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Mexico's GDP increases at 3.9% compared to 2.7% for Brazil in 2011. Foreign investment is increasing in Mexico especially in the automobile industry and in industries where Mexico is favored over China as a production location. The G-20 meets in Los Cabos, Mexico in June 2012.

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American companies on the Standard and Poors 500 stock index are sitting on a pile of cash-estimated at $960 billion. This includes undistributed foreign earnings that would incur 35% taxes if brought into the U.S. At the same time companies are hoarding this cash, using some of it for acquisitions, and only gradually increasing dividends. The dividend payout ratio- the percentage of earnings paid out as dividends- is at 28.9% for the past 4 quarters according to Standard & Poors. The dividend payout ratio was 46% for three decades since 1936, and 52% for the last two decades, according to Standard & Poors. Zweig cites Benjamin Graham who stated that companies should pay two thirds of dividends to shareholders. Why? Because shareholders can make better use of the money. With too much money companies tend not to make the best productive use of capital. One example is Microsofts's purchase of Skype at $8.5 billion, considered inflated by many analysts. Graham stated that when the companies are not making productive use of the capital it is appropriate to expect that it be returned to shareholders in the form of dividends. At the 50% ratio one dividend fund manager says companies could return $207 billion to investors. ...

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Ezra Klein cites Ed Luce, who writes in the Financial Times, that the real unemployment rate in the U.S. is 11%, when you count people who have no job but have given up looking after months of fruitless searching. These are the long term unemployed and pose risks for the economy and for society. Compared to 2007, the percent of people in the U.S with a job or actively looking for work has dropped from 62.7% to 58.5%. Luce's 11% is arrived at by considering these 62.7%, including millions of workers who have quit looking but would start looking again if the labor market brightens. This is important because U.S. government statistics show unemployment dropping below 9% in November 2009, supposedly an improvemment, when its actually the reverse that is actually happening. The real underemployment is nearly 20%.

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Dow Chemical CEO Liveris says he sees signs of recovery in China in 2013. He says small and medium sized businesses in China have better access to financing in Dec. 2012 after a period of destocking and hard times accessing credit.

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Modifications proposed for Agnipath recruitment to the Indian armed services include full healthcare benefits and pension benefits for the scheme. The government has presented a fact vs. myth explanation to provide a clear understanding of the intent of the scheme to reflect a younger population and integrated India without the regimental bias towards caste and region present since British times. Job security is always a concern in India. The better technically trained and better financed Agniveer recruit would have more opportunities for education and training after 4 years and become an attractive asset for the private and public sector. A program of this kind was the GI Bill in the US that Franklin Roosevelt signed in 1944 and the Veteran Act of 2008 that continued educational benefits for free college. These programs have resulted in benefit of great value to the US economy and to the military veterans who used these benefits. In India's fast growth period after 2025 the Indian economy would be 50% larger and be easily able to take in these graduates from the armed services with technical training and advanced courses just as the US economy did decades ago. During the days following the pandemic there is a sense of pessimism in some sections and the government can enhance the package with added pension benefits and healthcare and still keep the financial aspects in good shape. ...

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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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Experts say China's official GDP figures are unreliable and cannot be verified. Transparency is sorely lacking. The methodology, inflation assumptions and other basis for the calculations are not presented, so that many of the numbers cannot be reproduced. The official figure for 1st quarter GDP growth is 7%, from China's Bureau of National Statistics. GDP growth estimates developed by Capital Economics show 4.9% growth, by Citi 4.6%, by the China Center of the Conference Board 4%. Since 2012 the Capital Economics estimates are just above 5%, and the Conference Board estimates about 4%, showing that the growth rate has slowed markedly since 2012. As Communist party chief of Liaoning province, the current prime minister showed serious doubts about the GDP numbers and preferred to rely on figures for rail cargo, electricity consumption, bank loans.

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Germany's Economy minister Zypries warned that Germany would take legal action by taking the case to the World Trade Organization if president Trump imposes tariffs above that allowed by WTO rules. She said this before a meeting at the White House between president Trump and Chancellor Merkel. The U.S. is Germany's largest export market with 107 billion in imports and the U.S. exports 58 billion euros of products to the U.S. Zypries accepted that the large trade surplus of Germany was "a problem," but that America "needs our machines and industrial plants" for the time being. Germany has insisted that it does not provide unfair advantages to its companies, and that German companies were simply more competitive. Trump has focussed largely on China for anti-competitive practices, though he mentioned BMW by name during the campaign. In the last 2 years the euro has depreciated significantly against the dollar giving German companies competitive advantage, largely as a result of the ECB- in opposition to German economic policy- trying to stimulate the economy of other southern eurozone countries such as Spain, Italy and France. ...

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China is not experiencing high unemployment in 2012 the way it did in 2009. The lower growth rate of 7-8% is not having an adverse impact on unemployment. This makes it possible for the stimulus this time to be much smaller. There is rising upward pressure on wages. According to the National Bureau of Statistics, CEIC and WSJ, average annual wages at private sector manufacturing companies in current U.S. dollars was up 5% in 2009, 16% in 2010, and 20% in 2011. This is being encouraged by the government as China gradually shifts its economy towards higher domestic consumption and better standards of living for workers. Hon Hai Precision Industry Company added 82,000 workers in China in 2011. Salaries at the Shenzen plant were 2200 yuan or $345 a month in February 2012, an increase of 10%. An April survey by Manpower Group showed that a majority of companies will increase workers or hold employment stable, only 3% of companies will have job cuts. Demographic changes are also playing a part-with fewer people in the 15-19 age range, dropping from 120 million in 2005 to 95 million in 2015, according to UN estimates. The number of migrant workers remains steady at 252 million in 2012, up 4% from 242 million in 2010, according to the Bureau of National Statistics....

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Two Harvard economists, Lawrence Summers and Lant Pritchett, say China is likely to revert to the mean of average long term growth of developed countries after this spurt of growth is over. Growth is likely to slow to 6% by 2016, and revert to the mean of 2% for industrialized countries in the long term. Goldman Sachs banker Jim O'Neill, says the growth at a higher rate could be sustained because of urbanization. Summers does not rule out this outcome as he accepts a range of outcomes, with the most likely outcome being a reversion to the mean. The factors often cited for slowing growth are lower of productivity of capital as corruption and close connections determine where capital is allocated, misallocation of capital, large increases in credit in the economy since 2009 leading to bad debt in the financial system, aging society and demographics with increasing numbers of older people. Other reasons are the choices being made by Chinese leaders for slowing down to address the problems of air pollution and contamination of water supplies, inflation in housing prices, overdependence on exports, need to shift to increasing domestic consumer spending but unable to do this with the lack of spending power of large parts of the population because wealth is excessively concentrated in the upper ranks of society. The need to manage these forces ensuring some measure of stability depends on finding ways to reduce the growing concentration of wealth and power, in itself a challenge for the Communist Party elite. A combination of different factors with some still unknown factors are likely to play a part in this reversion to the mean for China, a situation encountered by every country so far in North America, Europe and Japan. This makes it even more important that each developing society structure its development around the most optimal goals with the least costs attached to the development....

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Lagging growth in GDP per capita, productivity growth, in Italy, with small family business unwilling to take risks for growth, and bureaucratic hurdles for business. To get an idea how Italy has lagged severely behind other countries in Europe, consider that GDP per capita increased by 28% in Spain, and 22% in France, compared to only 8% in Italy during the 20 year period 1993-2013, according to the Conference Board. Productivity growth measured by GDP per hour worked for Italy showed growth of only 13% in that 20 year period, compared to 30% in France and 23% in Spain. Since the 2008 global financial crisis the Italian economy has shrunk by 9% and growth is barely 1% in 2014. During 1993-2003 top performers Germany showed 31% increase in GDP per capita and 32% increase in productivity growth, the UK showed 44% increase in GDP per capita and 38% in productivity growth. Because of slowing population growth GDP growth has to come from productivity increases in Europe. France is the strongest in terms of productivity with $59 of GDP per hour worked, UK $51, and Germany $57. Italy at $45 has fallen behind Spain at $50. Conference Board statistics show GDP per capita in inflation adjusted, purchasing power adjusted 2013 dollars at $35,847 for France, $40,868 for Germany, $30,145 for Spain, $39,904 for Britain, and Italy lagging behind at $31,386. Most of the gains were made before 1993 for Italy, whereas Spain surged in the period after 1993 only slowing after 2008. The struggles in the U.S. auto industry showed how well meaning changes for labor in the early postwar period if not adapted to changes in the global economy decades later can lead to sharp decline before adjustment is made. In Italy well meaning labor laws in the early postwar period not adapted to changes in the global economy decades later, combined with cultural behaviour of entrenched group interests, and a bureaucratic government, have stifled growth and productivity....

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Taylor goes over details of the Romney Plan and why it is better for economic recovery in the U.S.

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This report in the Guardian says president Macron's party along with its small ally MoDem could win as many as three fourths of the 577 seats in parliament in the June 2017 election, or about 400-445 seats. The election showed a low turnout of 49%, with abstention highest among supporters of Marie Le Pen of the National Front on the extreme right and Le Melenchon on the extreme left.  A big loser is the Socialist Party which this report estimates losing about 200 seats. Les Republicains the other main party on the right is also a loser, as this report estimates it going from 199 seats to 70-130 seats. The National Front of Marie Le Pen could end up with one seat at worst or just below the threshold of 15 seats from 118 constituencies contested. This is because it faces competition from the right and the left parties for votes in every constitutency, and is kept out by the centre right and centre left coming together. Le Melenchon's France Unbowed is expected to win about 11-23 seats.  In this election young and working class voters stayed away, voters who supported the more extreme left and right wing parties. Chancellor Merkel called it "a vote for reforms." The big majority makes it possible for Macron to get laws to change the labor market to create more jobs, and to make changes to pension and unemployment benefits, so that France's economy can get moving again.  ...

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BJP led by prime minister Narendra Modi wins a huge majority of 325 seats out of 405 in India's largest state Uttar Pradesh for the state assembly elections. The national opposition party Congress wins only 7 seats in what was once the main source of Congress support during the period of Jawaharlal Nehru and Indira Gandhi. This will enable the BJP to push forward with the modernization program for infrastructure and roads, and other development. Opposition in the upper house Rajya Sabha and lack of support from states will not be a major hurdle in development now that BJP has won in states such as Orissa, Maharashtra, Uttar Pradesh, and Uttarkhand in recent state elections after its win in the 2014 national parliamentary election. This also gives credibility to the government's other efforts such as demonetisation to fight corruption in real estate and other areas. India's GDP is a fraction of China's and it is smaller than that of countries such as Indonesia, because of the poor administration and lack of development in India's 2 largest states of Uttar Pradesh and Bihar in the northern Hindi speaking region. To double the GDP from its current level will require doubling the GDP of Uttar Pradesh and Bihar. Bihar's state government is run by a former BJP leader, who has also pushed for improving standards of living and economic growth.  ...

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U.S. Federal Reserve chairman Bernanke, says the Fed will keep interest rates low till unemployment reaches 6.5%, as long as inflation remains at about 2%. If unemployment reaches 6.5%, and this is because more people are dropping out of the labor market, he will take this into account. If unemployment stays high the Fed indicated in its statement that it would tolerate a higher inflation of 2.5%, as long as the longer term outlook was for inflation to be at 2%. Bernanke said this doesn't mean monetary policy is on autopilot, because the Fed will watch conditions carefully and will leave room for flexibility- keeping an eye out for new asset bubbles that could develop, and monitoring labor market conditions and inflationary pressures and inflation expectations. If inflation falls well below 2%, or unemployment rate falls mainly because of people dropping out of the labor market, the Fed may continue to keep interest rates low. This policy was announced as U.S. fiscal cliff deficit negotiations continued in Dec. 2012 with one scenario being considered by both political parties being going over the Jan. 1 deadline before coming to an agreement. Bernanke pointed to this, saying "this is a major risk factor right now." The Fed's activist policy in economic policy has given financial markets and business a measure of stability not provided by government and Congress. Fed policy is to buy $40 billion of mortgage securities, and $45 billion of long term Treasury securities for each month in 2013. It will fund the purchases by adding reserves to the banking system, which is to say that it will print money to buy more bonds. This is a major decision by the Fed in that the Fed has shied away from unemployment targets in the past. Bernanke described this action as a new"automatic stabilizer" in the U.S. financial system- if unemployment rises investors know this pushes the Fed's interest rate increases further down the road and would drive interest rates down, if unemployment drops sooner than expected, investors anticipating Fed's rate increases would drive long term interest rates up, to keep stable growth....

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Robert Gordon of Northwestern University describes the problems in American Education and how this is the first generation which will not do better than its parents in educational attainment. The cost says Gordon comes in lower potential economic growth rates.

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The yuan is up 5.5% since the peg to the dollar ended in 2010, reaching 6.469 to the dollar. But this is not helping the U.S. trade deficit. The U.S. Bureau of Labor Statistics shows the price of imports from China are up 2.8% in May over the same month prior year. And the trade surplus for China in the first four months of 2011 is higher than the same period in 2010. What is happening? The improvements in productivity of Chinese manufacturers and the acceptance of lower margins is reducing the effects on trade balance of a small appreciation of the yuan, so that only a fraction of that appreciation is showing up in higher prices for Chinese goods. Also significant is that the yuan's small appreciation against the dollar is not enough to make up for the dollar's fall against other currencies. The yuan is down 8.3% against the euro and has actually declined 3.7% on a trade weighted basis in the last year.

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Somini Sengupta cites the UN Department of Social and Economic Affairs Report on unemployment in 2014 and projections for the future in a period of slower growth. One huge statistic- about one million Indians are expected to be added to the labor market every month for the next 15 years.

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The U.S. trade deficit widened sharply in March from February 2015, increasing by 43.1%, after the ending of a labor dispute at West coast ports. The deficit widened to $51.37 billion. This is more than expected from a strong dollar. This could make 1st quarter GDP figures show a contraction for the U.S. economy. Products imported from China were up 32%, compared with March 2014. Exports were up only 0.9%. Experts estimate GDP contraction of 0.4%- 0.5% for the 1st quarter 2015. In 2014 a similiar situation happened but growth was up for the rest of the year and experts see this happening again in 2015.

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Hon Hai chairman Terry Gou told corporate employees that Hon Hai plans to increase the number of robotic arms in its manufacturing plants from 10,000 to one million by 2013. He says the move will "improve working conditions and provide a better career path to employees." The improvement of working conditions is a major concern after a number of suicides. The plans to automate dangerous and monotonous tasks is intended to migrate workers to other work. Hon Hai has about 1 million employees in China. It is moving plants to the less costly interor of China where wages are lower- to Chengdu, Wuhan and Zhengzhou from the coastal areas.