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The WSJ's Joyu Wang looks at the life and political career of Taiwan's new president Lai Ching-Te. Lai has a completely different background from his mentor Tsai the DDP leader who led Taiwan for two terms. In contrast to Tsai who was from an affluent family and worked in the ministries, Lai is from a family with 6 children in northern Taiwan. His father was a coal miner who died in a work accident when he was a few months old. He studied medicine at Cheng Kung University medical school, before leaving medicine for politics at the urging of his teachers. Taiwan was in the middle of a pro democracy movement as the Koumintang party lost its grip on government in the 1980's. The DPP was in its early days and Lai was elected to the National Assembly in 1994. In 2010 he was elected mayor of Tainan. In 2014 by 72% of the vote he is reelected and 2017 the DPP's Tsai serving a first term as president brings Lai in as premier. People who know him say he shows great empathy with working people yet can be slow to change once he has made up his mind. This WSJ report says compared to Tsai Lai is less predictable as he believes in Taiwanese independence and does not hesitate to say this. He once having said he would like to walk into the White House to talk with the US president. This means he is less predictable than Tsai for both China and the US who seek to keep the relationship with Taiwan stable so that US-China business and other relations can be stable -without the distraction of a Chinese response to every move by Taiwan towards independent policies. Lai built a new science park in the city of Tainan, a new art museum and a new flood management system. ...

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It is hard to imagine that one is even writing about this, as shocking as it is- the 4 or 5 minutes between a decision to launch nuclear weapons and the end of life on this planet earth as we know it. Here Sam Nunn, a U.S. senator who was part of the negotiations for arms control and who is the leading American in this field talks about the unimaginable danger. He says the strategy from the Cold War where Russia and the U.S. put their nuclear forces in a position to be launched within minutes, 4 to 5 minutes, is outdated and needs to be changed. Hillary Clinton described the issue in the television debate. Yet this was not discussed because of the nature of the 2016 presidential election with lack of serious discussion.  And both Nunn and Clinton emphasize that once the missiles are in the air they cannot be ordered to go back. Accidental error, judgemental error, informational error in which one side thinks the other has launched a missile, a firing by mistake, are possible. In this situation Nunn says Trump is temperamentally unfit, and Clinton is fit to take on the responsibility. Yet the question this raises is as Nunn signals- is anyone but God fit to make this decision to launch nuclear weapons. Nunn says it is outdated and wrong to have only a few minutes, as such a decision cannot be made in a few hours or days, much less in 5 minutes. Nunn brings up a discussion he had in Moscow when he brought this up with Russians and president Putin. Russian president Putin told Nunn that he was fully aware of this. Putin's response was- "Senator Nunn, at some point it becomes automatic."  Nunn does not clarify what this means, or what Putin means to say. For people on the planet it is not enough to have Reagan, Gorbachev, Clinton, as Nunn mentions being responsible people for a nuclear decision. The current state of affairs is simply shocking and the lack of attention to this is also shocking. Equally dangerous is that 20 countries have weapons usable nuclear material, and sophisticated hacking of command and control processes is another danger.       ...

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Chinese government data show that inflation was 3.1% in May 2010. The spread of wage increases in manufacturing after a series of strikes at Hon Hai and Honda Motor suggest that price pressures will grow even further. Analysts warn that China's central bank will have to raise interest rates to control the boom in the economy and property markets; that merely reining in credit will not work. They also suggest the need for swifter action in revaluing the yuan. As wage increases spread throughout manufacturing, this will eventually be reflected in higher prices of end products.

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Deposit insurance at the top of the priorities for economic and banking changes in China in 2014.

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Fears about a property price bubble in China bursting with the central bank not able to control the economy. Increasing fears that China may not be able to control the bubble. Other countries where bubble effects are taking place: Canada where housing prices are accelerating, Brazil with expected GDP growth of 5.8% and "hot money" pouring in, India where inflation has reached 15% and $92 billion of foreign investment in Indian stocks and bonds, Australia with its hot mining sector with trade connections to China, South Korea with growth approaching 5% and high rates of household debt. GDP and property prices increased by 11% in China in the 1st quarter of 2010. Many of these economies have connections with China, including Brazil and Australia with commodities sectors dependent on China.

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The huge risks the misallocated stimulus capital from real estate speculation poses for the Chinese economy. China's government rapidly expanded lending after the 2008 global financial crisis. One estimate is that about 10 trillion yuan in new loans were made in 2009, over twice the amount of 2008, expanding the loan portfolio and money supply by one third. A major problem is vacant homes as Chinese put their money in second homes as an investment. Chinese are not investing in the stock market because of the volatility, and with the low yields in bonds and banks money is going into real estate. According to a Morgan Stanley economist, about 25-30% of private commercial and housing space is vacant. This happens just as middle class Chinese are being priced out of the housing market. Prices went up by 12% in the housing market this year according to the China National Bureau of Statistics. Couples wanting to leave their parent's homes find it difficult to do so. It was the topic for a Chinese TV series "Dwelling Narrowness." ...

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This article in the Economist magazine points out that official data do not accurately show the health of the banking sector, with large number of bad loans at smaller banks. Bank shares it points out are priced in a way that reflects bad loans at 5-10% of loans.

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China's shift in emphasis from heavy manufacturing and the auto industry to other technologically advanced and less environmentally sensitive industries including new energy sources. The National Development Reform Commisson lists industries in 3 categories- encouraged, allowed, and restricted. The auto industry is now in the allowed or permitted category, and is no longer encouraged for the purposes of foreign investment and the granting of preferential tax or streamlined approval processes. Alternative energy cars, internet equipment and some service industries are moving to the encouraged category. The growth in the auto industry has slowed to about 3% in 2011 from 32% in 2010, with the change hitting the domestic Chinese brands the most. As a result more laws are expected to help technical know-how flow towards Chinese auto companies, according to IHS Automotive.

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Malaysia's debt to GDP ratio increased to 242% in mid-2012 from 192% in 2008 according to McKinsey. As export growth has slowed the Malaysian government is relying on credit expansion to consumers and large capital projects such as the planned subway project in Kuala Lumpur to sustain growth. Similiar credit expansion is seen in other Asian countries- Thailand, Vietnam, Singapore, Hong Kong. The period 2008 to 2013 has seen a rapid acceleration in credit expansion in these countries and especially in China. China's debt to GDP ratio increased to 183% in mid 2012 from 153% in 2008, according to McKinsey. Nomura Holding's economist Zhiwei Zhang, and other economists say it is above 200% when government data on "shadow banking" lending institutions such as trust companies is included. IMF economist Giovanni Dell'Ariccia has studied of debt expansion and credit booms since the 1970's. He and other economists at the IMF have found that credit booms- the rapid increase in credit to GDP ratios- end up in crises one third of the time, result in below par growth in another third of the time, and only in one third of the time does growth continue at the high pace. Alex Frangos talks to government officials in Kuala Lumpur who do not take seriously the high vacancy rate for office buildings in the capital of about 20% even as new office towers are being built. Bob Davis gives the example of government owned Hunan Expressway company in China which has a huge road building program and doubled its 2009 debt levels. Another state owned company in shipping China Cosco Holdings increased total debt from 85 billion yuan in 2009 to 123 billion yuan in 2012. As export growth slowed in China in 2009 credit expansion is driving growth. The normal restraints of the market are absent in China's state owned companies. Charlene Chu, senior director of Fitch Ratings Inc in Beijing, says 2012 demonstrated that the Chinese government cannot slow credit growth without risking a decline in growth. China's GDP growth in the 1st quarter of 2013 slowed to 7.7% from 7.9% in the 4th quarter of 2012. This poses a serious problem for China. China has never experienced the kinds of problems seen in Asia after the 1997 banking crisis, in the eurozone today, and in the U.S. following the financial crisis of 2008, making government officials prone to complacency about the risks....

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Consumer issues raised in CCTV's 315 broadcasts named after World Consumer Rights Day. There is new energy in CCTV reporters now that consumer rights are a priority under the new administration of Jinping-Li Keqiang. Companies that have come up for review include food companies McDonald's, Yum Brands, retailer Carrefour, Automobile company VW, and computer/smartphone company Apple. Foreign companies operating in China are now expected to follow the high standards they maintain in their home markets or come up for review.

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The campaign rhetoric for renegotiating NAFTA and building a wall at the border has had a sharply negative effect on growth in Mexico. Growth slowed in 2016 and is expected to be close to zero in 2017 with declining foreign investment in the economy. The uncertainty is leading to sharp decline in foreign direct investment of 24% in the first 9 months of 2016, according to the Bank of Mexico. Further declines can be expected in 2017. The decline in the value of the peso of 16% since May 2016 has led to 6 interest rate increases in the past year. Inflation on annual basis was at 4.72% in Jan. 2017 and is rising. As Mexico depends on exports for one third of its output growth, and 80% is sent to the U.S., there is a need to diversify with trade agreements made with the European Union and other countries. Mexicans now question the value of NAFTA trade agreement as average growth of 2.6 since NAFTA was signed is below the 4.6% in the 2 decades prior to that. And poverty level is the same with about 60% of people in the underground economy. In addition crime, drug trade, a weak education system, weak rule of law, political corruption, show that Mexico has not made the progress since NAFTA that it should have made. ...

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This editorial in the New York Times points out that the new president of the ANC party -that runs South Africa and has a monopoly of power in the post Apartheid years, under Mandela, Mbeki and Zuma- faces a uphill task as the ANC remains deeply divided after supporting Mr. Zuma in office till the very end. Apart from the stagnant economy, there are challenges the ANC faces in the lethargy of the post Apartheid years, and the culture of corruption, and patronage management that led to mismanagement of state enterprises.

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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....