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Discussion in China's inner Communist party leadership circles about the way forward for democratic reforms, including free speech, and monitoring of government policy through criticism. This follows an unusually frank sppech in Shenzen in August, by premier Wen. A number of party elders call for further action in democratic reforms for better governance, and to curb corruption. The sense that China is reaching an impasse, and further development beyond what has been achieved in three decades requires democratic freedoms for the people of China. This has the potential to be a signifcant development, because it comes as economic policies of the past will have a harder time working now because of western resistance to high level of Chinese exports. The search for a new economic model may involve soul searching, and new thought on the political models that are needed now.

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Thomas Sargent of New York University and Christopher Sims win the Nobel Prize in Economics for 2011. Sargent, a professor at New York University, is best known for his work on "rational expectations theory, " which points out that people base their actions on their expectations about the impact of government policies in the future. The implications for today are that monetary policy by lowering rates cannnot permanently lower unemployment, as people will expect higher future inflation and insist on higher wages for labor and higher interest rates for capital. Sargent did most of the signifcant work on the theory of rational expectations at the University of Minnesota from 1971 to 1987. Sims work is in statistical relationships and use of vector autoregressions to study the economy. He taught at the University of Minnesota from 1974 to 1990.

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Pearlstein argues that the US and the Obama administration achieved most of its goals, even though the Europeans took the credit. On regulatory reform, Geithner's regulatory reform proposal he says, could well have been written at the French Finance Ministry, as at the US Treasury. And it gives Obama ammunition to prepare, as private equity, hedge funds, and banks try to water down his proposals for regulatory reform. By having member countries commit to adding $850 billion to the resources at the IMF, and regional development banks to provide help to countries in serious difficulties- and giving instructions that the money can be used not only for debt rollover, bank recapitalization and balance of payments support, but also for stimulus spending, infrastructure investment, trade finance and social support- the Obama adminstration has accomplished a great deal. It has succeeded in putting in place the necessary financial resources to support not only the financial systems of countries in Eastern Europe, Asia and Latin America that need help, but put emphasis on the need for resources to go for helping reduce job losses, create jobs, and provide some forms of income or support to people in these countries. This is a major step as it means the countries of Eastern Europe and other developing countries can deal with their crises in confidence. Mexico is taking loans from the IMF. Dominique Strauss Kahn had begun the policy of shifting IMF's focus to these social goals as significant parts of the recovery process in countries, but he faced the old mindset among the IMF staff, as when its reported staff wanted to increase interest rates in Pakistan by 10% instead of the 3% that was finally agreed to. That would have caused serious difficulty to the people of Pakistan, created chaotic situation and disturbed the social fabric of that country. See the link to this for S. Korea and for Pakistan. And as Gordon Brown put it the old conditionality that lay behind the IMF loans, is phased out. This makes it the new policy at the IMF backed by the G20 mandate. The Washington consensus which prescribed open borders, floating exchange rates and fiscal prudence is now ended. And to support this change the developing countries will have a bigger say in IMF policy and decisions. ...

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New legislation would permit Pemex to sign contracts with foreign oil companies for services but only on a fee or cash basis and no production sharing arrangements. Smaller or state owned oil companies may show interest as the majors have not signed up for these new arrangements.

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Toyota resale prices are dropping. Analysts at Kelley Blue Book estimate the price of a new Toyota Camry will fall by $500 to $1000 and a new Prius hybrid by $1000 to $1500 from the effects of the recalls now in motion. This is already in cars being resold at dealerships. Toyota was able to get higher prices for its cars because of higher resale values, so this will cut into the profitability at Toyota. The premium for Toyota used to be $1000 to $2000 on cars priced in the $20,000 to $25,00 range and this may be beginning to disappear for the first time in decades.Cost of lost sales estimated by Toyota at 100,000 vehicles from the recalls and $2.01 billion.

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For the largest electorate in the world India is relying entirely on electronic voting machines. It is massive - 970 million voters over several phases in different regions taking place in May 2024. The Election Commission is monitoring the election and India's Supreme Court gives it's ruling to protect the democratic process. It is unlike anything in the world. It all started in 1945 with the negotiations begun by Labour's Attlee government - the most successful British government of the 20th century, Clement Attlee's government created the Bank of England and the NHS, and brought freedom to India and started decolonization in European empires. A new Constitution was written by 1947 with the guidance of Gandhiji (Mohandas Gandhi) who led the struggle for Hind Swaraj in 1905. The democratic process was established with elections that elected Nehru, a series of coaltiion governments and since 2014 a government focused on Vikshit Bharat, modernization similar to Japan and China that is taking place in India. Already 250 million people have been lifted out of poverty. And free food rations have ended hunger in India, Swacch Bharat has made sanitation modern and available everywhere, water and gas connections are now down to the last household to fulfill Gandhi's dream of reaching the last person in the line. Solar and renewable energy are being undertaken, along with fast modern transportation and cost effective digital connections. A target is set for 2047 for Vikshit Bharat. ...

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Throughout their work as high school teachers in Mankato, Minnesota, during Tim Walz's 8 years in the US Congress, 8 years as Minnesota Governor, Tim and Gwen Walz were a pair that depended on each other and were each others closest advisers. Gwen Walz had an office in the Minnesota Governor's offices. She has taken a strong interest in education, in Minnesota's schools and colleges and shares the same passion that Tim Walz has for the school lunch programs and other ways to build educational opportunity in the state. Jospeh Bernstein looks at the life and work of Gwen Walz, spouse of the new running mate of Kamala Harris, Tim Walz of Minnesota. In 2002 when Tim Walz was running for Governor Walter Mondale came out of retirement to fill the seat of Senator Wellstone. At a meeting she is shown with Walter Mondale whom she thanked for inspiring her with his VP choice of Geraldine Ferraro. This is memorable because Hubert Humphrey was a mentor of Walter Mondale. Humphrey's role in US politics goes back to the days when he was a candidate for the presidential nomination against John F. Kennedy in 1956 and 1960. Humphrey was Vice President under LBJ. Mondale served as Vice President under president Jimmy Carter from Georgia 1977-1981. Minnesotans have served in the VP role twice before - with Tim it would be three- all highly competent Americans with a measure of respect worldwide. ...

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The head of Apple's mobile software, Mr Forstall refused to sign a letter apologizing for the company's shortcomings with its mapping service on the new iPhone. He was asked to resign.

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The Madoff trustee trying to recover $1 billion for ordinary investors, says in a lawsuit that the owners of the New York Mets were large beneficiaries of the Madoff Ponzi scheme.

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Bernie Sanders announces his support for Hillary Clinton as nominee of the Democratic Party after a long season of bruising primaries. The effort is now to heal the divisions in the Democratic Party. Hillary Clinton has adopted some parts of the Sanders agenda including some aspects of providing tution free education in public colleges. Both Hillary and Bernie appeared at a joint rally in New Hampshire. Sanders said that at the Democratic Platform Committee ending on July 10, 2016, the two had come together on setting a platform that he believes is the most progressive ever for the Democratic Party.

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Manufacturing in the US is adding jobs for the first time since 1997, according to government data. Job growth in 2010 was 1.2%, or 136,000 jobs. IHS Global Insight expects total manufacturing jobs in the US to increase in 2011 to 12 million. Manufacturing will be a modest contributor to job growth according to economists. Economists projections show a gain of 2.5% or 330,000 manufacturing jobs in 2011. Moody's Analytics estimates job growth of 2% a year through 2015. Government incentives, need to replace aging equipment and rehiring in the automobile industry will help manufacturing. At the same time manufacturers are cautious about hiring and increases in automation reduce the need for workers compared to earlier periods. Overall the loss of about 6 million manufacturing jobs since 1997 will not be made up. Yet the improvement is a positive sign as the US faces high unemployment and companies make investment in new factories overseas to meet growth in emerging markets.

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India changes its position on Kashmir and shows willingness to discuss the issue in peace talks for the first time. Opening the borders in Kashmir for trade in goods between the two countries is one of the topics for discussion. Opening of borders with Pakistan for goods trade is helping set the climate for new negotiations.

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SDP candidate Olaf Scholz is seen as the most convincing of the candidates, and ahead of the Green's Baerbock and CDU's Laschet in a poll following the 90 minute television debate on German television. Scholz maintained an unperturbed demeanor as he responded to an attack from Laschet on a money laundering investigation being conducted on the finance ministry. He said Scholz was presenting a misleading picture because it was centered on the possibly illegal activities of a single employee in Cologne. He added that he had increased the financial oversight at the ministry since he took over in 2018. Looking at the problems facing German industry, and the challenges from climate change facing Germany,  Scholz had this to say on the scale of the effort needed in renewable energy- "We have 250 years of economic and industrial history behind us, based on coal, gas, and oil. And if we are to change that now that means we have to do an awful lot, for it to really work." The SPD goes into the election at this point with a six point lead over CDU. SPD at 26% vs CDU at 20%, Greens at 15%, in the INSA poll. The election debate on television continues to give SPD and Scholz the confidence needed to stay ahead. Unlike the period facing Merkel Germany after the pandemic faces challenges in social, safety net, child care, climate change, and foreign policy that require new thinking and ability to tackle new frontiers. ...

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Obama is not going to shy away from developing a solution for the 12 million estimated illegal immigrants in the country, for some form of path to legal staus. The issue will be taken up this year. It does not have the same priorities as health care and energy and education, but as a human issue it will be addressed this year. The lives of people who are doing a lot of the work Americans normally do not want to do is entertwined with the economic crisis, as the lives of these immigrants are likely to be made even more difficult by this crisis. The idea is to give those who are here, and as it appears are likely to remain here, and their families, the opportunity to lead normal lives. Not see families broken or torn apart as a husband or wife has status and the other does not, or lives worsen for those who have done the menial and labor intensive jobs in factories, agriculture and in construction, that Americans born to parents from an earlier generation of immigrants do not wish to do because they have better opportunities. As it is an issue that has drawn opposition and aroused emotions, it will be tackled by framing it as "policy reform that controls immigration and makes it an orderly system." Rep. Gutierrez, who is from Chicago, is building support for the cause by speaking at churches around the country, and having church leaders speak at these meetings, in a movement that is reminiscent of the civil rights struggles for black people. Mr. Obama will speak publicly on the issue in May, in the summer he will convene working groups, including lawmakers from both sides and a range of immigration groups, to begin discussing possible legislation by early fall. The plan would not add new workers but normalize the living conditions of people already here, and who information shows are not returning home. Its also supported by a key and growing constituency in American politics, the Hispanic voters. It was a campaign promise that Obama intends to keep, and if successful only draws the Hispanic vote closer to Obama....

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Al Maktoum is prime minister of Dubai. He points out some important facts about the Arab world. About half of the 300 million people in the Arab world are under the age of 25. Unemploment is very high among these 150 million Arab youth. About 50% of the jobless are youth, according to the prime minister. About 65 million of the Arabs are illiterate, and 10 million children under the age of 25 are not enrolled in any school. He points out that with so little education, the Arab youth are especially vulnerable to propaganda that creates extremism and is hostile to the west and the USA. One of his key points is that the Arab world is the most militarized place in the world, and spending on conflicts in the Middle East in the last 60 years is about $3 trillion. And in the last 15 years he says the spending on education which is 20% of what the world's 30 wealthiest countries spend, has dropped to 10% of that amount. And very little is being done to educate girls and give them opportunities. As a result of these convictions, Al Maktoum, who is also the ruler of Dubai and from the royal family, has committed about $3 billion to various initiatives to provide schooling to children, especially girls, and education for young people. This makes him one of the more enlightened leaders in the region pushing for new directions. This also reveals the critical weakness among the Arab peoples and why they tend to be so radicalized. Improvements in education and more opportunities for jobless youth, and creating a peaceful region -with the US and the EU countries committing to policies that lead to much diminished military sales to Mideast countries and reducing hostilities in the region -would do more to reduce anti-American sentiment in the region and improve US security than any other policy actions. As Iran, Pakistan and Afghanistan, and the Muslims of India share the same characteristics as the Arab peoples, and the same cultures, the same is true of this region, actually more so. Education has been even worse neglected in the South Asian Muslim region than among the Arabs. It is the key to peace, does more than troops to ensure the peace. The need is for more schools to be built and run in the region, for essential services like healthcare and development, and financing of job creating industries. ...

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It is a sign of hope in Europe that the period known as the "Troubles" is over. Emma Little-Pengelly of the Democratic Unionist Party in Northern Ireland has dropped the boycott of the Assembly. She is assuming the post of second minister.  Little Pengelly says that we are shaped by the past but we are not defined by it. The party with most seats in the Assembly gained by looking out for people of both communities for housing and other basic needs is Sinn Fein's Michelle O'Neill. This is a new form of what PM Modi has called "Nari Shakti" or women's outlook and strength in Britain bringing peace and development to the island of Ireland. The Indian parliament was recently opened by a woman president Ms. Murmu and the Budget presented the next day by Ms. Sitharaman. Michelle O'Neill says we are not asking to move on, we are asking only to move forward. Such are the changes happening on opposite ends of the former British Empire as Modi moves forward with "sab ka vikas sab ke sath," development for all by all, and in Ireland with release of $4 billion by the Sunak UK government northern Ireland can move forward with meeting people's needs. Both Catholic and Protestant communities are asked to work with each other under the Good Friday Agreement and power is shared for helping people of both communities get better housing, education and other needs for themselves and their children. ...

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China's National Bureau of Statistics made an announcement in Beiijing that 51.27% of the Chinese people now live in urban areas. In 1949 the figure was 10.6%, in 1979 it was 19%. In the space of three decades China has urbanized rapidly. This has brought with it economic growth, infrastructure development and increased employment in the manufacturing sector as new workers moved from rural areas to the cities. With it also come major problems for the country and the leaders of the Communist party led government. Of the 691 million urban residents, 253 million are migrant workers- 37% of urban residents and 19% of the population are in this grey zone described as the "hukou" or household registration system. Under "hukou" these migrants from rural areas cannot access public services in the cities, and have rights to access them in their own villages where they are registered. Integrating these migrant workers who are different than their more affluent and better educated neigbors in the cities so that they become truly a part of the urban areas will remain a huge challenge for China. One of the ways China is addressing this is with the plan to build 36 million units of affordable housing for these migrant workers by 2016. Ever so gradually Chinese officials are relaxing the restrictions on migrant workers- such as Shanghai Mayor Han Zheng's announcement for allowing all migrant workers to rent subsidized housing in the outer parts of Shanghai and committing to "increase the migrant population's involvement in the community affairs, cultural life and show genuine care for them." Food security is another issue as more development on prime agricultural land means less land available for agriculture. Appropriation of agricultural land for industrial use is bringing the country down to the limit of 120 million hectares of agricultural land needed for self sufficiency in food, according to the Land Ministry. At the same time China's leaders want to avoid what the World Bank calls "the middle income trap," where a country reaches a level of modernization and urbanization, and then stalls at that level- the level being around $3000 per capital GDP, which is China's GDP per capita today, according to the National Bureau of Statistics in China. Li Keqiang, who takes over from premier Wen Biao, sees the building of affordable housing for migrant workers as a critical way to continue the urbanization process, and shift the country from its export focus by increasing consumption and the development of industries that support this. A slowing economy dominated by state owned companies focussed on a decelerating export model and an aging but still growing population- NBS says China's overall population was up by 4.8% in 2011 over 2010 and has reached 1.35 billion- presents a tougher set of challenges to the new leadership in China than was faced by the current leadership....

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As large companies such as BP and Shell sell off oil and coal projects, smaller competitors in the energy field are buying these projects with the idea that the transition from coal and oil will take longer. The smaller energy companies bet that coal and oil will be the main source for energy for developing countries in Asia and Africa and that the underinvestment by the large companies will boost commodity prices. Numbers support their thinking as coal, oil and natural gas are expected to be source of 76% of global energy consumption in 2030. In 2019 this was 81%, according to the International Energy Agency. Because of the rising demand it means using even more carbon intensive energy.  India is making big strides in renewable solar yet the energy demand in the future will also jump further as India modernizes its economy. The trend is all in the direction of renewables yet the time it takes will depend on demand and the cost reduction of renewables with new technologies. ...

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With the departure and replacement of Dan Cummings, the prime minister gets someone with extensive financial and other experience to replace his free wheeling adviser who lacked experience. Dan Rosenfield who worked at Treasury till 2016 under both Labor and Conservative party chancellors is the new choice for prime minister Boris Johnson's chief of staff at 10 Downing Street. Experts say less games, more interest in what matters in managing the costs of covid budgets. Here Mr. Rosenfield is described as the person at Treasury who put together the Olympics budget that came out at a little over 9 billion pounds after little preparation was done and Britain won the bid for the Olympics by bidding only 2.3 billion pounds. As Rosenfield puts it, there wasn't even a cats in hell chance of doing the Olympics at that cost, and the only option was to control costs as aggressively as we could. Britain now faces the task of keeping Covid budget costs manageable and getting a recovery in place in 2021-2022. ...

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During the first term of the NDA government two programs were launched to restart the Indian economy- one was Make In India, and the other was Skill India.

This report in Indian Express looks at Skill India, its history and goals, and progress. 

For Skill India to meet its ambitious goals of training "a minimum of 300 million people by 2022" much remains to be done. The quality of training, the active participation of industry and manufacturing in the training, the setup of vocational training of high quality in schools, has to be the focus of new efforts. Lack of results in meeting the needs of unemployed young people, is also because of the lack of growth in the industrial sector. For this to happen getting rid of the problems of non-performing loans has to be speeded up, partly through recapitalization of banks, and partly through other methods. 

 

 

 

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Starter interrupt devices have been installed by U.S. auto loan lenders on about 2 million vehicles, and feeding the boom for making subprime loans by reducing the delinquency rate. Its a new virtual repo system unlike anything known before, described in this exceptional piece by Corkery and Silver-Greenberg, with implications that reach beyond borrowers to the safety of the U.S. financial system. It means the lenders have a false incentive to reach deeper into the pool of subprime borrowers with lower and lower credit ratings, with the securities marketed using these loans spread out over the entire financial system waiting for another implosion like the one in 2008. Consider that the subprime auto loans have reached 27% of total loans in 2013, and $145 billion of subprime auto loans were made in just the first quarter of 2014. At some point this could reach the 36% in 2006 before the implosion in subprime securities of 2008, destabilizing the U.S. and global financial system. Are the regulators again asleep at the job? ...

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Politics in Britain as Britain prepares for a general election. The UKIP party polls 13 percent and Conservatives 32 percent and only an alliance could beat the Liberals and Labour, Greens combined. So why is Boris Johnson not embracing UKIP and Farage. Boris Johnson top adviser Cummings is said to have kept Farage to a minimum in display during the EU elections, causing resentment. Farage has doubts about the Conservatives and has rejected an alliance. Conservatives see him as playing populist politics and having little interest in the Conservative Party's ideas, somewhat like a Salvini in Italy or Orban in Hungary. Conservatives see Farage as preventing them appealing to moderates.  Boris Johnson hopes to work out new spending to support working class voters in an effort to win broader support for the Conservatives. He also hopes he can go back to voters saying only he could deliver Brexit if given a solid mandate, in dealing with the EU and in dealing with parliament.   ...

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India reaches $400 billion in exports for 2021-2022. This is a significant increase from the pre covid export figure of $330 billion in 2018-2019 which slipped to $313 billion in 2019-2020. Frequent lockdowns marked the period of the pandemic.

India's industrial sectors play a large role, including cotton yarn and the apparel industry. With the global supply chains being restructured and shifted away from China, India is gaining a more significant role. Australian exports are up 94% and US exports up 47%. India is making an effort to become a key part of the new supply chain arrangements of US and Europe, along with Vietnam and Japan. As part of the supply chain India is increasing imports from other countries with imports reaching about $600 billion, up about one third in 2021-2022.

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A video of how the French people have come together during this crisis from France 24. It is an inspiring video of how France is returning to family values, a return to basics, about helping neighbors, children and others. Volunteers are helping, the state is helping by supporting 10 million people who have lost work and wages by paying these wages, a way in which the collective in France is helping the individual. There is also an interview with the founder of French app "Hello Neighbor" who describes the changes happening in France and a new sense of what it means to be human and loving thy neighbors. He says this is a time it is lucky to be French because of the respect in France for a strong public health service that serves all its citizens.