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Prince Salman's efforts to launch an IPO of Saudi Arabian National Oil Company faces resistance from Saudi bureaucrats. Prince Salman wants to reduce the country's dependence on oil revenue, and hoped to use the IPO generated $100 billion to make investments in other industries. Saudi technocrats see risks in the plan- as costing consumers billions of dollars in higher gasoline prices, legal risks and public scrutiny. The IPO has been pushed back to 2021. Large new investments such as solar generation hub also face passive resistance in the bureaucracy. New investments policies have led to a Saudi recession in 2017, and reduced investment and consumer spending. Prince Salman sees it differently, once telling Theresa May of Britain that even if he got 50 of the 100 things he wanted done, that would be 50 not done otherwise. Salman has a disdain for the bureaucracy and has tight control over the country. He has led popular social changes such as letting women drive and taking away the power of religious police to make arrests. The Economy Minister has slowed down a plan to sell state assets such as government owned hospitals,airports, because conditions are not ideal. A plan to invest $7 billion in Uber was shelved. Aramco chairman Mr. Falih has reduced the size of investmetns including for the solar energy generation project. A plan to have ARAMCO listed on the New York Stock Exchange preferred by Prince Salman has been changed with advisers suggesting the London Stock Exchange as a place with lower risks of law suits under U.S. tort laws. Saudi executives at ARAMCO also pointed out that to reach the $2 trillion valuation that the Prince has in mind for ARAMCO the company would have to sell gasoline to Saudis at market rates, tripling oil prices in the kingdom -costing consumers $98 billion. The advisers believe it is more prudent financially to raise debt. Under that plan ARAMCO could raise debt to buy the Public Investment Fund's (PIF) 70% stake in state owned chemicals company Saudi Basic Industries Corp. which would infuse PIF with $70 billion, almost as much as generated by a IPO for ARAMCO. On solar energy Mr. Falih lowered the plan from 1500 gigawatts to 200 at a cost of $200 billion. Under a new plan this is at 60 gigawatts from solar and wind with 70% produced by the Public Investment Fund, the state's investment fund.   ...

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Rob Copeland describes the comeback of Citadel hedge fund and its founder Ken Griffin. During the 2008 financial crisis the firm almost collapsed with $8 billion in losses. It recovered only by barring clients from withdrawing money for 10 months, and slowly selling distressed assets as the market recovered. It took over 3 years to make up losses. Leverage at the time was high with 3 dollars of borrowed money for $1 in client money. Leverage in 2015 is higher at $7 of borrowed money for $1 of client money. In 2012-2015 three year period, by taking aggressive positions early, Citadel has made $3 billion. It is now engaged in many investments including commodities, buying and selling securities for other investors, trading, fixed income, global equities. To offset the higher risk Citadel bets equally on up and down markets, so that only 52% of stock bets need to work, according to Griffin. Copeland shows the highly intense nature of the business, large turnover of managers, the atmosphere on the 37th floor of the Chicago offices with 500 scenarios being simulated of the hedge fund's investments, and analysts looking at 36 screens of 14,000 investment positions. After the 2008 financial crisis highly leveraged activity continues at Citadel, just as other hedge funds have pulled back and targeted lower returns in mid to high single digits, or to improve their image. Citadel assets increased from $16 billion to $26 billion since the beginning of 2014, with higher returns of over 25% in its main investment funds Kensington and Wellington in 2013. The average hedge fund made returns of 6.2% in 2013, according to analysis by firm Hedge Fund Research. As part of risk mitigation Fed chairman Ben Bernanke has joined the firm as advisor- in 2008 the Fed was questionning this type of highly leveraged activity that led to the collapse of Lehman and Bear Stearns. Of the top ten hedge funds only Millenium Management and Citadel had leverage this high in reports to the SEC under Dodd Frank of regulatory assets that include borrowings for investment, showing systemic risk that remains in the financial system....

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The Brazilian Real drops to 2.9836 to the U.S. dollar in March 2015. The year to date March 2015 decline for the Real is 10.9%. Increase in interest rates will depress growth even further.

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Missteps by the Detroit automakers include fighting fuel efficiency legislation in 2005, even when the USA faced higher gas prices, and diluting the fuel efficiency legislation with a target of 35mpg for 2020 at a time when Europeans were taking up more aggressive challenges as public opinion there moved in that direction. They also spent heavily in lobbying spending, about $175 million for GM and Ford in the last 10 years, and some would say lobbying against the national interest and the national security interest of the USA, because failure to reduce consumption of oil through fuel efficient cars weakens the economy by sending hundreds of billions of dollars overseas to mideast countries. The closing of plants in states like Alabama, Louisiana, Georgia and Delaware and consolidating their operations closer to home weakened Congressional support, And the foreign auto makers built plants in places in the south like Alabama resulting in Senator Shelby of Alabama becoming allied with them. Rick Wagoner failed to show the vision and leadership needed, and Detroit failed to realize that vision and leadership were required to run these companies. not coming up through the large bureaucracies of these companies. And people associate him with declining market share and a company in decline and asky why. The whole mood of the country is reflected in newspaper columns across the country, in reader comments that run into the hundreds for each article overwhelmingly negative for taxpayer money going to Detroit automakers. This is the situation today and catches the Detroit automakers management, union, dealers, suppliers, by surprise as they have become so used to the status quo and know nothing different....

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The weaker dollar has given a boost to U.S. exports. The dollar has dropped by 9.1% compared to the prior year against a broad basket of currencies. U.S. exports have provided 1.4 percentage points of the 3.0% annualized growth since the 3rd quarter of 2009. The U.S. dollar is now 5% away from its all time low in March 2008, when tracked using the dollar index. Before the 2008 crisis the dollar had over a six year period lost about 40% of its value. Low interest rates in the U.S. and concerns about the deficit have contributed to the dollar's decline in value. While the decline helps boost exports, it also increases the price of oil in dollar terms and increases inflation. A Gallup poll in April showed 42% of Americans had no confidence in the Fed's policies for the economy, and 43% had no faith in Treasury Secretary Geithner. The decline is taking place even as Japan is recovering from the earthquake, and Greece is likely to have to restructure its debt obligations with European banks taking losses....

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Japan's situation, a strong yen and a stagnant economy, continues in 2010.

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The Economist points out that a third of the output of Japanese companies is made overseas. Japanese firms are increasing profits with the weaker yen but not sharply reducing prices. South Korean companies have also moved production overseas. As a result the Economist says concerns about the weaker yen leading to depreciation by other countries are not realistic.

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Coorodination, forbearance and multilateralism are three ways to keep economic nationalism from disrupting a global trading system that has benefitted all countries. Even the small moves to help home countries like the the move for US steel in the American stimulus projects, and the demonstrations supporting "British jobs for British workers", and other steps that quietly find their way into individual countries efforts to protect their home industries and jobs, can over time build up into something that would exaggerate the size and extent of this economic downturn. Forbearance and leadership from the US government on this issue and by leading developed countries is vital. So is the effort to develop a coordinated effort through close consultation and joint monitoring of progress. And equally important is multilateralism which works to help emerging countries hit hardest, and help prevent millions from sinking back into poverty, thereby destroying the hope and aspirations that had propelled the global progress in improving living standards....

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Even though U.S. president Trump has singled out countries such as Mexico, South Korea and China for trade practices, the U.S. today faces stronger competition in trade from Germany. The trade surplus with Germany for 2016 was $297 billion for Germany compared to $245 billion for China, according to Ifo economic institute. China's trade surplus according to the World Bank was down from 10% of gross domestic product or GDP in 2007 to 3% in 2016, while Germany's has gone up to 8.5%. The Chinese currency is seen as not being undervalued by some experts, while the euro has lost a quarter of its value in the last 3 years, giving Geman exporters an edge. The U.S. also competes with Germany in nine of the 10 export categories such as machinery and electronic equipment, according to the Peterson Institute. Then why is the focus under U.S. president Trump not including Germany? One reason is that China's products have put a downward pressure on U.S. manufacturing wages, and the the speed with the Chinese manufacturing has grown in certain industries. Germany has very few of the manufacturing subsidies that China provides to its industries. And the depreciation in the euro is not favored by the German government as it opposes the policies of the European Central Bank. Germany also has a higher propensity to save about 10% of GDP compared to about 3% for the U.S., according to OECD. As a result Germany is accumulating foreign assets at a faster rate than any other nation, while the U.S. is borrowing capital from overseas. Ways to change this are minimum wage regulations introduced by the government, but larger measures such as increasing government investment in the economy are not supported as the country prepares for the future with an aging population.   ...

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The limited options the US has to get China to appreciate the value of its currency, the yuan. Some of the options depend on getting the IMF or the WTO to prod the Chinese, others depend on a Plaza type Accord.

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A new family sedan will come out of a new manufacturing plant VW has built in Chattanooga, Tennessee, in 2011. The plant will turn out a new version of the Passat to compete with the Toyota Camry and the Honda Accord. Production capacity will be 150,000 A new Beetle will also be introduced. This is the first time VW has built a car specifically designed for the U.S.. During its previous efforts in the 80's VW used European designs and transferred them to the U.S. Its plans are to sell 400,000 VW's in the U.S. by 2013. VW sold 213,000 cars in the U.S. in 2009, so this means doubling sales in 4 years. At it height VW sold 577,000 cars in 1970, but this was before the Japanese and the Koreans entered the market in a significant way, and now the potential is there for Chinese and Indian imports at the low end of the price scale. Another factor making this goal difficult to achieve is the smaller car market and lower economic growth. By 1992, sales had dropped to 49,000, after the boxier replacement to the bug- in its Rabbit and Golf models- never took off. The new Beetle's introduction in 1998 improved sales, which reached 356,000 in 2001, and then declined as a result of too few new models, declining quality and a weakening dollar. There is a feeling among VW's American dealers, that VW's European headquarters staff is not giving the US the priority it deserves. The revolving door change in CEO's for the US operations, has only reinforced this impression. Mr Browning of GM's European operations replaced Jaccoby recently. Jaccoby joined Volvo as its new CEO. Steps taken to address these issues are to revamp the Jetta model for American customer preferences, and advertising that appeals to price conscious customers with the line: "Great for the price of good." Another innovative effort is an ad strategy that tries to capture Hispanics in the US market, with ads on Spanish language television networks. A sign of how much German management is involved in the detail of the new Jetta, is the discussion at the management board level about whether the new model should have American style cup holders. This meant pushing the brake two inches forward towards the driver, a decision that was made to do so after some deliberation at the management board. This will lead to intense competition in the US market, with Asian, European and US manufacturers all vying for the same price conscious customers....

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Krugman points out that some depreciation in the value of the dollar is welcome because it would make US exports more competitive and reduce our trade deficit. He says China's policy of keeping the yuan pegged to the dollar actually devalues the Chinese currency and makes it possible for China to siphon off growth from other countries. So what should America do. By putting pressure on China to revalue the yuan upward would America be risking China responding by selling some f its $2.1 trillion in dollar assets. This would not be such abad thing if the Chinese sold some of their dollar assets says Krugman, as lowering the value of the dollar at this time is not such abad thing. Malpass and Alan Meltzer of Carnegie Mellon, point out the importance of maintaining the value of the dollar in a separate piece. There the idea is not to have sharp fall in the value of the dollar that could economic disruption because of loss of confidence in the currency as opposed to a gradual decline.

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Turkey's lira depreciates by 21% in 2013 and an additional 7% by January 24, 2014. The central bank uses up a third of its foreign exchange reserves or $19 billion in intervention to support the lira since June 2013. The intervention on June 24, 2014, did not work and the lira continued its downward slide to 2.30 to the lira. The political protests in Turkey and divisions within factions in the government about corruption probes has led to a political crisis and investors pulling back from Turkey. The central bank failed to increase interest rates as expected by investors and suggested by the IMF. Inflation is running at 7.4% for 2013. In August 2001 a currency crisis caused the banking system to collapse. The financial position is stronger than in that crisis, yet the recent political crisis and the large current account deficit has badly dented investor sentiment.

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Japan's new LDP government led by Shinzo Abe approved a stimulus plan of 10.3 trillion yen ($115.7 billion) in Jan 2013. This comes as Japan's current account deficit increased for November to $2.5 billion before seasonal adjustment, reflecting a decline in exports. The Abe administration says this will increase GDP by 2 percentage points from the current forecast of 1.7%.

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The Japanese yen surged in value following the 2008 financial crisis as it was seen as a safe haven. As a result the Korean won declined by 42% against the Japanese yen. This continued till 2012. Japanese companies had to compete overseas at 80 yen to the dollar and shifted operations overseas. Now with the policy of monetary expansion of the Japanese central bank the situation is reversed in December 2014. The Korean won is up 40% against the Japanese yen since 2012. The Japanese yen is now down to 118 to the dollar in Dec. 2014. Abenomics gets a new mandate with the snap election in Dec. 2014. Aaron Back says Samsung may have gained ground in televisions and smartphones but other areas in electronics such as chips, displays and image sensors remain competitive and responsive to price. In autos Hyundai market share has declined to 4.4% by Dec. 2014 from 5.1% in 2011, according to MotorIntelligence.com. So far Japanese companies have used the currency advantage to improve profits and come up with better products. By using profits to invest in new technology and productivity Japanese companies can provide more features at the same price points to gain market share without having to cut price. After years of declining margins in electronics, autos and other markets this appears to be the current strategy. Another reason for this is that Japanese companies have already shifted production overseas, the shift being higher for Honda than for Toyota. Technological improvements from investments in R&D in Japan can be transferred to manufacturing operations overseas just as Apple is doing with smartphones manufacturing in China. The currency shift also improves Japan's position relative to American and European competitors in international markets....

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Large capital outflows from the eurozone to the U.S. and currencies of smaller nations as the U.S. dollar strengthens in 2015.