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Southwest hedged against oil price increases and has hedges through 2009 at $51 a crude oil barrel. This has proved to be a smart move as it has provided Southwest with a hedge worth over $2 billion with most of the hedges value being realized over the next 2 years. Airline fuel costs are substantial and evey dollar increase in the price of crude translates intoa $80 million increase in the fuel bill for American Airlines. The hedges for the first 9 months of 2007 cost Southwest about $42 million, so its surprising that other airlines, United, Delta, American, Jet Blue and Northwest did not hedge against rising prices. Maybe they thought that at prices of $52 at the beginning of this year why hedge if prices go down to $40. Or they were too distracted by looking for merger options, or pricing options or other things. What will happen now if oil prices keep climbing? Can airlines raise fares. Yes but revenue per mile is'nt going up significantly as the mix of seats changes with price increases, more of the lower priced seats are sold than the higher priced ones and revenue per seat has not improved. For example even in an environment where 6 industry fare increases ocurred in the 3rd quarter Southwest average ticket price for that period was $105.37 only 62 cents higher than the previous year. Southwest now hopes to gain in this cycle as the other airlines may scrap some routes or ground some planes and Southwest can expand in those areas. ...

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Nikki Haley is doing what has happened before, fighting for principles in her party and showing that a fully significant 40 percentage points of her party believe in the old conservative ideas, of the Republican party. That of the country club type, the everyman who happens to be conservative the core of the party, small and large business owners. The situation is analogous to the intraparty struggles that beset the Democratic party after the abrupt end after 1000 days of the John F. Kennedy presidency and administration. Since the 1920's and two periods of rising inequality accompanied by technological change from the 1870's that ended with the Great Depression, the US had experienced a great revival under Franklin Roosevelt, Harry Truman and Eisenhower. In 1960 a new future was articulated by Kennedy of the new world that lay ahead, one he had seen upfront in Asia before, during and after the war. How would we bring the post colonial world of billions of people into the modern world. Since then both a modern China and now modern India are part of this change. "Today our concern must be with that future. For the world is changing. The old era is ending. The old ways will not do." Acceptance speech for the Democratic nomination for President, July 15, 1960. It was interrupted after the intraparty disputes that began in 1968, Robert Kennedy challenging LBJ, leading to Richard Nixon, and Edward Kennedy challenging Jimmy Carter leading to Ronald Reagan. John F. Kennedy had articulated a vision that still is alive today based on an understanding of how America's needs fit into all humanity's needs.  In some ways the situation after 2024 or 2028 still goes back to the vision of a new order of the world with emerging nations in Asia with 3 billion people, and additional billions of people in Africa, Latin America. The Arms buildup promised by Reagan in 1980 has yielded little about 50 years later, not even the fall of the Berlin Wall which today has been replaced by another struggle in Eastern Europe in 2024. Truman tackled the Berlin Blockade,  Eisenhower had faced upto Soviet tanks in Budapest, Kennedy had faced the Berlin crisis in 1963 his ich bin ein Berliner (I am Berliner). What purpose would an orbital weapons program serve- and could the US ever be or even want to be  "only one superpower in a safe world," with an orbital weapons program as Reagan and Weinberger went out to do and failed completely. America faces a situation analogous to 1920's with increasing inequality and weakness in the social fabric, as a result of four decades of rising inequality accompanied by technological changes, and misguided Reagan programs that diverted from John Kennedy's vision that the "old era is ending, the old ways will not do."  The vision put forward by John F. Kennedy has more relevance today for the future. That vision he articulated in the First Inaugural Address in which he also said that this work may not be accomplished "in our lifetime on the planet." It is important to remember that John F. Kennedy connected his vision to FDR when he said in his State of the Union Address to Congress in Jan. 1961- In the name of a great President whose birthday we honor today, closing his final State of the Union Message sixteen years ago. "We pray that we may be worthy of the unlimited opportunities that God has given us." This is the vision that stands before America even today in 2024.   ...

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The American consumer still spends money on bigger ticket items like luxury cars and iPads. The rich are largely shielded from this recession and one might forget that even with a 10% unemployment rate, says one economist, there are still 90% with jobs, about 75% confident of keeping them, and half with liquidity. So there is spending which is erratic. A sort of EKG type recovery in which it keeps changing all the time, with no consistent pattern. Consumers who are uncertain about the future and facing tight budgets save on toothpaste and basic consumer items, while other consumers continue to spend. A Consumer Reports survey shows consumers willing to spend on appliances and electronics. American Express conducted its survey of consumers and found consumers behind on their savings plans and making impulse purchases, or going outside their means to buy things. One analyst who follows the savings rate closely thinks consumers are spending because the stock market recovered after the 2008 crisis, and as the stock market falters consumers will start saving more. And Prof. Dan Ariely of Duke University, a behavioural economist, says that people who fear losing money in stock market fluctuations feel better spending their money, this way a least they have something to show for it. One reason apple's IPad has done so well is that consumers see it as a compromise purchase, they can give themselves a little something as a reward and still not have to buy a Mac which costs a lot more. And in the patterns of American consumer behaviour experts point to behaviour where consumers will save at Target by buying cheaper brands or buy at Dollar stores for things like paper towels and detergents, and then go out and spend on something pricey to reward themselves or have that feel good feeling. So you have this development that sales are up 9% this year at the Mall of America in Bloomington, Minneapolis, USA's largest mall. People look at price tags and shop for deals, they cut spending in places and spend in other areas. ...

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This is an interview with Columbia University economic historian Adam Tooze about the international trade and economic issues brought about by globalization. The rapid emergence of China in manufacturing and overcapacity in steel has led to action on steel tariffs by president Trump. Tooze is typical of opinion that sees action by Trump not as limited action to level the playing field  as proposed by Trade Representative for the U.S., Robert Lighthizer, but as reckless move on trade.  Lyrarc.com shows articles from the WSJ and NYT showing how opinion got to this point in the U.S., on Robert Lighthizer's views that the U.S. was not facing a level playing field, and  on how trade has hurt communities across the U.S. a long distance away from Silicon Valley. President Trump's views reflect a different perspective that says the U.S. has to balance the favorable situation obtained by China and the European Union through moves of its own to protect U.S. interests. Political commentary that the U.S. was starting a trade war is not supported by the facts showing China's response as muted and a willingness by China to negotiate a balanced trading relationship as its trade surplus with the U.S. continues to grow. The trade surplus is so large that the Trump moves do not tell the real story. They are likely to be overshadowed by the increasing value of the U.S. dollar leading to a continued favorable situation for Chinese exports and a larger trade surplus in 2018, regardless of Mr. Trump's action.  Trump's moves are more significant in other areas- limiting China's access to advanced technologies, with the European Union also taking the same action. This is now the new field of competition for the major world economies. ...

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DW.com takes a deeper look at the conflict in Nagorno-Karabakh, an autonomous region of Azerbaijan now populated and controlled by ethnic Armenians. It has grown rapidly in the last decade at around 10% annual growth and 17% in 2017 with an influx of ethnic Armenians who have settled in the region with its higher average incomes. Karabakh has a large mining industry which provides employment for Armenians moving into Karabakh.  During the 1920's Azerbaijan and Armenia were part of the Soviet Republics which lasted till 1991. The Soviets made Karabakh part of Azerbaijan SSR with considerable autonomy. Since 1991 several wars have taken place with the largely Armenian population declaring itself independent of Azerbaijan.  Azerbaijan is three fifths Shiite and one third Sunni with close ties to its southern neighbor Iran, leading to efforts by Iran to mediate the conflict. There are social and political overtones for the conflict. Azerbaijan oil exports have been hit hard by the drop in the oil price and drop in global oil demand. Armenia has seen remittances from its 11 million Armenians living overseas drop by about 40%. Both countries face endemic corruption. Azerbaijan get 90% of export revenues from oil which is 40% of GDP. EBRD estimates exports fell by 25% in the first quarter and GDP will decline by 3% this year. Strict lockdown has also hurt the economy hard. Armenia expects a decline of 3.5% in GDP in 2020. Armenia is trying to tackle corruption with reforms since the Velvet Revolution in 2018. The conflict is a distraction from the economic and political situation, says Caucasus region expert Sylvia Stober. It could be politicians making a point as economic and social conditions deteriorate, with outside influence. Turkey has backed intervention in Libya and now supports Azerbaijan a Muslim neighbor.  Russia has a defense pact with its Orthodox Christian neighbor Armenia. In 2018 a short war lasted only 4 days when Russia intervened. This time Russia which has a defense pact with Armenia is looking to have Armenia join its Eurasia Economic Union. Armenian prime minister Nikol Pashinyan looks to Europe for closer ties. Russia supplies both warring parties in this conflict and acts as a mediator in a ceasefire. Outside influence is aggravating the conflict which has now displaced about half the population in Karabakh.   ...

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Sabine Kinkartz of the DW.com looks at the way in which Olaf Scholz achieved what was seen as impossible through patience, grit, and hard work in the face of adversity. SPD was seeing poll numbers of as low as 15% in the spring of 2021, just months before the election. Scholz believed in his party's ideas for the renewal of Germany, remained undeterred even after losing an election to lead the SPD to Esken and Walter-Borjans in 2019, when Esken and Walter-Borjans reinforced the idea that the SPD should stand for workers and families, what it always stood for. Scholz was put forward as candidate by Esken and Walter-Borjans in 2021 with conviction. By Spring 2021 it was clear that Scholz had achieved the impossible, getting the conservative Merkel and the CDU, with instincts against borrowing in all situations, to agree to a huge aid package for Germany to fight the pandemic, and a huge aid package for the European Union to fight the pandemic.  That Scholz remained undeterred in his campaign by low poll numbers and went on campaigning on the basis of convictions about what is right for Germans and Germany, comes from deeper convictions from his days growing up in the Hamburg youth wing of Social Democrats in the years following SPD's Wily Brandt and the post war recovery. Germany's most remembered leader after Adenauer, Willy Brandt was leader of the SPD Social Democrats from 1964 to 1987, and chancellor 1969-74. Both Adenauer and Brandt are respected some 50 years later in the world and in Germany. That Germany is going back to this tradition of leadership after the period of the Merkel years when Germany was held back, brings new hope to Europe and the world. In allying with the Greens under a younger generation leaders Scholz saw the promise of an opportunity to tackle problems of climate change and investment in infrastructure together. Both parties see borrowing as essential to invest big in the future. Scholz message to Germans, Europeans and the world is - "Big jobs, but our country is capable of doing them." A message sent out from the US by president Biden, and from Asia by the Indian prime minister. ...

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The reorganization underway at NBCUniversal under CEO Steve Burke. Burke is quick to end the practice of different fiefdoms operating at NBCUniversal incuding NBC Sports, and expects all divisions to work together to produce synergy. He uses the example of a Symphony orchestra. Of 20 senior executives at NBCUniversal from the GE days only 5 remain, and the rest of the management structure is streamlined. Dick Ebersol who ran NBC Sports as his own sports empire, including the Olympics, with little oversight is out. About $12 billion has gone into sports because of the potential for advertising. Burke, 55, is from a family with a history in the television business- his dad was CEO of Capital Cities/ABC. He was in corporate strategy at Walt Disney Co. before he joined Comcast in 1998 to develop corporate strategy and acquisitions under Mr. Roberts. The opportunity at NBC gives Comcast a shot at building a business that spans its cable business and a content development company. Operating cash flow for NBCU is up 21% for the second quarter of 2013....

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Medvedev appears to have little role in setting policy in Russia, even though he has presented a different view of liberal groups and showed interest in pluralistic democracy and free expression of opinion. Putin has expressed a very different view about liberal groups, as representing foreign interests in Russia. The media remains tightly controlled in Russia, and elections are determined in the Putin way. A mayor picked by Putin won the Sochi elections even without campaigning, as many opposition candidates were disqualified or discredited before the campaign. He won with 77% of the vote. In this way elections take place in Russia but are conducted in a way which makes it very difficult for the opposition parties, and keeps media television coverage heavily pro-government.

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Energy Conversion Devices, a Michigan company, is providing the solar electric system for the largest rooftop array, 12 megawatts, to a General Motors assembly plant in Zaragoza, Spain. This project uses solar devices manufactured in rolls like carpet runners. Veolia Environment and Clairvoyant Energy will lease the rooftop space from GM and operate the installation. Spain has become a center for solar installations as it offers large subsidies, 0.42 euros or 66 cents for each kilowatt hour, this is about 5 times the average cost of a kilowatt hour in the USA. Energy Conversion plans to produce 150 megawatts of cell this year and recently raised $400 million an dannounced plans to build cells for 1 gigawatt or 1000 megawatts. Solar arrays on houses are only a few kilowatts and 1 megawatt can run about 1000 window airconditioners simultaneously while the sun is shining.

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Among some of the big moves Pandit is making at Citigroup. Bringing in a new risk management team and also bringing in Brian Leach, one of the advisors for liquidating Long Term Capital Management which collapsed in 1998. The Board of Directors will change as all of the directors are up for reelection April 22. Bringing in high level talent Pandit has hired a former human resources manager from Dell to head talent management. As part of the cleanup he plans to trim the home loans portfolio of $45 billion and offload some $12 billion in leveraged loans. Critical to his vision is Citi's international reach. He wants to bring a worldwide perspective and hopes to do this with chiefs for each region. To understand the vision and views of previous persons in his role, he has had discussions with Prince, Weill and John Reed.

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The inflation index for Brazil went up by 5.99% in January 2011, compared to the prior year. Prices went up by 0.83% in January, compared to December 2010. Brazil's central bank surveys show rising expectations for inflation in the country. This creates pressures for the central bank to raise interest rates above the existing 11.25% overnight interest rate, which is already one of the highest worldwide. Higer rates would worsen the impact on the currency as it accelerates volatile money flows into Brazil. The soaring Braziling curency is widely considered to be highly overvalued and a volatile currency hurts Brazil's growth prospects. Brazil's government spending under the Luis Da Silva presidency was increasing rapidly and cuts in spending are expected, though there is skepticism that the incoming President Rousseff will control spending.

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Improvements in birth rate and more immigrants in Germany are making the demographic picture look better in Germany. About 13 million people are expected to reach retirement age in just a few years, according to Prof Enzo Weber, Institute of Employment Research. This means 13 million new pensioners. Birthrate today is about 1.4 children per woman. At this level of birthrate and even a low rate of immigration of 100,000 per year Germany's population of 83 million today would decline over time. Between 1990 and 2008 more people left Germany than came in with a net outflow. Some level of immigration would be the only way to keep the level of people in the workforce of 43 million today to become stable in the future. This would be needed to support the increasing number of pensioners. Yet the general aging of the population is expected to continue. And a high level of immigration in too short a time such as from the Syrian refugee crisis creates other tensions in the social fabric of society. Germany's very homogenous society faces a challenge that goes beyond the politics of the refugee crisis of today. Too many immigrants in too short a time is not the solution, immigration has become too politicized in today's context, good and early integration of immigrants through language and culture training needs to be established. Prof. Weber points out that the influx of immigrants from Southern and Eastern Europe has helped the labor market, and there is no reason that the labor market could not dry up with the number of people retiring soon. Tackling that will involve making family and career life choices easier and enabling flexible work-life choices, increasing retirement age, and some level of healthy immigration. A demographic summit will be held on March 16th in Berlin to look at the problem. ...

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Kuroda's first steps as he begins changing monetary policy of the Bank of Japan.

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GM's efforts to build its Buick and Cadillac brands in 2012-2014. The introduction of the new Buick SUV, the Encore, and the new Cadillac ATS models.

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British prime minister Sunak calls for general elections on July 4 at a time when the Tories are behind Labour by well over 20 percentage points. After 15 years in power the Conservative party is facing a British public that is deeply dissatisfied with its performance. Labor's Starmer has added to the popularity of Labour and is expected to form the new government.

 

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Global aid to agriculture in developing countries is about $5 billion a year. Mr Obama made the decision to double U.S> aid to developing countries farmers to more than $1 billion ayear in 2010. THe NYT reports that with the G8 meeting in Italy in July, America will spend $3.5 billion dollars over 3 years for helping farmers in developing countries. This according to Michael Fromans, an Obama adminsitration official is going to be new money. As far as the other G8 countries are concerned it could include old money for the total $15 billion committed. Since the worst hit areas for agriculture are in Africa, and Africa has lost a lot of ground in development in the last 20 years, suffering neglect in aid to farmers over 20 years both form the American administrations and their own governments, it is surprising that the amount and the details for where it would go in Africa are not revealed. Mr Obama has grasped the need not just for shipping food assistance from the USA, but need to help farmers. He agrees with ANdrew Natsios former head of Agency of International Development, who says that most of the poorest people in developing countries are farmers and herders living in the countryside, the crux of any effort to improve their lives has to start with agriculture. Obama advocates using the "tried and true agricultural methodfs and technologies that are cheap and are efficient but can have huge impact" in the lives of people. Malawi, is a good example, say Prof. Sachs of Columbia University, as subsidies for fertilizer sharply increased food production. Sachs says it is possible to double or triple food production by giving small-holder farmers access to high yielding seeds, fertilizer and agricultural extension services. But more needs to be done and devloping countries themselves that have made progress like India, China and Brazil can provide their know-how and experts and should have been brought into this, which is another reason why there is no reason for a G-8 summit of countries of European origin. An enlarged organization can bring in the resources and ideas of all the major countries in the world, to especially bear in on Africa, where alot needs to be done. Just to get an idea the UN's Food and Agriculture Organization says the global economic crisis will put another 100 million people into facing hunger this year....

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This article in the Economist magazine says Brazil's new president Michel Temer, once impeachment proceedings lead to the resignation of Dilma Rousseff, is only slightly less popular than her. Polls show 58% of Brazilians say Temer should be impeached close to the 61% for Rousseff, and his party is also affected by the Petrobras corruption scandal. Brazil's large trade unions supporting the Worker's Party of Rousseff see it as a "coup" or "golpe" and promise strikes, combined with large street protests, this comes as the country faces a second year of falling GDP at 3.8% according to the IMF. Brazil has a budget deficit of 10.8% and needs changes in public spending, including pension reforms, which are unlikely under Temer or his party the PMDB, or under the PMDB's Mr. Cunha. Some experts see the change in Brazil as part of a broader shift in Latin America, that happened in Argentina recently with the election of Mauricio Macri as president, towards governments that move to the centre in politics and reduce state intervention in the economy to stimulate growth. This is unlikely to happen in the short run, with society deeply divided and the area in front of the Brazilian Congress cordoned off to separate the opposing factions and rallies of political supporters....

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The P5+1 talks with Iran are stalled and not ending in agreement by August 2012. The former head of military intelligence of Israel, says the Obama administration needs to tell the Israeli parliament Knesset directly that preventing a nuclear Iran is a U.S. interest and the U.S. will take military action if needed. He points out that the U.S. with its larger operational capabilities can take additional time compared to the Israeli capabilities, but this goes against Israel's creed of not relying on the U.S. for its defense or outsourcing defense. For the Israelis to rely on the U.S. it needs this clear committment and statement of intention. In addition the Obama administration needs to take five steps to reassure Israel says Yadlin: a statement to Congress in writing that the president reserves the right to take military action, increased military presence in the gulf, provide advanced military technology and intelligence to Israel to enlarge Israel's window for military action in exchange for giving sanctions and diplomacy more time, talk publicly about the dangers of reconstitution of Iran's nuclear program, and commit to the security of U.S. allies in the gulf. The strategy Yadlin emphasizes is that if this is going to work for a peaceful goal, preparing for war is essential....

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The new Chancellor of the Exchequer in Britain, George Osborne, put forward a new budget that marks a big change from the past. In an effort to cut the budget deficit by $180 billon over 5 years, Osborne announced a cut in spending for the public sector and welfare spending. There will be cuts in the budgets of government departments of 25% by 2015 except for health and international aid. Reduced spending on public housing benefits, disability benefits and other costs in the $285 billion welfare budget is part of this budget. He announced a 2 year wage freeze for public employees, and new medical screeing for persons claiming disability benefits. On the tax side the value added tax on many goods and services goes up from 17.5% to 20%. Capital gains tax goes up to 28%. And overall the proportion of tax increases to spending cuts is 1 : 4. Osborne referred to rich people in Britain "paying less than the people who clean for them" in instituting higher taxes, and he removed entirely 900,000 of the poorest people in Britain from the income tax system. Corporate taxes will be reduced from 28% to 24% over a 5 year period....