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Ivan Rogers, UK ambassador to the European Union for three years till 2017 was sharply critical of the British government and forecast some of the Brexit problems. He has a book "9 Lessons in Brexit," which appeared in Feb. 2019. Here he is interviewed by Der Spiegel. He says he expected some of the problems but is still surprised that 4 weeks before the deadline the political class in Britain has not yet figured out what kind of Brexit they want. Here he points out that Cameron and Blair represented the centre in British politics. But that centre has now collapsed after the financial crisis and the period of austerity led to widening gaps between the different parts of British society. The public is now deeply alienated from both major parties. In both parties the populists on the left and the right have gained a bigger influence, as a result there are no centre right or centre left figures who command public influence. Rogers is a civil servant of high rank who has worked with several prime ministers including Blair and Cameron. His comments are worth listening to.  Was Theresa May the right person to tackle Brexit? Her problem says ROgers is that she started with a hardline position of reducing the number of people entering the UK from inside or outside the EU. Once you do this you cannot have free movement of goods, services and capital, so you have to leave the single market. And if Britain wanted a fully autonomous trade policy then it cannot stay in the customs union. Rogers thinks Theresa May never really understood what this meant- that it was going much further out of the European Union than Norway or Switzerland, or even Turkey. Now as she is trying to go back her right wing cries betrayal. Do British prime ministers understand the single market, the customs union, or how the EU really works? Rogers worked on European issues for a long time and he says after working very closely with British prime ministers that none of them had a deep understanding of how the European Union works. Plus they lack any emotional attachment to the EU, because of the mercantile relationship Britain has had with its neighbors. About the relationships in Europe between the Germans, the French, the British, what is it and what will it be like? Rogers says he has not seen a thinner relationship in his lifetime. He thinks the European political elites are not talking to each other anything like what was done 20 or 30 years ago. He says the Brits have to take a lot of the responsibility because the British political class lost interest in Europe. What could the Europeans have done? Rogers says the chaos continues because the British don't really know where they want to go. It opaque about the relationship on purpose. Have the Europeans thought about what kind of a continent they want to see after all this is over? This interview tells you more about the Brexit problem that many reports and opinions, bringing a thoughtful way of looking at the problem. ...

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Harry Markovitz who invented Portfolio Theory and won the Nobel Prize in 1990 on the economic crisis and solutions. His idea in portfolio theory is that you reduce risk by creating a portfolio of uncorrelated assets. Owning GM and Ford together is more risky because they are correlated. The securities owned by banks were not not portfolio type with uncorrelated risk, they were all of one type in the mortgage securties industry. He goes to the heart of the problem saying until all these securities are scrutinized and underlying mortgagesare scrutinized, sorted out down to the individual zip code level, and this is not as complicated as it seems given the amount of resources that can be thrown at this problem, and given what is at stake, and they are striped of their lack of transparency, the country and the global economies that are intertwined with America's problems cannot see a solution to this problem. And this is true for the banks like Bank of America and Chase and the government run banks like the FDIC Indymac bank, where only a small fraction of homeowners can be helped with loan modifications to make monthly payments affordable, as a big part of the mortgage loans they hold or service are in the form of mortgage securtities where they don't make the decisions. Unless mortgage securities are sorted out to restore transparency and the government steps in with help and mandates a direction, the foreclosure process will lead to dropping property prices and further deterioration and economic stagnation similiar to the experience of Japan. Markovitz says it could take a year to do this. He says "the valuation process will take as long as takes, but it is the primary step toward effectively utilizing the very controversial bailout and avoiding the structural problem of a stagnant economy." Writes Gordon Crovitz of WSJ, "to put the issue in probability terms, the odds are very remote and nonexistent that the economy can recover until these basic steps are taken."...

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This part of Wisconsin at Mount Pleasant has a 3000 acre site that has water and sewer improvements, highway building, but no factory 5 years after Taiwan's Foxconn announced it was building a large factory here with 13000 new jobs. If built the plant would have received $3 billion in stat3e tax credits. Now the project developed by Racine County Development Corporation is looking for other companies that want to build factories. Under agreements Foxconn is expected to pay $36 million a year for 24 years if the project was not completed. It shows the difficulties American states face as they compete with other states for good factory projects.

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Ms. Le Pen of the National Front called her going into the second round runoff against Macron's En Marche movement, "an act of French pride." Emmanuel Macron has his own way of looking at this. As this NYT editorial points out Macron says his is a movement "of patriots fighting the threat of nationalism." At his rallies and the rally following coming out the front runner in the first round of elections Macron is shown with people waving French flags all around him. The message- that in today's world of global cooperation for economic progress nationalist feeling has to be balanced with healthy cooperation and integration into the regional community, the European Union. That he is a patriot who also has in him a feeling for the communities in his wider region. That real economic progress can only be achieved working in cooperation with neighboring countries and regional community, and around new ideas for renewal.

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Peter Fisher spent 15 years at the New York Fed and was actively involved in the resolution of the 1998 LTCM crisis. He is amanaging director of Black Rock. Yes interest rates were too low for too long and the Bernanke Fed's shift from the earlier era made the markets take a new hard look at the loose practices in the mortgage market leading to a crisis of confidence. There is only a 60-40 % chance that the Fed will lower rates on Sept 18. Globalization spreads risk but it can also cause the crisis to spread to all parts of the world very quickly.

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A discussion on the drying up of capital available to the financial institutions for deleveraging, and the way deveraging puts even more pressure on home prices and lower consumer spending also puts pressure on housing prices by delaying a housing recovery. And the pros and cons of letting Lehman Brothers fail. Sovereign wealth funds are losing money on their investments as stock prices of these firms fall, and their investments are worth much less, resulting in criticism at home. Korean economy has problems of its own so regulators in Korea were not eager to support state owned Korea Development Bank taking a large stake in Lehman. When Mr Fuld, Lehman's CEO stood out for a better deal they may have flagged their concerns to KDB negotiators. And middle eastern sovereign funds are looking for better opportunities in other parts of the world like India, Asia or closer to home. Private Equity funds which have about $450 billion are not able to increase stakes above 25% because of regulations that make them bank holding companies subject to regulators when they go above that limit. Private equity funds like Blackstone and Carlyle are asking for these restrictions to be lifted to be able to invest more in capital starved financial institutions. Meanwhile with share prices plummeting with Lehman losing 90% of its share price it will be harder to raise capital. Merrill lost 17% of its share price in one day so it affects other institutions. Regarding the pros and cons of letting a firm fail the Fed's and Treasury's fear is that markets today are bound together by complex financial instrments like credit default swaps and certain money market instruments that firms and regulators have limited experience handling in a crisis and the concern is that letting a firm fail might have ripple effects. Regulators are addressing the clearing and settling of these instruments but still need time to finish. And there is no formal procedure for disposing off the assets of an investment bank if it fails. And behind all this is the realization as Lawrence Meyer, a former Fed governor, who is vice Chairman of Macroeconomic Advisors LLC puts it : "There's no trend of improvement. It's not improving even slowly." ...

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Foxconn announces salaries for workers would increase by 16-25% to about $400 a month before overtime. Foxconn plans to reduce overtime. Foxconn is a major supplier in China for Apple Computer.

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As remittances fall and in some places disappear from workers in developed countries to their families in developing countries, Kristof says about 46 million people there will fall into poverty. Something Zoellick of the World Bank has been warning for some time. Everything from food, school lunches, tution for children to go to school, housing, will be affected.

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How their strains in the the the Toyota manufacturing system and how Toyota's quality is not what it once was. Its image as a environment conscious company is also suffereing with its attempt to stall new fuel economy legislation in Congress like th Big Three American companies. And new hybrid engines are being introduced in joint development between Mercedes, BMW and GM so the novelty of Toyota hybrid may just wear out. And competitors from Germany and the US are now working harder to reduce Toyota's advantage by producing quality cars. As styling design and creative innovation has not been Toyota's strong point the Americans and the Germans have an opportunity to come up with something new. Even the incentives Toyota has to offer to sell its cars have now come up to what the Gm, Ford and Chrysler had to offer. According to CNW Marketing Research Toyota's dealer incentives have almost tripled in the last 3 years to an average of $3752 per vehicle. This is not a good sign. And we may have reached a point where the difference in quality between the GM Malibu and the Honda Accord from the Toyota Camry may really not be that much. No surprise that this is shaking up Toyota. The "Customer First Initiative" in response to quality issues and recalls is to have more power put into the hands of the chief engineer for any product launch to ensure quality problems are addressed early. And the dealers have EN2 (everything matters exponentially to address quality issues at the dealer level. And there aren't enough sensei or teachers of the Toyota Production System to meet the rapid growth of plants and the Global Production Centre was designed to meet this need by training teachers in an accelerated way in Japan. But there is a sense that a lot of the old Toyota magic may be fading just as Toyota reached te peak of its popularity sometime last year or 2005. Not because Toyota hasn't made the effort but because the whole dynamics of the car industry keep changing and Germans and the Americans are also pushing harder nowadays....

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Finnish president Niinisto provides a new understanding of Mr. Putin and the thinking that led to the invasion of Ukraine. Mr. Niinisto has an advantage having spoken with Mr. Putin countless times says this report in WSJ, and spoke again to Mr. Putin on May 14 to tell him that Finland was planning to join NATO. Putin simply responded that Russia does not pose a threat and "you made a mistake." He says it was not the Finnish way to not call Putin and tell him directly, and that not doing so would be like sneaking away around the corner. Mr. Niinisto says WSJ, has a rare insight into the thinking that led to the behavior of Mr. Putin in launching the war. Here are some insights from this report by Adam O'Neal of WSJ. On the situation in Ukraine Niinisto says " I would be a lot more worried about Ukrainians than about how Russians feel." Mr. Putin's willingness to see Ukraine's industrial centers, its infrastructure and cities destroyed, turning them into moon craters in the east compares with the relative ease of life in Moscow, St Petersburg and other cities, cushioned by Russian oil and gas exports and financial reserves. As a student of Finland's long and violent history with Russia Mr. Niinisto has some unique insights into Russian thinking. He tells WSJ's Adam O'Neal  that if a Russian is angry, yes, be careful, but if he's calm, be even more careful. The Russian invasion of Finland led to loss of 200,000 lives in 1939-40, and another 250,000 Russian lives in fighting between 1941-1944. Finland has 300,000 men or women in military reserves and men between 18 years and 60 years are called up for military service with the Finnish Constitution requiring every citizen to contribute to national defense. Recently Finland ordered 64 F-35 fighter jets from the US. What led to the invasion of Ukraine by Mr. Putin? Niinisto says that "somehow Mr. Putin has a feeling that Russia was betrayed in the 90's by the West. Over time this thinking continued feeding the negativity says Niinisto and led to the thinking that Russia could be betrayed once more.  Another aspect of Mr. Putin which was covered during the last decade of relations with Ukraine in Lyrarc, was his perception that Ukraine under various leaders before Zelensky was basically led by corrupt leaders including one president he supported but lost power in the last decade. Mr. Putin saw protests in Kviv and Lviv that ousted a president he supported recently as orchestrated from outside. This led to thinking that Ukrainian nationalism did not exist and he believed that Kviv would not be defended and would fall easily within a week or weeks. As his nationalist perceptions and that of a small group that included his partner in office Mr. Medvedev became stronger in the last ten years Mr. Putin made the decision to take the option for invasion in the thinking that the response of the US and Germany would not be to support Ukraine with arms and other aid. The CDU and SPD was perceived as weak in Germany and Scholz not seen as able to cut down oil and gas imports to the EU. Biden was seen as not willing to stop Russia by taking on a difficult conflict because of China allying itself with Russia, considering China's interconnections with the American economy. The timing was seen as good considering that this level of dependence on oil and gas imports of Europe on Russia would never be the case after planned shifts to renewable energy. The Russian economy was cushioned by its $620 billion in reserves and by the world's need for energy even as the shift to renewable was taking place. This window my have induced Mr. Putin to take what appeared to be a rational decision that ignored the common feelings of humanity of risking the destruction of a brotherly people that spoke Russian, prayed in Orthodox churches, and where Russia as a state started in the year 1000. Cambridge historian Brendan Simms in his new book "Europe : The Struggle for Supremacy 1453 to the present," has shown all European powers susceptible of reasoning and calculation of this type in their wars since 1453 in the struggle for supremacy in Europe up to the present- the Portuguese, the Spanish, the Dutch, the British, the French, the Germans, the Russians, the Danes, the Swedes. This also led to British and French empires in Asia and Africa with subjugation of Asian and African people. The Second World War had created the perception that somehow this had changed after the loss of millions of lives- that was the perception of Merkel a pastor's daughter who had grown up in the former communist state of GDR in East Germany, and of SPD leader Steinmeier who felt strongly about the loss of lives from the Nazi invasion. Merkel and Steinmeier built the relationship of Germany with Russia that has collapsed under Germany's new leader Scholz and Habeck-Baerbock of the Greens party. Merkel and Steinmeier also built the trade relationship with China that also faces collapse with China's support of Russia under Mr. Jinping, and the unexpected shifts in Chinese leadership and policies from that pursued by premier Deng and his successors in 1990-2010 of interconnected economic links with US and EU. Mr. Scholz, the new chancellor of Germany has Brendan Simms book on Europe on his reading list for 2022 as he ponders over the lessons of 2022 and the pandemic. Mr. Biden with long experience in the Senate of the US has a memory and understanding of what happened since World War II, how America got to this point, and what it will have to do to bring back the American spirit to the Free World that America has led for most of the last two hundred years. ...

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The advanced technology on the Noble Bully 1 oil drilling rig in deep waters 140 miles south of New Orleans. It is jointly owned by Shell and Noble Corp. The technological improvements on the rig could only have been imagined a few years ago. A Eiffel tower shaped structure is completely enclosed in the rig compared to open derrick structures used on earlier rigs. The technology includes GPS, wind sensors, motion sensors, hydraulic systems, computer controlled thruster propellers on the bottom of the vessel to drill wells with precision. It can operate in water 8250 feet deep to 12,000 feet with safety upgrades, and upto 40,000 feet. A similiar ship Noble Bully 2 operates on the coastal part of Brazil. A new platform called Olympus will be a tension leg platform floaing on the sea like a cork, held together by tying it to the ocean floor using cables. The project is called the Mars B development. New sensors use seismic technology with devices closer to the ocean floor in the Gulf picking up data. The data is sent to Shell scientists working onshore and produces four dimensional maps of oil reservoirs using computer chips. The cost savings for the smaller structure include less steel and less fuel used, zero toxic emissions, and operating with 160 workers- 40% less workers than previous rig designs. Veteran drillers say its a lot better working environment and lot safer. Chief drillers sit in "drill chairs" and adjust the speed and direction of drill pipes using joy sticks and computer screens. It is this kind of technology that countries like Mexico, Brazil, Argentina and India need to develop their off shore oil fields, creaing new opportunities for oil companies such as Chevron, Shell, BP, Exxon and Total. The new technology equiped drilling ships, platforms and LNG processing ships are a way for Shell to reduce costs and improve capital efficiency, the new focus for CEO Van Beurden in 2014-2015....

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Leonhardt points out a couple of problems with Paul Ryan's budget proposal for Medicare. He says Medicare recipients, with the exception of the very affluent, currently haven't paid enough for the benefits they receive. He cites a study that shows Medicare pays out several hundreds of thousands of dollars for the average retiree more than they ever paid in. Medicare funds go for hospital expenses, the rest for doctors bills come from general government revenues. Government borrowing increasing the national debt to unsustainable levels so that current retirees do not have to pay higher taxes, is simply shifting the burden to the next generation. He says the Ryan plan shields those who will retire in the next 10 years because they are a powerful voting bloc, making this more of a political calculation than a bold reform step, as this means younger people will have to bear a disproportionate share of the burden. The other part of Ryan's calculus is that it has proven extremely difficult to reduce the volume of medical care that is consumed in terms of tests, lack of preventive care leading to graver problems, and surgeries. Simply by shifting a larger share of the cost to future retirees this will have an effect on the volume of medical care consumed and put a lid on costs. This is something that needs to happen says Leonhardt, but at the same time all Americans need to share in the higher taxes that are necessary to fund Medicare, exempting 75 million Americans only creates an imbalance in contributions. The other problem with this is that the costs of this exempted group will postpone serious deficit reduction for ten years....

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France lags behind Germany and other countries in competitiveness. France's share of European exports decreased from 15.6% in 2000 to 12.5% in the first 5 months of 2011, according to Coe-Rexecode, an economics consultancy firm. Germany has used the last decade to lower social spending and state spending, bring wage restraint, and making industry more productive. France has not experienced a similiar process. Competitiveness and growth is needed for France to improve public finances. After the rise in borrowing costs to Italy France's premium over Germany to borrow for 10 years went up to 71 basis points on July 13, it is now at 62 points. France's trade deficit is rising and was 7 billion euros in April and May, according to Societe Generale.

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The Brazilian economy is growing too fast, and this pace not only won't be sustained, but it has signs of serious trouble ahead. The Brazilian economy grew at an estimated annualized pace of 10% in the last 6 months and generated 962,000 jobs between Jan-April of 2010. Growth in 2010 is expected to be 7%. The jump in growth is partly the result of the stimulus measures of the Lula government. But a consensus of experts is that Brazil still saves too little, has not invested enough in infrastructure,and its economy has the potential of 5% sustainable growth each year. The central bank has increased interest rates - increase of 0.75% in April 2010, and economists in Brazil think the rate will go up to 13% in 2011. About $10 billion in cuts in spending have been announced but they are cuts to an already growing budget approved by Congress, so in reality it will only slow the increase in spending. Public debt is at 42.7% of GDP. Real interest rates have fallen from close to 20% in 2003 to between 5-10%. Costs per unit of labor are increasing at about half the rate of real wages according to a finance official. The National Development Bank or BNDES played a role in helping the economy with subsidized loans when the financial markets ran into trouble. It has expanded lending by 50%, with money from the Treasury of 180 billion reais. Some of the measures of the Lula government has reduced the skewed income distribution Brazil, and in doing so has increased consumer demand. Meeting high consumer demand, and meeting the need for commodities like soyabeans and metals from China, has boosted growth in Brazil to twice the sustainable rate and it is now at a par with China and India. But this places Brazil too dependent on the boom in Chinese demand, especially as the stimulus in China slows and the property bubble threatens China's economy. See links to China. A new President after the upcoming Presidential election will have to tackle the high interest rates in 2011, lower commodity prices, and the need for better infrastructure, and make the adjustment to a sustainable pace of growth....

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Timothy Egan points to the huge gap between a T.R. in 1910 making the speech in Osawatomie, eastern Kansas, and Professor Obama making an election speech in 2011. T.R.'s was an election manifesto that brought up the issues of conservation, child labor, a plea for an income tax, call for worker protections, limits on corporate power and influence on the laws and direction of the country. The speech was made in 1910, after Taft had assumed the presidency with Roosevelt's backing, and would lead to T.R. running against Taft and Woodrow Wilson. Most of what T.R. advocated became part of the country's social and economic fabric, much of the work beginning with Theodore Roosevelt's two terms as president, and also pursued by Woodrow Wilson, the president elected in 1912. By contrast, in line with the timidity of today's politics, Obama's speech called for approving his nominee for consumer protection bureau chief, and continuance of tax cuts for the middle class. Egan calls it a curse of today's politics and national debate that no politician can set the course for revitalizing America the way T.R. did. Some of what T.R. said in Kansas that day is: "There can be no effective control of corporations while their political activity remains. To put an end to it will be neither a short nor an easy task, but it can be done." "The right to regulate the use of wealth in the public interest is universally admitted." Jackie Calmes covered the extensive ties of both candidates, Obama and McCain, to Fannie Mae and Freddie Mac, in her report for the New York Times, on September 9, 2008- "For 08' Rivals a Skein of Ties to Loan Giants." Paul Gigot, editorial page editor of the Wall Street Journal, who with his reporters did some of the difficult reporting on Fannie and Freddie, wrote in one of his columns with a note of pessimism, that he wasn't sure that either of the presidential candidates were interested in what was happening. ...

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Fears that India may be falling behind China, Mexico and Brazil in healthcare for the people. A planned budget increase was never implemented. Today the Indian government spends only $20 billion on healthcare for a population of over 1 billion people. Annual spending on healthcare is about 1.4% of GDP. Now the Indian government is planning to increase this to 2.5% of GDP. One senior health official Amarjeet Sinha, says other emerging economies such as Brazil, Mexico, Malaysia, now have better public health indicators than India. In 1990 India's public health indicators were similiar to those countries. Another serious problem in India is malnutrition with an estimated 4 of 10 children malnourished. Underinvestment in healthcare is a significant problem as needs grow but there is a shortage of resources and trained healthcare personnel. Arvind Singhal, chairman of consutancy Technopak, says India needs an additional 1 million doctors and 2.5 million nurses to meet the needs of the current level of the Indian population. To do this 600 new medical colleges and 1,500 nursing colleges are needed. The child care advocacy group Save the Children UK, points out that just to meet India's committment to reduce the infant mortality rate by two thirds of the current level by 2015- to meet India's commitment to the UN Millenium Development Goals- India will need 2.6 million additional trained health workers. This shortage is most acutely felt in rural areas, especially in the large states of Uttar Pradesh and Bihar....