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The Spanish high speed rail network now exceeds 2000 kilometres. A new 242 mile link opened between Madrid and Valencia recently. Spain hopes to export its high speed rail expertise to other countries.

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Indian manufacturing sector continues to grow rapidy at close to 12% as its starting off a small base and existing infrastructure needs upgrading badly and foreign investment is only now coming into India.

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Air fare price increases are being pushed through by airlines to cover jet fuel costs as oil hits $90 and becomes 25% of airline costs. Since january jet fuel went up by 40%.

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Arun Sarin of Vodafone and his efforts with Vodafone acquisition in India of Hutchinson Essar. Its the third largest company after Bharti Airtel 23%, Relaince Communications 17.5% and its market share of 16.5%.

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Vietnam has seen rapid growth in the last 20 years as it joined the shifted away from the state planned economy similar to China in the late 1980's, joined the worlds trading system, freed up the economy and attracted foreign investment. But something doesn't seem right. Looking at the Vietnam growth curve, growth in Vietnam's GDP vs growth of world GDP the curve seems to be following a similiar pattern, there is a sharp downturn in the early 1990's with a V shaped bounce back and a sharp downturn in early 2000 followed by another V shaped bounce back in growth to this date. As America begins its first of several years of credit contraction and investment contraction followed by similiar patterns in some European economies like the UK, Ireland, Spain and a slowdown in the rest of Europe, the question hangs over growth in Asia, from South Korea and Taiwan where recent elections reflected these concerns in electing politicians who promised new ways of kickstaring their economic growth, to China, India and Vietnam where the concerns are about how to meet the growing expectations of the large numbers of people, probably the majority of the people in these countries who have been left out of the economic development experienced in urban areas and by the new middle class. Corruption, the stock market collapse or severe setback, and a slowdown in their main export markets, and are problems shared by all 3 countries China, India and Vietnam. India and Vietnam share the problems of a poor infrastructure. In this new environment Asian countries will have to come up with innovative solutions to maintain growth and quality of growth, as some of the chaotic growth of the last 20 years may have come at some cost like that of the environment in the case of China and better solutions can be found than growth that sacrifices goals in health care and other necessary goals of balanced development....

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Airlines are learning to price aggressively, and sophisticated pricing models are helping to improve revenues. Online buying and search habits of travellers aim at getting lower prices, even as the airlines are using pricing models to price aggressively by monitoring passenger buying throughout the day. Further consolidation, as for instance a merger of Delta with US Airways, would further shrink airline fleets and raise prices as seat capacity is filled up. Southwest Airways continues to expand its fleet and is moving in the opposite direction, but it is also expanding routes flown and is increasing its presence in the market visa vis the other airlines. Overall, with 80 to 100% of capacity filled, airlines are finally obtaining some of the pricing power to operate at a profit. Note that leisure fares and business fares are moving in the opposite direction. Leisure down 9% year over year, business up 20% year over year. After the seats fill up the unsold seat is discounted as a filled seat vs a unfilled seat, means at the margin pure profit for the filled seat even at highly discounted rates. It also raises the capacity filled per flight to a higher level....

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Experts in Germany and the U.S. look at areas adversely affected by free trade and globalization and the increasing support for right wing parties in these areas. David Autor is a labor economist in the U.S. at MIT who has studied these trends. He says trends in free trade have hurt low wage workers. In 2014 he and David Dorn, Gordon Hansen, Jae Song, published a paper showing how trade with China was affecting different parts of the U.S. Lower wage workers, most of them with less education and skills were prone to be unemployed or face lower earnings in areas where cheap imports from China were replacing domestic production. Donald Trump has strong support with the white working class and less educated workers who form this group. He has accused China of "currency manipulation" and proposed a 25% tax on Chinese imports. Experts say there is no strong evidence that immigrants are causing this type of dislocation in the U.S. Yet immigrant bashing is used by Trump and other right wing politicians which is attributed to it being an easy tactic for politicians to appeal to the anxieties of working class voters....

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Khalid al-Falih, chairman of Saudi Aramco, says at the World Economic Forum in Davos, on Jan. 26, 2016- "If prices continue to be low, we will be able to withstand it for a long, long time." With $630 billion in foreign currency reserves the Saudis are following a long term policy of full production. Gasoline subsidies are being reduced, IPO of Saudi Aramco being discussed to raise additional capital, and other steps being taken to plan for long term oil prices. Flexibility for a change in policy is diminished with the addition of Iranian oil production to supplies following the lifting of sanctions. The events in 2015-2016 of Russian bombing campaign in Syria, and the cutoff of diplomatic relations with Iran, have worsened the standoff with Iran and Russia in the Middle East conflict. As a result it appears that the Saudis are settling down for a long term policy of full production which would keep oil prices low for the long term. India, Japan, China, the U.S. and the European Union, Turkey and other countries benefit from low oil prices when their economies need a boost in 2016-2017....

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In an hour long interview at the Moncloa palace in Madrid, Zapatero, Spain's prime minister, talks to NYT reporters Rachel Donadio and Victoria Burnett. He is standing firm when it comes to protecting labor rights and upholding th social welfare state. Zapatero says "my goal is to make this an innovative, creative, entrepreneurial country while upholding the social welfare state." He sees the need for government to invest in the economic crisis facing Europe and America. And he sees opportunities for Spain to create jobs and growth in sectors like renewable energy, biotechnology, civil engineering and high-speed railroads. About 4 million immigrants entered the country during the years of 3.8% growth from 1997 to 2007. Four million people are now unemployed, and the burden of unemployment has fallen hardest in construction and on immigrants and younger workers. The government has expanded unemployment benefits coverage and about half of the unemployed 4 million receive benefits. Zapatero's government turned down an effort by business leaders to roll back the payment to laid off workers from 30-45 days for each year worked to 20 days....

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The shift to finding new drugs for cancer. Pfizer has a development team of 10000 researchers in one location near San Diego, California, to develop new drugs for cancer even though some experts say the search for cancer drugs is devilishly complicated. The causes of cancer at the molecular level are complicated and vary even from person to person for the same cancer. Says one expert this also raises questions about the benefit to people as a large amount of resources are shifted to areas like cancer that affect fewer people than other diseases, and where the existing drugs have only prolonged life marginally, in some cases even as low as a few months at a huge cost of thousands of dollars. Tarceva for pancreatic cancer for example only prolongs life by 12 days at a cost of $3500 per month. 860 cancer drugs are being tested in clinical trials according to the trade group of the pharmaceutical industry. This is more than twice the number for heart disease and stroke, and nearly twice the number for AIDS and all other infdectious diseases combined, and nearly twice the number for Alzheimier's and all neurological dieases combined....

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The $350 billon in proposed cuts to Medicare and Medicaid in the 2011 deficit reduction talks will do little to reduce the rapid rise in medical costs. Instead it shifts the costs to seniors, state governments and public hospitals. Gail Wilensky, former head of Medicare under the first President Bush and now a senior fellow at Project Hope, says this should not be confused with real reform to Medicare which reduces the rapid increase in costs. It does little in the way of fundamental changes that would reduce the growth in costs. About $53 billion comes from reductions to senior's ability to buy extra Medicare supplemental insurance or Medigap. Another $14-26 billion would have the government reduce payments to hospitals for unpaid debt. The few items to curtail fraud in the use of CT scans or purchase of power wheelchairs would provide savings of $2-3 billion over 10 years. $4 billion comes from lowering Medicaid payments to hospitals treating a high percentage of low income patients, hospitals such as Cook County Hospital in Chicago, San Francisco General Hospital, and Parkland Hospital in Dallas....

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Daniel Altman's proposal for a tax on wealth over $1 million. He makes the case for taxing wealth not incomes to reduce inequality as this is where the situation in terms of inequality has worsened for the U.S. in recent decades. To support this proposal Altman cites the change in the U.S. Ginni coefficient, which measures inequality. The Ginni coefficient is anumber from 0 to 100 which goes up with higher income inequality. From the late 70's to the 1990's, the Cnesus Bureau showed this to be in the low 40's. By 1992 the Ginni coefficient went up to the mid-70's, according to the Federal Reserve data. It increased to about 80 in 2010. In 1992 the top 10% in the U.S. population controlled 20 times the wealth of the bottom 50%. By 2010 this figure triples to 65 times. and the graduated income tax even if it redistributes a small share of the wealth does little to affect the trend of wealth extremes from building up and threatening the social fabric of America, reducing mobility and opportunities for the bottom 50% to unprecedented levels since the 1950's. ...

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New UBS CEO, Sergio Ermotti, plans to scale down UBS investment banking operations because of stricter regulations and a changing market environment. He said in an interview that UBS will go back to what it was in the 1990's, that he now sees the investment banking boom of the last ten years as an aberration. He also sees rival banks taking the same route. The plan is to shrink risk-weighted assets from 300 billion Swiss francs today to 145 billion Swiss francs by scaling back or exiting in areas such as asset securitization, complex fixed income structured products and trading in some equity products. UBS will cut 2000 investment banking jobs to 16,500 in 2013. The focus will shift to foreign exchange, commodities and mergers and acquisitions. Investment banking made a profit for only one of the last 4 years, taking up two thirds of the bank's capital and earning 26% of the group's the pretax profit in the last year. The new plan will reduce the size of the investment bank so that it makes up less than half of the group assets by 2016....

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James Q. Wilson points to the link between educational levels and inequality. He says the poor face too few skills and too few opportunities. The link with education is critical. He cites information from the Bureau of Labor Statistics which show that between 1979 and 2010, hourly wages for those with a college degree went up 33% for men and 20% for women. For those without a high school diploma wages declined 31% for men and 9% for women. It appears that men have been more adversely affected than women. Minorities have done poorly especially Hispanics and Blacks. Social factors such as unwed mothers aggravate conditions for the bottom fifth in incomes. As the demographics of America shift to higher population of Hispanic immigrants, the situation worsens. High schools in Hispanic areas of New York city with high dropout rates, to take one example, can affect income inequality as more immigrants take jobs at the minimum wage level. The 2008 financial crisis has also taken a higher toll on minorities and people with modest incomes by reducing their savings and through the large number of home foreclosures....

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Spain's finance minister, Luis de Guindos, announced a two year plan in which Spanish banks are required to set aside 50 billion euros for losses on bad real estate and other loans. This is part of the effort to restore the flow of credit in the economy. He told a news conference: "At the moment credit is falling by around 5% or 10%." Banks have been slow in Spain to get rid of bad assets and proceed with a bank cleanup.The provisioning for losses required under the plan is by type of asset- for undeveloped land this will be raised to 80% of value from the 31% used currently, for new homes this goes to 35% from 25% used currently. The idea is to get banks to sell these properties at today's prices and give Spaniards an opportunity to buy these homes as opposed to letting this remain on the bank's books. Banks that merge will be given one year, other banks will be required to do this in one year. The cleanup will make it easier for Spanish banks to obtain financing in international markets, and in turn improve the flow of credit in the Spanish economy. ...

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Land prices went up by 500% during the last decade and developers went on a building spree in Spain. 800,000 units were built in 2007 alone. Many of these developed areas are now ghost towns. Coastal villages were turned into residential areas for vacationing Spaniards and for retired people from other parts of Europe. At the peak of the boom in real estate the construction sector accounted for 12% of GDP, double the level in Britain and France. Spain's deputy finance minister, Jose Campa,says that the adjustment in housing prices has already taken place. Yet housing prices are down a modest 12.8% from the peak according to the Bank of Spain. And that leaves plenty of skeptics. The estimates of the central bank, the Bank of Spain, are that banks in Spain have $280 billion in "problematic exposure," on their books, out of $580 billion invested in real estate and construction. With the lack of adequate disclosure it is hard to estimate the real exposure of Spanish banks. To improve investor confidence, the Bank of Spain is forcing banks to make more disclosures and to acknowledge bad assets faster....

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The election of Sebastian Pinera only confirms a new emphasis in Latin America towards a social cohesion agenda. In Mexico with Calderon, in Columbia with Uribe, in Brazil with Luiz Inacio Da Silva, in Chile with Pinera promising to work closely with the Concertacion and carry on social programs introduced by that coalition which reduced poverty, the trend is the same. It is to put behind Latin America the struggles between the military, the universities, business, unions and other parts of society and forge a common consensus for coupling social programs for the less well off with business friendly policies to improve the economy. Its even a process that is taking place in Spain which has a great deal of influence on Latin America, as Spain combines social support programs with business friendly policies. And the Concertacion President in Chile, Michelle Bachelet, leaves with personal popularity ratings of about 75% showing that these policies are popular with Chileans, as they are in places like Brazil and Mexico. The fatigue with 20 year old Concertacion rule shows with a change in administration but overall policy direction will in large measure continue....

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Concerns that the austerity cuts announced by Spanish prime minister Zapatero may not address the deeper causes of the financial crisis in Europe- taking on too much debt, government spending and the imbalances in the global economy. And the concern on the other side that even these small cuts and eventual larger cuts can squeeze domestic demand in countries with severe recession, weaken the tax base, test social cohesion, and dampen the prospects for recovery. Zapatero announced a 5% pay cut for public sector employees this year and a freeze for next year, cancelling index-linked pension increases, and cancelling a baby bonus tax break of 2500 euros, cutting back regional spending budgets, and postponement of infrastructure projects, all adding up to $15 billion in savings. This is intended to reduce the budget deficit to 6% of GDP from 11.2% in 2009. With Spain's unemployment at 20%, and the construction sector stalled, pain will be felt. Spain's large informal economy tied to tourism helps in this situation. Trade union Comisiones Obreras gave a muted response about a general strike saying that "it is the last thing this country needs at a time like this," after meetings with Zapatero. ...

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In a strategic move to fill a gap in its competition with Tesco and Sainsbury in Britain, Wal-mart has decided to pay 778 million pounds for Denmark's Netto chain's 193 stores in Britain. Tesco has ben expanding with new store formats and has built a sizable presence with smaller stores. Customers in Britain like the advantages of shopping in smaller stores, with older customers or customers in small households preferring to buy often and as needed rather than make a long drive to a distant location for bulk purchases. Wal-mart in Britain was seeing its share of the grocery market at 17% slipping in relation to Tesco's 30% share. Efforts to open its smaller stores of 8000 square feet have run into tight zoning regulations and it has only 25 such stores so far. The Netto acquisition helps fills this gap. It still will not have the same quality of locations that Tesco and Marks & Spencer have, which are better centrally located, and in busy residential areas. It still is a much needed move into convenience retailig for the Asda business of Wal-mart....

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Fitch Ratings Agency says that 65-75% of homeowners getting home loan modifications under the Obama administration's Home Affordable Loan Modification Program (HAMP) will default in 12 months. This is because the median ratio of total debt payments to pretax income is about 64% according to a Treasury Department estimate. Many of these homeowners have large credit card and other debt, and little is left for food, clothing and other expenses. By April 2010, 295,000 homeowners had taken loan modifications under HAMP, which provides interest rates of as low as 2%. And another 637,000 homeowners are in trial modifications, which require that homeowners show they can make the lower payments consistently and provide documets to show eligibility. The Obama administration has provided $50 billion for the HAMP program, with financial incentives to loan servicers and mortgage investors to modify loans. Critics say the program would have worked better if the government and HAMP dealt directly with homeowners- as homeowners complain about the long time, upto a year, it takes for loan servicers and mortgage companies to get the loan modified on a long-term basis....

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A worldwide trend to shorter term borrowing means that institutions and sovereign governments will compete in the capital markets, as they try to roll over existing borrowing by 2012. The US has $1.3 trillion to roll over by 2012. Worldwide about $5 trillion has to be rolled over, and of this $2.6 trillion is in Europe. With the European financial crisis which started in Greece it is becoming harder for sovereign governments to borrow in capital markets at favorable rates. A former economist of the Bank of England says this is of the highest importance for lending and for growth. The implications are reduced lending by banks to businesses and consumers, reducing output and growth, and limiting reductions in unemployment. It is a big issue say analysts, as debt needs to be rolled over over shorter periods. Moody's study shows new bond issues by banks during the last 5 years matured at an average 4.7 years. The stress say experts is likely to be on the less healthy banks like the savings banks in Spain, Landesbanks in Germany. Stress tests on European banks will be out July 23, 2010....

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Views of East Germans in the city of Erfurt on the eve of the 20th anniversary of Germany's reunification. Disparities remain after over a trillion dollars were invested to improve conditions in East Germany, yet the positive changes are visible. In this city of Erfurt the burning of lowgrade coal for heating homes made the air less breathable. It could take years just to buy a car. Still Germans in the east are disappointed, as their expectations were high during reunification. Wages in the east are 80% of wages in the west and unemployment is 12%, and the average wealth of east Germans is 40% lower than west Germans. Young people have immigrated to the west, leaving older people and retirees. Because of this the term reunification is less used than the term "die Wende"- meaning the turn or the change. A sense of the loss of the old values forged in a socialist state is still felt deeply by some east Germans and the change has been largely positive but wrenching in terms of a loss of identity, a sense of being treated as immigrants in their own country....

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Raphael Minder points out one episode in the life of Emilio Botin that shows how intertwined Spain and Santander had become. During the period when Spain took EU help after the collapse of Bankia bank in 2012 there was pressure on Spain to take a full government bailout. Finance minister Guindos says it was Botin who called him at that time and told him: "You know what you have to do and I will back you up." Botin's advice to the Spanish government was to resist the pressure. Botin expanded what was a family bank based in Santander in Northern Spain, through a series of successful acquisitions. He had a rare intuitive sense for timing of acquisitions, going into Brazil around the time candidate Lula of the Workers Party was elected president, with considerable uncertainty about how financial markets would respond to the election. About a quarter of the bank's profit now comes from Brazil. Besides Brazil Santander has commercial banking presence in Britain and the U.S., taking a bank that had 20 billion euros in assets in 1998 to 1.1 trillion euros by 2013, which is about the value of Spain's GDP....

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After an initial period of a year Japanese companies are now making the move to pull back some of the production shifted overseas with the yen at 80 to the dollar. Canon made 40% of its product overseas in 2009 before the shift to 60% by 2013. Now it is shifting production back home to reach 40% overseas production. Other consumer electronics companies Panasonic, Sharp, Daikin, are shifting production back to Japan. This is similiar to the shift back to the U.S. of products made overseas as costs have risen in China and other Asian countries. The sharp swing in exchange rates is accelerating the trend. Auto companies Subaru, Toyota, Nissan, Honda are continuing plans to manufacture close to customers in the U.S. Shorter product cycles make it possible to shift production for electronics companies compared to longer product cycles at auto companies. Murata Manufacturing will continue to make smartphone parts close to its customers in China, lifting production overseas from 14% to 30%. As a result exports have increased in Nov. 2014 by 10.8% from the prior year and imports up 2.2%, according to the Finance Ministry....