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The St. Louis Fed President, James Bullard, argues in a paper, that the keeping of target interest rates near zero as promised by Ben Bernanke at the Federal Reserve, sets up a situation similiar to Japan of a "deflation trap." He said that core annual inflation of only 0.9% in May 2010 suggests that there is a risk that the nominal inerest rate and inflation end up being at an unintended steady state which is dangerously low. He also said that the market's interpretation of the Fed's extended period of low interests language had a perverse effect of stretching out the period before things normalize. He suggests as an appropriate step "quantitative easing"- a policy of buying monetary debt with longer dates. But for this to be effective, the action has to be credible.

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As its economy slows and facing high debt levels, China benefits by an estimated $18 billion a month from lower oil prices in 2015. The estimate is from Starfort Holdings, investment and private equity group. The estimates as China benefits from lower prices of all commodities, including oil, are of about $250 billion annually as China replenishes its stocks of commodities. With $12 million barrels imported daily China is a major emerging market beneficiary, along with India, of the drop in oil prices. Continuing pressure on prices from the expected resilience in shale oil production in the U.S. with learning and the development of new production methods means the benefits are likely to continue. China has also not renegotiated price points in deals made earlier at higher prices with China and Venezuela, as it pursues its foreign interests. Stockpiling of grains and edible oils are being increased by 33% in 2015 by $24.7 billion.

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Kozo Yamamoto joined the Finance Ministry in 1971, and is serving his sixth term as member of Japan's parliament. Since 2011 Yamamoto has convinced Abe, a colleague in parliament, about the need for reflationist policies now called Abenomics. This helped Abe make a comeback win for the prime minister's position for a second time. Yamamoto led the study group that convinced Abe of the need to delay the second increase in the consumption tax to 2017, and a 3 trillion yen stimulus package to encourage household spending, following the economy's fallback into a recession in Nov. 2014. He says it was important to not add to the headwinds the economy is facing. Yamamoto does not fall into the conservative mold of people from the Finance Ministry, as he takes tango lessons, is interested in fine pottery, and in Italian cooking. He has called bureaucrats in the ministry and central bankers "feckless" and "defiant," after years of questioning them in parliament and demanding reflationist policies. With the snap election in December 2014 the Abe led LDP is taking on the conservative Finance Ministry officials, who have insisted on sticking with the old timetable for the tax increase, regardless of the headwinds and slowing exports....

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The Journal's Jeff Bennett talks with Rodney O'Neal, the CEO of Delphi Automotive. O'Neal says Delphi's success depends on focussing on advanced technologies where emerging market producers are less able to compete. He has focussed on 33 product lines which are 'green,' safe' and connected.' If it doen't create value then revenue and cost numbers are wrong, is O'Neal's lesson from the bankruptcy filing. He likes the chaotic discussion coming form strong debate, where views are expressed with passion and counterpoints made, and he takes this debate seriously, because as he sees it choosing the right course is a significant task in itself, which takes much time to correct if wrong. There are major improvements in emission and fuel economy ahead and a high tech future for the automobile industry. He see America's future in high-tech where America can do better than emerging market producers, and ensuring that the steady flow of exceptional American talent continues to be channelled properly....

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Two weeks after his election Donald Trump says the U.S. will not join the Trans Pacific Trade Agreement during his term in office. Barack Obama took seven years to negotiate the trade agreement which was opposed by trade unions, the auto industry and was unpopular in the midwestern U.S. because of the impact of trade in hollowing out the manufacturing sector. Here Frank Sieren of the DW.com points out that the agreement was not really about trade, as most of the gains of trade had already been realized according to experts. It was part of the "pivot to Asia" to maintain American dominance in the region, says Sieren. After China pulled together some Asian and European countries into its trade agreement, the Regional Comprehensive Economic Partnership (RCEP), the U.S. pushed for TPP as a counterweight to the China sponsored trade zone. China says it will try to integrate the countries in TPP into the trade zone it has sponsored. President Trump has said that the U.S. is better off negotiating agreements with each country and not getting into multilateral trade agreements. He fought the election campaign on the basis of the opposition to TPP and trade agreements that unfairly hurt American workers. This could have provided the 110,000 margin of victory in the states suffering from the hollowing out in manufacturing such as Michigan, Wisconsin, Ohio and Pennsylvania. A similar hollowing out in Ontario favored Justin Trudeau's Liberals against the Conservatives in Canada's election. ...

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China's economic planning agency, the National Development and Reform Commission, has approved $156 billion in new infrastructure projects, new subways, highways and other projects in recent weeks. The response is more carefully planned than the stimulus projects in 2009-2010, which are now seen as excessive response creating the prospect of bad loans in the banking system and causing inflation. The stimulus spread over 2 years, 2009 and 2010, was by government's initial estimates about 4 trillion yuan and this does not include additional local government spending as the government encouraged spending. This time the stimulus is about 1 trillion yuan or $158 billion, 2% of GDP, spread over 4 years, with projects going through careful review, according to Nomura economist Zhang Zhiwei. The Chinese government wants to avoid losing gains made in controlling a property bubble and holding down inflation.

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China's GDP growth for the 4th quarter of 2012 was 7.9% over prior year, increasing from 7.4% in the third quarter of 2012, according to the National Bureau of Statistics. GDP growth for 2012 was 7.8%, down from 9.3% in 2011. Growth is stabilizing at 8% which shows China is managing the economy, slowing the growth rate with a smaller stimulus planned in 2013, and working on sustainable growth for the longer term. This is a significant positive as a new leadership takes over in China and sets priorities for stable growth, and improvements in housing and health care.

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With U.S. exports to China related to about 1% of U.S. GDP, and the direct foreign investment by China in the U.S. being less than 1% of all foreign investment in the U.S., the slowdown in China is likely to have a small effect on the U.S. economy, say experts. China's slowdown will help service industries in the U.S., internet companies, software and entertainment companies. Positive factors include slower growth in manufactured imports from China, low commodity prices including oil for an extended period of time, access to more Chinese investment in the U.S. with higher returns, and more talented students from China staying in the U.S.

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In 2013 growth shows signs of strengthening in the U.S. and the eurozone countries see improvement from the severe recession in Greece, Ireland, Spain, Portugal and weakness in Italy. Developing countries see growth slow down to about 5% in India, 7% in China and 2% in Brazil. Growth improvement in Japan. Overall the situation appears to be reversing with growth picking up in the developed countries and slowing in developing countries and emerging markets. This was also reflected in equity markets performance with U.S. and European stock markets showing strong performance and emerging markets weak or declining performance.

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The IMF Global Economic Outlook report for 2012-2013 presented at the annual meeting in Oct. 2012, says there are considerable downside risks and a large degree of uncertainty in late 2012. The IMF report lowers estimates for global economic growth in 2013.

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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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China's GDP growth accelerated slightly to 6.9 percent in the 1st quarter of 2017, after five consecutive quarters of GDP growth at 6.7-6.8%, according to government data. This reflected larger use of steel in the construction industry and more mortgages issued by the state controlled banking sector. Government officials say productivity is improving helping GDP growth, with closing of less efficient manufacturing plants. Industrial production increased 7.6% in March 2017, according to the National Bureau of Statistics. The government is trying to control higher lending and reduce the backlog of bad loans at banks. Higher growth helps to reduce the bad loans at banks from the earlier period after 2008 financial crisis, improving financial stability.

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Could high oil prices lead to real conservation in the US and lead to the US following Japan's lead in conservation. If this were to happen it would be a good thing. Union pacific is betting on more fuel efficient locomotives and operating trains in ways that conserve fuel. What if this happens everywhere in industry after industry. Would America's wasteful ways become a thing of the past? Some of this is likely to happen if not completely as oil prices have hit already and are likely to go up further. Still this shock may not as bad as previous ones as long asmoney going to Russia and the Middle East is reinvested in the US or Europe or Asia, in the global economy, as it liklely will be, and as long as the rise is gradual which it likely will be as its not a political shock like an embargo, aand as long as the rise is matched by conservation moves by American and European industry following the lead of Japan which also is likely to happen as industry after industry responds to the price increases with conservation and fuel efficiency moves of its own in terms of better technology and equipment and techniques of fuel usage something that extends to airplaners and cars. Also crucial to the reilient response to higher prices is a careful Fed policy that does not hike interest rates in response to the inflation in oil prices and this is also not likely to happen as Bernanke's own research has shown that he will be careful to respond to not adversely affect the global economy. ...

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John Taylor on the dual mandate for inflation and unemployment and discretionary policies by the U.S. Federal Reserve that ended up creating booms and busts in the U.S. economy. He advocates replacing the dual mandate of "maximum employment" and "stable prices," which was inserted into the Federal Reserve Act in the 1970's, with a single mandate for "long-run price stability." Taylor points out that this will still give the Fed flexibility, as it is focussed on long run price stability. The Fed does not have to overreact to short run increases in inflation. And he points out that this actually will work well for unemployment as the booms caused by an overextended period of low interest rates such as that in 2003-2005, have led to booms followed by busts with high unemployment.

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The shift away from Iranian oil with U.S. pressure and sanctions, and higher oil prices, could pose challenges for the Indian macroeconomic outlook in 2020.

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The demand for ships went up so steeply that shipping rates hit the roof, and the prices of ships went up accordingly. Between the end of 2006 and July 2008 , shipyards received enough commissions, says the Economist, that this would double the world's fleet. Just as demand has collapsed and international trade has gone down, about 9000 ships are coming onstream. Now 11% of fleet capacity justs sits on the water, in the seas outside the harbors of Singapore, Hong Kong and other southeast Asian ports. A 150 tonne cape class ship that sold in 2003 for $18.5 million in the used market, when rates for charter were $15,000 a day, had risen by summer 2008, to $85 million with rates of $175,000 a day. These rates went up even more to $300,000 a day, which is 20 times what it was in 2003. And rates today are back down to $15,000 a day, where they were in 2003. This ship, cited by a broker, to give some idea of the extent of this boom and its collapse, was sold for scrap at $7 million. And South Korean shipyards are taking this into account, in their pricing and collection of payment, with 20% demanded upfront, 60% during construction, and 20% upon delivery. The backlog in shipyards is estimated by Clarkson Research, a maritime research firm, at $526 billion, even as banks are leery of lending and concerned about the value of the collateral in the event of default. Some smaller Korean shipyards are closing. Steve Mann, analyst at HSBC, says that half of the orders for delivery in 2010 will be delayed, so that there is work for 2011 and inventory or excess capacity does not pile up on the oceans. Even in this situation China, India and Vietnam continue to support the expansion of their own shipyards. This suggests additional losses for shipbuilders, shipping lines and the banks that lend to shipyards. All this also goes to show that the rush to industrialize, once it gets a firm footing- like it has in the Chinese model of increasing investment and local governments pushing infrastructure, industry and export factories with officials judged on GNP growth numbers- can exacerbate a boom-bust cycle. This is one industry, others include machinery manufacturers, commodity producers, and manufacturers of parts that go into finished products assembled in China for export. This means it would take the world economy down with it, if some external factor like the drop in export demand suddenly slows everything down. Machinery manufacturers in Germany, commodity producers in Brazil, Argentina, Chile, Australia, and manufacturers of the high tech parts in Japan and Taiwan that are shipped to China for assembly, all go down in this boom-bust cycle, in a dramatic manner. ...

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Vikram Pandit's style at Citigroup after 4 months, thoughful, asking lots of questions, fixing the little things that actually matter a lot, like the unwillingness of some heads of divisions to sit together in the same room, some hiring decisions and new lines of reporting and responsibiity and interaction in the organization structure that call for teamwork, discussion and collaboration. The oldtimers like Krawcheck used to clear lines of reporting are now getting used to the new culture of collaborative working. His style is first to come to grips with issues and not to come to snap decisions based on intuition, such as interviewing at length and asking tough questions at length to Ajay Banga, head of Citi's international group about the extensive defaults in Citi's consumer loan business in Japan. One of his views is that only if you get the foundation right can you talk about vision. Regarding pettiness in management and small grudges, its either going to be a partnership or you're not going to be here. some of his colleagues like James Forense say that they would take substance over form, judgement over form, any day of the week. And while he does not shy away from details like expecting lower level employees to pay for sporting event tickets Citigroup earlier gave out free, and he himself rides the subway sometimes, he has made some of the bigger decisions. Among these, getting capital from outside sources by travelling extensively abroad, urging Citigroup's board to slash the dividend for the first time in 20 years, selling off 2 peripheral units that did not belong and a third Primerica on sale also. And urged by his mentor former Treasury secretary Rubin who also used a note pad and a thinking thoughtful style like Pandit's at Treasury during the Asian banking crisis and the Mexican financial crisis, Pandit has been direct and realistic. He tells Wall Street that the fate of Citigroup is going to be decided to some extent by the duration of the environment we are going through, the twin perils of the debt-market crisis and the sluggish US economy. And that for now issues like these are going to overwhelm our actions. Pandit's father was a senior executive of one of India's leading pharmaceutical companies when the family moved to New York, so he has grown up around business, and is able to ask the question quite sincerely and matter of factly of his managers at the beginning of every meeting. "What are you doing with the shareholder's money?" After which come the torrent of well thought out questions, probing deeper each time, especiually where issues are festering for a long time, and remain unresolved. ...

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The Trump administration's early proposal for NAFTA moves away from campaign pledges to completely renegotiate the treaty, instead taking the approach of working to improve the U.S. trade position in relation to Mexico and Canada. It includes seven objectives for tougher rules for labor and the environment favored by Democrats in Congress, and it also has support from Republicans with its effort to update NAFTA for changes in technology and in other areas since the accord was signed during the Clinton administration. The area in which U.S. and Mexican business are wary is one in which the Trump administration still seeks to keep the option of imposing protective tariffs, and a border-adjusted tax to level playing field for differences in taxes, as well as other measures to protect American jobs and interests. Because any renegotiated NAFTA also has to pass both houses of Congress this proposal took into account the different constituencies and interests for this issue. Robert Lighthizer, trade representative under president Reagan is likely to become the next U.S. Trade Representative and lead negotiator. We first profiled Lighthizer in a group in Lyrarc for pointing to the need for a level playing field in trade. As early as 2010 Lighthizer argued in op-ed articles that globalization and trade practices should ensure a level playing field for the U.S., and was covered in Lyrarc. ...

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Aaron Back cites U.S. Bureau of Labor of Statistics figures showing hourly manufacturing wages in 2011 for Japan at a level 89% higher than in South Korea. The decline in the value of the yen to 100 to the dollar is expected to improve the competitiveness of Japan's manufacturing companies in relation to competitors in S. Korea and Taiwan. The higher manufacturing costs in Japan offset some of that advantage. Much depends on Japanese companies recovering in the area of innovation, and improving competitiveness in other ways.

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Members of the U.S. Congress lead a lousy life with life split between the capital and their home state location, most are weekend dads or moms. This makes them less likely to grasp the issues of work-life balance and the issues of parenting faced by average working families or couples with both parents working, says this essay in Politico magazine. This is true also of understanding issues facing women and mothers. Hard to believe but this report points out that Congress in the U.S. does not have a family friendly leave policy and no restroom for women till 2011 on the floor of the House. Similar issues face women in Japan and other countries for women in parliament. Former Speaker Ryan says he is tired of being a "weekend Dad." Senator Biden, former vice president says of his commute from Delaware to Washington D.C., he realized that "a child has a thought he wants to share and 12-18 hours later its gone, gone, gone." ...