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Elelven of twelve Fed Governors support the U.S. Federal Reserve's decision to keep rates low till unemployment falls below 6.5%, as long as inflation remains subdued at 2-2.5% and inflation expectations are low. Only the Fed governor of Richmond expressed a dissenting vote. The Fed in its policy statement said it was addressing the problems of the last three years in housing and joblessness. Charles Evans of the Chicago Fed put it this way in a Sept 2011 speech- suppose the inflation rate was 5% when the target was 2%, then central banksers at the Fed would have acted as if their hair was on fire to tackle inflation, then why shouldn't the Fed do the same for unemployment. He succeeded in convincing Bernanke, Yellen and other Fed governors. Bernanke emphasized the enormous cost in human potential and productive capacity of the U.S. economy from high unemployment and people dropping out of the labor force.

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Empty storage tanks and empty supertankers and idle storage terminals are to be seen in the area of Cameron Parish, in coastal Louisiana. This is where Cheniere Energy opened a $1.4 billion liquefied natural gas terminal recently. This was part of a $7 billion construction of 8 new LNG terminals over the last 5 years around the Gulf of Mexico and the Atlantic coast. Only a year ago this seemed like an attractive investment as LNG supplies to the USA appeared to be on the rise. But that is not the way it turned out. By October its estimated that the USA will have in storage 3.1 trillion cubic feet of gas, about 1 trillion less than the full storage capacity.This is after the summer use and reduced LNG imports. This is 1 trillion feet of idle unused capacity or about 25% idle capacity. What has happened is that with a nuclear plant down in Japan because of an earthquake and drought conditions in Spain limiting hydroelectric dam electricity prices these countries pay has jumped and LNG tankers have been diverted to these places instead of the USA. Because natural gas prices unlike oil prices are set on a regional basis, prices in other regions and countries are several dollars higher than the US price of $11.80 per thousand cubic feet, which is itself up from $7.50 per thousand cubic feet at the beginning of 2008. The reason for all this unused capacity is that imports are 40% of what they were for last year and capacity has been doubled. Producers have also put more supplies on the spot market and less on long term contracts to make higher profits thus raising prices even higher. Some analysts believe that it was a bad thing for the US not to import more as 3.1 trillion cubic feet of gas in storage will not meet expected demand in the winter heating season of 2008-2009. And with global demand up and global supplies not coming up fast enough gas prices may increase still further. Demand is growing at about 7% in the developing world, and about 2.6% worldwide so demand in the USA is not increasing at this time. The new refineries and petrochemical plants going up in the Middle East and Asia will increase demand further for natural gas. The whole issue has not been prominent because the US meets only 3% of its natural gas needs through LNG. ...

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NHTSA and NASA conclude a 10 month investigation in Feb 2011, saying that "pedal misapplication" not faulty electronics were the likely cause of unintended acceleration of Toyota vehicles.

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Shinzo Abe is determined to avoid the mistakes made during his last term as prime minister 2006-2007, which lasted only 10 months and ended with defeat in the upper house elections. The LDP is aware that it won by a landslide because of the splintered opposition. The LDP won only 40% of the vote in the electoral districts in Japan. His focus will be on the economy, on tackling deflation, on central bank policy and efforts to support exporters with a weaker yen, and this time he will be cautious about sounding too nationalistic. Abe told a news conference: "I once fell to rock bottom and was hit with a storm of criticism. Now, I want to prove it's possible to start over again." During 2006-2007 Abe followed a popular LDP leader, Junichiro Koizumi, and hope that he represented a new post war generation of leaders. One approach he might take is to stay close to the U.S. on policies. The early stumble in this respect hurt DPJ's prime minister Yuko Hatoyama after differences with the U.S. shortened his term in office....

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Here are 11 big infrastructure projects that are planned across the country. They are part of the $2.2 trillion of projects to build or repair infrastructure, that is estimated by the American Society of Civil Engineers as needed by America today. But there is only $100 billion for infrastructure spending in the Stimulus Plan, and much of this will go to keeping existing infrastructure, a dilapidated bridge here or road there in repair. Only $50 billion is available for transportation projects. The rapid transit planned for California with trains twice as fast as Acela for a 800 mile track is estimated at $45 billion, but there is only $11 billion in the Stimulus for mass transit aand cities like Washington DC for Dulles airport with its need for a airport train, and other mass transit projects around the country wil compete for the same money. As a result most will go unfunded. The Second Avenue Subway in New York at $4.35 billion, Miami Port Tunnel at $1 billion, Bridge to Canada from Detroit for $1.8 billion, Hudson Rail Tunnel for New York at $8.75 billion, Seattle Highway Tunnel at $4.24 billion, Gulf ports at New Orleans and Gulfport, Mississippi at $2.04 billion, tens of billions for new California aqueduct bypassing the delta around Sacramento to bring water from north to arid Southern part of California, NestGen Air Traffic Control for $15 billion to $22 billion, are the other projects on this list. Many of these are badly needed and have been waiting for years to get the necessary investment. This is only a partial list, and suggests that there are a lot of projects that can productively use government investment, so that wasteful spending does not occur. It appears that the projects are there because these areas were neglected for a long period, more like the situation faced during the post Thatcher period in the UK, where infrastructure and services had been neglected for so long that Labor governments could productively channel new investment in these areas to avoid wasteful spending. And it appears that the situation is very different from Japan where the Liberal Democratic Party had a vested interest in keeping its farm and rural base happy with new projects, like a bridge to nowhere, that led to wasteful spending for a decade or more, leading to rising deficits and investments that did not create productive returns in terms of economic growth. By contrast these projects have potential to generate productive returns for years into the future and also are large enough to create jobs and be spread out over a number of years. This could end up being a real bright spot in the current situation. Felix Rohatyn, who helped New York rebuild its finances afte a crisis, has a new book "Bold Endeavors: How our Government Built America, and Why It Must Rebuild Now", using examples like the rebuilding of the Erie Canal, the transcontinental railroad, and the Interstate Highway System, and says the US needs to build for the future with more ambitious, better planned projects today. He says, that infrastructure is not an expense, it has to be seen as a vitally needed and productive investment. People like Rohatyn and others see the Stimlulus plan as a missed opportunity because a lot of these projects mentioned here and the numerous others not shown here will simply not see much money from the government to support them and get them off the ground. The idea that this is wasteful government spending that is spreading, may be a danger to this vision and opportunity. At the same time the reality is that if all this was happening during the time of the Erie Canal or the postwar period of the Interstate Highway System it would have been much easier to support. The banking crisis fix is taking away so many of the dollars that could have gone here, that this may be the missed opportunity, the lack of room for visionary investments because of the danger of pushing the government deficit to 60% of GDP with the current spending plans. ...

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The OPEC meeting in Qatar in April 2016 to stabilize oil prices with a freeze in production is not likely to affect supply and demand. Saudis and Russia are producing all out, and Iran plans to increase its production, making it difficult to reach an agreement. The International Energy Agency, IEA, predicts demand will rise by the end of 2016 from 94.8 million barrels a day to 95.9 million barrels a day. Production is at 96.4 million barrels a day, and this is expected to lead to narrowing the gap between supply and demand. Experts say cars are becoming more fuel effficient, and electric car technology is becoming commercially viable, leading to a lack of growth in demand in developed and middle income countries. This may have to be factored in for the intermediate and long run for demand growth.

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The National Highway Traffic Safety Administration failed to take action when asked by drivers to investigate incidents of unintended acceleration. It also failed to take up action with the company's quality staff in Japan- who were in charge of things related to quality- after what appeared to be years of inaction and stalling by Toyota. Where it did investigate, the agency did nothing about the complaints when Toyota failed to provide the necessary information. Internal agency documents show that since 2003 the agency opened inquiries into possible Toyota problems, and six times closed them without action of any sort. With agency managers joining Toyota after their work at the agency, there appears to have been a cozy relationship with Toyota. Add to that the lack of a steady hand at the agency- with about 6 changes in directors since 2005- and the current administrator David Strickland only confirmed in December 2009. Throughout its 6 investigations NHTSA regulators were told they have to talk not with Toyota USA but Toyota people in Japan who made the decisions and had the answers, yet no effort was made to break the logjam and get Toyota Japanese managers to provide answers. At one point State Farm Insurance brought the incidents of accidents and near accidents to the attention of NHTSA, something that happened a decade before this in the Ford Explorer roll over accidents. On both occasions NHTSA was slow to act....

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The House passes the $819 billion tax and spending bill. Every Republican in the House voted against the bill in the 244-188 vote. Most of the money to be spent of about $526 billion will be spent in 2009 and 2010, though some spending on student loan programs, clean water projects and housing assistance will carry over into future years. To help workers with the downturn $27 billion will go to continue unemployment insurance benefits till December 31, 2009. $9 billion will go to increase the current benefit from $300 to $325 per week. This is money that will be spent as workers lose jobs. The bill also lets former employees to get COBRA coverage, It funds 65% of individual's premiums for upto 12 months. And workers over 55 or with more than 10 years service will get to keep their COBRA coverage until they get a new job or get Medicare. A big departure is allowing those who are unemployed enroll in Medicaid, and Medicaid will temporarily expand to include millions of unemployed workers. See the link to Education spending for the $125 billion going into Education spending that will save the jobs of hundreds of thousands of teachers and create jobs for construction as schools are repaired and renovated....

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Tom Wright shows the results of an examination by the WSJ of the operations of 1Malaysia Development Fund BhD, setup in 2009 for economic development. This report shows lack of transparency and use of the state owned and operated fund to indirectly help the ruling UMNO party and prime minister Najib Razak in the tight 2013 Malaysian general elections. The 1MDB fund is becoming a huge controversy in Malaysia as the former head of the UNMO party and prime minister for 22 years Mr. Mahathir Mohammed, and the opposition parties in Malaysia, are questioning the lack of transparency at 1MDB fund and misuse of funds. Prime minister Najib Razak is chairman of the board of advisors of the fund. The problem is serious because of the $11 billion in debt of the fund- and the need to reschedule debt repayments. The financial report of the fund of March 31, 2014 shows interest costs taking up half of revenues. A $260 million emergency credit was provided by the government in 2015, and a Abu Dhabi state fund provided $1 billion, in an effort to meet loan repayments. Moody's Investors Service and private investment funds see the government eventually coming up with a bailout of 1MDB. Malaysia's currency the ringgit has lost 6% of its value in the first 6 months of 2015, and foreign investors are taking funds out of the country. On the questions of transparency the WSJ examination shows a questionable deal with the Genting Group which owns a casino in New York, and $ 4 billion casino in Las Vegas, plantations, real estate, and power plants in Malaysia. In one deal between Genting and 1MDB, a 75% interest in a power plant near Kuala Lumpur was bought at highly inflated prices, according to the WSJ examination. Genting is shown to have helped the UMNO in the Najib 2013 election campaign. 1MDB has also raised money just before the 2013 election with a $3 billion bond offering arranged by Goldman Sachs in March 2013. The United Malays National Organization (UMNO) party which openly favors Malays has ruled Malaysia for all the years since independence from Britain in 1957. In the 2013 election a key battleground was in Penang state which went to the opposition Democratic Action Party, and the UMNO failed to get a majority of the vote. It held onto government through electoral rules that gave a higher number of parliamentary seats for the rural areas where UMNO draws large support. The situation in Malaysia is unusual because power has shifted to opposition parties in most of the countries in the region- Indonesia, Philippines following dictatorships, Pakistan and Bangladesh following military rule, India and Japan following a long spell under the Congress party and the LDP. Only in Malaysia and Singapore have the UMNO and the PAP party of Lee Kuan Yew held on for almost 6 decades, by keeping opposition parties weak and not allowing a two party system to develop. Indonesia, another Muslim country, has moved ahead with free and fair elections with the recent election of Widodo as president, leading to significant efforts to improve infrastructure development and other parts of the economy. Experts say healthy two party systems and free elections provide economic benefits by giving voters a choice between competing economic plans for the future, as is seen in the higher future growth prospects under new leadership for India, Pakistan, Bangladesh, Sri Lanka, Indonesia, the Philippines, and including Japan with the shift back to the LDP with Abe. Corruption, lack of transparency, and poor management of the economy, are major issues with entrenched parties. ...

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The U.S. Federal Reserve Flow of Funds report for 2011 shows Fed purchases of 61% of total net Treasury issuance. Goodman points out that the net issuance of Treasury securities for covering U.S. budget deficits is normally 0.6% to 3.9% of GDP on average for the last six decades since 1950, compared to on average 8.6% of GDP today. A big jump in Fed purchases with a corresponding steep fall in the participation of foreigners and the private sector. Foreign purchases declined from 6% of GDP in 2009 to 1.9% of GDP in 2011. U.S. private sector- mutual funds, banks, corporations and individuals- purchases declined from 6% of GDP in 2009 to 0.9% of GDP in 2011. This helps keep interest rates low and funds U.S. government needs. Lawrence Lindsay pointed out in the WSJ in 2011 that Fed has itself boxed in being forced to keep interest rates low for years. If the government borrowed at a more normal rate of 5.7%, instead of the Fed induced rate of 2.5% today, Lindsay estimated the U.S. government would face an additional $800 billion in interest costs by 2021....

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Ford CEO, Alan Mulally, says the electric battery in the newly designed Ford Focus EV electric car costs about $12,000 to $15,000. The car price is $39,200. The similiar gasoline powered car price is about $22,000. This car has a 23 hour kilowatt hour battery pack. Based on this information the cost is $522- $650 per kilwatt hour. The U.S. Department of Energy has set a goal reaching $300 per kilowatt hour by 2013, as it funds new electric car development in the U.S. The Ford Focus EV is directly competing against the Nissan Leaf. The Leaf starts at $35,200, with a range of 73 miles on a full charge compared to 76 for the Focus EV. The Focus can be recharged in three and half hours using a 240 volt charger, compared to 7 hours for the Leaf. What the battery cost tells us is that the electric car development has to bring costs down rapidly for electric cars to become price competitive.

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How currency exchange rates are creating shifts in production from Europe into the US and further accelerating the changes in the automotive landscape. Now more German factories are planned by the likes of VW and BMW and their suppliers, and near their production bases in southern states which are non-unionized labor. BMW figures currency swings cost it about $900 million in earnings in 2006 due to the stronger euro. Both BMW and Mercedes see the stronger euro as a long term thing and are planning investments in the US based on this. BMW is expanding its Spartanburg , NC facility. In addition to the X3 SUV it will make the X5 and X6 SUVs there. And product from here will be exported back to Europe and other countries in addition to the US market. Mercedes had already expanded in Vance, Alabama before the pronounced currency swing for the euro. The Korean car makers Hyundai and Kia are facing similiar situation because of the stronger won. The weaker yen is creating a revert back to production in Japan in the case of Toyota and a halt to expansion in the USA, see the article on this recently. ...

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Nissan has fallen behind in China and India. It is now trying to take a new approach by being one of the first to build a small car in India that would cost initally $7000, then bring it down to $5000, and also is working to make a car in the long run for about $3000. India has a small car that runs about $5000 made by Maruti Suzuki but this model the Maruti 800 has a rudimentary design that has not been changed since 1983 and its peak time may have passed. Tata Motors is coming up with a small car costing about $2500 or 100,000 rupees w th a sales target of 2 million cars in the first 5 years, with 4 doors four to five seats, and a 660 cubic centimetre rear engine similiar to the size used in minicars in Japan. Hyundai is also big in the Indian market and holds the second largest market share after Maruti Suzuki. Honda has the Civic in India for about $17,000. And Toyota's Corolla runs $23,000 and Toyota is looking at a small car for the Indian market. Nissan is focussing on the Indian market at a time when sales in Japan are falling. The Indian strategy for a global export hub from India for small cars means Nissan has to dedicate resources and priority for this effort. Nissan and Renault plan a joint business center in Chennai. It will also mean Nissan has to break all the old rules as with the current methods margins are very low, 2-3 % on small cars, so new things have to be tried. ...

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The TPP as negotiated by Nov. 2015 gives biologics drugs 8 years of protection. Senator Hatch of Utah and the pharmaceutical industry seek 12 years of protection to recoup costly investments in these drugs. Japan says the agreement would be difficult to renegotiate. There is opposition to extending it beyond 8 years in many TPP countries.

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Vikram Pandit's style at Citigroup after 4 months, thoughful, asking lots of questions, fixing the little things that actually matter a lot, like the unwillingness of some heads of divisions to sit together in the same room, some hiring decisions and new lines of reporting and responsibiity and interaction in the organization structure that call for teamwork, discussion and collaboration. The oldtimers like Krawcheck used to clear lines of reporting are now getting used to the new culture of collaborative working. His style is first to come to grips with issues and not to come to snap decisions based on intuition, such as interviewing at length and asking tough questions at length to Ajay Banga, head of Citi's international group about the extensive defaults in Citi's consumer loan business in Japan. One of his views is that only if you get the foundation right can you talk about vision. Regarding pettiness in management and small grudges, its either going to be a partnership or you're not going to be here. some of his colleagues like James Forense say that they would take substance over form, judgement over form, any day of the week. And while he does not shy away from details like expecting lower level employees to pay for sporting event tickets Citigroup earlier gave out free, and he himself rides the subway sometimes, he has made some of the bigger decisions. Among these, getting capital from outside sources by travelling extensively abroad, urging Citigroup's board to slash the dividend for the first time in 20 years, selling off 2 peripheral units that did not belong and a third Primerica on sale also. And urged by his mentor former Treasury secretary Rubin who also used a note pad and a thinking thoughtful style like Pandit's at Treasury during the Asian banking crisis and the Mexican financial crisis, Pandit has been direct and realistic. He tells Wall Street that the fate of Citigroup is going to be decided to some extent by the duration of the environment we are going through, the twin perils of the debt-market crisis and the sluggish US economy. And that for now issues like these are going to overwhelm our actions. Pandit's father was a senior executive of one of India's leading pharmaceutical companies when the family moved to New York, so he has grown up around business, and is able to ask the question quite sincerely and matter of factly of his managers at the beginning of every meeting. "What are you doing with the shareholder's money?" After which come the torrent of well thought out questions, probing deeper each time, especiually where issues are festering for a long time, and remain unresolved. ...

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David Autor, an economist at the Massachusetts Institute of Technology, says he is quite worried about the steadily declining participation of men 16-64 in the labor force from 85% in the decade after World War II to less than 65% today. This is a blow to the men, their families , government revenues and the economy.

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The fears within Mexico's auto industry that the TPP will allow imports of cheap Chinese auto parts hurting its auto industry, and reversing years of gains made under NAFTA. Canada also has fears about the TPP for its auto industry. Japan uses China and Thailand as part of its supply chain. China is not part of the TPP. Add to this the UAW and Detroit's suspicion of TPP concessions to Japan. This has stalled U.S. negotiations with Japan on the TPP trade agreement in 2015.

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Underreporting of coronavirus cases in China poses risks for other nations in not giving them a sense of the magnitude and severity of coronavirus. This leads to a false sense of security- in Japan, Sweden and other countries, much delayed action and a sense of exceptionalism that we can ride this thing through like an ordinary virus, In the U.S. and Italy, Spain, UK and Germany, loss of crucial weeks before taking action. Looking to the future this poses new risks as it still leaves people without a sense of how long to continue lockdowns.  The pandemic poses huge risks for Asia and Latin America because of poverty, crowded conditions and sanitation levels. The early action by prime minister Modi was a huge step in the right direction before coronavirus spread could damage the economy and people- as Mr. Modi said if not done right such as with a 21 day lockdown this could set India back by 21 years. It had value in that it alerted other countries such as Philippines, Indonesia, Malaysia, Bangladesh, Pakistan to take strong action early. As the WSJ says here in this essay by what is important for China and all other countries reporting on coronavirus is that this reporting is vital only because it can save many other countries from making costly mistakes. Which is why the direct doctor to doctor contact between Chinese doctors and American doctors is an encouraging right step, says WSJ.  ...

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Compared with 2007 when participatory notes (p-notes), which provide anonymity for institutional investors, comprised 56% of foreign institutional investment, the p-notes comprise only 15% in 2010. This is good for India as investors are registering as institutional investors and there is less likelihood of speculative capital behaviour, as institutions think longer term. India received $18 billion in stock market investments from overseas investors in 2007, a record amount, and with $11 billion invested so far this will be exceeded in 2010.