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By July 2013 only about 40% of the Dodd-Frank financial reform legislation rules were completed, 60% of deadlines were missed, according to law firm Davis Polk & Wardwell LLP. A singular aspect of the Dodd-Frank legislation was that rule making was left to regulators in different agencies and open to lobbying by the financial industry. This has the effect of delaying the rule making until a consensus is reached, diluting some of the original intent as financial firms jockey for advantage, and making it voluminous in many cases because of the wording designed to achieve consensus and account for objections by various interests. Reform legislators such as Barney Frank openly said they had no interest in learning enough about the financial industry to do the rule making, and may have left an excessive amount of the rule making to regulators in the future. A consumer protection agency was established under the new law and derivatives are required to be traded on exchanges. The Volcker Rule to separate investment banking from deposit taking and a requirement that banks hold onto a portion of mortgage securities marketed are not completed. The S.E.C. has to write the rule on how much money brokerages must set aside for losses on swap trades. Another bubble in financial markets would leave the U.S. and European economies vulnerable to problems similiar to the global financial crisis of 2008, which is why the U.S. Federal Reserve, the Bank of England and the European regulatory authorites are requiring large banks to set aside more capital reserves. The S.E.C. under its new chief is also taking a more active role in overseeing the banks for violations of securities laws, including a series of actions taken against JP Morgan Chase bank in 2013. This has a deterrent effect as the huge monetary easing by the U.S. Federal Reserve to reduce unemployment also creates bubble conditions in financial markets, according to Fed governor, Jeremy Stein. Former FDIC chief, Sheila Bair, says the lack of leadership in this area is simply astonishing....

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Karishma Vaswani of the BBC points out that the Trump administration tariffs and the response from China with tariffs of its own, are not the beginning of a trade war but negotiating tactics of both sides. Behind the scenes and behind the declarations and position statements both sides are talking to each other and considering the options open to each. The U.S. position is that China has emerged with a bigger share of the global economy by dumping products, subsidizing its industries from solar panels to high tech ventures, and stealing American technology by forcing U.S. firms into joint ventures that increase pass through of advanced technology. U.S. firms seeking access to the Chinese market or using China as a manufacturing base such as Boeing, Apple, GE and other high tech companies are in ventures or manufacturing arrangements where China has access to advanced American technology. Nathaniel Taplin in his article in the WSJ also sees this as a negotiating position set out in the U.S. for talks with China. Taplin says the U.S. is in a stronger position in this negotiation because of the huge surplus of about $300 billion that China now has with the U.S., and which is increasing in 2018 with the strength of the dollar. The Trump administration is looking to correct the trade imbalance in the future by focussing on China's access to advanced U.S. technologies in the next phase of competition between the U.S., Europe and China. This limited objective is more likely to lead to concessions by China Taplin argues, because of two reasons. China needs the dynamism of U.S. firms and technology advances because these firms and Chinese firms that are getting foreign investment are the most productive part of the Chinese economy with jobs generated, rate of return about twice that of inefficient state run firms. China also needs access to advanced U.S. and European technologies even in a limited form as it pursues further modernization.   ...

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Binyamin Applebaum cites different experts on how U.S. Fed policy could play out in 2017-2019. He cites Fed governor Dudley that there is increased uncertainty under the Trump administration, and other economists who say that aging population, lack of innovation, and steady growth under the Obama administration with falling unemployment, make it unlikely that growth will jump well above 2%. The Fed's own forecasts are for for under 2% growth in 2017 and 2018, and Applebaum says this is not expected to change by much. Janet Yellen does not see a huge stimulus as a positive, says Applebaum, because it would increase the deficit at the wrong time. He cites Yellen who prefers to see more fiscal space now that unemployment is down to 4.6%. Steady growth in the view of Fed officials has taken up much of the backlog of people looking for work since the 2008 crisis. Yellen sees some fiscal space as desirable with high debt to GDP ratio at 77 percent, so that the government could respond to some adverse event in the future. A Republican Congress is also averse to sudden increases in the deficit. See the link to views about the uncertainty of how things can play out in a separate article by Neil Irwin of NYT. ...

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Toyota seeing the American market in sharp decline has finally realized the need to build up manufacturing capacity in India. Today it ranks seventh in sales in India behind Suzuki and Honda. Its market share actuallly slipped in 2003 to 3.5% from 4.7% partly because it neglected having a lowpriced small car in its lineup. Toyota sees the Indian market growing in the long term even though it is slowing down this year with effects of the global credit and economic crisis. In 2007 Toyota sold 54,000 vehicles in India. It now plans to increase sales to 400,000 vehicles by 2015 or about 10% of the projected passenger car market of 4 million vehicles by 2015. To do this it plans to add new models, including a lower cost car and open a plant with capacity of 100,000 vehicles a year. It is also opening a Technical Training Institute. In September Honda plans to open a technical college. And other carmakers have formed partnerships with India's technical institutes for training. What it hopes to do is instill lessons of discipline, for instance exercizes are part of the routine and inspections are made at morning exercizes to ensure that hair, uniform and other details conform to Toyota standards. It teaches subjects like math, English and Japanese as well as teaching skills in welding auto assembly and maintenance. And it teaches lessons in company principles of eliminating waste, continuous improvement and consensus building. And it teaches hard work and resilience with one sign on the campus reading "small drops of water make a mighty ocean", reminding one of the power of small individual efforts combined and organized over long periods of time to build great things, like Toyota's own efforts from its humble beginnings from scratch in the thirties. To get the right kind of person for training Toyota looks for about 180 junior high school graduates from poor farming families from a large pool of applicants, who would be open to new ideas and training, and have the right kind of temperament and discipline and intelligence to make good factory employees in a Toyota type production system of continuous improvement and cooperative effort....

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Brent crude drops below $60 by Dec. 15, 2014.

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After police use of tear gas against protestors in Hong Kong- demanding the resignation of Chief Executive Leung and open elections- crowds swell, and the protests spread from the business district to other parts of the city. A major route on Nathan Road through Hong Kong's Kowloon district was blocked by protestors. Young people, including a management trainee and an assistant engineer in this report, university students and others, were determined to continue the standoff with the government on September 28-30, 2014. The current system is for Beijing to nominate a Chief Executive, and Beijing granted Hong Kong the right to vote for a Chief Executive but only for candidates approved by Beijing.

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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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U.S. Federal Reserve chairman Ben Bernanke's speech at the annual Jackson Hole conference in August 2011.

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In a closely watched election Mr. Wilders of the far Right in Netherlands gains 20 seats, far behind centre right People's Party for Freedom and Democracy of prime minister Rutte who won 33 seats. The Dutch Green party which is strongly pro- Europe went from 4 seats to 14 seats, the Christian Democratic Appeal party gained 19 seats and the pro-European Democrats 66 party also gained 19 seats. In the 150 member parliament Rutte needs 76 seats to form a new coalition government, and he is likely to ally with these other parties to form a new government that supports strongly the European Union. This editorial in the NYT says the people of the Netherlands turned out in large numbers to support pro-European Union parties. Next the focus is on France and Marie Le Pen's challenge from the far Right. Cyber threats from Russia are seen as a way to discredit otherwise strong candidates, and the French government is taking this seriously. Chancellor Merkel said she "was very happy that a high turnout led to a very pro-European result," and president Hollande said this was "a clear victory against extremism."  ...

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EIA figures show U.S. stockpiles of crude oil, refined fuels and other petroleum products increasing to 1.149 billion barrels in the week ending Jan 2, 2015, excluding the strategic petroleum reserve. This is the highest ever since 1990, except for June 2013. Brent crude drops below $50 a barrel.

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US Trade Representative Lighthizer in the Report on China's Entry into WTO sees this as a mistake in the policy of president Clinton. Clinton has said that was a mistake. David Sacks raised this issue in a podcast with Larry Summers, an economist who was deputy to Robert Rubin and Deputy Treasury Secretary, then Treasury Secretary succeeding Rubin in 1999. Clinton on the advice of Rubin and Summers set up the framework for China to join the World Trade Organization without the safeguards and the setup that would prevent it using state capitalism and subisidies to build its own economy with exports, to ally with American corporations to support the outshoring of almost the entire industrial base of the US. Shocking as it sounds this has happened, had happened by 2016, when Donald Trump with the advice of USTR Lighthizer took the first steps to reverse this with Tariff policy, which was supported by president Biden, and continues in its new phase under DJT in 2025. Rubin and Summers had supported deregulation of financial markets and removal of the Glass Steagall Act by 1999. This was to led to the financial crisis of 2009 that was to be one of three body blows to the American working and middle class. The others China entering WTO without safeguards that led to deindustrializing US and loss of its manufacturing base, loss of 5 million jobs, tens of thousands of factories. And the third was the pandemic. “ . . .it seems clear that the United States erred in supporting China’s entry into the WTO on terms that have proven to be ineffective in securing China’s embrace of an open, market-oriented trade regime” 2017 USTR Report to Congress on China’s WTO ...

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U.S. Secretary of State Hillary Clinton, says Russia's entry into the World Trade Organization in the summer of 2012 will be good for the global economy and for the U.S. It will increase U.S. exports to Russia from the low level of 1% of U.S. global exports. It will also set the right tone for improving U.S.-Russia relations and improving cooperation on global issues. She calls for Congress to change the Jackson-Vanik amendment and setting up normal trading relations between the U.S. and Russia. It is a smart investment in trade with Russia,and also a way to help Russia diversify its economy, setup an open political system and put its world trading relationships on a more transparent basis with clear tariff rates.

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Dubai airport had 67.3 million passengers in the 12 month period through Feb. 2014, according to Airports Council International. Emiraes airline is based in Dubai. It was setup in 1985 using a $10 millon grant from the government of Dubai and 2 Boeing 727 planes. The precipitating factor was a cutback in flights by Gulf Air between UAE and Pakistan. Emirates benefitted from a business friendly environment in Dubai and open skies policies that helped the aviation sector grow. Another factor helping rapid growth is that the CEO of Emirates, Sheikh Ahmed bin al-Maktoum, is chairman of Dubai Airports and Dubai Civil Aviation Authority, chairman of the low cost carrier Flydubai, and is the uncle of Dubai's ruling king Sheikh Rashid al-Maktoum.

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The market shares of Hyundai, Kia, and VW have received a boost as the Detroit carmakers struggle. Kia and Hyundai have moved their market share from 5 in 2008 to 7.3% today, up by 2.3%. Hyundai had difficulty getting brand name recognition for quality and performance in prior years, but it has persevered. KIa and yundai spend more on incentives, $3200 in 2009 compared to $2000 in 2008 to attract first time buyers. To take into account the economc conditions Hyundai was the first to come up with the Hyundai Assurance Plan, which allows buywers who finance their purchase to return the cars if they lose their jobs. Once these buyers try the Korea cars the ope is that they will see that the quality is on par with the Americans and the Japannese for a lower price, or even exceeds them. The Korean carmakers have worked hard on improving quality. In 2009 Hyundai won the North American Car of the Year award at the Detroit Auto Show for the Genesis luxury car. VW is also gaining market share this year. VW's market share is up to 2% from 1.5% in 2008. Aggressive marketing of the Jetta has moved its sales by 8.3% in May. Some of this market share is coming from Japanese carmakers....

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State Bank of India saw its deposit base jump by 40% in the last 3 months of 2008, as customers transferred money from foreign banks and private sector banks to State Bank of India. State Bank of India is 60% owned by the Government of India. Over the last decade ICICI and other private sector banks modernized, had better looking, airconditioned branches open longer hours, compared to the older shabby looking branches with fans of State Bank of India. Now State Bank of India has tens of billions of additional deposits, has $20 billion in cash above the amount it needs to operate, and is able to offer interest rates on loans that are 2% lower than the competition. ITs also investing in modernization of its branches so that it canoffer the same cheery looking, airconditioned branches as its private sector competitors. It hired 25,000 workers in 2008, plans to hire 10,000 in 2009, is investing in 4000 additional ATM's and adding 2000 branches to its 10,000 existing branches. Competitors attribute State Bank's growth to lhigher deposit rates and lower loan rates more than the flight to quality. State Bank says about 60% of new loans are coming from competitors. And State Bank hopes to recover the market share it lost to private sector banks in the last decade. Lending at State Bank and other public sector banks rose 29% last year, up from 20% in 2007. Lending by private sector banks rose11.8% in 2008, compared to 24% in 2007, and at foreign banks increased by 16.9% in 2008 compared to 30.7% in 2007...

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Oil traders are pricing in much higher oil prices- with $150 not being inconceivable- because of Mideast unrest. They see this unrest playing out over a long period of time, and do not see this changing even if the Libyan situation returns to normal tomorrow. Saudi Arabia will need to price oil at $85-90 a barrel just to meet the economic demands for a growing population, says Rachel Ziemba, analyst at Roubini Global Economics. Saudi King Abdullah recently promised $150 billion in new housing, higher wages and other benefits to prevent protests. The fiscal pressures are growing in these countries. A $15-$20 premium for unrest is assigned by Paramount Options, a trader at the New York Mercantile Exchange.

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Saudi Oil minister Ali Naimi increased his previous estimate for oil prices needed to balance the needs of producers and consumers. His new estimate is $90, up from the previous estimate of $80. This will give upward momentum to oil prices. The fall in the price of the dollar is affecting OPEC countries, including Libya, Algeria and Venezuela. These countries are looking for a price of $100.