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

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The new Australian budget is designed to generate a slight surplus from the A$44 billion deficit for the fiscal year ending June 30. This prepares the Australian government of Julia Gillard for elections in 2013. The budget depends on the mining boom to generate the tax revenues for planned economic growth of over 3% in 2012-2013. This is based on the large number of projects planned for investments in oil, gas and other energy projects, valued at US$456 billion. GE as supplier of turbines and other products to the Chevron-Total gas project and other projects in Australia, has sales in Australia match its sales level in China in 2012-2013. This gives an idea of the extent of the boom in the mining and energy sector. Even the widening trade deficit to A$1.59 in March 2012 reflects large imports for the mining sector. The weakness of this approach is that too much is dependent on the mining and offshore gas boom. Retail spending is weak and Australia is increasingly looking like a two tier economy, subject to the boom and bust cycles that its mining companies have experienced in the past. A bubble in Australia's housing markets and uncertainties in the global economy pose other risks....

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Tourists from China went up by 20% in 2015, going over 1 million. Foreign enrollment at Australian educational institutions was up significantly in 2015, going up to 645,000, up 25% over 2012 with the weaker Australian dollar. Australia's services sector including inbound education and tourism exceeded in value the minerals and metal ores exports in the last two months of 2015. This enabled the Australian economy to grow by 3% in the 4th quarter of 2015 over the prior year.

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Mohamed Hanif of the BBC's Urdu Service points to the manner in which the CIA and the ISI collaborated in the two time destruction of Kabul. And he points to a Pakistani view outside of the military which is not obsessed with India and would like to get down to the basics- electricity and infrastructure, better lives, and a safer neighborhood. In this perspective the Pakistani military and the Americans both do not understand the basic needs of the large majority of Pakistanis yearning for a better life. Contrast this with the Thomas Friedman piece which complains on the other side, with a note of innocence, of becoming a sucker in this game of a two-faced Pakistani military and intelligence services using the Americans for their own game, supporting the Americans and the insurgents at the same time. Hanif almost has the last word in this, pointing to the ordinary Pakistanis who are just poor and looking in.

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Lower oil prices in 2015 make it possible for president Joko Widodo of Indonesia to remove costly fuel subsidies in Jan. 2015. With the steep decline in oil prices this made it possible to lower fuel prices at the pump at the same time. The costly fuel subsidies cost Indonesia more than money spent on education and healthcare. This frees up money for other programs. In November the Widodo government fulfilled one of its election promises by sending out national "smart cards" to over 15 million poor Indonesian families, which gives them free health insurance and education related expenses for children for upto 12 years of school. Programs planned for infrastructure in 2015 include 13 new dams and long overdue upgrade to the north-south Trans Sumatra Highway. Critics point to the appointments, including for police chief and attorney general, that reflect the influence of Megawati Sukarnoputri, a former president and chairwoman of Mr. Joko's party, the Indonesian Democratic Party of Struggle, and of parties that supported Widodo. ...

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The huge risks the misallocated stimulus capital from real estate speculation poses for the Chinese economy. China's government rapidly expanded lending after the 2008 global financial crisis. One estimate is that about 10 trillion yuan in new loans were made in 2009, over twice the amount of 2008, expanding the loan portfolio and money supply by one third. A major problem is vacant homes as Chinese put their money in second homes as an investment. Chinese are not investing in the stock market because of the volatility, and with the low yields in bonds and banks money is going into real estate. According to a Morgan Stanley economist, about 25-30% of private commercial and housing space is vacant. This happens just as middle class Chinese are being priced out of the housing market. Prices went up by 12% in the housing market this year according to the China National Bureau of Statistics. Couples wanting to leave their parent's homes find it difficult to do so. It was the topic for a Chinese TV series "Dwelling Narrowness." ...

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Factors making Russia different from other emerging markets are the foreign exchange reserves of $497 billion. From mid 2009 to the end of 2012 portfolio inflows were only 1% of GDP, according to Morgan Stanley. Problems in Russia include growth slowing to 1.5% and higher inflation with reliance on oil revenues. Russia is still dependent on oil and gas revenues and has not diversified the economy. Foreign investment is limited.

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Brazil's currency, the Real, moved up to 1.7 per 1 US dollar, on the eve of the Presidential election in the first week of October 2010. Brazil's overnight interest rate of 10.75% attracts speculative foreign capital in the carry trade, where investors boorow cheaply in the US and Japan and invest it in Brazil. The central bank has kept these rates high to finance a current account deficit of $46 billion in 2010 -which is forecast to hit $60 billion in 2011- and to finance a high level of government spending. This spending is likely to continue with Ms Rousseff as the new President, as Rousseff plans to invest in infrastructure such as bullet trains and river dams, as well as the FIFA world cup and the Olympics. Government spending has increased by 18% so far in 2010. Exporters are affected by the artificially high value of the Brazilian real. Goldman Sachs economist, Alberto Ramos, says the real is overvalued by 55% compared to its fair value of 2.65 to 1 US dollar, based on a computer model that incorporates factors such as trade, inflation and productivity. Sao Paulo is already the most expensive city in the Americas, according to one survey....

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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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It makes for good political rhetoric, but in reality the flow of money goes both ways. A lot of investments are made by American companies overseas. This time the flow of oil money because of high oil prices, from the USA and Europe to the Middle East is being recycled back to the USA in the form of investments in the US through small equity stakes in companies and more so through purchases of capital equipment and services to build Saudi infrastructure projects. The $500 billion investment plan over several years in Saudi Arabia is to build everything from new cities, aluminium plants, electricity generation plants and chemicals and plastics plants. The fears and rhetoric are overblown, as the USA also invests overseas with holdings according to the Treasury department of $6 trillion of foreign stock and debt. The acceleration of foreign investment in the US is to be seen in the numbers, as the dollar gets weaker, and its more advantageous for Canadians and Euuropeans to invest here. Last year $414 billion of foreign investors money went into buying stakes in American companies and building factories and purchasing stock, according to Thomson Financial. Thats up 90% from 2006 and represented one fourth of all announced deals. This year in just 2 weeks foreign investors poured $22.6 billion in just the first 2 weeks of January, and that represents one half of all deals. Shows how quickly the picture is changing. One way of looking at it is that Americans buy a lot of foreign goods and the money Americans use to pay for a lot of imports is now being returned to the USA in the form of foreign investments. Note that foreign investment is desirable because it brings new ideas and technology and new management methods to the host country from other countries. These foreign investors in many cases are able to make these investments overseas because they are good at what they do, having them in the host country benefits the host country and shakes up competition in the particular industry in the host country that is receiving the investment. This is why economies once relatively unfavorable to foreign investors like Japan and S. Korea are now passionately seeking foreign investment to make their economies thrive through the exchange and inflow of new ideas and ways of doing things. The same can be and is true for the USA. The other aspect is that most of the investment is still from countries like Canada, Germany, Japan, S. Korea which are big free trade partners of the USA. Manufacturing investment is heavily skewed to European and Japanese companies. Foreign multinational investment (Sony, Toyota etc) grew to $43.3 billion in 2007 from $39.2 billion in 2006 according to OCO Monitor, and will accelerate significantly as companies like VW and other German companies find it cheaper to build in the USA and shift more manufacturing here. To get an idea why the rhetoric is overblown Canada spent the most in buying American companies, $65 billion in 2007, according to Thomson Financial. Russia spent $572 million and India $3.3 billion. How will this improve the chances of the USA making it out of this recession? Five million American work for foreign companies in the USA. Of these one third are manufacturing jobs. These jobs pay about 30% more than jobs in American owned companies. Figures from Treasury Department. There will be more of these jobs as companies like VW build plants here. Roubini Economics estimates that an infusion of about $300-400 billion is needed for the USA to overcome the effects of the current mortgage and credit crisis. $414 billion was invested in the USA by foreign investors according to Thomson Financial in 2007, going up from something like $200 billion in 2006. If this pace continues becasue of some of the same underlying reasons as the weaker dollar, stronger economies overseas, then $200 billion additional investments this year would add that much to a stimulus package of $150 billion by one estimate, to provide a boost of somewhere around $350 billion. In the range of the needed boost. Companies like IBM and GE which have significant investments in India and China and investments in software or infrastructure industries that are growing rapidly or Caterpillar with growth in construction overseas, may keep growing through this downturn. This recession may hit selectively and differently, not be a complete hit to the USA economy, and could prevent it from going beyond 2009 with recovery in 2010. ...

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The Brazilian Real drops to 2.9836 to the U.S. dollar in March 2015. The year to date March 2015 decline for the Real is 10.9%. Increase in interest rates will depress growth even further.

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Friedman reviews Acemoglu and Robinson's new book, "Why Nations Fail." Acemoglu says that nations fail when wealth and opportunities are concentrated in the hands of few people, that a condition for societies to succeed is to create opportunities for more people. For this to happen it is important to create inclusive political and economic institutions. This is an important insight, but for Western society this is an insight as old as Adam Smith when he pointed out the importance of this aspect of western societies after the feudal period in his "Wealth of Nations." For Smith it was the failure to create inclusive societies that led to the gradual unravelling of societies in the river valleys of the Yangste and the Ganges, in China and India, of increasing poverty and the gradual disappearance of what constituted the middle class in India and China. Chapter 8 titled "Of Wages and Labor" in the "Wealth of Nations" makes specific reference to this.

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Brent crude drops below $60 by Dec. 15, 2014.

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The appreciation of the U.S. dollar and depreciating currencies in Africa in 2015 makes it costlier to import manufactured goods to African countries. Quality Supermarkets in Kampala, Uganda, struggles to fill its shelves with imported packaged foods and manufactured goods. The lack of financing for $30 million in crude supplies leads to the closure of a refinery in Lusaka, Zambia, and long lines at gas stations. The Zambian currency kwacha has depreciated by 17% against the U.S. dollar in 2015. Uganda's currency the shilling, Angola's currency the kwanza, and Nigeria's currency the Naira, all depreciated in 2015. This means larger trade deficits to finance consumer imports or upgrade infrastructure. In Uganda this means delays in upgrades to power lines and transformers. In oil producing countries such as Angola and Nigeria, and oil producers at the early stage such as Uganda and Ghana, there is a double whammy with lower oil prices leading to lower revenues to finance costlier imports. This is likely to slow growth in Africa from about 5% in recent years to 3.7%, according to Capital Economics forecast. Countries in Africa that import oil will see lower import bill for oil, but that benefit eroded by a depreciating currency. South Africa sees benefit of lower oil prices offset by lower revenues from commodity exports of iron ore, and the higher cost of imports with a depreciating currency. ...

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The WSJ Dollar Index tracks the U.S. dollar's performance against 16 other currencies. It surged by 12% in 2014 with a strengthening U.S. dollar. The rise in the dollar is likely to adversely affect the 15% of U.S. GNP that comes from exports and the $200 billion plus tourism industry in the U.S.

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The Brazilian economy is growing too fast, and this pace not only won't be sustained, but it has signs of serious trouble ahead. The Brazilian economy grew at an estimated annualized pace of 10% in the last 6 months and generated 962,000 jobs between Jan-April of 2010. Growth in 2010 is expected to be 7%. The jump in growth is partly the result of the stimulus measures of the Lula government. But a consensus of experts is that Brazil still saves too little, has not invested enough in infrastructure,and its economy has the potential of 5% sustainable growth each year. The central bank has increased interest rates - increase of 0.75% in April 2010, and economists in Brazil think the rate will go up to 13% in 2011. About $10 billion in cuts in spending have been announced but they are cuts to an already growing budget approved by Congress, so in reality it will only slow the increase in spending. Public debt is at 42.7% of GDP. Real interest rates have fallen from close to 20% in 2003 to between 5-10%. Costs per unit of labor are increasing at about half the rate of real wages according to a finance official. The National Development Bank or BNDES played a role in helping the economy with subsidized loans when the financial markets ran into trouble. It has expanded lending by 50%, with money from the Treasury of 180 billion reais. Some of the measures of the Lula government has reduced the skewed income distribution Brazil, and in doing so has increased consumer demand. Meeting high consumer demand, and meeting the need for commodities like soyabeans and metals from China, has boosted growth in Brazil to twice the sustainable rate and it is now at a par with China and India. But this places Brazil too dependent on the boom in Chinese demand, especially as the stimulus in China slows and the property bubble threatens China's economy. See links to China. A new President after the upcoming Presidential election will have to tackle the high interest rates in 2011, lower commodity prices, and the need for better infrastructure, and make the adjustment to a sustainable pace of growth....

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Inozemtsev of the Institute of Post-Industrial Studies in Moscow, asks the question wht if the Russian economy shows no growth in 2017, and 2015-2016 become the beginning of a serious downturn. If oil prices remain low for an extended period as now looks likely with factors such as shale oil technologies, Iranian oil, and Saudi policy, playing an increasingly long term role, Russia could face some of the problems former finance minister, Alexei Kudrin, other business leaders including head of Sberbank, warned about. A major problem that Inozemtsev points to is the change in the business climate for foreign investment in 2012-2016 as the Russian economy looks more inward, and the departure of many foreign companies. During the period 2000-2008, a major boost to the economy came from foreign investment which brought with it management and technological improvements. No emerging market country, including China, can have a bright future without access to new technologies and investments from foreign investment. The current period starting in 2009 stands in sharp contrast to the earlier period with the Russian economy lacking the boost from foreign investment, facing capital outflows, and international conflicts creating a long term effect on oil prices. Russia needed time to move its economy away from commodity dependence through technological improvements and investment, yet this does not appear to be happening, raising serious questions....