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The Federal Reserve's Open Market Committee voted 7 to 3 to continue a policy of keeping the federal funds rate at exceptionally low levels "at least through mid-2013." Presidents of the Federal Reserve regional banks- Fisher of Dallas, Kocherlakota of Minneapolis, and Plosser of Philadelphia preferred different language that would only say exceptionally low rates for "for an extended period."

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Cracks are appearing in Japan's manufacturing model in recent years. Kobe Steel, Mitsubishi Materials and Subaru Corp have admitted to manipulating quality inspections. Takata Corp, maker of airbags is a case study in what can go wrong, as the company declared bankruptcy after failing to tackle safety problems and supplying defective airbags. The case is all the more astounding as airbags are designed for ensuring the safety of automobile passengers, a key feature of every automobile.  The situation is one of failure of management to take the right actions. This also happened with Toyota as management missteps worsened the issues related to faulty acceleration of vehicles, leading to media focus on Toyota in the U.S. Japan is not unique in this area of management failures as VW's actions in the diesel emissions case have clearly shown. Pressures to cut costs are part of the problem as this report shows. In Japanese companies quality checking staff employees are the targets of cost cutting layoffs resulting in the faulty step of outsourcing quality checks, which is contrary to what the country's pioneers sought to do when they adopted American Total Quality methods in the 1960's. This creates opportunities for China today, and for India in the future if it is able to capitalize on the opportunities in manufacturing desperately needed for job creation.    ...

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At 79 years, Wilbur Ross will be one of the oldest people serving in any administration, as he serves as Commerce Secretary in the Trump administration. Wilbur Ross is best known for the turnaround efforts in the steel industry. In 2002 he acquired LTV Corp, a third largest steel producer in the U.S. facing tough times and legacy costs, for $125 million in cash and $200 million in environmental liabilities. In 2005 he sold his International Steel Group to Arcelor Mittal for $4.5 billion, and is still an independent director on the Arcelor board. Ross's earlier experience was as a bankruptcy specialist at Rothschild Inc. in the 1970's working on restructurings at Texaco, TWA and Continental Airlines. Analyst Charles Bradford is cited in this report by WSJ's John Miller, who competed with Ross in restructuring proposals for failing assets, and describes Ross as working harder and being tougher to make the deals. Some of these restructurings involved cutting pensions and large layoffs. The entire U.S. steel industry faced problems from foreign competition and legacy costs at the time. This included representing bondholders for Taj Mahal Casino in Atlantic City. At the time Ross told creditors considering seizing the asset for a possible missed payment that it would be better to keep Trump in charge for Trump properties as they would be worth more with Trump inside. This led to Ross later providing critical backing for the Trump campaign and raising money from the business community. Mitt Romney had similiar work at Bain Capital in turnaround of failing companies, later turning to politics as Governor of Massachusetts, and 2012 Republican nominee for president. Both Romney and Ross have come under criticism for their role in cost cuts at companies involving layoffs and cutting worker benefits. ...

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Eighth grades civics and history national test scores in the US hit new lows of 13% for history and 20% for civics meeting proficiency standards. The Test used was the National Assessment of Educational Progress. Reading scores are also low. About three decades of progress appear to be wiped out during the pandemic. A message for president Biden- the fight for the soul of America starts right here and this site Lyrarc.com has a knowledge role for this to happen.

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Gerard Baker in The Times of London looks at California as some kind of dystopia, a malfunctioning place with rolling blackouts from PG&E the electricity company, drought and water shortages, housing costs soaring making it affordable only to the few at the top, and high taxes. He cites an expert from Chapman University who compares it to some sort of medieval feudal place run by nobility at the top, the investors, lawyers and people in entertainment, with the academy and the media as a kind of clerisy who propagate the ideas that this nobility supports, a small middle and the rest as serfs or minimum wage workers in logistics, retail and farms. Median costs of housing are about $613,000, and the affordability index of people who can afford housing is 32% compared to 56% in the country. Hispanic immigrants now prefer Texas, though with a loss of 6 million people in the last decade and gain of five million, it sees increase in population with high birthrates from the existing population to about 40 million. Half the population of homeless in the U.S. are now in California though it has only one eighth the population of the country. High housing costs and high cost of living hurt people at the low end, the lower middle and the retired the most. With low wages at the bottom and extremes of wealth, homeless, housing zone restrictions, drought and rolling electricity blackouts, this is not what the future should look like.  ...

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Apple and protests over working conditions at factories of suppliers like Foxconn which make the iPads and iPhones. Issues related to Apple's large profit margins and the low wages paid to workers at supplier factories in China and other countries.

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The US is requesting talks with China at the World Trade Organization with the objective of ending hundreds of millions of dollars of subsidies China gives to increase wind energy production. The wind power grants are being targeted because Chinese producers are required to use domestic parts to be eligible for the grant, which range from $6.7 million to $22.5 million. In the last 5 years foreign companies' share of the Chinese market has dropped from 79% to 13%, according to Goldman Sachs, with China's efforts to promote Chinese manufacturers. The renewable energy market in China is expected to reach $100 billion by 2020. And wind energy is the fastest growing sector. The effort comes after the US Steelworkers union alleged that China was using import substitution subsidies in violation of WTO rules, in a 5800 page petition. Steelworkers union president, Leo Gerard, says this doesn't address most of the billions of dollars of clean-tech subsidies and other support provided by the Chinese government. Gerard says the goal is not litigation but to put an end to these practices that are trade distorting, and act as a barrier to US exports to China....

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Karabell points out that Egypt ranks 137 in the world in per capita income (behind Tonga) and a population in the top 20. Two thirds of the population is under 30 years of age. The young in Egypt have no future with high rates of unemployment and little of the industrial development that you see in other large developing countries such as China, India, and Brazil. The 30 year rule of Mubarak also stifled any opportunity for public participation in the political process. During that rule Mubarak consciously decided to not pursue rapid economic development, something China has done even though it has a lack of public participation in the political process. As a result Egypt simply fell behind while the rest of the developing world improved opportunities in education, incomes and job opportunities.

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Internet penetration in India is increasing rapidly. India had 71 million internet users in 2009 by one estimate. Current estimates are of 80-100 million internet users. India's internet penetration as percentage of population of 5% is low compared to China which is at 28.9%, Brazil at 39.2%, and Mexico at 28.3%, according to figures from the International Telecommunication Union. Analysts expect the launch of third generation broadband networks will help increase internet use in India. One study done by investment bank Caris & Co. shows internet use growing to 180-200 million users by 2015. Most of the major internet sites are in news, job-search or match-making. Internet retail is just beginning to grow with online purchases of $1.4 billion in 2010 going up to $5 billion in 2012.

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One of the most egregious abuses in the form of capitalism prevailing in the United States, that leaves consumers unprotected, is the way credit card companies operate. This NYT editorial talks about the tricks and traps, interest rate spikes, and other abuses that have agonized millions of customers. This becomes a larger social issue, because of the widespread debt and the increasing job losses, loss of income, and the housing market, which draw millions more into burdensome credit card debt situations. The Federal Reserve has made some changes in the rules by which credit card companies have to operate, but this will not go into effect till mid 2010. NYT editorial says that the new legislation sponsored by Senator Dodd to make this effective in 2009, is critical and should be passed.

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Priorities from voting by 100 CEO's at the CEO Council the week of 17 November, 2008. Swiftly passing an internationally coordinated stimulus in excess of $300 billion was voted a priority of 7.1 on scale of 1 to 9 with nine the highest. Bolstering education for a competitive workforce came in second at an average of 6.9. Speedily stating a clear economic vision, appointing advisers, and sending a strong message about priorities and direction of economic policy, came in third with an average of 6.8. Making a comprehensive energy and environmental policy a top priority, creating incentives for consumers to become more energy efficient, came in fourth with a 6.6 average. A long term tax policy that encourages employment and job creation and enhancing global competitiveness came in fifth with an average of 6.0.

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More flexiblity from Secretary Paulson as Senate leaders on a bipartisan basis get restless about the lack of Chinese action on their currency to help reduce the US trade deficit and protect US jobs and manufacturing. One of the arguments they will manufacture elsewhere samer goods imported from Chia may not hold because places like India and Vietnasm have weak infrastructure and are just now getting started so its difficult for them to replace Chinese goods in the very near term. The other point mentioned here is that the strengthening of the euro has significantly helped the US trade deficit.

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How the formation of Special Economic Zones like the one at Shenzen in China is now moving forward in India with the help of the central and state governments. The SEZ's like the one near Chennai are attracting a lot of foreign investment to India and take care of the roads, power, water, access to ports, and make it easier for investment capital to come to India. Companies from Germany, S. Korea, Taiwan and Japan, Finland and the USA are investing in these SEZ's. India needs manufacturing investment to create large numbers of jobs for a large and younger demographic.

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The Hulme Company mail order catalog business in Minnesota may not be representative of small business, considering the errors and the scale of the debt taken on. But even if a small fraction of this debt taking tendency is representative of small business, it means that small business will not generate jobs as it did in the past. Small business will actually layoff people. And small business will not be able to provide the bounce the economy will need in years to come. The following is an an anaysis of this venture. The owners of this small business Bidwell and Ms. Guarino bought a luxury goods maker that was losing money for $600,000. Their business was to sell $500 garment bags and $1200 duffel bags. The experience of Bidwell was with Target, Tonka Toys and a cigarette distributor. Ms Guarino had a $130,000 job with a magazine publisher, running regional magazines like Minnesota Parent, which she quit. She had some experience as a handbag designer in California before that. They had never seen hard times, no, they had only seen good times. And were willing to spend heavily on the business like the $600,000 for a business, Hulme Company, that lost $150,000 on sales of $450,000 making duck hunting gear, the business they bought in 2003. All this for a tiny factory employing 3 seamstresses, and with no brand name for luxury goods like leather duffels. Their lender's experience- Kassim who founded Maple Bank in Champlin, Minnesota, considered it pretty typical of small business in those days to do everything on debt and loaned $550,000 over 5 years. So the lender was in for the ride. Another bank Stephens bank loaned on SBA approved loans which were later cut off. Guarino had no experience in this business, and simply relied on Bidwell's experience. The borrowing went on and on from friends, taking in debt with total lack of understanding of what debt means, from their daughter, the entire $50,000 savings of Bidwell's wife, and finally with banks refusing to lend after having friends put up their CD's and collateral on loans. Debt to equity ratio gets to 5 to 1. Second mortgages on the house getting Bidwell and extra $130,000. Even in the best year 2006 sales at $1.4 million, and earnings before taxes and other items at $325,000, not enough to pay the interest and other payments on loans that later totaled $2 million by year end 2007. $500,000 from friends and family including $20,000 from his daughter or two thirds of their savings. 600,000 catalogs went out in 2007. With the Hulme Company behind on payments in 2008, the catalogs mailed in 2008 dropped to 175,000. It is a very capital intensive business from the standpoint of catalog cost. $1 million in inventory at year end 2007, or two thirds of sales of $1.5 million in 2007, was a sign of how expansion preceded even getting the financing in place, and going out into the dark thinking sales wil materialize. So even in the best year 2006 the business was not viable, and would have collapsed even without the financial and credit conditions of 2008, ruining the owners in the process. By 2008 it led to the usual things in this kind of business failure, Bidwell's divorce, loss of his home as he falls behind on mortgage payments, Guarino's loss of job and friends whom she borrowed from, and both deeply in debt. Evaluation of the failure is as follows. Seamstresses and the small factory space could be obtained for a fraction of the cost in an emerging market country, even in an eastern European country, and no cost needed to be incurred for the purchase of Hulme Company or for sending out catalogs. Only travel expenses to meet high end retailers who might carry this merchandise, and go to the country where the plant was setup. Sales would come first, and expansion to meet sales very carefully done so that the plant could be downscaled if sales dropped. Even then scores of small luxury goods makers in China or other emerging market countries could put the owners out of business. The lesson if you can't watch costs, if you don't understand what debt means, then you don't pass the most basic of tests. You cannot run business on savings, home equity or credit card loans, or business loans with personal guarantees. Costs tend to just run up to the money one has artificially created. It will ruin you. If you don't have experience with the business and the product area, or can't put together a group of people with the experience to guide you on the pitfalls and what to watch for, you don't pass the next basic test. Only then does one get to the other tests about whether there is a market, the price and value of the offering and so on. This is before the current economic crisis. Now all these tests become more important than ever, or it will kill you and quickly. One has to be paranoid and very careful after 2008. Stephens Bank loaned money on SBA loans ...

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Katya Adler, Europe Editor of the BBC, points out the change in Germany as AKK, Anne Margaret Kampbrauer, the new leader of the ruling CDU party, brings a change of tone in its outreach to Britain. AKK is slated to be the next chancellor. Her vision was expressed in a letter to The Times saying with other Germans that her wish was for Britain to remain in the EUroepan Union, that she was asking Britain to reconsider. She also supports a second referendum on Brexit.    There is also anxiety in Germany about the effects of no-deal Brexit taking out 0.5% of German GDP at a time when Germany's economy is struggling in 2019. About 100,000 job loss is expected from no-deal Brexit in Germany. As Germany's tone is changing, AKK offers a new face in German relations with Britain that looks towards building a better relationship with Britain. Could this change minds in Britain as a new mood takes place in Germany, and in some ways in France with the emergence of populists in recent years calling for France to leave the EU. AKK tell BBC that Brexit has been a strain for all of us, that in some ways it has paralyzed us. She tells the BBC's Adler that anything that keeps Britain in the EU is something that would make her personally very happy. Rarely have German leaders or public expressed it in this way. Compared to the indifference of the past Germans and Britons having second thoughts offer some more light to the issues of Germany and Britain at a more personal level. ...

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Concerns that the austerity cuts announced by Spanish prime minister Zapatero may not address the deeper causes of the financial crisis in Europe- taking on too much debt, government spending and the imbalances in the global economy. And the concern on the other side that even these small cuts and eventual larger cuts can squeeze domestic demand in countries with severe recession, weaken the tax base, test social cohesion, and dampen the prospects for recovery. Zapatero announced a 5% pay cut for public sector employees this year and a freeze for next year, cancelling index-linked pension increases, and cancelling a baby bonus tax break of 2500 euros, cutting back regional spending budgets, and postponement of infrastructure projects, all adding up to $15 billion in savings. This is intended to reduce the budget deficit to 6% of GDP from 11.2% in 2009. With Spain's unemployment at 20%, and the construction sector stalled, pain will be felt. Spain's large informal economy tied to tourism helps in this situation. Trade union Comisiones Obreras gave a muted response about a general strike saying that "it is the last thing this country needs at a time like this," after meetings with Zapatero. ...

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Infosys growth is slowing down significantly. Infosys estimates sales growth of 6-12% for the 12 months April 2013 to April 2014. Infosys gets two thirds of revenue in North America and a quarter of revenues in Europe. Infosys is preparing a strategic plan "Infosys 3.0" to move to higher end consulting and cloud computing.