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Former Defense Secretary in the second term of the Obama administration, Chuck Hagel, says U.S. president Obama hurt his credibility when he failed to act on his own comments of a "red line" being crossed following the chemical attacks in Syria by the Assad government. Hagel was critical in an article in Foreign Policy magazine of the way the national security advisor, Susan E. Rice, ran discussions on foreign policy issues, with too many meetings and discussion followed up with deferring difficult decisions.

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Liu He, the author of the 2013 DRC report on recommended changes to China's banking and financial system, is now the director of the Communist party's top financial policy committee and senior advisor to president Jinping. Changes he is pushing for relate to increasing focus on credit risk for China's banks, promoting competiion between banks, a mechanism for letting banks fail, and a deposit insurance program to protect the public against failing banks. To open up the sector dominated by state owned banks, opening private banks would be encouraged. Local governments would be allowed to issue bonds in an effort to reduce their dependence on land sales and opaque off-market borrowing. The urgency of this agenda comes from the realization in top Chinese policy circles and the Jinping-Keqiang administration of the risks to the banking sysem from the lack of attention to credit risks in bank lending.

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Macroprudential policies of central banks in S. Korea, Indonesia, China, Canada, and other countries, as concerns grow about a housing and credit bubble.

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The wounds left behind in S. Korea from the 1997 Asian financial crisis when the IMF imposed conditions for $21 billion in loans as part of a $60 billion loan package to prevent a sovereign debt default. The conditionality imposed for loans led to layoffs and economic hardship for the working class. S. Koreans remember the crisis as the "IMF crisis." It also has a particular stigma in S. Korea which the IMF is now trying hard to erase. One laid off employee from an automobile plant describes the period as a hard hitting IMF typhoon. So struck are S. Koreans with the term that it has become synonymous with financial hardship. In the 12 years since the crisis the IMF itself has changed. It is now trying to provide help to countries on better terms and is conscious of the problems of austerity policies. During the 2008 financial crisis Seoul stayed away from the IMF. Seoul is host to the G-20 in 2010 and now has a participatory role in international meetings. The IMF has created a emergency loan facility that could be useful for Asian countries and wants to change the perception of the IMF in Asia....

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Easwar Prasad, Cornell University economist, and a former head of the IMF's China division, says the new report by the World Bank and the Development Reform Commission (DRC), is part of an effort by government officials in China to push the agenda for change forward during the transition to a new leadership. This includes Premier Wen. There is pushback from large state enterprises. The DRC and the World Bank had called for a change from the current situation to allow more private sector involvement in the economy, which means restricting the growth of the large state owned companies and letting the private sector operate in more parts of the economy. The alternative is to see growth slowing quickly and -some economists- say suddenly without warning. The role of Zhu Rongji, a former prime minister during the period Jiang Zemin was president, in pushing for changes appropriate to the period, is also cited. The last decade under prime minister Wen Biao is seen as one in which China relentlessly pursued its currrent export led model of development with large state run companies and state run banks dominating the economy. This has made change even harder to achieve because of the pushback to preserve the status quo....

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Analysts fear an oil shock in 2012 similiar to that in 2008. There is similiarity in the situation now and in 2008- as in 2008, the surge in oil prices comes at a time of higher tensions with Iran and shrinking spare capacity. Spare capacity is at 2.5 million barrels a day on average for January and February 2012, according to the Energy Information Administration. This compares with 3.7 millon barrels a day for the same period in 2011. Part of the reason is that global oil demand is increasing in 2012 by 1 million barrels a day, to 89 million barrels a day. Technical and political problems have shutdown another 750,000 barrels a day. The problems begin to kick in during the second half of 2012. The U.S. ban on dealing with the Iranian central bank for oil trades starts in June 2012. According to the International Energy Agency, the EU embargo and U.S. sanctions will take 1 million barrels a day of Iranian crude out of the market. The result will be that demand exceeds supply by the third quarter by 1.1 million barrels a day, according to the U.S. Energy Information Administration. Use of existing reserves in Europe, the U.S. and other countries will make up the gap. The effect will be to put pressure on oil prices. May Brent crude on the ICE Futures Europe exchange was up to $125.81 a barrel, on March 16, 2012, and prices for April delivery were at $107.06 a barrel on the New York Mercantile Exchange....

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WSJ reporter Bob Davis writes this report on the end of the China economic miracle in 2014 as he completes a 4 year assignment covering China. He says China's economy is slowing rapidly and he is pessimistic abou the future. Construction cranes visible across China's skyline says Davis, can no longer be interpreted as growth inducing. With rows upon rows of empty flats in third and fourth tier cities which account for the bulk of the increase in housing construction, the consequences of a debt fueled construction boom are easy to see. Davis cites the IMF on the dangers of credit fueled growth in China- only 4 countries have experienced as rapid an increase in credit to GDP ratio in 5 years. Each of the 4 countries Brazil, Ireland, Spain and Sweden experienced a sharp decline in GDP growth and banking crises following the credit bubble. Estimates of debt to GDP are as high as 250% for China. Krugman, Roubini and other economists have warned about the credit bubble, saying China is no exception to the rule for the risks posed by such a bubble. ...

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Aaron Back says this time China is likely to feel the effects of the volatility in the stock markets. The surge in the stock markets added about half a percentage point to GDP growth in the 1st quarter of 2015, according to Capital Economics. GDP growth in the 1st quarter 2015 was 7%. Capital Economics says removing the boost from the stock market to a sluggish economy would mean a loss of 1 percentage point in GDP growth. Equity issuance was one way China hoped to reduce high debt levels at companies, and that avenue would the be that much harder to access to reduce debt levels. Margin financing is about $354 billion, or 3.5% of GDP according to Goldman Sachs, posing another source of problems and potentially affecting growth if stock losses lead to defaults. Declining investor sentiment and confidence in management of the economy would be another casualty in this situation. Only 10% of Chinese households own stocks compared to 50% in the U.S., yet Aaron Back says the effects of this are likely to be felt in lower economic growth and shaken confidence in the economy....

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Finance Minister Joaquim Levy, a University of Chicago trained economist, is replaced by planning minister Nelson Barbosa, as the new Finance Minister of Brazil. President Rousseff faces criticism as Brazil's economy contracts and ordinary Brazilians feel the effects of fiscal austerity policies pursued under Levy. Former president Lula da Silva was critical of Levy's policies.

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Since 2004 consumer spending's share of the economy in China has fallen from 40% to 35%.

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The G-20 statement for the meeting in Washington D.C. in April 2013, says: "Japan's recent policy actions are intended to stop deflation and support domestic demand." Bank of Japan Governor Haruhiko Kuroda's response was that this will help the BOJ implement its monetary expansion program in an orderly way. Kuroda said: "Now that we have obtained the support of the international community, we will be able to implement our program with confidence." These moves come with a call for Europe to proceed with banking union and giving more time for austerity programs to reduce the slowdown in Europe. This happens as fears emerged of a global slowdown in April 2013.

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Some manufacturing towns have done worse than others during this period of a surge in Chinese imports. Dunn, North Carolina is one of these towns. It is 40 miles south of Raleigh. In the 10 counties clustered around Raleigh factory employment declined by 40% between 1990 and 2007. Per capita cost of government payments for benefits such as unemployment insurance, food stamps, increased by 74%. Cleveland by contrast was relatively insulated and adapted to the imports by moving into areas of manufacturing that required more technology and complexity. Autor and Hanson studied 722 county clusters throughout the U.S. to discern the impact of the surge in imports and free trade.

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Hilsenrath describes how the Federal Reserve missed the signs of the mortgage financial crisis of 2008, the bubble economy, and how low interest rates and other actions of the Fed to rescue the economy led to a situation which hurt savers. The lack of a serious plan for homeowner rescue as part of the actions by the government further hurt the working and middle class. The rescue also lacked credibility because the banks ended up becoming bigger than they were, and no action was taken in the U.S. which had been pushed by the U.S. in similiar situations overseas- for example on South Korean banks for overborrowing during the 1997 Asian financial crisis.  At the 2014 Boston Fed sponsored conference on Inequality, Fed chairman Janet Yellen described what she called the largest inequality in the U.S. not seen since the 19th century. The average net worth of the lower half of the distribution, said Yellen, of 62 million households, was $11,000, and a quarter of them had zero net worth. These were the shocking statistics that propelled two unlikely outsiders forward- Donald Trump to the Republican nomination for president, and Bernie Sanders who coming close to getting the Democratic nomination settled for a big part of setting the Democratic agenda supported by nominee Clinton in 2016. ...

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Chinese government data show that inflation was 3.1% in May 2010. The spread of wage increases in manufacturing after a series of strikes at Hon Hai and Honda Motor suggest that price pressures will grow even further. Analysts warn that China's central bank will have to raise interest rates to control the boom in the economy and property markets; that merely reining in credit will not work. They also suggest the need for swifter action in revaluing the yuan. As wage increases spread throughout manufacturing, this will eventually be reflected in higher prices of end products.

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The lower oil prices in 2015 helps lower the current account deficit, which reached 7.9% in 2013, to 5% projected for 2015. Inflation is projected at 6.8%. GDP growth of 3.5% is expected for 2015. Turkey imports oil amounting to about 6% of GDP making for a large impact. Weakness is in the area of manufacturing, as Turkey's high tech exports are only 2% of manufactured exports, according to the Economist. About 1% of Turkish students have advanced computer skills. With problems in Brazil and Russia, money flowing into emerging markets is giving Turkey a second look after the emerging markets crisis in early 2014, when the lira slumped and interest rates had to be increased. The economy is recovering in 2015 from that situation. Two major beneficiaries of lower oil prices in emerging markets are India and Turkey in 2015, as both economies struggled with a large oil import bill.

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Improving performance of Toyota, Nissan and Honda in the U.S., Japan and emerging markets. Japanese automakers report higher profits in the fiscal fourth quarter. Sales for 2012 are expected to quadruple for Toyota in the 2012 fiscal year compared to fiscal 2011, according to analyst estimates. Part of the recovery is from weakening of the yen from 75 to the U.S. dollar in October 2011 to 81 in the March-April 2012 period. Profit margins are expected to improve for Toyota from 1.5% to 5.1% for Toyota, 5.4% to 7% for Nissan and 2.5% to 6.8% for Honda.