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The Brazilian economy is growing too fast, and this pace not only won't be sustained, but it has signs of serious trouble ahead. The Brazilian economy grew at an estimated annualized pace of 10% in the last 6 months and generated 962,000 jobs between Jan-April of 2010. Growth in 2010 is expected to be 7%. The jump in growth is partly the result of the stimulus measures of the Lula government. But a consensus of experts is that Brazil still saves too little, has not invested enough in infrastructure,and its economy has the potential of 5% sustainable growth each year. The central bank has increased interest rates - increase of 0.75% in April 2010, and economists in Brazil think the rate will go up to 13% in 2011. About $10 billion in cuts in spending have been announced but they are cuts to an already growing budget approved by Congress, so in reality it will only slow the increase in spending. Public debt is at 42.7% of GDP. Real interest rates have fallen from close to 20% in 2003 to between 5-10%. Costs per unit of labor are increasing at about half the rate of real wages according to a finance official. The National Development Bank or BNDES played a role in helping the economy with subsidized loans when the financial markets ran into trouble. It has expanded lending by 50%, with money from the Treasury of 180 billion reais. Some of the measures of the Lula government has reduced the skewed income distribution Brazil, and in doing so has increased consumer demand. Meeting high consumer demand, and meeting the need for commodities like soyabeans and metals from China, has boosted growth in Brazil to twice the sustainable rate and it is now at a par with China and India. But this places Brazil too dependent on the boom in Chinese demand, especially as the stimulus in China slows and the property bubble threatens China's economy. See links to China. A new President after the upcoming Presidential election will have to tackle the high interest rates in 2011, lower commodity prices, and the need for better infrastructure, and make the adjustment to a sustainable pace of growth....

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In an effort to normalize trade relations Pakistan's government plans to move forward with a step by step approach that will end the restrictions on Indian imports by Jan 1, 2013. The first step is ending a system that allows a list of 2000 import items from India and replacing it with a list of 600 items from India that are banned, allowing the flow of all other goods. This negative list will be eliminated by the end of 2012 leaving in place restrictions on sensitive defense items and some staple goods. Ashfaque Khan, dean of Pakistan's National University of Sciences and Technology Business School advises the government on trade issues. The trade between India and Pakistan stands at $2.7 billion for the year ending March 2011. This is much smaller than the $60 billion in trade between India and China which is growing. The trade between India and Pakistan is likely to grow significantly in the next ten years as trade barriers are removed and normal trade is established.

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New data from Pew Research Center in Dec. 2013 shows 89% of Hispanics support a legal path to citizenship for illegal immigrants. But when asked to choose between relief from deportation and path to citizenship, a majority 55% of respondents chose relief from deportation, compared to 35% preferring a path to citizenship. This shows the extent to which the Obama administration's efforts in deportation have affected the Hispanic community in the U.S.

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The Fed acts to stabilize the credit markets till the current administration and Congress or its successor can think of the best way to inject money into the USA banking system and in helping homeowners in the housing crisis. One fact remains between 2000 and 2006 Americans took on about 3 tillion dollars of additional debt than if they had followed the earlier trajectory of spending, so they owe $3 trillion dollars more than they would have if they followed earlier spending patterns, accordingto Business Week estimate. It is this debt that will depress consumption spending for 3 to 4 years according to BW estimates till this debt can be worked down. The other estimate by BW in Street of Fear in the same issue is for $285 billion in total amount of subprime writedowns expected with only $150 billon accounted for so far in early April 2008. This means another $135 billion in writedowns will come probably this year. One anlayst Meridian of Keefe, Bruyette & Woodsfor example points outan additional $15 billion of subprime writedowns expected for Citigroup on top of the $21 billn already taken and in the worst case the writedowns could reach $60 billion. So clearly we are only half way through these writedowns. With consumption spending due for a big hit, and more big hits in the credit markets, the worst may still be ahead in 2008. ...

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All sides had to make concessions to reach a new agreement on a restructuring of Greece's debt, and new terms for loans to Ireland and Portugal. The agreement was reached after negotiations between France, Germany, the ECB, and eurozone countries with a declaration issued on July 21, 2011. The powers and financing of the European Financial Stability Facility (EFSF) were expanded to be the main mechanism for channeling EU funding to reduce the burden of Greece's debt. Germany will provide new funding and be open to additional commitments, something German chancellor Angela Merkel had resisted since the beginning of the crisis in 2010. Earlier funding had come with high interest rates and only when the situation had reached a crisis, with Germany insisting on the punitive rates and conditions as a way to discourage countries from taking advantage of cheap borrowing. In exchange for commitment of German funds Ms Merkel had insisted that banks and private creditors share in the losses. Private bondholders resisted but finally agreed to take a loss of 20% of principal on a small portion of the bonds. Their larger concession was to take lower interest rates and extend the maturities to 15 years and 30 years on new bonds which are guaranteed by the EU. The specific terms of the agreement are as follows: The EFSF and the IMF will lend Greece 109 billion euros over 3 years at 3.5%. Private creditors including German and French banks will "voluntarily" turn in their old bonds for new ones that mature over 15-30 year periods. These new bonds include 15 and 30 year Greek bonds with varying coupons. Some of the bonds would have a 20% discount on principal. EU leaders say the private sector contribution amounts to 37 billion euros through 2014 and 106 billion euros through 2019. Another part of the program is for the EFSF to buy back some of the Greek bonds on the secondary markets, which would mean Greece would now owe a smaller amount to the EFSF on these bonds. The EFSF will now have additional financial support from Germany and other EU countries and be authorized to provide aid to countries before a crisis situation arises. It would also have power to buy Greek bonds at prices on secondary markets to reduce the Greek debt burden. Ireland and Portugal are also assisted in the agreement. The interest rate for EU aid to Ireland and Portugal is taken down to 3.5%. Ireland is paying about 6% on the EU portion of its 67.5 billon euros bailout and efforts to reduce the rate were resisted earlier. The main theme behind these concessions and provisions is to give Greece, (and Ireland and Portugal) a chance to grow. High interest rates came under strong criticism because it only increased the size of the debt burden of these countries with a shrinking economy and high unemployment. The failure to come together behind a broad and sensible agreement with all parties making serious concessions, the EU, the ECB and the political leadership in these countries especially Greece, was undermining confidence in the euro and the eurozone itself. By mid-July Italy and Spain were feeling the effects of contagion in the financial markets, U.S. debt ceiling negotiations were unsettling global financial markets, the pressure was intense to come up with the workable agreement achieved on July 21, 2011. ...

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Brazilian President Lula's interview witht the Economist, just before leaving office. It is not still clear how Lula will be seen, even though his popularity at the moment is helping elect his chief of staff Ms. Rousseff, as his successor. Lula's success in office is seen as a continuation of the policies of President Cardozo, who helped tame Brazil's inflationary crisis. Lula has benefitted from the continuation of the policies of his predecessor, and also from the boom in exports to China for soya, metals and other exports. By helping expand Brazil's middle class and the aid to poorer segments of society with the Bolsa programme, he has earned credibility and wide popular support. The dangers lie in the areas of an extremely overvalued currency- see the link to the Brazilian currency Real- with the Real at 1.7 and analysts with computer models showing the Real really worth 2.65 dollars. Part of the problem is government deficits to finance increased spending which require inflow of foreign capital and higher interest rates. Brazil is very dependent on exports to China for the increased level of growth, this poses risks if China's growth slows as expected from the high growth rates of the past. This poses risks for the level of infrastructure spending the Lula and Ms. Rousseff goverments plan on developing. Brazil's educational system is weak and efforts to improve this under the Lula government have not produced results. So the longer term assessment of the Lula goverment will have a balanced score card of wins and losses, without the euphoria of the moment....

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The dimming hopes for the remaining Obama legislative agenda in 2014-2015 after the June 2014 upset win of Prof. David Brat over Cantor in Virgina.

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Bill Gates describes the successful work of 2 million volunteers and millions of children and parents in India's poorest rural areas to get all the children in India vaccinated for polio. This includes the work of the Bill and Melinda Gates foundation. He decribes his visits to India and realizing over time how bringing vaccinations, healthcare, improvement in agricultural development would enable hundreds of millions of India's children to participate and contribute to bringing out India's full potential. Harnessing their full potential is the next big challenge in India's development and modernization.

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Matthew Kaminski's interview with Marco Rubio, Republican Senator from Florida. Rubio outlines his proposal for immigration reform in the U.S.

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The Obama administration announced a policy of increasing the number of refugees accepted in fiscal 2017 to 110,000. This will be an increase from 85,000 in 2016, and 70,000 in the prior 3 years. Secretary of State Kerry says the target is consistent  with the idea that all countries need to do more, and if we could do more we would. After 3 years of cautious policy president Obama now follows Chancellor Merkel's lead.

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Germany went through a period of stagnant growth and persistently high unemployment leading to reforms of the welfare system and entitlements under the Schroeder administration. The reforms led to lower unemployment benefits and an effort to get the unemployed take up jobs. Instead of unemployment benefits that amounted to half the salary indefinitely, unemployment benefits ended in 12 months under the reforms, and workers were forced to take up jobs or dig into their savings. The cuts to benefits led to more of the unemployed taking jobs that were not their first choice with lower incomes. Unions agreed to defer wage demands and wages remained relatively flat for a long period. The "kurzarbeit" system of government subsidizing employers to retain workers during economic downturns, helped cushion the workforce from ups and downs in the economy. Unemployment which was in double digits a decade ago, is now 6.1%. The system still preserved some other aspects of generous benefits- parental leave of 14 months at two-thirds salary, vacation time and publicly sponsored health insurance. Recent changes include raising the retirement age to 67 from 65. The Organization of Economc Cooperation and Development estimates that the 200,000 jobs saved in Germany during the recession of 2008-2009 cost the government $7 billion. Government funds helped companies retain workers by paying a portion of worker salaries and averting layoffs.This comes to $35,000 per job. Compare this with the $38.9 billion allocated to a loan program at the Energy Department under the U.S. stimulus. 8050 jobs were created under this program according to the Washington Post- for the money spent so far in Sept 2011- 2 years into the loan program, of $19.3 billion. This comes to $2.4 million in government guaranteed loans per job. The Energy Department says that 33,000 jobs were saved under the $5.9 billion that was given to the auto industry under this program for investments in manufacturing to improve fuel efficiency. This comes to $178,000 per job. The Energy Department and Congress estimated a 5%-10% loss on the $38.6 billion loan program for loans that go sour, such as the Solyndra solar company $535 million loan. This comes to $1.9 billion at 5% loss and $3.8 billion for a 10% loss. The purpose of these figures is to show the cost of programs when the programs fail to achieve job goals or produce too little for the investment. The $3.8 billion loss under the program is over half the $7 billon Germany invested for the 200,000 jobs saved as estimated by the OECD. That ranks as a far superior investment than the Energy Department program. For the U.S. there are aspects of German reforms such as "kurzarbeit" that bear emulation, with serious questions about the effective use of the U.S. stimulus funds. For the rest of Europe the stingier unemployment benefits, raising the retirement age to 67, and other reforms send a different message. From the average German the message is: we made the tough changes, the rest of Europe cannot expect Germans to pay higher taxes while they put off similiar changes. Italy needs to change its retirement age, just as the Germans have done. As Chancellor Merkel puts it: "People in countries like Greece, Spain, Portugal shouldn't be able to retire earlier than in Germany. It's important for everybody to put in effort to make it roughly equal. Germany will only help when others really make an effort." Which is why Greece, Spain, Italy, even France are faced with making serious changes. This isn't stalling when it comes to euro bonds, from the German perspective. And it isn't about the lack of committment to the idea of a European Union, as all major political parties in Germany, the CDP, the SDP and the Greens, all strongly support the idea of a European Union. ...

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Hardy and Merced take an inside look at what happened at Autonomy Inc that resulted in the charge of $8.8 billion by H-P in Nov. 2012. The problems start with the hiring of Lee Apotheker, a former CEO of German software maker SAP, as H-P's new CEO in the beginning of 2011. This comes after CEO Mark Hurd is fired over relations with a female employee. Apotheker starts out within months of joining H-P with some precipitious moves that raise questions about his decisions- he dumps the new H-P tablet within weeks of joining, and follows this with a move to shift H-P out of its PC business and focus on software. To do this he pays ten times revenue for Autonomy Inc., a British software maker which has grown through acquisitions and not invested enough in advancements for its software, according to a piece by Al Lewis in the WSJ in August 2011. Autonomy's business is software that analyzes and finds patterns in voluminious data like e-mails, online data, web surfing. The tech community and analysts sees this as a risky investment from the start with Apotheker overpaying for Autonomy. Apotheker has failed to look at H-P's record in acquisitions with the failed Palm acquisition costing H-P over a billion dollars. H-P has a poor record of integrating companies. This proves to be especially true with Autonomy with founder Mike Lynch keeping a distance from Palo Alto headquarters by staying mostly in his London office. Apotheker is fired by the H-P Board within months of taking office and the Autonomy managers including Lynch leave H-P in the following months. Alarmed by a falloff in Autonomy sales, H-P's new CEO Meg Whitman sent a team in May 2012 to review the books of Autonomy. This results in finding "serious accounting improprieties." The problems are caught when a senior finance official at the London Autonomy offices points them out. What Autonomy did before selling out to H-P is to sell low end hardware servers at a loss, and disguise the loss by inflating marketing expense, resulting in marketing expenses going up just as it was trying to sell the company as a pure software company. Middle men who sold the Autonomy software reported sales that were made up and licensing revenue was taken before it was received. Analysts at Forrester Research say Autonomy had not invested in R&D, and did not make regular software releases, had poor customer relations, no regular customer feedback, and lacked transparency on future product plans. The question goes back to how did Apotheker make such decisions without giving enough time, with the due diligence reported to the head of strategy Robison and not the CFO as is normal, and how did he fail to catch the obvious failure to invest in the company R&D? Apotheker described his approach in a February 18, 2011 interview with the WSJ's Ben Worthen. He told Worthen a joke about the Swedish parliament where members discuss a proposal to move driving from the left to driving on the right, by doing this gradually. Apotheker's analogy turns out to be misplaced, his approach brash and dangerous, and the H-P's Board's confidence in their new hire misplaced. It turns out that H-P's previous CEO Mark Hurd came in for criticism for not investing enough in R&D. The money wasted in these acquisitions leaves H-P at a severe disadvantage for increasing investments in R&D when margins and sales are declining in the printer and PC business. On Nov. 20, 2012, H-P share price dropped 12% to under $12. H-P reported a $6.9 billion loss in third quarter 2012. Revenue for the full fiscal year declined 5% to $120.4 billon, and earnings declined 23% to $8 billion. ...

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The toal loans held by the 15 largest banks declined by 2.8% in the second quarter, 2009. More than half of the new loans in April and Maycame from refinancing mortgages and renewing credt to businesses, not new loans, acording to an analysis by the WSJ.