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With small margins of 5-10% many Chinese producers in Shenzen see the loss of the American market after the American tariffs of 20%. US president DJT put a10% tariff on all products imported from China on Feb 4, 2025 Executive Order. Another Order on March 4 amended this for an additional 10% to total 20% in March 2025. The local Chinese market where consumption is low cannot make up for the American market. The market in Russia is smaller with its population of 145 million and smaller consumption level. The markets in South East Asia are highly fragmented, and Brazil's economy is weak. India has a large trade imbalance already and is unlikely to let this get worse. Russia is imposing some restrictions on imports to not get flooded with cheap Chinese imports that drive local makers out of business.

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Keith Bradsher's NYT interview with Raghuram Rajan, Governor of the Reserve Bank of India, comes when Rajan has come under criticism from the business sector and the small business support base of prime minister Modi's party. The criticism centers on the drop in oil prices since Nov. 2014, and Rajan's failure to drop interest rates at the Dec. 2, 2014 central bank meeting. Rajan says it was not clear whether oil prices would remain low for an extended period at the Dec. 2, 2014 meeting. Since then new inventory data, EIA estimates and OPEC policy guidance have confirmed low prices will remain for an extended period. Rajan lowered interest rates on Jan. 14, 2015, by one quarter of a percentage point. Under India's setup the central bank chief makes decisions on interest rates, compared to the decisions made by the Federal Open Market Committee at the U.S. Federal Reserve. Rajan says there is full understanding between the central bank and the Modi government economic team led by finance minister Arun Jaitley, Jayan Sinha, deputy minister of state for finance, and chief economic advisor Arvind Subramanium. Modi and Jaitley prefer to rely on the advice and policy direction of economic policymakers with long experience in the U.S. and international circles. Both Subramanium and Rajan bring this level of experience and expertise. Subramanium brings experience from his years at the GATT which preceded the WTO, the IMF, and the Peterson Institute of International Economics, and Rajan brings experience at the University of Chicago, and as chief economist of the IMF. Modi is a dilgent listener and policymaker giving careful attention to the best advice, making it unlikely that Rajan would be seen as a holdover from the administration of Manmohan Singh. Other criticism that the business sector has made of Rajan are as financial regulator in asking state banks to increase collateral required from large business firms for large bank loans. Rajan points out the need for business to bear the costs as well as the benefits of taking risks. Under previous governments the state banks allowed large firms to keep their holdings at companies even when the risk taking resulted in losses. Rajan has also not tried to reverse the sharp decline in the rupee, which hurts business firms which took on dollar denominated loans. Rajan has instead followed policy of building up the reserves by buying dollars. The reserves were depleted in 2013 by a policy of currency interventions to reverse that decline. Inflation in India reached 9.9% in Dec. 2013, with policy of the central bank under Rajan set to bring it down to 8% in 2014, and below 6% in 2015, so that India could get out of the trap of persistently high inflation with slow growth. This is critical for a new Indian success story. A goal set by Rajan in Oct. 2012 when he was appointed as central bank chief, was to increase foreign investment and encourage new business so that India was no longer dependent on large companies for growth. This is also critical for a new Indian success story, as the Modi administration and the central bank are both keenly aware. Just as Bernanke and now Yellen at the U.S. Fed face criticism for quantitative easing monetary policy, focus on the high long term unemployed, and not focussing on inflation- with their focus on the long term economic recovery in an environment of low inflation below 2% in the U.S.- India's Reserve Bank faces a different kind of criticism for careful and prudent policies to ensure long term growth....

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The way Mr. Partovi's idea of mixing keyword search with ads met with resistance at Microsoft, after Microsoft spent $265 million to acquire his company LinkExchage. Some of Partovi's bosses warmed to his idea of auctioning keywords but their eyes were glued to the prospects of display banner ads and did not think much of the search and ads combined together, like searching for a term and seeing the vendors of all kinds of related services who pay a fee every time someone clicks on their name. Bosses changed and the Keywords group was shifted to other parts of the Microsoft business ending up in software. A small trial was made but price of auctioning keywords was not set appropriately. Partovi's insistence was seen as resistance to the ordered way of doing things at Microsoft, and Ballmer in 2003 talked about "discordant and dissident directions" in the company, tendencies which he derided. Partovi's passion was seen as insubordination and finally in May 2000 with $1 million in revenue from Keywords comparing poorly with Microsoft's other online ad revenue, Keywords was shutdown. Partovi left Microsoft in July 2000. He shopped his idea around. Yahoo said it did not fit in with its plans, later buying Overture for $1.8 billion in summer 2003. Google talked to Partovi but declined, instead quietly building its own service. And Google launched its own service AdWords combining search and ads in October 2000. It was under pressure to come up with arevenue generating method.By 2002 Google was stealing advertisers from Goto.com that had pioneered the business of ads and search but lacked the advantage of having its own search engine. Microsoft also faced the same problem. In May 2002 AOL dropped Goto.com and teamed up with Google for paid search. By late 2002 Microsoft executive Yusuf Mehdi was visiting Goto.com and launched an effort to buy Overture the new name for Goto.com. But when in Spring 2003 Mehdi pitched buying Overture for $1 billion to Gates and Ballmer, both tore into the proposal saying that they could do it for less than the $1-2 billion price tag by doing it inhouse. By this time Google was already the dominant company in search ads and Overture was losing out. But even with hundreds of programmers Microsoft did not get its search engine ready till late 2004 and the search ad system in May 2006, about 3 years from the meeting with Mehdi. The resistance of founders to development of new products, is seen at HP for the personal computer which was later embraced, and at Honda where a new kind of engine had to be developed secretly without Soichiro Honda's knowledge. In both cases the product was developed successfully after initial resistance, but in the case of Microsoft the new ideas and people may have been smothered and development done to Microsoft's founders own inclinations for order, and treated the same way as its other products till it was too late. A factor not present to the same degree in HP and Honda's situation was the speed with which the internet developed and search engines like Google developed. So that in 8 years since its launch Google is firmly entrenched, and has 73% of search ad spending, with Yahoo at 13.3% and Microsoft a distant third. Google generated $5 billion in profits from this in 2008. By 2009 search ad spending is estimated to reach $12.3 billion....

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DJT 1.0 was led on the tariffs policy by USTR Robert Lighthizer, who had experience negotiating with the Japanese negotiators in the Reagan era. He is today respected by  Republicans, is seen in an important role in economic policy and to prepare the tariff policy actions of the new DJT administration. Lighthizer prefers to get Congress to take action with legislation. He also believes that domestic manufacturing will make gains with new and higher tariffs on Chinese imports. Lighthizer policy is falsely compared with Hoover Tariffs Act of 1930 when world trade was 9% of world GDP, today it is 63% of world GDP, and where under Hoover in 1930 the tariffs were across the board all countries 20,000 goods. Under Lighthizer on specific products where dumping is happening -steel, aluminium, autos, with Japan in 1960-70 or China 2000-2020 targeting American industries + technologies for takeover. And falsely when it comes to raising costs to each American family on average by $4000 a year by economists. The conventional view for business for 2000-2016 through Bush and Obama favoring free trade did not take into account the unusual experience of China which entered WTO in 1990, then expanded in a way unprecedented in history at 10-12% growth rates for 15 years destroying American manufacturing with dumping, having support of outshoring by companies in the US, and not giving reciprocal treatment for exports from the US to China. China also had unrestricted access to US technologies in this type of trade. Lighthizer's approach was to specifically address this problem not a general across the board tariffs on all goods (20,000 goods) on all countries as with the Hoover Tariffs Act in 1930. Lighthizer's approach adopted by DJT called for reciprocal trade response with China as the US had already done with Japan, not unilateral across the board tariffs, and when world trade had advanced to about zero tariff rates. And falsely compared to Hoover 1930 Act because under Hoover tariffs were 29-40%. raised to 60% when world trade was small, was 9% of GDP. The Biden administration has tacitly agreed with Lighthizer's vision by not reversing DJT tariffs. A new higher tariff will probably be selective based on the industry, country and what goals the US has set under the new administration for that industry. Some of the tariffs revenue may also be used for tax cuts. ...

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The emergence of a national party in India is the subject of this editorial in The Hindustan Times. The Indian National Congress led by Mohandas Gandhi led the way to transitional home rule in the 1930's under the British, independence in 1947, with the party running India till 1962 under Mr. Nehru, one of Gandhi's assistants. This was followed by a breakup of the party into different factions with one faction led by Nehru family forming governments under Indira Gandhi, and her son Rajiv Gandhi. This faction then lost its popularity in the Hindi speaking heartland of Uttar Pradesh, Bihar and became a regional party with presence only in a few states of India and very little in the south. By 2014 a new party the Bharatiya Janata Party had emerged that had a strong presence in the Hindi speaking heartland of Uttar Pradesh and Bihar, Madhya Pradesh, Rajasthan, Gujarat, and in the northeast of the country. It still lacked a strong presence in the south. This has happened in the 2020 Telengana elections, says Hindustan Times. By getting a strong performance in the Hyderabad region the BJP now has a strong presence in Telengana, Andhra Pradesh, and Karnataka where Bangalore is located. Only Kerala and the Tamilnadu region around Madras, have their own regional parties in government. In the east the Bihar elections showed BJP as the leading party to form government to push the development agenda in Uttar Pradesh and Bihar. It is now well positioned to take this theme of rapid development to West Bengal state around the Kolakata (Calcutta) area, a state that has lagged far behind in development under a regional party that was an offshoot of the Indira Gandhi faction of the Congress party. As is common in India national political parties split into factional parties with infighting that split again into purely regional parties. This has further undermined the them of development through failed governance in India. The BJP under the current prime minister is now the exception to this because of its themes of health, governance and development, with Development at the top of the triangle supported by Health and Governance at the base of the triangle. The BJP which started out as a small business oriented upper caste party also changed its image under prime minister Modi. The slogan "Sab Ka Vikas, Sab Ke Saath," (Development for all, with all) has given the BJP support of the lower castes, the Scheduled class and the backward castes in India. This make it a truly national party with support across all socioeconomic and demographic groups. The prime minister's own background growing up working in his father's tea shop near a railway station in Gujarat has also given the party a new image of being with the working classes and the average man. His experience in Gujarat delivering on development projects and infrastructure, energy, has also given the word "development" new meaning for a modern India, very distant from the period when poor governance failed to deliver on development and modernization. Bold moves have cleared the way for a nationwide approach to development, yet decentralized, with rapid development based on accumulation of technologies, human skills, land and capital. A singular focus on the needs of the ordinary people is evident when the prime minister talks about the effect of firewood burning stoves used in cooking by hundreds of millions of rural women for their families. He says the smoke from burning this firewood in the home has the effect of smoking 400 cigarettes for each woman. Rarely has this happened since Mohandas Gandhi took up the situation of village women in the backcountry and lack of clothing in the period under the British.   ...

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After the Phase 1 trade deal with China led to cancellation of new tariffs on computers, mobile phones and the remaining products imported from China, tariffs are still in place on $370 billion of imports from China. President Trump says China agreed to import $32 billion of agricultural goods, with the figures reaching $50 billion in 2020. The prior high was $26 billion in 2012. This comes as a big relief for the agricultural farm sector which had 24% more bankruptcies in 2019. Farmers are now more likely to vote for president Trump as they did in the last election. In addition China agreed to buy $200 billion more of American goods over the next 2 years. This combined with the USMCA agreement to replace NAFTA, for North American trade, is good news for president Trump and for the U.S. economy for 2% annual growth. The S&P stock index went up by 29% in 2019. The big concession by China is its agreement to agree to penalties if it does not keep up its part of the bargain.  Intellectual property protection remains a challenge and Mr. Trump may have decided to take a tactical success and shore up his base of farmers and small business people before taking up these issues in the future. China for its part may have decided to make a tactical move of its own as it has nothing to lose in importing more farm products from the U.S. in exchange for being able to continue to make the computers, iPhones and tech products it manufactures, just like before. China has not conceded much in terms of its goals set  in "Made in China 2025." Both sides are taking a much needed pause to consolidate their positions, as the fundamental differences remain to be tackled. Huawei and Chinese technology issue remains as before with the U.S. wary of China's technological gains in 5G telecom equipment and keen on building and protecting America's technological advantage in future trade relations. ...

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Sternberg points out that China's banking system lacks the experience in consumer credit and consumer finance products that would provide the impetus to a surge in consumer spending in China for imported products from the US or Europe. Outstanding consumer credit in China is only 13% of GDP, according to a 2009 study by McKinsey and Company, compared to 48% in Malaysia and 70% in S. Korea. China has lost a decade or more he says in allowing foreign banks to develop a consumer-finance market, and Chinese banks have little compettitive pressure to serve lower income consumer borowers. The Dutch PPF Group was allowed into this field for the first time in November 2010 to introduce in-store financing for durable goods purchases, something available to consumers in Brazil and other developing countries for many years. Large banks have an entrenched mindset to lend to businesses, and especially to state owned enterprises which have the collateral and government guarantees and support to obtain this lending. Risk averse banks in a financial system that lacks the kind of credit ratings system for consumers that the US and Europe have, prefer to lend to make loans to state owned enterprises where the government guarantees the loans. Interest rates on deposits are low and the government deliberately allows a wide spread for the banks so that they can ensure enough earnings to pay for non-performung bad loans, both from the last decade and from the binge in stimulus lending in 2009-2010. This reduces consumption by reducing the earnings on savings for consumers and households. These problems can only be solved gradually if the government and leadership want to change course, but this oddly enough is not happening. Other problems are that China's export factories are part of a global supply chain in which other countries do the product development, logistics, marketing, and retailing. Chinese firms lack the experience in these areas to shift to domestic consumers. As a result, says Sternberg, to lose a foreign customer can mean going out of business. Without government leadership and new direction through large scale re-allocation of capital and labor to the small scale businesses that serve consumers in the domestic market, all the talk of rebalancing will be just that, talk only and no real rebalancing....

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Inflation in the eurozone is running at 0.7%, well below the target of 2%. In a opening speech for a 2 day conference organized by the ECB in May 2014, ECB president Draghi said the increase in the value of the euro since 2011 has made commodities like oil cost less in euros, contributing to lower inflation. A key concern referred to in Draghi's speech is the data from Spain and Portugal about the difficulty for business to get loans in Spain and Portugal. About 25% of Spanish businesses and 33% of Portgual's businesses have difficulty getting loans. Even profitable companies have difficulty getting loans. One way the ECB could tackle this is to make cheap loans available to eurozone banks conditional on the money being lent to businesses and not invested in government bonds, as has happened during prior ECB efforts to capitalize banks.

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This Journal editorial looks into the jobs numbers for September 2012 that showed unemployment decreasing to 7.8% according to the household survey. By taking the numbers as they are in the Labor Dept. surveys and setting aside skepticism it provides useful insights into the condition of the labor market. It cites the reason for some of the skepticism about the numbers- the 873,000 jump in employment shown by the household survey which looks at 60,000 households. It is the largest increase in employment for one month in 30 years says the Journal. The household survey finds that 582,000 of the 873,000 jobs are "part-time for economic reasons" in the survey's words. The number of part-time workers for economic reasons went up from 7.7 million in March 2012 to 8.6 million in September 2012. This also returns the focus on U-6 the measure of unemployment that Fed chairman Bernanke and experts looks at. This has remained the same for Sept. at 14.7% and includes the number of people working part-time who cannot find full time work. Another useful statistic for insight into the labor market is the decline in household incomes. Studies of Census data show a $4019 decline in median household income from Jan 2009 to June 2012. And the long term unemployed represent about 40.7% of the employed in recent data, an unusually high number that worries Mr. Bernanke. By looking at the broader picture one can get a better sense of the labor market....

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This editorial in the Economist says Spain's economy has recovered to pre crisis levels by 2018 with growth at 3 percent. It says Spain had a bigger crisis than Italy and took stronger measures under prime minister Rajoy to fix problems in its banking system, address the housing crisis, and unemployment. Italy's steps by comparison were timid and faltering. Mr. Rajoy had his problems including corruption scandals in his party and a poor handling of the Catalan drive for independence. Yet Spain owes muchas gracias to Rajoy for his leadership in bringing Spain out of the housing and economic crisis, and for running the country for two and a half years after losing his majority in parliament.  Another difference with Italy is the generally favorable attitude to immigration for all parties. Of the newer parties Ciudadanos remains at the centre and the Podemos party remains to the left in politics, as part of the populist changes in Spain during the economic crisis. The new government of Pedro Sanchez has a positive attitude to immigrants and to women, with the largest number of women in the cabinet of any European country. ...

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Philip Hampton, chairman of the Royal Bank of Scotland, tells a shareholder at the annual meeting in Edinburgh in June 2014- "compensation in the financial industry got out of line with the underlying performance of the business."

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Another significant development in this crisis, is how small businesses got addicted to credit card debt as a way to operate for ongoing expenses of the small business, from a small nursery, to abed and breakfast or a solo law practice. There are an estimated 27.2 million small businesses who are supposed to be one of the growth engines of the economy. Credit card debt when banks are tightening up credit and businesses are unable to meet expenses, is extremely costly because of the underlying usurious nature of the industry in the US and lax regulation. It will only push more businesses, that have acquired the bad habit of credit cards to finance operations, into bankruptcy. There were 5 million business credit cards in 2000. By 2009 after Visa Inc, American Express Co, and MasterCard Inc. and Discover Financial Services Inc. pushed these cards aggressively, using a new credit scoring system that looked less at the business and more at personal credit scores, the number jumped six fold to what Nilsen Reports estimates as 29 million business credit cards. The spending on these cards jumped for this period four fold, from $70 billion to $296 billion. As the average debt on each credit card jumped so did the likelihood of some of these card holders difficulties. Missed payments could lead to interest rates for some card holders jumping to 30+% from initial rates of 7-8%, all in the last 12 months. This makes small businesses less likely to create the jobs they created in the past, and one more troublespot in this economy....

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China's central bank, the People's Bank of China, reduces the capital reserve requirement ratio for the largest banks by 1% to 18.5%, on April 19, 2015. This move is expected to free up $200 billion for new lending by banks. China's securities regulator also acted to curb margin financing, the using of borrowed money to invest in the stock market which faces bubble conditions. China's economy is reported to be slowing making it uncertain whether the 7% annual growth target can be met.

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BHP Billiton was known as Broken Hill Proprietary in the 1990's. The largest Australian mining company, it was based in Melbourne and simply known as the Big Australian. It had huge losses in that period - $3 billion in 1998-1999. The turnaround at BHP Billiton comes as a remarkable turnaround for the whole mining sector. BHP made $6.5 billion in profit in the year ending June 2005. Its not just rising Chinese demand that has made this possible. Billiton has taken steps to avoid past boom bust cycles in mining by taking a conservative approach to investing in new mines that might create an oversupply in the market. The company is run buy a banker. CEO Charles Goodyear avoids taking on large risky projects and has announced plans to return $2 billion to shareholders in stock buybacks. Even with this discipline compared to the past, some mining analysts believe the boom bust cycle will occur over time. HP has $10 billion worth of projects in different stages of development. One advantage the mining companies enjoy is the concentration of mining in a few companies- BHP, Rio Tinto, Xstrata PLC. This makes it possible to price aggressively for the nickel, copper, iron ore, and other metals. A 72% price increase was negotiated with steelmakers in 2005. Another part of the transformation is the use of risk-analysis tools. BHP uses "Monte Carlo analysis" to check all potential outcomes once a range of parameters- commodity prices, currency vales, interest rate scenarios- are entered that affect financial performance of a new mine or a new investment. Goodyear came in as CFO under a new team led by Paul Anderson, a former executive of Duke Energy Corporation, after the huge losses in failed copper mining investments in the late 1990's. Even with the recent success and the careful investing discipline there is a sense that things could change quickly if rising demand slows in China and other developing countries. And in that situation this discipline may prove insufficient and the models may only be good as the assumptions and information entered....

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The PBOC, China's central bank, injects $65 billion into China's banking system in Dec. 2014 to get banks to increase lending as the economy slows further. Experts say the growth rate is likely to drop below 7%. At the same time the central bank and economic policy makers are concerned about excesssive debt in the economy, shadow banking and local government debt risks. It cut benchmark interest rates by 0.25% in 2014. Other risks are developing as the property market cools off and investors shift investment to equity markets creating a surge of 50% in the Shanghai and Shenzen stock exchanges for 2014. As a result economic policy is not as effective in today's environment.

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The first of a series of quarterly reports put out by the Federal Reserve Bank of New York, on the subject of household debt and credit. It shows that the process of unwinding consumer debt in the US is a slow and painful one. The figures tell the story, which touch every aspect of the US economy and business, with ripple effects through the world economy. Total consumer debt is $11.7 trillion as of June 30, 2010, which is down 6.5% from the crest reached in the third quarter 2008. Credit card accounts are down 23% from the high reached in second quarter 2008, and mortgage obligations down 6.4% from 2008. By mid 2010 11.4% of consumer debt was delinquent, and this was up from 11.2% in 2009. $1.3 trillion of consumer debt is delinquent, and $986 billion is seriously delinquent- that is 90 days late. Serious delinquencies are up by 3.1%. Other figures fromt he Fed report: Half million people in the USA had a foreclosure added to the credit reports for the period March 31, 2010 to June 30, 2010. This was up 8.7% above the figure for first quarter of 2010. New bankruptcies showed up in credit reports for 624,000 people during that quarter, an increase of 34%. Another major problem stacked on top of this for consumer spending- the Fed's interest rate policy according to Todd Petzel, chief investment officer of Offit Capital Advisors, burdens consumers with a tax of $350 billion in income lost from low to zero interest rates. This creates two problems of its own. Not only does it depress consumer spending. It also makes consumers reach out for riskier investments. This figure was calculated by taking $14 trillion in debt issued by Treasury, federal agencies and municipalities. Rates are near zero on short term Treasuries compared to 3% average over the years. Taking 2.5% on $14 trillion, the figure of $350 billion was arrived at. Or 2% of gross domestic product. Analysts say that it would be better not to save a few zombie banks at the expense of consumers and pension funds. It lowers the cost of the deficits through the lower interest rates the government pays on its debt, but lower consumer spending and a limping economy hurt tax revenues and increases the deficit....

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The PBOC makes a 0.25% cut in interest rates and a 0.5% reduction in bank reserve requirement ratios in October 2015, designed to lower financing costs for business and put more liquidity into the economy.