LyrArc Article Gist
India is an attractive place for foreign investors with the country moving up 23 places in the ease of doing business rankings of the World Bank. Growth is faster than China since 2015, and GDP is expected to double to $5 trillion by 2030, according to government think tank NITI Aayog. Corporate deal making from foreign investors exceeds that in China. Mergers and acquisitions targeting Indian companies reaching a total of $93.7 billion in 2018, up 52% from last year, according to Dealogic. Overseas purchases were $39.5 billion for India in 2018 compared to $32.8 billion for China. In comparison to China where trade tensions are increasing, India under the Modi government has improved the ease of doing business- implementing a new bankruptcy code, easing foreign direct investment rules, introduced a nationwide goods and services tax to replace a hodge podge of taxes in different states. In the consumer sector Unilever NV made purchase of a malted drink brand Horlicks from GlaxoSmithKline PLC as part of a $3.75 billion deal. Softbank led a $1 billion investment in OYO Hotels. In infrastructure Tata Steel made a $8.3 billion acquisition of steelmaker Bhushan Steel. Reliance Jio's aggressive push in mobile with low prices is leaving the telecom industry ripe for mergers and consolidation- Bharti Infratel acquired Indus Towers for $6.5 billion. Closely held family companies are also selling out their controlling stakes. ...

LyrArc Article Gist
WSJ shows how the daughter of David Rockefeller Neva Goodwin and her daughter Kaiser have led the fight against Exxon for not making the change to renewable energy from fossil fuels in time to avert climate change disasters now common worldwide. One of the major problems of the last 50 years since the Reagan administration in 1980 involve oil wealth in the Middle East used to finance wars and US involvement in these wars in Iran, Iraq, Saudi Arabia, UAE, Libya, Yemen. It haunts us to this day with conflict in the Red Sea and Persian Gulf. This has its origins with John D. Rockefeller  who started the oil company Standard Oil in the 1870's in Cleveland, Ohio, now called Exxon in the US and Esso overseas. A bigger problem has emerged in recent years that remained unnoticed till about 2006 when David Rockefeller, the grandson of John D. Rockefeller, met with the head of Exxon for lunch to ask why Exxon was not doing more to invest in green energy and increase awareness of the damage to the environment by fossil fuels. This was the beginning of the dawning realization of the signs of climate change so prevalent 20 years later today in wildfires, drought, extreme heat and fast floods worldwide.   Today's Exxon is a descendent of the companies John D. Rockefeller (Library of Congress site) created by the 1880's to refine oil which he turned into a monopoly by deals with railroad companies to reduce cost of product. In 1888 he created the Anglo American Oil Company later called Esso which is a phonetic rendition of S and O in Standard Oil, which in 1972 was changed to Exxon. Many of the crises of this century have their origins in the activities of Esso and British oil companies in Iran, Iraq, and Saudi Arabia and the wars that wasted trillions of dollars in American resources through the administrations of Reagan, Bush, Clinton and Obama have their origins in the activities of oil companies, and the governments of these countries using oil financed wealth for wars that involved the US. Huge mistakes that combined with neglect of manufacturing the lifeblood of any economy have led to the gradual decline of the US, being reversed for the first time with the decisive and complete shift made by president Biden so that investments of trillions of dollars can be made to revive the strength of the US economy and the wellbeing of its people. ...

LyrArc Article Gist
Robert Doll, equity strategist for Black Rock, the world's largest money manager, says the growing population of the U.S. will drive economic growth in the next decade compared to Japan and Europe. He says that over the next two decades the U.S. work force will grow by 11%, Europe's will decline by 5%, and Japan's will decline by 17%. China's population growth will be only slightly more than that of the U.S. during that period and Doll expects China's growth to slow. He sees America as the best bet in a bad neighborhood. Higher immigration in the U.S. is a huge positive, as he points out economic growth is simply the product of the change in the size of the work force multiplied by its productivity. And America's productivity is good enough compared to other nations, is how Doll sees it. In 1995 the U.S. produced 25% of the world's goods and services, it was still 25% in 2010 says Doll. Other economists have pointed to this and observed a similiar pattern for most of the twentieth century. Doll sees this pattern continuing. India's population will show signficant growth and he sees greater opportunity there for long term investing. Doll sees a decoupling between U.S. stock markets and high unemployment. Most of the large U.S. companies generate a large portion of their sales and profits overseas. He estimates 40% of the business of these companies is overseas. Doll's estimate is for 70% of the incremental earnings growth of the S&P 500 companies coming from overseas markets. He also expects higher inflation with the Fed keeping it from getting out of control, and deficit cutting efforts to cut some trillions over the years. He sees favorable prospects for equities based on the money growth being strong and credit markets being good....

LyrArc Article Gist
International Court for Trade in New York (Customs Court for New York setup 1970) ruling on tariffs May 29 2025. An obscure NY federal court that few know about has issued a ruling saying tariffs are not legal under emergency powers of the president. In the first term DJT used Section 301 of the Trade Act of 1974, which provides firm legal footing to act in the Nation's interest. This court says there is no emergency not considering the trade deficit of $ 1 trillion and with it a loss of manufacturing technologies lost to other nations a danger. A loss of manufacturing technologies that comes with shipping manufacturing overseas, that makes it impossible to make the ships the US Navy need on time, as not posing  dangers to the Nation.  The administration says unelected judges should not be making such decisions. The Court jurisdiction is to review the decisions of customs officials on import duties. Was the Court in New York City with judges appointed by the president, expected to decide on what presidential decisions in the Nation's interest were legal. Nothing about its history suggests that it was designed to do this. ...

LyrArc Article Gist
The Economist points out serious problems at India's state owned banks. Following a $21 billion or 1.3 trillion rupee bailout from the government, and a new bankruptcy law to help banks deal with bad loans, the Indian banking sector was seen as recovering. Last week (Feb. 2018) showed new problems at three of the largest state owned banks. PNB, Punjab National Bank, is faced with fradulent transactions for 114 billion rupees, about a third of its market capitalisation. A jeweller, Mr Nirav Modi, had PNB employees issue letters of credit which were then used to borrow overseas, but the credit was not shown in PNB's books. The State Bank of India, SBI, is faced with losses after tackling bad loans. The Reserve Bank of India, India's central bank and bank regulator, has taken action to have banks recognize more bad loans to clean up the banking system.  The Bank of Baroda, the third largest state owned bank, is exiting South Africa after entering that market and lending to the controversial Gupta family that is seen as having undue influence on the government of ex- president Jacob Zuma of South Africa.  These events have battered the reputation of state owned banks in India. One private lender HDFC bank alone now has market capitalization worth more than the entire state owned banks in India. State banks are worth less than net assets in the market, showing a huge credibility gap. The bad loan situation that goes back to previous governments is affecting the growth rate in India's economy and creating new pressures on the government of prime minister Modi as it faces general elections in 2019. ...

LyrArc Article Gist
This analysis in The Guardian says US president Biden is reversing 3 decades of policy since president Reagan that looked with skepticism at government intervention in the economy. The $1.9 trillion aid package Biden has pushed through Congress is a big game changer in the way government operates to help rebuild America after the pandemic. The 2009 response by the government under president Obama was done without conviction that the government response was the best way to help the economy. By 2016 voters turned to a Republican, Mr. Trump, to help working class voters with a USA first policy, after decades of presidents from both parties Republican and Democrat failed to protect American interests in manufacturing, jobs and incomes.  US president Biden is continuing Trump's policies to protect working class Americans. And bringing new conviction that government not only has a positive role, but has an essential and vital role to play in protecting workers and households struggling to make ends meet. President Reagan had introduced such a deep skepticism of government, that it took so long for people to remember FDR and the role of government before the second world war and afterwards under the Truman administration.  What changed? The health care crisis exposed the weak areas in the governance and policy mindset in America. China had advanced mainly through strong government role of the Communist Party  in steering the economy and business to gain competitive advantage. The health crisis from the pandemic further devastated America's lower middle and working class following the banking and financial sector mismanagement by 2009. The pharmaceutical and health care sector similar to other sectors had shipped manufacturing overseas. In 2021 there is a deep sense that theories don't work, one has to act based on the needs and the situation the country is facing. The way competitor nations such as China are building new infrastructure, gaining manufacturing advantage, dominating key sectors and industries, and creating jobs, requires America to respond. In this situation posing the threat America faces as well as the social dislocation of decades of misguided policies, the US government is the only one capable and having the resources and capacity to respond.  ...

LyrArc Article Gist
The Tax Plan of Jeb Bush, with the help of advisors Martin Feldstein and Kevin Warsh, lowers the top personal tax rate from 40% (including surcharges) to 28%, and reduces the corporate tax rate from 30% to 20%. The plan is designed to jumpstart the economy for higher growth by increasing business investment and incentives. Businesses are allowed to deduct 100% of new investment immediately. The idea is to increase capital investment so that benefits also go to workers in higher wages. The Bush economic advisors see 50% of the corporate tax burden as affecting workers wages- average compensation would go up by $2750 a year by 2020 and $6200 by 2025 in 2015 dollars. Companies can pay a one time 8.75% tax on money earned and held overseas, paid over 10 years- about $2.1 trillion of this income held overseas can be added to the pool available for business investment. As proposed earlier by Feldstein the itemized deductions including mortgage interest can be taken only upto 2% of adjusted gross income, suggestions during the reform effort not taken up by Obama. To reduce the excessive use of leverage in business decisions the field is levelled for use of debt and equity by removing the deduction for business interest expense. This editorial says that by putting in the details, which political leaders tend to leave vague on specific figures, Jeb Bush and his advisors have taken a crucial step forward. This it says, shifts the debate from current shallow posturing to how America can lay the groundwork for the kind of growth needed to help increase wages, increase economic growth to higher levels, and preserve America's position in the world....

LyrArc Article Gist
Over the short run Europe presents some opportunities after Germany's Merz gets the constitutional brake on spending removed and plans $1 trillion in spending on infrastructure and defense. The US is busy with immigration and other challenges, and tariffs are part of the effort to stop fentanyl on Canada, Mexico and China. This poses uncertainty for business in 2025 which should gain clarity as most tariffs are meant to ensure a level playing field and India, China, EU, Mexico, Canada cannot argue with the idea of we charge them what they charge us, as reciprocal tariffs, as fairness in trade. These countries have reason to cooperate as it is basically fair trade DJT administration is after. Japan cooperated so history shows it can be done and Lighthizer was Deputy Trade Representative under Reagan when he got the Japanese to cooperate and be fair. His deputy is Jameson, now US Trade Representative in 2025. They are no ideologues, just fed up with the way things are and US carrying the trade imbalances and shipping manufacturing overseas that hurts ordinary Americans. US exceptionalism is seen as prevailing after a period in which American companies gain a footing in a level playing field and unfair advantages China, EU other nations had are corrected for investors in the UK, Australia, India and many European countries. It also gives American companies a chance to retool for a new business environment that can offer more opportunities and markets including in India and Europe. ...

LyrArc Article Gist
Consumer spending boom is over and when you look at the detail in the government numbers on spending consumer spending is already declining. So the idea that consumer stocks like P&G, J&J and Coca Cola and Kimberly Clark will hold up better than other stocks is a mirage. Just this week the idea that stocks of companies doing a lot of business overseas and in infrastructure will hold up better turned out to be an illusion as GE fell by 12% in one day, April 11, 2008, because of earnings shortfalls in its finance units as a result of the new climate in the credit and financial markets. Consumers spent heavily. If consumer spending had continued the trends from the 1990's then it would have gone up $3 trillion less today. It would have been 70% ratio of household debt to GDP, right now its close to 97% of GDP. Some of this $3 trillion estimate of Business Week economist Mandel using Fed data will be what the American consumer will be dealing with as he reduces spending in the years ahead. According to OECD data the ratio of household liabilities to disposable income (charts P11 of BW, April 21, 2008) is close to 1.0 in France and Germany which is contrary to what one would expect considering the more conservative spending there especially Germany, exceeds 1.0 in Japan, and far exceeds 1.0 in the US, and in Canada aabout 1.3, with the highest ratio in Britain at a whopping 1.7, using a ballpark view of the charts. This suggests that Britain is way off the charts in spending, see the link to this so expect spending to be hit hardest in Britain and with financial services being a bigger part of the GDP and the economy in Britain expect higher unemployment in Britain than the rest of Europe....

LyrArc Article Gist
The tax plan offered by Jeb Bush in September 2014 is based on simplifying the tax code to three rates, lowering the corporate tax rate to stimulate business investment and growth. It will pay for this by limiting itemized deductions to 2% of adjusted gross income, removing state and local tax deductions, by generating higher growth of estimated 0.5% per year which translates into higher tax revenues, and by increasing the deficit by $1.2 trillion. In the last tax debate economists such as Martin Feldstein and other experts proposed removing or limiting the itemized deductions. Simplifying the code and lowering corporate tax rates has been favored as a method to jumpstart growth by many experts, but was not taken up during the deep recession following the 2008-2009 financial crisis when the stimulus added to the deficit. The 3 tax rates changes the current 7 brackets to 10 percent, 25 percent and 28%, with the coporate tax rate lowered to 20%. The plan removes the alternative minimum tax, the estate tax, marraige penalty tax, leaves charitable deductions as now. To help the people at the lower end in incomes and the middle class- the standard deduction is doubled, the earned income tax credit expanded. Companies would be allowed to deduct capital investments, and there would be a gradual phase out of taxation on income American companies earn overseas. Hedge funds will not have access to a loophole called "carried interest." The plan comes as the American economy is in recovery mode, making it more likely that increased growth would generate extra tax revenues....

LyrArc Article Gist
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. ...

LyrArc Article Gist
Gerald Seib, executive editor of of the WSJ, attributes the divisions in America both on the left and the right to a deep skepticism among people about the intentions of the U.S. political and financial establishment to conduct the country's affairs in a way that benefits all people. Both the traditional Democratic and Republican establishments, the Bush-Reagan, Clinton-Obama politicians and the financial community were seen as self-serving and looking after their own interests. The right of center supply side economics and the the tolerance for immigration levels of 30% rise in the last decade were discredited. A much larger recovery program was seen as needed from the deeply bruising effects of the financial crisis of 2008, started by the reckless financial establishment behaviours, than either the Reagan supply siders or the Obama people had understood or planned. This opened the way for Mr. Trump to take up the cause of ordinary Americans with a message of ambitious infrastructure development, confronting China's use of trade adversely affecting American workers, and slowing down immigration. And within the Democratic party the emergence of Elizabeth Warren and Bernie Sanders with programs for a wealth tax that would finance Medicare for All and college education supported by the federal government. Both the traditional Republicans under Bush and Democrats under Clinton Obama were seen not upto the task, after the 2008 financial and economic crisis created deeper scars than were imagined possible. The lack of effective policies under Bush or Obama simply aggravating the situation further. The culture wars have split Americans down the middle with a breakdown of the traditional American family and social structures creating deep anxieties in America. Obama's comments unsettled people in the heartland when he said that economic decline in the Rust Belt had made people there to "cling to guns or religion or antipathy toward people who aren't like them."   The trillions of dollars spent in wars in Asia and the Middle East were seen by Mr. Trump as an enormous waste when much needed investment was deprived of attention at home. Mr. Trump hammered this point home till today it is well accepted across America.  Even as political divisions persist they are now on how to tackle the redevelopment and growth of the U.S. The new focus of agreement has shifted with agreement across the country that infrastructure development in the U.S. and defending workers rights to jobs and opportunities is the top priority. That trade relations need to be reshaped keeping this priority ever present in negotiations. As a result all parties could agree on infrastructure and the recently concluded agreement for trade with Mexico and Canada and phase 1 of negotiated agreement with China. In overseas affairs the U.S. under Trump seeks cost sharing with a 2% of GDP defense spending by other nations so that money can be diverted to use at home. In this sense the debate has already shifted in the U.S. and the UK to how to address the problems of uneven development and growth across the two countries and better allocation of scarce resources to needs at home. Which is for the U.S. a good thing in the middle of all the perception of divisions.      ...

LyrArc Article Gist
Who is Nandalal Weerasinghe? This report in The Daily News gives some idea about the man chosen to help Sri Lanka negotiate a deal with the IMF.  Dr. Nandalal Weerasinghe was an alternate executive director at the International Monetary Fund before being appointed deputy governor of the Ceylon Central Bank in 2012. Before this he managed several macroeconomic departments at the central bank and was assistant governor of the central bank from 2007 to 2009, He has spent the large part of his career in economic positions at the Central Bank of Ceylon after getting his PhD in economics from the Australian National University. Weerasinghe is the leading expert in macroeconomics from Sri Lanka who has IMF experience. He says "things will get worse before they get better." He retired early from the central bank with a change in government in 2019. He was reappointed as Sri Lanka faced a debt crisis in March 2022 following the two year long pandemic, and the Ukraine war in 2022 that was bad for emerging market economies. Weerasinghe says about the crisis facing Sri Lanka- Recent decisons followed Modern Monetary Theory. This has dire consequences. In recent times the savings brought about by the low tax and interest rate regime passed savings on to the corporate sector and took away spending power from savers and pensioners. Surging inflation made things even worse for the lower income middle class and older parts of society. Years of accumulated debt have brought Ceylon to this point. In Ceylon one is seeing the effects of savings being passed on to the corporate sector in an economy dependent on tourism and remittances from overseas workers, both hit by the two year long pandemic. This is part of  a trend that has hurt emerging market economies from Argentina and Pakistan which also turned to the IMF to Turkey.  In other countries in the European Union savings also passed on to the corporate sector with low tax and low interest rate regime. With high inflation resulting in the cost of living crisis seen today in France and Germany. This type of policy that Weerasinghe calls 'Modern Monetary Theory' is not healthy for the European Union and the US, as these policies led to the neglect of much needed and vital investments in infrastructure, health and education. Only now are these effects being corrected by new administrations of Biden in the US and Scholz in Germany, with Biden's 2 trillion plan for workers and families, and a similar plan from chancellor Scholz. With this come needed investments to tackle climate change, all of which was neglected before. India has taken a different approach. By following good governance, managing vaccination effectively during the pandemic, social emphasis for food, water, electricity, cooking gas, medicine for the vast population of 1.2 billion, and a Master plan for building Made in India manufacturing,  India has avoided such crises and maintained strong economic growth. In this sense it is a model for South Asian, South East Asian, African, and Latin American emerging market economies that face a difficult situation today. Good governance is critical.   ...

LyrArc Article Gist
Much of China's strong GDP growth year after year of 9-12% was generated through large fixed investments in manufacturing. More than 40% of GDP is from factory construction or fixed asset investment in housing and infrastructure. And this spawned suddenly on its own a whole generation of new small business bootstrap entrepreneurs, as if from nowhere, who were good at adapting and seeking out new opportunities as new factories and exports shot upwards. GDP multiplied 14 fold from 1980's. And created 5 million businesses of over 8 employees each, according to the State Administration for Industry and Commerce. In the processs creating 75 million jobs for university graduates, workers from state companies and fro migrants from the rural areas. These private companies and their investment spending make up half of the 2008 GDP of $4.42 trillion. But with the export model heavily dependent on overseas markets especially the USA, the collapsing export markets is shrinking production and investment. Industrial production which went up by 16% annually for 5 years, dropped to 3.8% for Jan-Feb 2009. Mr Yu and his company GenTech, profiled here, was an engineer who studied engineering in Beijing, then at Newcastle University in the UK, worked for Cargill in Iowa, and looked for opportunities away from agricultural engineering. Adapting to China's needs in first semiconductors and then solar equipment assembly lines, he provided the high tech tubing for the gases and chemicals used in manufacturing assembly lines, competing with the likes of Air Products and Chemicals of the USA....

LyrArc Article Gist
Everything is moving in the wrong direction in terms of sustaining growth according to Nicholas Lardy of the Peterson Institute of International Economics. China's exports dependent economy will see a serious downturn as export markets in the USA and Europe dry up in 2009 as the deep recession takes shape. This could lead to growth rates going down to 6-7%.Other areas that propelled Chinese growth areinfrastructure investment and housing construction. Worried about rising housing prices the government last year out in place measures to dampen housing purchases, with tighter restrictions on second mortgages by banks and tighter lending for first mortgages. With house prices flat or falling now in Chinese cities many buyers are holding off for a better price in the future. Slower growth in housing will mean less demand for migrant labor and less demand for imports of cement and steel from other countries. China's lower imports of machinery, machine tools and heavy equipment for industry and infrastructure building will affect especially the German and Japanese economies. Germany has become the world's largest exporting nation in part by selling industrial equipment to China, its second most important market for machinery. In the first 7 months of 2008 these exports were still expanding at 20%. But these exports are likley now expanding at a rate of 10% and may slip to single digit growth in 2009, according to Olaf Wortmann, an economist with the VDMA engineering association. A good example of what is happening is the German manufacturers of textile machinery which derive 95% of their sales from overseas and mostly from China. These orders were down 42% in the first 7 months of 2008. With declining consumer demand in the US demand from China's exporting factories is declining. These figures and the accelerating slowdown in the US consumer markets suggest there will be a serious downturn in Chinese exports of textiles and other goods. The impact on German growth rates which are going below 2% in 2008 is to lead to 0% or declining growth in 2009. A similiar situation is ocurring for imports of heavy equipment from Japan. Orders of Japanese machine tools by China declined by 25% in September according to the Japan Machine Tool Builder's Association and Komatsu's shares have declined by 70% since their June peak. Part of the Chinese impact on global growth is mitigated by the fact that at market exchange rates China's economy is still only 6% of the world economy at market exchange rates and 10% at purchasing power parity. Chinese domestic consumer demand is $1.2 trillion for 2007 compared to the USA's $9.7 trillion, which also suggests how heavily China was dependent on the American consumer and how the missing American consumer will be hard to replace and the growth rates of 10-12% may be a thing of the past, with 6-7% being more realistic. ...

LyrArc Article Gist
"To Invest (at home), To Align (with allies), To Compete (with the world)" sums up the approach of president Biden with China. It also sums up the approach at home and overseas. Biden senior adviser, Jake Sullivan at Council of Foreign Relations sets out the framework and path for managing US-China relations into the future for many decades. Here at the Council of Foreign Relations he shows how- through careful study of the relationship's history, the changes in the relationship, and where it is today in 2024. Having participated in previous administrations Jake understood how it has evolved, where mistakes were made by both China and the US, where misperceptions took hold and need for clarification, for action. The old Strategic Dialogue followed by Paulsen under Bush 2000-2008 allowed the relationship to be guided by business interests, -without any clear strategy or idea where it was going except maximizing interests of business on both sides- was continued by Kerry under Obama 2008-2016. Sullivan, Blinken and Biden have built a Strategic Economic Cooperation Framework that has clear goals on the American side and goals on the Chinese side, and work between the two presidents and their cabinet ministers. Trump 2016-2020 rejected the earlier Strategic Dialogue but was not able to set up a sound framework that would guide future relations for decades. Sullivan helped set up a new framework around three principles- To Invest, To Align, and To Compete.   Here he describes how the plan to invest trillions in infrastructure in the US was part of this plan's principle To Invest. On Align it was to derisk not decouple by reducing the excessive concentration of supply chains in China, that was revealed as a problem in the pandemic years. Building up manufacturing at home and in India, Vietnam and Japan. Align also was to have allies Japan, South Korea and India to be aligned with the US policy. It also meant that all three countries would follow the same framework for their economies To Invest, To Align, To Compete.  By combining the strengths of the 2 largest economic centers Seoul/Tokyo with New Delhi/Sydney in Indo-Pacific the leveraging effect of US strength could be felt to support its position. And third to compete on level field so that America retained control of its technologies and implementing exports controls. And sharing this in  open communication with China that the US was protecting its technology and interests the way China has done in the past for its interests. The benefit of open communication even where there are differences had the advantage of not turning this into open rhetoric that damaged relations as had happened under previous administrations. Wang Yi on China's side having seen and approached it with careful study and reflection had similar goals to stabilize and put the relationship on a sound footing. Sullivan met extensively with Wang Yi in meetings in several locations around the world. Ministers Yellen, Raimondo, Blinken, Kerry, were sent to China for extensive discussions as part of this strategy in 2023 leading to remarkable change in the mood and confidence in US- China relations after tumult in 2016-2020 and uncertainty in previous administrations. Much credit goes to president Biden and Jake Sullivan, Anthony Blinken, and also to Wang Yi and Jinping in no way diminishing their own initiative, so that for the first time in decades the US China relationship is now on a stable footing. Both countries faced common challenges around counter narcotics, around climate change, and other issues. These are being addressed. Competition is managed carefully and no rhetoric is taking place so that the largest two economies and about 1.7 billion in US and China and 2 billion people who are allies in India/Indonesia/Vietnam/ Korea/Japan living on the same planet earth can have economic and other cooperation  with different cultures, economic structures and systems of government. The result of such a framework also gives the basis for cooperation with America's allies to invest in Africa and Latin America and in the people of these two continents as another level of alignment and investment for a safer better world. ...

LyrArc Article Gist
"Progressive" is a misused word, people are just interested in the words "decent," "fairness," and "Christian" from the color of the heart.  It is just how Republicans see the contest for the US Senate  that reveals their sense of priorities for the Nation.The main concerns of Republicans, old traditional Republicans shown here in this WSJ Editorial are that somehow gains on the US Supreme Court could be reversed with retirement of Alito and Thomas in their seventies, and fears of the same policies that set up Medicare and Social Security- following the changes of the Industrial Revolution and dismal factory conditions and wages at the turn of the century- under Republican Teddy Roosevelt  (the incipient changes), Woodrow Wilson an academic from Princeton, and Franklin Roosevelt. A new version of old Tory politics still exists in the US. It is these industrial conditions rewritten with work safety laws, workmen's compensation, first 54 in 1918 after the Triangle Factory Fire,  then 40 hour week, unemployment insurance, worker union rights for fair negotiations on wages, that made the US a strong manufacturing nation and Industrial power, creating the synergies for worker contributions combining with technologies, managerial skills for a decent standard of living that surpassed all other nations. It is this achievement that was put at risk in the 21st century by shipping factories overseas and thoughtlessly sending the technologies with it, which happened under a series of administrations since the 1980's Reagan, Bush, Clinton, Bush Jr., Obama and Trump. Done thoughtlessly and recklessly. And the wars that started with president Reagan in Iraq/Iran/Afghanistan that diverted the two trillion dollars that would have rebuilt America's aging infrastructure. Biden was the first president to have a clear focus on the changes needed to rebuild infrastructure and manufacturing, technologies and science, and rural America, in a concerted push that has made gains that surpass any that exist in Europe or China. Restoring the US economy to No. 1. Harris in her own way offers the pieces of the puzzle to reverse the pandemic induced cost of living increases that complement the work of president Biden in 2024, continuing the work of rebuilding infrastructure and manufacturing for leadership in the world.     ...

LyrArc Article Gist
Some of the roots of the Alawite role in Syria go back to the colonial period. Alawites are a Muslim sect living in the coastal mountainous region of Syria in towns such as Tartus, Latakia and in the mountains. The French setup a Alawite state in 1924-1936 before it was merged with the rest of Syria. The Russians have set up a small naval base in Tartus. As the Free Syrian Army reaches Damascus and suburbs the Assad regime is expected to move to Tartus and the coastal region and mountains. This account by NYT reporters from the area reveal the unreal nature of the conflict and the Assad regime. The seaside town of Tartus swells with people fleeing Damascus and other cities, with people from the Assad regime or allied to it, and the real estate market booms. During the same week other accounts in the NYT reported accounts of cluster bombs being used against civilians by the Assad regime. The civil war brought artillery attacks and air raids by the predominantly Alawite Assad military regime on mostly Sunni civilian populations thorough most of 2012. The Russians, the Assad military and public officials, living what may be the last weeks of this civil war as it takes on a sectarian nature, in some kind of bubble. From the international community only France, Turkey, Britain, and Egypt may retain credibility in Syria after the passive role of the U.S. under president Obama to the struggle for freedom in Syria. The U.S. Democratic administration's distaste for engagements overseas may have carried it to the point of standing by as artillery was turned against a civilian population. France and Britain's role in the Libyan people's struggle, and its lower profile assistance to the freedom struggle in Syria compared to the earlier effort under president Sarkozy, still creates a measure of respect. A no fly zone by the U.S. would have prevented the destruction to civilian population that occurred and salvaged U.S. respect, at very little cost relative to the one trillion dollars spent in Iraq and Afghanistan....

LyrArc Article Gist
If the decline in manufacturing in rural southern Virginia for 500 workers in a low tech deli meatpacking plant can devastate whole communities, then imagine what happens  when manufacturing in chips and science with high paying jobs are put at risk by market forces focused on AI.  This week WSJ carried a story about Qualcomm which does design and does no manufacturing is planning a takeover of Intel, a leader in manufacturing for advanced chips in the US, a key part of Biden-Harris strategy to regain a American foothold in Chips manufacturing. Such a takeover makes no sense for America's long term interests. Qualcomm could simply jettison the manufacturing capabilities -a key part of America's long term chips and science strategy just because AI focus has distorted market forces. IMAGINE THE DAMAGE. Regulators need to safeguard the Nation's long term interests for reliable chips manufacturing within the US, to avoid the crisis experienced with chips outsourced overseas leading to severe shortages in 2021-2023. How this has happened is that AI has created distortions in the market so that companies are valued differently. So that an Nvidia gets valued at $1 trillion and even for a day at $2 trillion then going back down to half that, all within a 12 month period. AI is distorting the market in ways that a chip leader like Intel now gets valued at $90 billion a third of the $290 billion it is valued at only a short time ago, making talk of takeovers possible even from smaller design only companies such as Qualcomm. The market failure in this case comes from markets being distorted by not reflecting true costs of shortages America experienced in chips from lack of its own advanced manufacturing during 2021-2023.   ...

LyrArc Article Gist
Debt of poor countries is a serious problem in 2022. Debt owed to foreign lenders by low and middle income countries increased by 6.9% on average to $9.3 trillion in 2021, faster than the 5.3% in 2020, according to World Bank estimates. As a result the percentage of the poorest countries in debt distress or high risk of debt distress increased from 15% in 2015 to 60% in 2020, according to the International Monetary Fund.  The pandemic has clearly worsened the situation for countries in weak economic situations in 2019. A country is in debt distress when it is unable to fulfill its financial obligations and debt restructuring is required. Argentina, Sri Lanka, Pakistan are recent examples of countries undergoing serious debt restructuring after falling behind in debt payments. Rising interest rates, inflation, and weak growth lower government revenues and make it harder to make the debt payments to service the debt. A list of weaker economies shown in this WSJ report where interest rates have risen are Russia, Ukraine and Belarus in Europe, Argentina, Ecuador and Venezuela in Latin America, Ethiopia, Ghana and Mozambique in Africa, Pakistan and Sri Lanka in Asia. Mismanagement of the economies, overborrowing, not taking corrective action during a period before the crisis, corruption, wars or drought, factors affecting tourism or remittances from overseas, are some of the factors leading to debt distress. ...

LyrArc Article Gist
The WSJ Dollar Index , which shows the strength of the U.S. dollar against a trade-weighted basket of currencies, jumped up by 22% from July 1, 2014 to March 17, 2015, according to FactSet. Since that time the dollar has risen slowly by 2.7%. Scott Mather, chief investment officer, U.S. core strategies, PIMCO, says the dollar normally rises faster in the period when there is an expectation of rising rates than when the actual increase of rates takes place. Analysts say if the Fed raises rates in 2016 this could strengthen the dollar further, complicating the Fed's rate increase plans with slower increase in inflation. U.S. S&P 500 companies have reported lower earnings by 10-12% in the third quarter of 2015- when actual earnings dropped by only 1.5%- because of the stronger dollar, according to Binky Chadha, chief global strategist at Deutsche Bank. He says core goods inflation would have risen by half a percentage point more without the stronger dollar, meeting the 2% Fed target, had the dollar not strengthened....

LyrArc Article Gist
After the huge crisis the debate about capitalism. What went wrong, and importantly what did not go wrong. Not in the sense of more punditry to place the blame but to ask questions to have a better grasp of the fact and better understanding of the twists and turns of the last decade, the complexities, the frailties, the errors of judgement, and the failings, and the outright falsehoods and ethical breaks. So that the good things are not lost for instance the individual initiative and the bad things are corrected and measures put in place to prevent recurrence and minimize damage. Has the model of anglo-saxon capitalism failed? Actually some specific things failed, deregulation at a time when banks and markets were behaving irresponsibly and without any restraint internal or external, credit ratings agencies failed, financial institutions failed in performing their first line of business which is to finance investment in the economy not in housing and mortgages, and American consumerism failed in that value of saving disappeared and abundance of debt brought American savings to zero, leaving little for investment in the economy and infrastructure except by borrowing from other countries. And living on illusions and not on sound basics the leadership failed thinking that free enterprise and technology and productivity improvements somehow allowed a country or group of countries to live way beyond their means, and a tendency to excess in the popular mood of the country, excesssive consumption, excessive and profligate use of energy which sent trillions of dollars overseas over decades, and excessive expectations of the lower classes for housing and goods beyond their means, all played a part. What did not fail is the freedom to trade, the fall of "barriers to intercourse" between nations, that produced gains on a big scale so that computer and cell phone technology developed in one part of the world quickly spread around the world and the innovations and technology developed in one country spread producing benefits all over the world. It created amood of optimism in developing countries whose incomes rose especially where countries encouraged growth as in China, India, Russia, Brazil, Eastern Europe and pulled hundreds of millons out of poverty. With China, America and Germany in effect shipped technology goods in return for lower value added goods like textiles and shoes, to help China industrialize, and American consumption played a useful part until things reached an extreme and the system was abused by forgetting the basics and allowing excesses and failing to respect ethical responsibilities. Regarding regulation excessive regulation and red tape has proved to be bad as in the license Raj in India which stifled private initiative and new enterprise till it was abandoned in 1990, and no one in India is calling for more regulation. What is bad is to abandon good common sense and to rely on the illusion that no regulation is needed to run a complex financial system like we have today, a laissez fairre libertarian philosophy that was rampant in the Bush administration and in the country's leadership in the Bush years. As a result an underfunded SEC failed to deliver on its basic mission and responsibility, and the lack of a centralized regulatory authority with powers and funding to meet the challenges of modern finance as for instance ineffective derivative regulation under the CFTC, simply aggravated things further. ...