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Many of the achievements of Jindal in the areas of education, and competitiveness and health care and infrastructure for the state of Louisiana are now at risk because of an anticipated deficit of $2 billion in state revenues for 2009 and in the current year the $865 million surplus has evaporated and turned into a$365 million shortfall all in a short time. The state budget used afigure of $84 abarrrel for oil in calculating the state's revenues related to oil revenues generated in the state from offshore drilling but with oil at $40 a barrel things are not lookin good. The total intake from oil and gas from royalties and leases accounts for 17% of the Louisiana state budget. The state rolled back atax increase and increased expenditures on much needed higher education and health care and infrastructure spending. Louisiana needed these programs because it continues to lose people to migration and is the only southern state to do so. The expected cuts are $109 for education and an additional $160 million for health care cuts much from Medicaid. It also shows how quickly things can change for states that are overdependent on natural resource revenues and in this deep downturn for a range of states from California, to New York to Louisiana....

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A study done by the Hudson Institute shows an increase in sales of 5.5% on average in same store sales of restaurants which increased lower calorie items on the menu. The reverse is taking place for restaurants that have neglected to do this, with these restaurants experiencing a decline in sales. This was based on research firm NPD and restaurant data at 21 fast-food and sit-down restaurant chains between 2006 and 2011. Chains that include lower calorie counts on menus include Panera, McDonalds, Denny's and Au Bon Pain chain. Federal regulations will require restaurants with 20 or more outlets to post the calorie counts in early 2014. The process of moving Americans away from eating habits that lead to obesity is moving at a slow pace. Margo Wootan, director of nutrition policy at the Center of Science in the Public Interest, says large serving sizes at restaurants lead to overeating and obesity. Frequency of eating at restaurants is another problem, with studies showing women who eat out more than 5 times a week take in about 290 calories each day compared to women who do not eat out that often. The healthy options at restaurants are still restricted to a small portion of menus and healthy choices are limited....

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The Dutch model for counterinsurgency which intertwines the civilian efforts with aid workers working inside the military, and military work focussing on security for the people so that economic development projects can go on, is an inspiration for the US effort. It has also reduced casualties for the Dutch. Only 19 deaths have occurred for the Dutch for 2000 personnel employed since they deployed in Uruzgan province in March 2006, where 350,000 Afghans live, according to icasualties.org. Sec of state Hillary Clinton describes this 3 D effort of defense, diplomacy, and development, as the model for her own efforts and that of the Obama administration. Dutch soldiers are ingrained in their training for this mission that their main work in Afghainstan will be economic development. The aid workers work closely with the soldiers and the commander Col. Gert-Jan Koolj says over time the focus has been on pure development. In fact diplomats from the Dutch foreigh ministry help to command the Dutch team in Uruzgan. One problem Clinton is facing is the shortage of civilian personnel to work in provincial reconstruction teams. About 500-600 more civilians are needed to complement the additional 21,000 troops that are to be added in 2009. ...

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GM surprised German officials on June 28, 2009, with the information that Opel would need an additional 300 million euros. Also significant was the development that Fiat learned of earlier in the week that Opel's finances were much worse than previously disclosed by GM. Instead of a $1.5 billion loss Opel expects a loss of $2 billion to $3 billion for 2009. Fiat pulled out of the talks. At that point the German government put together a deal in a memorandum of understanding in the next 36 hours, with Magna International taking a 20% stake in the new Opel, the Russian government through its bank Sberbank taking 35% stake, GM taking 35%, and Opel's employees taking 10%. The German government's position was focussed on protecting the 25,000 Opel jobs in Germany, with both labor leaders and politicians supporting this. Angela Merkel, the German leader spoke on phone with Mr Putin of Russia to firm up the deal. Magna International, a Canadian autoparts supplier with Austrian roots provides the carmaking expertise. Cooperation with Russian carmaker Gaz raises the prospect of selling 500,000 Opel vehicles in Russia. Opel produces about 2 million cars in Europe and has 50,000 employees. ...

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With fewer banks and securities houses remaining, the remaining banks like Chase and securties houses like Goldaman and Morgan Stanley are using the spreads between the price of buying and selling bonds- and the easy access to government money and FDIC guanrantees for their bonds- to make large profits. In effect the Fed is pouring money into the system to help financial institutions recover and in the process is making it possible for firms like Morgan and Goldman that were on the verge of collapsing to be able to make large profits through cheap money from the Fed. The resulting large bonuses are likely to upset a public and taxpayers who shoulder the dual burdens of a bailout of large banks, which is not making credit easier for small and medium businesses that form the backbone for employment. The smaller banks that support these businesses are failing and being closed by the FDIC. THe result- increasing joblessness and shrinking consumer demand. This is outlined by Ms. Lee in her op-ed article- The Banking System is Broken, WSJ, October 16, 2009. See this link. Meantime banks like Citigroup and Bank of America continue to see losses, so that even these profits are happening in only some parts of Wall Street....

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Raghuram Rajan, Professor of Finance at the Graduate School of Business, University of Chicago, was appointed chief economist at the IMF in 2003. He presented a paper, titled "Has Financial Development Made the World Riskier," at the annual Jackson Hole meeting of economists and central bankers for 2005. Rajan says he had planned to write about how financial developments during Greenspan's 18 year old tenure had made things safer, but the more he looked the more evidence came up that the risk reward relationships in a normal functioning financial market had been terribly distorted. Market participants were being rewarded for wins but were not being asked to take on commensurate risks and impacts on their bonuses and rewards. He also cautioned about the use of credit default swaps which acted as insurance against bond defaults, and said insurers were generating big returns on this but with the appearance of little risk- even though the pain could be immense in a default. Banks were carrying credit securties on their books that posed risks to the whole financial system if things went wrong with the credit securities. Reaction from the gathering was unfavorable. Lawrence Summers, a former Treasury Secretary said, "the basic, slightly lead eyed premise of the paper was misguided."...

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On December 17 Kenneth Lewis CEO of Bank of America arranged a urgent meeting with Treasury's Paulson and the Fed's Bernanke to discuss unexpected losses in the billions at Merrill. Paulson and Bernanke persuaded Lewis not to scrap the deal and offered a $138 billion package not to scrap the deal. The deal then closed at $24 billion. Was it abad idea not to disclose the bad news immediately? It certainly proved to be the just that. In five trading days Bank of America's market capitalization dropped 45% wiping out a much bigger sum than the Merrill deal. Lewis says that the government was firm in its view that serious systemic harm would result if Bank of America did not close on the deal. Law suits from shareholders could result from this but says one legal expert a legal doctrine could emerge that in anational economic emergency companies are absolved from governance actions harmful to shareholders like nondisclosure of critical information. Which only shows how complicated situations can get once everythings spins out of control starting from the basic fact of bad opaque assets on the company's books, taking any form of rational action and behaviour with it with a million unpredictables....

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A further drop in the value of the ruble would increase the cost of servicing the $500 billion in foreign debt. Fitch downgraded Russia's credit rating to BBB, the main concern being the drop in foreign exchange reserves, down by $210 billion to $390 billion in 6 months. Forward rates on the ruble imply a further depreciation of 20% in 12 months. Russia last week abandoned its committment to stick to the 2009 budget. After the first $29 billion bailout for banks another $40 billion has been assigned for the banks. All this has shown clearly that for Russia the job of reforming the economy, of changing its dependence on oil and commodities, and shifting to manufacturing and high tech industries has hardly begun. As a writer at the Financial Times put it in a CSPAN talk show, Russia is like 120 million people gathered around a oil wellhead. Or as another writer puts it, it remains a dangerously leveraged bet on the oil price. This has ominous implications for Russia, and serious social implications in terms of unemployment, social unrest, and a crisis of expectations, as for the second time in the lives of this generation hopes are raised only to be disappointed....

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Different visions of primary education, one from the Cambridge Primary Review, and the other from Sir Jim Rose, for children in the UK. Sir Jim Rose thinks there is a lot of overcrowding of subjects in primary education or curriculum overload, and wants to go back to a core curriculum, computer skills, a foreign language, and replace the 12 subjects taught with 6 crosscutting areas of learning. Cambridge Review doesn't see overcrowding as the problem but the lack of good quality teaching of subjects outside the narrow diet of numeracy and literacy. They don't like the dumbing down to core subjects and want to see a broad, rich and balanced curriculum. The Government is following Sir Jim Roses's report as it has been commissioned by the government and is written by one government report writer. By contrast the Cambridge Primary review is independently conceived and has been years in its preparation and draws on international experience and many experts. They are both very different in their perspectives. This is too important an issue, the educational upbringing of a whole new generation of children, to be left to a kind of random selection without discussion of the different views and their merits. ...

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GM announces loss for 2008 is $30.9 billion and loss for the fourth qurter is $9.6 billion. The company also said it may not be able to meet its auditors going concern requirements. GM burned through $5.2 billion in cash in the fourth quarter, and $19 billion in 2009. This puts the cumulative net loss to $82 billion since CEO Wagoner began restructuring in 2009. Its obvious now that notwithstanding the media attention it got and what was said by key players, not much was done and the dangers in continuing existing strategy on fuel efficiency, and on too optimistic assumptions about what could happen to car sales, and on acquiescing to union demands on benefits that no company could sustain if economic conditions turned for the worse. All this has played out and in dramatic fashion in the last 6 months. Astonishingly the Board and GM are going down with the ship, the same management and the same board are in place, proving again that capitalism does not necessarily follow rules of pay for performance, except when things are looking good when management skills are not really tested. The banks have proved this in ample measure in recent months....

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Areas in which David Cameron shares the same thinking as Barrack Obama are generating green technology jobs, the importance of the voluntary sector and families all doing their bit so that its not just government that will be doing things. "That society should bring about change, not just government." He diagrees with Obama on the Stimulus and believes that the situation in Britain with the government borrowing 10% of national output already makes it difficult to have an extra discretionary stimulus without people losing confidence in then nation's finances. He makes some other points. Britain needs amore balanced economy so that it is not so reliant on financial services. And in Europe as awhole he says its important to deal with the huge dependence on welfare which is a drag on the economies of Europe. This has to be seen in the light of the huge emphasis placed by recent Labor governments on rebuilding the health and human serivces and infrastructure of Britain. In this crisis the social safety net provided by these services may be the reason that asmaller stimulus is needed in Europe. He talks of capitalism with a conscience, where markets are amean not an end to themselves and morality, ethics and asense of values are brough to bear at every turn. ...

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Is there a lesson in this for the Detroit automakers who have too many dealerships. See related article on the dealership numbers for the Big Three vs. the like of Toyota and Honda. Deere has gone from 3400 dealerships to 2984 dealerships, down 12% in ten years since 1996, so it appears to be a gradual decline, and dealerships are consolidating with stronger partners, or selling out to stronger partners. The number of owners has shrunk at a much faster pace. (Why are auto dealerships able to take this to the courts and not Deere dealerships, as is mentioned in the related auto dealership article? ) Much of this reflects search for improved profitability and stability in a very cyclical industry. Fewer distribution outlets owners and better management of inventory, better parts service with better techically trained staff, and bringing new technology and designs to improve the revenue generating capacity of each machine by reducing demand for expensive labor, is a shrewd way of managing this business. A $100 million dealer organization can better service what is becoming a high tech product, a better hire technically trained people, and better manage inventory. With this setup Deere probably can better manage production to match demand and not let inventory clutter the dealer lots for discounted clearence. ...

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Relations between Iran and Arab Sunni states Saudi Arabia and UAE are improving especially as Arabs distance themselves from the Bush Administration after faulty inelligence estimates about Iran were corrected by the CIA concluding that Iran wasnot pursuing a nuclear weapons program. The Arab Sunni states arenot altogether happy with the US policy in Iraq and Palestine. Note that that even before this there is a stron economic link between UAE and Iran. About 400,000 Iranian expatriates live in the Emirates and 9000 part Iranian owned firms are registered with the Dubai Chamber of Commerce and Industry. One look at the map show why Dubai is closest to Iran just a short strip of water dividing the two countries. This bodes well for oil prices as any volatility in the region would only increase pressure on oil prices. Peace in the Gulf region would do a lot to decrease the volatility affecting oil prices. It would also give Iran confidence to address its own role as a supplier by modernizing its oil industry. See the link to Mexico where President Calderon wants to transform Pemex and Mexico's oil industry over 10 years after Petrobras was pushed into reform by President Cardozo in Brazil. Commerce and Industry...

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European countries are focussing on the environmental damage and emissions of biofuels generation, and will not subsidize biofuels that cannot show sustainability or prove that they are produced without causing some environmental damage. Germany has canceled tax exemptions for biodiesel at the pump and is mandating that only biodiels produced meeting sustainability criteria will count towards the national quota.The annual target of biofuels making 5.75% of transportation fuel in Germany. The European Union will require restrictions on imports of biofuels that are produced in an environmentally harmful manner. Europe rushed into the push to produce biofuels without thinking of these issues. In 2007 Europe paid farmers 45 euros per hectare or $27 per acre for any biofuel produced. Note that corn ethanol made in the USA does not meet this standard as its carbon dioxide reduction is 10-20% from the level of gasoli, neaccording to one German NGO. Quebec has discontinued the building of cornbased ethanol plants. The feeling is growing that corn is a less efficient source of biofuels because it requires a lot of processing and the environmental net benefits are small. It is also seen that the rush to corn ethanol in US may be overdone and pushed by politicians trying to help farmers more than the environment....

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The auto parts industry is seeing a huge transformation as American Axle, Visteon and other companies look to Europe, Asia and other countries for growth and shift to a lower cost manufacturing base overseas. Costs are in many cases about 5 times in the USA than in other countries in Asia. And health care costs are a major part of the costs the auto parts makers face in the USA. To get an idea of how fundamental a change is going on American Axle which in 1995 did not have a plant overseas now expects 75% of its $1.3 billion in product orders to be met by plants overseas. And it is planning to build plants in India and Thailand. Visteon which used to be part of Ford Motor and made parts like heating and cooling systems mainly for Ford, will by 2010 according to Visteon's CEO, have sales to Hyundai and Kia of 28% of sales, making the Korean company its largest buyer. Ford's North American operations will only account for 6% of sales from 15% today. That is a dramatic change and involves closing plants in the US. For Visteon this means $635 million in cost reduction mainly through plant closings in 2008-2010....

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New legislation that cleared Congress on helping homeowners about 400,000 homeowners avoid foreclosure. Congresspromises to get tough on lenders and loan servicers if they do work to honor what Congress has mandated. The Federal Housing Administration will run the program and it will insure upto $300 billion in refinanced 30 year fixed rate loans The mortgages cannot be for more than 90% of a home's newly appraised value. For mortgages that exceed that value the lender would have to voluntarily write down the principal to the qualifying level. If the home goes up in value the borrower must share newly created equity with the FHA. THe program begins October 1 and ends Sept 30, 2011. Borrowers will not qualify if they have intentionally defaulted on the loan or if they had a debt to income ratio of less than 31% as of March 1. This is the first serious effort by Congress and the Administration to work in bipartisan fashion to put a serious dent in the housing foreclosure levels which are at the root of the present financial crisis and Secreatary Paulson, Bernanke, and Barney Frank and others in Congress have helped support this effort which should eventually help the financail markets recover from failing mortgages that caused this crisis....

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The graphs show some striking results for the nation's trucking industry. Leading trucking company YRC Worldwide inthe LTL less than truckload niche of the trucking industry shows a 90% decline in shipping volume and has seen its shares decline by 90%. It is having problems with more nimble regional competitors as it strugggles to complete amerger of Yellow with Roadway trucking companies. In the midst of this merger it has been hit hard by drop in shipping volumes. Formed by a series of acquisitions YRC has 60,000 employees and 25,000 trucks with 25% of the LTL market. Other companies feeling the dramatic drop in freight shipping are UPS with a decline of about 40% and Fedex a decline of 50% shown in the graph. Union Pacific sees a decline of 5% in freight volumes for 4th quarter. Its the same story at the other railroads Norfolk, Burlington, and CSX. And ocean transport is showing a drop of 7% for the January to September period 2008 over 2007 for shipping containers entering the US through the top 10 container ports, according to HIS Global Insights. And the credit crisis is choking off credit to trucking companies, with 4000 of the 200,000 for hire trucking concerns in the US expected to fail. ...

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The strategy to reach Catholics and other Christians was crafted by Mara Vanderslice and Alexia Kelley two Democratic advisers who were avangelical Christian and Catholic respectively. In a white paper they circulated they blamed Kerry's loss among religious voters on his unwillingness to talk about their faith and address their moral concerns.They suggested talking about their faith, going on Christian radio, granting interviews to reporters for Catholic media and discussing issues that Republicans were not addressing, namely poverty, immigration and the environment. In a 2006 speech "A Call to Renewal" Obama addressed these issues and his faith, and this was mailed to 40,000 pastors by his staff. Obama strategy was to grasp this aspect of the culture of life and to minimize the abortion issue by putting in the Democratic platform measures and aid programs to reduce the one million operations that occur annually. In the end Obama carried Catholic voters by 54% to 45%, and eroded but not much of evangelicals support for Republicans from 78% to 74%, and eroded Republican share of regular churchgoers to 55% from 61%. Ofcourse some of that Catholic vote was also from voters anxious about the economy and possibly some anxious about Palin's inexperience at such a criticial juncture with the financial crisis....

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Christina Pretto, a Citigroup spokeswoman says the company was carefuly managing its employee levels, nothing has changed. Statements like this, a kind of corporatese speak that has been around for years is taking on a new life these days, as companies go through heart wrenching change, yet put on many different faces. Citigroup executives are saying that in addition to the 9100 layoffs expected to be announced next week, another 25% reduction in employees will likely take place by end of 2009, which would take the total employee levels to 264,000 from 354,000. Everyone from investment bankers to the backoffice functions and legal and human resources divisions will be hit. Citi's stock has lost 68% of its value this year, and is now down to single digits. On November 13 Citi fell to $9.45. The company is losing money, and will likely need more government money next year. And Vikram Pandit who has been in the CEO position for a year after selling his hedge fund to Citigroup for $165 million, appears to have lost focus, and with the loss of the Wachovia merger and the opportunity to lure deposits and built up its branch network, it is simply going forward without a strategy....

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The wars in Afghanistan and Iraq by one estimate have already cost 1 trillion dollars. By comparison World War II cost 4 trillion dollars in inflation adjusted dollars. The figures are from the Congressional Research Service, and show the pressures to control spending. The reason that civil society is not very disturbed even as these wars cost so much, is that so far these costs in 2008 for example were 1.2% of GDP, creating the danger that these wars can be carried out by a political leadership without the nation feeling the strains of the war. This may change with higher unemployment, and the feeling that not much is gained, that this money can be used in better ways to rebuild the US economy and infrastructure.

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A 41 year old doctor, Vasant Narasimhan, is the new CEO of Novartis in Feb. 2018. Under Narasimhan R&D is expected to get prominence. His predecesor Mr. Jimenez's focus was on developing new prescription drugs. Dr. Narasimhan sees a shift to new technology, improving data science and digital capabilities to discover new medicines. This shift raises the possibility of a spinoff of the Alcon eyecare business and the Sandoz generics business.   Narasimhan joined Novartis in 2005 from consultancy Mckinsey & Co. and becoming head of R&D. He is expected to push a series of tech based initiatives including artificial intelligence to be used for new biomarkers showing effectiveness of treatment, new sensor technologies developed with Microsoft. This shift is a result of the earlier effort under previous CEO's to make up for the loss of patent protection on profitable drugs by diversifying into consumer healthcare. During the period under Jimenez Novartis share price performance was mediocre, rising 41% over 8 years. Its business is stagnant with a 1% increase in 2017 for revenues, the first increase in 3 years.   ...

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In Brazil's 2018 elections most candidates talk about shoring up crumbling infrastructure, and law and order. Yet no one talks about the budget crisis as there is no money left for doing this.  Shocking as this may sound after years of overspending and a recession, Brazil now uses borrowed money to pay pensions and salaries, and keep schools and hospitals open. Brazil's public spending exceeds revenue by about 7% of annual economic output. Taxes are already 40% of economic output, according to CIA's World Factbook website, making it hard to raise taxes.  This WSJ analysis says you cannot overstate the problem in Brazil as about two thirds of the budget goes to paying old age pensions, payroll of public sector and public healthcare. By 2020 these liablilities will grow to the point there is nothing left for discretionary spending such as roads, infrastructure, new hospitals, police equipment. Trimming pensions and freezing wages are likely options to tackle the problem. Still this leaves Brazil with the prospect of a lost decade.   Neighboring Argentina is experiencing a contracting economy and had to turn to the IMF for assistance.  The decline in GDP comes as a new conservative administration took over promising an improvement in the economy. The peso declined by 18% in 2018 so far leaving Argentina's public and private debt of $166 billion which is 80% denominated in U.S. dollars much harder to pay off. The stronger dollar has hurt Argentina leading to a $50 billion support agreement with the IMF.  Much of Latin America is now in an economic crisis. ...

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Sheila Bair says she fears the next crisis will start in Washington. Bair points to the need for urgent action along the lines recommended by the Bowles-Simpson Deficit Commission. Areas identified by Bowles-Simpson should be tackled as early as possible, she says - tax subsidies for housing and health care that lead to misallocation of resources, defense spending, special-interest provisions. She points out that the increase in the deficit is a result of the unwillingness of governments over the last two decades to make the hard choices necessary to control the structural deficit. Total federal debt doubled in the last 7 years, to almost $14 trillion, or about $100,000 for every American household. Bair, as Chairman of the FDIC, played a critical role in the efforts to control the US financial crisis of 2008-2009. Relentless federal borrowing she says, undermines the confidence private investors have in US government obligations. The cost for bond investors and others to purchase insurance against a default by the US governmet went up from 2 basis points in January 2007 to 100 basis points in early 2009, and is now at 41 basis points. With 70% of US Treasury obligations held by private investors scheduled to mature in 5 years, a decline in investor confidence would lead to higher government and private borrowing costs. She writes this just as the debt crisis in Ireland is taking place, following the one in Greece, and contagion to Portugal and Spain is feared. Bair fears a similar loss of confidence in US public debt. High and volatile interest rates could lead to losses for financial institutions holding Treasury debt and raise funding costs for depository institutions....