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US differences with Pakistan are based on two different perspectves that are not reconcilable. Recent events and the relationship between the US and Pakistan's army chief have confirmed that this is not going to change. US sees militants and Taliban inside Pakistan as havens for the short term as the US disengages from Afghanistan, whereas Pakistan's army sees them as useful elements in Pakistan's security interests in relation to India for the long term. Whe Kayani met with Obama in Washington, he handed Obama a 13 page document showing Pakistan's strategic perspective and emphasizing the gap between short term US interests and Pakistan's long term interests. The Wikileaks cables show Kayani discussing with US officials a possible removal of President Zardari and his preferred replacement. This made Kayani, normally reticent, to rant for hours on the irreconciliable differences between the US and Pakistan with a group of Pakistani journalists. He described Pakistan as the US's "most bullied ally," and said the frames of reference of the US and Pakistan regarding regional ssecurity "can never be the same," according to news accounts. And added that "the real aim of US strategy is to de-nuclearize Pakistan." Holbrooke and Admiral Mullen had hoped to reverse "a trust deficit" between the two sides. But this has not happened. General Petraeus is taking a tougher attitude and patience is thin on both sides. According to a Kayani friend, air marshal Chaudhry, Kayani is always asking Petraeus what the strategic objectives are in Afghanistan. US officials say they have given up on changing Kayani's thinking and that Kayani has told them: "I don't trust you." Kayani's position makes sense when one looks at the strongly anti-American public in Pakistan. Pakistani military and intelligence officials say a campaign against militants inside Pakistan incites domestic terrorism and uproots local communities. And by following Pakistan's own interests and frames of reference Kayani sends signals that win esteem among the Pakistani public. Opinion polls now show the military held in higher esteem than the Zardari administration. This puts the US in a no-win situation in Afghanistan with no clear objectives for the long term. This leaves the US in a time of tight budgets stretched thin to meet the needs in other defence areas that need attention, such as modernization of forces, trouble spots such as Korea, Iran and elsewhere, and resources needed for modernization of US infrastructure and supporting new technologies and industries. The lasting solutions that will take time, careful thought and preparation would be to integrate South Asia as a whole into an economic zone, extensive infrastructure building, and bring India and Pakistan closer through diplomacy and negotiations. See the articles by Richard Haas and others on the need to redirect resources. ...

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The airlines are hit hard by the coronavirus crisis. Reservations have declined as fewer people travel. There is a sense that a recovery will take time, several months. Delta is cutting international capacity by about 25% and domestic flights by 15%. It is also offering voluntary leave options to employees.

Southwest CEO Kelly says the severity of the decline is being felt with loss of $300 million in revenue in March. One piece of good news for airlines that offsets the severe demand decline is the fall in oil prices. American Airlines estimates the cost savings as much as $3 billion. A decade of industry profits have put the airlines in a better position to tackle the crisis. Other cost savings moves are reducing capital expenditures and managing cash flows efficiently.

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The Black teen jobless rate in 2011, the third year of the Obama administration- a shocking 46.5%!

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Almuth Schult of Wolfsburg is a women's soccer player who plans to come back to soccer after having two children. After a successful case of a Wolfsburg teammate of hers against Lyon the new FIFA rules require that professional women football players get maternity leave at two thirds pay for at least 14 weeks. In addition clubs are not allowed to discriminate against players because of pregnancy and must reinstate them after giving birth.

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Melissa Abadia, 28 years old, with a nursing degree, leaves Madrid to work in retail stores in the Netherlands. Alba Mendez, with a Masters degree in Sociology, leaves to find work in a supermarket, not something she had envisioned. Spain's younger workers, and youth in Italy and France face similiar problems finding work, or face problems working in unpaid internships with long hours or temporary contracts.

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Denmark plans a huge wind farm project in Germany on an artificial island with 200 turbines. This will be Denmark's biggest infrastructure project. Germany plans to reduce emissions by 65% over 1990 levels by 2030. This means projects like this will be needed. Denmark prime minister Witte is on a 3 day visit to India with renewable energy projects under discussion. Germany's Economics Ministry has set up a joint working group with Denmark. 

The new project will be the size of 18 soccer fields setup on this artificial island in the Baltic Sea, to generate 3 GW enough for 3 million households. After this the project second stage is to install more turbines, for a total of 650 turbines, according to Der Spiegel. The project will cost 28 billion euros ($32 billion) with energy planned flowing by 2033.

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The British economy is struggling and the economy stagnating in the last quarter, inflation at 5%, the pound losing 15% of its value so far this year, and the housing market collapsing.

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Roshe gives an independent view of whats happening in the economy and sees a recession, sticky inflation that will last a long time for the US and the world economy in a semirecession for a long time. Roche of independent Strategy consultancy in London does not see the Fed's actions to increase liquidity having any effect in resolving the issues of solvency which have resulted from the overleveraging of brokerage and mortgage firms on Wall Street, only exacerbating the effects of a weaker dollar and higher inflation over the longer term. He points out that hedge fund and broker balance sheets or nondeposit financial institutions (NDFI's) half the size of banks in the USA and a quarter of the size of banks in Europe have their assets and liabilities financed by repurchase agreements. They lend and borrow against the collateral of assets that are marked to market, which means that they can borrow more and easily in a rising market cycle and can borrow less and with more difficulty in a falling market cycle. With the contracting cycle in place now they are facing insolvency issues. This may have been delayed till now because of investment banking profits and having credit lines for the duration of a contract. Till now investmet banking profits gave them leverage over lenders who made money from fees in investment banking. Now the banks hurt by writedowns of loans in mortgages and other areas are likely to tighten lending and call in their loans. What the Fed's actions will do is delay things a bit but not prevent a credit contraction and fall in asset prices. David Roche was Global Strategist for Morgan Stanley before starting Independent Strategy to provide fresh thinking and new insights on financial markets. His estimate is that reduction in available credit for corporate investment in technology, R&D and factories as a result of contraction in the financial system will require reducing corporate debt ultimately by 11-12 %. This will generate a loss of 5% points of real GDP growth for the US and put into a recession. For Europe he estimates loss of 2% points of real GDP growth. Global credit losses of $1.4 trillion would cause a contraction in world GDP of 2.5 percentage points or half the current rate of growth. For the global economy he sees a gray dull world of semi-recession and stickly inflation that will last a long time even without any major policy blunders. If this is original thinking and he is right then the Fed, the IMF, the Council of Economic Advisors, and general thinking on Wall Street that sees a short recession lasting several quarters may be in for a big shock....

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Federal Reserve chairman Bernanke says he plans to keep interest rates low till the end of 2014. Bernanke told a news conference after a two day policy meeting of the Fed April 23-24: "It's a little premature to declare victory. Keeping interest rates low is still appropriate for our economy."

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Brexiters dream of a revival of colonial trade links with a nostalgic view of Britain. The idea of "global Britain." Yet there is a flaw in this vision as only 3.3% of Indian exports went to Britain in 2016, and 17% went to EU countries. As an exporter Britain barely comes into India's top 20 trading partners. Part of the reason is that British companies build domestic plants in India. Much of the optimism comes from the UK-India Technology partnership agreed between prime ministers Modi and May in April 2018. 

On a trade deal the EU is working on this since 2007 so a trade deal will take a long time in negotiations.

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Individual investors reacted strongly to declining prospects for emerging markets with slowing growth, depreciating currencies, corruption and political uncertainty in 2013. As of the beginning of June, retail investors pulled $18.1 billion from emerging market bond funds, about one third of the amount that went in to emerging markets since the financial crisis in 2007, according to fund tracker EPFR Global. Institutional investors have pulled out less, about $9.3 billion, or 10% of their investments in emerging markets bonds since 2007. A similiar pattern is seen for investment in the stock markets of emerging market countries. The U.S. Federal Reserve's monetary expansion helped pull more money into emerging markets such as India, Indonesia, Brazil and Turkey. As the Fed shifts away from these policies in 2013 emerging market countries have large current account deficits and less money to finance imports and debt.

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Evangelical Christianity in Brazil and the efforts to reduce teenage pregnancies. Ms. Alves, minister for women and family issues, is popular among the poorer communities in Brazil for her efforts in this direction. WSJ reports that her popularity is close to that of the corruption fighting Justice Minister Sergio Moro. She recently launched the Adolescence First campaign. Evangelical Christianity has grown quickly in the poorer urban areas and the northern region of Brazil and now makes up a third of the population. About 54% of Brazilians now think of the conservative Christian message as positive following years of corruption scandals and neglect of basic services such as sanitation and transport, says this report in the WSJ.

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The new EPA rules for auto emission standards were setup under the Obama administration in 2012. The rules are a major part of the effort to meet the challenge of pollution and clean air. The Trump administration and EPA chief Scott Pruitt plan to reverse the higher standards. The new standards which had the support of automakers when enacted require that average fuel economy be doubled to about 54.5 miles per gallon by 2025. This would cut oil use by 12 billion barrels over the lifetime of the cars and reduce carbon dioxide pollution by about 6 billion tons.  The EPA under president Trump does not say how much the standards will be rolled back. This also leads to one more tension between California and the Trump administration. California plans to vigorously oppose the rollback. Under the Clean Air Act of 1970 California has historically made its own rules and was followed by 12 other states making up one third of the car market in the U.S. If the Trump administration is able to to this it would create two markets for automobiles in the U.S. which is not in the interest of automakers who are having second thoughts about the change. Amazingly a suburban Virginia Chevy dealership has vigorously opposed being used as the location for the EPA under the Trump administration making an announcement on this issue. Chevy dealerships are saying the Trump administration does not have the facts, that the auto industry has done very well in the last 4-5 years. Chevrolet and GM do not want to be associated with the politics on this issue. California has historically acted as a pioneer in automobile standards with the rest of the nation following. The Trump administration move would be an effort to break this precedent.  ...

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California Governor Schwarznegger points out that about 80 cents on every government dollar in California goes to public employees compensation and benefits. He says spending on state employees went up three times as fast as state revenues during the last decade. The result is crowding out of other programs such as higher education, parks and recreation. Because of large unfunded pension and retirement health-care benefit committments, California faces $550 billion of retirement debt. Costs of servicing that debt have grown at the rate of 15% for the last decade. The result is that California will spend more on retirement benefits than on higher education in 2010. Schwarznegger points to the fact that most employees in the private sector do not have $1 million in savings, but are in effect guaranteeing a retirement account of $1 million to state employees who retire at 55 years age- with a $3000 inflation protected check for the rest of their lives- as evidence that politicians in the State Assembly have made committments for the future that they cannot keep. And if they are kept they will leave little money for essential programs in education and public services....

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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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China's shadow banking system of trust companies and insurance companies with trust company units and other informal lenders are the fastest growing part of its banking system. Between 2010 and 2012 trust companies and other shadow banks doubled outstanding loans to 36 trillon yuan ($5.8 trillion) or about 69% of China's GDP, according to J.P. Morgan Chase & Co. Hidden debt that is likely to default in this poorly regulated sector is seen as a large risk in the banking system by the central bank and China's government planners. Tightening of credit by the central bank, the People's Bank of China, sent interbank lending rates from 3% to as high as 25% in late June 2013, finally settling on June 24 at 6.64%. China's state owned banks lend to trust companies in this market. Trust companies get additional financing by selling wealth management products promising investors returns of 8-10%. Even with China's high savings rate and large government reserves, the hidden debt and large unknowns about the loans in default, are seen by the central bank as posing risks to the target rate of economic growth of 7.5% if the government has to bailout a significant number of troubled banks. Much of the money funnelled through the trust companies since 2008 has been poorly invested. The trust companies such as Citic and Ping An Trust channel lending to borrowers for projects ranging from steel mills to infrastructure projects, such as highways and property developments that cannot obtain the financing through the large state owned banks. Fitch Ratings estimate is that since the financial crisis of 2009 these loans generated only one third of the economic growth per yuan as they did before 2009. ...

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This report in the WSJ by Peterson and Hackman shows how the American Health Care Act proposed by Speaker Paul Ryan provides less financial support and allows premiums to go higher for seniors approaching retirement in the 50-64 year age group. Premiums are allowed to go up 5 times that of premiums of young people in the Ryan House  plan compared to 3 times in the Affordable Care Act. Subsidies in the form of tax incentives provide $2000 to younger people going up by age not income to $4000 in the Ryan House plan. By contrast someone 60 years old making $20,000 a year can get Affordable Care Act credit of $9874, and making $40,000 a credit of $6752, according to analysis by Kaiser Family Foundation. The Ryan plan makes health care costs lower for young people in an effort to bring more young people who use less services into the system to support its overall financial condition. Another feature of the Ryan Plan is that it allows only for CPI index +1% even if health care costs are rising faster. Deep cuts to Medicaid affect lower income seniors on Medicare. As a result the AARP organization representing seniors has come out in opposition to the Ryan bill. The GOP plan wants to reduce premium costs yet in the process it makes vulnerable seniors with lower incomes pay more, which is likely to hurt Republicans who won by winning a large part of the senior vote. ...

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Questions about the whereabouts of Masataka Shimizu, president of Tokyo Electric Power Company, which owns the Fukushima nuclear plant. Shimizu was last seen in public appearances at a news conference on March 13, 2011. The chairman of the upper house of Japan's Diet, the parliament, calls this "inexcusable." The governor of Fukushima prefecture, Yuhei Sato, tells Japanese television that the people there cannot accept apologies, "because their anger and anxiety are extreme." Protestors walk past Tepco headquarters, chanting "No more Hiroshimas."Toko Kanoh, a former Tepco vice president, and for 12 years member of the Diet upper house, says Shimizu should talk to the public as soon as possible. This kind of disappearance is not uncommon in Japanese corporate circles. During the Toyota recall crisis, the chief of Toyota was also unavailable. Shimizu like other senior executives in the corporate elite is a lifer, having joined Tepco at 23, after graduating from Keio University. Because of the size and influence of Tepco, it produces one third of Japan's energy, he is also vice chairman of the Nippon Keidanren, the Japan Business Federation. Shimizu's role at Tepco was marked by an effort to restore profitability after the 2007 earthquake that damaged a nuclear plant. Shimizu decribed Tepco's core mission in the last annual report as "cost-cutting. He describes the need to construct "disaster resistant nuclear power stations," but at the same time in somewhat of a contradiction, says that the company had cut the cost of inspections not "by postponing them but by reducing their frequency." Just as Toyota went through a wrenching crisis after cost cutting and insulated corporate executive behaviour, which combined with technology and user behaviour put its safety reputation in risk, Tepco finds itself in severe shock. Tepco has lost two thirds of its value on the Tokyo stock exchange, and is looking for $25 billion in emergency loans. ...

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Sophie Egan has put together this wonderful clarification of what works well in foods and what one should eat by taking apart some myths. Myth No.10 is that stuff on nutrition is always changing. It isn't and she gives Michael Pollan's seven words as an example- "Eat Food. Not too Much. Mostly Plants." A recent book has title Ikigai, on people with healthy bodies and minds well into their nineties. It pulls together information from persons in Okinawa, Japan, who passed one hundred years and they say not eating too much, eating plant foods, and community spirit, a passion for doing something worthwhile that you enjoy doing and do well referred to in Japanese as Ikigai, is a way to keep healthy. Other myth clarification- Sophie Egan offers is that soy based foods are good for us, and that plant protein when consumed in different forms can give complete nutrition. Not all fats are bad olive oil and seeds nuts are good for us, and white potatoes are also healthy eaten with the skin. All this adds up to good common sense without getting tied up into knots by too much attention to studies. ...

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President Biden meets newly elected South Korean president Yoon Suk-yeol on his visit to South Korea. During the visit Biden also promoted South Korean investments in Texas and Georgia. He visited a Samsung semiconductor plant with the president of Samsung. Samsung is investing billions of dollars $10 billion for a new electric vehicle plant in Savannah, Georgia. By getting American semiconductor and electric car manufacturers to invest heavily in the US president Biden is changing how America invests for regaining technological leadership by 2030. In an effort to get plants to support unions president Biden called for the plants to hire union workers. Biden called by name two Senate contestants in upcoming Georgia elections for their efforts in getting the Hyundai plant that will hire 8000 workers. In contrast to Mr. Trump who lacked a plan or vision for the future Mr. Biden is keenly focused on getting South Korea, Japan and Germany to invest heavily in the US and help restructure the whole supply chain. Where Mr. Trump called for South Korea and other partners to share the defense burden, Mr. Biden is focused on getting American allies to have their large companies invest in American plants and jobs and a new supply chain. ...

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Mexico's former president Enrique Pena Nieto, 54 years, is being investigated for corruption. The former head of the oil company Pemex  Emilio Lozoya, 45 years, was arrested in February in Spain and is said to be cooperating fully with the authorites. A wide ranging inquiry was ordered by president Lopez Obrador.  Mexico's Attorney General says that Mr. Lozoya testified that he was asked to give two bribes of over 3 million dollars each to Pena's election campaign and to bribe politicians to pass legislation to open up the state sector to private investment. The money was sourced from Odebrecht a Brazilian construction company that paid hundreds of millions of dollars in bribes to build ports, bridges and stadiums all over Latin America. This shows how quickly the reputations of leaders in Latin America have changed from Mexico, Brazil, Chile, Argentina and Peru. In every case it is corruption or mismanagement of the economy or both. The failure to consider the needs of people in Latin America, the hype and the pretense, show how much good sense, wisdom, hard work and honest leadership is needed.   ...

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With inflation running at 6.7% in Russia, the central bank has decided not to increase interest rates following the U.S. Fed's bond purchase tapering decision in Jan 2014. The ruble declined by 6% in Jan 2014 and 15% for the last year. With the economy slowing the central bank finds it difficult to raise interest rates, and with inflation the bank has less flexibility to lower rates and increase credit availability. The ruble's lower value is a result of a shrinking current account surplus, with the added effect of capital flight from markets seen as riskier by investors. Currency collapse is a sensitive issue for many Russians after the 1997 crisis and collapse of the ruble. Central bank chief Ms. Nabiullina was on television explaining the decline to ordinary Russians, saying- " It's not that the ruble is weakening but the dollar and the euro are rising in price." Economists say the ruble's weakening won't add as much to inflation as slowing demand will make it harder for retail chains to raise prices....

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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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Matthew Slaughter of the Tuck School, Dartmouth, says that the principle of comparitive advantage should determine what America exports and imports. Under comparitive advantage each country concentrates its energies on the particular goods and services that it does better than other countries. Free trade operates under the idea of comparitive advantage, but in practice it is quite different than its textbook economic counterpart. It is constantly changing as new countries or industries in different countries try to upset the existing pattern. Under a textbook example Airbus should not exist because Boeing was the most efficient manufacturer upto that time, and new entrants in a industry are nurtured for years with support from the governments of their countries. And in some situations the governments may exclude certain companies or industries from support such as Komatsu and construction equipment in postwar Japan, and Infosys and software outsourcing in India, and still survive and grow. Under comparitive advantage Japan should still be importing construction equipment from Caterpillar in the US, and there would be no serious competition in that industry. This would work to the detriment of the principle of competition in free trade which is just as important to free trade as the idea of comparitive advantage, with new entrants in an industry upsetting the old way of doing things and creating price/quality improvements. Slaughter simply pulls back off the shelf the old idea of comparitive advantage without seriously considering its real life aspects. Without dealing with trade distortion from currency manipulation, from the impact on jobs, without considering the continuing critical role of manufacturing in developed economies to provide the standards of living for a large middle class, and creating the kind of society that people of developed countries aspire to. He mentions GE's Immelt and the President's Council on Jobs, but makes no effort to engage Immelt 's statement in his recent op-ed article in the Washington Post, that the concept of transitioning from a export-oriented economic powerhouse to a services led consumption based economy could be done without loss of jobs, prosperity and prestige, was fundamentally wrong. He has only one line for manufacturing's role in America's economy. This line says knowledge intensive industries such as education and software are just as important as manufacturing, but fails to mention that manufacturing has received less attention in recent decades. In so doing he is discounting his own profession of concern for the high rate of joblessness in the U.S., and the need for a new focus on manufacturing in the U.S. to reverse that trend. By saying that imports are not a sign of failure but can raise standards of living, and leaving it at that, Slaughter does not acknowledge that consumer debt that US consumers have taken on in the process certainly affects future prospects for the US economy. And he makes no mention of the need for rebalancing the world economy, which is exactly how free trade should work ideally. Countries that have high imports export more to rebalance the world trading system, as currency valuations are allowed to adjust makig their exports more attractive. By not taking into account the realities of free trade, and the need for practical measures to rebalance without policy induced distortions by state run economies, Slaughter ignores the idea of free trade that works as it should and for all countries. The irony is that Immelt's own committment to jobs and competitiveness has been questioned in online blogs and most recently by an editorial in the Wall Street Journal on January 26, 2011, titled "The Misallocators." That editorial refers to the outsize role of GE Capital in GE's earnings during the past decade, and the lack of credibility of a focus on competitiveness and jobs that this creates for GE. It mentions the loss of 34,000 GE jobs in the US during the last decade. ...

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How shares of British and American banks are being hit hard in the stock market. Barclays went down by 24 % in 1 month. And rumors are rife about huge losses at many banks, for Barclays the rumor is that it has losses of $10 billion that will be announced as writedowns.