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Jurgen Kroger, is the chief negotiator for the European Commission, and Poul Thomsen, heads the IMF negotiating team, for the 78 billion euros in loans extended to Portugal under a bailout agreement. Kroger offered his views on the agreement in Lisbon. Kroger said he was convinced that the program gives Portugal the means to boost growth and jobs, as it builds a sustainable and competitive economy. Two thirds of the loans come from the EU at an interest rate that is yet to be set. The yield on Portugal's 10 year bonds keeps rising and is now at 10.20%. The IMF will provide one third of the funds. The IMF's Thomsen said the issue of interest rates was addressed by arranging for two thirds of the loan package money coming in the first of the three years of the program. What this does is to take Portugal out of the markets for medium and long term debt for a "little over two years" he said and gives Portugal the "breathing space" it needs to restore credibility before going to the financial markets. The fear expressed by analysts is that the tough austerity measures in the programs of the EU and IMF can cause the economies of these countries to worsen, making it even harder to repay the much larger debts when the loan package money is added to the original debt. The IMF and the EU negotiators had to create a credible program for recovery in the light of these facts. Already Portugal's finance minister is predicting a contraction in the Portuguese economy of 2% in 2011, and 2% in 2012. The negotiators appear to have taken this into account in setting interest rates. Portugal will pay the IMF an interest rate of 3.25% for the first 3 years, with the rate going to 4.25 in the fourth year. By comparison Greece's loans are for seven years with an average interest rate of 4.2%. Ireland's seven year loans carry an interest rate of 5.8%, which it is working to renegotiate. To give Portugal more breathing space the terms of the loans set a slower reduction in the budget deficit than originally planned. Portugal gets to cut its budget deficit to 5.9% of GDP in 2011, and 4.5% of GDP in 2012. The 3% target is set for 2013, one year later. Economists such as Carl Weinberg of High Frequency Economics, say the loan package will only increase Portugal's debt and lead to a larger default later on when the debt amount owed is larger. The debt restructuring solution is being actively debated in the EU, including the risks that European banks would take large hits. Negotiators are also mindful of keeping any negative impact on Spain as low as possible. As Portugal's financing costs have risen, Spain's have risen also. Spain offered higher rates to sell 3.4 billion euros of five year bonds on May 5, with the average yield on Spain's bond sale rising to 4.55%, up from 4.39% on March 3. ...

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The Microsoft Board of Directors has nine members with extensive management experience, no member younger than 56 years, one member from IBM with 28 years working for the company, an auto executive, and two former bank executives. There is no member who understands well or has a grasp of the technologies sweeping the internet and the information technology field. Bill Gates who owns less than 5% of the stock still has significant influence and stature to decide who will replace Steve Ballmer as CEO. Value Act venture capital firm owns only about 0.8% of Microsoft shares. Though it is expected to get a board seat, its influence in the CEO choice is limited.

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On April 20, 1996 the story of the merger of Ciba Geigy with Sandoz was the first story in notes made that day for Lyrarc from the WSJ Europe. This was during a trip to Europe. Ciba Geigy and Sandoz had become part of the home medical kits in Asia and Latin America by the 1960's, and their story had to be told to millions of people in these countries bringing Basel, Switzerland, to the world. Sandoz was founded in Basel in 1886 as a chemical company in Basel, Switzerland, and entered pharmaceuticals business in 1900. Ciba Geigy was formed in the 1850's as a chemical company for dyeing silk fabrics and entered the pharmaceuticals business in 1930's. The two companies were merged in December 1996 to form Novartis. Today Sandoz is the generics manufacturing part of Novartis. As prices of generics have declined Novartis CEO Narasimhan is planning to sell or spinoff Sandoz. With this move Novartis will focus solely on innovative drugs, says this report in WSJ. CEO's have also shifted fin the 25 years since the merger of Ciba Geigy and Sandoz from one with family connections to one with a professional background from India.   ...

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Iranian president Ahmadinejad's populist agenda covers- 1. Social goals: A $4 billion national school renovation program. Raised salaries for workers in Iran's government run companies and raised minimum wage 50%. Has plans to give shares in government controlled companies to the poor and working classes. Iran subsidizes basic staples and gasoline. These subsidies existed before Ahmadinejad. Gasoline costs 40 cents a gallon. Against these social goals are committments by Iran as part of its plan to join the WTO, which includes limiting the subsidy on gasoline to only a certain number of gallons per user. 2. Economic costs of the programs. Dipping into the Oil Stabilization Fund to finance subsidies. Iran imports about half of its gasoline as it lacks enough oil refineries to supply itself. This means as gasoline prices go up Iran has to dip into the stabilization fund to finance subsidies. Inflation is running at 15%. Will oil spending fuel inflation further is a looming question. In 2005 $7.7 billion was taken out of the Oil Stabilization Fund to fund subsidies for wheat, gasoline and other items. 3. Ahmadinejad's election promise was "to put the oil revenue on the dinner table of every Iranian." 4. After the runup in oil prices Iran now generates $49 billion from oil and natural gas. This is twice the amount compared to four years ago....

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The Federal Administrative Court in Leipzig, Germany, ruled in an appeal of a lower court decision, that German cities Stuttgart and Dusseldorf could ban diesel vehicles from urban traffic to reduce air pollution. Diesel vehicle technology of German manufacturers took a hit with the VW emissions cheating scandal. This ruling now puts pressure on the next German government to force car makers to take on estimated 8 billion euros in costs to refit older diesel vehicles to reduce pollution. Another option for government is to push this cost onto taxpayers, not a popular move. A longer term trend is also underway now that diesel fumes are seen as being more damaging to health than previously thought. Cars made up half of cars sold in Europe before the 2015 VW diesel emissions scandal when VW misrepresented the real amount of emissions taking place. This has dropped now to 44%, and is now more concentrated in delivery vehicles, craftsmen vehicles, according to analysts. This is expected to drop to 20% by 2025. The Leipzig ruling accelerates the decline of the diesel engine in Europe. As the Leipzig ruling is at the federal level the Environmental Action Germany which setup the lawsuit says the first diesel bans could go into effect in 3-6 months.    ...

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Ben Rooney of the Wall Street Journal interviews Mike Lynch of Autonomy. He tells Rooney that the main reason he sold his company to H-P was that H-P had no legacy database business, and this made it possible for H-P to take a new look at how to make data human friendly and to do new things with data that haven't been done before. He describes this as the 85% of what data is about that none of the legacy database companies have shown interest in doing. H-P's size means that it can bring more resources to this effort. He calls this an alignment of values that was the main attraction of H-P to Autonomy. The canny Lynch also says H-P's price, an 80% premium over the share price, was not a blow-out or over-paying by H-P. The London listed technology firms are about 25% undervalued. The acquisition by H-P of Vertica, an advanced database company, also converged in the same direction, says Lynch. And the potential for H-P is to use these resources as a major advatage in developing new products. On the UK technology scene, Lynch says the access to high quality graduates from Cambridge, Imperial, Herriot Watt, and Warwick is an advantage. He worries more about problems lower down with standards of math failing in high schools. ...

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Rakuten CEO, Hiroshi Mikitani, lived in Connecticut, completed graduate studies in the U.S. and speaks fluent English. It is now two years since his announcement that all business in the company will be conducted in English. July 1, 2012 was set as a target date after which all employee communication, including internal emails and memos would take place in English. All employees were required to take English language classes and employee tests in the language. Mikitani planned to expand Rakuten's operations overseas, and in these two years it has expanded to 12 countries from two countries, and plans to take this to 27 countries with 70% of sales generated overseas. Mikitani runs an e-commerce competitor to Amazon and he sees opportunities for the company worldwide and the need for employees to come out of their shell. He has long been a critic of Japanese elementary and secondary schooling in English. Most of the 3000 hours studying English after the seventh grade are wasted he says because most Japanese have trouble speaking English. A similiar effort to get employees to learn English has been launched at Uniqlo, a clothing retailer, and there is much discussion about this issue of improving the country's language proficiency as Japan's population ages and companies have to focus on overseas markets....

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The former CEO of GE (General Electric) says why he is skeptical about the decline in the unemployment rate to 7.8% as shown by the household survey of the Bureau of Labor Statistics. He says the economy has to have grown at breakneck speed for unemployent to drop from 8.3% to 7.8% in 2 months. The dozen companies he is working with are seeing third quarter 2012 results worse than the second quarter. The labor force participation rate declined to 63.5%, the lowest since Sept 1981- fewer people looking for work accounts for the drop from 8.3% in July to 8.1% in August 2012. Other numbers that look implausible are the BLS figures of federal state and local governments adding 602,000 workers to their payrolls in Aug and Sept 2012, the largest 2 month increase in 20 years. And the BLS figure of overall 873,000 workers being added in Sept. 2012, the largest one month increase since 1983. All this he calls implausible. Part of the problem is the way the data is collected because someone who for example says he got a job baby sitting for from anywhere in the range of 1 to 34 hours is a parttime worker, so that working 1-2 hours would be counted as employed parttime in the BLS methodology....

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H-P alleges that Autonomy Inc. misrepresented its revenue before its acquisition for $11.1 billion in Oct. 2011. H-P made a surprise announcement Nov. 20, 2012, about a $9 billion charge it is taking for the Autonomy acquisition. Mike Lynch, founder of Autonomy Inc. says he cannot see how 300 people doing due diligence and Deloitte doing its accounting could have missed such a big elephant. Lynch tells the WSJ that he has not been contacted about this by the Serious Fraud Office. The Autonomy Inc. acquisition is unusual because it reflects a period of high CEO turnover at H-P with the hiring of former SAP CEO Apotheker to run the company, following the resignation of CEO Mark Hurd for relations with a female employee. Apotheker made the highly criticized decision to shift H-P away from its main business of PC's and into software. The Autonomy acqusition was the first step and it was widely observed that he had overpaid for the acquisition. A few months later Apotheker was fired by the H-P Board, with the Board itself coming under severe criticism. Lynch says most of the best Autonomy employees in the company he founded over ten years ago had left the company because of culture conflicts with H-P managers. This had already resulted in destruction of much of the intellectual value of the company....

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Mexico has emerged as the world's fourth largest exporter of cars in 2012 after Japan, Germany, and S. Korea. Mexico is expected to surpass S. Korea in a few years. In 2011 2.68 millon cars and trucks were manufactured in Mexico. Honda, Nissan, VW and other companies are building new plants in Mexico. Exports in 2012 are expected to reach 2.14 million cars. With the increase in wages in China's auto plants Mexican wages are highly competitive with China, considering the proximity to markets in N. America and Latin America. Wages in Mexico are about $40 a day for assembly line workers. By comparison wages in China are about $3 an hour. Honda plans to manufacture its Fit small car in Mexico. VW executives say a VW car made in Europe is imported into Brazil with 35% duty, into the U.S. with a 25% duty on trucks, and this can be avoided by making automobiles in Mexico. The quality and reliability of vehicles made in Mexico compares well with vehicles made in Japan, according to Nissan, and productivity at plants is high. There is also good avialability of engineers and plant workers. The growing automobile production also means new plants of auto suppliers from Japan, Germany and other countries in a snowball effect as new auto plants open creating new demand for components....

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The view from the streets of Athens in November 2011, by Landon Thomas, shows Greece teetering on the brink. A situation it appears that is not fully grasped by EU officials who have throughout 2009, 2010 and 2011, acted always lagging far behind new developments and struggled to cope. Greek manufacturing will contract by 6% in 2011, on top of earlier declines. Auto sales have practically ceased and are at the lowest levels since 1993. The number of uninsured drivers increased by 500,000 in just the last 3 months, taking the total to 1.5 million. And small shops in Greece which depend on domestic demand are closing every day. A flood of money is leaving Greece. Since January 2010, Greece's banks have see a loss of $63.5 billion in deposits, 20% of Greece's annual economic output. Greece's bankers estimate that in just the last 2 months, September and October 2011, the numbers jumped to a figure ranging from $13.8 billion to $20.7 billion. The government has imposed value added taxes and a special real estate tax attached to Greek electricity bills, which is further cutting into consumer spending. And the public is blaming the politicians. Any setttlement by a unity government with the EU may be illusory, because the rapid deterioration of the economy would hasten a default. ...

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AstraZeneca PLC showed a net profit decline of 8.3% in fourth quarter 2011, on sales that remained stable at $8.66 billion compared to $8.62 billion in the prior year quarter. AstraZeneca is facing competition from low cost generics and cuts in government health care spending similiar to the rest of the industry. The company has announced new job cuts of 7,300 job for 2012, which brings total job cuts to 30,000 for the last 5 years. Most of the job cuts are in the U.S. and Europe. Hiring has continued in emerging markets leaving the net job cuts over the last 5 years at 9,600. Of the 7,300 job cuts planned for 2012, 2,200 will be in R&D departments, 1,350 in manufacturing and 3,750 in sales. AstraZeneca is changing the way it will do research and development with these changes. It will close the neuroscience research laboratories in Sodertalje, Sweden and in Montreal. It will have in its place "virtual" neuroscience units, small groups of 40-50 researchers working with academic groups and scientists outside to utilize the best science in the field. This is one of the most radical changes in R&D practices among pharmaceutical companies. In marketing the approach has shifted from having full time sales people call doctors offices to using online marketing tools and telemarketers. This approach is also being adopted for emerging markets....

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The authors of the book Red Capitalism, two bankers, Walter and Howie, describe the evolution of China's banking system from the early days of 1974 to the present day. The account shows a sophisticated system of markets and companies, but behind the facade, is a more primitive system with its good side and problem areas. Risk is hard to define or capture in this system as the system is for the most part closed, trading entirely with itself. State controlled banks deal with stae entities in ways that are not so transparent. This distorts external perception of China's solvency. state debt for example is low, about 20% of GDP by one measure, but when all government obligations are added together, the authors say it is 76%. The whole business of providing, receiving and regulating money involves different state entities. As the system trades with itself, critical information about liabilities and pricing is concealed or difficult to figure out. The lack of outside entities setting prices disrupts efficient capital allocation and lets excesses grow within the system, making for concern about the future of this system.This is especially true considering that with the Asian crisis of 1997, then the US banking crisis of 2008, and the current crisis in the Euro-zone countries banking systems, excesses eventually take root....

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The Economist's view is that trade and currency tensions are too high to result in an accord along the lines of the 1985 Plaza Accord. There may be a general underestimation of how strongly the American public feels about trade and jobs issues, and the currency issues that are intertwined with trade issues. This includes the Economist. See the 2010 survey of American public opinion (Murray, Belkin, WSJ, Oct 2, 2010, Americans Sour on Trade), which shows that better educated and higher income professionals are also shifting to firm opinions on trade that impacts jobs in the U.S. Also see Roubini's recent analysis (interview with Peter Stein, WSJ, 10/2/2010, Yen Revaluation for China's Own Sake), on why it is imperative in China's own interest to move forward with a currency revaluation. Economist Robert Gordon of Northwestern University (Peter Coy, Business Week, 9/30/2010, Why One Economist Predicts Slow US Economic Growth), recently pointed out that his models show a significant slowing down of the U.S. economy over the next two decades, the slowest growth since the Presidency of George Washington. This means growth slowing down to 1.5% in the period 2007-2027, from 1.93% in the prior three decades, which he says leaves less money for everything from tackling carbon emissions to infrastructure needs. ...

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The Bank of Japan's Governor Haruhiko Kuroda announces a massive monetary stimulus in November 2014, with a 33% increase in asset purchases, including government bonds and also stocks and real estate funds. The move was intended to get the maximum possible impact with the Nikkei Averages up 5% and boosting global stock markets. It is designed to make an affort to achieve the target of 2% inflation in 2 years announced earlier by Governor Kuroda. Slowing consumer spending with the increase in the sales tax to 8% was expected to lower growth in GDP for fiscal 2014 ending in March to 0.5%. At the same time inflation which had reached 1.5% was decelerating to the 1% level in September 2014. Faced with this problem and confidence levels in Abenomics dropping below 50% in polls, the BOJ and the Welfare Ministry acted jointly to support the economy. BOJ move is supported by a shift in the portfolio of the Government Pension Investment Fund, which will reduce purchases of government bonds and shift to higher investment in Japanese and foreign stock markets. The Welfare Ministry said it would increase its share of assets in the $1.2 trillion Government Pension Investment Fund for Japanese and foreign stocks each by 10 percentage points. Kuroda has insisted he will act strongly to fight Japan's "deflationary mindset." The vote to take the action was 5 to 4....

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Jeff Bezos's letter to employees of The Washington Post shows why Graham family members, Donald Graham and Katherine Weymouth, who own and run the newspaper, see Bezos as the right person to continue the family's legacy from 80 years of stewardship. Apart from saying he has known Donald Graham for over 10 years and knows no finer person, Bezos also said about the critical role journalism plays in a free society: "I would highlight two kinds of courage the Grahams have shown as owners that I hope to channel. The first is the courage to say wait, be sure, slow down, get another source. Real people and their reputations, livelihoods and families are at stake. The second is the courage to say follow the story, no matter the cost." Bezos also pointed out the major changes in the journalism field from the arrival of the internet. Changes he will now address as owner of the newspaper and one of the business pioneers in the field of internet retailing, starting with books and following this up with the Kindle reader. Bezos sees the changes coming from three sources: "shorter news cycles, eroding long-reliable revenue sources, and enabling new kinds of competition, some of which bear little or no news-gathering costs." His response will be to invent and experiment in new ways....

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Fears of nervous investors is now touching the bond markets. AIG's insurance subsidiaries traded their bonds at prices ranging from 38 cents on the dollar to around 81 cents, from more than 50 cents on the dollar a month ago, according to MarketAxess. Investors are worried that future restructurings will cause cash generated by AIG's units to go to the government before its bondholders, as the government has already chalked up a huge bill of $177 billion for AIG. Long term bonds of triple rated General Electric Company, which with GE Capital is the largest US corporate debt issuer, dropped last week to 63 cents on the dollar. Again investors are worried that they may not get all their money back. And again GE's CFO Sherin had to reassure investors that GE's capital position was strong. The bonds of Citigroup are trading at 70 cents on the dollar. Sales of blocks of securities called "bid lists" are not a good sign, as big groups of sales are an indication investors are desperate to unload investments quickly. Bonds issued by Goldman Sachs and General Electric without the government's backing have dropped to 96 cents on the dollar and 73 cents on the dollar, respectively in the last few days. Their government backed debt trades at close to full value or 100 cents on the dollar. ...

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Ajami makes the point that opinions and attitudes -after the Obama efforts to improve America's standing in the Muslim world - havent changed much since the Bush days. He cites the Pew Global Attitudes Survey for 2009- In Turkey after the Obama Anakra visit favorable rating is only 14%, 69% are unreconciled. In Egypt 27% have favorable view 70% do not, in Pakistan unfavorables actally went up from 63% to 68%. He also points to the situation in Iran where the protester for the fraud in the election of Ahmadinejad did not receive much supprt from Obama, as the Obama administration decided to engage with Ahmadinejad to achieve nuclear settlement. In effect the rhetoric from Obama has not been matched with courage of convicitions , and lacks the courage to turn a new chapter by breaking from the past not just with talk but in real policy changes. And says Ajami the Arabs havve stopped listening to the rhetoric as little has been accomplished by way of change. At the same time false expectations may have been aroused because the Cairo speech was made at the University with the aging Mubarak at Obama's side, and beyond addressing these students the feeling clearly must be that the US would simply continue its policies of supporting old regimes that tolerate no dissent of any kind such as Mubarak's. ...

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BAE Systems has a $120 million contract to provide social anthropologists to the Defense Department of the USA. In December, L-3 Communications Holdings Inc. acquired International Resources Ltd, a Washington based economic-development firm which is different from its military advisory business. This is the way the Defense Department and the suppliers to the Defense department are changing in response to Defense Secretary Gates philosophy that economic development, rule of law programs and strategic communications and a whole host of soft power initiatives are essential needs, and to the new President's philosophy. Now US Defense suppliers Lockheed and Northrop are providing peacekeepers thorugh the State Department, and BAE SYstems is providing social anthropologists in addition to armored vehicles to go with US troops on village patrols. The State Department, Agency of International Development and a changing Defense Department are all getting the attention of suppliers who are building new relationships for new needs and new services tackle the issues of terrorism, poverty, drugs and crime that generate or exacerbate conflict in other countries. In the first budget presented recently Obama pledged $50 billion double the amount before for foreign assistance. A portion of the $130 billion requested for wartime operations in 2010 will be allocated to these new kinds of services which are more effective and generate better understanding and support for the US in other countries....

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A locally produced ton of hot rolled coil steel in India, an industry benchmark, is up 42% in price to $675, since January 2008, when Tata unveiled the Nano. Raw materials account for a higher portion of the costs of making a car like the Nano, and account for 23% of the costs of making the Nano, according to consultants Global Insight. This means margins will be harder to preserve on the Nano. As Ratan Tata, Chairman of the Tata group of companies put it at a shareholder meeting July 24, "if we passed on all costs to the consumer, it will affect demand, and if we don't it will affect margins". Tata is accomodating suppliers like Rico Industries that make the engine blocks that use steel for increased costs of raw materials. Other costs also are going up. For new car loans the interest rates are between 14 and 16% and fuel prices are going up making the cost of operating the 50mpg Nano costlier for those riding motorcycles. Tata faces other higher costs, its managng director Ravi Kant says the project for the Nano plant in Singur is costing more. The $470 million invested so far is 18% more than it had projected in January and double the amount stated when the prject was started in 2006....

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Krugman points out that the U.S. Federal Reserve's forecasts in March 2012 show the U.S. will experience low inflation and high unemployment for many years. These forecasts are in sharp contrast to the expectations in the equity markets based on an uptick for a couple of months of unemployment numbers. The Fed's own statements suggest the improvement in hiring may be temporary and a response to the overreaction in hiring in 2009-2010 to the financial crisis, and not a lasting improvement. The Fed pointed out that the long term unemployed are at about 40% of the total unemployed and the share of the population that is working in March 2012 has barely budged from 58% in 2009.

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The cash for clunkers program in turning in excellent results bothy in terms of promoting sales and in terms of the mileage improvement for the new cars put on the road. For Motor saw sales up 2.4% over same month 2008 and Hyundai 11% increase. In the light of this and the speed with wihich the initial $1 billion was used up and the $2 billion that was aded by Congress, and the success of the program in Europe, its hard to understand so little money has been allocated to this program as a part of stimulus spending. Senators Feinstein, Collins and Schumer are encouraged by the customer reaction to choose higher mileage vehicles. According to the Transportation Department, the average fuel efficiency of trade ins was 15.8 mpg, and the average fuel efficiency of vehicles traded in 25.4 mpg. Equally significant was that 83% of the trade-ins were trucks and 60% of new purchases were cars. The Ford Focus was the top selling vehicle. Dealers estimate they sold 250,000 cars with the rebate money....

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A WSJ study showing the plans offered under the new U.S. Health Care Law in the state of Oregon. For young people ages 18-34 earning about $17,000 and uninsured the law offers a bargain with insurance premiums monthly at about $52 and deductibles as low as $100, because of higher subsidies. The situation changes at incomes of $29,000 when the deductibles are about $6300 and the premiums per month at about $147 a month, because subsidies are much smaller, or deductibles dropping to $2500 at $172 in monthly premium. The federal subsidies disappear for single people under age 30 earning much more than $26,000 because of the way the law places them to specific plans on each state's exchange. According to the U.S. Department of Health and Human Services, there are 11.6 million people in the U.S. ages 18-34 who are uninsured. The federal government has to get as many of these people to get insurance so that the cost of medical care for the elderly can be supported.

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Cable news in structural decline says this report in NYT. It is particularly severe at CNN News. Viewers are declining rapidly dropping 27% in the second quarter for a year ago, and down to 639,000 people in prime time. This trails MSNBC where viewers have declined by 23%. Fox News viewer numbers show a 1% increase.

Viewers looking for discriminating and in depth news have other alternatives including online editions of major newspapers around the world.