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JP Morgan Chase Bank faces six separate investigations by the U.S. Justice Department in 2013. Cases from the housing crisis are still being worked out. The Justice Department has concluded that securities laws were broken in JP Morgan's selling of mortgage backed securities in 2005-2007. A new investigation is taking place into anti-bribery law violations in hiring of children of Chinese officials. The legal settlement losses could place JP Morgan Chase ahead of Bank of America in the extent of losses. One estimate is for $6.8 billion in losses above that set aside in reserves, an amount larger than that of any other U.S. bank, according to Barclays Research.

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China's premier, Wen Jiabao, opened the National People's Congress, annual meeting of the Chinese parliament, by saying that China had lowered its growth rate to 7.5% from 8%. GDP growth for 2011 was 9.2%. Wen set an inflation target of 4%. The CPI index increased by 5.4% in 2011. Wen set 14% growth target for M2, China's broadest measure of money supply.

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With China's automobile market declining for the fifth month in a row, and trade tensions rising, it now appears that carmakers such as Ford expanded too quickly in the Chinese market. Ford, Peugeot, and Hyundai appear to have poorly times their expansion in China, expanding at the tail end of the Chinese boom just ahead of the new Trump administration's efforts to challenge China's lopsided trade balance.  It has become so bad that this report shows workers at a Peugeot factory in China spending their days washing floors and attending Communist political study sessions at work. At a Ford plant workers shifts are reduced to a couple of days a month. Sales grew 3% in 2017 and declined 2% in the first 11 months of 2018, after increases of 14% in previous years taking the market to 28 million in a dizzying ride as it surpassed the U.S. sales of 17.5 million. Overcapacity is a problem in China with the aggressive expansion. There is capacity to make 43 million cars, but will produce 29 million in 2018, according to PwC, consulting firm. Ford meanwhile put in a new plant in Harbin in 2017, expanding its capacity to 1.6 million a year, but sales peaked at 1.27 million in 2016, and are down 6% in 2017, and 34% in 2018 to about 700,000. While there are no layoffs some workers are making only $220 monthly, forcing them to take second jobs as cab drivers or couriers. Suzuki decided to quit in 2018 exiting China entirely just so it would not pile up losses in what is now a market that is way overblown from the boom years. Electric vehicle production in the pipeline of about 7.5 million vehicles will compound this problem further with 32 new plants planned by 26 firms.   ...

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As David Ignatius points out in his trip to China, the China of post 2010 is a lot of things depending on who you talk to in China- cocky, scared, anxious. He comes away perplexed by the range of questions that come up in his mind. The wealth of the coastal cities is stunning, and at the same time as the leaders insist China is still a poor country with deep regional imbalances, and what is less mentioned, the rising inequality in society. How to pull it all together to make possible a transition to development that is evened out across all regions and sections of society and to allow freedom of expression, is a challenge for the new leadership of Xi Jinping in 2011.

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Mouhanad Khorchide, is professor of Islamic pedagogy at the University of Munster in Germany. He is offering an innovative approach to teach a gentler and more tolerant Islam as Germany shifts to the teaching of Islam in primary and secondary schools, alongside teaching of the Christian and Jewish faiths. He is the author of the book published in Arabic and as an e-book in English- "Islam in Mercy." He goes back to the open discourse in the Islam of the eight and ninth centuries for ideas, asking questions and seeing this as part of the discourse in the educational process. He is a Palestinian who studied sociology at the University of Vienna. Germany has 4 million Muslims.

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Manufacturing in the US is adding jobs for the first time since 1997, according to government data. Job growth in 2010 was 1.2%, or 136,000 jobs. IHS Global Insight expects total manufacturing jobs in the US to increase in 2011 to 12 million. Manufacturing will be a modest contributor to job growth according to economists. Economists projections show a gain of 2.5% or 330,000 manufacturing jobs in 2011. Moody's Analytics estimates job growth of 2% a year through 2015. Government incentives, need to replace aging equipment and rehiring in the automobile industry will help manufacturing. At the same time manufacturers are cautious about hiring and increases in automation reduce the need for workers compared to earlier periods. Overall the loss of about 6 million manufacturing jobs since 1997 will not be made up. Yet the improvement is a positive sign as the US faces high unemployment and companies make investment in new factories overseas to meet growth in emerging markets.

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Two Harvard economists, Lawrence Summers and Lant Pritchett, say China is likely to revert to the mean of average long term growth of developed countries after this spurt of growth is over. Growth is likely to slow to 6% by 2016, and revert to the mean of 2% for industrialized countries in the long term. Goldman Sachs banker Jim O'Neill, says the growth at a higher rate could be sustained because of urbanization. Summers does not rule out this outcome as he accepts a range of outcomes, with the most likely outcome being a reversion to the mean. The factors often cited for slowing growth are lower of productivity of capital as corruption and close connections determine where capital is allocated, misallocation of capital, large increases in credit in the economy since 2009 leading to bad debt in the financial system, aging society and demographics with increasing numbers of older people. Other reasons are the choices being made by Chinese leaders for slowing down to address the problems of air pollution and contamination of water supplies, inflation in housing prices, overdependence on exports, need to shift to increasing domestic consumer spending but unable to do this with the lack of spending power of large parts of the population because wealth is excessively concentrated in the upper ranks of society. The need to manage these forces ensuring some measure of stability depends on finding ways to reduce the growing concentration of wealth and power, in itself a challenge for the Communist Party elite. A combination of different factors with some still unknown factors are likely to play a part in this reversion to the mean for China, a situation encountered by every country so far in North America, Europe and Japan. This makes it even more important that each developing society structure its development around the most optimal goals with the least costs attached to the development....

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After overly aggressive bank lending following the financial crisis of 2008 China is now badly overextended. China has also learned from the U.S. experience about the risks inherent in growth generated from a credit boom. In 2009-2010 China was also getting less bang for the buck in terms of the increase in lending needed to generate growth compared to earlier periods. Orlik says don't expect China to help the global economy the way it did in 2009-2011, and that there is no Plan B for China.

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Experts in the U.S. say the U.S. made a mistake in not supporting the idea of a new financial institution to meet the urgent needs of development and infrastructure financing of Asia's developing countries. India, Australia, S. Korea, Britain, Germany, France and Italy are joining as founding members in 2015. China has offered leadership in providing resources for the new bank. Jane Perlez says China is looking for the best talent worldwide to help write the charter for the bank and to run it. It is a project pushed forward by China's president Jinping, and was discussed at the 2013 G-20 meeeting in Moscow as a critical part of the agenda. Laurence Brahm, who supported Chinese premier Zhu Rongji in 2001 for entry into the WTO, says it is natural for China to look for ways to use its extra capacity in steel, concrete and pipes to build projects in other parts of Asia, which would mutually benefit China and the region. Paul Haenle of the Carnegie-Tsinghua Center in Beijing, says the U.S. lack of support is shortsighted, as the existing U.S. sponsored institutions World Bank and the Asian Development Bank are sorely lacking the resources to deal with the huge infrastructure challenges in Asia. China's Finance Ministry is looking for the best talent worldwide to write the charter and run the bank. Natalie Lichtenstein, a lawyer with 30 years experience working at the World Bank will write the bank's founding charter. ...

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The President of the American Chamber of Commerce, Harley Seyedin, says that the days when migrant workers did not know their rights, labor laws were not enforced, and factory owners could keep wages low, are gone. With 787 million mobile phone users and 384 million Internet users- which includes migrant workers who can now get the news about the latest developments, send messages, video, and access the internet. For its part the government made serious effort to create awareness about new labor laws of 2008 through the state run media outlets. And workers have greater awareness and understanding of their rights for safe working conditions and double overtime pay, as well as other rights guaranteed in China's new labor laws. And something else is happening that connects the universities with workers. The expansion of the number of students at Chinese universities has brought more people from rural areas into the universities. This has created sympathy and support for migrant workers at the universities. Nine sociologists at Peking and Tsinghua universities signed an open letter calling national and local governments to implement actions that let migrant workers integrate into the city environment and share in the country's progress that they are creating. The government's security system has prevented the creation of a worker's movement in the past. But this time the government may be thinking of the need to develop China's domestic market, as the reliability of markets in the USA and European countries is uncertain as economic conditions change. For this to happen China's workers need higher wages to buy the goods China produces. ...

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A major shift in foreign investment may be taking place as the 2014 St. Petersburg International Economic Forum takes place in May 2014. Russian policy in Ukraine and tensions with the U.S. and Germany could lead to a shift in investment to other emerging market countries. China's tensions with Japan could lead to a similiar shift of Japanese foreign investment. At the same time India has elected a new government with an absolute majority and an overwhelming mandate from young people to accelerate development. The new government under the BJP party's Modi has a decade of experience attracting foreign investment in western India. Indonesia, Vietnam, Africa and other emerging market countries, could benefit from the shift in investment. Investment could also return to the home countries with lower labor costs in Southern Europe, lower labor/energy/transport costs in North America. For Russia the debate at the St Petersburg Economic Forum was about pursuing one of three policy paths with some riskier than others, or some combination also risky and uncertain- depending on state banks and oil windfall funds, increasing ties with Asian countries, continuing on the current path with lower foreign investment and continued capital outflows. The failure to use the time wisely to diversify the oil based economy which could have been better accomplished in an economy not overly dependent on crony capitalism and centralized economy, both current characteristics, will affect future progress. A key weakness for Russia compared to China is the centralization under one person Putin, more so in the third term. In China the two man team Keqiang and Jinping is part of a larger team chosen by consensus and negotiation and part of a rotational scheme. It has senior leaders who initiated the changes to a market driven economy in the nineties determined to see China on track....

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Professors Cole and Ohanian of the University of Pennsylvania and UCLA, provide a new interpretation of FDR's economic policies during the period 1932-1934 and the period 1937-1941, based on their research. This suggests conclusions different from that of Obama advisor, Christina Romer, and Fed chairman, Bernanke about that period. Changes in economic policies under the Roosevelt administration that helped bring wages in line with productivity, reduced strikes, and gradual elimination of the undistributed profits tax, improved incentives for business investment during 1938-1939. Cole and Ohanian, say that by 1941, before the U.S. entered the war, close to half of the increase in nonmilitary hours worked in the U.S. between 1939 and the peak of the war, had already been achieved. And this was primarily the result of the changes in FDR's policies in 1938. They say a similiar opportunity is presented by the proposals of the Bowles-Simpson commission on deficit reduction, by lowering the corporate income tax through simplification of the tax code and reducing or eliminating most tax expenditures. Improving the incentives for business to hire and invest through this and other steps is likely to do more for the economy than the steps tried so far since 2009....

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Krugman points to the economic muddle that China is getting itself into. He says one way of looking at what is happening now with high inflation is that inflation is the market's way of undoing the currency manipulation that China has engaged in. By following aweak currency policy to protect export interests China has created an artificially high trade surplus. But this is now turning into a lose-lose proposition for both China and the US as market forces push wages and prices up, whittling away at any competitive advantage of China's weak currency policy. He says some estimates he has seen show that Chinese undervaluation could be gone in two or three years. Chinese consumers are asked to accept interest on savings limited to 2.75% and below inflation, with the spread designed to help banks earn their way out of bad loans made during the stimulus lending binge of 2009-2010. What is happening is a massive allocation of capital away from consumers to lending for state owned companies that have created overcapacity in many industries, and use part of this capital to engage in real estate speculation. Krugman says China may be on its way to some kind of crisis with collateral damage to the rest of the world as it is a major importer of commodities from Canada, Brazil, Argentina, Australia, and a major importer of high tech goods from Germany and the USA....

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In the next 15 years approximately India will have a higher percentage of working age population to non-working age population than China, based on information from the UN and Morgan Stanley. The number of people over 64 and under 15 has declined from 69% to 56% in 2010, according to UN figures. By 2020 the working age population will increase by 136 million in India, compared to 23 million in China. From this it can be seen that a huge demographic change is playing out. As China's economy matures and with the one-child policy in place, China's working age population is expected to decline; just as India's working age population picks up. This should give India momentum in the next 15-20 years, and lead to an increasing growth rate in India, just as China's growth rate slows. India's weak areas are infrastructure, and education. Infrastructure development will accelerate nevertheless, with larger private investments and participation in projects; and India will move up the experience curve as more projects are completed. Education for the poorer classes and in public schools will remain a problem. Private schools are making up for the weakness in this area, and private schools now make up 20% of attendance even in the rural areas according to one estimate. The strong points are democratic structures and the rule of law, private enterprise and private companies, English speaking middle class, and smart initiatives by business to develop low cost products that are affordable for all segments of sciety in India. For instance a $35 laptop developed by the IIT and Indian Institute of Science researchers, and Tata Chemicals development of a filter for 30 rupees or 65 cents that would filter water for a month for a family of five. This will bring the benefits of development to all segments of society as development progresses, and is crucial for balanced development in the poorer parts of Asia. Tata Motors 1 lakh ruppees car concept and the Tata Nano as its tangible product, is another verson of this kind of development being pioneered in India. Being a democratic country makes some processes slower, yet at the same time the private initiative enabled by democratic processes -cultivated over a long period from British times -enables a creative sort of development that could be turned into a distinct advantage....

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Lawrence Katz, Harvard labor economist, talks to Friedman about the jobs crisis in the U.S.. Katz identifies three jobs crises occurring at the same time today. One is the drop in the demand for goods and services that resulted from the longer term effects of the financial crisis of 2008, with rising foreclosures, weak housing markets, bad debt on the balance sheets of banks, and interest rates at close to zero reducing the scope of action by the Federal Reserve bank. The second, is the widespread long term unemployment with workers dropping out of the labor market. The third, is the nature of new factories and hiring. Work in new factories is done through increased automation, information technology and fewer workers. As a result job creation is a fraction of what it was in the past. Not mentioned here is the shrinking of the public sector under the strain of budget deficits for local, state and federal government. This leads to the question of how America will create jobs in the future. Katz believes the answer is creating more "hubs," networked urban areas like Austin, Silicon Valley, and Raleigh-Durham, by bringing together universities, high-tech manufacturers, software providers, and startup companies, to cooperate in creating new products that enhance people's lives worldwide. This has to be done by the private sector and government working together to build the infrastructure and make the investments in education, training of workers, and equipment for new job creation....

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Germany benefits from the lower value of the euro in relation to other currencies. Germany's exports to the eurozone as a percentage of all exports increased from 38.4% in 2009 to 41.7% in 2011, according to the Germany Federal Statistical Office and the German Chambers of Industry and Commerce. Exports to China increased from 4.64% to 6.11%, and to Asia from 11.8% to 13.73%, and to the U.S. from 6.77% to 6.95%. This increases the gap between Germany and other eurozone countries with smaller exports. Ireland with its large export base and foreign investment is likely to benefit from the lower euro. German companies VW, BMW, Mercedes, Heidelberg Cement and EADS also benefit from the weaker euro. France's Peugeot with sales concentrated in Europe does not benefit from the weaker euro compared to German auto companies with higher sales overseas, especially in China.

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Fareed Zakaria points out that the primary elections of the Republican and Democratic parties can pose a danger to democracy because of demagogic politicians who can appeal to popular passions to bring a fringe group or individual to the presidency. Primaries for both parties became important after 1968. Eisenhower and Lincoln won the nomination after the person nominated on the first ballot failed to win the necessary votes. Another serious problem is that the turnout in the primaries is low, so low that a 15% turnout is considered high turnout. The media attention is so great that it creates the impression that a real election has taken place when in reality about 85% of the people have not voted- as the Economist magazine points out a representative turnout would change the outcome significantly so it is not clear how much this promotes democratic process.

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Research from Australian National University shows steadily improving conditions for migrant workers in China. Migrant workers were able to spend more time in cities- an average of 8.9 years. The hukou sysem ensures migrants return to rural areas when they have to raise a family. About 252 million migrant workers work in factories and construction jobs in urban areas. Migrants with children leave them with grandparents back home. Improving the conditions of these workers is important to reduce the wage and income disparities in China and to reduce inequality. About a fifth of the migrant population now has pension and health benefits. Creating a balanced economy with domestic consumer spending making a larger share of GDP also requires improving wages and benefits of migrant workers. Incoming prime minister Li Keqiang says in a statement on a government website: China "must take migrant rural workers and gradually change them into urban residents. This requires that we push forward household registration reform." If done seriously this will create a new kind of China as these migrant workers are integrated into urban society after years of being shunned and ignored by China's educated middle class. Professor Meng's research at Australian National University of migrant workers shows the proportion of migrant workers with unemployment insurance increased from 11% in 2008 to 21% in 2012. The research shows similiar figures for health and pensions. Improving their living standards also make it attractive for more young people from rural areas to migrate to cities increasing urbanization....