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The new bipartisan sanctions on Russia agreement in the U.S. Congress has the support of key senators, McConnell and Corker on the Republican side, Schumer and Cardin on the Democratic side. The agreement would impose new sanctions on Russia and provide for a mandated congressional review. This follows Russian meddling in the U.S. 2016 election and cyberattacks. This measure is being considered as a sanctions bill on Iran is being passed.

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Mr. Eike Batista's EBX Group companies were one of the prime beneficiaries of huge government investments in mining, oil and other commodities. The fading of the commodities boom is resulting in large losses for these companies. Street protests in Brazilian cities shows the weakness of the Brazilian economic model that neglected public services in transportation, health care and education and concentrated on infrastructure and mining projects.

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Jerry Muller, professor of history at the Catholic University of America, offers some useful insights into the nature of inequality in advanced capitalist societies and other parts of the world, and a clear eyed way to tackle the problem of inequality. Tackling the problem should be done in a way that preserves the economic protections for the middle class and the poor which are needed for capitalism to work- unemployment insurance, Medicare, Medicaid, Social Security, Earned Income Credit, and the Affordable Care Act. Much of this system is already in place in advanced capitalist societies. Incremental gains in this area will be much smaller and it is important to recognize the need for strengthening the economic engine that supports these benefits, says Muller. Economic dynamism has to be preserved and nurtured with human capital deployed in the best possible way, and competitiveness of countries increased. Each country and society has to find its own way of achieving this. The family matters, and matters a lot in taking advantage of educational opportunity, says Muller. The culture of different ethnic, immigrant groups, also matter. These differences were present in earlier periods in the nineteenth and twentieth century and are likely to remain. Strengthening the pool of human capital and deploying it is essential to progress. In an earlier book "Adam Smith In His Time and Ours- Designing a Decent Society," Muller emphasized the importance Smith placed on the civic duty of citizens to promote the welfare of the whole society, and the importance of education, family and moral character, with no substitute for the "general prevalence of wisdom and virtue." ...

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David Brooks says the Paul Ryan Budget proposal is a bold step forward that is badly needed in this debate on health care, even though it has some grave weaknesses which need to be corrected. It is a bold step forward because he says Democrats say they want no middle class tax increases, or are not willing to say what kinds of tax increases they support, and yet they believe the Medicare and Medicaid and Social Security programs are worth preserving. This is'nt based on reality. He cites the weaknesses, beginning with the one discussed in David Leonhardt's column in the New York Times on April 7, 2011. Too many Americans pay too little into Medicare taxes and expect to collect several hundred thousand dollars more in Medicare benefits. The example given in Leonhardt's column is from a study that shows 56 year olds with average earnings pay about $140,000 in dedicated Medicare taxes over a lifetime, and then go on to collect $430,000 in benefits. Middle class and affluent boomers can't get off paying their share like everybody else. Its just the right way for their children and the nation's children. Ryan's plan excludes older people reaching retirement in ten years. The other major weakness is that the cuts are too deep. Things like the Pell grants which Ryan proposes to cut back to 2008 levels need to be preserved, and more money has to go into science, education and research and early childhood education for the U.S. to be competitive with China and India. The Ryan proposal places cuts that would be required so that tax revenues need to be at 18% of GDP. The number where a larger consensus exists is for tax revenues at 20% of GDP (also supported by business and the Wall Street Journal's editorial columns). This would preserve programs that are most productive for the economic future of the U.S. Ryan's proposal lets the hope for reducing costs of medical care rest entirely on future retirees deciding how much medical care (tests, procedures etc) they consume through larger cost sharing. Yet a structure and framework is needed to manage these costs effectively, and some combination of incentives to retirees to control costs and an effective structural framework is needed. ...

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Dilip Hiro's new book on the emergence of two states India and Pakistan in 1947 presents the story in terms of the two founding leaders Mohandas Gandhi and Mohammed Ali Jinnah. The division of the region into conflicting states is shown as a result of the divergent views and politics of the two leaders. Jinnah who was skeptical of the mass civil disobedience movement of Gandhi and preferred a legislative approach, and Gandhi who appealed to the masses and oppressed millions in British India. Jinnah and Gandhi's style and approach were fundamentally different. Seven decades later Pakistan has failed to build a genuine participatory democracy for most of this period with military actively involved in government, and India in the manner of Gandhi built institutions of participatory democracy under different political parties. Jinnah was an assistant to Dadabhai Naoroji, India's first nationalist leader at the turn of the century, when the two were in London. Naoroji passionately argued against the British policies that entrenched the poverty of millions of Indians in the countryside. Ironically it was Gandhi, not Jinnah, who took up Naoroji's call for bringing hope to the hundreds of millions of people on the subcontinent in "Poverty and Un-British Rule in India," first published in 1901, and showing how the draining of the country by the British was leaving India weak and oppressed. In 2015 that struggle of Naoroji for bringing hope and economic opportunity to millions of people is the task taken up by India's new government and the new government in Pakistan. Naoroji, the first Asian to be elected as a member of the British parliament, established the East India Association in 1867, the predecessor organization to the Indian National Congress which he founded with Hume, and is the leader Gandhi and Jinnah most respected in the first three decades of the twentieth century. Naoroji was elected to the British parliament for the Liberal party from Finsbury Central in 1892, and was assisted in his campaign and duties as a member of parliament by Mohammed Ali Jinnah. In the light of this common upbringing for Gandhi and Jinnah, the nineteen forties and their aftermath could be seen as a detour, not the substance of political life on the subcontinent- just as Mao and Chiang Kai Shek are a sort of detour for today's China. Particularly in a globalized world where technology continues to open up unbelievable economic opportunity, interchange and communication. ...

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Petrobras and the discovery 200 miles offfshore of the Tupi field with estimated reserves of 5-8 billion barrels of light crude oil. As Brazil is self sufficient in energy with its own ethanol industry helping substitute ethanol for oil at the pump, it can become a major exporter with this find. However even with Petrobras technology and expertise in offshore drilling its a challenge as the oil is 4.5 miles below the oceans surface, and involves drilling through 7000 feet of water and 17000 feet of sand rock and massive salt layer. Cost could approach $20 billion according to analysts with current inflation in oil drilling rig costs. It involves challenges like building floating liquefied natural gas plants. Gabrielli, the Petrobras CEO thinks Petrobras has the expertise to develop it on its own. If oil majors are given the chance to join in the development the investment terms will be ones that favor Brazil. Gabrielli pointed this out saying that Brazil had already incurred most of the risk in exploration offshore so the oil majors have far less risk and Brazil should invite them only on its own terms if needed. The Tupi field puts Brazil ahead of Canada in oil reserves and in the leagues of China and Nigeria, with new Brazilian reserves at 17.2 billion from the 12.2 billion barrels currently. Brazil has invested in refineries with 2 new refineries coming up in 2010 and 2014 to increase refining capacity by 40%. It is also investing to convert heavy crude oil into diesel and $8.6 billion to reduce sulfur at 11 refineries. The Tupi field will take about 7 years to develop. Similiarly the Kashgan field in the Caspian in Kazakhstan is also in difficult in this case icy and gases filled environment that will take years for a Eni led consortium to develop. When oil does come will the demand situation have changed with new conservation taking hold in the developed world and the cars in developing countries more like the Tata Nano at 54 miles per gallon consuming less gasoline? Even with increase in energy needs of developing countries, improved efficiency and new technology for conservation brought into developing countries could if not significantly reduce, at least moderate demand. To the point where prices drop from $100 a barrel to something more affordable to developing countries....

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How ArvinMeritor navigated the treacherous waters of the automotive parts buzsiness since 2000 when the company was formed taking in the automotive business of Rockwell International in Troy, Michigan. The combination was designed to bring the automotive parts business for roof and door systems, chassis and wheel products with the comercial truck business which makes drivetrain systems and components like axles, drivelines and braking systems. The business is in turmoil and ArvinMeritor last recorded a profit in 2005. Here is how they did it. First, the combination provided some linited diversification for the cyclicality of the automotive business passenger cars and trucking together. By 2004 the foreign makers especially the Japanese were taking market share from the Detroit Big Three car makers which only accelerated after that when the Big Three overconcentrated on SUV's and had no competitive car lineup to match the Japanese in 2007 and 2008. The Big three closed plants and companies like ArvinMeritor closed plants also. In the last couple of years first GM and then Ford began to emphasize emerging market countries like China, Russia, Brazil and India. Wagoner GM's CEO in citing improved results in 2008 specifically referred to the $500 million profit in Brazil as making this possible. He also said that when investors see the improved results so early they are forgetting that the model that GM has setup has changed completely from the model that investors were used to in previous years which was a large and growing US focussed market base. Now its a global focussed market base with particular focus on emerging markets. ArvinMeritor has followed this pattern and set up parts plants in new countries like Russia to supply the Big Three's plants there. But it appears from Phil Martens, Arvin Innovation's CEO's statement that only 20% of global automotive sales for ArvinInnovation, the automobile part of the busines that is being setup as a separate company, are coming from the Big Three of Detroit. And 65% of the sales are coming from outside North America. Which suggests that 15% of sales are coming from the foreign carmakers in North America. ArvinMeritor closed 11 plants in North America and the new company Arvin Innovation has 42 facilities in 16 countries with sales of $2.2 billion in fiscal 2007. ...

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Yun Hua writes about perceptions of ordinary Chinese about the Cultural Revolution period in Communist China under Mao.

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Chinese banks have 20% of total loans as receivable in 2016, up from 6% at the end of 2011, according to WSJ analysis. Many banks disguise loans as receivables. The government regulators have warned about this, but are hesitant to take strong action so that there is no shock to the system. This has created a parallel buildup of debt next to official debt of over 250% of GDP. These are seen as "hidden credit risks" by Shang Fulin, top banking regulator. As a result about $2 trillion is missing from broad measures of credit reported by the central bank, according to economists at UBS, using shadow lenders to mask loans as investments.

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Tony Blair on how far CHina has come and the culture revolution of abetter kind under way.

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With higher growth overseas multinational companies are increasingly investing outside their local base country. Germany has strong trade unions and German companies are investing outside Germany, in Eastern Europe and other countries. This is leading to a shift in investment to countries in Eastern Europe, China, India, etc. where there is growth and labor costs are attractive. The multinational companies still do a lot of the advanced research and manufacturing in their home base and say the growth overseas makes them stronger financially to continue to invest at home. The shift may also be due to the trade union factor- an example being the UAW union in the U.S., rigid labor rules, and other distortions from high wages and benefits that cannot be supported in the global economy. This includes distortions such as the Jobs Bank in the Detroit auto industry. Similiar situations exist in Europe where unions are strong and there is not enough of the flexibility needed for companies to grow in the global economy....

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According to information from Goldman Sachs investment gains including stocks contributed 23% of overall profit at listed nonfinancial companies in 1st quarter 2007, up from 13% in prior quarter. An example is China Yangste Power Company, a utility company. Its board secretary is quoted here that 30% of the company's investments are made to make quick profits. These speculative profits create a virtuous circle where higher investment profits increase overall profits at listed companies and lead to investor perception to increase prices even higher. This increases the risk in the market and was last seen when companies like Intel saw higher prices during the tech bubble in the USA and becomes dangerous downward spiral when the process goes in reverse and the companies show losseson their investments driving the market much lower than otherwise. A government survey quoted here shows that profits in 2007 as of May end are running 42% above 2006. How much of this is a result of profits on stock investments? ...

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Sales of passenger cars in India have increased from 675,000 in 2002 to 1.4 million, with 200,000 exports. The study by IBM and the Transportation Research Institute of the University of Michigan forecasts that sales in India of passenger cars will double again by 2010 to 2.8 million and reach 4.2 million by 2015. Auto loans are more prevalent in India with banking consumer credit better established than in China. The minus side is the bad condition of roads which will take a lot of resources and effort to fix but is likely to be accomplished in te next ten to fifteen years. One advantage for the auto industry is that the government fully supports the auto industry and even has a plan with targets to be achieved by the auto industry. With manufacturing lagging behind in India the hope is to build a manufacturing base for automobiles and auto parts that will generate jobs and expand manufacturing capabilities.

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India and China subsidize the cost of fuel to their people. In India kerosene is the urban poor's cooking fuel. It sell around Delhi at Rs 9 a litre compared to a market rate of about Rs. 25. Inida subsidizes kerosene and liqueefied petroleum gas directly and subsidizes diesel and gasoline indirectly by preventing the state oil companies from increasing prices, instead issuing bonds that help compensate the oil companies for their increased costs of crude. In October the Government announced it would issue bonds worth 235 billion rupees this fiscal year to compensate the oil companies for 43% of their losses, according to Lombard Street Research, a British firm. The fuel subsidies amount to a total of $17.5 billion or about 2% of GDP. The government which is a shaky coalition facing elections in the near fuure is unlikely to hurt election prospects by increasing oil prices, in addition to the facts that the country's poor depend on these subsidies to carry on their daily lives.

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Prime Minister Fukuda of Japan and a hot new Japanese drama TV show "Change", that centers on a 35 year old prime minister Keita Asakura. It starts with dawn rising over the Japanese prime minister's building and in one of the episodes shows people talking excitedly about Obama 46 years, and Cameron, 41 years, politicians in the USA and Britain with comparisons to older political leaders like prime Minister Fukuda of Japan. In fairness to Fukuda, 72 years old, he has improved relations with China and hosted the Chinese President in Tokyo, but he has failed to get legislation through parliament because of the opposition parties the DJP which is also unpopular. But with the TV show having 20% of viewers in the Tokyo area including the current defence minister Ishiba, 51 years old, and the youngest cabinet minister, it shows that status quo is quite unpopular in Japan and the current politicians are quite unpopular.

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This editorial in the WSJ says Obama's silence when it comes to the jailed opposition leader in Malaysia is one more silence when it comes to issues related to suppression of democratic freedoms. When this issue was raised in June the WSJ reports it drew the Obama comment: "democracy is hard." This is all the more astounding now says the Journal, after the WSJ report about corruption in the Najib Razak government related to the $700 million from a state owned investment bank. This editorial says about the record of the Obama administration on going silent when issues of freedom and suppression have come up from Iran in 2009 to many other events and Malaysia today- that this is one of the most puzzling aspects of the Obama presidency. It also points out this is is one of the most discouraging aspects of how the U.S. is seen in the world under the Obama presidency, when it comes to protecting freedom and freedom of speech and expression.

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Achieving a right balance between the needs for public health in developing countries- and the need for cost reduction in developed countries- with the need to keep innovation, is the challenge facing the Indian Supreme Court as it hears the Novartis case on its leukemia drug Gleevec. The efforts by Novartis and other western pharmaceutical companies to restrict the flow of low cost generic drugs from India. India stopped granting patents on drugs in 1970. It only resumed giving patents under a WTO agreement on patents. The Indian government denied the patent on Gleevec and the case is now coming up before the Supreme Court.

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Brazil's GDP increased by 0.34% for the 4th quarter of 2011 from the prior quarter. For the full year GDP increased by 2.7%, with an actual decline in GDP for the third quarter of 0.1%. The GDP growth for 2010 was 7.5%. The slowing economic growth reflects an overvalued currency, weak manufacturing competitiveness, and inflation. Brazil's growth will be lower than potential say analysts, and it will be tough to get to even 3.5% growth in 2012-2013. A similiar process is seen in other emerging markets. China's premier Wen Biao announced lower growth targets of 7.5% and a shift in priorities recently. And India's growth rate for 4th quarter, 2011, was 6.1%.