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Foreign investment in the auto industry is having a significant impact in the growth of Mexico's middle class. VW has plants in Puebla, General Motors in Silao, Chrysler in Toluca, Nissan in Aguascalientes. Production increased by 24% in February 2012 over the prior year. The growth is likely to continue. Facilities in Mexico have high productivity and are technologically equiped comparable to plants in the U.S., Europe and Japan. Nissan plans a $2 billion investment in a plant in Aguascalientes. Because of the lower cost of living, with food, transportation and health care costing less, even though household appliances cost more, workers at a Mexican plant earning $4 an hour in pay and benefits or $130 a week can still have a decent standard of living. Foreign investment is likely to grow with Mexico's emphasis on technical education - about 130,000 engineers graduating each year according to Mexico's president Calderon- the work ethic of young Mexicans joining manufacturing plants, the productivity of these lower cost plants, and a growing market in Latin America. Nissan plans to produce 1 million cars in Mexico with an investment of $2 billion in Aguascalientes. Nissan has succeeded in taking over from VW as the preeminent manufacturer in Mexico, and has 32,000 workers in the Aguascalientes area, once a small town but now a thriving city of 700,000. Drug cartels have no interest in places like Aguasalientes, which is why foreign investment continues to come into Mexico. The lack of economical credit- interest rate on car loans is about 10%- and the flow of about 600,000 used cars each year into Mexico from the U.S. has restricted growth in Mexico's automobile market. Jose Munoz, Nissan's senior executive for Latin America sees this changing as more credit including Nissan's new financing center in Aguascalientes make lower cost credit easily available to a growing middle class....

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Abercrombie & Fitch sees a sharp drop in sales and 33% decline in profits in the second quarter of 2013. CEO, Mike Jeffries, says younger consumers are struggling and not fully a part of the recovery in consumer spending in the U.S. Other retailers appealing to a younger demographic, Aerospatiale and American Eagle Outfitters are also seeing decline in U.S. sales. Many younger consumers are weighed down by student debt and a weak job market.

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Robert Gates, U.S. Defense Secretary from 2006-11, says the West should provide a strong response to Russian president Putin's actions in Ukraine. He says settling old scores is not the way to peace in Asia or Europe. He describes Mr Putin's resentment of how Russia has been treated since the disintegration of the Soviet Union, and the desire to prevent the EU and NATO from coming too close to its borders, and especially Ukraine which is linked he says to the beginnings of the Russian Empire centuries ago. This could only lead to worsening tensions. Actions include bolstering defenses in Europe and reducing economic vulnerabilities of the Baltic states, restoring the defense budget to the levels of the 2014 budget proposed by the Obama administration in 2013, cutting overhead at the Defense department to add Navy ships, and urging the EU to grant associate status to Moldova, Georgia and Ukraine.

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One reason why outside of the midwest there is not as much concern for Ford, and GM, is the entry of foreign automanufacturers. Good jobs are being created in the south by foreign auto companies, even as Ford and GM close plants there. And the appreciating won makes it more attractive for South Korean companies to build plants in the U.S. Kia Motors Corp. said it has chosen West Point, Ga., as the site for its first U.S. factory. The investment provides good news for a state that has heard both Ford Motor Co. and General Motors Corp. say they will close plants there as they restructure to cut costs. Also note the forecast of sales at 800,000 in 2010 for Kia, up from 275,00 in 2005, moving market share from 1.6% in 2005 to almost triple that. Where will it come from?

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Kissinger on great power diplomacy and balance of power in the Middle East. He ignores the Arab Spring, the aspiration of peoples in the region, the role of the Maliki administration in reviving Sunni-Shiite antagonism and its corrupt incompetent administration that led to the rise of ISIS, the Obama administration's policy of paralysis in the Middle East and errors in policy that has led to some of the chaos in the region, and the vacuum left by the U.S. lack of any interest or involvement with partners in Turkey, Saudis, moderate Sunnis and Shiites in Iraq. Most of the people want education, civil rights, protection from religious militias, and U.S or other countries score a win-win only by aligning themselves with the interest of the people in the region which will assert itself in the long run.

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Jack Ewng's interview with Norbert Reithofer, CEO of BMW, in Nov. 2012. Reithofer tells Ewing about the time in 1997- 2000 when he was in charge of the BMW Spartanburg plant in the U.S. Reithofer made a list of problems and presented this to managers. Managers at the plant told Reithofer that in the U.S. the company did not have problems, it had challenges and every challenge was an opportunity. This made a deep impression on him and he sees the current problems in the European auto market in that light. BMW has an agreement with unions to cut production quickly as it did in 2008, if there is a sharp decline in the market. It will continue to invest in R&D, bring out a light weight battery powered car in 2013, and build a new factory in Brazil.

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Folk singer Pete Seeger is the most popular folk singer in the U.S. since the 50's, and continues a tradition of folk songs started by Woody Guthrie in the 30's. He was able to bond with the public by having them sing along with him popular folk songs, including such tunes as "This Land is Your Land," "Michael Row the Boat Ashore," "So Long, It's Been Good to Know Yuh," "On Top of Old Smoky," "Turn, Turn, Turn," "If I Had a Hammer." The tradition of music and dissent ran in his family with his father being a music scholar who taught the first musicology course in the U.S. and a conscientious objector in World War I, his mother a professional composer and violinist. He attended Harvard but lost interest during the Depression years and dropped out.

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The U.S. Treasury plans to sell off its whole stake in General Motors in 15 months. Treasury will sell about 200 millon shares to GM for $5.5 billion by Dec. 2013. The buying price for GM of $27.50 is about 8% higher than GM's closing price on Dec. 18, 2012. Treasury plans to sell the remaining 300.1 million shares within in the next 12-15 months depending on market conditions. Treasury's breakeven point is about $53 a share, and the government will lose money on the bailout compared to the AIG rescue. The government invested about $49.5 billion to help take GM through a planned Chapter 11 bankruptcy filing and reduce a huge debt load. The key in the auto bailout was preserving over 1 million jobs in the U.S. auto industry during an economc crisis.

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Britian's Chancellor of the Exchequer, George Osborne, on the economic recovery in Britain. He points to total public spending under control, with it dropping from 45% when the Tories entered government to 36.4% in 2015. He also points to the drop in the unemployment rate and the economic plan to cut the remaining budget deficit and show a surplus. This puts Britain in the best position to spend more on defense, says Osborne. Osborne makes a commitment to spend 2% of national income on defense, and raise Britain's defensive and offensive capabilities. This includes buying 138 F35 aircraft from the U.S. manufactured in the U.S. and Britain, and a fleet of maritime patrol aircraft, increasing cybercapabilities by over 75%. It would be backed up by spending 0.7% of national income on overseas development to back hard power with soft power.

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The growing middle class in Mexico is to be seen in cities like Queretaro, far from the drug violence seen in cities on the Texas border. Even though growth has averaged only 2-3%, the number of Mexicans who see themselves as middle class in a country of over 100 million is 65%, according to a survey by pollster Jorge Buendia. The definition of middle class is a new refrigerator, a car and a couple of cellphones. Sometimes this is also aspiring to be or thinking you are middle class. A big change is the shift to small families. Astonishing as this may sound, Mexico's fertility rate has declined from 7.3 children per woman in 1960 to 2.3 today, according to the World Bank. The U.S. fertility rate is 2.1 children per woman.

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The arguments of both sides in front of U.S. Supreme Court Justices on the Health Care Law's expansion of Medicaid. Justice Scalia said the law gives the states no choice. Justice Kennedy pointed to the situation of the states which have no way to opt out without stripping millions of Americans of medical care. Justice Roberts pointed to the states willingness to accept federal aid for years which brings us to the current situation. The attorney generals of 27 states have objected to the Health Care Law's provisions which they believe effectively requires the states suffering tight budget constraints to cover more of the poor than they they think they can, with the alternative being dropping out of Medicaid totally, not giving them much of a choice. As the three day hearing came to a close on March 28, 2012, the Supreme Court's conservative Justices expressed doubts whether the Obama Health Care Law could surivive if some key parts are struck down. With Justices Sotomayor, Ginsberg, Kagan, on one side, and Scalia, with other conservative Justices on the other side, the Court's final decision depends on Justices Kennedy and Roberts. ...

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The U.S. Senate passes a motion that allows the chamber to proceed with a debate on a health care bill. The motion passed 51-50 with Vice President Mike Pence casting the deciding vote. Republican Senators Collins and Murkowski voted against the motion. This report in the WSJ says this sets in motion a process in which debate will take place and amendments will be made. It is not clear what shape the bill will take. Under the process used only a simple majority is needed in the Senate, yet this allows for many amendments to be made.  Only hours after this motion passed by one vote, a bill replacing major parts of the Affordable Care Act failed to pass 57 votes against and 43 in favor. Senator John McCain who arrived in Washington from Arizona following brain tumor surgery, delivered strong criticism of the way the Republican healthcare bill was rushed through allowing very little debate. Experts have commented on the way the bill was rushed through with a thin majority for passage, with very little debate, first by Democrats in 2009 and now in the House by Republicans. With the same pattern now followed in the Senate by Mitch McConnell, the Republican leader in the Senate. A backup bill would remove just the individual and employer mandates and a tax on medical devices- the elements Republicans agree on, if no majority can be put together for the healthcare bill. ...

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A slight shift in American opinion favoring a deal with Iran is shown in a WSJ/NBC poll in July 2015 compared to the poll in April 2015. Support for reaching a nuclear deal with Iran remains stable at 36% in both polls, the opposed drops by 6 percentage points to 17% from 23%, and the percentage of people who say they do not know enough to formulate an opinion goes up to 46% from 40%. The intricacies of a nuclear technology deal and the sites involved lead to a high percentage of don't know enough to give an opinion. Factors hindering a deal include inspection of military sites, and Iranian intentions. Factors favoring reaching a deal now is the risk that this would mean Iran would go back into isolation and the opportunity to work with moderates might be lost. The Rouhani administration was an effort by voters to elect a government that could ease or remove sanctions to improve the economy and living conditions- its failure would lead to Iran losing an opportunity to open up to the world. The pressure from the U.S. Congress and Israel served to push for a verifiable and effective agreement to control development of nuclear technology for weapons systems. Behavioural factors involved are the very young population in Iran which has no memories about the period before the revolution in 1979- 70% of the population of 74 million are people under the age of 35. This group is eager for ties to the outside and could change Iran's outlook and policies int the future towards moderation. Risks in not reaching a deal also include the possibility of the Saudis developing nuclear technology and nuclear proliferation. Winners from a deal because of the flow of Iranian oil to world markets and a period of extended low oil prices are the U.S., Europe, China and India. Germany gains new markets to replace the growth in the Russian market after sanctions. Lifting of an arms embargo, an added risk in the last days of the talks, would be mitigated by making the lifting of that embargo very gradual....

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This WSJ editorial say the Liberal Party leader Justin Trudeau's plan to keep corporate taxes at 15% to give Canada an advantage over the U.S., and efforts to moderate spending are an improvement over policies pursued under the administration of former Liberal Party premier Pierre Trudeau.

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European stocks have a P/E ratio of 18.7 compared to 26 in the U.S. With earnings growth sluggish a runup in European stocks following the announcement of the ECB's QE program in Jan. 2015, could result in a pullback later on, according to Societe Generale analysts.

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Egypt's presidential candidate Mohammed Morsi, leads in the first round of presidential elections over Amr Moussa. He has no ties with the Mubarak regime and comes from the Muslim Brotherhood. Morsi is an engineer trained in Egypt and the U.S. Morsi graduated with bachelors and masters degree in engineering from Cairo University, and a PhD. from the University of Southern California in 1982. From 1982 to 1985, he was a professor at California State University at Northridge, California. In 1985 he returned to teach at a university in Egypt. He was elected to parliament as an independent candidate as the Mubark regime banned the Muslim Brotherhood. In 2011 he was elected head of the Freedom and Justice Party and made its candidate for president. Because of the severe economic problems facing Egypt- a demographic explosion of young people with few job opportunities, enough foreign reserves to finance a limited period of food and essential imports and dependent on the IMF for financing, neglected infrastructure development during decades of misrule under Mubarak- a candidate with an advanced engineering background trained in the U.S. could bring the right set of skills to the job of rebuilding Egypt. ...

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Mitt Romney's position on the auto industry bailout was spelled out in an article in the New York Times in 2008 titled "Let Detroit Go Bankrupt." Romney opposed government loans to the auto industry. Because of the unusual factors that faced the auto industry such as the subprime mortgage driven financial credit crisis, financial market volatility and GM and Chrysler being shut out of credit markets, the need to maintain buyer confidence during bankruptcy, the planned bankruptcy with government loans was seen as the way to rescue a crucial part of the U.S. manufacturing industry by other business executives such as Jack Welch of GE, and by many adviors to the government from the private sector.

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The situation in Tampico, Mexico, with corruption, crime and dangers to public safety, show the problems Mexico is still grappling with to ensure a rule-of-law state right next to the U.S. The paradox is that of a breakdown in public safety with Calderon's war against drug gangs undermined by corrupt police and local government, and the continued foreign investment in the country. DuPont is investing $500 million in a new plant near the port of Tampico and South Korea's steel manufacturer POSCO is planning a $300 million investment to double production in this area.

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U.S. bank Wells Fargo is paying $175 million in a settlement with the Justice Department for "systemic discrimination" in mortgage lending to Blacks and Hispanics. The lawsuit was originally filed by the city of Baltimore over violations of fair lending laws. The Justice Department started its own investigation following the lawsuit. The Justice Department said 4500 black and Hispanic homeowners in the Baltimore and Washington region were targets of loans at unfavorable rates and excessie fees. Federal officials described this as a pattern of unfair lending practices that spanned 36 states and 34,000 minority customers over 5 years. As part of the settlement Wells Fargo is providing $50 million to Washington, Baltimore and six other metropolitan regions to help residents make down payments on new homes. Separately Wells Fargo in its settlement with the city of Baltimore, will provide $3 million in homeowner assistance to residents, and make $125 million in lower cost loans to low and moderate income people for the next 5 years....

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Friedman on the opportunity for president Morsi to move the Middle East towards a peace settlement between Israel and Palestine and acceptance of Israel in the broader Muslim community. For the U.S. it also means continuing support for the democracy movement in Egypt and the Middle East. For this to happen Israelis have to take the extra step away from the current position of being insecure in their borders and morally secure to a unknown but right direction of moving towards a lasting settlement of problems. This is looking beyond the conflicts with Syria and Iran- which are likely to be resolved by the people of Syria finally asserting themselves and the Iranian people choosing economic improvement over a weapons program.

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Short sales in the U.S. housing market in 2012-2013 are helping the recovery in housing prices and reducing foreclosures. Banks are reducing the time required to process short sales and both banks and homeowners are benefitting as foreclosures lead to much higher losses for all. In Oct 2012 foreclosures were 11.5% of total home sales, declining from 17.3% in Oct 2011, and dropping sharply from the 30% level in 2008-2009, according to CoreLogic. For the same period Oct 2011 to Oct 2012 short sales increased from 8.1% to 10.2%. Banks, real estate agents and homeowners see short sales as a better more efficient approach than letting homes go into disrepair, reducing prices in the neighborhood and creating larger losses for banks and homeowners. CoreLogic figures show short sales in Dec. 2012 cost 24% less than comparable houses not in financial distress. For foreclosures the discount was about 64%, showing the huge difference and how the wave of foreclosures in 2008-2011 must have hurt society and the economy....

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E-book sales reached 20% of total U.S. book sales in 2011- a total of $970 million. Book sales in paper copies were a bit lower than $5 billion in 2011, close to where they were in 2011, showing that book sales have not fallen as e-book sales have increased. This is based on figures from the monthly industry reports of the Association of American Publishers. The Justice Department's antitrust lawsuit against Apple and five publishers for price collusion is having a serious impact on Barnes & Noble, as Barnes & Noble's made a profit of about 30% or $3.90 under the pricing model Apple helped establish, where the e book title sold for $12.99. In a lower pricing arrangement Amazon establishes Barnes & Noble's profits would decline substantially or even lead to a loss. Barnes & Noble's stock lost 17% in April, 2012.

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This essay in the Economist magazine describes the voter rejection of ruling parties and their candidates in France. Two presidents and two former prime ministers from the Socialist party and the Republican Party, Hollande and Sarkozy, Valls and Fillon face rejection. And another candidate from the Republican party Juppe also has fared poorly. This leaves two outsiders LePen of the National Front, and Macron a former Economy minister in the Hollande government who launched En Marche as his own movement for moderate change alternative in 2016. The rural-urban and less educated-more educated divide which was evident in voting in the U.S. election and the Brexit referendum is now seen in France, says this essay. Research from the Economist shows National Front support highest in outlying areas of major cities. The fears of immigration, terrorism, and globalization leaving parts of the working class behind are factors in this election. Support for the European Union is also a factor as it has suffered in recent years.     ...

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Pope Francis meets Bosnia's three presidents in a Council, with each president rotating in office every 8 months. He also addresses a crowd of 65,000 in Sarajevo. Pope Francis told the crowd: " In a world unfortunately rent by conflicts, this land can become a message, attesting that it is possible to live together side by side." A council of Interracial Dialogue to bring together different clerics is working well, says the Vatican's ambassador Luigi Pezzuto. At the level of politics divisions remain as political leaders still promote ethnic nationalism. But overall the Dayton Accords negotiated by Richard Holbrooke of the U.S. are working well. The economy struggles with 50% unemployment and 60% of the workers dependent on the government.

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The ECB stands ready to act with the unanimous support of its 25 member governing policy, says Mario Draghi, president of the ECB. Draghi said that "if oil feeds into other prices, that could generate exactly what we want to avoid, namely a spiralling downward phenomenon" for wages and prices. Mark Carney of the Bank of England, says he will see "how things evolve." The U.S. Federal Reserve might slow planned rate increases in 2016, if inflation remains well below the target of 2%, and conditions indicate adverse effect on the economy.