LyrArc Article Gist
Are bubble type incentives inflating the size of the U.S. auto market in 2012-2013 as happened in the past decade. This could hurt future sales. Japanese automakers have sharply increased incentives to make a come back after the tsunami and earhtquake restricted supplies. U.S. automakers are reluctant to go further down the incentives route that hurt them in the past decade. The result is higher inventories for Detroit automakers, another undesirable result. General Motors had 5 months of Malibu supply at dealers in Nov. 2012 at the current sales rate, Ford 4 months of Fiesta subcompact inventory and 73 days of total inventory overall, Chrysler 6 months of 2013 Dodge Dart inventory. GM has 3 months of Chevy Cruze inventory, and 138 days of Chevy Silverado pickup truck inventory. GM decided to idle one of two plants making the Cruze. In contrast Toyota has 2 months inventory for the Camry and Corolla. The largest incentives in the U.S. market are from Nissan, a 55% jump to average $4,273 in Nov. 2012 from $2,764 in Jan 2012. Honda increased incentives to average $2,428 from $1,978 in Feb. 2012, a 23% increase. Toyota up to average $2,075 in Nov 2012 from $1717 in Jan. 2012, a 21% increase, according to TrueCar.com, with zero percent interest rates not counted in these numbers. Ford offers $2895 off its 2013 Focus sedan, which has 2 months inventory. General Motors offers between $2900 and $3500 in average incentives , according to TrueCar.com....

LyrArc Article Gist
Nouriel Roubini has proven correct on global financial issues. He said in an interview on the sidelines of a symposium in Malaysia, that China needs to revalue its currency for its own sake. China will see a growth collapse in the next 2-3 years if it fails to do so. His point is that China can still maintain growth by shifting to domestic consumption and less infrastructure spending and exports. In his view growth should not be affected if China exports less and consumes more. He points to the decrease in consumption as a share of GDP from 45% to 36% in the last ten years- this ratio is 70% in the USA. A cheap yuan keeps foreign goods unaffordable and protects state owned companies which also get cheap credit, as keeping the yuan low requires China to keep interest rates artificially low. What this does is make a massive transfer of income from the household sector to the state owned companies, just at the time when China needs to do the very opposite of this. And compounding the problem is that the 25% of China's GDP that is made up of retained earnings of mostly state owned companies, goes into real estate and production facilities. See the link to David Barboza in the New York Times who points to the wasteful spending and real estate speculation by state owned companies. Roubini cites the automobile sector where capacity has doubled in the last year to 20 million, when the domestic market increased by 50% to 10 million vehicles. The stimulus only increased the effect of surplus capacity and misallocation of investment, with highways to nowhere and brand new airports that are three quarters empty. The Chinese leadership is beginning to grasp this, but the state owned companies and other interests who benefit fromm the old model, may make it difficult to reverse the trends. A lot is at stake in this, as it affects the U.S., as well as countries dependent on China's imports such as Australia, Canada, Brazil and Germany. ...

LyrArc Article Gist
Greece passed what prime minister Samaras called the last of the austerity cuts in November 2012 and called for action by lenders in the EU. The EU's Rehn says it is time to dispel the notion that Greece has not made progress in making the economic changes needed. Finance ministers of the eurozone meeting in Brussels agreed to give Greece two more years to reach deficit reduction targets. The cost of this to the eurozone will be 32.6 billion euros. A $40 billion payment to Greece is still on hold till Nov. 20, 2012. The cuts passed in parliament in November 2012 by the Samaras government will raise 17 billion euros over 4 years. The 2013 budget passed in parliament has cuts of 9.4 billion euros to salaries pensions and benefits, and raises the retirement age from 65 to 67. As of Nov. 2012 the bailout packages to Greece from the eurozone countries are at $240 billion.

LyrArc Article Gist
Tax cuts initiated by the Bush administration and to a smaller degree by the Obama administration account for $6.3 trillon of the $10 trillion deficit in 2011. This is about half the $12.7 trillion gap between the $2.3 trillion surplus predicted by the CBO a decade ago for the year 2011 and the current deficit of $10.4 trillon. Two wars and higher defense spending add another $2 trillion. The Stimulus added $700 billon. The Prescription Drug Benefit for seniors $272 billion. This is based on new analysis of CBO data by the Pew Fiscal Analysis Initiative. The record shows unrestrained spending by both parties has led to the current mess. Pete Domenici who chaired the Senate Budget Committee at the time of the first tax cuts in 2001 says "in the end the floodgates were opened." This also shows how quickly the situation can change if sound fiscal practices are abandoned. Two wars were financed entirely with borrowed money for the first time in U.S. history.

LyrArc Article Gist
China needs to make a serious effort to move away from export based model for growth and fix what is broken about that model which is investment in health care, education, the environment, improving rural incomes by giving farmers ownership of land, directing money to the poor and to rural areas that have suffered during the long three decade boom years. The growth rate is expected by analysts to hit 6% in the fourth quarter. And further declines can be expected as exports get hit hard as export markets in the USA and Europe see large declines in consumer spending. The stimulus package is less than what it appears because it includes things that were already planned expenditures, yet it is a step forward. Investment in railways to modernize the rail network is a good investment. And with proper reallocation to the rural sector this stimulus and approoriate new policies could unwind what the Economist calls the grotesque global distortion that has seen poor Chinese farmers help finance the debt fueled excesses of western consumers in countries like USA, UK, and Ireland. Something the Economist has not emphasized in the boom years, but now that the growth rate could drop to 4-6% there is deep concern what it would do for social stability, for rural incomes, and the disparity that has been built up between urban and rural incomes, both within China for policymakers and the media outside....

LyrArc Article Gist
The Fabian Society suggests extending the freeze on income thresholds to generate 12 billion pounds. The reasoning is that it would be fair to most of the middle and lower income households- only the top 20% would pay higher. “The chancellor  (Reeves) recently she wanted to ensure that those with the ‘broadest shoulders pay their fair share of tax’. Our modelling suggests that half (49%) of the revenue raised would come from the highest-earning fifth of households. Conversely, the poorest fifth of households would bear just 4% of the cost,” he writes. “With our public services in dire need of investment, and our public finances under great pressure, there are few good options. Continuing the freeze in income tax thresholds for a further two years is surely one of the better ones." Reeves has been a poor choice for chancellor throughout this Labor administration as she lacked the ideas to go with the grassroots and the people all across Britain struggling to live beyond paycheck to paycheck including the middle class, and follow Labour's own instincts about what was right for Britain at this time in 2025. In this case 49% of the revenue would come from the highest earning fifth of the households and only 4% from the poorest fifth of households. Such choices have inevitably to be made and a lot is needed for the infrastructure and services that benefit all segments of the population and most the four fifths of the population. ...

LyrArc Article Gist
After many banks and financial companies did not admit wrongdoing in the last two decades even after huge losses to families and working class communities from financial activities, the SEC may finally be asking the right questions after president Biden's democracy summit. Democracy can be damaged as much from inside by impunity for wrongdoing as it is from outside by failed states and authoritarian states. President Biden's initiative in getting together countries was to think of new initiatives as the lessons for democracy have to be relearned by every new generation anew.  The appointment of Mr. Gurbir Grewal can only be seen in this light as Mr. Biden's initiative for democratic processes that work for families and American workers. Gurbir Grewal who takes the top job of making the correction America needs is straightforward about malefactors in finance and banking- "We can't arrest them. We can get them out of the industry." Gurbir Grewal is the the new director of the SEC's enforcement program after serving in difficult jobs in New Jersey and NY state, first as prosecutor and then as Attorney General of New Jersey.  Democracy can be shattered as much by hate crimes as by financial crimes. Either way families and working class families in the US are affected, as are minorities and the less well off sections of the community affecting the credibility of the commitment of the well off to honest governance and to fairness. This credibility was severely damaged in the 2009 financial crisis and the situation continues to this day. To understand first hand by being in the shoes of families and workers, minorities and the less well off, gives Gurbir Grewal the courage to take on this job. He told the New York City Bar Association that Americans have grown cynical about how business and government agencies interact- "the perception that we, the regulators, are failing to hold them appropriately accountable, or worse still, the belief by some that there are two sets of rules."  Mr. Biden can see that if anything can make democratic processes lose even more credibility with the people is when new administrations fail to act. Mr. Obama and particularly Mr. Trump raised the issue of revolving door between government agencies and the finance industries, more recently Tech, yet strong action on wrongdoing was missing leading to a loss of faith in democratic processes working for families and workers in the US. The result is weakening the fabric of society from within just as mounting national security challenges grow for the US from outside in in its industrial competitiveness, and its technological leadership, something that affects all Americans and America's allies overseas in Asia, Africa and Latin America.   ...

LyrArc Article Gist
The credibility of the US at stake in its ambivalent responses to the protests in Egypt against thirty years of one-party rule under Mubarak. Opposition leader and Nobel laureate El-Baradei leads demonstrators after prayers at a mosque in Cairo and is met by waves of police shooting tear gas. After returning to the mosque El-Baradei tells reporters that Mubarak's regime has closed the door to a peaceful transition with its use of the police in large numbers to stop the demonstrators. He said if the international community is not speaking now when would it speak up. He called the Mubarak regime barbaric in its treatment of the Egyptian people on the streets of Cairo and other cities. He held the US responsible for its wavering and hesitant approach to the popular revolt demanding democracy, human rights and the rule of law. By supporting the barbaric regime the international community should not be surprised if it loses all credibility in Egypt and the rest of the world, said El-Baradei. ...

LyrArc Article Gist
Britain's parliament voted 358 in favor and 234 against to back prime minister Boris Johnson in his effort to get Britain to leave the European Union by January 31, 2020. Negotiation will not be extended beyond 2020. With a comfortable 80 seat majority and many lawmakers newly elected in parliament in favor of Brexit the process appeared easy compared to the problems faced by Theresa May who lacked a majority. In October Mr. Johnson negotiated a deal with the EU which stated how Britain plans to leave the EU. This covered citizens' rights, a financial settlement to leave, and an arrangement to avoid a physical border in Ireland. With another vote in parliament and passage in the House of Lords the process now appears certain to be completed before January end 2020. To get Brexit done Mr. Johnson sought blue collar support in the north of England and the Midlands, a region neglected by Labour and the old Conservatives. Too much of the focus had remained on London. This strategy worked after neglect of working class districts by Labour under Blair and Brown. Mr. Johnson's approach was to commit the Conservatives to new infrastructure spending, spending on schools and the NHS, just as Mr. Trump had done in the U.S. to permanently change the Republican party. This combined with an appeal to patriotism and the idea of Britain drew strong support across England in the election. ...

LyrArc Article Gist
Paul Volcker sets up the Volcker Alliance foundation to support improvement in how government works at the federal, state and local levels. Volcker sees it as a catalyst for improving government and for renewing the spirit of public administration that pervaded America as it recovered from the Great Depression and World War II. Volcker's concerns for the situation in America in 2013 are: the lack of effectiveness of federal regulatory agencies, and the lack of the spirit of public service, the missing enthusiasm for work in public administration. There is he say too much emphasis on the theory in public administration and not on the way it works and getting good governance. The Volcker Alliance will be independent of academic institutions, and act as a catalyst, with senior people working alongside junior people and nonresident fellows. The initial budget is $5 million, some of it from Volcker's own account, and based at his offices in New York.

LyrArc Article Gist
German president Scholz visits Japan with 6 members of his cabinet. He will hold the inaugural session of intergovernmental consultations the two countries plan to hold every year. Japan is keen to understand the German position on relations with China. Prof. Shigemura of Waseda University says prime minister Kishida want to get a first hand understanding of Germany's policy towards China and on the Ukraine situation. Shigemura says Japan is deeply worried that Germany and other countries still want to cooperate with China, despite the problems seen in the Indo-Pacific region. Germany is seen as not having taken the steps to change its economic relations with China after the Russian invasion of Ukraine, which has not drawn criticism from China.

LyrArc Article Gist
In a remarkable statement of how he sees India in 2022 US president Biden goes all out- "There's so much that our countries can and will do together, and I am committed to making the US-India parnership among the closest we have on Earth." "The closest we have on Earth" is a statement of how the US and India partnership should be given the work of Mohandas Gandhi and its leaders in the nineteenth and twentieth century including Vivekananda, and India's history as the home of Buddhism and the Vedanta. No one has ever put it in such words till Biden in his outspoken way and style. 

LyrArc Article Gist
Greg Ip of the WSJ looks at the impact on the economy worldwide from the effects of variants of Covid-19 in 2022. He cites IMF estimates that global output will be 3% lower in 2022 than it had projected in 2019, with Western Europe and Latin America taking larger hits. US growth is distorted and disrupted with the effects of absence of workers from illness (5 million American workers not working in December 2021 because they were sick, or caring for someone sick or afraid of spreading it), supply shocks from supply chains, 7% inflation. The boost to productivity from digitization conceals the impact of an overworked and fatigue prone remote working workforce, says Greg Ip.

LyrArc Article Gist
Rishi Sunak's approval rating drops by 5 percentage points in just one week, and this after the Conservative Conference in Manchester where he announced plans on relaxing net zero plans and other policy. Sunak's approval rating drops to 20%. A poll taken after Starmer's speech at the Labor conference in Liverpool shows the Conservatives dropping to 24% and Liberal Democrats dropping to 9%. Labor has the support of just under half of voters in Britain today at 47%. 32% now feel Starmer would be the best prime minister compared to 20% for Sunak. After the Liverpool Labor Conference the percentage of people who thought Labor had a clear plan for the country increased by 6 percentage points.