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The risks facing China of slow growth and a bubble economy as the new leadership of Xi Jinping takes over in 2012. The export model for the economy is coming to the end of its run and the new leaders have to come up with a new plan for the future. At the same time they face the interests of state owned companies, banks and local governments interested in maintaining the status quo.

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Vice president Harris will be interviewed on MSNBC on Wednesday September 25, 2024 at 7.00 pm. She will make an important speech on her economic policies in Pittsburgh today. Both candidates are focusing on the economy. US president Biden appeared on a television show "The View," and said that he had delegated responsibilities to vice president Harris and there was nothing that he did as president that Harris could not do.

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The protest vote in Uttar Pradesh is just that a protest vote intended to get a message that the work of the Modi government to modernize and industrialize the economy needs to be accelerated to see its effects felt in rural agricultural areas of Indian states. Modi said yesterday- "If you work for ten hours I will work for 18 hours" showing that he sees the need for acceleration, even harder work ahead to modernize and industrialize India.  Disconnect with lower caste untouchable voters called Dalits and economic distress felt from the effects of the pandemic, decades of neglect that take time to correct in one of India's largest and least industrialized states Uttar Pradesh, led to prime minister Modi failing to get most of the 80 of 543 seats as it had done in three previous elections. Lower caste Dalits form 20% of the population, other lower castes another 40% of the population and 20% are Muslim voters. With this mix of voters and the time it takes to modernize and industrialize its economy in a state that was neglected for over 60 years the Modi government's best intentions have not delivered election results in the state in 2024 after the pandemic. Delivery on schemes for sanitation, clean running water, affordable housing, cooking gas for poor households, that have brought 250 million out of poverty nationally and about 40 million in Uttar Pradesh alone, was overlooked by voters, and younger voters. This does not change the path of modernization that countries such as China have taken and which require a strong administration with full public support working with industry and all parts of society to build infrastructure and manufacturing rapidly over 15-20 years. In China this happened from 1990 to 2010. In India this will take 2014- 2030 to achieve. In Bihar, UP, Orissa, Maharashtra, Andhra Pradesh, in all these states with large areas of backwardness in development the only path to realize the aspirations of the people is the path offered for modernization by prime minister Modi. The protest vote of 2024 is then a way of saying to prime minister Modi that the level of development needs only to be accelerated to see its benefits for hundreds of million of people in rural agricultural areas. ...

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China takes another step to curb inflation. Effective May 18, 2011, China's largest banks will have a 21% reserve requirement. Food prices were up 11.5% in April. There were a larger number of bank loans in April 2011, of $112 billion, and a larger trade surplus of $11.4 billion. This may cause banks to lend in ways that go around these requirements, say experts. It may also ration capital to the entrepreneurial sectors of the economy.

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Reflecting the volatile nature of the global economy with systemic risks remaining, impact of sharp cuts in spending, and the danger of oil prices exceeding $150 with a mideast crisis, the IMF provided a wide range of possibilities around its basic forecast. The IMF says it expects the global economy to grow 3.5% in 2012, up 0.2% from a Jan. forecast, and a forecast of 4.1% for 2013. But the IMF says this depends on the eurozone crisis, which could take off 2% from global output and 3.5% from output in the eurozone if things went wrong in Europe. Higher oil prices above $165 with supply disruptions after Iranian sanctions are another danger. Its forecast for Europe is 0.3% contraction in 2012 and 0.9% growth in 2013. Because of the risks in the outlook the IMF cautions countries from cutting spending too quickly, and says the best approach is to reduce deficits gradually over the long term and not to move too fast in the short term. This word of caution applies to Spain, the UK, France and Germany. To maintain enough funding in a crisis the IMF plans to increase its lending capacity from $380 billion by an additional $280 billion, with pledges of $60 billion from Japan, $26 billion from the Nordic countries, and $200 from other eurozone countries. ...

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Turkey is reviving its relations with Saudi Arabia and the UAE. Prince Bin Salman will visit Turkey as part of a remake of Turkey Saudi relations. Turkey's economic crisis has revived the relationship as Turkey badly needs aid for its economy. The pressure on emerging markets is increasing with US central bank raising rates reducing inflows of western money into Turkey even further. Prince Salman has already received visits from French and British leaders. He visited Jordan and Egypt this week and will now be in Ankara. In the summer he will visit Greece and Cyprus. Saudis are modernizing their economy changing culture in relationships of men and women, in women's rights and education, and broadening relationships with the world under Salman. There is an astonishing openness to science and technology in a drive to be modern. The old Saudi monarchy and conservative rule with ancient traditions is giving way to what the Saudis in the group under Salman see as the modernization of Europe and America in the 20th century using science and technology as what they would like to see in their own country. There is also a drive to think independently from the dogmatic positions of the past that have turned the Kingdom into an American dependency with no obligation or incentive to modernize its culture and be open to the world outside.  The US fought a war to ostensibly modernize a backward mountainous remote state as Afghanistan, while being perfectly comfortable with the old Saudi monarchies of the past that made little change in the ancient culture and tradition and in women's rights and education. Such were the contradictions in American policy and the failure to think anew. As president Lincoln said "as our case is new we must think anew, and act anew." President Biden will now visit Saudi Arabia to build a new relationship with an independent nation, which along with the UAE is bringing change to the Middle East through infrastructure development and modernization. Salman's modernization comes as the kingdom also faced a need to make a transition out of dependence on fossil fuels. Salman sees trips to Greece and Turkey as opening up to all sides. Saudis have good relations with Israel and Egypt another part of this openness. The US senses this, India has sensed this. India's Modi government  made sending the Oxford vaccines manufactured in India to Saudis a priority during 2021. The Indian example is also changing the way the UAE and Saudis see infrastructure development and modernization in the region. This is also changing the way the region is looking at itself. For decades Egypt lacking the resources to build infrastructure on its own has languished economically. A helping hand from the Saudis is changing Egypt. The entire rail system is being modernized with the latest technology from Siemens. The Saudis have stabilized the Egyptian economy with a $5 billion deposit in the Central Bank of Egypt. On June 21 Egypt and Saudis signed $7.7 billion in investment deals for infrastructure, logistics, port administration, food, industry, medicine, energy and technology. In the investments in Egypt some of the oil money going to Saudis with $100 per barrel oil price is going to an economy in Egypt that can easily absorb and make good use of the investment to modernize.   The influence of Saudi leverage in fossil fuels which drove the US relationship with Saudis since FDR is being replaced with an independent Saudi kingdom making decisions to modernize across the board in all aspects compared to one that favored a few American companies such as Exxon Mobil and ARAMCO or arms makers such as Boeing and Lockheed that helped recycle American money going to pay for Saudi fossil fuels back to America.    ...

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In the most recent Global Financial Stability Report out in Sept. 2011, the increase in the ratio of a country's outstanding credit to GDP is highlighted as a key warning light indicator for country economies. An increase in this ratio of over 5% signals a warning light according to the IMF. It tells us that borrowing is expanding at significantly faster rate than the growth of the economy. Using this indicator would have set a warning light up for the U.S. before the 2008 mortgage crisis, and a warning light well before the financial crises in Greece, Portugal and Ireland. The outstanding credit to GDP ratio went up for China by 24 percentage points in 2009, with 4% percentage point increase in 2010. The ratio was up 30 percentage points in Hong Kong for 2010. The warning light is also up for Turkey and Vietnam. Capital inflows into countries that can be suddenly reversed, and overvalued currencies are a danger for emerging market countries and act as supplemental indicator warning lights. Brazil and South Africa have overvalued currencies. Turkey has high capital inflows. Only a small portion of this is foreign direct investment, the rest helps support a high amount of lending and credit provided by the banks. That a significant portion of this is in short term borrowing poses additional risks, as evident in the 1997 Asian financal crisis for S. Korea, Thailand and Malaysia....

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Jeremy Hunt, head of the Health Select Committee and Health Secretary 2012-2018, says Britain needs to take up mass contact tracing as its next national mission. Britain he says has passed 20,000 tests a day for coronavirus. America has passed 150,000 tests a day. Both more than South Korea. What is missing when compared to South Korea and Taiwan is mass contact tracing.  The app TraceTogether is not enough, as it was used by only 20% of Singapore's population. Only South Korea and Taiwan are able to open up the economy, have workplaces and life function close to normal through extensive testing and mass contact tracing, with feet on the ground. This is the only path that has worked with South Korea successfully out of the lockdown. This means "feet on the street." Making these calls requires skills, getting information, getting cooperation, offering guidance, and ensuring people isolate themselves after contact with an infected person. Sometimes it is by phone and sometimes in person wearing full PPE. They need to be sensitive enough in talking to someone feeling ill and to see how home isolation can be achieved, who else the coronavirus infected person or someone in the chain of contacts has been in contact with. Mr. Hunt says no effort should be spared in doing this as the millions of jobs in Britain, of people without work, the economy, and the need for light at the end of the tunnel of lockdowns, requires a way out. A huge task but a lot of impossible tasks are being tackled in the health services. The resources of Britain, every spare civil servant, every administrator not working, every one who can do this, needs to be enlisted to do this. The same task needs to be tackled in America, and in other countries as a national mission. ...

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The Stimson Center looks at the closing of an era of Conservative politics in Japan which ended in 2025 after the death of Shinzo Abe and the 2 year premiership of Kishida. Interview is conducted by the Stimson Center of a senior Japanese political figure with 30 years of experience in the Foreign Service, and the author of the only English language book on Shinzo Abe, reflecting the paucity of research on Japan. Shinzo Abe was premier for a short time in 2005-2006 and for a full term in 2012. He made changes to Japan's SDF, its partnership with India, Australia in the Quad, and his economic policy which increased women's participation in the economy. For the first time in post war Japan there was a new sensde of confidence under Abe and he is missed sorely in Japan today. Yet as this senior Japanese politician says, Japan has changed the way the US and Europe have changed, and nationalist politics are replacing old Conservative politics of the LDP. In a way also how the deindustrialization of US, Europe and Japan has also taken place discrediting that era. Takaichi Sanae is itself a representative of the new era, as she did not hesitate to say Japan would get involved if China attacked Taiwan. Her popularity is at 62% and she has called a snap election, as she came in to replace Shigeru Ishiba in October 2025 and was not directly elected PM. Yet in the long view this is also a misconception because neither the Stimson Center or the interview participants had a keen sense of who Abe really was and Abe's grasp of the history of the Kamakura period of Buddhist Japan and China, India, of the 12th century before the foreign invasions from the north. One of Shinzo Abe's biggest legacies is the relationship that was close to his heart, the relationship with India and prime minister Modi. This week chancellor Merz of the Federal Republic of Germany was at the kite festival with PM Modi in Ahmedabad and at the Sabarmati Ashram of Gandhiji. The same degree of warmth shown by the German leader and Modi reflecting Vivekananda's time in Germany, was seen long time back between Modi and Abe. The bullet train project Mumbai to Ahmedabad and the ones that follow across India are a testimony to the warmth shown by Abe for India, and his knowledge of history from the Buddhist period in India when by the 12th century in Japan in Dogen's time Tenjiku (India) was the sacred homeland of Buddhism. Today India has revived the Buddhist traditions and centers of Buddhism, the universities and research centers for Buddhism from that period in Indian history. Buddhism started in India near Nepal in what is now Bihar state at Sarnath and Kushinagar, and spread through China to Japan and Korea. The whole continent of Asia would reflect Buddhist ideals and ideas without the intervening period of Vedic culture in India and China's Mongolian and Manchurian northern invasions, and the periods of European colonialism. Today Buddhism and The Bhagavad Gita are itself strung like pearls on a string as the Gita itself says, part of the long spiritual traditions of three nations- India, China and Japan, and of the many others Vietnam and Korea. ("All these worlds have their rest in me as many pearls on a string." -Mascaro tr. of Bhagavad Gita, Penguin). As Asian nations and peoples come to their own inner selves, find their inmost self, this is the culture that really pervades all of Asia. ...

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Some of the concern about the economy comes from the economic damage done by the coronavirus. The longer the shutdowns continue the more the damage. About 17 million have filed claims for unemployment benefits. The WSJ consensus of 57 economists is that 14.4 million jobs will be lost in coming months, and the unemployment rate will rise to a record 13% in June, from a 50 year low of 3.5% in February. The earliest the economy could go back to the level in February 2020 is 27 months says the WSJ economist survey. The brighter side of this comes in two aspects of this pandemic recovery curve. By flattening the curve and strict testing, contact tracing and isolation till the vaccine is developed about half the jobs lost can be recovered by the end of summer, says Moody's Analytics. The vaccine a year from now or in 9 months by November 2020 would allow the economy to recover faster. A more optimistic view comes from Daiwa Capital Markets which predicts many of people laid off will be recalled quickly allowing the labor market to recover in 6 months by September or October 2020. Only finance and real estate might take longer but most of the industries where the vast majority of jobs are could be back on their feet. The credible evidence supporting this perspective of a rebound comes from Colorado and Washington which require large employers to specify whether layoffs are temporary or permanent, 70% this year are temporary. Compare this to the prior 2009 recession where this figure was less than 1%- as reported by WSJ. The big push in this direction will be the $2 trillion that the Trump administration and U.S. Congress have committed to this task. Even more so is the determination of president Trump to protect American workers at all costs, that every job counts, and that businesses without exception to get the money have to show that workers are retained. The very success of the aid is being judged by how quickly people are back to work. Now for a look at where the situation is today- Oxford Economics, a UK based forecasting and consulting firm, projects 27.9 million jobs lost with industries other than those ordered to close making up 8 to 10 million of that number. It projects April's report will will capture late March layoffs. It will show cuts to 3.4 million business services workers, including lawyers, software groups, architects and consultants, advertising professionals, in addition to 1.5 million non-essential healthcare workers, 100,000 information workers. One conclusion of this report is that the virus does not discriminate across business groups and business service workers are also affected. Many companies that were hiring will cancel that move and many will cut hours worked. Many of these business services are not a priority. Hospitals are affected too, as they cut elective surgical procedures and routine care that are major revenue sources. Some are now charging for telemedicine visits to maintain some revenue stream. State and local governments employ 20 million workers. As tax receipts decline these local governments will face choices of cutting payrolls and services without enough federal government relief. In a way laying off workers and having them take unemployment benefits shifts that burden to the federal government so that services for overtime to police and paramedics, retention and deployment of nurses in schools.    ...

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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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The lack of trust in negotiations on the terms of spending cuts between Greece and EU ministers in February 2011. In difficult exchanges between German finance minister Schauble and Greece's finance minister Venizelos, Schauble criticized the Greek government for not beginning negotiations for reduction in the minimum wage. EU ministers at a meeting with Venizelos on Feb 10, 2012, showed a distrust of Greece's figures on austerity cuts and asked for an additional $428 million in cuts to make up for the refusal of Greece to cut supplemental pensions. In Greece five ministers in the Greek cabinet resigned in protest over the conditions set by the troika of the EC, ECB and the IMF, just as unions launched a 48 hour strike in Athens. Greece is in the fifth year of a recession with unemployment at over 20%, making sharp cuts more painful. A shrinking economy makes achieving budget defict targets even more difficult and worsening the debt situation.

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A centrist 73 years, and mentor of Macron, the head of the Movement Democrate allied to Macron's Renaissance party is appointed to succceed Banrnier as PM of France. Macron hit a new low of public approval rating of 23% by Ipsos. Scholz of Germany is at 18% following reaching 65% in Jan 2022. Bayrou says-“I am fully aware of the Himalaya of difficulties that lie before us,” Bayrou says he would strive for a “necessary reconciliation” with Melenchon of France Unbowed party and Marie Le Pen of National Rally on the left and right of the centrist Macron. These are mere labels- both Melenchon and Marie Le Pen want to see higher public spending and no cuts in the Budget for 2025, Macron is not eager for cuts, Barnier wanted to cut the budget to cut the growing deficit but this is not a time to cut spending as investment is needed to grow the economy and meet needs for public services and cost of living assistance. Macron was taken by surprise by Barnier's approach leading to a no confidence vote and Barnier resigning.  ...

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Republicans have supported less regulation. After the 2009 financial crisis with faulty mortgages and excessive leveraging one would expect that there would be a shift among Republicans favoring necessary regulation of banks. This did not happen after the Obama administration failed to articulate a new culture after 2009 and lost control of Congress in 2010 by as much as 64 seats in the House 6 in the Senate, and in all demographic and income groups. The result was that the 2009 crisis changed some laws but not the culture of laissez faire that less regulation was better for the economy. It is left to president Biden to tackle this problem of culture and the Silicon Valley Bank clearly shows that the parts of the Republican and Democratic parties that support less regulation even where the regulation is essential for a good economy for workers and families, are self serving. No where is this culture of laissez fairre in its other manifestation in not planning for the US manufacturing base to be strengthened by government action more evident than in the way it has prevailed to turn a blind eye to not just sending manufacturing overseas, but over concentrating it in one country China with additional supply base from Japan into China. This is the challenge that the country faces- only if the culture or mindset changes will laws have the needed impact.  This report in the NYT shows that when president Trump appointed Randall Quarles to vice chair of banking supervision in 2017, Congressmen both Republicans and Democrats believed that less supervision was better for the economy. Democrats such as Congressmen Barney Frank were themselves part of the new culture when Frank joined Signature Bank's board in 2015, one of the banks that along with SVB bank caused the banking crisis of 2023. Its association with risky crypto assets is considered by the WSJ as being one reason the government decided to close it. Frank did not see this aspect of its risk insisting that the bank was in sound condition.  This culture is also manifested in its approach to the cost of living crisis and support for workers and families. The Biden administration sees the problem of culture and of clearly making the changes that create a new culture, and a new understanding of what is right for America, for its economy and for its role in the world, and best for its people.   ...

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Ratan Tata welcomes Air India- formerly founded as Tata Airlines in 1932 by an accomplished pilot JRD Tata who flew the maiden postal flight in South Asia from Karachi to Bombay in 1932- back to Tata Group. JRD Tata assumed the position as head of Tata Sons in 1938. Nehru nationalized Air India in 1953 after years of bureaucratic interference in the management of the airline. Ratan Tata was selected by JRD Tata to run the Tata Group in 1990 and was present during the early formative years of the airline. The decision to take 100% ownership of Air India in 2021 appears to be a good one considering the difficulties JRD Tata had- and which Ratan Tata is familiar with- from interference by the government in the management of the airline in the early period after independence in 1947. This gives Tata Group a clean start to build a new airline. By taking responsibility for three fourths of the debt of Air India with Tata Group taking on the other one fourth, the government gives the new airline a good start. Air India was losing 3 million dollars a day according to a report in DW.com. This transfer also frees up this huge investment for use in other areas of the economy such as infrastructure building, healthcare, education, logistics for exports. ...

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The problems facing Labour under Keir Starmer with a 156 seat majority on only 34% of the vote and 40% of voters staying away, the split of Conservative vote between Reform UK and Tories and first past the line election rules giving Labour an unreal advantage.

The first six months with the budget and abolishing of winter fuel allowance by Rachel Reeves. It was pushed by Treasury but was it the best messaging by Labour which has been faced with criticism on this issue and its perception of pensioners and working class. The lack of growth and the possibility of no growth in the last quarter of 2025 creates more problems for giving conviction to Labour's message and vision of a turnaround in the economy. 

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Senior Republicans Wicker and McConnell both push for the putting pieces of the defense puzzle in place so that American can offer leadership to the world in the 21st century. Biden has put pieces of the puzzle on the economic front, these are the pieces in defense and security. On D-Day 80 senior Republican leader Mitch McConnell cautions against the lethargy of so called left parties and the isolationist tendencies of so called right parties. He says America should put preparedness first, that the better part of valor is to build credible defenses before they are necessary so that American leadership is not doubted further as it has been before. He commends the plan put forward by Roger Wicker in the US Congress Senate Armed Services Committee. The plan calls for raising defense spending to about 5% from 2.9% now over 5-7 years, with $55 billion more in 2025. Wicker says the military has a backlog of $180 billion just for maintenance. For the Navy 357 new ships by 2035, for the Air Force 340 additional fighters. This in light of China's additions and in light of the Russian economy being put into a position for a long term conflict with NATO over Ukraine.  ...

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Orlik cites a 2011 survey from China's South Western University of Finance and Economics, which surveyed 8000 households and found that 55% of Chinese households had little or no savings for that year. 10% of households control 86% of wealth and 56% of household income. Surveys in 1995 and 2002 showed 10% of households controlled 31% and 41% of wealth. In the U.S. top 10% of households control 74% of the wealth, according to the Federal Reserve figures. What this means, says Orlik, is that before China can shift to consumption based growth the low incomes of the majority of households have to go up, requiring a major policy shift. Under current policies and even with movement in the direction of the DRC/World Bank policy report for China for a gradual shift away from state owned enterprises, there is little prospect for rebalancing the world economy.

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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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In August 2023 the Ukraine war is reduced to small unit tactics after a stalled Ukraine offensive. The results of the war over the last 2 years is a broadened NATO with Sweden and Finland inside NATO increasing the borders of NATO with Russia. On the Russian side some of eastern Ukraine on the Black Sea and the Dnieper river are now part of Russia in addition to the Crimea. The Ukraine offensive is stalled. Russia's economy has shifted from its western European orientation for energy exports and auto other imports to a Chinese orientation.  These changes are likely to remain with a shift of supply chains back from China and its suppliers to the US and the EU. This acts to restore the factory bases in the US and EU and revive communities built around factories in small towns across the region. This will bring back regions in the EU and the US that suffered from the loss of factory jobs and public services they supported. Overall this is a healthier situation for the people of Europe and the US. For China also the situation reverses to better quality yet slower growth, and a pause to take stock of the immense changes that happened with explosive growth in trade- the damage to the environment, floods and heat waves from climate change, the explosion in debt to three time its GDP, higher unemployment, rural poverty, and devise solutions to these problems. The war has accelerated the unraveling of the existing economic, social and trade arrangements that had stopped working for many years. ...

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The US economy is growing at a much faster pace than Europe or China in the last quarter of 2021- at 7% annualized growth in the fourth quarter up from 2% in the third quarter, according to Federal Reserve Bank of Atlanta. This compares to 2% in eurozone and 4% in China. Major US ports such as Los Angeles are processing 20% more container volume in 2021 than in 2019, while Rotterdam and Hamburg are almost flat compared to 2019 level. Consumption of durable goods has jumped 45% above 2018 levels in the US, only 2% in eurozone, according to ECB data. The factory gate prices in China are far outpacing the consumer prices in China, suggesting weak domestic demand and strong foreign demand. Lars Jensen, head of network at container ship company A.P. Moller-Maersk says the global supply bottlenecks were started by this surge in US demand with more ships headed for the US taking ships away from other places. The US economy will grow at 6% in 2021 and 4% in 2022, with wages growing 4% a year above the pre-pandemic trend rate, compared with 1% in eurozone, according to Bank for International Settlements. This is pushing inflation up in other countries by pushing up the value of the dollar. In Mexico hitting 7.4% and the central bank raising interest rates 0.5% point to 5.5%. In Russia inflation up to 8.4% and central bank raising interest rates by 1percentage point to 8.5%. The equipment investment in the US is up by 13% this year according to JP Morgan Chase, only 3.6% in eurozone, 0.1% in Japan. All this is creating a large gap between the US and Europe, US and China in economic growth and demand growth, and in income growth. ...

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From the 1950's to the 1980''s profits earned by financial firms excluding insurance and real estate accounted for 10% of total US profits. This grew to 22% by the 1990's and jumped to 34% from 2001 to 2005. A financial sector of this size becomes a danger for the US economy, especially with overleveraging, high-frequency trading, excessive risk-taking and other practices common before the crisis of 2008. It also does not add to the productive strength of the US economy, and diverts human and capital resources that can be productively used elsewhere in the US economy. A large sector also creates its own self-perpetuation mechanisms such as efforts to dilute or reduce the regulation needed for it to function safely and productively. By diminishing the power of the legislative and executive branches of the US government to regulate this sector, it also reduces public confidence in government.

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Landers and Gale of the WSJ show how undersupplied conscript soldiers, high inflation and industrial breakdowns during wartime have led to major upheavals in Russia. Three conflicts led to such changes in Russia's domestic situation. The Russo-Japanese war in 1905 led to Russia seeing one fourth of 340,000 Russian troops killed in a battle near the Chinese city of Shenyang, and loss of most of its Baltic fleet in a Japanese attack on Port Arthur. The war ended with a peace treaty arranged by president Theodore Roosevelt of the United States. The Russian czar gave up most of his absolute powers in 1905.  In 1914 Ukraine was involved in regime change as the Germans fought to take Ukraine. The czar wanted to keep Russia's expansive sphere of influence. Without Ukraine's agriculture and industry and its population Russia would not be a great power, says an expert on Czarist Russia. At the time the Russian military was ill prepared in motorized vehicles and communications equipment, and industry lacked the ability to resupply the military. Inflation jumped leading to unrest and protests. Fighting in the First World War led to millions of refugees. In 2022 experts see the same old problem of seeking spheres of influence leading to wars, and the lack of sufficient ability to cope with prolonged wars when short wars were expected by the regimes in power in Russia. Dissent inside Russia and protests led to the abdication of Czar Nicholas in March 2017, and Bolsheviks led by Lenin seizing power in November of 2017. By 1979 Ukrainian leader Leonid Brezhnev was leader of the Soviet Union as Russia's economy could not keep up with modernization. Seeking spheres of influence Brezhnev pushed into a long war in Afghanistan in the mistaken idea that a quick strike on Kabul with a change in government would achieve Soviet goals in central Asia. By 1989 the Russian army withdrew from Afghanistan and in 1990 the protests led to the fall of the Berlin Wall and the collapse of the Soviet Union and emergence of Russia as a separate country. Landers and Gale of the WSJ see these events in Russian history showing how wars have led to domestic changes and upheavals in Russia when leaders projected power beyond Russia's capacity to handle the results of conflict. Russia's economy is about the size of Italy or Britain say experts and its industry much smaller than the European Union economies and the US, Japan combined.  ...

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The apartment vacancy rate declined to 5.2% in fourth quarter 2011 from 6.6% in 2010, and down from 5.6% in the third quarter, according to Reis. The vacancy rate went up to 8.5% in 2009. Data from Reis shows rents went up in 71 of 82 markets it tracks. For the U.S. rents went up by an average 0.4% in the 4th quarter, to $1064 a month, increasing from $1026 in 2009. Rent growth for 2011 was 2%. Factors helping demand for apartment rentals are the reluctance of buyers to invest in a home when prices are declining in an uncertain economy, and fears of another downturn. Factors holding price increases down in New York are the declining jobs inthe financial services industry and the already high levels of rental prices- reaching $2876 a month. Demand in San Francisco and San Jose was higher and prices were up over 5% in 2011, with better properties raising rents by 10%.

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Elected to the Politburo in 1980, Gorbachev became president of USSR in 1985. In the six year period to 1991 he launched a movement to free the USSR from the rigid constraints of communist party rule called Perestroika to improve productivity, freedoms and quality of life. He came from a peasant family with Ukrainian origins and was born in 1931 during the period of upheaval in Russia. The rapid removal of Soviet rule was something Russia was not able to adapt to in the early years with no experience in democratic process. By 2000 after drop in life expectancy and fall in the standard of living Mr. Putin emerged as president.  Russia's economy recovered under Putin's three terms till the miscalculations in the invasion of Ukraine in 2022, that were itself a result of a sense that Russia had lost something with the fall of the Soviet Union and the advancement of NATO and the European Union. Gorbachev's sense in his memoirs was that Russia would do best under democracy. Even in 2017 he wrote that Russia and its people were "ready for a real multiparty system, fair elections and a regular rotation of government." Yet he was too much of an optimist and not enough hands on to grasp that Russia was a large economy and safeguards had to be put in place for the rule of law to prevent lawless elements that could control companies, safeguards for the vulnerable sections of society such as pensioners and older people, and limited self government through elected assemblies and parliaments were needed for a decade before democracy to take roots. Gorbachev's knowledge of American and British democracies, constitutions and parliaments and their evolution over centuries was non existent, with little contact and education of this sort under the Czar or Soviets. The democracies in Germany and Japan were established with American power and extensive education, the Marshall Plan, and unlimited imports by the US from Japan to prevent economic catastrophes of the kind experienced by the Weimar Republic in Germany in the 1920's. No plan from western aid and assistance, limited self government of the people was introduced as training ground as in India. In India the British introduced limited self-government or Swaraj in the 1930's with elected assemblies in Indian states, in the pattern of Dominion states such as Canada and Australia. Mohandas Gandhi negotiated the rights of indentured Indians in South Africa in this arrangement and studied British law and constitutions. This led to the catastrophic failure of the rule of law in Russia after 1979, lawless elements emerging under Yeltsin  that controlled companies and the state, high unemployment, failure of the economy, and drop in life expectancy between 1979 and 2005. How this led to the Putin years and now led to the war in Ukraine is covered in more detail under the Lyrarc article on Gorbachev and how he is seen in Germany. ...