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In this Agenda column Simon Nixon takes on the U.S. Treasury's criticism of Germany for its current account surplus of 7% of GDP in 2012, and not doing enough for the economies of southern Europe. The German government called it "incomprehensible." Nixon says it is better for the German economy to remain strong and to boost competitiveness and consumer spending in Spain, Portugal, Italy and Greece. He says the low eurozone inflation of annualized 0.7% for September 2013, which prompted the ECB to cut rates by 0.25%, is healthy to the extent that consumer prices are declining to adjust to a decline in wages. The reduction in labor costs is a way to restore lost competitiveness, just as Germany did in the last decade. The criticism is considered by many economists to be misdirected, and seen as "incomprehensible" by Germans, as Germans ask what would the U.S. have them do- provide stimulus when the government debt to GDP ratio is currently 82%, increase wages and how would this help Southern Europeans. Focussing on Germany's current account surplus says Nixon, is obscuring the larger issues of increasing consumer and business confidence and spending in the eurozone, and increasing bank lending. The new ECB bank resolution arrangements and other changes including deposit insurance if done right should help the recapitalization and restructuring needed for restoring bank lending to support recovery. Spain is furthest along in regaining competitiveness, with changes in Portugal, Italy and Greece also supporting a gradual return to growth....

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A cold wave for most of the US is expected for Christmas week December 2022.

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US fentanyl tariffs on Canada and Mexico go into effect on March 4, 2024. 

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Tom Brokaw is perplexed by the absence of the war in Afghanistan as a campaign issue in 2010 US elections. Especially because the war is in its 9th year, has caused 5000 dead, 30,000 wounded, and cost over $1 trillion dollars. He reasons that this is because the vast majority of Americans can opt out of fighting the war on the ground. The all volunteer service draws from 1% of the population, with the majority from working class or middle class backgrounds. This has an unintended effect in making the costs of the war less visible, when actually it is taking a toll in other ways. The US is short of funds to build much needed infrastructure or update infrastructure. States and local governments are laying off teachers because of budget shortfalls, and the national budget deficit makes less money available for solving pressing problems in carbon emissions, energy, and infrastructure. Only recently New Jersey Governor Christie put on hold a new tunnel into New York City because of a lack funds. Pressing infrastructure issues elsewhere will be postponed in this manner. And the outlook for the next 20 years, according to Robert Gordon of Northwestern University, is not going to be better with slower growth at an average of 1.5%, leaving less money for the kinds of projects that defined America from the Erie canal to interstate highways. Brokaw says, the country would benefit from an effort to discuss what happens next, in the continued expenditure of blood and treasure. A discussion of what happens next in this effort to deal with Islamic rage....

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Bradsher, Tankersley and Cohen say in this NYT report- US industrial policy under president Biden corrects the failures of the past. Chinese experts in Hong Kong say the US and Europe deindustrialized their economies with pursuing of policies called "neo-liberal" but basically Reagan era policies that Democratic presidents Clinton-Obama imitated. As they deindustrialized it created disaffection among the struggling lower and middle income classes making $35,000-$106,000 that were big losers in the process, creating threats to democracy as financial and tech, plus pharmaceutical sectors took control of the economy. China's success comes from three decades of mastering the ways of practicing industrial policy that it can support private companies with low cost land, additional subsidies that reduce the cost of production and provide a buffer to absorb losses so that it could dominate key industries. Policies where textbooks and economists trained in the US failed utterly and completely leading to dangers to US democracy that we see as opportunities for good paying jobs in manufacturing disappeared for middle and lower income households from 1980 to 2020. These economists trained in the US always said see lower cost Chinese made goods means lower and middle income people pay less, never saying that this means all opportunities for better paying jobs in manufacturing will be lost for these classes in society. The tech and financial sectors had close ties to the new arrangement that turned manufacturing over to China from the Reagan era to the Obama and Trump era. Apple and Tesla and many industries benefitted from manufacturing mostly outsourced to China. ...

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Wal-Mart is expected to announce the sixth quarter of declining same store sales in the U.S. By raising prices on some items and reducing prices on others Wal-Mart moved away from Wal-Mart founder Sam Walton's pledge to provide the best prices. Walton built Wal-Mart by promising to transfer much of the benefits of Wal-Mart's sourcing of lower priced goods to customers. The "high-low" technique in pricing is just the opposite of the everyday best price of Sam Walton. In recent years Wal-Mart has lost its touch with its core customer base by trying to attract upscale customers with trendy products and organic foods. The core customers have always been the U.S. households making less than $70,000 a year. This made up 68% of its business. Now this business is under assault by discounting chains and dollar stores. To reduce clutter in its stores, Wal-mart reduced the amount of goods carried from different suppliers, alienating some suppliers. Ironically the new pricing strategies and store design to reduce sprawl came from John Fleming, a former Target executive who became Wal-Mart's chief merchandising officer. Management changes led to Mr Fleming's departure....

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Audi faced similiar problems of unintended acceleration incidents that Toyota faces today. A "60 Minutes" segment by Ed Bradley in November 1986 showed Audi owners of the Audi 5000 sedan who said the cars suddenly accelerated. That show even showed an Audi 5000 moving on its own which later was shown to be due to an altered transmission for that shot. Even when it was shown in a 1989 government study that blamed driver errors especially because of the close placement of gas and brake pedals. This led to the report's recommendations to move the pedals apart, and install ashift lock mechanism which required a foot on the brake to shift the car into drive. Audi ran newspaper ads showing these findings but consumer fear had set in. It took Audi many years to recover, From 1985 to 1991 Audi U.S. sales dropped 84%, hitting a low of 12,000 annually and not reaching levels from before the crisis till 2000. Audi, a division of Volkswagen, is now expanding in the U.S. but the story has lessons for Toyota. This may explain why Toyota was quick to refute a story in ABC News on the acceleration issue. ...

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After an initial period of a year Japanese companies are now making the move to pull back some of the production shifted overseas with the yen at 80 to the dollar. Canon made 40% of its product overseas in 2009 before the shift to 60% by 2013. Now it is shifting production back home to reach 40% overseas production. Other consumer electronics companies Panasonic, Sharp, Daikin, are shifting production back to Japan. This is similiar to the shift back to the U.S. of products made overseas as costs have risen in China and other Asian countries. The sharp swing in exchange rates is accelerating the trend. Auto companies Subaru, Toyota, Nissan, Honda are continuing plans to manufacture close to customers in the U.S. Shorter product cycles make it possible to shift production for electronics companies compared to longer product cycles at auto companies. Murata Manufacturing will continue to make smartphone parts close to its customers in China, lifting production overseas from 14% to 30%. As a result exports have increased in Nov. 2014 by 10.8% from the prior year and imports up 2.2%, according to the Finance Ministry....

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Britain's campaign finance laws limit each party to spending $29.5 million for the year before the election. British elections are determined by the results in 650 local constituencies, under a parliamentary system, making campaigning local. There too the laws are strict. Candidates for a parliamentary constituency have a limit of $60,000 for spending for the 5 months before the election, plus additional amounts depending on the number of voters and if it is rural or urban. Britain bans election advertising on commercial television and radio. Parties are provided pre-election broadcasts shown on commercial television and by the British Broadcasting Corporation. This stands in obvious contrast to the U.S. where an estimated $10 billion will be spent on the 2016 presidential election. Candidates spend as much time raising money as they do getting across their election message in the U.S. Britain also disproves the popular idea that election campaign spending inevitably moves in an upward trajectory. British researchers estimate the cost of the 1880 campaign to be 100 million pounds in 2002 prices, and the election spending in the 2010 British general election of 45.5 million pounds coming to less than half that....

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This editorial in the NYT points out that the new minimum wage proposed of $10.10 only provides 17 million working age people with about the same purchasing power that the minimum wage in 2013 dollars of $9.40 did in 1968. It also shows how far behind working age people many with small children have fallen behind. The $8 for the minimum wage in New York is now about one third of the $21 average wage in the U.S. in 2014. At $10 it would be about half. Another 11 million Americans slightly above the $10 per hour wage would also see their incomes increase. Even with the increase the incomes would only be $21,000 a year for this group of Americans up from about $15,000, many who are disproportionately women of average 35 years of age struggling to make ends meet. For 5 years the U.S. has seen no increase in the federal minimum wage. 600 American economists have sent a letter to leaders in Congress calling for the change without delay, saying that it would have a "stimulative effect on the economy" through higher consumer spending and spillover effects in jobs created by stimulating demand....

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VW AG China will recall cars with direct shift gearbox systems with quality issues, including acceleration problems. This follows a CCTV broadcast of consumer issues program 315 on World Consumer Rights Day. The 315 program has taken up quality issues of foreign brands in China, including Carrefours, McDonalds, Yum Brands, and Apple. The program shows the shift in China supported by the new government for greater attention to consumer issues. It acts as a signal to foreign manufacturers in China to provide the same quality and attention to detail in the Chinese market that is provided in their home markets. For companies such as VW that depend on the Chinese market for growth, and generally for German, Japanese and U.S. manufacturers that depend on export growth, this will be the new standard for the Chinese market. Companies are at greater risk of quality problems during periods of rapid expansion, such as that being experienced by VW as it ramps up to become the leading global automobile manufacturer. This is similiar to the situation Toyota faced in 2009 leading to recall problems in the U.S. and negative publicity....

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Honda is now exporting the small compact Fit made at its Chinese plant to Canada. A Honda plant in Mexico will assemble the Fit and export the car to the U.S. and Canada in 2014.

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There can be some comfort with the loss of the usual social contact during the period of lockdown and working from home. There are is the opportunity to slow down, pause and reflect in prayer or meditation. There is also time to spend in gardens or parks, a patio or balcony to be outside. As Adrian Higgins of the Washington Post- who has two books on gardening and covered it since the 1980's- points out here we are not apart from nature or above it, we are nature, and plants and birds outside are fellow beings of a sort. Most of us live in tight urban environments and this is a great opportunity to break away from all the noise and bustle and experience some time with nature and with ourselves. A time for renewal and listening to our inner voices, as the gods may be reminding us about living a better and slower life. Higgins reminds us that sometimes it is an experience that is alive in memory as there is a word for it in Japanese and in German, and in other languages. In Japan shinrin-yoku is about forest bathing, by finding a woodland or park and experiencing the stillness. Germans call it a forest walk or waldspaziergang. Plant gardens or parks will do, even landscaped areas in urban settings. The shades in a garden with sunlight falling in different ways on leaves and plants. We develop a capacity to notice things we stopped noticing as we grew up. Just walk or sit quietly and look. Plants and trees also take away some of the isolation and loneliness as they are fellow travelers of a sort. As anyone who has planted will know we can look forward to the new flowering, and the growth into next year, and the next. We have got too intertwined with the short term and the immediate fulfillment, and this draws us out of this in ways that enrich and nourish our lives.     ...

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The new data security law that went into effect Sept 1, 2021, limits the amount of sensitive information China will share with foreign companies, and investors. All data related activities are subject to government oversight says this report in WSJ, including collection, storage, use and transmission. Companies in China now are reluctant to share information.  Because the law is ambiguous about what is sensitive information this makes companies more reluctant. The result is a China that is more opaque than before. It is driven by antagonism in the US over the effect on American workers of manufacturing and supply chains shifted to China. The response of the Chinese government is to turn the country inward, looking to self sufficiency, data security, and an environment that looks at foreigners with suspicion, says this report in WSJ. The pandemic has increased this view of foreigners in China, after China's experience with a deteriorating trade relationship with the US. Xi Jinping has not left the country since the pandemic started in January 2020. China has also seen an alarming drop in passengers going overseas or coming into China from 50 million in the first 8 months of 2019, to 1 million in the first 8 months of 2021, a drop of 49 million passengers, according to data from the Civil Aviation Administration. Government directives are to minimize foreign travel as a result of the pandemic. People in the US see the operations in China of companies such as Apple and now Tesla as a sign of how well the system of international cooperation is functioning without realizing that these companies never had the understanding of the history and culture of the country after two centuries of struggle against colonialism. When the situation takes a different turn as it has after Mr. Trump raised the issue of American workers and loss of manufacturing, and after the pandemic created unexpected distrust, there is very little these companies have to offer to keep the relationship between two of the world's population blocs, between North America and the closely related population of South America, with the people of China, a billion people on each side. This shows that the relationship cannot be left only to the business and private sector driven by profit and business interests, that all sections of the population in China and in the US need to be involved for a stable relationship with ongoing human and cultural contacts at all levels. ...

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Shinzo Abe and the LDP won a landslide victory in Japan's Dec. 2012 elections. Shinzo Abe was the first prime minister of Japan born during the post war period when he became prime minister in 2006. He is less influenced by the legacy of the pre-war period and war period. Abe is the grandson of Nobusuke Kishi, Commerce and Industry minister during the war, and prime minister when Japan signed the security treaty with the U.S. in 1960. His father was foreign minister, making him one of the rare politicians with a deep family history in Japan's government. Their views also influenced his own. Kishi is committed to changing Article 9 in Japan's constitution which limits the role of the military, and renounces the right to wage war. His 2006 book "Toward a Beautiful Nation," describes some of his views.

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Even with a 2024 2.4% general pay raise and 10% for junior enlisted in US military 25% of servicemen experience food insecurity or need food pantries. This WSJ report looks at the problem. It is simply outrageous that this should happen in 2025.

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The PCE personal consumption expenditures index of the US Commerce Department is likely to come down slower than the CPI index by October 2023. The US Fed prefers to use the PCE index and this could lead to the Fed staying with higher interest rates for longer, says the WSJ. Medical care costs are likely to accelerate by the end of 2023, as housing costs decline. The PCE has a larger weighting for medical care costs than the CPI index. 

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German chancellor Scholz is making a 2 day trip to the US to meet president Biden. There is a surge in discussion on looking for a way out of the Ukraine war after meeting between US's Blinken and Russia's Lavrov at the G20 meeting in India. India is pushing for both sides to engage in talks to end the war. Brazil has also offered to mediate to bring an end to the conflict. 

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The move by the US Fed to cover the deposits at the Silicon Valley Bank to limit the fallout of the bank's collapse on the US banking system. By taking the step that the bank posed a systemic risk the government's deposit insurance fund will cover all deposits at the two banks rather than the standard $250,000. Any losses will be covered by a special assessment on banks and there will be no cost to taxpayers.

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A red wave fails to appear, says this report in The Guardian of the US 2022 midterm elections for the US Congress. A key Senate seat in Pennsylvania goes to Democrat Fetterman. Other races are tight and the final results will take time. Ron De Santis wins Florida as a Republican with a wide margin and is seen as looking for the Republican nomination for president in 2024. The Georgia Senate seat looks to be headed for a runoff.

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A sharp decrease in China's contacts with the outside world as a result of its zero tolerance covid policies during the pandemic, is the topic of this report in The Hindu. This has happened with Chinese people to people contact with Europe, US, and India which is sharply down from before the pandemic. This is also happening as supply chains are being rebuilt in a new direction of being shorter and culturally closer for Europe and the US.

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Fed officials at the US central bank say they are looking t getting to 4% from the current 2.5% for the federal funds rate. A third increase of 0.75% in interest rates is expected for 2022 from the Fed. Fed chairman Powell intends to keep inflation in check. Higher interest rates in the US is also good for savers and provides more stable sources of income for Americans, creating a new element of stability that was missing.

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The US policy of assistance to Israel balanced by the need for deterrance not to lead to regional conflict in the Middle East. The US was close to an agreement with Saudi Arabia and Israel, following earlier accords with UAE and Morocco. These agreements provided a way forward for bringing the Middle East out of a conflict ridden period. Internal divisions in Israeli politics have also played a part in not reaching a lasting settlement of disputes in the region.

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With Japanese PM Shigeru Ishiba present DJT announces investment by New Nippon Steel in US Steel at a White House press conference.

Both the Biden administration and the new DJT administration opposed the $14.1 billion takeover of US Steel by New Nippon Steel of Japan. 

DJT says- "They’re doing it as an investment, no longer a purchase. I didn’t want it purchased, but investment I love."

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An excellent midlife health test for checking physical health, mental health and cognitive health. This can be done by anyone at home and is fairly simple to take. Also suggested are exercises that may help in each of 9 categories of the test. This includes the well known standing on one leg in yoga pose, press-ups, sitting and standing from a chair, linking fingers behind your back, calf raises. And for mental health drawing a clock face with the numbers, jotting down fruits and vegetables you can in 60 seconds.