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Japan's central bank, the Bank of Japan, is under pressure from the government to do more to address deflation and the appreciation of the yen. The central bank increased purchase of government bonds to 10 trillion yen ($124.7 billion) in February 2012, and set a goal of 1% inflation. A senior cabinet ofice official attending the central bank policy meetings of April 9-10, stated that the government expects the Bank of Japan to "promptly" achieve the inflation rate of 1%.

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At the end of the 2012 Communist Party Congress in Beijing, Xi Jinping assumes the post of chief of the Communist Party of China. He also assumes the post of head of the Central Military Commission, which makes him head of the armed forces of China. Li Keqiang, the incoming prime minister, is the only member of the party Politburo Standing Committee selected by current president Hu Jintao. Jinping is supported by Jiang Zemin, former president. Four of the other five members are older party leaders placed in these positions by former president Jiang Zemin, who succeeded Deng Xiaoping and started China's three decade long modernization. The seven member Standing Committee governs China by consensus. This will limit the room for change, especially as the other five members are in their mid 60-s and favor the status quo. Xi Jinping is 59, Li Keqiang is 57. Xi becomes president in the spring of 2013, and Li becomes prime minister to run the government ministries. The optimism for Li who is the best educated of China's leaders, holding a doctorate in economics from Peking University, and an early interest in constitutional law, is restrained by the institutional arrrangements that favor the status quo. Some experts in China see the new leaders likely to make major changes only if confronted by a crisis. In his live television acceptance speech Xi focussed on China's "rejuvenation," with improvements in the party bureaucracy, tackling corruption, and improving the lives of ordinary people, for better schooling, jobs, incomes, health care, better housing conditions, social security and the environment. From the rush to modernize and build infrastructure attention is now shifting to creating better conditions for the Chinese people....

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China's handling of the surging stock market, and use of the market for debt ridden companies to reduce debt loads, is based on an erroneous assumption of how equity markets work. China's lack of experience with declining equity markets during China's experiment with its form of capitalism since 1990, is a serious handicap in 2015.

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A 15% minimum corporate tax on large, profitable corporations is part of the global minimum corporate tax proposed by US central bank chairwoman Janet Yellen, and the tax proposed by US president Biden. The tax would not apply to companies making $100 million as earlier proposed. The threshold has been raised to $2 billion and affects the companies that have avoided taxes the most. This report says there are 45 such companies in the US.  A US Treasury report on the tax says "the 15% minimum tax is a targeted approach to ensure that the most aggressive tax avoiders are forced to pay meaningful tax liabilities." The Biden agenda on corporate taxes would raise more than $2 trillion over 15 years to pay for essential infrastructure renovation to replace decaying infrastructure in the US. This means roads, bridges, airports, ports, transit systems, electricity grid, broadband systems, school systems, health systems, would all be targets for investment for the first time in 50 years in a concerted drive. The tax drive would partly reverse the Republican Congress's 2017 reduction in corporate tax rate to 21% from 35%, boosting it to 28%. European Union countries such as Britain are also following similar policies after decades in which a race to the bottom led to the lack of funds to finance essential infrastructure rebuilding. As a result China which was a nation of bicycles back in the 1980's now has some of the newest infrastructure, while the US and the EU countries have what might be considered crumbling infrastructure badly in need for renovation. As the shift in mood to a competitive world not only in technologies but in infrastructure and ease of living happens there is more and more awareness of what has been lost in the last 40 years.  ...

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The Indonesian currency, the Rupiah, has declined by 13% in 2013- by Sept. 3. It reached a level of 11,050 rupiah for one dollar on Sept 3. Economic growth has declined to 6% for the second quarter of 2013. The depreciation of the rupiah is likely to increase inflation significantly and affect the consumer spending boom in Indonesia. Indonesia had a $2.3 billion trade deficit in July 2013 after a continuing surge in imports. This will affect car prices and prices of international brands popular in the country. Toyota set the rate at 9500 rupiah to the dollar and plans to increase prices now that the rate has passed 11,000 rupiah.

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Small shortfall in China's agricultural production can make a big difference in world food prices. A 5% shortfall in China's grain harvest can take up 20% of current global grain exports, according to an analyst at Standard Chartered Bank. China's food imports are small- about 3% according to an economist at HSBC. Just a small increase in the exports as a result of drought can have a large increase in food prices. The use of good agricultural land in places like Shandong province for industry, means more of the agricultural production is being shifted to the drier north, which has water shortages. China's agricultural land is shrinking- going down by 12 million hectares since 2000 according to the government.

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Actually some of this is a healthy development as more nations and people have a stake in the world economy. Take the Brazil situation for example . Clearly the Brazilian people are more favorable to globalization and its benefits than they were a decade ago at the height of the Asian crisis and the contagion effect on Brazil. Actually the advantages of free trade and a global trading system that benefits Brazil as well as China and India and other countries that buy its commodities such as iron ore is more now than ever because these nationas are benefitting from this trade. Because of the high prices of commodities and the agricultural products of Brazil, it has a currrent account surplus and its currency is strengthening. Instead of having to go to the IMF for assistance Brazil has large foreign exchange reserves that support its currency and which help it push up its investments as a share of GDP from 19% to closer to 25%, which should enable it to sustain about 5% growth year after year., according to Sergio Vale of MB Associados. A strong real, lower interest rates, and consumer credit have boosted the purchasing power of the middle class and the antipoverty programs of the Lula government have helped the poorer classes have a stake in the development. According to a recent Observador/Ipsos survey 23 million Brazilians have left social classes D and E and joined class C whose distinctive markings are a rented apartment, a car and some new gadgets. Actually quite to the contrary of the impression created by this article Brazil according to a former central bank governor is now showing a new enthusiasm for this kind of development which encompasses free trade and markets, a feeling that the stockmarket is not a casino and being part of the world economy is a good thing. The big discoveries of oil at Tupi and Carioca-Sugar Loaf in Atlantic offshore waters by Petrobras even though they are in miles deep waters and require special expertise must only have reinforced this mood. The danger to Brazil's enthusiasm comes not from nationalism of different countries trying to find better ways of meeting the aspirations of their people but from the risks in a global slowdown that started with the US subprime and mortgage crisis, the resulting credit tightening, and fall in consumption thats expected after years of overspending by the American consumer. Its now upto these individual countries, like Brazil, China, India and Russia, Japan as well as Germany France and other countries that are not directly part of the housing bubble and subprime and mortgage securitization mess affecting the USA, and the UK and Ireland and Spain to a lesser extent, to find ways of maintaining more modest but still substantial growth to meet the growing aspirations of people in these countries. In this sense the policy errors and regulatory errors made during this last decade in the US will actually have hurt the world economy and markets in a serious manner, and it is this that has now to be managed in a better way by these countries with the close cooperation between them and the USA. The situation in Brazil is repeated in the experience of India, China and Russia where for the first time there is enthusiasm for being part of the world economy. In the light of this development there is more reason for hope and more need for careful navigation mechanisms for these and other countries to weather the difficulties from a global slowdown and still sustain development that itself could help the USA work its way out of the current crisis through its exports....

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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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Stewart points out that Japanese government efforts to prop up stock prices by buying stocks in 1992 failed after 2 years when the fundamentals did not support the government effort. Experts say that even if the stock prices recover in China in 2015 after government efforts to prop up prices, this will be temporary if the economic fundamentals do not support such high valuations. The Shanghai Stock Exchange has a P/E ratio of 37 and the Shenzen Stock Exchange has a P/E of 80, very high valuations. Earnings numbers from smaller companies in China are also unreliable increasing investor risk. Additional issues are the timing of the government's effort to promote a surge in the stock market in 2014-2015. It comes as real estate and housing prices are in a bubble and the economy is slowing rapidly.

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Li Keqiang, China's new premier, entered Peking University in 1978 by excelling in merit exams. Li and a fellow student, Yang Baikui, translated the English book "The Due Process of Law" by British jurist Lord Denning. Professor Gong Xiangrui, brought the book to China and educated his students in the ideas of constitutional law and western liberalism. Yang says Li learned English on his own and meticulously carried a stack of notecards with English on one side and Chinese translation on the other. Li would study the cards while waiting for a bus or in the line at the school cafeteria. Li has political discusions with students from that time, some of whom joined the pro-democracy demonstrations of 1989. He is the son of a mid level county official from Anhui province and moved in the party ranks through diligent effort. Li's doctoral thesis is in economcs and he is expected to focus on economic changes, with Xi Jinping, the new president, taking the lead in making changes to the political system. Fellow students from Li's days at Peking University say the difference between them and Li is the pace of democratization, with Li looking at it as a longer process. Recent articles by Li Keqiang on economic change show his emphasis on urbanization as a way to improve agricultural conditions with a smaller number of farmers improving producitvity in agriculture, and the importance of creating a better social safety net for people in China....

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China risks a steeper fall in the value of the yuan with capital outflows following its policy of gradually weakening the yuan in 2015-2016.

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Official currency reserves of developing world countries almost quadrupled over the last decade to $2.9 trillion. Reserves of industrialized countries went up by 150%. In 2005 reserves went up by 18% for developing countries and declined 1.5% for developed countries. 70% of total currency reserves are in developing countries. This is a huge accumulation of reserves by developing countries in a short period. In 2005 74% of overall reserves were in U.S. dollars. The reserves help countries pay bills and make investments. For developing countries having sufficient reserves helps in two other ways. The reserves are a buffer in emergencies , and means countries like Brazil and S. Korea don't have to turn to the IMF or the U.S. for assistance. Another way this helps is for countries like China to be able to use their reserves to keep their currencies from appreciating and maintain a competitive edge in exports.

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China's GDP growth accelerated slightly to 6.9 percent in the 1st quarter of 2017, after five consecutive quarters of GDP growth at 6.7-6.8%, according to government data. This reflected larger use of steel in the construction industry and more mortgages issued by the state controlled banking sector. Government officials say productivity is improving helping GDP growth, with closing of less efficient manufacturing plants. Industrial production increased 7.6% in March 2017, according to the National Bureau of Statistics. The government is trying to control higher lending and reduce the backlog of bad loans at banks. Higher growth helps to reduce the bad loans at banks from the earlier period after 2008 financial crisis, improving financial stability.

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Kenneth Rogoff of Harvard University, expert on debt crises, and author of "This Time is Different," says China is one of the best examples of the idea that this time is different, with the idea created that somehow China was impervious to the massive build up of debt. The debt is now over 250% of GDP, and this was possible for so long because of the high savings rate of 30% of disposable income and the millions of young migrants moving to cities to work in manufacturing. The growth of shadow banking, opaqueness in decisionmaking, unreliable data, use of local government financing vehicles, the bubble in housing with a large portion of loans tied to the real estate market, all combine to create serious problems that will take a long time to sort out. Rogoff says the crisis in Tianjin with the deadly explosions in the port area, and the government's inability to provide answers to questions from a alarmed public, only added to the uncertainty and loss of credibility. Rogoff says he hopes the trillions of dollars in reserves will provide China with the tools adequate to tackle the debt problems before they spread to other countries....

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Moody's Investor's Service downgrades China's credit rating to A1 from Aa3. Moody's predicts a slowdown in growth for China. GDP growth for 1st quarter 2017 was 6.9%. Total debt has grown from 149% of gross domestic product in 2008, to 213% in 2013, and is now 253%, according to JP Morgan. The problem is that ever higher levels of credit have supported growth and more of this is coming from the shadow banking sector. Higher levels of debt in future years from the already high levels will weigh heavily on growth, leading to an eventual slowdown in the economy's growth rate.

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This Wall Street Journal editorial calls for more transparency in disclosing bad debt problems at Spanish and other European banks. It faults recent and upcoming stress tests of EU banks for not being stringent enough and taking into account adverse scenarios. While Spain's central bank says only 20 billion euros are needed to recapitalize the cajas savings banks, other estimates are much higher. Moody's country report says Spain could need upto 120 billion euros to recapitalize its banks. A big problem is European banks exposure in Spain which is over 700 billion euros as of September 2010- Spanish banks have high exposure in Portugal and German banks have high exposure to Spain.