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Friedman on the need to build more economic clusters around university towns similar to the ones at Cambridge, Austin, Boulder, Ann Arbor, Palo Alto to generate new innovations. The impact of globalization and the internet is creating new opportunities through knowledge exchange and generation. These are part of the technological developments predicted by IBM for 2012-2016.

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Fears about a property price bubble in China bursting with the central bank not able to control the economy. Increasing fears that China may not be able to control the bubble. Other countries where bubble effects are taking place: Canada where housing prices are accelerating, Brazil with expected GDP growth of 5.8% and "hot money" pouring in, India where inflation has reached 15% and $92 billion of foreign investment in Indian stocks and bonds, Australia with its hot mining sector with trade connections to China, South Korea with growth approaching 5% and high rates of household debt. GDP and property prices increased by 11% in China in the 1st quarter of 2010. Many of these economies have connections with China, including Brazil and Australia with commodities sectors dependent on China.

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China Investment Corporation, China's sovereign wealth fund is expected to issue upto 28 billion in bonds to help recapitalize China's state owned banks. These banks face the prospect of increasing bad loans as a result of the hectic pace of bank lending in 2009-2010. Loans guaranteed by muncipal governments are estimated at 7.7 trillion yuan, or 17% of overall lending, about 50% of these loans face uncertainty in the event of falling housing prices, and 25% are bad loans. The recent IPO of Agricultural Bank of China raised funds, but the environment for raising money in this way does not look good, as information is spreading that these banks face large loan losses. The bonds from CIC would be picked up by state controlled companies. Yet these state controlled companies are engaging in the real estate speculation, as reported by David Barboza of the New York Times and Peter Coy of Business Week. In a down cycle things could get much worse as a state sovereign fund is selling bonds, state controlled companies would buy these bonds, and state controlled banks are expected to be recapitalized making a complete circle....

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The Indian government reports the benchmark wholesale price index for April 2012 was at 7.23%, up from 6.89% in March. The wholesale price index measures bulk sales between corporations and is considered a better measure than the old consumer price index, which lacks representative data from all regions. The wholesale price index does not include services, which make up half of the economic output. A new CPI has been introduced, but more data has to be gathered for it to become a dependable measure of inflation. Core inflation excluding food and energy, which focusses on the manufacturing sector, increased 5.1%.

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Risks to stable long term growth of too much liquidity in the global financial system.

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Concern about slowing growth in China with rising inflation. The problem of opaqueness of the financial system and of banks that are both listed companies and run by the government, and how this could accelerate a slowdown at some point with accumulated problems in the financial system. A sense that China's growth model has reached a limit, and whether there will be a soft landing.

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The appointments to key economic positions in the Jinping-Keqiang administration in 2013 reflect continuity and importance given to experience. Zhou Xiaochuan continues as head of the central bank PBOC, to keep an experienced person in the the event of a financial crisis. Lou Jiwei, chairman of the sovereign wealth fund, is now the new finance minister. Xu Shaoshi, minister of land and resources, is the new head of the National Development and Reform Commission, the economic planning agency. Xiao Gang, chairman of the Bank of China, one of four state owned banks, will be the new head of the securities regulator, China Securities Regulatory Commission. Zhang Gaoli, a member of the Political Standing Committee of the Communist party, and Wang Yang, party chief of southern Guangdong province, also join the economic team. Li Keqiang, the new prime minister emphasized the agenda for the next decade telling a press conference: "Talking the talk is not as good as walking the walk. We need to pursue market oriented reforms." This means giving the private sector and consumers a signficant role in the Chinese economy....

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Details of the $825 billion stimulus plan. Renewable energy does well under the plan including production tax credit for renewables, with $32 billion for a "smart" electrical grid for which GE makes components and lobbied for. Renewable energy producers win an extension of production tax credits now convertible into cash for companies whose losses leave them unable to use the credits. Transportation infrastructure green projects did not do so well, with $32 billion for transportation projects and only $10 billion for mass transit projects.The Natural Resources Defense Council had compiled a list of more than 80 environmentally friendly infrastructure and transportation projects worth about $405 billion. Only a small number of these projects made it. What is in the stimulus to create jobs and stimulate capital investment? Businesses get bonus depreciation, which speeds up depreciation deductions for companies that invest in plant and equipment. The stimulus doubles the amount small businesses can immediately write off for capital investments and purchasing new eqipment, and gives incentives for businesses to invest in renewable energy. States get help with $90 billion going to increase the federal share of Medicaid payments, and an additional $79 billion to help states avoid cutbacks in education and other services. And there is a "Make Work Pay" tax credit for $500 per worer and $1000 per couple. Experts say the effects of the stimulus will be felt in the latter part of 2009 and into 2010. Which is one reason the view of economists that there would be a second half recovery does not reflect conditions on the ground. Goldman has revised its view to 2010 and even that may be optimistic. One example of what has happened in the stimulus in this respect is that the earlier optimistic view of largeinvestments in science and technology, broadband networks, and transportation projects for fast rail and transit have all been trimmed down. Part of the reason may be that the bill for the nation's banking system revival may be larger than realized as an additional amount of $15-20 billion is being negotiated for Bank of America and more money will go to Citigroup. $6 billion is shown for highspeed internet access for rural and underserved areas. Science facilities get $10 billion. Repair of public infrastructure (read roads and bridges) gets $31 billion. School modernization gets $21 billion. And modernization of health information technology systems gets $20 billion which its hoped will provide equivalent or higher returns to pay for some of the universal health care costs, and preventative care gets $4 billion. There is a tax credit for R&D work on energy innovations and renewable energy production of $20 billion, and $32 billion for a "smart electricity grid." These are the proactive parts of the stimulus that create something new and make improvements. They add up to $144 billion. So much money goes to shore up the existing services and supplement incomes, and to relieve stresses on the banking system, and other ways to shore up the system, that the proactive expenditures are only a small fraction or 17% of the $825 billion stimulus. And all the time the federal deficit and debt increases with these huge outlays just to shore up the system. The Heritage Foundation Data Analysis Director Mr. Beach told Congressmen at a discussion chaired by Congressman Cantor (R), on January 16, 2009, that the federal debt would reach 92% of the nation's GDP in 2009 from 58 billion or 70% in 2008, with the $825 billion for stimulus. The federal deficit would go up to $1.31 trillion or 9.2% of GDP up from $541 billion in 2008. See the research paper on the Heritage website. ...

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Nouriel Roubini has proven correct on global financial issues. He said in an interview on the sidelines of a symposium in Malaysia, that China needs to revalue its currency for its own sake. China will see a growth collapse in the next 2-3 years if it fails to do so. His point is that China can still maintain growth by shifting to domestic consumption and less infrastructure spending and exports. In his view growth should not be affected if China exports less and consumes more. He points to the decrease in consumption as a share of GDP from 45% to 36% in the last ten years- this ratio is 70% in the USA. A cheap yuan keeps foreign goods unaffordable and protects state owned companies which also get cheap credit, as keeping the yuan low requires China to keep interest rates artificially low. What this does is make a massive transfer of income from the household sector to the state owned companies, just at the time when China needs to do the very opposite of this. And compounding the problem is that the 25% of China's GDP that is made up of retained earnings of mostly state owned companies, goes into real estate and production facilities. See the link to David Barboza in the New York Times who points to the wasteful spending and real estate speculation by state owned companies. Roubini cites the automobile sector where capacity has doubled in the last year to 20 million, when the domestic market increased by 50% to 10 million vehicles. The stimulus only increased the effect of surplus capacity and misallocation of investment, with highways to nowhere and brand new airports that are three quarters empty. The Chinese leadership is beginning to grasp this, but the state owned companies and other interests who benefit fromm the old model, may make it difficult to reverse the trends. A lot is at stake in this, as it affects the U.S., as well as countries dependent on China's imports such as Australia, Canada, Brazil and Germany. ...

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Saudi Arabia needs current oil price of $60 a barrel to move up to $80 a barrel to balance its national budget. To do this OPEC needs to coordinate its oil production cuts with a group of 10 countries led by Russia that includes Mexico. These countries include countries in the former Soviet Union.  In December cuts of 1.2 million barrels a day were coordinated between the 2 groups to push up oil prices. Now the OPEC cartel plans regular meetings with the Russian led group to push up oil prices. Under a draft document an alliance between the 2 groups would last 3 years and include regular meetings. Earlier Prince Salman led Saudi government proposed replacing OPEC with a new group combining Russia and Saudi Arabia and the other countries in OPEC, yet giving most of the decision making power to Russia and Saudis. This was rejected by Russia and was received poorly by Iraq, Iran  Nigeria, Angola, Algeria. The Iraqis reminded Saudis that OPEC was started in Baghdad. ...

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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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Saudi Arabia continued to follow a policy of high oil production in 2016, and reported that it produced 10.67 million barrels a day in July 2016. Iran is producing at a pre-sanction level of 4 million barrels a day. 2017 oil demand prediction by OPEC is at growth of 1.15 million barrels a day. Experts says that the interests of Iran and the Saudis may be converging to reduce production as they face low oil prices. Iran needs to make large investments and Saudis face budget cuts with low oil prices. They point to this cooperation being temporary as there are issues of competing politics in the region, and beyond that both countries seek to expand their market share.

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The IMF's Anoop Singh, director of the Asia-Pacific department, says the inflation in Asia and other countries is a result of wider structural economic shifts, not just a one-off result of the weather related food production declines. For this reason the response should be broader reforms to control inflation. Monetary policies alone cannot therefore do the job, more strengthening of currencies will be needed. Singh says some of the underlying demand in Asia is a result of a widening middle class, which implies the price pressures may not be temporary. The high growth rate in Asia has some good and bad aspects. The bad aspect is the quality of some of the growth and the sustainability of that kind of growth, says Singh.

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Prof Richard Thaler of the Booth School of Business at the University of Chicago, sees an acute underestimation of risk as a common element in recurring crises- both the crises of a financial type and the crises like the one in the BP Gulf Oil Spill. Tony Hayward, CEO of BP said that BP had perceived the risk of such a spill as one in a million.