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Research from Australian National University shows steadily improving conditions for migrant workers in China. Migrant workers were able to spend more time in cities- an average of 8.9 years. The hukou sysem ensures migrants return to rural areas when they have to raise a family. About 252 million migrant workers work in factories and construction jobs in urban areas. Migrants with children leave them with grandparents back home. Improving the conditions of these workers is important to reduce the wage and income disparities in China and to reduce inequality. About a fifth of the migrant population now has pension and health benefits. Creating a balanced economy with domestic consumer spending making a larger share of GDP also requires improving wages and benefits of migrant workers. Incoming prime minister Li Keqiang says in a statement on a government website: China "must take migrant rural workers and gradually change them into urban residents. This requires that we push forward household registration reform." If done seriously this will create a new kind of China as these migrant workers are integrated into urban society after years of being shunned and ignored by China's educated middle class. Professor Meng's research at Australian National University of migrant workers shows the proportion of migrant workers with unemployment insurance increased from 11% in 2008 to 21% in 2012. The research shows similiar figures for health and pensions. Improving their living standards also make it attractive for more young people from rural areas to migrate to cities increasing urbanization....

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Spain's prime minister Mariano Rajoy repeats his request that the $125 billion from the European Financial Stability Facility (EFSF), the eurozone rescue fund, be sent directly to recapitalize Spanish banks, instead of being sent to the Spanish government. Capital markets did not respond positively to the aid announcement and Spain's 10 year bonds yields were close to 7%, one point higher than before the aid announcement. Rajoy told the other leaders at the G-20 summit in Los Cabos, Mexico, that it is necessary "to break the link between risk in the banking sector and the sovereign risk," according to a Spanish official. The European Commission and some EU governments support this, but Germany remains opposed to such a move. Spain paid higher rates on 3.04 billion euros in short term debt financed on June 19, 2012. Spain plans to sell 2 billion euros of two, three and five year bonds on June 21. Part of the problem for investors is the lack of clear accounting and transparency of the total debt of regional governments in Spain, and bad loans at banks, which it is feared could be much larger than the $125 billion in rescue funds from the EFSF. This is a result of the housing and asset bubble in Spain of the last two decades since joining the EU. The $125 billion would take Spanish debt to GDP ratios to 90%, which is lower than Italy's but comes at a time of unemployment at over 25% and a declining GDP, increasing investor uncertainty....

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Adam Parker, chief equity strategist of Morgan Stanley, sees the Standard and Poor's 500 stock index ending 2012 at 1167. Garry Evans, global head of equity strategy at HSBC, sees the S&P 500 stock index ending 2012 at 1190. This is down from the end of 2011 level of 1257. David Kostin, top equity strategist at Goldman Sachs, sees the S&P at 1250 at the end of 2012. Parker, Evans and Kostin, share concerns about the macroeconomic environment and Europe. Parker also sees weakness in bank earnings contributing to this level in the S&P 500 stock index. Parker view global macroeconomic factors determining 50% of the outcome, with weaknesses not only in Europe but also in China. His predictions for S&P earnings per share are at about $100 for 2012 and $103 for 2013.

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Arvind Panagriya, Prof. of Economics at Columbia University, points out the key initiatives of the Modi government in its first four years which will show results in future years for development of the country.  He mentions the Swachh Bharat Mission and cites results that show rural households with toilets are now 84% up from 38%.  By 2019 the whole country will be defecation zone free on the 100th anniversary of the birth of Mahatma Gandhi. The Dhan Jan Yojana DJY accounts opened for rural households are up to 316 million. Aadhar cards for identification are up from 650 million to 1.2 billion. The Aadhar and DJY work together to enable direct transfer of benefits to poor households, eliminating the leaks in benefits transfer and ghost accounts of the period since independence in 1947. Not mentioned by Panagriya is the Health Insurance scheme for lower income households that enable families to survive a sudden medical expense that could put them in dire straits.  These efforts work in a way to change India from the ground up from its villages and rural areas as envisioned by Mahatma Gandhi in the struggle for independence. The land acquisition law amendments were put on hold till farmers concerns could be better accomodated, an area of concern for industrial development cited in an editorial in the Hindu newspaper. Fiscal consolidation and inflation targeting have resulted in an average inflation rate of 4.3% for the 4 years of the Modi government. Inflation was over 9% in the last 2 years of the previous Congress UPA government with GDP growth dropping to 5.9% for the last two years. Average GDP growth for four years for the Modi government is 7.3%, even after the changes to implement GST taxation for one national tax eliminating state barriers in interstate commerce and demonetization to fight corruption and black money. Rate of GDP growth should be higher after the gains from the initiatives and the new GST integration of the country are felt, with increase in investment and FDI, after infrastructure improvements and land acquisition arrangements are made. Transportation infrastructure modernization initiative pushes ahead with the first bullet train in the pilot project for Ahmedabad- Mumbai set to start in 2022. This is a $17 billion project financed for $13 billion by the Japanese government at 0.1% loan for 50 years, moratorium on repayments for 20 years, using E5 Shinkansen series technology. Implementation of this project on a sound financial basis should lead to transformation of the Indian rail network, raising the level of technology implementation across the entire Indian rail system. Such an achievement would rival the first introduction of railways into India in the nineteenth century under the British. A new bankruptcy law is intended to free up capital for investment by putting behind the large number of non performing loans in the Indian banking system. Changes made by the central bank RBI are designed to speed up this process so that loss making enterprises are absorbed, consolidated or shut down, a legacy from the earlier period.     ...

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The annual report on China by the IMF points to a diminishing margin of safety and higher risks for delays in needed economic changes from earlier infrastructure and construction focussed policies which neglected Chinese consumers and savers. The IMF pointed to risks from the shadow banking system and the real estate bubble that need to be addressed.

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The prospects for a coalition government of the PD of Luigi Bersani and the parties supporting outgoing prime minister Mario Monti. This is the best outcome for the eurozone and for lowering Italy's borrowing costs on debt.

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ECB study put out in April 2013 shows household wealth and income in eurozone countries based on 2009-2010 data for 60,000 households throughout the eurozone. The household wealth in southern European countries is higher than that in Germany. The study shows why ordinary Germans oppose bailouts for banks, Greece, and eurozone countries that experienced a boom in the 2000-2010 period, a period in which German workers took small pay raises to improve German competitiveness. Germans also see Portugal and Ireland in a different light compared to Greece, Cyprus, Italy and Spain where real estate speculation, lax accounting, tax evasion and favored treatment of certain groups, has created or aggravated the debt problems. Wealth is defined as total assets, including real estate, vehicles, bank deposits, investments and pensions, minus liabilities for mortgages, credit card debt and loans. By this measure German households had an average of 200,000 euros in wealth, and lower than this in Finland and Netherlands. At the median or midpoint German households had 50,000 euros, the lowest in the eurozone, for Greece the median was 102,000 euros. The impact of home ownership is significant in the report, as home ownership is lower in Germany than in Southern European countries, and mortgage interest is not considered favorably in German tax laws. The decline in value of homes after 2010 is also not reflected. Another indicator for comparitive wellbeing is income, and this is shown in figures released in March 2013 from the European Statistics Agency for GDP per capita. For Germany per capita GDP was 29,000 euros in 2010. The average GDP per capita for the eurozone is about 24,000 euros. By this measure Greece is at 21,000 euros, 24,000 euros for Italy and for Spain. Germany being 18-19% above Spain and Italy. If Germans, Dutch, Finns and Austrians are less well off then the argument favors having the banks, creditors, and including depositors, in a burdensharing arrangement for bailout of troubled eurozone economies. ...

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The health care system is designed to encourage procedure based specialist practices and discourages the patient understanding education and monitoring that occurs with a well designed preventive family physician practice. As a result a patient only spends 30 minutes ayear on average with family physician compared to one hour in other developed nations. In the USA there has been a steady decline in the level and quality and extent of family care and the close one on one rapport with well trained family physicians who enjoyed their work and understood their patients and kept up with their health conditions and provided good and regular advice on these conditions. There is no money in this care as a result first you provide an environment where a whole range of medical conditions can flourish and expand, and then you hit them with a whole series of tests to rule out specific medical conditions. It is a perfect way to expand the testing and let testing flourish, so it would appear that if someone had wanted to start with a goal of letting testing proliferate unhindered then this would be the perfect way to design it. ...

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How the Simpson-Bowles Commission recommendations on reducting tax expenditures and the Romney, Feldstein proposals to limit tax deductions and loopholes to make the rich pay more- at the same time as the tax code is simplified with lower rates- offer a basis for moving towards a deficit reduction plan that has support on both sides of the aisle in Congress, of Democrats and Republicans. Jeb Hensarling and Pat Toomey are the Republican members on the Supercommittee to address deficit reduction, who support a balanced approach to raise revenue from taxes and spending. Obama advisor, Chrisitina Romer sees the Simpson-Bowles approach to limting tax deductions as a good starting point for building an agreement. Romer goes so far as to say let the Republicans in Congress decide on infrastructure project selection as there so many worthy infrastructure improvement projects that getting started would be the main objective.

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Shiller says policy is captured and communicated by metaphors, the most effective being belt tightening for a family. However what works for a family does not work for a country in the same way, especially if not accompanied by other measures and implemented in a strict manner without looking at the real situation. Better suggests Shiller, and more real is the metaphor of "winter on the family farm," where people work to do other chores than planting and harvesting, because a lot of other things need to be done and this is a good time to do it. This would include cleaning up the place, fixing the farm and the barn, fixing machinery, building fences. The farm's members pay a tax in terms of donated labor which goes to do all the work needed and helps the farm's productiveness as the weather changes. Similiarly the Salant-Paul Samuelson balanced budget theorem from the FDR days shows an increase in national output by the amount of a tax, such as the one proposed in France by president Hollande; that would then be invested in hiring more teachers (the labor) and investing in education infrastructure....

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Efforts by Spain's government of prime minister Rajoy to come up with credible estimates about the actual needs for recapitalization of troubled parts of the banking system, and which banks should be closed. Report out in June by consulting firms Oliver Wyman and Roland Berger relies on information from the Bank of Spain. A detailed audit examining the books of the 14 largest banks in Spain will be completed by audit firms by the end of July 2012. Considerable criticism in banking circles in Barcelona and London about the procrastination by Spanish banking authorites in coming up with credible estimates of the actual bad loans and losses in the Spanish banking system. This would improve confidence in financial markets that the problems can be controlled and a way forward planned.

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Macroprudential policies of central banks in S. Korea, Indonesia, China, Canada, and other countries, as concerns grow about a housing and credit bubble.

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Shipping and freight statistics show an increase of shipments from Mexico. Trains and truck shipments from Mexico to the U.S. increased by 8.7% by weight in the first 11 months of 2011 compared to the prior year. By comparison shipping containers entering the ports of Los Angeles and Long Beach went down by 0.2% in 2011. Mexico stands to benefit from the shift in dynamics as manufacturing costs in China increase with labor constraints, higher wages, higher commercial land prices and recent Asian supply chain issues making firms wary of unanticipated problems. This is expected to benefit the U.S. with the return of some manufacturig jobs and a serious rethink of outsourcing. Because of highly automated factories and advanced technologies the manufacturing process requires fewer and more skilled operators, reducing the labor component of costs. Carlisle Companies CEO, David Roberts says he is expanding tire manufacturing plants in Tennessee. He says he can make tires as cheaply or cheaper in the U.S than in China. This has serious implications as the U.S. gets down to rebuilding and renewal of its manufacturing industry....

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Thomas Sargent of New York University, the 2012 Nobel prize winner in economics, says the EU leaders can learn from the way the federal government in the U.S. handled the issue of state's debt when it came up in the 1790's and in 1840. In 1790 the federal government- under the leadership of Washington and Hamilton- saw the need to honor state's debt because of the contribution made by states in the war of independence and the U.S. assumed state's debt. In 1840 the U.S. refused to assume state's debt and states went into default. The result was beneficial because state's passed balanced budget rules and restrained reckless spending. Another benefit was that this preserved state rights to manage their finances and the federal structure setup under the constitution.

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Gordon Brown, former prime minister of Britain from 2007 to 2010, chaired the April 2009 G-20 meeting that came up with ways to tackle the global financial crisis. Brown also led the way by recapitalizing British banks, a step the U.S. followed. He comments on the volatility in financial markets in August 2007 following the S&P credit downgrade of the U.S.. Brown gives an incomplete grade to the tasks the 2009 G-20 set out to accomplish. He points to three goals the G-20 had set in the middle of the financial crisis in April 2009. The first was to prevent a recession from becoming a depression. The other two were to establish a financial stability regime, and a compact for growth. These two became paper promises says Brown. Brown sees the best approach to prevent a lost decade is for U.S. and Europe trading their way out of a downturn as the Asian market absorbs more industrial goods from Europe and the U.S. This includes policies that would keep commodity prices low and ways of coping with currency shocks. Analysts have pointed to an export led recovery as one of the solutions the U.S. was hoping to achieve with a lower value of the dollar. This has had only limited success because of deep structural problems- high consumer indebtedness, bad debt at the banks, weak housing sector following the mortgage crisis, and a rising U.S. deficit- which will take some time to clear. Brown does not come to grips with these underlying imbalances built up during the boom years of the last decade, both in Britain and in the U.S., during which he was the finance minister of Britain....