and his son had to use vouchers for getting health insurance. Ryan's district includes Racine withe high unemployment, and Janesville which was devastated by the closing of the General Motors plant in 2010. Most of the people there are conservative, believe in fiscal responsibility and a balanced budget, but they are also older, working class people. Some of them like Clarence are dependent on their Social Security check to get by from month to month and are not sure they can cope with the kinds of cuts Ryan is proposing. In this story Clarence and Tim discuss the meeting and come to the conclusion that Tim will lose either way- with taxes going up or Tim not getting the retirement that he should be getting. Clarence a life long saver decides he will cut back on his expenses and save $588 from his $1912 monthly social security check for Tim. Tim has severe attention deficit disorder and works for $10 an hour in food prep at a resort....

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Stephen Harper's Conservative party won 167 of the 308 seats in Canada's House of Commons, the NDP won 102 seats, the Liberals 34 seats and the Bloc Quebecois 2 seats. Harper gave indications of how he would govern by saying that he would stay on the same path the Conservatives followed when they were a minority party. He said there would be no changes to Canada's public health care system. He told a news conference in Calgary, Alberta: "Even as a majority you have to, on an ongoing basis, keep the trust of the population." The Conservatives won only 40% of the popular vote, and this may be a reason for the caution in making major changes. The Conservatives maintained their base in western Canada, and gained seats in Ontario. The gains in and around Toronto, came because the left-of-center vote was split between the Liberals and the NDP. Experts say Harper will shut down a disputed registry for rifles, end direct government subsidies of political parties, and maintain scheduled corporate tax cuts. The Conservative government is also expected not take any significant steps to cut greenhouse gas emissions that are opposed by the oil and gas industries in western Canada. ...

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Leon Panetta, former Defense Secretary in Obama's first term, and president Clinton's chief of staff, says president Obama made a series of poor decisions for Iraq and Syria. Not following up on the "red line" of use of chemical weapons by the Assad regime has damaged U.S. credibility, says Panetta. The failure to lead in budget fights, on health care, is seen in foreign policy for Iraq. There Panetta points out Obama failed to lead to ensure that Maliki had to agree to a residual troop presence in Iraq, for without this the hard won gains under the previous Republican administration could easily be allowed to slip away. Sectarian tensions, and rise of ISIS could have been controlled by having U.S. troop presence, according to Panetta. White House centralized power under Tom Donilon, chief of staff, and John Brennan, counter terrorism advisor, to th detriment of input from the Defense Secretary and the Secretary of State, says Panetta. Panetta says Obama lacks fire and too often does not take the lead as a president should. A similiar complaint is made by Washington Post journalist Bob Woodward, who covered Nixon and Watergate, after observing Obama's dealings with the Republicans and Congress up close in the first term....

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Danny Hakim's gives this indepth account on the U.S. Chamber of Commerce's connections to the tobacco industry, with reporting from Ukraine, Nepal, the Philippines and other poorer nations struggling with the public health implications of widespread smoking. Since 1997 the Chamber of Commerce, which is viewed in foreign countries as an outpost of the U.S. government, has taken some controversial positions. In the U.S. the chamber has as it members the tech industry leaders such as Google and Microsoft. Yet it is increasingly at odds with these companies. In 2009 the chamber under Mr. Donahue opposed greenhouse gas emissions regulation by the EPA, leading to the departure of Apple from the group and Nike stepping down from the board. In 2013 the American subsidiary of Sweden's construction company Skanska left the group, in protest against the chamber's opposition to green building codes. Michael Bloomberg and Bill Gates have set up an international fund to fight law suits challenging international anti-smoking laws by tobacco companies. The TPP's provision for companies being able to sue foreign governments for violation of trade agreements has no exception for tobacco companies. Similiar concerns are raised about pharmaceutical companies suiing foreign governments where the governments are working to increase access to medicine for poorer sections of the population....

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IBM's Watson Computer business has set a target of $1 billion in sales by 2018 and $10 billion by 2024. Current sales are in the $100 million range. Manoj Saxena is the head of the Watson business unit. The Watson ranks medical treatments by "confidence scores" and incorporates learning from errors. The way Watson works is for IBM engineers to study the technical details of a customers business and store this information for the computer to use. Uses so far are insurer WellPoint using it for determining if doctor's treatments meet company guidelines and a patient's insurance policy. M.D. Anderson Cancer Center is developing a version that recommends leukemia treatments for patients by data mining medical literature. Watson was moved to commercial phase in 2011 after beating 2 Jeopardy champions. IBM has a $15 million deal, its largest so far, with M.D. Anderson. It has taken frequent interaction between developers and IBM engineers to develop a version that recommends cancer treatments. The versions are only as good as how well knowledge in the field is translated into usable software, a long and difficult process. Applications in health care are seen as the best prospects for revenue generation. Google with its data mining capabilities is seen as the closest competitor....

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Portugal's foreign minister, Paulo Portas, resigns in protest against continuity of austerity measures signalled by the selection of Ms. Albuquerque as the new finance minister. Portas's party is part of the coalition of centre right parties in the administration of prime minister, Pedro Passos Coelho. Cuts in public employee pay and spending on health and education, income and sales tax increases, have cut the deficit to 6.4% of GDP by 2013 from about 10% in 2010. The cost of this is an economy that is shrinking more than expected- by 4.8% in 2011 and 2012, and an additional 2.3% in 2013. Unemployment exceeds 17% in 2013. The loan terms negotiated for the 78 billion euro bailout with the IMF and E.U. in 2010, were renegotiated so that the 3% of GDP target for the deficit for 2013 was relaxed to 5.5%. Portas's party and other leaders are calling for a further renegotiation to take into account the economic conditions in Portugal and boost growth. Portas's party opposed the effort to cut labor costs of companies with a large increase in worker social security contributions, a measure seen as counterproductive even by business leaders that was later dropped. In financial markets the 10 year Portugal bond yield increased 0.22% to 6.615%....

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U.S. president Obama's passive response in the handling of the NSA spying on the phones of world leaders including the president of Brazil and the chancellor of Germany comes under criticism in the U.S. The failure to provide adequate assurance- and take immediate action since the summer of 2013 when the first revelations of NSA spying were out- to regain trust of European and other leaders is seen as a weakness in leadership. With German presidential elections approaching German chancellor Merkel actually tried to tone down the initial uproar over NSA spying revelations in the summer of 2013. It was only after it was revealed in October 2013 that NSA had monitored Merkel's mobile phone did the chancellor make an issue of this and Obama could not respond to why no action had been taken since the summer and a complete review of NSA spy activities made by the President and advisors. Because world leaders are involved, and not just of allies but large emerging market nations such as Brazil, this becomes the personal responsibility of the U.S. president. Obama also comes under criticism for not responding to the failure of the healthcare website. This matter is of a different nature and could be handled by the President's Health and Human Services Secretary, Ms. Sibelius....

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California's governor Jerry Brown has put forward his budget plan for fiscal 2013 showing a budget surplus of $851 million. Brown was able to get Proposition 30 passed in the November 2008 elections. Higher income earners pay more in taxes for several years and the sales tax is increased. An improved economy with unemployment down from 11.3% in 2011 to 9.8% in Nov. 2012 is helping with higher tax revenues. General fund revenues are expected to increase 3.3% to $98.5 billion in the 2013 fiscal year from $95.4 billion the prior year. Brown has accomplished a remarkable feat of balancing the budget for 2013 and still continuing to invest in education and healthcare. Spending will increase 5% to $97.7 billion in fiscal 2013 from $93 billion in fiscal 2012 with higher spending on education and health care and lower spending in other areas. Brown's path to achieving this was eased after Democrats won control of both houses in the the state legislature. Says Brown: "Right now, for the next 4 years, we'll be talking about a balanced budget, we're talking about living within our means... This is new." Even Republicans praise this effort from a veteran of California politics- his father was governor in the Kennedy years, and he was governor in the 1980's....

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There are serious serious flaws with the FDA regulations for weight loss pills and dietary supplements. THe law enacted in 1994 gives the FDA jurisdiction only after the pills go on the market whereas for drugs they get reviewed first. THe re is only aspot checking of manufacturers and distributors once the pills are on the dshelves or on the internet. THe FDA believes there may be hundreds of contaminated weight loss diet supplements. Says Michael Levy director of the FDA's deivision of New Drugs and Labeling Compliance, alarge percentage of these products contain dangerous undeclared ingredients. Even after the products are on the market the FDA does not have thability to remove pills from stores, initially the law allows that its upto the companies to issue arecall. It is only eventually that the FDA can act and it does not have the resources to deal with this problem. This even though these ingredients can cause heart atttacks, seizures, and all kinds of health problems. About $27 billion are spent on dietary supplement, $1.7 billion on weight loss pills, and 15% of the population say they have used weight loss supplements, and most have not told their doctors about it. ...

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Areas in which David Cameron shares the same thinking as Barrack Obama are generating green technology jobs, the importance of the voluntary sector and families all doing their bit so that its not just government that will be doing things. "That society should bring about change, not just government." He diagrees with Obama on the Stimulus and believes that the situation in Britain with the government borrowing 10% of national output already makes it difficult to have an extra discretionary stimulus without people losing confidence in then nation's finances. He makes some other points. Britain needs amore balanced economy so that it is not so reliant on financial services. And in Europe as awhole he says its important to deal with the huge dependence on welfare which is a drag on the economies of Europe. This has to be seen in the light of the huge emphasis placed by recent Labor governments on rebuilding the health and human serivces and infrastructure of Britain. In this crisis the social safety net provided by these services may be the reason that asmaller stimulus is needed in Europe. He talks of capitalism with a conscience, where markets are amean not an end to themselves and morality, ethics and asense of values are brough to bear at every turn. ...

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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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Two way trade goal of $60 billion goal set for 2010 during the visit of Indian Prime Minister Manmohan Singh to China. The focus on both sides is on improving the lives of the people in their countries, where even rapid growth still leaves vast gaps in the country's development between urban and rural, coastal and remote regions in the interior, and huge challenges wherever they turn from the environmental degradation of industrialization, to health care in a capitalist economy for both countries, and worker and human rights in a capitalist economy for China, to infrastructure development in India. So the sobering tone of Wen " its not a matter of who outdoes whom" and the thrust of Manmohan Singh's "our people are united in their aspirations for a better future". See Wen's speech to the Japanese Parliament in 2007 where he referred to two temples or monasteries in China where lamps were burning continuously to promote the cooperation and peaceful development in the two countries. He strikes one as thoughtful and focussed on improving the lives of the Chinese people, but that said is part of the system of development in China which is focussed on manufacturing for export with few of the worker protections and much corruption....

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

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Tom Rees the head of the Orniston Academies Trust with 35000 pupils in the UK says the status quo is unacceptable. In France a government report says restrict internet enabled phones to children over 13  years and to social media 16 years. This is the headline in today's The Guardian. Tom Rees says- We are seeing huge and real concerns around mental health, post-pandemic. These are not just self-reported, we’re also seeing real concerns about self-harm, attempted suicide, A&E admissions – these are facts from across the world involving young people and adolescents. “We’re seeing a clear correlation between that and mobile phone and social media use, in particular. Not all mobile phone use is equal and the relationship between that and adolescent mental health, we think, is overwhelming. “There is a responsibility for society to respond, and a responsibility for schools to make it harder for children to access inappropriate content through the school day and restrict the draw of social media.” ...

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This editorial in the Wall Street Journal says faster approvals at the Food and Drug Administration have helped bring more generic drugs to market lowering prices for the public. In 20 months the Trump administration approved 1617 generic drugs, 81 a month on average or a 17% increase over the preceding 20 months. Council of Economic Advisers in October said this was a saving of $26 billion for the public.

President Trump is looking at price controls as a way to bring down drug prices. With increasing outcry about high drug prices in the U.S. the Trump administration and Democrats in Congress are looking for new approaches to bring down prices.

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Landon Thomas Jr. looks at the situation in Spain and finds it hard not to conclude that austerity policies are not working in the absence of economic growth, and increasing unemployment. Unemployment in Spain is at 24% and growing. Deficit reduction is likely to take longer with the deteriorating economic outlook. Spain's economy minister, Luis de Guindos has announced Spain plans to increase consumer taxes in 2013, including the VAT, which is currently at 18%. This would further depress consumer spending. Bondholders sense dangers from lack of economic growth and competitiveness, as much as they sense dangers from uncontrolled regional spending. As a result investors are leaving Spain. According to analysts at Credit Agricole Cheuvreux in Madrid, 100 billion euros (132 billion) have left Spain, including distress sales- coming from insurance companies, pension and sovereign wealth funds reducing holdings of Spanish bonds.

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A three judge special bench of India's Supreme Court led by chief justice Rajendra Mal Lodha, said the process of allocation of coal licenses by the coal ministry lacked accountability and openness. Lodha said: "There was no fair and transparent procedure, all resulting in unfair distribution of the national wealth. Common good and public interest have, thus, suffered heavily." A report by India's federal auditor in 2012 stated the improper allocation of 200 coal leases to private companies cost the government about $30 billion. Former prime minister Manmohan Singh of the Congresss party headed the Coal ministry for part of the period when the improper coal leases were given, leading to intense criticism from the media. This was an issue in the elections leading to the defeat of the Congress party by the BJP party led by Mr. Modi.

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Lee Kuan Yew, passes away at the age of 91. He led Singapore for 31 years after becoming prime minister in 1959. During this period he helped transform Singapore's economy into a centre for international trade and finance by attracting foreign investment. To do this he developed infrastructure, setup training colleges for the workforce, and provided tax breaks for investors, using Singapore's strategic location on the sea lanes in Asia to best advantage. Singapore became a export hub for Japanese electronics companies, and U.S. companies such as HP and General Electric established regional headquarters there. Strategic investments were made in high tech industries and Singapore's sovereign wealth fund took stakes in companies overseas. He retired in 2011 after opposition parties won 40% of the vote in general elections. His son is now the new prime minister.