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The 2014 budget for Spain is free of the strong austerity measures, cuts in spending, and tax increases, of earlier budgets. Growth is expected to be 0.7% in 2014, after 1.3% decline in 2013. The unemployment rate is set to decline from 27% high in first quarter of 2013, to 25.9% in 2014. Savings of $800 million euros will come from changes in the pension system and civil servants face a freeze in salaries for the fourth year. The premium over German government bonds for Spain's government bonds is now less than that of government bonds of Italy. Cost of financing Spain's debt is projected to decline by 5.2% to 36.6 billion euros, according to Treasury minister Montero. The EU with the backing of the IMF has considered the high unemployment in Spain in its decision to relax deficit targets. This has given Spain an opportunity to clean up its accounts without further damage to the economy. Spain's deficit will now decline to 6.5% in 2013 from a deficit of 6.8% in 2012. The target for the deficit is set at 5.8% for 2014. Credit is still tight and consumer spending weak, major concerns for the government- in addition to the need for creating jobs- of prime minister Rajoy....

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A detailed look at how Enel is trying to penetrate the Russian power market. It is investing $6 billion in Russia. Mr. Fulvio Conti, CEO of Eni, has a clear idea how he is going to operate in Russia. He has developed close ties with Gazprom, has Gazprom as a partner in ownership of former Yukos gas assets which supply power plants it is acquiring ownership of (OGK-5's constellation of power plants in western Russia.) Eni uses Gazproms pipeline network to get the gas to its plants. In this way Eni feels it has a winning model to convert gas into electricity with low risk. Eni can then wait for what it expects will be gradual progress towards liberalization of electricity markets in Russia, so that prices will be higher and give Eni good margins. It will also put Eni ahead of German and other European competitors. Russia's electricity market is expected to grow rapidly as its economy grows. It needs $120 billion in investment to build further its electricity infrastructure and foreign investment is needed in this area. Eni has also offered Gazprom reciprocal ownership of power plant assets in Italy in its negotiations, to build a win-win situation....

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The director of the MIT Initiative on the Digital Economy says he worries about the effect of automation on work performed by garment workers in countries such as Bangladesh. As machines become adept at performing the difficult tasks performed by humans, automation is spreading in places like Bangladesh. This report shows the Mohammadi Group which makes sweaters for H&M, Zara and other brands replacing 500 workers in its Bangladesh factory with 173 German machines. As wages grow in countries that made garment products such as Bangladesh, India, China and Cambodia are affected. A 2016 International Labor Organization Study predicts some Asian countries could lose as much as 80% of the apparel, textile jobs as automation spreads. This presents a huge problem for these countries as creating high skilled jobs is a challenge in these Asian countries. In Bangladesh where 2 million new jobs are needed each year to keep pace with increasing labor force, the 300,000 new textile industry jobs a year for 2003-2010 have shrunk now to about 60,000 a year, according to World Bank data.  The garment industry in Bangladesh provides 80% of the exports and 3 million  manufacturing jobs, reducing significantly the number of people below the poverty line. After a fire at a garment factory in Bangladesh the government set a monthly minimum wage of $64, an increase of 77%, with automatic annual raises. Factory owners moved to suburbs and used more machines to deal with labor unrest. Some garment workers became rickshaw drivers, a scooter type taxi in India. The Bangladeshi garment industry is continuing to be cost competitive by reducing costs through automation, increasing exports by 19.5% from 2013 to mid 2016, increasing jobs by 4.5% during this period, according to the local industry association figures.   ...

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More answers on more questions by readers, this time from the Guardian.

How does Britain get out of this mess- finding a deal acceptable to all, the Tories right wing, Labour party, and the EU, which isn't likely any time soon. Extending Article 50 beyond March 29, only adds a few months.

Is the UK going insane asked one reader. The answer from the Guardian- yes.

 

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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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The historical allusions in the media in Greece, Italy and Germany, and cultural perceptions which have increased differences in the European Union. This comes at a time of austerity programs in the Southern tier of EU countries and pressure on Germany to fund the debt reduction in some EU countries.

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Germany holds the presidency of the G-20 in 2017. This provides chancellor Merkel an opportunity to provide German leadership on many issues. The ministerial conferences will lead to the summit in Hamburg in July 2017. Concern about the incoming Trump administration views on trade in international circles gives Germany and China a larger role in the meetings for 2017. Germany plans to put more focus on the real causes of migration and flight from poor countries and war zones.

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The unemployment rate drops to 7.8% from 8.1% in September according to the Labor Dept. The decline partly comes from people taking part time jobs because they are unable to find full time work. The establishment survey shows 104,000 jobs added in the private sector in September, and revises the figures for July and August to show 86,000 additional jobs created. Of the 104,000 jobs added, jobs increased in health care and transportation. Government added 10,000 jobs. Manufacturing jobs declined by 16,000, a cause for concern. A more accurate measure of unemployment is the underutilization of labor called U-6 by experts, this includes part time workers who would prefer to work full time- this has remained at 14.7% for Sept. 2012. The overall picture is that the job market remains sluggish. Because Labor Department numbers are prone to revision this could change in coming months. The slowing economy in China with the new stimulus in China coming in at one eighth the size of the old stimulus (1 trillion yuan over 4 years compared to 4 trillion yuan over 2 years 2009-2010) because of inflation concerns and risks of aggravating a property bubble, and the declining growth in the eurozone- France with zero growth in 2013 and Germany at 0.9%, Italy and Spain declining growth- means the prospects for U.S. economic growth will be lower in 2013. U.S. GDP growth was 1.3% in the second quarter according to the Commerce Department, and Macroeconomic Advisors predicts GDP growth of 1.5% in the third quarter in downward revisions. ...

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Yanukovych, the president of Ukraine, is from the industrial eastern part of Ukraine centring on Donetsk. He is intensely disliked by the protesters in Ukraine and unpopular with the western part of the country which favors joining the European Union. Polls show 45% of the people support joining the EU, and only 14% joining Russia in a economic union. Yanukovych failed to bring the country together. The EU had called for the release of a former prime minister Ms. Tymoshenko in prison for the last 2 years, and Yanukovych's failure to do this worsened relations with Germany. The U.S. sees Yatsenuyk 39, a economist who served in the Tymoshenko administration as economy minister, as a person with the credibility in Ukraine and the experience to be part of a transition government. Figures who are popular with protesters but have no connections with previous governments include Vitali Klitschko, 42, a boxing champion, who has his own party Udar, meaning punch. Tymoshenko, was popular during the Orange Revolution in 2004, but her two terms as prime minister came under criticism for mismanagement. Parliament selected the prime minister under the 2004 constitution, and the protests focussed on consolidation of power under the president, including the appointment of the prime minister. As a first step parliament took on powers to appoint the prime minister on Feb. 21, 2014, freed Tymoshenko from prison, and set a date for elections in May 2014. Yanukovych fled Kiev and left for the eastern part of the country as parliament began the transition to a new government. ...

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Lufthansa sees profit drop 599 million euros in 2008, compared to 1.66 billion euros in 2007. 2007 sales were inflated by 500 million euros in asset sales. 2008 sales also reflect awritedown on the stake in Jet Blue Airways of the USA. Sales rose 11% to 24.87 billion euros, boosted by consolidation of Swiss International. Lufthansa plans to takeover Austrian Airlines, increase its holding in BMI, and acquire astake in SN holding, the parent company of Brussels Airlines.

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The Gallois Report and France's efforts to improve competitiveness under the Hollande administration.

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The IMF's World Economic Outlook in March 2008. The IMF Outlook has been behind the curve in looking ahead at the world economy. The IMF chief economist Simon Johnson cut the baseline forecast cut its US growth forecast by a percentage point since its January outlook, its now at 0.5% for 2008 and 0.6% for 2009. But thats when the Fed minutes already show the discussion about a" severe and protracted recession " in the USA, so it looks like its a bit late and after the fact. And some experts expect a contraction in the US economy this year. More indicative is its forecast of the European economy which is not as upbeat as the OECD estimates and suggests that the ECB may be more receptive to monetary easing and lowering interest rates because of lower growth in the Euro region. IMF sees eurozone growth at 1.4% in 2008 and 1.2% in 2009. Germany and France are expected to grow at 1.4%.

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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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This very exceptional report from the city of Recife in Brazil's northeastern state of Pernambuco, comes from WSJ reporters Johnson and Jelmayer. It is about the physicians Vanessa van der Linden Mota, and Ana van der Linden Mota, her mother, who first alerted health authorites in Pernambuco about the cases of encephaly and the links to the mosquito Zika Virus in Recife, Brazil. From 147 recorded encephaly cases, and babies born with shrunken skulls or calcified brain structure in 2014 in Brazil, the cases reported jumped to 4,180 suspected cases. Estimates of cases by 2020 for such cases run up to 50,000 to 100,000 if the problem is not tackled. The family of the van der lindens come from Dutch-German immigrants settled in northeastern Brazil, a less developed region of the country. The family is unique with five doctors including neuro pediatricians Ana and Vanessa working in public hospitals in Recife , and father Helio a neuro surgeon. The entire state of Pernambuco has a total of 15 neuropediatricians, according to this report. The Ebola Virus emerged in countries such as Sierra Leone and Liberia which suffered from war and neglect of health infrastructure. Here in Pernambuco state, as reporters Johnson and Jelmayer point out, the problem stems from neglect in public health infrastructure, especially sanitation and drinking water for shantytown dwellers and vast majority of poor residents in a city of 3.5 million, typical of developing countries in Latin America and South Asia, where development in some parts of the country have lagged far behind, and where needed public health infrastructure investments have not been made. Lack of dependable drinking water means collecting water in containers that are susceptible to breeding mosquitoes, such as the mosquitoes carrying the Zika Virus. A public debate on the lack of attention by socialist and worker's party led governments to this type of infrastructure and transportation services was already underway in Brazil leading to widespread protests in 2013. A $226 million investment in a soccer stadium in Recife, and similar investments in other smaller cities in the northeast were made under the Worker's Party government. Large investments for the Olympics now come as the economy contracted in 2015, and Brazil is hurt by another boom-bust cycle with the slowdown in China- with fiscal austerity policies, a loss of a third in the value of its currency, and the popularity rating of the newly elected government from the Worker's Party in single digits....

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Harold Meyerson poses some difficult questions for those who like Mitt Romney say America's choice is between the merit based society Romney sees and the "European social democratic vision." In Romney's words- "a merit-based opportunity society- an American-style society- where people earn their rewards based on their education, their work, their willingness to take risks and their dreams." Meyerson cites several studies to show that European societies today are more dynamic on several measures of performance than America's. In intergenerational mobility he cites a Brookings Institution study by Julia Isaacs, that shows incomes are three times more likely to remain the same in America compared to Denmark, Norway and Finland, and one and a half times more frequently than in Germany. Another measure evident from Germany's experience is the degree of union-company-government cooperation to worker retraining, corporate boards that have representatives of workers and management, the "kurzarbeit" program of retaining employees to smooth out impact of cyclical swings in the economy on workers and companies, and worker's willingness to show restraint on wages especially because management wages are not way out of line as in America. Meyerson reminds readers that the U.S. had a more merit based society in terms of upward intergenerational mobility, distribution of rewards of work between workers in manufacturing and service sectors and management, educational mobility with the G.I. bill, in the first 30 years after the Second World War. In a separate article in the Washington Post on Jan. 5, 2012, David Ignatius poses questions about the effects of globalization in shrivelling the middle class. The access to lower wage manufacturing in China, India, Mexico, and other countries, and lowering of wages in the U.S. to be competitive, was part of globalization. The two tier wage structure in the U.S. automobile industry is one example, making middle class wages a thing of the past. Globalization opened up new markets for American companies. Yet many of the gains in employment were made in emerging markets, as the example of GM's expansion in China showed, with automobile manufacturing expansion inside China....