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Robert Reich, a former Labor Secretary, says that instead of "rebalancing" with Chinese consumers buying more American goods and China exporting less to the USA, things are headed in the opposite direction. Why? Because at the macroeconomic level China is devoting more of its country's resources to production capacity. Chinese consumers are taking home a smaller proportion of the total economy. In 2008 personal consumption amounted to 35% of the total economy, whereas in 1998 it was 50%. Capital investment in the same 10 years went up 35% to 44%. Chinese continue to save and these savings are going into infrastructure and manufacturing capacity. There is even a social twist to the savings, with fewer young Chinese women than men parents with boys have to compete in the marraige market and save assets for this. Households are also saving to support more elderly people as population is aging quickly with population policies. All this means that with all the talk (see links to Niall Ferguson and Krugman), the situation will likely roll on in this manner till things reach an impasse, or there is a strong political backlash in the USA which leads to stronger trade actions by the government, or there is a crisis. Meanwhile the trade deficit is headed higher and Chinese foreign reserves will go far above the current $2.3 trillion. And the Europeans will also be getting restless with their trade imbalance, as the euro edges higher and the yuan remians pegged to the dollar, leading to trade distortions. ...

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US is shutting down 10% of airport traffic because of government shutdown in November 2025. Democrats are holding up the passing of the new budget till Obama's Affordable Care Act healthcare subsidies for low income Americans are restored. Republicans who control both houses of Congress are unwilling to restore these subsidies saying it will cost $350 billion over 10 years. Editorials in the Washington Post in November see Obama's Affordable Care Act as a bandaid approach for a broken healthcare system in the US. Public opinion in the US supports this assessment. Trade unions and labor have called for an end to the government shutdown. Democrats are acting as though the party is for low income Americans and labor yet this is not the party of FDR who fought hard for labor over vested interests, Democrats today are the vested interests whether from Tech which is taking a disproportionate share of the Nation's wealth and resources and pouring it into projects that do not reduce the cost of living or rebuild crumbling obsolete infrastructure, or from Banks which were not sanctioned for their part in the 2009 financial crisis, or from healthcare interests that oppose restructuring the entire healthcare system for fairness in insurance, pharmaceutical pricing and wellness. Republicans are making an effort to displace Democrats in the role of FDR and Lincoln under newcomer DJT who rejects both the incompetent Bush (Republican) and Obama (Democrat) administrations that wasted money and resources in foreign wars while overlooking America's many challenges and strengthening foreign powers including China, while weakening the US. The US government is cutting airport traffic to relieve unpaid traffic controllers. Also at risk are SNAP benefits which are for the loew income Americans. The US president is asking the Senate to drop the filibuster rule which requires 60 votes in the Senate for the biudget to pass it and pass it by majority vote. The Senate Majority Leader Republican Thune wants to keep the filibuster because it acts as a brake for hasty legislation passed by whichever party is in government. ...

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European Union countries, Britain and the US face the risk of a resurgence of coronavirus through the Delta variant and other variants. The Delta variant detected in India is 40% to 80% more transmissible than the Alpha variant detected in the UK, with the Alpha variant 50% more transmissible than the original coronavirus that originated in Wuhan.    Virologists in Italy feel they are flying blind at this time because of the lack of genetic sequencing in Italy, Spain, France and across most European Union countries. The UK has done genetic sequencing on 27% of recent covid positive tests. The figure drops to 1% for Italy and is tiny for most of the EU countries including Spain and France. Without genetic sequencing it is hard to predict and take steps. Another problem in the EU is that the southern economies Spain, Portugal, Greece, Italy, Croatia are dependent on summer tourism for the economy. The UK economy can handle a delay to a full opening for 6 weeks without serious impact to the economy, says WSJ. Southern European economies can afford only short delays to full reopening. Croatia acted as a door to spread of coronavirus into central Europe when Germans and Austrians went to vacation spots in Croatia in summer 2020. This situation could be happening again in 2020 with British and other tourists visiting vacation areas in Portugal, and Germans visiting Greece and other summer tourism spots. Portugal's national health institute says the Delta variant represents 60% of new cases in the area around Lisbon based on early data. The government of Portugal is facing criticism for letting a Champions League soccer final to take place in Porto, Portugal between two English teams. Thousands of English fans watched the game at the stadium. Other problems are in relaxing of mask rules in France and Italy, last week in France and in the coming week in Italy. French nightclubs open July 9 without mask requirement. Germany is maintaining some social distancing measures and this includes mandating medical masks in closed public spaces and on public transport. Half of French, Italians, Germans are vaccinated and quarter fully vaccinated. Yet the gaps of unvaccinated people is large enough to cause serious concern of another wave. The relaxation of mask rules- the entire stadium in Budapest was packed for a recent game between Hungary and Italy for a soccer Euro 2021 game with no masks to be seen. Stadiums played a key role for the spread of the original coronavirus in Italy with a game in Bergamo, Italy, in the area near Milan. All this makes health officials concerned about the risks of still another wave of the coronavirus.   ...

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An ad for a state sponsored campaign to promote women having babies on "Fertility Day," September 22, in Italy, shows a man holding a cigarette that is half burned, with the line: "Don't let your sperm go up in smoke."  The ads were deemed offensive and were withdrawn. Women say the problem is not that women don't want to have babies. It is because women depend on grandparents to provide childcare in a country that lacks enough child care facilities. Companies are still backward when it comes to offering flexible hours for women with small children. Birthrate in Italy is about 1.37 per woman compared to France at about 2.0, because France does better at flexible hours, and social safety net that includes day care and subsidies for families with children. In fact women say in cities it is prudent for women to think about having a second child because of work related issues. Italy spends less on social protection benefits- about 1% of GDP. Has a low female employment rate with some young women having to sign a pre-sign a resignation letter. Only recently did premier Renzi introduce a baby bonus of 80 to 160 euros. But the culture at work and the social support net is not encouraging. ...

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Iran's government drastically cut subsidies for gasoline, electricity and basic food items. Gasoline prices were raised from 1,000 rials (about 10 cents) per liter to 4,000 rials. As a result gasoline consumption is down 14% in early January from the prior month. Use of public transport is up 20%. Fares for Tehran's buses and subway went up by 20%, far less than the price increase for gasoline. The government introduced a $40 per person monthly stipend to soften the impact especially for poor families. Iranians are gradually tightening their belts and adjusting to the price increases, reducing wasteful energy use. Iranians have one of the highest rates of wasteful energy consumption in the world, according to IMF. This is because Iran has so far provided generous subsidies, covering 80% of the cost of energy and basic food items. President Ahmadinejad has introduced the Smart Subsidy Plan which calls for a gradual five year phaseout. These cuts will save $100 billion a year, according to government estimates, and is supported by the IMF. Iran is rigorously monitoring price increases in retail stores to ensure that retailers are not passing on the increases to customers. Trucking and transport businesses are allowed to raise their fees by only 15% to cover rising costs including the 837% fuel price increase....

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Domestic tourist trips up 19% over 2019 in China as China opens up to tourism are leading to only a 1% increase in total tourist spending, as tourists are just plain thrifty. Food inflation that is 10-15% in the US is about a catastrophic 40% in Europe with creeping higher margins of grocery stores. Compare that with China where inflation is less than 1%. WSJ looks at Zibo a city in China that was like hundreds of smaller industrial cities in China until a government publicity campaign got about 4.7 million people to visit it for its barbecue pancakes. The prices were relatively inexpensive with two people eating for $20. Yet this type of tourism is not boosting the Chinese economy when exports are slowing and the construction sector is in poor shape financially. 

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At a videoconference between DJT and European leaders on Aug. 14, 2025, initiated by Germany's Merz , it was decided that no territory exchanges are to be discussed at DJT Putin meeting in Alaska. DJT and the Europeans will simply seek an immediate ceasefire followed by talks between Zelensky and Putin with DJT offering to be there to mediate differences. DJT says there will be strong sanctions on Russia in the event no ceasefire is reached. Legislation in Congress with 80 senators on board a clear majority of both parties is for putting a 500% tariff on countries such as China and India that import Russian oil. These imports exceed $100 billion each for China and India. DJT has placed a 50% duty on India if negotiations do not yield results on this issue. This is seen in Congress as fueling the continuation of the Russian war in Ukraine.

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A city already 40% below sea level faces torrential rain and flooding in the first days of 2020. Jakarta, Indonesia is a metropolitan area of around 30 million people. Land around the city is subsiding from overuse of pumping of underground water. Floodwaters do not drain into the sea as is normal. Walls protect the parts of the city that are below sea level. 

During heavy rain the water from upland areas comes down to Jakarta further overwhelming a poor drainage canal system.

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Meg Gentle, who helped build the first LNG terminal for Cherniere Inc. in the Gulf Coast of the US for export of natural gas extracted in the US, is now switching to work in green hydrogen production. The first facility goes up in Texas by 202 7after an experimental project in Chile. WSJ shows many former fossil fuel executives are taking this route to green hydrogen. Gentle says the nascent green hydrogen industry is similar to the beginnings of natural gas. She says there are all the same elements in both. And that the new companies can go from one plant to create a new transformation just like that done for LNG. A chief technology officer of Airbus, a head of GE Europe and China, and an Italian from Eni Enel are also working at green hydrogen companies. What has turned an historically uneconomic business into a possibly profitable business are subsidies from president Biden put in place for clean energy. These subsidies now cover 60% of the cost of green hydrogen, says the WSJ. Green hydrogen requires permiting, infrastructure, financing, customer agreements, similar to the fossil fuel industry. Many are joining for the challenge as green hydrogen when converted into a liquid for transport can't carry as much energy as fossil fuels. About 120 startups raised $2.6 billion in 2022, a 50% jump from 2021. The GE executive says no one has done this on scale making the opportunity enormous. ...

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Bondholders and the Greek government are stalled in talks and waiting for Germany and the IMF to come up with the 14.5 billion euros that is due on March 20, 2012. It may suit the bondholders holding out for a higher interest rate in the 4-5% range for the new bonds to be issued at 50% of face value with long term maturities, but is bad for Europe. This Journal editorial points out that this is bad for European taxpayers and points to other steps that can be taken which are being discussed in European circles. One step is for acollective action clause to be inserted for the existing Greek bonds under which all bondholders have to accept losses if two thirds of the bondholders agree to accept losses. To ensure the safety of the Greek banking system Greece would restructure the bonds held by Greek banks so that they continue to be acceptable as collateral with the ECB, and issue new bonds to the ECB with face values, interest rates and maturities matching existing holdings. The idea is to make it possible for Greece to reduce its total debt and its debt servicing costs- which is really the only way out of the crisis. The ECB and Greece would use the collective action clause to restructure the Greek debt to reduce interest and debt servicing costs on new bonds to be issued. The Journal editorial says it should also mean Greece and the ECB are not required to put up the 30 billion euros in up-front cash that was agreed to in a poorly devised agreement in 2011....

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Independent oil companies are eager to invest in Venezuela says Treasury Secretary Bessent at the Economic Club of Minnesota. He says phone are ringing non stop from these companies. Big Oil such as Exxon is taking longer. Chevron is already in Venezuela and Bessent says in a few months it can increase production by 40-50%. Oil revenue from Venezuela will be in a special fund that will be used for the people of Venezuela. Under Maduro since 2013 the oil revenue was used for regimes in Cuba and not managed well for the investment in infrastructure and modernization. US sanctions made it hard to modernize the oil industry which will now take place. Bessent calls Cuba's economy decrepit and now in bad shape. It also shows that realistically modernization and good standards of living are not possible in the western hemisphere by regimes of the Cuban or Bolivarist type which descend into corrupt regimes and lack foreign capital and technologies. Lula adopted an approach in Brazil that worked with the US and EU to modernize the economy creating a workable model for a Workers party. There is much to learn from these experiences in Latin America which come at considerable cost and suffering. ...

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When it comes to essential policy Republicans and Democrats in the US Congress can and will work together. A roughly $1 trillion infrastructure bill passed in the US Senate. Kentucky Republican Mitch McConnell says there are issues that are popular with both Democrats and Republicans.  He said in an interview with the WSJ - "The American people, divided, sent us a 50-50 Senate, and a narrowly divided House. I don't think the message of that was, 'Do absolutely nothing.' And if you are going to find an area of potential agreement, I can't think of a better one than infrastructure, which is desperately needed." The infrastructure bill passed this week 69-30 in the US Senate. McConnell thanked president Biden for getting the Democrats ready to compromise to pass the bill. Biden's long experience in the US Congress compares with another US president, when getting Congressional action from both parties was needed. Lyndon Johnson had this type of long experience in the US Congress which enabled him to reach compromise with Republicans to achieve goals in civil rights legislation and in passage of Social Security during the 1960's. In this sense Biden is right for the 2020's when national rebuilding is the task before America. ...

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The Chief Correspondent of BBC News points out the dangers facing May and the British economy as the deadline of March approaches for invoking Article 50 to leave the EU and start negotiations. The possibilities of a "disorderly break" cannot be discounted, he says. There are many hurdles. The negotiations could get bogged down on the issue of settling outstanding obligations for which Britain owes 50-60 billion euros. Consumers will feel the effects of higher prices on their budgets as prices creep up. Already tech goods prices are reflecting the drop in value of the British pound. There is little solace to be found in the 6 months of steady economy following the Brexit vote as inflation has not hit consumers hard so far. Chancellor Merkel of Germany has said that there will be "no cherry picking" allowed in the negotiations. And the French right and former Gaullists have never concealed their views about Britain being on again and off again on the idea of Europe. The City of London, British business, and large parts of the Conservative Party do not favor Brexit, even the civil servants expected to implement it are skeptical, creating an additional layer of complexity and uncertainty and difficulty.Under a "disorderly break" Britain would revert back to the tariffs set under World Trade Organization arrangements. ...

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India recorded 100,000 cases in one day on April 5, 2021. About half of these cases are in one state Maharashtra. Most of the cases are in about 6 states. Super spreader events such as cricket matches, weddings and social gatherings, political rallies with elections in states of Tamilnadu, Kerala, West Bengal, and Holi festival, are increasing the rate of infection. People have become lax in wearing masks and following the safety protocol after cases dropped to less than 15,000 for the whole country in February. This report says variants also are playing apart. Google Mobility Reports have shown that movements around retail areas dropped to about 80% below regular levels in the middle of the national lockdown in spring of 2020, and have come back up to about 20% below normal levels. When the winter surge did not happen, and the vaccination drive started in January in India people became less vigilant, allowing infections to increase. The vaccination drive is accelerating and open to everyone over 45 years. About 80 million doses have been given and the target is still for 300 million doses by August.  ...

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Car buying has changed permanently in 5 ways, says this report in WSJ. There are fewer cars made and fewer cars on manufacturer's and dealer's lots, cars are more expensive these days. Car sales have dropped from 17 million before the pandemic to 13 million and up only to 15 million in 2023 as more cars were made. Carmakers have learned to make money by selling fewer cars concentrating on the pricier cars and reducing cars available in the lower end of price range. Used car prices are up on average to $30,000. New car prices have surged to an average of $47,000 in 2022 and 46,000 in 2023.  New car loans are up from average $562 to $733. The share of leased light vehicles has dropped from 30% to 20% of cars sold and carmakers are offering fewer lease deals as demand is easily fulfilled. With fewer leased cars coming in the dealers have to actually go out and buy them. 

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It is a reminder of far household debt went up in 10 years. Household debt was only 66% of GDP in 1998, Today it is 96% of GDP, and it is 130% of disposable income. For it to go back to the level only 10 years ago, it would have to drop 30%.

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India plans to vaccinate 300 million people in the first drive of the vaccination campaign. The two vaccines approved are the Covishield from Astra Zeneca partnership with Serum Institute of India, and the Bharat Biotech vaccine. India is the largest vaccine manufacturer in the world, and its vaccination production and campaign is being watched closely.  The largest maker of vaccines is Serum Institute of India based in Pune. Countries that are seeking India's help in vaccines are Brazil, South Africa, Morocco, Saudi Arabia, Bangladesh. Brazil has ordered 1.5 million vaccine doses. The Indian government has approved sending vaccines to other governments. Price of 100 million doses to be supplied by Serum Institute to the Indian government is 200 rupees a dose or about $2.73 a dose. Vaccine sold in private markets will be priced at 2000 rupees a dose. Serum Institute and Bharat Biotech have stockpiled 70 million doses. ...

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Southwest pioneered lower cost domestic travel under founder CEO Kelleher. It did not charge fees for checking in bags and seats were not assigned. This model is now being questioned as baggage fees are generating $1.3 billion at American, $1.2 billion at United and $1 billion at Delta Airlines. Even a smaller airline like Spirit generates $1 billion from baggage fees. Additional sources of income are passengers charged for seat selection. Southwest generates about $70 million from baggage fees and does not charge for seat selection. Southwest sees not charging for baggage as part of its culture and current management is not changing the status quo.

Other problems are that Boeing can deliver only a fourth of the plane Southwest ordered. As a result the airline is facing a crisis and Eliott Investment Management now owning 11% of the company is pushing for change including ouster of the CEO and the Board.

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Manpower decisive in 20226 for Ukraine as two hundred thousand deserted and 2 million dodge the draft. Ukraine has more older men at the front lines than before. The situation is where Ukraine with a population of 40 million faces Russia with apopulation of 120 million, three times its size. The war is in its 4th year. Ukraine needs young people to rebuild and the focus was to prevent loss of young generation to the war to rebuild. This is getting harder to do. It also show why after 4 years of war the war on both sides has dragged on for too long. Britain, France are further away from the frontlines, and Germany, Poland much closer, the Nordic countries and Baltics having lived with Russia as a neighbor, their respective locations affect how they talk about this war. US has rightly seen that it is in no one's interest to prolong this war with loss of tens of thousands of young people every month.

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The usage of long distance and short distance passenger trains in Germany has dropped to 15%. Yet Deutsche Bahn is keeping the trains running on schedule with 65% of short distance and 75% of long distance trains running on schedule so that the service is available for essential workers who need it. This is similar to weekend schedule. Deutsch Bahn says it is "stability" that is its motto, and that "whoever works in systematically relevant professions, and is dependent on rail travel should be able to do so without drawbacks." The government is the owner of Deutsche Bahn and is likely to provide financial support for Deutsche Bahn to keep the trains running.  Passenger trains are being used to transport whatever needs to be transported including groceries such as pastry wares, flour, and toilet paper. In the case of freight trains 70% of capacity is being utilized, as the freight is now not autos but things that need to be moved in the times of the pandemic. ...

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Europe's second wave affected mostly younger people with mild or fewer symptoms. Latest data show that this is changing so that infections from young people are spreading to older members of the same family. In Italy the median age of newly affected is rising with more than one third from people over the age of 50 years. In Britain the number of hospitalizations have doubled in September to more than 2000, and in Spain deaths are rising sharply to 547 in the first week of October. With multigenerational families and older people offering care of grandchildren it is particularly difficult to isolate completely in Italy and Spain.

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Germany faces the possibility of a pandemic surge of the unvaccinated, something that is happening today in the southern United States.  For days the percentage of people that are fully vaccinated remains at 62%. Some vaccination centers are closed. A vaccination center outside the train station in Cologne offers passersby free vaccinations. Berlin's Social Democrat mayor Michael Muller is very frustrated. He says "I am now coming to a point where I think we have exhausted what we can do in politics."  At 62% the rate of fully vaccinated people in Germany is too low to prevent a surge of the Delta variant in the way that it has hit the southern US, and California. Vaccination rates of close to 85% are needed to tackle the risk of another surge in highly contagious delta variant. Not everyone remaining is die hard opposed to vaccines. The Robert Koch Institute estimate is that 5 to 10% of people are in that die hard category. The remaining 20-30 % are people who have various other concerns and fears, hesitancy, that may be changed.  The chairman of the World Medical Association Frank Ulrich Montgomery favors a vaccine mandate, what he calls a 2G rule, that should be introduced in Germany requiring vaccination to attend events, sports, restaurant visits, adopted nationwide. German government has rejected idea of mandatory vaccination of health personnel, that was adopted in France. Vaccination drives are regionally based. Some are ineffective such as the Deutsche Bahn train system vaccination drive for commuters that only had a few hundred doses of J&J vaccine and ran out quickly in Berlin. One prick J&J some say is better for vaccine skeptics. Vaccine skeptics think they may get away without getting covid infection. How does one get over this misconception? Others including members of the Greens party say vaccine needs to be delivered where people are- transit points, bus stops, doses offered in evening and early morning hours, trying new ways to reach people and inspire confidence. Germany now ranks behind France but ahead of Bulgaria in terms of vaccination percentage in September 2021, not a good situation. ...

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Three very important point about a soda tax. First, obesity was rated as the No 1 problem of concern for business leaders at a WSJ conference for business leaders at the beginning of the Obama administration in January 2009. If obesity related costs are taken out of health care, and even though they are not collected as statistics they must be significant, it would reduce the costs of providing universal health insurance. Especially considering that most diseases are exacerbated by obesity, and in some obesity figures as one of the leading causes. Second, Centers for Disease Control Data shows that a typical person now consumes 190 calories a day from sugary drinks, up from 70 a day in the late 1970's. That 120 calorie increase, an almost threefold jump in consumption of sugary sodas, represents one-half of the total daily caloric increase during that span per person, according to C.D.C. data. This is a crucial finding. Just one product alone can cause so much disruption in people's lives. Just as thrifty ways of living are becoming popular in America, better education in schools and communities on good nutrition and eating habits can become popular to reverse the bad habits acquired in the last 20 years, habits that are careless and reckless. Third, research shows that soda drinkers are price sensitive, so that in the past when soda prices went up by 10%, consumption dropped about 8%. So a tax on sugary sodas would make sense. The huge soda sizes at fast food places are one of the signs of the excess of this age with no regard for the consequences to health. living habits....

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Research firm Dragonomics says real estate prices fell 4.9% in April from the prior year for nine cities in China. In 2010 prices in these nine cities went up by 21.5%, the increase in 2009 was 10%. Standard Chartered estimates China's second tier cities, such as Dalian and Tianjin, could have 20 months of housing inventory by the end of 2011. Standard Chartered says price declines of 10-20% can be expected. Government data understates the extent of the bubble and the drop in prices say analysts. Beijing real estate consultant, Soufun, confirms the slowdown in price increases, saying its data show average property prices went up by 5.1% in May over the prior year, compared to the jump in prices in 2009 and 2010. Prices of copper and steel are coming down after rapid increases. The price increases in the Chinese real estate market have put housing out of the reach of ordinary couples. In 2006 an average price of a new apartment in Beijing cost $100,000, by 2011 this had gone up to $250,000. It woud take 57 years of saving for an average person to buy the apartment at todays cost. The government's response has been to boost down payments on mortgages for second homes to 60% from 40%, prohibiting state owned enterprises outside the real estate sector from investing in real estate, and raising the reserve requirements of banks....

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China agrees to drop a 40% tariff on American cars after a trade truce is announced following the Xi-Trump meetings at G-20 meeting in Buenos Aires. About $9.5 billion in car exports are made chiefly from Alabama with German plants, and the states of California, Kentucky and South Carolina. For China this is a small concession as this is only 4% of China's car market, or 1.2 million cars, and are aimed at the affluent market.