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China's breakneck growth was enabled by housing construction, and coal in a way that created problems of climate change. Now China's largest housing developers Evergrande and Country Garden together have a staggering $500 billion in debt and in serious financial trouble in or near default. How will China's government respond? It let Evergrande who had defaulted on debt payments build 300,000 apartments last year, just to protect home buyers. Now it's founder Mr. Xu is taken in for questioning and "illegal crimes." Making sure that the apartments on which people made deposits are built would cost another $72 billion, says Nomura. Yet suppliers, painters, builders and brokers are owed another $390 billion, in one estimate. And foreign creditors are getting together for complicated restructurings. Evergrande had entered wealth management promising 8 or 9% returns and has stopped making payments. All this is affecting public confidence in the future and China's growth story. For decades China depended on housing construction for high growth rates. Now the process is unwinding with both in financial difficulties. This NYT report says that after Evergrande's default, Country Garden failed to make a payment on $200 billion in debt last week and has 400,000 apartments that it sold but has not finished building. ...

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Harris supports some of the most far reaching efforts to help workers and families with cost of living action. Teachers would benefit with pay raises, workers earning less than $100,000 a year would benefit with special support of $500 a month to meet cost of living increases, $100 billion would be invested to support housing affordability using a estate tax on the wealthiest households. Harris proposed Rent Relief Act would provided refundable tax credits giving renters who earn less than $100,000 the ability to recoup housing costs in excess of 30 percent of their incomes. One of the more egregious situations today is shown in the WSJ where 25% of people renting apartments in the US- middle and lower income people- pay over 50% of their income on rent leaving less and less for food, transport, childcare. This would make a huge difference for these households. Affordable Housing is a big issue in many states including Nevad and Biden had proposed a 5% cap on rent increases after 20% increase in the last two years of the pandemic. Harris's proposal goes beyond this to help the hardest hit households. Harris supports emergency relief funding for homeless. And she supports spending $100 billion in communities hurt by discrimination in getting housing. ...

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Health officials around the world, companies, governments, and schools are creating health policy on the fly, and prefer to err on the side of caution in setting policy. The American government said that it would deny entry to foreign citizens who traveled to China in past 14 days, and American citizens returning from Hubei province, china, will be quarantined for 14 days. Major airlines have stopped flights to China. Nothing like this has happened before. A major public health experiment in setting policy is underway, mostly preferring lockdown or quarantine as preferred method. 

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The city where the auto industry in the USA started in the 1920's and what it is today and its future a century later as we approach the 2020 mark. The industry in decline and reshaping itself as a global industry with sales in Asia and Europe and the rest of the world a new focus as the US market begins to decine in significance relative to the rest of the world both in terms of sales and opportunities for expansion. The poverty rate the highest in the nation at 28.5% and the highest foreclosure rate in the nation after Stockton, California, with one in 33 homes in Wayne County in foreclosure. And things are only going to get worse in 2008 and 2009 because auto sales are expected to decline and the Alt A mortgages are expected to see a bump up in the interest rates.

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This piece in DW.com is critical of Merkel and Macron, leaders of Germany and France, following the Russian invasion of Ukraine on Feb. 24, 2022. It says the West - European and American leaders bear partial responsibility for the developments in Ukraine.  Another view that also is critical of the western leaders says that NATO's role needed to be redefined, Russia's role in security cooperation in Europe needed to be defined not in the old terms of European history but in a new way so that NATO did not become a new form of shifting Eastern Europe into the opposite of what it had become under the Soviet Union. The western leaders of the last 20 years never addressed these issues and allowed them to be decided by default by different countries in Eastern Europe, just as they engaged in small lengthy wars in remote corners of the world - in Afghanistan to Iraq. From Reagan to Bush Sr and Bush Jr, from Clinton to Obama, from Kohl to Merkel and Schroeder these leaders never addressed the basic underlying issues creating the situation that is faced today. ...

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Airlines are placing placeholder schedules full of flights 6 to 9 months ahead of travel dates. The 2 months before the travel date the real schedule will be placed. At the time of travel some flights with few passengers will be cancelled. Airlines are also flying directly to travel destinations from smaller cities, new flights are setup for destinations such as Israel because of vaccinations, Reykjavik, and other destinations such as Greece that are opening up for vaccinated people in the US. In 20 years there has never been a time when airlines are planning flights in this way. A vacation surge is under way as vaccinations increase. Federal money to aid airlines recovery is helping airlines bring back planes and new flights, retrain pilots. Business travel is down and likely to stay that way, so that the surge is expected mostly from vacation travel. Delta has the unique situation where it can increase capacity by 30% by ending its block on middle seats on April 30, 2021. Delta's available seat miles are expected to be 80% of 2019 showing that a recovery is underway as more people book airline travel. ...

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Young voters 18 years to 29 years, some voting for the first time, including men on college campuses, voted by 14 percentage points in favor of DJT, compared to the same group of young voters giving  Biden a 15 percentage point margin. The total shift this time nearly 30 percentage points in favor of DJT. Young men fight the endless wars and young men are falling behind women in college education and Democrat Biden and Republican Trump were the only presidents fighting to end these wars, Democrats not even sensitive about the crisis facing young men.  For younger women 18-29 years the Harris margin was 18 percentage points down from 32 percentage points for Biden in 2020, a swing of 14 percentage points away from Democrats.  Overall for men and women Harris was only 52% to 46% for DJT a margin of only 6 percentage points.  This bodes well for America to have independent thinking from young people, and the same pattern is observed for Latinos, which also is a good sign for America for the future. ...

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The Greens party will not be represented in the Saarland parliament as its performance declined in last weeks election. The Greens Party polls less than 8 percent in Germany, and less than 6 percent in North Rhine Westphalia elections for May 2017. The improving prospects of Martin Schulz the SPD candidate for chancellor have hurt the Greens. Even as the climate change issue becomes prominent the Greens are seeing the focus shift to the SPD and the CDU in 2017. The issues after the election of Trump following Brexit vote have shifted attention to what happens to the European Union, and the need for strong leadership in Germany and for the European Union. This does not help the Greens Party or other smaller parties. The AfD also has suffered as Germans take a second look at the parties, and think long and hard about what kind of future they want to see and the best way forward. 

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New risks are emerging in the shadow banking system as regulators work to make the banks safer. Banks as deposit backed financial firms are different from mutual funds, private equity and other firms that are doing more of the financing for business and home loans in the U.S. financial system. As banks deleverage responding to tighter regulation by increasing capital buffers and reducing assets, it makes the financial system safer, yet creates new risks in the shadow banking system not subject to regulation and not supported by bank deposits the way banks are. A IMF report put out in April 2015 underlines these new risks in the U.S. and European financial system. Mutual funds and exchange-traded funds now rival banks in providing financing to companies with high debt. Total bond holdings worldwide in 2014 were $9.6 trillion, increasing 25% over 2008, and the mutual funds leveraged loans increased 60% to $151 billion in the U.S., 223% in the eurozone to $126 billion, according to the IMF. The IMF points out that these mutual funds and exchange traded funds favor emerging market and corporate junk bonds, and operate in a way where they mimic each others in their investments, creating contagion. With hard to sell securities and the rapid decline in these types of funds in a panic, the effect could be to create contagion across the funds. In the mortgage lending field a similiar process of deleveraging is happening. U.S. banks share of federally guaranteed mortgages from big banks down from 61% in late 2012 to 33% in 2015, other smaller finance companies taking up 51% increasing from 24%, according to an American Enterprise Institute report. Paul Tucker, former deputy governor of the Bank of England, points out the dangers. He says policy makers and regulators are playing catchup with firms in the financial services industry who are constantly looking for gaps in the rules, a game that policymakers and regulators are likely to lose at some point....

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This analysis of coal use using graphs shows a clear move away from coal in the world, except for two growth markets China and India which account for 60% of the increase in coal use since 2008. India has gone black in its shift to increasing use of coal. China has begun the shift away from coal to address the smog over large urban areas, poor air quality and health impact of coal use. Because China used five times the coal used by India in 2017, the overall impact in China and India is showing a shift away from coal to hydropower, other renewables including solar energy. It is likely that India will make the shift following China's example in the future. 

The trend is clear when one looks at the incremental terawatt hour and where it comes from. The shift is clear to renewables, hydropower, and non fossil uses in the rest of the World and China which account for most of the coal use in the world.

 

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Consumer Reports is published by nonprofit advocacy group with 640 employees. It is based in Yonkers, New York, and was founded in 1936. It takes no advertising and answers only to buyers of the magazine and to consumers. Its labs based in Yonkers test a whole range of products and Consumer Reports does not hesitate to put a "Don't Buy" rating on products. In June it pointed out the defect in the Apple iphone that made it lose reception when the left corner was touched by a user. It tested the Lexus 460 a few months ago, and when it found that it was a rollover risk, Consumer Reports gave it a "Don't Buy: Safety Risk" rating. The magazine has come up with new contraptions that test different products. In the 50's it created a smoking machine that accumulated what was left of a smoker's inhalations in a container device. And it was credited by the Surgeon General's Report in 1964 warning of the dangers of smoking, as having done some of the serious research on the subject of smoking dangers. The magazine suffered a loss in 2001 of $9.4 million, but has since recovered under the leadership of Guest, who had earlier served as chairman. Guest moved the testing to more expensive products like Lexus cars and made another important decision. He expanded testing so that when it came to laptops, cell phones and flat screen TV's (which were becoming rapidly popular in the market), the testing would be ongoing. Guest moved announcements and postings of new product results to the internet and online subscriptions have tripled in the last 7 years. As a result the company has been profitable since 2003. Other decisions have been to add user opinions and comments, buying Consumerist.com which puts up reader opinions, and to attract younger readers. And though initially feared by scientists at Consumer Reports, who preferred to avoid user opinions and stick with the scientific facts, the moves have not affected its credibility. About 7 million subscribers subscribe to Consumer Reports, and about half of these subscribers pay $26 a year for access to its website, ConsumerReports.org. This makes it one of the handful of information publications that have paid digital subscribers, including the Wall Street Journal Online, which has only a fraction of the subscribers of Consumer Reports....

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How the reconstruction effort in Iraq never had the clear policy goals and objectives, the technical capacity, and the organization structure, to deliver the basic services like electricity, clean water, phone connections and other infrastructure services which crumbled by 70% or broke down totally after the war. And still does not have these elements, as well as one agency or authority responsible and accountable for delivery and results. This are some of the findings of a detailed audit and investigation in a 513 page history of the American reconstruction effort in Iraq, prepared by the Office of Special Inspector General for Iraq Reconstruction , led by Stuart Bowen, Jr. The reconstruction effort has already cost by mid 2008 $117 billion with $50 billion in US taxpayer money, but the results show that all they have achieved is at best a restoration of services to what they were before the war, when Iraq was under severe sanctions and had an outdated infrastructure. One of the biggest problems was that the war effort was not prepared for such a total breakdown of the infrastructure, and never grasped the critical role the continued delivery of basic services would have in winning or losing the support of the people of Iraq, who would blame whoever was in power if things were worse than under the previous regime which is exactly what happened. The whole reconstruction effort was botched because the will was not there, the direction was not there, and no clear policy on how to go about doing this, and lacking the organization structure for its execution. Bowen concludes that the US government was not adequately prepared to take on the reconstruction mission it took on in mid 2003. When Jay Garner presented plans on rebuilding to Donald Rumsfeld, the secretary of Defense, before the invasion, the conversation shows Rumsfeld asking Garner how much they would cost. Upon being told that it would cost billions of dollars Rumsfeld responded saying, my friend if you think we're going to spend a billion dollars of our money over there you are sadly mistaken. All this becomes important in the light of another reconstruction effort underway in Afghanistan which aslo has struggled with severe problems and poor results. And as the struggle with militants in Afghanistan is growing the reconstruction effort in Afghanistan and its ability to win the support of ordinary people will be critical to winning support of the Afghan people. ...

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The U.S. Justice Department files a civil lawsuit accusing S&P and parent company McGraw Hill of giving improper ratings to poor mortgage investments which allowed them to inflate in value, creating the conditions for a crash in these investments when the crisis happened in 2008. The penalty sought by the Justice Department and the attorney generals for 16 states is $5 billion to cover losses to investors such as state pension funds and federally insured banks and credit unions. The civil suit comes 5 years after the onset of the financial crisis of 2008, which created the greatest financial crisis since the 1930's. Negotiations for a settlement were conducted by the Justice Department with McGraw Hill for an extended period of time. The talks broke down in January 2013. In these negotiations the Justice Department sought a penalty of over $1 billion and S&P's acceptance of wrongdoing. S&P countered with a proposed settlement of $100 million. The government pushed for admission of guilt on at least one count of fraud. It is not known why the Justice Department filed this lawsuit 5 years after the crisis when the public's memory of the ratings issue is beginning to fade. Is it because the preparation of the case required this much time, the action not taken because it would be seen as punitive in 2011 when S&P downgraded the U.S. sovereign credit rating, the fragility of the economy in 2011, because of the approaching election in 2012, or some other reason. One of the reasons why it was important to take corrective action early was to preserve the integrity and credibility of financial markets, so critical for public confidence. An additional reason was to secure from credit ratings companies the internal reforms and change in leadership and culture that would prevent recurrence and damage to the economy. An example of this change is the change in leadership and culture underway at Barclays bank in Britain after the investigation into the manipulation of the London Interbank Offered Rate or LIBOR. The Justice Department action in this respect is an advance from the policy at the S.E.C., which has not insisted that companies involved in the crisis admit wrongdoing, setting up the process for changes in leadership and culture such as the one at Barclays....

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Chinese company investments in Korean companies are not doing well because of widespread feeling among Korean workers in these companies that the Chinese company is only interested in transferring the Korean company technology to China. Also hopes of selling products in the Chinese market have not been realized. Instead the experience is that the Korean company ends up up laying off most of the employees after being hollowed out. In 2003 BOE a Chinese company paid $380 million for Hydis, a Korean maker of displays for cellphones and laptop computers. After the transfer of technology to build a new display panel factory in Beijing, Hydis was left o hollow out and went into bankrupptcy protection in 2006. Shanghai Automotive Industry Corporation bought a controlling stake in Ssangyong Motor of South Korea in 2004. Shanghai Automotive Industry Corporation, one of China's top state owned companies saw this as a push abroad, as China accumulated large dollar reserves from foreign trade, and a chance to acquire foreign technolgy for SUV and luxury car manufacture. Shanghai Automotive has partnerships with GM and VW to use foreign technology to make cars in China. The Korean economy after the financial crisis of 1997 was opening up to foreign investment. In this climate the Korean side was expecting China to open its market to Korean cars from Ssangyong, but this did not happen. Instead Korean workers say the company transferred technology to its Chinese parent, and after 5 years the partnership is falling apart in protests by the workers, layoffs and bitter battles amid declining sales. The Korean workers even have a word for such foreign companies that have come to Korea, during Korea's opening to foreign investors after the 1997 banking crisis, when Korean firms went for fire-sale prices. That word is "meoktwi", a slang term that means "a thief who eats and runs away." This has hurt China's reputation in South Korea, and its reputation as an enlightened investor in other countries. It also is what may be happening with Taiwanese investment in China in this downturn. Companies like Hon Hai, with its Chinese subsidiary Foxconn, are reported by the Economist to be shrinking their Chinese operations in a large industrial city sized campus employing 250,000 workers in the Shenzen area, to 100,000 workers. That factory city made laptops, PC's cellphones for Western companies using foreign technology....

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Amazing! Just fresh from the foreclosure crisis and as the worst of the foreclosures are taking place between now and 2009 for subprime and other loans homebuilders and home sellers are financing the 3% downpayment required by FHA for loans from the is government agency. What do they hope to accomplish sell homes and have the government foot the bill when these homes also go into foreclosure in a downturn? Already above average default rates for seller assisted down payment programs will make this government agency the Federal Housing Administration ask for a government subsidy for the firtst time in its 74 year history. The FHA will need $1.4 billion next year. FHA estimates that down payments provided by nonprofit groups account for 34% of all 200,000 loans backed by the FHA so far this year, up from 18% in all of 2003, and less than 2% in 2000. And FHA says that borrowers are 2 to 3 times as likely to default on their payments when they receive a down payment from a nonprofit. The reckless manner in which homebuilders are selling these homes is unbelievable, more so in today's difficult economy. See the ads for these homes in this WSJ article and its is shocking. D.R. Horton is advertising 100% financing for 2 and 3 bedroom homes near the beach in Maui, costint $498,000, and a Seattle area builder Quadrant corporation is advertising townhomes for $500 downpayment. Use your coffee budget says a online promotion in the St Louis area! And though the risks are known to housing officials in the government they face a battle from well funded and coaltition of homebuilders, lowincome housing and minority groups. though its hard to understand how a home that ends in foreclosure for a low income group or minortiy group can benefit a minority group. Yet the Black and Hispanic caucus, people in Congress like Maxine Waters and Barney Frank still think it does as they continue to support the lobbying that keeps these kinds of loans going. Two examples given here of a Dick Whitmore and a Gloria Harris one saying it was impossible for him to come up with the $5000 downpayment and the other saying she was living from week to week suggest that they are likely to end up having difficulty making payments. ...

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The director of the Institute of Population and Labor Economics at the Chinese Academy of Social Sciences, Cai Fang predicts that by 2009 there would be a widespread shortage of workers, pushing up industrial wages. Figures from the UN Population Division show that China's working age population will decline in the years ahead. There are two things here that matter. The millions of people in a socalled surplus labor force that can be tapped so that industry can hire more people expand and grow without wage inflation, and second the working age population 20-29, younger people being preferred by employers for the long hours, single people who can stay in dorms and can be mobile to move near factories and do not have the restrictions of married people with children. The one child policy has limited the growth of the working age population. After rising by 1.3% a year according to the UN Population Division during the decade to 2005, the population of working age is expected to increase at an annual rate of 0.7% until 2015, and then shrink by 0.1% ayear until 2025. The surplus labor pool figures estimates vary from 150 million people to 200 million people, but the Economist estimates the true figure to be much smaller because government figures for the rural labor force include millios of migrants already in the cities and others working in rural industry not farming. The population of workers in ages 20-29 fell from 233 million in 1990 to 165 million in 2005. Because of this shrinking of supply of eligible labor especially considering the preference of textile and electronics firms to hire young women because they complain less and put up with long hours and for single men preferred by construction firms, Cai Fang believes that this preferred or eligible labor pool is shrinking to the point where it will be a problem in the years ahead. This will have the impact of shrinking the growth rate to around 7% sometime after 2009. Problems that remained under cover because of the Olympics will also become evident as 2008 winds down. Some experts argue that there are other factors that will contine to sustain the pool of available workers, but its this pool of preferred available workers that will be in short supply according to Cai Fang. ...

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A ZDF poll in Dec. 2016 shows 64% of the German people support chancellor Merkel's decision to run for fourth term. Of CDU supporters 89% support Merkel. If the election were held today CDU/CSU would win 36%, SPD 21%, Greens 11% and FDP 5%. Schulz is a lot more popular than Sigmar Gabriel in the SPD. About 51% of the German people support Martin Schulz, current head of the European parliament, Gabriel gets only 29%. With SPD supporters Schulz has 64%. Merkel could form a government with Greens and FDP support. See the related article on Greens and CDU positions coming closer.

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The World Health Organization lists the world's most polluted cities with the highest level of PM2.5 particulate matter as 1. Kanpur, India     173 2. Faridabad          172 3.  Varanasi            151 4.  Gaya                  149 5. Patna                   144 6.  Delhi                    143 7.  Lucknow                 138 8.  Agra                        131 9.  Muzzaffarpur           120 10.  Srinagar                113 11.   Gurgaon                113 12.  Jaipur                     105 13.  Patiala                      101 14.  Jodhpur                     98 15.  li Subah ali Salem      94 A look at the cities most polluted shows that most of the cities are in or near New Delhi, (Gurgaon, New Delhi, Faridabad, Agra) in the state of Uttar Pradesh (Lucknow, Kanpur, Varanasi, Agra). The cities on the list that one does not expect are cities such as Jodhpur in the Thar desert, and Srinagar in the mountainous region of Kashmir. Srinagar is on the list because of inadequate sewage facilities to treat sewage. The Dal lake is polluted from houseboats and tourist hotels dumping sewage into the lake and not connecting to the sewage system. Jodhpur is polluted from auto exhaust and vehicular pollution.. The WHO says India's efforts to control pollution need to follow the steps taken by China recently. In response to citizen pressure and outrage about health conditions China has closed down polluting factories, and is shifting away from coal, away from coal stoves. India's efforts are inadequate and scattered says the WHO. This includes stopping fireworks sales that aggravated toxic conditions in Delhi. A program giving 37 million poor Indian women free gas connections helps a shift from use of dung fired clay ovens or coal ovens. Pollution kills 7 million people each year says WHO, and over half or 3.8 million people die from use of unhealthy cooking stoves which create indoor air pollution. Of cities above 14 million Delhi ranks first, Cairo, Egypt second, Mumbai, India fourth and Beijing fifth in air pollution levels.  ...

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Economist John Spence on advice to the Chinese government to tackle problems of shifting from an export based economy to one more dependent on domestic spending. And managing the shift upscale to sophisticated technologies from basic consumer goods.

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No country benefited more than first Japan and then South Korea till 2000, and now China till 2022 from the trade and sharing of industrial technology enabled by the American backed system of trade and industry. Walter Russell Mead says in WSJ that China has chosen to challenge the system through which it developed into an industrialized nation with the US running huge trade deficits, sharing its technology and letting Chinese manufacturing displace American local manufacturing. China is seen as challenging the system. Yet what has happened is that this process of displacing American manufacturing and industry was not sustainable anyway and continued for a decade longer than it would otherwise have lasted because American industry could not easily reverse a course it had set of setting up manufacturing in China, once that manufacturing base had already been transferred from the US to China and American companies had grown accustomed to a new state of affairs of making overseas in China. Not much thought was given to how American workers would react to that situation as companies and industries making that transfer made independent decisions. This led to the election of Trump with wins in midwestern states that had suffered from loss of manufacturing communities.  The Trump tariffs on Chinese goods and the Biden administration lining up completely behind American workers and families for the first time for Democrats has sent the signal to China that it finds the situation of China's dominance in the trade system unacceptable. The document of "China 2030" of the Chinese Government with planned dominance in key sectors and industries was met with alarm across America in all parties. The paradox of Apple as a key sector in Chinese manufacturing and the largest American company is the result of policies pursued by America without realizing the true cost of shipping manufacturing out of the country. That process is now being reversed with change of management starting at Intel Corp. and other companies to bring the manufacturing base back to the US. This policy is being resolutely pursued by the US and will speed up following the pandemic which has further demonstrated how much of a mistake the policy of sending out manufacturing in critical areas such as health could be. This is the reality behind the rhetoric and verbal exchange between China and the US. With the rapid growth of Chinese manufacturing countries such as India were put in a difficult situation  as this was preventing the local industrial base developing in India with Chinese imports in the same way as it had damaged that of the US and the EU. Worse it led to the use of US and European technology in China's defense industrial base including aviation and other sectors that threatened India's borders with repeated Chinese incursions in the Himalayas, from the Pakistan western Himalayas to Ladakh and the eastern Himalayan mountains. That situation existed long before the Trump and Biden administration and the Modi administration called for a return to America of its industrial manufacturing base and its technological leadership. Both the Bush and Obama administrations and the Indian Congress administrations failed to realize the dangers of letting the US, European and Indian industrial base wither. India is not just a country but a culture that extends from the Himalayas all the way across Bangladesh to the Indonesian islands which shares a common cultural history of Buddhism and the Vedanta. This is a region that has a population of about 2 billion people. In a larger sense the cultural history extends to  Vietnam and Japan with its Buddhist culture whose origins go back to India, and also of China itself. In the larger sense this is a population of close to 3 billion people. The economic development of this region and learning from the parliamentary traditions and scientific discoveries of the modern period since 1700 is a task for both the US, Europe and the people of the region.   ...