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A few events in the last 50 years are rewriting the rules for business, finance and economics, says the WSJ in this analysis. The admitting of China to the World Trade Organization under president Clinton in 2001 was one, another was the global financial crisis in 2009 with the selling of bad mortgages by the financial industry, the euro currency financial crisis with the bad accounting, real estate industry speculation, and lack of financial oversight in countries such as Greece, Ireland, Spain. The coronavirus pandemic is one more addition to this string of crises and events that have made the working class and middle class in US and Europe poorer and in worse shape after the recovery following World War II.  The changes indicated here are some of the surface changes- such as the shift to the suburbs for cleaner air and better living, the work at home as a serious option, the new focus on health care, wellness, exercise, nutrition and mental health, remote learning and community college as a realistic option to high tuition costs by the education industry, and a pharmaceutical industry refocused on public health and vaccines as it was in its early years before its shift into a simply profit driven industry. The underlying thread for all these changes on the surface is a deeper change in the public mind- a change that redefines what the people believe in just as happened after World War II. Rebuilding the devastated economies of Europe, America and Asia required a new vision at the time after World War II. And reconstruction could only happen with all the people involved and working for the public interest.  This also created a new hope for the future. President Biden's vision is for a new set of priorities that make child care, women's position in the economy, community college education as a right for all as a first step to opening the access to education that existed after the war in 1945. Investment in infrastructure, in building new roads, bridges and rail, water, internet connections, public services in transport, better layout of urban areas, better lives for retirees, are all part of an effort to improve quality and ease of living for all parts of society, not just those who can afford it.  This is uppermost on people's minds and administrations or governments that fail to deliver or simply talk with no action, will not have the support of ordinary working men and women in all countries. This is true for countries and regions as varied in their level of development as the US, Northern Europe, Southern Europe, Japan, India, Brazil and Mexico, and African nations. Democracy, government adminstration, technology and business structures exist for the people, to improve the ease of living, quality of life, through better health, education and public services.  ...

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India's robust debate as a democracy is of an astonishing size and diversity of opinion. The debate did not diminish when there was one federal party in many states under Indira Gandhi (1970's). It actually increased many times during this period compared to the period under Jawaharlal Nehru (1950's) taking the example of one state Gujarat as an example of what was going on in 18 states of that time. Newspapers in Gujarati such as Jansatta, Gujarat Samachar and others carried on a vigorous debate with opposing points of view to the Indira Gandhi government at the state and federal level of the 1970's. Most people in places like New York and London fail to understand or see the local language newspapers or are totally unaware of their existence, and the debate carried on in their pages. So that they falsely assume what a small group of English language newspapers tell them about the vigor of Indian democratic debate that is truly unmatched anywhere in the world. And in terms of its 22 languages in one nation one could say in the entire history of the world. Swapan Dasgupta in the Times of India gives the staggering number of publications today in 2023- 144,520 publications reaching 386 million people every day. And 392 television news channels . All in 22 languages. To ignore the local languages as if they did not exist is to ignore India as if a billion people did not exist. Or as it is for China to say that everything written in Chinese papers and Chinese news channels did not exist. Dasgupta also points out that one should take Mr. Modi and the BJP out of this as at the national level its a 10 year old phenomenon. Look back from 2010 for the sixty years from 1950 to 2010 and India was as badly misconceived, misrepresented, and misperceived back then. India he says fell from 105th place in Freedom House rankings in 2006 to 140th place in 2013. Mr. Modi only enters the picture after that. Dasgupta points out the small sample for these ratings 150 respondents and the methodology having missed much if not everything that is needed in a robust democratic debate. There is another aspect which is present which is prominent in New York and London and Washington D.C. and that is that non-alignment is not popular.  One has to see the way Adlai Stevenson running against Eisenhower twice in the 1950's very warmly received Jawaharlal Nehru on his visit to the US and compare it with the way the US perceived India under John Foster Dulles after Dwight Eisenhower was elected in 1952 to understand this aspect of American perception. Dulles was facing the Soviet Union and the British under Churchill then Macmillan had an equal disdain for Nehru's non alignment and tilt towards the Soviet Union. These root perceptions did not change with the Kennedy and Johnson administrations, and continued into the 1970's when Nehru's daughter Indira Gandhi was prime minister and continued non alignment.  India's political alignment after the pandemic is anything but non-aligned. It thinks, acts and lives in a way that is similar to the people of the US and Europe. Not even because it chooses to but because of what it is, coming from being part of its ancient path of Vedanta and Buddhist civilization that is the core Asian experience. It also needs to bring 400 million out of poverty and build the next phase of industrialization and modernization that requires fossil fuels in large quantities at lower prices to sustain its rapid growth. Some of it comes from Russia purely as an economic decision during the pandemic. The Biden administration fully supports India in this task of rapidly growth to meet the aspirations of a mostly young population- sourcing fossil fuels from whichever source that makes sense. To become a key part of the US new supply chain that reverses the overconcentration of the supply chain in China. It can only be said then that Freedom House has the peculiar affliction left behind from the John Foster Dulles period, combined with a bit of arrogance in failing to grasp the central fact of India which is its 22 languages forging one nation- a task nowhere seen in the history of the world. ...

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David Barboza of NYT describes the hidden subsidies China gives to Foxconn for its plant in Zhengzhou, in a poor region of China. The factory there makes about half a million iPhones a day. These subsidies include incentive packages, infrastructure building, local government help of about $1.5 billion. As a result Apple has high margins. For a 32 gigabyte iPhone 7 that costs $400 to make, the retail price is about $649 in the U.S.  The hidden subsidies is why Apple can maintain dominance as profits are reinvested. And the result is that with only 12% of the smartphone market Apple can take in 90% of the profit, according to Strategy Analytics. Barboza looks back at Apple before co-founder Steve Jobs left in 1985 as focussing on manufacturing at plants in Colorado and California. By 2001 with iPod sales soaring the move to China under Cook, who previously worked for Compaq, was underway. With the introduction of the iPhone in 2007, the move to China for manufacturing accelerated. The reason: only China offered the kind of subsidies, the speed of approval and building of infrastructure facilities, the local government support, the hundreds of thousands of workers, and the best tooling engineers, to produce in huge volumes with speed, and maintaining quality levels. Earlier plants including one in Colorado Springs that this Lyrarc editor was invited to visit just prior to Jobs rejoining Apple had many quality problems, so much so that Apple had a large part of the manufactured personal computers set aside for rework. The quality levels were dismal, defects were unbelievably high. This is the Apple manufacturing process and plant that Jobs must have seen when he returned, and which he hired Cook to fix. Not only were costs higher in the U.S., (subsidies in China came later) when Jobs looked at the manufacturing quality and the inability to get the quality he needed from American workers and engineers at that time in the 1990's, only then did he turn to China- and the more he saw what was possible to accomplish there he sensed an unusual opportunity to finally put the ghosts of memories from competition with Microsoft at rest, and to surpass everything that had been done in Silicon Valley. The result one of the most ingenious and large manufacturing networks in the world, huge profits for an American company, except for one thing- it would not do much for American workers. ...

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The economics situation in Eastern Europe is looking much better now after the recovery of confidence in the USA and Western Europe with stimulus measures and other steps to ease credit, and the decision at the G20 summit in London in early 2009 to provide a strong line of credit to emerging market economies struggling in this crisis. The European Bank for Reconstruction ad Development sees a 5.2% drop in GDP in 2009 over 2008, and the IMF 4.9% for Eastern European economies. The region varies country by country, with GDP decline forecast for 2009 over the prior year by the IMF showing a modest decline of 0.7% for Poland which is doing well, Czech Republic 3.5%, Hungary 3.3%, Bulgaria 2%. Other countries Lithuania 10%, Ukraine 8% and Russia at 6% decline in GDP for 2009 are hit hardest but thing there are also improving compared to last quarter. The stock market in Poland went up by 40% since the low in February 2009, Hungary by 50%, and Russia by nearly 90%, reflecting this increased confidence. A big difference is in the way the IMF under Dominique Strauss Kahn is operating. WIth the new mandate to help emerging market countries and the new funds from western countries, China and Japan, the IMF is working in cooperation with the European COmmission, the banks, and the national governments in Eastern Europe, to lessen the effects of this crisis. This is afirst for the IMF and aremarkable change. In May 2009 the IMF gave a$21 billion credit line to Poland with no strings attached , the kind of loan it made to Mexico, as aproactive measure to restore confidence. IMF told the Ukraine that a deficit of 4% of GDP was realistic when it released a $2.8 billion tranche recently. Latvia was allowed to run adeficit of 7% for 2009, with a committment to bring this down to 4% in 2010. Another change is that more aid is now given to western banks with souring loans in eastern Europe, so that these banks do not cut back severely or pull out of Eastern European economies. The EBRD has raised $24.5billion to lend to banks and other companies in the region. And $590 million went to UniCredit Italia, an Italina bank heavily exposed to Eastern Europe. Ther EBRD is looking at investing in 12 other western European banks. The Swedes have national schemes too to help the Baltic countries. The political situation is improving also, as the transition to new administration as aresult of voter discontent is being managed wisely. In the Czech Republic acompetent tranisiton government is headed by Jan Fischer, chief statistician, till elections in October 2009. In Hungary the transition government is run by an economist Gordon Bajnai, till an election next spring....

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Areas for growth for the Indian drug Industry include the large growing domestic market, the outsourcing by US drug manufacturers, and sales in other developing countries of Asia, Middle East, Latin America and Africa. Analyst estimates are that India will spend $30 billion a year on drugs to improve care for its people in the next 10 years up from $8 billion today. And the distribution network is being developed by drug companies insdie India to reach more people. Also companies like Pfizer plan to double outsourcing of manufacturing drugs from 10% today to 20%.

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When it comes to the wars in the Middle East Biden showed courage in "doing the right thing," even if it would cost him. Biden pulled America from wars in the Middle East that DJT had laid the ground work for by setting up that goal and taking action. Obama by contrast lacked the courage, and would not take any risks to his reelection effort. Biden in one term proved to be a transformative president in ways that Obama never even comes close, by building on the wave of support for rebuilding infrastructure that DJT had created in his first term. In ways that were unpredictable but real it could be said that DJT anticipated Biden and Biden anticipated DJT's efforts to get America out of wars that were never really in America's interest and started under the Reagan and Bush administrations continued through the Obama years. In the same way DJT anticipated Biden on rebuilding infrastructure and Biden anticipated DJT in action on the US Border and shutting down fentanyl flows from Mexico and China by getting Republican Senator Lankford to write up the legislation on the Border. This is also why president Biden can welcome DJT at the White House on the day of the Inauguration Jan 20 knowing both worked for the best interests of the Nation, and in the end listened to each other. ...

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De Aenile describes the volatility in stock markets after the Brexit vote. Earnings growth is slow and expectations are declining. Indexes of emerging markets are trading at 10 times earnings, say experts. The S&P 500 ended the quarter at 19 times earnings, compared to historical average of 15, according to this report. Uncertainty remains high in Europe and the U.S., and monetary policy is stuck in a low interest rate environment.

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The Japanese yen surged in value following the 2008 financial crisis as it was seen as a safe haven. As a result the Korean won declined by 42% against the Japanese yen. This continued till 2012. Japanese companies had to compete overseas at 80 yen to the dollar and shifted operations overseas. Now with the policy of monetary expansion of the Japanese central bank the situation is reversed in December 2014. The Korean won is up 40% against the Japanese yen since 2012. The Japanese yen is now down to 118 to the dollar in Dec. 2014. Abenomics gets a new mandate with the snap election in Dec. 2014. Aaron Back says Samsung may have gained ground in televisions and smartphones but other areas in electronics such as chips, displays and image sensors remain competitive and responsive to price. In autos Hyundai market share has declined to 4.4% by Dec. 2014 from 5.1% in 2011, according to MotorIntelligence.com. So far Japanese companies have used the currency advantage to improve profits and come up with better products. By using profits to invest in new technology and productivity Japanese companies can provide more features at the same price points to gain market share without having to cut price. After years of declining margins in electronics, autos and other markets this appears to be the current strategy. Another reason for this is that Japanese companies have already shifted production overseas, the shift being higher for Honda than for Toyota. Technological improvements from investments in R&D in Japan can be transferred to manufacturing operations overseas just as Apple is doing with smartphones manufacturing in China. The currency shift also improves Japan's position relative to American and European competitors in international markets....

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A big hurdle for local brands in China is the Chinese consumer's interest and respect for foreign brands. Asked about local brands buyers say they can't think of any, or say Chinese brands are shoddy in quality and value. Brands such as Haier in consumer appliances and Lenovo in tech are an exception. During the big surge in consumer sales in the last two decades Chinese companies producing local brands thought it adequate to simply imitate foreign brand names rather than take the difficult route of establishing the credibility of their own brand- an effort which might take years. Often the foreign name was changed slightly to keep the resemblance but mean something positive to Chinese consumers in the local language. Common are names such as Adidos, Hike, Cnoverse and Fuma for sneakers. Clio Coste keeps the connection to Lacoste with its crocodile logo. Coca Cola in Chinese is Kekoulele, translated to mean Tasty Fun. Only now are local companies giving serious attention to creating long term brand entity and image. The serious attention to brand names and branding comes at a time when China increasingly depends on consumer sales to power the economy with the decline in real estate and slower manufacturing. For the 11 months of 2014 retail sales were up 12 percent over the prior year period to $3.8 trillion, according to the National Bureau of Statistics. ...

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Amazon profit was $92 million on sales of $23.18 billion for 2nd quarter 2015. Amazon shares went up by 17% with the profit announcement. By contrast Apple's results showed huge profits up 38% and improving margins, yet the stock price declined, possibly because of an expected slowdown in China sales which played a part in Apple's better results. This shows different ways analysts and investors look at tech companies. Amazon has growth of close to 20% for several years, with large investments in warehouses to speed shipping, and early investments in cloud computing. Amazon made operating profits of $703 million on sales increase of 25% to $13.8 billion for the 2nd quarter 2015 in the North American market. Overseas sales increased only by 3% to $7.6 billion showing operating loss of $19 million. Amazon plans to expand with a consumer retail site for Mexico. Sales growth in North America and in cloud computing are two bright spots. In cloud computing services Amazon Web Services increased sales 81% to $1.82 billion, higher than 1st quarter growth of 49%. Profit for 2nd quarter in cloud computing was $391 million, compared to $77 million in the same quarter in 2014. ...

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Zhu Changhong plays a key role in investing China's $3.5 trillion dollars in foreign reserves. He is part of the management at China's State Administration of Foreign Exchange or SAFE, a division of the central bank. He maintains a low profile, yet he has played a critical role in shifting investment into Japanese and U.S. equities and bonds issued by the European Financial Stability Fund, reducing the risk exposure to U.S. Treasury's as the U.S. Federal Reserve changes monetary policy. From 45% of China's foreign reserves invested in U.S. government bonds, or $1.11 trillion, in June 2010, SAFE under Zhu's guidance reduced the allocation to 35%, or $1.14 trillon, in June 2012, according to a Wall Street Journal analysis. He has an interesting background. Coming from Anhui province, he studied physics at the University of Chicago, then shifted to life as a trader in financial markets at Allianz's PIMCO investment firm. After spending 20 years in the U.S., Zhu returned in 2009 as chief investment officer of SAFE. He was drawn back to China by another expatriate Yi Gang, a SAFE director who was an economics professor at Indiana University- Purdue University, Indianapolis....

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Prime Minister Fukuda of Japan and a hot new Japanese drama TV show "Change", that centers on a 35 year old prime minister Keita Asakura. It starts with dawn rising over the Japanese prime minister's building and in one of the episodes shows people talking excitedly about Obama 46 years, and Cameron, 41 years, politicians in the USA and Britain with comparisons to older political leaders like prime Minister Fukuda of Japan. In fairness to Fukuda, 72 years old, he has improved relations with China and hosted the Chinese President in Tokyo, but he has failed to get legislation through parliament because of the opposition parties the DJP which is also unpopular. But with the TV show having 20% of viewers in the Tokyo area including the current defence minister Ishiba, 51 years old, and the youngest cabinet minister, it shows that status quo is quite unpopular in Japan and the current politicians are quite unpopular.

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Mexico's economy grew at 1.34% in the third quarter of 2011, according to the national statistics institute. Annual growth is estimated at 4% for 2011. The war against organized drug trafficking in Mexico cost the economy one percentage point of economic growth, according to estimates by BBVA Bancomer, Mexico's largest bank. Mexico received $20 billion in foreign investment in 2011, about the same as in 2010. Cars and aerospace have drawn large foreign investment. Mazda will invest $500 million on a new plant in central Mexico. Honda says it will spend $800 million on a second Mexican plant. In recent years with higher costs in China, higher transport costs, and a weaker peso with a stronger yuan, Mexico is becoming more competitive with China as a manufacturing investment location. The younger workforce, low inflation and technical education schooling, offer Mexico additional advantages. Mexico is the second largest manufacturer of flat screen television sets, and is now the fourth largest location for outsourced IT such as call centers. Axa CEO, Henri Castries, and Siemens CEO, Louise Goeser, have very favorable views of doing business in Mexico. Siemens sees sales increasing by double digits through 2015, and has located one of three global R&D centers in the state of Queretaro. Goeser says many parts of Mexico are safer than parts of the U.S. A large part of the violence is concentrated in a few states, and in border cities like Juarez, and affects smaller businesses more than the large manufacturing enterprises of overseas companies. As a result it is as if there were several economies in Mexico, with foreign enterprises largely insulated from the violence. ...

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A brief history of Xinjiang which translates as New Frontier in Chinese. Its the western frontier of China and a vast area that comprises the desert region of the Tarim basin. It has 13 sizeable ethnic minority groups and borders eight countries. Because of the lack of irrigation technologies these arid expanses were settled very late in history, says Victor Mair, a Professor of Chinese language and literature at the University of Pennsylvania. Even the Uighurs were tribes from the Mongolian steppes who settled Xinjiang in the 10th century. For China it was mostly aplace for havin border military garrisons. Around the 10th century and the Tang dynasty in China, trade on the Silk Road- with places like Kashgar oasis towns on the fringes of the desert as hubs- was at its height. It was not until 1760 under the Quing dynasty of ethnic Manchus, that this area was annexed by CHina and serious effort made to settle it with demobilized troops. A civil and military administration encouraged immigration, say scholars Millward and Perdue in a 2004 book of essays by 16 scholars, "Xinjiang: China's Muslim Borderland." About 50,000 demobilized troops were offered benefits, seeds and land if they stayed. A similiar situation seems to have been repeated after Mao annexed Xinjiang in 1949. In the early 1950's the Chinese government established the Xinjiang Province Production and COnstruction Corps, which was setup to manage large farms and construction projects called bingtuan and provide jobs for demobilized troops. The bingtuan are profitable enterprises and an estimated one of every six people in Xinjiang are employed in bingtuan, or 1.3 million people. THe HAn who were 6% of the population in 1949, now comprise 40% of the 20 million population of Xinjiang. Another source of employment is in the oil and gas industry, with the Communist party secretary of Xinjiang for the last 15 years being aprotege of President Hu Jintao, from his days in the Communist Youth League, coming from the oil industry province of of Shandong. These jobs are mostly all reserved for Chinese which causes resentment among the local Uighurs. Wong quotes a Uighur university student as saying, who is the foreigner here and whose culture, language and way of life should be protected. This may be the crux of the grievances of the Uighurs, as their use of the language and religious practice is restricted, and they feel they are second class citizens in their own land. Other articles in the NYT and Economist go to point out that the links with international terrrism are not a source of the problem, and the unrest among the Uighurs is more about a feeling of loss of culture, language, religion and identity, and jobs. And the idea that the best way to work with minorities, or regions with different language, religion and culture, just as the British did in South Asia and India is doing now is through tolerance. See the links to NYT and Michael Wines on 7/11/2009 about the Communist party secretary for Xinjiang, Wang Lequang, whose policies in Xinjiang and now in Tibet through a protege, may be worsening this situation. ...

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For years the US shunned artisanal mining by small operators using children with no safety equipmentn for cobalt supplies. With China restricting the supply, the US AID agency has a $20 million program to integrate these small operators into the global supply chain. The US is coming to terms with the "inconvenient truth" that is there when it involves mining in the Congo for cobalt, a precious metal that is needed for renewable energy and lithium ion batteries in electric cars. Don't forget that 70% of the world's cobalt comes from the Congo and a third of this is dug up in small mines dug up in an in formal sector where children also work and there is no safety equipment. 

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Where on the global map has there been a far bigger runup in house prices than in the USA? Answer Ireland, and way bigger runup. The average house price went up to $490,000 at the beginning of 2007, an increase of 300% compared to 130% in the US over ten years, according to the IMF. Important to note that in Ireland home prices have dropped only 7%in 2007, even though according to the Economic and Social Research Institute 90,000 new homes were constructed in 2006 double the number needed which suggests large inventory buildup of homes. This is similiar to the situation in the USA where house prices have not dropped more than 10% and in some parts like the northeastern USA not yet dropped according to the National Association of Realtors considering February 2008 over February 2007. See the BW link. What this suggests is that there will be a slow unwinding of the housing price bubble and that it has a long way to go for prices to go down 20-30% as many experts expect. Ireland also shares other problems as we see in countries like Ireland that changed the rues to promote foreign investment, China for instance. According to the Bureau of Labor Statistics Ireland's hourly pay for manufacturing workers was an astounding $25.96 in 2006 compared to $23.82 in the USA and only $4.99 in Poland. See the link to China, BW April 7, 2008. China is seeing a jump in wages, according to one manufacturer in Hebei province the wages for unskilled workers is 1000 reminbi a month compared to 500 renminbi a month in Vietnam. Ireland is losing foreign investment from companies that are either closing plants or postpoing new investment. Groeth rates close to 6.5% on average for the last 10 years now is projected at 1.6% and will probably be negative when the full brunt of the housing crisis hits Ireland....

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Why polluting industries and colluding local government officials who are judged on the rate of economic growth achieved have come together and become entrenched to thepoint where its hard for the central government to implement pollution control measures. Deng's response to a sluggish socialist bureaucracy was to give power to local government officals to promote growth and to be judged on that basis. The environmental ministry and the environmental protection departments are very small and lack the resources to control these industries. And NGO's and the informed public and citizens are powerless to demand change as they are seen by the government as risking social stability by risking growth. After the East Asian crisis China anticipating a slowing down in competition with recovering Asian economies pushed harder for more economic growth. As a result production of steel set new records and the addition of power generating capacity each year surpassed the total power generation of countries like Britain and France.But this power generation does not use the modern technology available as it is costlier and takes longer to build. So a lot of short run decisions are being made in the interests of growth. An effort to introduce Green GDP backed by President Hu Jintao was dropped after it ran into a lot of resistance. Using this about 3 points of GDP were deducted from the 10% growth as environmental cost. This was based on modest environmental costs estimates and did not take into account the entire cost of pollution to health and the environment. China's own environmental experts think that Western estimates of environmental costs are if anything on the conservative side as they are based on models used in the west and conditions in China have little precedent in the scale and range of environmental degradation. Coal is burned to produce two thirds of the energy and uses older technology for power generation, it is a big polluter of the environment. And the modest energy efficiency goals set by the central government are not being met as a result China is already expected to be consuming as much energy in 2010 as it was expected by its own planners to be consuming in 2020. To informed outsiders it appears that the polutting process is systemic in its nature and only political change that allows people who are suffering the worst effects of this pollution to make their voice heard, can lead to reversing the trends that have been set in place from the Deng period of economic change that started in the 80's. ...

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In nominal terms China's currency, the yuan, appreciated by 3.7% in 2011. The real effective exchange rate, measured on a trade weighted basis and adjusted for relative consumer prices is the more significant rate. The real rate shows the yuan up by 5.3% in 2011, according to the Bank for International Settlements. In November 2011 the yuan appeared to be weakening, and China's prime minister, Wen Jiabao, says China wants to see the renminbi more flexible "in either direction."

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Yoshimi Inaba is Toyota, executive vice president in charge of China operations, says Toyota is committed to making it in the Chinese market. Toyota has struggled to establish asolid brand image in the Chinese market. It started with focus on the low end of the market with VIOS cars and then shifted to the high end with Crown cars. Its now focused on both the high and low ends of the market.

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It makes for good political rhetoric, but in reality the flow of money goes both ways. A lot of investments are made by American companies overseas. This time the flow of oil money because of high oil prices, from the USA and Europe to the Middle East is being recycled back to the USA in the form of investments in the US through small equity stakes in companies and more so through purchases of capital equipment and services to build Saudi infrastructure projects. The $500 billion investment plan over several years in Saudi Arabia is to build everything from new cities, aluminium plants, electricity generation plants and chemicals and plastics plants. The fears and rhetoric are overblown, as the USA also invests overseas with holdings according to the Treasury department of $6 trillion of foreign stock and debt. The acceleration of foreign investment in the US is to be seen in the numbers, as the dollar gets weaker, and its more advantageous for Canadians and Euuropeans to invest here. Last year $414 billion of foreign investors money went into buying stakes in American companies and building factories and purchasing stock, according to Thomson Financial. Thats up 90% from 2006 and represented one fourth of all announced deals. This year in just 2 weeks foreign investors poured $22.6 billion in just the first 2 weeks of January, and that represents one half of all deals. Shows how quickly the picture is changing. One way of looking at it is that Americans buy a lot of foreign goods and the money Americans use to pay for a lot of imports is now being returned to the USA in the form of foreign investments. Note that foreign investment is desirable because it brings new ideas and technology and new management methods to the host country from other countries. These foreign investors in many cases are able to make these investments overseas because they are good at what they do, having them in the host country benefits the host country and shakes up competition in the particular industry in the host country that is receiving the investment. This is why economies once relatively unfavorable to foreign investors like Japan and S. Korea are now passionately seeking foreign investment to make their economies thrive through the exchange and inflow of new ideas and ways of doing things. The same can be and is true for the USA. The other aspect is that most of the investment is still from countries like Canada, Germany, Japan, S. Korea which are big free trade partners of the USA. Manufacturing investment is heavily skewed to European and Japanese companies. Foreign multinational investment (Sony, Toyota etc) grew to $43.3 billion in 2007 from $39.2 billion in 2006 according to OCO Monitor, and will accelerate significantly as companies like VW and other German companies find it cheaper to build in the USA and shift more manufacturing here. To get an idea why the rhetoric is overblown Canada spent the most in buying American companies, $65 billion in 2007, according to Thomson Financial. Russia spent $572 million and India $3.3 billion. How will this improve the chances of the USA making it out of this recession? Five million American work for foreign companies in the USA. Of these one third are manufacturing jobs. These jobs pay about 30% more than jobs in American owned companies. Figures from Treasury Department. There will be more of these jobs as companies like VW build plants here. Roubini Economics estimates that an infusion of about $300-400 billion is needed for the USA to overcome the effects of the current mortgage and credit crisis. $414 billion was invested in the USA by foreign investors according to Thomson Financial in 2007, going up from something like $200 billion in 2006. If this pace continues becasue of some of the same underlying reasons as the weaker dollar, stronger economies overseas, then $200 billion additional investments this year would add that much to a stimulus package of $150 billion by one estimate, to provide a boost of somewhere around $350 billion. In the range of the needed boost. Companies like IBM and GE which have significant investments in India and China and investments in software or infrastructure industries that are growing rapidly or Caterpillar with growth in construction overseas, may keep growing through this downturn. This recession may hit selectively and differently, not be a complete hit to the USA economy, and could prevent it from going beyond 2009 with recovery in 2010. ...

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China needs to make a serious effort to move away from export based model for growth and fix what is broken about that model which is investment in health care, education, the environment, improving rural incomes by giving farmers ownership of land, directing money to the poor and to rural areas that have suffered during the long three decade boom years. The growth rate is expected by analysts to hit 6% in the fourth quarter. And further declines can be expected as exports get hit hard as export markets in the USA and Europe see large declines in consumer spending. The stimulus package is less than what it appears because it includes things that were already planned expenditures, yet it is a step forward. Investment in railways to modernize the rail network is a good investment. And with proper reallocation to the rural sector this stimulus and approoriate new policies could unwind what the Economist calls the grotesque global distortion that has seen poor Chinese farmers help finance the debt fueled excesses of western consumers in countries like USA, UK, and Ireland. Something the Economist has not emphasized in the boom years, but now that the growth rate could drop to 4-6% there is deep concern what it would do for social stability, for rural incomes, and the disparity that has been built up between urban and rural incomes, both within China for policymakers and the media outside....

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In a sign of the changes roiling the pharmaceutical industry the off patent business of American maker Pfizer is based in Shanghai. The generics business of Mylan Pharmaceutical is incorporated in Netherlands and run from Pittsburgh. Pressure is increasing in the generics industry from manufacturers in India and China. Pfizer announced the merger of its Upjohn off patent pharmaceuticals business with Mylan to fight pricing pressures. Pharmaceutical prices in the U.S. are the  highest in the world and generics offer only small relief compared to the government mandated pricing of the same pharma products in India. Generics drugs are also offered at lower prices by distributors who buy in bulk adding to pricing pressures in the U.S. The government rarely intervenes in the negotiated prices as it does in India or in other countries in Europe including Britain.  In fact many asthma patients young and old alike are forced to do without inhalers because of the exorbitant prices set by American manufacturers with scant help from government under Democratic or Republican administrations in the U.S. In this respect middle class customers in India have better access to asthma inhalers as well as hundreds of other medicines basic to healthy living. This has created a greater level of basic equity/fairness in India as well as in Europe in this regard than in the U.S.  In this sense the pricing of basic care medicines in the U.S. adds to the sense of a lack of fairness. To that is added the manner in which the banking and financial industry operated resulting in the financial crisis of 2009 and damage to the bank savings accounts of ordinary Americans hit by unemployment, underemployment, and lower savings accumulation with interest rates kept low to offset the damage done by the banks through bad lending. This is also why an astonishing percentage of Americans like never before in the last 50 years do not have basic funds for spending to manage a health crisis in the family. Just as in times of the Depression in the U.S. industry operates in a way that is oblivious to what ordinary Americans are experiencing only to be excoriated by FDR. ...