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Chile, Mexico and the U.S. rank high in the diabetes rate for top soda consuming countries. In the U.S. the diabetes rate is at 7.7% of the population, in Chile 9.6% and Mexico 9%. Soda consumption per capita was at 165 litres in the U.S., 146 litres in Mexico and 134 litres in Chile, and 145 litres in Argentina where the diabetes rate is at 3.9%, for 2012. A new public service ad in Mexico City subway stations says it all, showing an ad with a soda bottle and the words- "Would you take 12 teaspoonfuls of sugar? Soda is sweet, diabetes isn't." The new Pacto de Mexico agreed to by all major political parties includes the soaring diabetes rate in Mexico as a problem to be tackled, including lunches at public schools and the consumption of coke and sodas by children. A particular acute problem in Mexico is the lack of clean drinking water in many areas and the dependence on coke and sodas for liquids. But bottled water could be used in its place if available at lower prices. One proposal is for a soda tax which could generate $2 billion and be used for setting up clean drinking water fountains in schools and other places. Elected officals in Mexico are firm about the need for action, as Mexico recently became the first country over 100 million inhabitants with the highest obesity rates at 7 adults out of 10 over the age of 20 obese or overweight, and the consequently high diabetes rate. Diabetes is the No. 2 killer in Mexico, and a serious health danger. Coca Cola gets its second highest revenues from Mexico after Europe, and the situation has evolved after years of heavy coke advertising to the point where Coca Cola is taken at every meal by some Mexican families, and is a sign of prestige. The company's response is to fight the public service ads with ads showing people burning off 149 calories by walking. The country now faces a long and uphill fight. Russia is one of the countries which is also conducting a similiar fight against soda drinks. The Bloomberg Philanthropy is financing efforts against soda drinks in Mexico, as part of its campaign against smoking and sodas as health hazards, and this maybe Bloomberg's bigger contribution to society than his service to New York City. Developing middle income countries such as Mexico, Chile, India, China, Brazil, are the hardest hit by soaring diabetes. And the costs to their health systems in 10-20 years from uncontrolled obesity and diabetes will be enormous. The U.S. is a developed country with similiar high rates of obesity and diabetes, with soaring medical costs, and serious problems that strangely have not received the public awareness and efforts that one should expect. ...

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A shift in priorities away from focussing on high growth to lower sustainable growth was announced by China's premier Wen Jiabao at the National People's Congress, China's parliament, in March 2012. This shift will reduce investment in infrastructure, power generation and exports, which will affect the level of imports of commodities from commodity producing nations in the Middle East, Australia, Canada and Brazil. It should increase imports of software, computers, entertainment, tourism and high tech goods from the U.S. and Europe. Chinese leaders have said they would make this kind of shift for some years now but growth has consistently increased more than the target rate, and domestic consumption as a percentage of the economy has actually decreased in the last decade. Now 9-10% growth rates may be a thing of the past and the target of 7.5% set this year may be actually closer to the real figure. The Chinese leaders have belatedly realized the need to make these changes now because slowing markets in Europe -which is seeing declining growth and high unemployment- and in the U.S., make the issue impossible to avoid. Wen told the Congress: "Accelerating the transformation of the pattern of economc development... is both a long term task and our most pressing task at present... Domestically it has become more urgent but also more difficult... to alleviate the problem of unbalanced, uncoordinated and unsustainable development." This is his way of saying that its unavoidable and better to start in earnest now, and at the same time recognizing the resistance to change from the stateowned companies and the other interests who have benefitted from surging growth, and now occupy a central role in the power structure. An opinion article in the People's Daily, China's official newspaper, said: "imperfect reforms are to be preferred to a crisis caused by no reforms." The World Bank's president Zoellick is respected by the Chinese leaders. He also urged them to make changes now. The recent report of the DRC, China's planning research arm, and the World Bank, also laid out the new direction away from a focus on infrastructure to domestic consumption. The fear is sudden deceleration in the absence of policy action. The impact of this will be negative for commodities over time, leading to slower growth in Australia, Brazil, and Canada. It should boost imports from Europe and the U.S. of high tech, consumer, pharmaceutical goods over time....

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Defense Secretary Gates does not see Russia as the threat it was in the Cold War, first because Russia's conventional forces are a "shadow" of what they were during the Cold War, and Russia has adverse demographic trends that will diminish Russia's ability in conventional forces. He sees the Georgian war in the context of Russia's seeking to exorcize, as he puts it, past humiliations. And Gates sees opportunities in the relationship with Russia. Such things as Russia's willingness to work with the US on Afghanistan. Evidence of this is Russia supporting the renwal of the UN resolution on Afghanistan. Another indication is that Russia he says is very worried about the drugs coming out of Afghanistan, and has been supportive to provide alternative routes for Europeans to get equipment and supplies into Afghanistan. These views come across in an interview on December 17, with Charlie Rose, a five time elected Congressman, for the PBS Charlie Rose show. They are also reflected in an article in Foreign Affairs journal's current issue. Gates was a CIA analyst and has some insightful observations. Gates told Charlie Rose that he does not see the Islamic radicals and violent Islamic extremists as a threat in the same way as the threat in the Cold War years. This threat is not as big as the threat to freedom during the Cold War. He says the failure in strategic communications was huge as agencies of the US government engaged in activities in other countries, like the Agency for International Development and the US Information Agency, were neglected starting in the in the 1990's. Communications in other countries of what the US represented and stands for was left to the Pentagon, a role the Pentagon was ill-suited for. He sees the Islamic terrorism as more of an ideological conflict. Speaking at a town hall meeting at the Balad Air Force base in Iraq, in December, Gates pointed to these communications failures as a real challenge for the new administration. But he now sees a huge opportunity in this past failure, and ways of addressing it creatively, in addition to commiting resources and people to this effort. Walter Pincus wrote this article, and its part of the fineprint analysis effort at the Washington Post in which speeches, reports, and other documents are examined by people like Pincus, to catch the really important things, uncovering the fine print that really makes the headlines. Another aspect of this fineprint effort is that there are a huge number of reports, and speeches and documents that had a tone reminiscent of the Cold War during the Georgia war and yet they do not correctly reflect the real situation about Russia, as Gates sees it from his analysis of what is actually happening. Gates has used Foreign Affairs, the Dec 17 Charlie Rose Show on PBS in which he was interviewed, and the speech at the Balad Air Force base in Iraq, to communicate his views and analysis. They are important to underline and emphasize precisely because they show that all that cold war hysteria reporting and speeches may be misleading and lead to improper conclusions and mistakes in policy, wasted effort, wasted resources, and lost lives. And just as the US strategic communications was starved of resources and effort, so also this necessary work to retrieve and give emphasis to the important things is neglected. One additional link to this is the speech, discussion, and QA session in Washington DC at the time of the G20 summit in which President Medvedev and the new administration's elder statesman and diplomat Marilyn Albright, former secretary of state, expressed their hopes and plans for a new era in Russian-American relations. ...

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Former World Bank chief Zoellick points to the need for investments in human capital and productivity improvements in emerging markets such as India, China and Brazil to overcome the problem of slow growth in 2013.

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Achieving a right balance between the needs for public health in developing countries- and the need for cost reduction in developed countries- with the need to keep innovation, is the challenge facing the Indian Supreme Court as it hears the Novartis case on its leukemia drug Gleevec. The efforts by Novartis and other western pharmaceutical companies to restrict the flow of low cost generic drugs from India. India stopped granting patents on drugs in 1970. It only resumed giving patents under a WTO agreement on patents. The Indian government denied the patent on Gleevec and the case is now coming up before the Supreme Court.

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Spain's central bank was lauded for macroprudential supervision before the housing bubble burst. Will China's central bank and financial authorites which have managed the housing bubble upto this point face similiar problems? Can China be the sole exception even as housing bubbles burst with wide repercussions in the U.S., UK and Spain? Nicholas Lardy, of the Peterson Institute of international Economics, says urban housing stock makes up 41% of Chinese household wealth in 2011. The same figure for the U.S. is 26%. Chinese buyers invest in homes because low interest rates on savings accounts cannot keep up with inflation. Real estate investment was 13% of GDP in 2011. Home ownership is a recent development in China, only since 1990, Chinese have never experienced large price declines. Household debt as a percentage of disposable income has increased significantly in recent years, up to 53.6% in 2011 from 31.3% in 2008, according to Lardy.

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The IMF's managing director, Christine Lagarde, pointed to the urgent need to recapitalize European banks in September 2011. European banks face potential losses of 120 billion euros for Belgium, Spain and Italy, 60 billion euros for Greece, 20 billion euros for Ireland and Portugal, and 100 billion euros for other banking exposure, for a total of 300 billion euros, according to the International Monetary Fund. In the absence of recapitalization there could be further damage to EU economies from restricted lending by banks. IMF estimates show that deteriorating credit conditions could damage growth in the eurozone countries by 3.5 percentage points, and in the U.S. by 2.2 percentage points, creating another recession.

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John Taylor on the dangers of a loose U.S. monetary policy and the effects this had in fueling a housing bubble in Spain, Ireland and other EU countries. Taylor points to the bubble ocurring in emerging market economies from low interest rates. Taylor says the ECB's interest rate moves in 2003-2005 were affected by the Fed's low interest rates. He estimates the ECB set rates about two percentage points too low leading to housing bubbles in EU countries. A similiar process is taking place today with the Fed's near zero interest rate policy. Taylor points to interest rates in a group of 18 emerging market economies- including Brazil, China, India, Mexico and Turkey, which have held interest rates on average about 5 percentage points below widely used benchmarks fueling a doubling of global commodity prices between 2009-2011. The U.S. Fed's policies make it harder for central banks in emerging market economies to take aggresssive action against bubbles developing in these countries. Taylor says his does not mean that the Fed should not pay attention to the U.S. unemployment rate and long term unemployed, but should keep in mind the negative effects of slowing demand in emerging market economies and in the EU as a result of its monetary policy of keeping rates at near zero for long periods of time. This feeds back to the U.S. economy at a critical time....

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Denning says that because of the enormous repercusions on Iran's economy of a war in the Persian Gulf, a more likely scenario is not the cutoff of supplies of Iranian oil altogether but a smaller list of buyers for Iranian oil, making Iran sell the oil at a discount. Saudi Arabia's and Libya's added production would bring more oil to the market. The impact will be larger on Europe because of the decline in the value of the euro, with Brent crude on a 12 month average basis costing 14% more now than in the peak price in 2008. By comparison in dollar terms the comparable figure is 4% higher for the U.S. At a price of Brent crude of $120 in 2012, according to Citigroup, energy costs would take up 9% of world GDP, putting pressure on a economic recovery in Europe and the U.S.

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Oil prices are forecast to remain above $100 a barrel in 2012 because of higher social spending in Saudi Arabia, Iran and other countries after the democracy protests, and the threat of retaliation by Iran in the Straits of Hormuz. Iranian threats of retaliation for increased sanctions has embedded a $10-$20 premium in oil prices say some experts.

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Kenneth Rogoff of Harvard University, expert on debt crises, and author of "This Time is Different," says China is one of the best examples of the idea that this time is different, with the idea created that somehow China was impervious to the massive build up of debt. The debt is now over 250% of GDP, and this was possible for so long because of the high savings rate of 30% of disposable income and the millions of young migrants moving to cities to work in manufacturing. The growth of shadow banking, opaqueness in decisionmaking, unreliable data, use of local government financing vehicles, the bubble in housing with a large portion of loans tied to the real estate market, all combine to create serious problems that will take a long time to sort out. Rogoff says the crisis in Tianjin with the deadly explosions in the port area, and the government's inability to provide answers to questions from a alarmed public, only added to the uncertainty and loss of credibility. Rogoff says he hopes the trillions of dollars in reserves will provide China with the tools adequate to tackle the debt problems before they spread to other countries....

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

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Krugman points to some striking facts about China in 2011. Consumer spending in China is only 35% of GDP and has declined over the years. There are no signs of rebalancing the economy away from exports by increasing consumer spending. China's dependence on exports for trade surpluses is greater than ever. Beyond this there is another disturbing fact. With weak consumer spending and heavy investment spending at about half of GDP, Kugman raises the question where is all that increase in spending going? Real estate investment takes up about half of the increase in investment spending, as the share of GDP of real estate investment almost doubles compared to figures for 2000. Much of the rest of the increase Krugman attributes to firms selling to the construction industry. The speculative fever, the corruption at the local level, the shadow banking system which is not protected and unsupervised, the poor quality of statistics, suggest a bubble phenomena that may not be under control of policy makers, and risks damaging China economy and the world economy in 2012-2013. After all China's economic and financial planners and banks are no better than America's or Japan's, where asset bubbles burst causing serious damage....

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The Muslim Brotherhood is thrust into a critical role as economic policymaker after winning the parliamentary elections in Egypt. The Muslim Brotherhood's foreign policy advisor, Essam El-Haddad, says it gave the IMF its tentative approval for a $3.2 billion loan to Egypt. Haddad says it was a very, very short time for the learning process to occur about the economic issues facing Egypt and the IMF. Foreign investment peaked in 2007 at $13.7 billion. It is now a small fraction of this and tourism earnings have declined to a third of what they were before. The Brotherhood cites the example of Turkey where the Islamist Justice and Development Party formed the government in 2002. At the time Turkish inflation was at 55%, the currency Turkish Lira had lost 51% of its value and GDP fell by 5.7%. Turkey has seen high economic growth in the last decade.

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"China's Superbank," by Henry Sanderson and Michael Forsythe looks at the rise of China Development Bank to provide insights into the two decade real estate boom in China, and the trillions of dollars in loans made by state owned banks to finance China's state owned industries and infrastructure development. The authors say these loans based on land owned by the state, improved with roads and other infrastructure and then sold to industry, have helped finance China's urbanization and industrial development. But it has also created problems including eviction of farmers from the land by local government authorites increasing inequality, led to misallocation of capital on bad projects, and an unsustainable model of development focussed on state owned companies. A major side effect of this is not covered in the book. This is the impact of crowding out of credit for private industry in China, with privately owned business having to pay higher rates in the underground loan market or lacking financing. A major focus of the report "China: 2030" by the World Bank and China's official think tank Development Research Center is on reversing this development to come up with a sustainable development model. The report was supported by World Bank chief Zoellick and China's new prime minister Li Keqiang. "The Great Rebalancing," by Pettis, a finance professor at Beijing University, looks at the other side of the financing of China's boom- the low interest rates on savings for China's consumer. This reduces household incomes and reduces purchasing power as the interest rates are lower than the rate of inflation. Lower value of China's currency also reduces the purchasing power for China's consumers. Estimates show the low interest rates cost China's workers and consumers somewhere in the range of 3 to 8% of GDP annually in bank deposit income. This money is funnelled through the banking system to make more loans for infrastructure and growth at the state owned companies, concentrating exraordinary level of financing in one direction. As a result the consumption share of GDP in China has actually fallen in the two decades of hyper development. This is about 34% compared to 50-55% for other Asian economies....

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Krugman is critical of ECB president Trichet's decision to raise interest rates in 2010, because of the way it affects Spain, Italy, and Portugal. Increase in interest rates by the ECB affect the entire eurozone and this means, he points out, that inflation in Germany would be extremely low -about 1% for the next five years- and the result being that inflation would be much lower in debtor countries like Spain. A decrease in interest rates with inflation at 3-4 % in Germany would be better for the debtor countries (Spain, Italy, Portugal, Ireland) as this would enable them to cut prices and costs relative to Germany and other creditor countries. The first step taken by the new ECB president, Mario Draghi, was a small increase in interest rates. Krugman asks if the private demand is affected negatively by the end of a debt financed boom in the debtor countries, and austerity programs reduce any growth in the public sector, then where are the new jobs supposed to come from? A policy that reduces the prices of the products of debtor countries relative to creditor countries like Germany- so that exports can generate necessary growth- is needed says Krugman. ...

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Adly Mansour, Chief Justice of Egypt's Supreme Constitutional Court is sworn in as interim president in July 2013, after the ouster of president Morsi.

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Friedman on the ouster of president Morsi after only one year in office following large scale protests. He sees this as the beginning of a fallback of political Islam, with the protests of secularists in Turkey, the shift to a moderate candidate Rouhani in Iran's presidential election, the shift of the Emhada Islamist party in Tunisia to work with center-left parties in writing the constitution, and the election of a western educated political scientist to lead a coalition government in Libya. In each country the secular and liberal leaders and the young people felt the revolution was being stolen from them by Islamist parties and are asserting themselves to gain a voice in government. The Islamist party in Egypt has older leaders, an authoritarian structure and hierarchy, which failed to incorporate liberal and other opinion in writing the constitution and in forming the government. A more tolerant and open Islamist party needs to be part of a broad based government with other parties, which can focus on the economy, unemployment, infrastructure and public services....

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Islamist parties are having difficulty integrating into political life and bridging the differences with secularist or liberal political parties in Egypt, Libya, Tunisia, Pakistan and Turkey following the democratic transition in 2011-2013 in the Muslim world. Some progress has been made, but lack of experience, lack of respect for the opposition and other opinion, overreaching, personal styles of individual leaders such as Erdogan and Morsi, and poor economic conditions after decades of neglect under military rulers in Egypt and other countries, is creating problems for Islamist parties in government.

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Bernard Lewis's "The Arabs in History," is a short book which confirms Zakaria's point about the openness of Islamic societies before the 19th century, with some exceptions in certain periods. Most books or a quick look at Wikipedia shows us that the Renaissance in Europe in the 15th century got its boost from books by ancient Greek authors that were available in Arab societies long after they were forgotten in Europe. His point about Indonesia and India is also true to a large extent except for periods such as the one under Aurangzeb (17th c.). Muslim societies in British India (todays Pakistan and Bangladesh) experienced less social and educational reforms under the British than Hindu societies for various reasons leading to larger backwardness, illiteracy which breed extremist ideas. This is likely to change throughout North African Arab societies and South Asia in the next 50 years, especially with the modernization drive underway in India, which is likely to spread to other parts of the region. Islam as a missionary religion with force of arms spread in the 7th-9th century rapidly over Arab North Africa and parts of west Asia, and later to South Asia. Once established there were long periods of openness to ideas and books, and different cultures ( with the exception of preferences for Muslims), and a stress on commerce which inherently reduces religious vehemence, as the example of Britain shows. For this reason the current conditions in Islamic societies is more atypical than typical. A factor that has worsened it is that 19th c.-20th c. Islamic societies have put less emphasis on commerce and industry than historically seen in prosperous Islamic societies, on which more research is needed to understand why. Another factor is the impact of the interface with technologically and scientifically progressing Europe and America not becoming a learning experience for acquisition of this science and technology and making it one's own, a pattern seen in Buddhist societies of Japan in 19th c., South Korea in 20thc.,and China 21st c. Because Buddhism sprang from Hinduism or a response to Hindu ideas in India, India could be put alongside China for the 21st c. rapid assimilation of western science and technology making it one's own. When there is a violent collison between Japan and U.S. Admiral Dewey's ships, or China and British advances around 1900, the initial reaction of rejection is reversed with adoption of western technology and practices making it one's own. Similiar response in India. Islamic societies have had an extended period of rejection for reasons not fully understood even today. This is likely to generate the kind of internal debate about how to revert back to the usual mode of adoption in Islamic civilization, with the potential catalyst in India and other locations in the Middle East. The most respected German of the 19th century is Alexander Von Humboldt, a naturalist who advanced scientific knowledge, and a mentor to Charles Darwin in England, author of "Origin of the Species." Humboldt says- "There are no inferior races, we are all humans, and we are all destined to reach for and grasp liberty." That Humboldt spent most of his best years in Paris, France, which he compared to the provincialism in his native Berlin, goes to show how Humboldt, Darwin and Humboldt's friend Aime Bonpland of France, maintained close cooperation and friendship and anticipated the close cooperation in Europe since the second half of the 20th c., long before European politicians and governments grasped this. Commerce, science, travel, media and free exchange of ideas, are as favorable to progress as politics and ideology is inimical to it....