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Chrysler's net income increased in 2012 to $1.67 billion, up from the $183 million in 2011. Revenue was $65.8 billion in 2012, increasing 19.6% over $55 billion in 2011. To see what impact taking ownership stake in Chrysler over four years has accomplished for Fiat one has to consider the losses Fiat would suffer without Chrysler. In France the lack of a foreign presence required Peugeot Citroen to look for government aid. Even the initial investment in Chrysler by Fiat made use of the $2 billion in a breakup fee for an agreement Fiat signed with GM before 2007. Showing the huge dividends Fiat has gained from the new management team installed at Fiat in the last decade. This makeover of Fiat was done using younger managers under an executive from outside the auto industry. That alone would have not saved Fiat, leveraging the skills at Chrysler was a crucial opportunity. Fiat now has a 58.5% stake in Chrysler. Taken alone Fiat would lose $1.04 billion euros or $1.4 billion in 2012, and would need government aid, even after the turnaround under Marchionne, showing how crucial taking the initiative to make the early investment in Chrysler was to saving Fiat. Sensing this opportunity when first Daimler and then Cerberus private equity failed with Chrysler, taking advantage of the government aid to Chrysler after the 2008 financial crisis, and creating a partnership with the government on issues such as fuel efficiency, may be the biggest achievements of Marchionne and his team of managers. Sensing the opportunity to get geographical diversification by taking on Chrysler separated Fiat from Peugeot Citroen, which lacked this diversification and had to turn to the French government for aid. Taking on the Chrysler venture, sensing the timing and balancing the risk with management knowhow, securing the right kind of deal with the U.S. government to reduce risks in 2008, turning Fiat technology in small cars into a saleable asset, and managing the relationship with the Obama administration, separates Marchionne and his team from a management team that would have seen its role in a purely Italian turnaround which would have not lasted. ...

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How Elizabeth Warren, a Professor at Harvard Law School, influenced economic advisor Summers and President Obama in their decision to form a Consumer Financial Protection Agency. She met with Summers recently and they have known each other for a long time at Harvard University. Warren has spoken up for consumers, and written several books and articles on the subject of protecting consumers, credit and economic stress. She was the chief advisor to the National Bankruptcy Review Commission and chairwoman of the Congressional Oversight Panel which acted as a watchdog over the TARP program. Ms. Warren says she first got the idea of a financial products agency while researching a 2003 book about middle class families who did well on one income, but now were having a difficult time coping with two incomes. She made the point that it wasn't overspending by many families that was to blame but poorly designed financial products. In 2007 she wrote an article in the journal Democracy about this idea of an agency to protect consumers of financial products. She says overhauling the regulation of financial products is necessary not only to help consumers make good decisions, but also help "make the market work." And she adds that the market "has been badly regulated" through a system of seven federal agencies, each of which has jurisdiction over some aspect of consumer financial products. See the other link in the WSJ of June 20, 2009, by Jason Zweig, which talks about the influence of a friend of Obama at University of Chicago Law School, Prof Sunstein, on the formation of a Consumer Protection Agency. Sunstein, and Thaler, a Professor of Economics at the University of Chicago, wrote a book "Nudge" which shows the impact of psychology and the behavioural element in decisions made by consumers. Sunstein and Thaler express the idea that there are advantages in having standard products that cannot lie to consumers, and are based on the "fair-dealing, openness and transparency" the President emphasized. They act as an anchor for all other products, which are compared to these products. ...

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The expansion plans of VW will add more competition into the US market which is declining. Martin Winterkorn ran VW's Audi business. He became VW's new CEO this year and brings a new leadership perspective to his job. He has several new strategies. In the area of pricing he wants to reduce unneeded features such as external mirrors that fold inward for narrow European streets, and bring down the price of VW Jetta and Passat models to be competitive with Toyota's Corolla and Camry models. Currently a Jetta is $17,000, a Corolla is $ 15,200 and a Passat is $23900 compared to a Camry at $20,000. VW's plans are to set a sales target of 1 million cars by 2018, tripling sales in ten years from the current 330,000 vehicles. In the next 3 years to 2010 sales world wide are expected to increase by 12 to 15%, VW wants to capture a bigger share by seeing its sales increase by 30% from the six million units today to 8 million units by 2010. Winterkorn sees this as possible given that VW has a more centralized management structure now which makes for quicker decisions. VW is also working on a new family of small fuel efficient cars on a common platform to be sold in China, India and other markets where a small car will be popular. Winterkorn referred to its new concept car as an example of the direction this would take. As importing cars from Europe is becoming costlier with the strong euro and the Japanese in contrast have the advantage of a weaker yen, the expansion plans will require lower pricing. VW looks to build a plant in the USA. Another strategy is to add 12 new models to its global product line and to launch more new vehicles in new product segments. This is what Winterkorn thinks has given Toyota its increased sales. A new compact SUV caled the Tiguan will be introduced. What all this means is that VW is seeking to move buyers of Japanese and American cars to try German cars, make German cars cost less and make a strong showing in the American and global markets. ...

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Government data show that the German GDP declined by 0.5% in the thrid quarter after declining 0.4% in the second quarter. IMF predicts GDP decline of 0.8% in 2009. Germany's recession look like the worst in Europe except for the UK which has many of the same problems as the US economy. Germany's housing market has seen prices grow by almost zero in the last 10 years and German consumers are not in debt so Germany felt fairly immune to the troubles facing the US and the UK and Spain. But Germany is a big exporter and it has become more dependent on exports in the last 10 years. Exports account for 41% of GDP and CHina sucked up alot of machinery exports from Germany and China is in the midst of a drastic slowdown. In fact for the first time China is seeing a decline in monthly electricity output. And China's GDP growth rate may go from 12% to the range of somewhere around 6% in 2009, considering that Chinese export factories are closing down as the USA its main export market is seeing a rapid slowdown. Its already reached 9% and the slowdown is just beginning as the US market is also at the beginning of its slowdown. As the US market declines further in 2009 China's export factories will face a further decline in orders. Comparing the US at 10%, Japan at 20% and Germany at 41% of GDP one can see how heavily dependent the Germans have become on exports, especially with Asia's booming economies sucking up German exports. New orders for German goods declined by 18% from their peak in November 2007. And this is just the beginnning. So German unemployment is expected to increase. Its true that German banks invested heavily in mortgage related securities and other risky assets abroad, and the international financial crisis has led to a bailout fund of 500 billion euros setup by the German government. But Bundesbank figures show that what is causing the drastic contraction is the drop in investment spending as loan demand has dropped. ...

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Carl Richards, a certified financial planner in Park City, Utah, says the most important question about an investment is how it fits into our plan, and how it fits into our lives, but investors today focus too much on the latest IPO, or specific stocks. He says it is important to set a limit of 5% of the portfolio on any individual stock or investment.

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Chief of TechMet a company in mineral resource development says that it will take years to dislodge China's dominance in rare metals mining and development for metals critical to technologies in car batteries, wind turbines, cellphones. This includes nickel and cobalt for car batteries.Last week president Trump signed an executive order declaring a national emergency and authorizing use of the Defense Production Act to speed development of mines. The U.S. imports 80% of its rare earth elements from China, with further supply coming indirectly from the country. For 14 of 35 critical types of minerals the U.S. has no domestic production. Gallium for light emitting diodes in cell phones is one of these metals. Half of Barite a metal used in hydraulic fracturing for shale oil is imported from China. To get some idea of the neglect in U.S.policy in these area under three administrations, the U.S. in the 1980's was the largest producer of rare earth metals and the technology to process them. Today there is only one mine the Mountain Pass mine in California, and no processing plants. It takes about 10 years to develop a mine. Just as in health care products essential to tackle the virus the U.S has found its manufacturing and technology base left in woeful shape after manufacturing and mining were neglected in a failed policy. Under the guise of globalization corporations transferred essential manufacturing from the U.S. and Europe to China, without understanding the importance these products played in the life of countries, and governments neglected to help local manufacturers and mining companies. Governments play a critical role as China has done by providing loans and grants to develop the national industrial base. Tariffs and quotas are also used to promote local development of the manufacturing base and mining base. Another factor is that investors are more able to invest in these companies when the government take some of the risk with its help and active support. With the Trump executive order comes a new awareness in Canada, Australia, and European Union which are now taking active steps to nurture and develop the local resources. ...

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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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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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Discount airline Azul carried 2.2 millon passengers in its first year. It was founded by David Neeleman of Jet Blue Airways. Azul operates out of Campinas, a city near Sao Paulo, with 14 Embraer jetliners covering 16 cities. Plans are to add 4 desinatios in 2010, and increase the fleet to 21 by end of 2010 and 33 by end of 2011, according to Neelman. Azul now has about 4% market share in Brazil with plane occupancy at 80%.

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Pierre Beaudoin will step down as CEO as Bombardier announces a $1.59 billion loss for the 4th quarter of 2014. The loss for 2014 was $2.2 billion, compared to a profit of $1.4 billion in 2013. Revenues increased in 2014 from $18 billion to $20 billion. Beaudoin will remain as executive chairman. The new CEO is Alain Bellemare, former president and CEO of the United Technologies propulsion and aerospace systems group, which includes aircraft engine maker Pratt and Whitney.

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This story in the WSJ shows how the Phase 1 deal between the U.S. and China was negotiated in November and December 2019. As a bargaining chip for negotiations on a Phase 2 deal the U.S. has preserved tariffs of 25% on $250 billion in imports from China, and the reduced tariff  of 7.5% on $120 billion of imports. In Phase 1 Mr. Trump convinced the Chinese leadership that he was serious about going ahead with further tariffs to cover all of China's exports to the U.S.by a December deadline. This was also Mr. Kushner's message to the Chinese ambassador. In talks China gave easy concessions on agricultural imports and offered to buy twice the amount of soyabeans and other food imports- which helps Mr. Trump with farmers in the U.S. At the same time difficult concessions on enforcement to change subsidies to Chinese state owned companies were put off. China formally says it is an issue of Chinese sovereignty. It is also seen as a part of the Chinese business model that is working and China is in no hurry to change this. It has offered to step back from asking foreign companies to transfer technology in exchange for market access. On technology issues and subsidies the tough negotiating issues on which the U.S. has insisted for changes, China has held back. Phase Two is not likely to happen at least not till after the election, as China wants to be able to develop its own technology rivaling the U.S. and Europe, without the kind of formal enforcement the U.S. is demanding. In the long run it plans a shift to an economy that is less dependent on the U.S. for imports which may be in the interest of both countries, as U.S. manufacturing has shriveled over two decades hurting American jobs as a result.   ...

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The Trump administration released its framework for NAFTA negotiations. The framework is designed to reduce the U.S. trade deficit and promote "Buy America" provisions. It will challenge Mexico on labor and environmental matters, which is likely to win the support of Democrats. A mechanism for preventing countries from getting unfair advantage through currency manipulation is part of the framework, yet less of an issue with Mexico and Canada. It will also work to protect U.S. trade interests in an effort to appeal to workers who supported Trump in the 2016 election. Overall it does not deviate much from established U.S. trade policy, according to the WSJ. For this reason the new guidelines were welcomed by the Mexican and Canadian governments. Mexico and Canada also see this as an effort to modernize the agreement to reflect changes in technology and commerce since NAFTA was signed. Under fast track trade promotion authority the president's Trade Representative Mr. Lighthizer can start negotiations in 30 days. One of the matters up for change is the Chapter 19 dispute settlement mechanism which makes it easier for Canada and Mexico to avert trade sanctions. Mexico's economic prospects have improved as the NAFTA renegotiation avoids the sharp rhetoric of the election campaign. The Mexican peso which traded at 22 to the dollar in January 2017 following the U.S. election, is now trading in July 2017 at 18 to the dollar.   ...

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About 11% of student loans outstanding amount were over 90 days past due in Sept. 2012, increasing from 8.9% at the end of the second quarter 2012, according to the Federal Reserve Bank of New York. This now exceeds the figure for credit cards. U.S. student loan debt is now at $956 billion for the third quarter 2012, increasing by 4.6%. About 93% of student loans made in 2011 were made by the U.S. government, which is promoting access to loans without asking for information about borrowers finances and education plans and ability to pay the loans back. Because student loans have to be paid back and are hard to discharge even in bankruptcy, this means many borowers who cannot find jobs are deep in debt, and unlikely to get loans for many years for cars and other needs. Moody's warns of a wave of student loan defaults in coming years.

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The Consumer Price Index CPI rose by 8.3% in August, US Labor Department reports from same month a year ago. This is down 8.5% in July and 9.1% in June, even though oil prices are coming down. The average household is spending $460 a month more to pay for the same basket of goods and services than last year according to Moody's. Core CPI excluding volatile food and energy prices was higher in August at 6.3% compared to 5.9% in July and June 2022. The US price of gasoline was average of $3.71 at the pump in August down 26% from its high in June, according to OPIS/DowJones.

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Michael Spence, Professor emeritus at Stanford, and Nobel prize winner in economics in 2001, says the recession is global with growth globally approaching zero, and the economy in high speed descent. So he doesn't see recovery even if all the actions are appropriate and clear till 2011. And if not it will be much worse.

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This op-ed in the WSJ calls for increased trade and investment and closer U.S. ties with Sri Lanka, an Indian Ocean island nation of 21 million people at the southernmost tip of India. This follows the election of Maithripala Sirisena as the new president in the recent election. Formerly called Ceylon, this nation and India share a long tradition of democratic processes and free press since independence for almost 7 decades. These are the only 6 nations with British influence that have preserved democratic processes and mutiparty systems, including a vibrant free press, gradually established during the period of British rule- the U.S., Canada, Australia, New Zealand, India, and Ceylon or Sri Lanka as it is now called. These institutions were transferred to 2 nations during a short period of American rule- Japan and Germany. Western Europe, and Eastern European countries since the fall of the Berlin Wall have joined this core group of countries. All these countries have a common bond and interest in building and strengthening democratic institutions and shared prosperity in a larger global neighborhood. Other countries in the British Commonwealth have struggled to develop multiparty systems and free press such as Malaysia, Ghana and Kenya, or had periods of military rule as Nigeria. Indonesia and South Korea have emerged from periods of military rule and are developing effective democratic processes to join what is now a large community of nations with a common interest in democratic process, truly functioning democracy, respect for the opposition, and freedom of people to express their views to participate in the working of government....

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June unemployment numbers will jump say experts at IHS Insight as GM and Chrysler downsize even more to become smaller companies with even less market share. This will reflect closing Pontiac and sale or closing of the other GM brands Saturn, Saab, and Hummer. It will reflect closing of more dealerships of GM and Chrysler. THis might be offset by a pickup in sales if something like the European trading clunkers for new cars program takes off in the USA. But with the US customers more in debt and with rising job losses, the pattern may be different in the US. It may only offer a small boost in sales. Manufacturing still matters in a recovery. In 1980 manufacturing was 20% of America's output, now it is 11.5% says Mark Zandl of Moody's Economy.com. Manufacturing, he says, has a bigger impact than its size suggests, because it responds quickly. As sales resume workers are called back to their jobs. The sharp V shaped recoveries in the early 80's reflected the rapid response of manufacturing. After the 1980's both the declines and the recoveries were shallow in 1990-1991 and 2001. Now with GM and Chrysler shrinking further under the government plan to fix these companies, and taking the supplier impact, the rebound leg of the V is missing. The kick from the Big Three and their suppliers is missing, says Nigel Gault of IHS Insight. Of the 5.7 million jobs lost from Jan 2008 to June 2009, 1.6 million were in manufacturing and 289,000 were in motor vehicles, split almost evenly between assemblers and supplier networks....

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News on several fronts in June 2009. On housing, a month to month improvement but still stuggling compared to a year ago levels. The Commerce Department said that an increase in multifamily units led to housing starts jumping 17% in May from April to a 532,000 annual rate. Compared to ayear ago level housing starts was down 45% from May 2008. There were 10 times more homes for sale in April as sold that month, with the typical ratio at 6. With layoff, tight credit and rising mortgage rates laying aheavy hand on these markets, even as developers cut prices deeply to clear unsold homes. On Manufacturing. Industrial production fell 1.1% in May from April, according to the Federal Reserve. Capacity utilization fell to 68.3%. See the graph for the steep drop for auto and auto parts manufacturing. On inflation. The producer price index showed its largest decline in 60 years, according to a Labor Department report. The PPI was down 5% from one year ago, the biggest decline since 1949. It went up from April to May by 0.2%. Part of this was rising oil prices. The core PPI which excludes food and energy dropped 0.1% in May from April. Rising oil prices, a falling US dollar and stabilization in the economy are reducing defaltion risk. At the same time the sign that inflation is not taking root are clearly evident in the slack that is building up with the drop in the capacity utilization rate to 68%, and further declines expected as the auto industry shrinks in 2009, with the huge overcapacity worldwide in that industry. ...

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The React-1 study from the Imperial College of London acts as an early warning system for the UK on coronavirus. The latest study has raised alarm about spread of the virus that is not related to testing and is across all age groups leading to the new rule of six by prime minister Johnson. This bans gatherings of more than six as Christmas approaches. During the  period in July to August the virus was taking 17 days to double now this is at 7 days.  The React-1 study for Aug 22 to Sept 2 shows 13 per ten thousand being infected and compares to 4 per ten thousand July 24 to Aug 11. It is a robust study with swabs sent in for tests from 300,000 volunteers in Britiain. Prof. Eliott the director of the study at Imperial College, London, says that "there is an epidemic in the community and there is no room for complacency." The R rate is measured at 1.7 in this study which is taken seriously by the government as an early warning of what could happen. ...