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Second hald profits will get hammered by inflation and the economy will be getting much worse with housing deteriorating and the credit crunch only getting worse. Exports the one bright spot also is on the decline as manufacturing output in the EU and Japan declined in the second quarter and growth in emerging markets including India is cooling. So the contribution of 1 to 1.5 percentage points from overseas trade is declining.

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Officials of 130 countries met virtually to agree on a global minimum tax rate. A minimum tax rate of 15% would be paid by corporations in each of the countries in which they operate so that tax avoidance is prevented. The Group of 20 major economies including India and China also agreed to this change in taxation to ensure that all companies pay their fair share of taxes. It is also part of the Biden plan for tax revenue generation to fund the infrastructure and human needs in health, education and public services that were neglected for so long. US president Biden says- "This will level the playing field and also make America more competitive. And it will allow us to devote the additional revenue we raise to make generational investments, which are necessary to keep America's competitive edge razor sharp in today's global economy." This tax change was needed to prevent companies shopping for low tax locations such as Ireland. This kind of locating in low tax rate locations worked badly for the major G-20 economies for decades as it prevented the generation of revenues needed for essential services and infrastructure investments. Tax changes include Biden's plan to increase the corporate tax rate to 28% from 21%, and raise the minimum tax on US based companies foreign profits to 21% from 10.5%.  ...

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About 12 million Chinese viewers on Weibo look at new VP pick Tim Walz hoping for better relations with the US, reports BBC. Walz was teaching English and American history at Foshan No. 1 High School as part of a Harvard University volunteer program. Walz says it is one of the best things he has ever done, and gives him a unique insight into China and the Chinese people. Tim Walz was fresh out of college when he joined the Harvard volunteer program to teach in China in 1989. One Weibo user reflected the sentiment on Weibo- Walz's "unique background gives him a real perspective on China", and he could "promote cultural exchanges between China and the United States at a time when... relations are extremely difficult". China was different back then somewhat where India was in 2014, a largely agricultural economy beginning its transformation into an industrialized nation like the US, Germany or Britain. Walz told a local newspaper inthe US when he returned-  there are "no limits" on what the Chinese could accomplish "if they had proper leadership". "They are such kind, generous, capable people," Walz said. Walz encouraged cultural contacts and educational trips after he returned. With his knowledge of China it could improve relations with Chinese people that were affected by the pandemic. The pandemic reduced educational and cultural contacts. ...

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This piece in the Economist provides useful insights in the efforts to repair relations between Japan and China by October 2014, following a series of incidents and disputes. Some experts say China's slowing economy is one reason for mending relations. Japanese direct investment in China has declined sharply by over 40% in 2014 compared to 2013. In 2013 there was a decline following other incidents, and Japanese business has experienced difficulties in operating in China. As a result there is a shift to other parts of Asia including Vietnam and India, that is underway. Volatile relations with China has given the Japanese business and diplomatic community pause about the future of Japanese business investments in China. This is also the background as Chinese Communist leaders face a critical decision on how to handle the protests in Hong Kong over universal suffrage- errors will only add to the image of a China volatile in its relations with the outside world. It is not just North America and Europe, China has to interact with, it has to interact with Japan, Australia, S. Korea, South East Asian nations (Vietnam, Malaysia, Thailand, Philippines), and India, all these countries not sure what China's intentions are after territorial waters or land disputes. Along with Indonesia and Bangladesh, this is a region with about twice the population of China and representing most of Asia, a fact usually omitted as western business rushed into the Chinese market. Chinese Communist leaders are faced with huge challenges and success in the next phase of development, and it is by no means certain under a ossified system of government which cannot change with the times, as technology and foreign investment will now be much more critical drivers of development than in the first phase. ...

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This report in WSJ shows how people are adapting to coronavirus pandemic taking the long view and settling down with new arrangements that will continue into 2021. Some software engineers are shown redesigning their homes to setup offices for working dads and moms where they previously worked out of temporary arrangements in the home. Physicians used telemedicine in the early months of the pandemic. They still see patients only once or a couple of times a week in specially designed arrangements where patients stay in the parking lot till they their appointment and waiting rooms are largely empty. It is a season of deeper adaptation as people realize they are in this for the long run into 2021. Workers are setting up new routines and home offices, families are trying new rituals, and businesses are trying new ways to energize their employees, all with the objective of making it work in the long term. Though the economy has reopened office buildings are largely remaining empty, schools and colleges are remote teaching as cases are climbing with the daily average at 40,000 a week in the U.S. and over 70,000 in India each day. ...

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To keep prices from taking a nosedive if there is a slowdown, as for example in the Chinese economy, a concentration of resources within 3 or 4 mining companies enable them to slow down development of new deposits to adjust supply with demand. In this case even if China slows, India, Russia and Brazil may still pick up, as they may be less sensitve to the U.S. consumer than China. China is a manufacturing export based economy compared to India and Russia, which are more dependent on internal demand. Iron ore prices have increased by three times since 2003, and China's imports of iron ore have gone up from 29% to half of the world's imports. Prices of all commodities copper, alumina, uranium have shot up. BHP and Rio both based in Melbourne, Australia have absorbed all the medium size companies in the Melbourne mining scene. Australia has traditionally been a leader in this field because of its huge mining resources. Other reasons for consolidation are the more complex technologies needed to develop the remaining deposit finds, which are fewer and fewer and of lesser quality. Another factor is that the resource nationalism in India, Bolivia, Indonesia, Mongolia and other places requires more sophisticated investors. Combining Rio and BHP also means BHP can use the better infrastructure of Rio and invest more productively in future infrastructure rail lines and port development to speed exports to other countries. See the Barta article in the WSJ Link on this on Dec 18, 2007. ...

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Ip's point about the actions of previous president's in promoting a recovery long after they are in office has to be qualified by the uncertain economic outlook for 2013, with a slowdown in the eurozone, China and India, and the efforts to control the deficit in the U.S. also affecting the economic outlook. The process of deleveraging has still to work itself out and the economy is still being supported by the Fed's continual easing of monetary policy.

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Brazil's economy is forecast to contract by 2% in 2015, the currency has lost about one third its value and the stock market is down 22% in the last year. This follows the decline in demand for Brazil's commodities exports as China growth slows down. Experts say Brazil is now seeing another boom bust cycle similiar to boom-bust cycles in the past, such as the 1966-73 boom followed by years of hyperinflation and stagnation. Brazil's exports to China declined 17% in the first 7 months of 2015. The crisis is in many ways similiar to crises in other emerging markets dependent on commodities exports. The resources boom leads to overvaluation of the currency, and decline in development of manufacturing away from dependence on commodities exports. Other errors rise from complacency and politics prevalent in such periods. These errors include mismanagement of resources with poor resource allocation decisions such as spending on soccer stadiums in cities in the northeast while basic bus services remained underfinanced in large urban areas, large overspending by the government using state owned bank BNDES to offer rates at below market rates, a credit fueled boom and credit card binge for households, and a reversal of capital flows from the U.S. and Europe with the sharp decline in investment climate. There is a severe loss of confidence in the government of Dilma Rousseff with her approval rating as low as 8%. Corruption scandals at Petrobras show close links between the Workers Party of Rousseff and executives, with about $2 billion in misused funds. Brazil, like other emerging markets such as Russia and India, have taken some lessons from the 1997 financial crisis by setting aside large foreign exchange reserves for a crisis. Brazil's reserves of $397 billion help it cushion the effects with funding of the safety net and support to industries to avoid large layoffs. Other problems not tackled as in Mexico, India, and other emerging markets, are the weak educational system, and poor infrastructure, that create bottlenecks for growth. Brazil could face a lost decade after the debt overhang, decline in foreign investment and commodity export generated revenues. ...

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Modifications proposed for Agnipath recruitment to the Indian armed services include full healthcare benefits and pension benefits for the scheme. The government has presented a fact vs. myth explanation to provide a clear understanding of the intent of the scheme to reflect a younger population and integrated India without the regimental bias towards caste and region present since British times. Job security is always a concern in India. The better technically trained and better financed Agniveer recruit would have more opportunities for education and training after 4 years and become an attractive asset for the private and public sector. A program of this kind was the GI Bill in the US that Franklin Roosevelt signed in 1944 and the Veteran Act of 2008 that continued educational benefits for free college. These programs have resulted in benefit of great value to the US economy and to the military veterans who used these benefits. In India's fast growth period after 2025 the Indian economy would be 50% larger and be easily able to take in these graduates from the armed services with technical training and advanced courses just as the US economy did decades ago. During the days following the pandemic there is a sense of pessimism in some sections and the government can enhance the package with added pension benefits and healthcare and still keep the financial aspects in good shape. ...

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Connors and Magalhaes provide an exceptional account of the work of nine young prosecutors in Brazil, including Deltan Dallagnol, a Harvard trained law graduate, Carlos Santos Lima, a Cornell law graduate, and Paulo de Carvalho, in looking into the corruption and money laundering at Petrobras. Contracts for work given out by Petrobras to construction firms were inflated in value, and 3% of the inflated value was given to executives at Petrobras, or to the fund of the ruling Workers Party of Brazil. Dallagnol is a prosecutor in Curitiba, a small provincial city. He detected unusual movement of money, where a local car wash showed a new Land Rover being gifted to a Petrobras executive, in an apparent money laundering effort. Appointments at high levels are made by the government, and the current president who has not been implicated, was at one time chairman of Petrobras. In Brazil, as in India, Nigeria, and other developing countries, politicians were known to have misused public funds, but were able to act with impunity because the legal system made it difficult to impose strict penalties. The effort by the young prosecutors in Brazil is an effort to bring changes to the legal system so that this type of near impunity no longer exists. It is the first step to bringing serious changes and increasing public awareness for change. The result in Nigeria is a huge loss in Africa, with the electricity system for the entire country the size of what it would take to light up one medium sized American city. In India with the lack of roads and electricity in rural areas of many states, the misuse of public funds is a similiar burden on the people. Brazil is coming out of a borrowing binge in the last ten years which is leading to a credit crunch in the country and near junk bond status for Petrobras, Brazil's largest company, which experts predict will lead to a contraction in the economy in 2015-2016. ...

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Any Asian conflict involving China would in a few months destroy Apple's value, CEO's would change quickly, and Apple policies change to shift entire production to India and the US in a rapid shift. Tim Cook would be seen as having gambled against America's interests, unresponsive and failing after repeated warnings.  Apple's goal of sourcing from India by 2027 a mere 26% of its iphones, means that a decade after USTR Lighthizer and DJT started the task of reshoring manufacturing to US and allies in 2016, the No. 1 outshoring company would still be making 75% of its dollar value iphones in China. A degree of overconcentration that would make no sense considering that Apple's 75% of manufacturing would be entirely at risk in 2027 after repeated warnings and inaction. The only option for Tim Cook in 2025 is to come up with new goals of shifting a minimum of 50-60% of its dollar value product manufacturing for iphones to India by 2027. . Tim Cook as Apple CEO has done little to prevent the overconcentration of manufacturing in China since 2016. About 10 years after DJT was elected to bring manufacturing back to India or close allies the simple idea of diversification was not implemented. Why? Having set up this system starting in 1998, a system that did not exist before that tiem when Steve Jobs hired Tim Cook with a winning formula to Make in China, a country just emerging from its Communist phase of failed state economy. By 2008 in 10 years the infrastructure was built in a backward largely agricultural economy that was rapidly modernizing under a market economy with state run capitalism under the Communist Party experiment. The Bush Obama 16 years were ones with America not responding to the challenge posed by this new system which could create huge surges in production capacity with focus on key technologies and flood markets. The next decade after 1998-2008 was one of rapid growth of this experiment which combined with design and engineering in the US generated few jobs in manufacturng in the US, but huge profits with huge margins fro a low cost base with a high image and technology innovation product. Lighthizer, Navarro, Jamieson had already sounded the alarm for American manufacturing and loss of jobs in 2016.  America's deindustrialization was becoming a bigger challenge by 2020 so that president Biden continued the policy of reindustrializing. In 2025 China 2025 Plan that was a warning in 2016 is already a reality with China flooding the world in solar panels, and ready to flood the markets overseas with electric cars. Apple may only get a reprieve, this exemption is not the same as the last one. National security is an issue, key technologies need to be protected. There is only one more opportunity to rebuild American manufacturing and keep promises.     ...

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The U.S. bans travel from most of  Europe and India imposes quarantine on visitors and overseas citizens entering the country for 14 days. Countries around the world reacted quickly to the situation in Italy, France and Germany. The strict measures taken by China are gradually being adopted by other countries. Quarantine done early has worked limiting the spread of the coronavirus. Countries with strong public health systems are better positioned to weather the health crisis. Where strong action is taken early and in anticipation, with a strong public health response, there is better control over the spread. This comes with some economic cost as it has hit the Chinese economy, yet the rebound is likely to be that much quicker and done with more confidence. For instance air travel in China declined by 85% in February from a year earlier to 8.3 million journeys according to Chinese aviation officials. Moves to keep social interactions to a minimum have yielded results. Only food stores and pharmacies remain open in China till March 25.  ...

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China and India pass Mexico as immigration to the U.S. from Mexico declines rapidly, as a result of an improving Mexican economy, the 2008-2011 recession in the U.S. with sharp drop in jobs for construction, lower birthrates, and stricter U.S. law enforcement at the U.S. border with Mexico. Researchers using the American Community Survey of the U.S. Census Bureau found immigration from China increased to 147,000 from China, 129,000 from India, as it declined to 125,000 from Mexico, for 2013. This Survey counts a person as an immigrant for a particular year who says he was living abroad previously. Mexico shows a decline from 400,000 in 2000, with steady decline for every year after 2005. In 2000 India and China were at about 75,000, and did not cross the 100,000 mark till 2007. Other Asian countries are also at the top including S. Korea, Philippines and Japan. William Frey documents this surge in diversity in the U.S., -which is supplemented by now common intermarraige between young people from different countries of origin- in his book "Diversity Explosion."...

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Turkey's finance minister Simsek praises the independence of the central bank, as prime minister Erdogan and the Economy minister Zeybecki put political pressure on the central bank to cut interest rates. Erdogan says the half percentage cut in rates to 9.5% is "a mockery of this nation." Governor Basci of the central bank has said in the past that such calls are part of Turkish political culture and the bank remains independent. Inflation is high at 9.38% and expected to reach 10% in May 2014. The central bank forecast is for interest rates at 8.33% by the end of 2014. India, Turkey, Indonesia, Brazil and Russia, face high inflation and depend on capital inflows for growth. Analysts say investors are likely to reduce Turkish assets if Governor Basci is forced out. For emerging markets political protests in Turkey, Russia (with the added volatility created by the Ukraine crisis), India, and Brazil, have led to capital outflows and increased uncertainty. The situation is reversing itself in India with the election of a business friendly government and in Indonesia following the recent election....

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The Indian public from retired businessmen, farmers, students, and the press are coming out in support of anti-corruption leader Anna Hazare's call for effective legislation to control corruption of public officials in India. This comes after a number of corruption scandals and lack of action from the Congress government. The government's bill in parliament - introduced after pressure from public opinion- sets up an ombudsman or Lokpal agency, which would exclude from its jurisdiction the very public officials over whom it was meant to exercize oversight. Under the government's bill the prime minister, the public officials in the bureaucracy and the judiciary would be excluded. This has set up a confrontation with an increasingly exasperated public, with Hazare's protest fast in central New Delhi as the catalyst for protest across the country. The Prime Minister Manmohan Singh told parliament that he sees it as an issue of parliamentary sovereignty, as Hazare's protest is for a version of the bill that he has drafted to be adopted. But the public's sense is that Hazare is only responding with his own draft of the bill because of the government's effort to make only a token effort by not giving the anti-corruption body the powers it needs to function effectively. The response has brought thousands of demonstrators from around the country to Tihar jail where Hazare is being held by the government after his arrest. The situation is reminiscent of the protests against the British imperial government by Mohandas Gandhi, and in this sense has serious implicatons for how the country is governed. Corruption was prevalent in India during the days of the license Raj in the period 1950-1990 when business needed government permits in the closed economy of the Nehru period, and corruption existed in the bureaucracy in its delivery of public services. Since 1990 as the economy opened up and the growth rate increased corruption at all levels of government has in some ways increased and become embedded in the bureaucracy and government. This hurts the poor and the middle class the most, as corruption acts as a tax on the delivery of public services and infrastructure development, both badly needed in an emerging market country....

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California's economy is going through tough times during the coronavirus. Unemployment is up to over 20% which compares to 14.7% for the U.S., closer to that of New York. The state depends on the tourism industry, agriculture in the San Joaquin Valley, and entertainment industry around Los Angeles for jobs. Tech in the San Jose area does not account for as many jobs. The state also has a public university system and foreign students mostly from China bringing in $7 billion.   Its port system around Long Beach and Los Angeles connects with the Asian economies and China, for goods mainly transported to the rest of the U.S.  All these sectors are the ones most badly hit during the coronavirus.  California now has a deficit of $54 billion and was the first state to borrow from the federal government to pay $13 billion in unemployment claims. Undocumented Californians are not able to collect unemployment because of their immigration status, creating an American version of the informal economy that is found in India and Italy or Spain. California has 83 million people taking plane trips to the state for a tourism industry that normally brings in $145 billion. 600,000 travel industry jobs were lost in the state. Taxes related to travel are a significant source of revenue for cities in California bringing in $12 billion. The only sector that is less affected is the tech industry, yet this makes up only about 10% of the jobs or 1.7 million higher paid but fewer jobs. This tech sector at about just 15% of the California economy GDP, is of a precarious nature with a boom bust pattern, the last boom one that happened since the 2009 financial crisis. It in no way forms a significant support for employment or income for people in California or the U.S., and may even be responsible for distortions in the allocation of capital away from infrastructure and public services, through its disproportionate influence on how the nation's capital is allocated. The broader changes underway during coronavirus are likely to affect the state over many years, as supply chains shift away from China, and as infrastructure and public services investment assume their rightful role again in the nation rebuilding effort, agriculture and rural America become a part of the American renewal story.   ...

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Rick Rieder of Black Rock and David Kelly of  JP Morgan Chase and others sense that the US is entering a phase they call "the satellite economic phase in which there are no crash landings and takeoffs but steady orbiting in space. Less boom and bust and more steady growth for years is the new economy Biden is creating with huge investments in infrastructure and manufacturing and worker skills training that upgrade the workforce. Investments in health and education are part of this. This makes the US economy more resilient with government working both as a partner and agencies of the government that regulate and provide the rules for fairness and level playing field acting to prevent the booms and busts of the past such as the 2009 financial crisis and other crises. With China, EU, India, Japan+South Korea and the US, all 5 of the largest economies aligned to maintain steady growth for their people the prospect of war acting to reduce growth potential will also be managed in a setting that is needed following the pandemic. This will make both the Middle East and the Eastern European recurring crises to be toned down and a shift made to growth in these regions from the war ravaged periods of reckless behaviour of nation actors. This is a view now emerging among key people in the US economy such as Rieder Black Rock and Kelly JP Morgan. Both says the ways of understanding this and the terminology "soft landing" or "cylical, midcycle" are now outdated and no longer apply. Says Reider-“But one point to keep in mind is that satellites don’t land and maybe that is a better analogy for a modern advanced economy” like the United States.  ...

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China imports most of Iran's oil exports about 1.8 million barrels a day which flow through the Straits of Hormuz. Iran is heavily dependent on these exports for oil revenues that support it's economy. All Asian economies are heavily dependent on the oil flowing from Saudis, UAE and Iran through the Straits.  For Iran it would mean the loss of oil revenues needed to support its economy if the Straits are shut down. Iran's central bank says it get $67 billion from oil exports 90% of it going to China alone.  82% of oil imports of Asian countries  from Saudi, UAE, Qatar and Iran sources go though the Straits.  The US is not dependent on the Straits- less than 10% of its oil. Also true of Germany. The US  would have to use air strikes to prevent any mining of the waters seaway, and China, US, Japan, India would join in combined effort to keep all sea navigation open for international shipping.  ...

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China imports from the US only $143 billion and much of this is soyabeans (US farmers), petroleum oil products (buyers in Europe and Asia), aircraft (Boeing). Farmers were compensated from the tariff revenues in the first term, oil products would be shipped to Asia and LNG to Europe to make up for loss of supplies from Russia. India will take up the Boeing production as it's economy expands to levels China, Japan had earlier. The action is a last resort as 490,000 lives were lost in 12 years from the fentanyl shipped raw materials from China and drug trafficking gangs in Mexico processing it in labs to ship across the long US border or Canadian border into the US. China and Mexico have not stopped the flow of fentanyl into the US. How much is 490,000 American lives worth? That is 5 times the lives lost in the Vietnam War and the Korean War combined of 100,000 lives lost in both wars. China exported $436 billion to the US in 2023 increasing by about 6% from prior year. Integrated Circuits alone were more than all US exports combined to China at $154 billion. Electric batteries another $80 billion. Computers and office machine parts were $54 billion. Where will China ship all these products. It is brave but it is easier to stop fentanyl flows out of China, and cut all the trade barriers, reverse state policy to dominate key industrial sectors in State Planning. The problem in the stock market response is that this is a trade war which it is NOT. It is about National Security if this is allowed to continue as Clinton, Bush, Obama have allowed to happen US is in real danger of becoming a second rate power in the world, at which point the world will become a dangerous place with India, China, Russia, Germany and other states having no constraints to create future wars without US to set some basic principles of world peace. UN itself would not exist without Cordell Hull and FDR. The world we know will be GONE. US Navy will not be able to build the ships it needs in USA if this deindustrialization is allowed to continue.    ...

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Wang Yi, a senior adviser for China's decarbonization strategy and 5 year plan has this to say about China's approach to climate change. Yi says it is more important to focus on what actions are to be taken between now and 2030. Here he says China has outlined concrete steps that it will take that the world media has not covered in its coverage of COP26 Glasgow. Yi says China is making changes to its entire system not only its energy sector, across the whole society and the economy. Yet he says "nobody knows this." The working guidance document for carbon control China has put out says it will peak coal consumption by 2025.  Yi says it is unfair to ask China to close all coal powered plants, saying that if these plants with a life of 10 years were closed now who will pay for stranded assets and who will hire the laid off workers. He called attention to western nations failure to provide climate finance to China, India and developing countries. And he called attention to the the plans that by 2030 Chinese investment is to have 1200 gigawatts of installed solar and wind energy, more than the entire installed electricity capacity of the US. He says we are all in the same boat yet in different cabins, with some living in bigger space and consuming too much. ...

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Claudia Sheinbaum's father was a biology professor at UNAM, her mother a chemical engineer. She studied physics at UNAM (Universidad Autonomo de Mexico) and did her dissertation for doctoral work comparing energy use of the US and Mexico at Lawrence Livermore Laboratory in Berkeley, California. She returned to the faculty of engineering at UNAM in 1995. In 2000 she was appointed energy minister in the Mexico City government by the city's Mayor Lopez Obrador.  From 2018 to 2023 she was Mayor of Mexico City and a close associate of Lopez Obrador who supported her for president in 2024. Mexico limits presidents to one six year term. This period was overshadowed by the migration crisis with the US, building of the Border Wall by Trump, the negotiation of the new trade agreement with the US and Canada, the pandemic and its impact on the poorer classes in Mexico. Obrador attacked corruption in Mexico that had become entrenched under previous parties to bring good governance. Under Obrador Mexico brought millions out of poverty. Sheinbaum's sweeping election win shows that Obrador is one of the most popular presidents in the world. Mexico has an opportunity to bring tens of millions more into the mainstream economy under Sheinbaum. As a neighbor of the US Mexico stands to benefit from a diversifying supply chain for the US that includes Mexico and India that will boost Mexico's manufacturing, create jobs and increase economic growth. ...

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The Indian rupee drops to a low of 62.13 in trading on Aug. 16, 2013. The Bombay Sensex index drops by 4%.