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Britain's Treasury chief Osborne faces a difficult period as the economy shows flat growth for 2012 and 2013. The targets he set for eliminating the structural deficit or budget gap by April 2017 may need to be shifted to 2018. The target for net debt to decline as a percentage of GDP by 2015 may also be unachievable if growth is flat in the coming year. An accounting change in how profit from the Bank of England's bond buying program are shown is designed to reduce Treasury's borrowing and bring Britain closer to this target. Osborne says Britain's actions for austerity measures, spending cuts and increasing taxes have helped keep interest rates low to pay off debt.

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Andy Grove makes this passionate plea for the dignity of workers in America in 2010. It is worth reading in 2020 what this founder of Intel Corp and pioneering spirit of Silicon Valley has to say. Andy Grove of Intel says there is something seriously wrong when the unemployment rate in the Bay Area is higher than the 9.7% national average for the USA. American companies have added jobs like crazy in Asia, but things are sputtering back home. Hon Hai has 800,000 employees and makes most of the electronic and computer products for American companies. Grove says startups are not the answer, unless they scale up and create jobs the way Intel did starting back in 1968, with a $3 million capital infusion by investors. The move from the first production model to mass production is critical, as companies hire thousands of people. Innovation and scaling up have to go together. He makes his point clearly by pointing out that Apple has 25,000 employees. For every Apple employee there are 10 employees in China working on Apple iMacs, iPods, iPhones. And he adds that the same 10 to 1 relationship applies to other U.S. tech companies. And here Grove asks the tough question by first posing an answer. He says it sounds like- no big deal, we keep the high paying jobs, we keep most of the profits, but what kind of society are we going to have with highly paid professional workers and lots of people unemployed? And he doesn't mention that there are a lot more young people unemployed. He says the US has become very inefficient at creating tech jobs, and it would be a great mistake not to act decisively early on. And adds that the investments in such areas as solar power and electric car batteries have to be made early on to maintain leadership in these areas. Grove faults academics like Alan Blinder and others who say loss of manufacturing jobs and whole industries was no big deal. The U.S. has forgotten the value of manufacturing jobs. He wants to see America focus on jobs and rebuild its industrial base. And less of transferring engineering knowhow and new technologies overseas, technology that can help bring innovation and scaling up of factories at home. In his view individual companies doing their own thing, in a misguided fashion that jobs don't matter, is not the answer to the situation we face. The industrial economies of Asia, China at the present day, have focussed on jobs and technology, and scaled up. Grove reminds readers of the situation in America in 1932, when jobless veterans demonstrating outside the White House in large numbers were dispersed by soldiers with live ammunition and fixed bayonets. This makes him shudder at the very thought of it, and brings back memories of his early years in Hungary, as a young man in 1956. Are we listening? ...

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U.S. GDP growth is 1.5% for the second quarter after 2% growth in the first quarter. The slower growth shows that much of the productive capacity of the U.S. economy is not being utilized. See the graph showing the growth during the recovery after the recession of 2009 compared to the recessions in 2001, 1991, 1980, 1975, 1970. The curve is much flatter this time. Every recovery except the recovery in 1980 shows a faster rebound. Economic recoveries have taken longer over time since the postwar boom period.

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Adam Davidson of the NYT's interview with American economist Posen, a member of the Monetary Policy Committee of the Bank of England. Posen says austerity measures have a negative effect on the British economy with high unemployment and lack of economic growth.

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This report in The South China Morning Post in Hong Kong, gives insights into the Chinese position in trade war with the U.S.  China has its own internal groups which support China being able to take a leadership role in world affairs. Xi Jinping made giving China a prominent role in the world a feature of his presidency. China  has this internal audience and its own sense that China's resurgence was won with hard work and cooperation, plus dedication of the Chinese people. In the past Japan and South Korea also used state subsidized industries, and subsidies to gain leadership in key business sectors involving high technology. China would see this state subsidies model as its own model of development. From this standpoint the U.S. demands on subsidies as unfair competition could be seen as changing a key part of its economic model.  Asking China to put everything in writing and show tangible proof of enforcement as the U.S. insisted in talks, was too much for the Chinese side. China said trust us to do this, and lift the tariffs based on our verbal assurances. The U.S. having seen decades of no progress on this point, wanted tangible proof before tariffs were lifted. Added to the demands on subsidies were the demands for no more of what the U.S. calls stealing of U.S. technology through forced transfer of technology by U.S. firms as a condition to operate in Chinese markets. With the U.S. lagging in 5G technology and Huawei ahead the issue resonates on the U.S. side. Add to this Mr. Trump's key voter base includes the former Democratic party supporting workers who have shifted to him because of trade agreements and policies of Clinton and Obama that hurt American workers through seemingly endless closure of manufacturing plants from Chinese competition.   ...

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Commerce Department figures for May shows sales at retail establishments fell 1.2% in May 2010 from April 2010. The decline induced by drop in autos and building materials was the first decline since September 2009's 2.2% drop.

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If not passed by Congress, the extension of unemployment benefits expires by July 4, 2010. This would leave an estimated 1.6 million people without the average check of $309 a week. A bill when passed is expected to reduce benefits and reduce aid to states and local governments facing budget deficits.

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The campaign rhetoric for renegotiating NAFTA and building a wall at the border has had a sharply negative effect on growth in Mexico. Growth slowed in 2016 and is expected to be close to zero in 2017 with declining foreign investment in the economy. The uncertainty is leading to sharp decline in foreign direct investment of 24% in the first 9 months of 2016, according to the Bank of Mexico. Further declines can be expected in 2017. The decline in the value of the peso of 16% since May 2016 has led to 6 interest rate increases in the past year. Inflation on annual basis was at 4.72% in Jan. 2017 and is rising. As Mexico depends on exports for one third of its output growth, and 80% is sent to the U.S., there is a need to diversify with trade agreements made with the European Union and other countries. Mexicans now question the value of NAFTA trade agreement as average growth of 2.6 since NAFTA was signed is below the 4.6% in the 2 decades prior to that. And poverty level is the same with about 60% of people in the underground economy. In addition crime, drug trade, a weak education system, weak rule of law, political corruption, show that Mexico has not made the progress since NAFTA that it should have made. ...

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Reforms planned by the administration of prime minister, Naoto Kan. Plans to raise the consumption tax, to make changes to social security, and to commit Japan to join the Trans Pacific Partnership. Japan's business community supports the plan to join the free trade community called the Trans Pacific Partnership. This group consists of USA, Australia, New Zealand, Singapore, Malaysia, Peru, Chile. South Korea has signed free trade agreements with the USA and the EU, and Japanese business does not want to be left behind.

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Problems of declining production at the Cantarell oil field in Mexico have been known for some time. Now President Calderon is trying to take on this issue. Brazil's Petrobras reached an impasse also some years back but was able to make the reforms, see the link to Petrobras. See the link in the WSJ for 8/30/07 on Petrobras . In 1995 President Cardozo of Brazil pushed through reforms after a oil workers strike at Petrobras. Upto that time Petrobras had problems similar to Pemex with underinvestment, state meddling in its affairs and finances, and too much bureaucracy and inefficiency. Can Calderon get reform for Pemex. Which amount of Pemex revenues should go to the government, how much should Pemex have so that it can adequately fund investment in new oil field exploration offshore, how to overcome bureaucracy and inefficient management, and how to arrange board representation so that Pemex can transform itself like Petrobras did. Some of the answers to these questions are emerging. Calderon wants to prepare his political position as the reform of Pemex is something that previous Presidents have failed to tackle. To do this the Senate's Energy Committee is holding a private debate on the issues. Calderon may try to forge a consensus with the Institutional Nacional Party, as he did with pension reforms if an all party consensus eludes him. Already in reforms of public finances that Calderon has pushed through Pemex will pay 71.5 centavos on every peso of oil extracted by 2012, instead of 79 centavos as royalty payments to the government. One reform being considered is to givePemex control of its own budget. At this time $10 billion a year goes back to the government on top of the royalty tax payments. Another reform would open up refining, transport and distribution to private enterprise. A think tank expert at CIDAC in Mexico City thinks that this can be done without reforming the constitution as was done to allow private investment in electricity generation in the 1990's. The same methods could be used to promote risk sharing contracts with other companies to bring in new technology for oil exploration, including companies from emerging countries like Petrobras, Petrochina and others, given Mexican's bias against the western oil majors. Especially because Petrobras has proven expertise in deep water drilling offshore. There is no question that Mexico is falling behind. One energy expert at the National Autonomous University estimates that the density of drilling rigs in the American portion of the Gulf of Mexico is 20 times greater than in the Mexican part, with Mexico having drilled only 20 exploratory wells in water deeper than 980 feet. in other areas like refining Pemex has not built a new refinery in 20 years, and imports 40% of its gasoline from US refineries, and its 7500 gasoline stations need expansion as Mexico's economy expands. Cardozo's transformation came with setting up an independent Board of Directors and putting an investment banker in charge. International oil companies were allowed into Brazil as a way to get Petrobras to compete with western oil companies and increase efficiency. And Cardozo got Petrobras listed on the New York Stock Exchange selling some 16% of Petrobras in the capital markets. This listing ensured transparency and improved corporate governance, as about 50 analysts now tracked Petrobras. ...

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Seib cites as a key reason why the presidential race in the U.S. could change- Romney leads by three percentage points over Obama among voters most intensely interested in voting. Another related reason is the plan to reach out to low intensity voters, with the Romney campaign having knocked on 2 million more doors already than they did in all of 2008. Some of the intensely interested voters are more against Obama than in favor of Romney, something Obama experienced in 2008 with the anti-Bush sentiment over the war in Iraq carrying over to support for the Democratic ticket. Another part of the undecided voter sentiment is that more of these voters compared to other voters are dissatisfied with the current condition of the economy and the direction the country is taking. Other reasons that could be cited are the volatile situation in the Middle East which could create questions in voter minds about American resolve in that region, dissatisfaction among some black voters with the deteriorating economic situation for black people, and the lack of intensity among Hispanic voters who feel the Obama administration did not keep its promises on immigration changes, the poor performance of the economy in industrial states of the midwest and east with decline in incomes....

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"There is'nt another planet to export to," is what Paul Krugman of the New York Times says, when referring to the impossibility of all countries keeping up exports and reducing imports at the same time. In crises similiar to what the US faces today, countries have increased exports as a way to stage an economic recovery. But this time countries are depressing their currencies to gain or preserve a large share of global demand achieved through high exports. China has resisted demands for a significant revaluation of the yuan, and persists in efforts in currrency markets to keep the value of the yuan low. This cuts off one avenue of recovery. Bloomberg Business Week and Bloomberg News interviewed Edmund Phelps, Jan Hatzius, Krugman, and other economists, with the idea of figuring out how the US could stage an economic recovery. Krugman is not optimistic, considering the effects of the financial crisis being really protracted. Krugman points out that when comparing the US currently to the eaarly stages of Japan's lost decade, the US is doing worse. Unemployment is worse, and overall he says, a weaker policy response. And he says Japan is still a depressed fragile economy 18 years after its financial crisis. Jan Hatzius of Goldman Sachs, predicts that the unemployment rate will rise back to 10% in early 2011, with a 30% chance that the economy will fall back into a recession. He says that in the postwar economy, there has never been an increase in the unemployment rate of one third of one percentage point that did not result in a recession. Phelps and Hatzius see one way the US could stage a recovery is with replacement old structures and equipmet as wear and tear and obsolescence takes place. Phelps sees the possibility of technological innovation resultig in a new burst of activity. Robert Gordon of Northwestern University, is less optimistic about this, and predicts a lower growth rate of 1.5% over the next 20 years. ...

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The Economist cites figures showing Canada lost 500,000 manufacturing jobs since 2005, with employment in manufacturing down to 1.7 million by 2013. From 2000 to 2013 manufacturing's share of GDP declined from 18% to 10%. This situation is shown by the decaying manufacturing towns seen in Ontario. About 500,000 manufacturing jobs were lost between 2005 and 2013, as the price of oil increased to the $100-$120 range and the Canadian currency was overvalued, leaving the Canadian economy more dependent on energy exports. Some of the auto manufacturing supplier base has shifted from the midwest to southern U.S. states, reducing the attractiveness of Ontario for manufacturing investment. Overvalued currencies have hurt the manufacturing sector of commodity producing countries dependent on exports of mining products or oil, especially Brazil and Canada. The depreciation of the Canadian currency in 2014-2015 may not help, as many of these jobs are not likely to return.

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The 50 day Shanghai Composite index fell below the 200 day Shanghai Composite index in June 2011. This results in what is called a "death cross," or a long term bearish pattern. The last time this occurred in March 2010, the index went up slightly for a month before going on a 25% drop .

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The outsize effect of a slowing economy on profits of Chinese companies, with higher interest expense on loans taken out for rapid expansion in the boom years, and the lower prices as a result of surplus capacity.

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Glassman cites Ronald Reagan who once said economists are people who look at things in practice and then see if they can prove this in theory. He co-authored a book on "Dow 36,000" in 1999. What happened and why? He correctly says the Dow is up to 12,000- and this only after Fed chairman Bernanke's $600 billion quanitative easing on top of low to zero interest rate policies after the 2008 crisis- in the 12 years since. So what happened? Glassman says what he did not account for is the huge decline in the prospects for the U.S. economy, with Congressional Budget Office estimates of 2% growth over the next 70 years, compared to the 3.5% growth in the first 50 years of the 20th century. A lot goes go into this, including the debt buildup, the lack of investment in human capital and K-12 education. The other is the huge volatility in stock returns, and the "discontinuous" risks stemming from things like the home price crash, terrorist 9/11 attack and other such developments. He says he is tired of telling investors to hold on in the face of such huge volatility and uncertainty. He advises a cautious strategy, a pull back from stocks to reduce the downside on returns and a smaller allocation to stocks....

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Yannis Stournaras, economcs professor at the University of Athens becomes the finance minister in the new administration of prime minister Antonis Samaras. He holds a doctorate from Oxford University in economic theory and policy, lectured at St. Catherine's College, Oxford and at the Oxford Institute for Energy Studies. He was special advisor on monetary policy to the finance minstry and Greece's central bank. His public official positions include vice chairman of the Greek natural gas company and board member of the public debt management agency. He is well qualified to lead the effort for Greece to remain in the European Union with modified terms that extend the achievement of deficit targets by 2 years to 2016, and offer tax cuts and other growth oriented measures to get the Greek economy back on the path to recovery and growth after 4 years of declining GDP. He also brings a sense of committment to the EU, because he was chief economic advisor to Greece's Finance Ministry in 1994-2000 and took part in the negotiations that led to Greece's joining the eurozone in 2001. His strong views about changes needed to Greece's overregulated economy which favors special interests also coincide with the moves for labor and other reforms taken by the Monti and Rajoy governments in Italy and Spain. ...

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The Labor Department statistics show unemployment dropped from 8.9% to 8.2%, however at the same time GDP growth for the 1st quarter only reached an estimated 2.1%, only slightly higher than the economy's potential of 2%, the figure for growth used by Fed chairman Bernanke. This has puzzled Bernanke because there was just not enough growth to account for the drop in the unemployment rate. A lower jobs number of 120,000 for jobs created in March 2012 gives the Fed chairman only a short time to respond with another version of the Operation Twist, before election season begins in earnest with the Fed wanting to stay neutral, says Lahart. Other reports suggest that the U.S. Federal Reserve having come under criticism for being too interventionist may decide to wait longer.

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India's Foreign Investment Board clears investments by Vodafone and Tesco.