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S. Korea's household debt is now 155% of GDP, according to the OECD. For the last ten years the household debt is growing at 13 percent, double the rate of GDP growth. Korea was not affected to the same extent as other countries by the 2008 financial crisis. As a result household debt continues to grow rapidly. The household debt to disposable income reached 140% in the U.S. before the 2008 financial crisis, according to the IMF. Spain reached a level of 130% before the crisis, according to the McKinsey Global Institute. The Financial Services Commission in S. Korea has taken steps to control this- by imposing limits on bank lending, tighter credit checks by banks, and incentives for shifting to fixed rate mortgages. About 95% of mortgages in S. Korea are adjustable rate mortgages. Housing loan rules in S. Korea require loans to not exceed half of the value of the house, and annual payments of principal and interest cannot exceed 40% of the owners income. This effectively insulates the banks from the effects of a housing bubble. One of the effect of the 1997 financial crisis in S. Korea when it turned to the IMF for assistance, is the relaxing of controls on interest rates to encourage spending in a country that encouraged saving. The result is the growth of a nonbank sector which is not subject to central government regulation by the Financial Supervisory Service. The non-banks are regulated only by local governments and can charge upto 39% compared to 4-6% at banks. Non-banks are also allowed to turn in their licenses and operate charging even higher rates. Each year about a 1000 nonbanks from 18,500 such banks in 2007 are joining the black market according to the Consumer Loan Finance Association, showing the size of the problem of black market lending to low income borrowers. S. Korea has mostly relied on growing GDP to control the situation, but slowing growth could lead to unsustainable levels of household debt....

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Exxon has cut costs of shale oil production by learning new cost efficient ways of getting the oil out of the rock. Exxon states it has cut costs by 20 to 25% for production in the Bakken from shale, making it possible to invest in shale oil production at much lower prices as the learning continues. This will be a factor for oil prices in future years.

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Ailworth and Faucon describe the ways in which shale oil producers such as Continental Resources in Texas and S. Dakota are responding to the drop in oil prices. One strategy adopted is to put off 60% of the expense of production by not completing the final stages of production of hydraulic fracturing, but keeping the wells ready so that production can quickly be ramped up if prices go to the $60-65 range. EOG Resources, Andarko, Apache, Chesapeake Energy, are also following this strategy. There are about 3000 such wells, not pumping but drilled and ready for hydraulic fracturing, according to RBC Capital Markets estimates. This strategy would mean large shale oil supplies well into the future to keep oil prices low. Production from lower cost wells continues with U.S. oil production climbing to a new high of 9.4 million barrels a day for week ending March 6, 2015, according to federal data. This shows that this is a new situation and the resilience of shale oil supplies may have been underestimated. Another strategy adopted by other large companies such as Exxon is to continue to develop technology by learning to get the oil out of the rock in the most cost efficient way. The capital investment in U.S. shale oil has dropped by $50 billion in 2015 compared to 2014. The number of oil rigs drilling declined to 866 in the U.S. by March 2015, according to Baker Hughes....

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WSJ's Fidler describes the views of Victor Ruhe, a former German defense minister, on the Ukraine crisis and the EU's response. The EU's position for relations with Ukraine comes under criticism for being technocratic as in earler trade and aid negotiations, and not addressing the problems which Ukraine faces. This requires closer cooperation from the EU, and some costs the EU has been unwilling to assume. Ruhe says the best response for the EU is to turn Ukraine into a European success story. This means taking on the effort to gradually transform the corrupt and inefficient political and economic system, something the EU did over many years in the Balkans. EU leaders have signed an agreement with Ukraine's new government on political dialogue and security cooperation. Critical parts of the agreement for trade, law enforcement, anticorruption actions, and macroeconomics changes, will be signed after a new government is elected in May 2014 elections. The EU is in this for the long haul as political support will be needed for a new generation of politicians....

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The stories of Dylan Roberts, 32 years, in Rockford, Illinois and Alfred Butt, 42 years,in Hohenlockenstedt, Germany. Roberts lost his job at aChrysler plant in Belvidere, near Rockford, Illinois, and Butt lost his job a German auto parts maker. Roberts gets a $64,000 severance package, and 59 weeks of unemployment insurance, with apossible additional 13 weeks, with monthly check of $1426 that is 27% of his income of $64,000 a year when employed. attribute 33 weeks of the 59 weeks to the stimulus measures of President Obama. Butt has 4 months as atransfer worker at full pay, which can be as long as 1 year, then he has till May 2010 at 80% of his pay when employed full time of 2700 euros amonth. The transfer company gives job training and job hunting advice. He continues getting his medical insurance benefits which are provided by the state. Roberts loses his health insurance with his job, and hopes to pay his expenses for a2 bedroom apartment with his girlfriend who makes close to $1500 as an elementary school teacher. He will take a2 year electronic engineering course with a local college using $6000 from Obama's Dislocated Worker's Program. But he isn't sure if he can do his studies after one year when his unemployment benefits expire. Butt can afford to take a vacation to Cyprus and his lifestyle is not much affected he says. His wife works as a nurse at a rheumatism clinic. Butt is like the 64% of Germans who say the crisis is not affecting them personally. Roberts is like the 87% of Americans who say this crisis id hurting them in their persdonal lives. To pay for the state funded benefits the total wage tax burdenas a percentage of labor costs for Butt is 52% in Germany. FOr Roberts it is 30% in the USA. France is at 49% Spain at 39% and the UK at 34%. Germany's public expenditures for these labor benefits are 2.97% of GDP in 2006, the USA's are 0.38%. Spain and France are at 2.32% and the UK at 0.61%. This also explains why the impact in countries like Germany and Spain is not felt so badly as in the USA. In SPain there is also the lower mobility and the safety net of family support helping people cope making it possible to cope with 20% unemployment without serious distress and hardships. See the link to Spain's unemployed....

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The U.S. trade agreement with Mexico is for 16 years, to provide business with a stable rules environment to operate in. It includes a clause for review after 6 years. The content made in the U.S. is increased to 70% from 62.5%. This has to be made by workers earning at least $16  an hour. Aluminium and steel going into the cars has to come from the U.S. helping push U.S. steel plant capacity utilization to 80%. Labor collective bargaining is strengthened in Mexico through new provisions, a provision supported by new Mexican socialist president Obrador. Free trade in agricultural products is maintained. $4.7 billion was added in help to U.S. farmers as aid for the effects of China's tariff retaliation. New rules are set for textiles, chemicals, and steel intensive products that set requirements to qualify for tariff free import into the U.S. This is intended to help bring more jobs and investment in these industries in the U.S.     ...

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New figures on campaign financing show the that from Oct 15 onwards the Obama campaign spent $161.5 million, the McCain campaign spent $75 million. Obama outspending McCain 2 to 1. By the end of the campaign Obama had raised $750 million. To get a sense of these numbers. This was three times what President Bush had raised, the previous record. Obama would have received $84 million in public financing after the Democratic party's national convention, and had to stop raising money at that point. This is what McCain did. Starting in September Obama spent $380 million and McCain $195 million. By mid October 2008, the Obama campaign raised $300 million in contributions of $200 or less -at which point donor identity's need not be revealed- from 4 million donors, according to Campaign Finance Institute. It also raised $300 million in contributions of $1000 or more for the period before mid-October. What this means is the figures have far outstripped what was set aside by campaign finance laws and the party with the bigger fundraising machine has little incentive to work for updating the laws. It also means good candidates who do not want to do this much fund raising or who are not good fund raisers will not participate in elections that determint the direction of the country, depriving the country of such service. It also means government policy is likely to be distorted sometimes with serious consequences by donors, bundlers and lobbyists. ...

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Ms. Annegret Kramp-Krarrenbauer, elected leader of the CDU party in 2018 with the support of Angela Merkel, will not run for chancellor in next years election and will resign from her position by the end of the year. She will continue as Germany's defense minister. After losses for the CDU in recent elections and the embarrassment of local CDU leaders in Thuringia supporting the far right AfD, AKK as she is known decided to step down. Angela Merkel has decided not to run for chancellor again. Germany is set to chair the EU in the second half of 2020, and Merkel is no longer seen as a leader of influence. The Nationalist Alternative for Germany AfD has gained votes in recent elections following the 2015-2016 migrant crisis, with large numbers of refugees from North Africa and Arab world landing in Greece and Turkey and walking to Hungary, Austria and Germany. Merkel's handling of the crisis with acceptance of a million refugees in 2015-2016 unsettled European and German politics. Why? One way of looking at it is that in the same way that the U.S. took in Chinese imported goods ending in the Trump tariffs war, at some point it just becomes too big to handle. That ended up at $1 billion a day in imports from China when president Trump called it off and accused Obama Democrats, Bush Republicans, of betraying the country. Putting it into perspective Germany with one fourth of the population of the U.S. took in about twice the number of refugees in just one year 2015-2016 that the U.S. took in 10 years 2005-2015. The U.S. took in 675,000 immigrants between 2005-2015. This is as if the U.S. took in something like 20 million immigrants in a short period of 1 year on an equivalent basis- though the cultural impact is even greater in a nation like Germany that is like Japan an historically immigrant averse nation. All this happened too quickly for Germany to handle for its fragile cultural fabric. Much of the initial outpouring of support and positive sentiment came from the sense of having gone through World War II and the refugees in that and the early post war period, the need to return in the same spirit support Germany had received. Over time it eroded support for the Christian Democratic Union and Merkel. That Merkel could have done this is itself a small miracle. Now the rebuilding has to begin. Adenauer's CDU and the socialist SPD party of Willy Brandt now have less than 50% support, only with the Greens Party do they make up 50%. The question now is can the CDU, and the SPD which has fallen to 14% in elections, make it back and what kind of future makeup political parties will have in Germany, how the social fabric can be restored. AKK's achievement is to mend relations between the liberal Merkel wing of the CDU and conservatives from Bavaria (CSU) over immigration.  Candidates for CDU leadership are Armin Laschet, Jens Spahn, and Friedrich Merz. Laschet premier of North Rhine-Westphalia has Merkel's support. Looking back too much attention was taken up by the euro crisis, and too little was done in the areas of infrastructure, inequality gaps, education, child care, under Merkel's leadership and of the preceding SPD years, much like what happened under Bush and Obama administrations in the U.S. where wars, economic crises led to neglect on issues that affect lives of ordinary working families. ...

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Anne Applebaum of the WP describes the effect of a Dutch referendum on a 2014 European Union trade and cooperation treaty with Ukraine which taps into Dutch anti-immigrant sentiment of right wing parties and anti-corruption sentiment of left wing parties. It passed with a two thirds majority and 32 % of people voting. Applebaum says the centre right government in the Netherlands has not commented on the referendum which is "consultative." She says officials in the Dutch government told her they did not want to become the focus of anti-government sentiment in the media, because of the small majority in parliament.

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The message from some Ivy League professors to students is "think for yourself."  The letter published by Princeton's James Madison Program in American Ideals and Institutions, is from professors at Harvard, Yale and Princeton universities. Madison played a large role in the drafting of the U.S. Constitution and its First Amendment protecting free speech. By thinking for yourself one avoids getting caught up in a tide of conformism to whatever is popular at the moment, say the professors.

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For passengers air travel nowadays is travelling on planes that are often totally booked. This is because airlines are cutting flights. And with fewer passengers after the economic crisis hit, airlines are having a difficult time cutting flights enough to meet the continuing drop in the number of passengers. Before the crisis business and international travel was a good source of revenue, now this is fading as there is more competition on transatlantic routes with about 50 airlines offering flights between US cities and European cities. The liberalization of air travel between the two continents with the 2007 "open skies" agreement is keeping downward pressure on prices. The International Air Transport Association says the number of passengers travelling on business and first class tickets between N. America and Europe was down 18.4% in April 2009, compared with same month in 2008. Traffic between N. America and Asia was down 26%, for the same period. This is hitting Lufthansa ansd KLM-Air France hard, but is helping Easyjet, Ryanair, and Air Berlin. As demand drops airlines will continue to cut capacity, and this will be done by cutting the number of flights on a route and using smaller planes. After all this capacity cutting takes place by September, OAG Aviation estimates that the seats on domestic flights will drop to 66.5 million from a peak of 84 million in 2001, a drop of 21%. Some airlines which rely less on corporate travellers will not see as steep a drop. These airlines are Southwest, JetBlue and AirTran. Airlines that may not survive the effects of the economic crisis, with tight credit and drop in air travel, and volatile oil prices, are United Airlines and US Airways. United relied heavily on corporate and trans-Pacific fliers before the economic crisis. Fitrch Ratings cites this in reducing the credit rating for United to junk status, as well as the heavy debt maturities in 2009 and 2010. In June 2009 United raised $175 million by issuing new debt, but at an interest rate of 17%. At US Airways the combined airline with America West after a$1.5 billion merger is struggling. It has the thinnest cash position of any airline according to a Morningstar research analyst, and may need further borrowing to meet debt payments. With all assets already mortgaged US Airways may have little borrowing capability left....

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Even with the growth strategies of the Abe administration in 2014, projections of the IMF show growth rate for Japan are at 1.0% for 2015, compared to 3% for the U.S., 2.5% for UK, and 1.6% for Germany. The Third Arrow in prime minister Abe's Three Arrows program now follows the implementation of the other two Arrows- monetary easing and public works spending. Abe is faced with the task of convincing foreign and domestic investors that he can implement a winning growth strategy for Japan. The plan announced in June 2014 is an effort to overcome barriers to growth with a strategy that will work. The core of the plan is to cut the corporate tax rate from 35.64% to below 30% in the next couple of years. The corporations are expected to do their part to improve corporate governance and return on equity, so that shareholders, domestic and foreign investors, have more incentives to invest in the Japanese stock market. Analysts and economists say this plan has attractive features. It asks Japanese companies to increase ROE and ROI to global levels through a Tokyo Stock Exchange corporate governance code. Companies listed on TSE and not following the code will have to come up with reasons why they are failing to do so. Some analysts say this would increase the value of companies. Companies are more likely to make investments with cash that is not being invested. The plan includes measures for bringing more women into the workforce, which is seen as a serious committment to women. In addition to increasing the number of child care centers, this plan includes tax revisions that benefit women joining the workforce. Increased representation for women at the executive level is also part of this plan. Hiroshige Seko, a top adviser to Abe, says importance was given to execution for results, so that a score of 80 with definite results was preferred to an uncertain attempt to get a 100. To do this some compromises were made. The plan for special economic zones is still in the drafting stage as discussion is just beginning. A shakeup of the Central Union of Agricultural Cooperatives and more flexible medical care will be taken up gradually. The efforts to increase ROI, ROE, and improve corporate governance were initiated from the time of the Koizumi administration, and the latest plan may bring results after over a decade of effort in this direction....

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The amazing story of Abdel Hakim Belhaj who is seen as a foe by the CIA and turned over to Gaddafi's regime from Bangkok, followed by six years in Libyan jails. He is in the Western mountains near Tripoli leading a brigade that enters Tripoli. Because of the military discipline and experience gained in Afghanistan, Belhaj is put in charge of Tripoli by the Libyan Transitional Council. He looks to the future and is grateful to NATO and the U.S. for freeing his country. He holds no rancor for the past and looks to the future.

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Silbersweig of the Brigham and Women's Hospital makes a convincing case for the importance of liberal arts and philosophy studies for pursuing a career in medicine. His studies extend from philosophy at Dartmouth to interdisciplinary studies in psychiatry, neurosciences, at Cornell Medical College, to work in these fields and the physical sciences at Brigham. He says the study of philosophy helped him to ask questions, to work and think in unique ways. Interdisciplinary studies are important combined with interdisciplinary work between people from different but related fields, says Silbersweig. Students have to be willing to be explorers and have the broad and rigorous education to make this possible.

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Compared to precrisis peak in GDP for 2006 the economies of Germany and France are up about 3%, and 1% respectively, with Italy down by close to 10%, and the eurozone down about 2%. Inadequate demand is the largest problem for eurozone companies as the GDP for eurozone increased barely in the 3rd quarter 2014, increase of 0.6%.

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Britain's Tax Service reports the number of taxpayers reporting incomes of 1 million pounds a year declined by over 60% in fiscal 2010-2011 from the prior year. In 2010 the Labor government of Gordon Brown introduced a 50% income tax rate for this income group, up from 40%. The number of million dollar incomes filed declined to 6000 from 16000 in 2009-2010, and revenues declined from 13.4 billion pounds or 9% of total taxes from taxpayers to 6.5 billion pounds or 4.4% or about half. The Labor government had hoped for additional 2.5 billion pounds in revenue, showig unintended consequences and surprises in economic policies.

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The Wall Street Journal points out that about 3.92 million people in the U.S. reported income above 200,000 in 2009, and paid $434 billion in taxes. Of these people 90% are not millionaires. The overwhelming majority of the people affected by an increase in taxes on the middle class with incomes above $200,000 are not millionaires. The editorial asks a question about "fairness" for these Americans- who pay a large share of their income for higher university tution payments for kids- for whom the taxes can make a difference.

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China's Nobel prize winner Mo Yan says he hopes democarcy activist and dissident Liu Xiaobo is released soon.

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A senior Indian diplomat, and former ambassador to China, Gautam Bambawale, says China's action in the June 15 clash at Galwan Valley was the worst violence since 1967. He sees it as a premeditated and well thought out action. His view is that India's relations with China will deteriorate further. That this was an action by the PLA to take territory to what it sees as the LAC or border. For small tactical gains he says "China has strategically lost India." This will impact trade and other relations going forward in his view.  Nothing of this sort was expected says Bambawale. All the agreements put in place since 1993, everything for tranquillity at the border, all the mechanisms, have now collapsed. Bambawale has provided a very lucid and clear account of the relations and the border issues. He goes on to say that Chinese observers have given reasons for the Galwan clash with PLA- that India should stay away from the US and other democracies such as the European Union. Some reflection shows that the opposite has happened. And further reflection would show that the same situation was repeated in the period of transfer from British Empire to Republican India, and from Nationalist China to Communist China from the period 1947 onwards. Different perceptions and different leaderships that gave the perception of gaps between the two countries. In the 1950's after the Korean War Chinese perceptions about India could have led to the incursions that brought China to the borders of India in 1950, similar perceptions of gaps in development and capabilities could have led to the conflict in 1962. From 1993 peace prevailed with India after China entered the World Trade Organization under president Clinton in 2001 following a 10 year effort. Because the focus in China was on development after a series of crises, internal sense of a widening technological gap with the US and Europe, disagreements with the Soviet Union, and the experiments with market economy, internal struggles for democracy. With that period coming to a close as the new trading relationship has led to working class losses in factory jobs in the US, China is faced with protecting its economy as it and the US look at changing supply channels and how it affects both countries. It is a critical time for China as it faces governments in US, France, UK and Canada determined to protect their own interests in manufacturing jobs, renewing supply channels, and in technological advancement. The response is similar to that in 1962 when seen from the Communist party perspective as a gap has opened up with India following China's progress in the 30 year trading relationship with the US and Europe. That gap and the difficult situation China faces today with the US and EU in trade and technology has brought forward the Galwan clash and future clashes in Ladakh and at the border.  As Mr. Jaishnkar, India's Minister of External Affairs as well as former ambassador to China,  has pointed out this is a very different aspirational India that China faces. The same kind of grassroots development that happened in China and rapid pooling of capital, human resources and technology inputs for development is taking place in India, and will continue for the next two decades, quickly bridging any gaps in modernization between the two countries. The difference between a youthful population in India and aging population in China and Japan, is likely to add another dimension. China's Buddhist culture that came from India is not likely to go away, more likely is that China will see a revival of Buddhist ideas of wellness and living more as culture than religion. The experience with British colonialism that prevailed both in India and China, and which from its base in India caused so much grief to China during the Opium wars will recede from memory. Extending borders from historical memory of Japanese incursions into border areas in Manchuria could have led leaders after 1950 in China to extend borders to remote areas in the Arunachal region of India and communist theory books may have created the perception of defensive moves. In the context of an aspirational India similar to China, and no real intention on the part of India to extend itself in any way to China's provinces in Sichuan, this extending of borders as a defensive move will be seen as stemming from memories of Japanese incursions in the 1930's, but simply costly and not relevant in any way to China's own aspirational development and progress. ...