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The effort to shift China's economc growth away from the rampant overbuilding in housing and industrial capacity of the past to domestic consumption, and focus on meeting the demand for better medical care, quality of food, education and other quality of life products. China's leaders met at the Central Economic Work Conference in Beijing in Dec. 2015 to work out ways to make this shift so that growth rate of 6.5% and other goals can be met. Plans include reducing industrial overcapacity, dealing with overinvestment and unused inventory in housing, reducing financial risks from high corporate debt to GDP ratio approaching 160% estimated by Standard and Poors Ratings Services. By comparison the U.S. debt to GDP ratio is 70%. A steep rise resulted from the huge China stimulus program of 2008-2009, when the ratio was 98% for China. Experts such as Derek Scissors of the American Enterprise Institute are pessimistic about the prospects of successfully implementing reforms, saying reducing industrial overcapacity was a goal of the new Jinping Li-Keqiang leadership in 2013, but not much progress has been made in 2 years....

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This view from the Guardian by David Adler from July 8 2019, gives a third perspective on Greece as it goes into elections. It looks at the turbulent period of 2015-2019 when a new leader Alexis Tsipras promised to lead Greece out of the eurozone crisis by standing up to the ECB and Germany, instead of looking at Greece's own responsibility in letting debt buildup till it overwhelmed Greece. Adler says Syriza was too much on one end blaming Germany for strict conditions on a loan bailout, and after this did not work embracing the loan program in a complete reversal causing much anguish to his own support base when this led to callous implementation.  Mitsotakis is careful to say in his interview with Reuters that the vulnerable have to be protected while also committing to a path of economic growth for Greece. It says 50 billion euros was provided to help people with the cost of living crisis, pensions were increased, minimum wage increased by 20%. It also shows the need to judge by looking at the situation not by labels of centre left or center right, are people better off, will people be better off in the future, are all the bases education, healthcare, public services, infrastructure covered? Is the government honest with the people and doing everything it can after listening to the people? ...

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The epitome of massive distortions in the way capital is allocated in capital markets of the last two decades even as healthcare, childcare, manufacturing technologies and infrastructure was starved of captal funding is Masayoshi Sen and Softbank which posted a $23 billion loss in the April-June 2022 quarter. This is one and half times the loss in the first quarter. Heard on the Street in WSJ dismisses Mr. Sen's contrition on these losses as this will continue into the future it says, and is simply the style of these types of extreme speculation funds. It obscures a larger problem in society and in America and Europe of capital markets giving the pass on such wasteful use of capital on huge scale amounting to trillions of dollars and not funding desperately needed healthcare, education, infrastructure, childcare and other needs of the 900 million people in these countries. Even the claims of profits hangs hollow on the necks of these investments, with dubious selection of many projects. Capital returns are insignificant or zero as the WSj says many of Softbanks funds have net zero gains since 2017. Yet extravagant demands for capital are met with extravagant supply where the needs or reasoining are the least credible in today's distorted capital market allocations causing egregious harm to the 900 million people of the US and Europe.   ...

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Officials of 130 countries met virtually to agree on a global minimum tax rate. A minimum tax rate of 15% would be paid by corporations in each of the countries in which they operate so that tax avoidance is prevented. The Group of 20 major economies including India and China also agreed to this change in taxation to ensure that all companies pay their fair share of taxes. It is also part of the Biden plan for tax revenue generation to fund the infrastructure and human needs in health, education and public services that were neglected for so long. US president Biden says- "This will level the playing field and also make America more competitive. And it will allow us to devote the additional revenue we raise to make generational investments, which are necessary to keep America's competitive edge razor sharp in today's global economy." This tax change was needed to prevent companies shopping for low tax locations such as Ireland. This kind of locating in low tax rate locations worked badly for the major G-20 economies for decades as it prevented the generation of revenues needed for essential services and infrastructure investments. Tax changes include Biden's plan to increase the corporate tax rate to 28% from 21%, and raise the minimum tax on US based companies foreign profits to 21% from 10.5%.  ...

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PM Modi makes changes in his cabinet of ministers with new ministers brought in and some ministers in the current cabinet asked to leave. Javadekar  in Information and Broadcasting ministry, Harsh Vardhan at the Health Ministry, and Ravi Shankar Prasad at IT and Law ministry, Ramesh Pokhriyal at HRD were replaced. Seven cabinet ministers were replaced including social justice and empowerment, and chemicals and fertilizers. Jaishankar at Ministry of External Affairs, Rajnath Singh at Defense, and Sitharaman at Finance, Amit Shah at Home are in the core of ministers who will continue in their roles. Dharmendra Pradhan is new Education minister, Mansukh Mandavia in charge of Health and chemicals and fertilizers, Kiran Rijjuju is Law minister, Giriraj Singh new Rural Development minister. Ashwini Vaishnaw from the IAS is the new Minister of Railways. The main idea of these changes is to bring in younger ministers and give them 3 years of experience before the next parliamentary elections, and to replace ministers who have not accomplished much. Some appointments such as the civil aviation ministry went to persons who supported the state government in Madhya Pradesh, and similar appointments for Bihar. A Dalit leader Virender Kumar is the new Social Justice and Empowerment minister, and this is a way to increase the support in the OBC or backward caste communities which get greater participation.     ...

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On September 26 Germany holds a general election to decide who will lead Germany after Merkel. Olaf Scholz of the Social Democrats is seen as personally popular for his work in government with 48% support in recent polls, with Armin Laschet of the Christian Democrats at 24% and Annalena Baerbock at 27%. The Social Democrats poll 24% and are expected to form a government with the Greens at 16% and the FDP party. Baerbock of the Greens and Armin Laschet of the Christian Democrats have lost support in recent weeks with the floods and other events. The figures are from Deutschlandtrend poll by Infratest dimap Institute.  The CDU of Merkel looks less likely to form a government under leadership of Armin Laschet today compared to a few months before. Merkel is still popular with most Germans but this support does not carry over to Armin Laschet. There may also be some sense among Germans that it is time for a change in government after the Merkel years even though she is personally popular. The difficulties imposed by the pandemic on the German people, and the added problems of the floods could lead voters to look for change in government under new leadership more sensitive to the problems of today- infrastructure, employment participation of people held back by the pandemic, and rebuilding healthcare, education, childcare systems, tackling climate change issues. ...

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The exceptional role played by US president Biden in ensuring the recovery of the US economy, reaching both low unemployment and bringing down inflation was made possible by the president's conviction that the bargaining power of labor and its share in the productive wealth of the economy needed to be restored. The chair of the president's Council of Economic Advisers Jared Bernstein points this out in his speech at the Petersen Institute of International Economics. Bernstein points out that the Philips Curve which shows the tradeoff between reducing unemployment and increasing inflation is essentially flat and the president was right to push for full employment at between 3.5-4%. In the post Reagan era America was reduced to trickle down economics as president Biden has said at every State of the Union leading to a situation where workers had lost their bargaining power. See this as a resilience factor R in the economy which if it falls below a certain point leads to the economy operating well below its potential with high unemployment and worker incomes depressed. This strong conviction of the president and the efforts of the Fed chairman Powell have helped America recover from the pandemic faster than Europe, China and other countries, and is opening a path to meet the challenges of the future including infrastructure development and overcoming climate change, and meeting needs in healthcare and education, ease of living. ...

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The mirage of progress presented from Silicon Valley in the form of FTX crypto exchange ends with $8 billion in losses to investors and a 25 year sentence for the founder in 2024. More proof of the excesses of the "free to choose" post-Reagan era with misallocation of capital leaving the vital needs and priorities of America unfunded, underfunded, or totally neglected from infrastructure, health, education to climate change action. An aversion to government taking action where it is needed that goes back to the 1930's when Franklin Roosevelt said in the State of the Union speech to Congress in 1935- "We have, however, a clear mandate from the people, that Americans must forswear that conception of the acquisition of wealth which, through excessive profits, creates undue private power over private affairs and, to our misfortune, over public affairs as well. In building toward this end we do not destroy ambition, nor do we seek to divide our wealth into equal shares on stated occasions. We continue to recognize the greater ability of some to earn more than others. But we do assert that the ambition of the individual to obtain for him and his a proper security, a reasonable leisure, and a decent living throughout life is an ambition to be preferred to the appetite for great wealth and great power."   ...

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Italy is investing the $225 billion of EU funds to modernize its economy under Mario Draghi. Draghi has shown in his first year that he can spend the funds wisely and invest in areas of the economy that need investments most. In the past year he has tackled problems including the slowness of the judicial system, modernizing an inefficient bureaucracy, and liberalizing wide parts of of the services sector. Draghi plans to invest EU grants in digital and physical infrastructure, education, environmental protection, and other needs for the long term. Before being chosen to lead the government Draghi was head of the Italian Treasury and central bank. He then headed the European Central Bank helping southern European countries tackle the debt crisis at a difficult time when Germany under Merkel pursued strict austerity policies and insisted on these policies for all eurozone countries. This report in WSJ shows the prevailing opinion in Italy is strongly in favor of Draghi staying on as prime minister till 2023 because of the confidence people inside Italy and in the European Union have in his leadership and discipline for making the investments to modernize Italy. Draghi told school children in Rome that "the most important thing is what you are doing right now," showing he understands the importance of providing Italy with the leadership it needs today.  ...

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Uber built up about $30 billion in operating losses and burnt up huge amounts of capital with its access to capital from from financial markets in the US, according to S&P Global Market Intelligence. 2023 is the first year for profits of $1.43 billon of which the larger part of it $1 billion is from equity investments. It went public in 2019. Lyft a competitor of Uber has not yet turned a profit. Contrary to the general impression these kinds of startups have burnt enormous amounts of capital, and diverted capital from essential needs such as education, healthcare services, and public transportation. Consider the case of lack of investment in the New York subway system that lags so far behind that in other cities such as Tokyo to make it incomprehensible. The New York Port Bus Terminal  needed to be replaced- the planning took 10 years and the new terminal building will not be completed till 2032. Essential investments that improve the lives of millions of people in our cities are neglected or delayed. The real crowding out of capital from essential public needs is a feature of the Reagan era economics that have created many of the problems we face today of underfunding where it really counts. The capital allocation system is distorted so that capital does not generate proper returns or benefit the largest part of the population. ...

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Kamala Harris is profoundly influenced by the Gandhian ideal of public service coming from the influence of her mother Shyamala and her mother's father P. V. Gopalan, who was a leading civil servant in the transition to independence under Gandhi in India in the late 1940's. P.V. Gopalan was 31 years old during the Quit India Movement launched by Mohandas Gandhi in 1942. In this sense what even Martin Luther King Jr experienced about Gandhiji from a distance came to her directly in ways that may be inscrutable even to Kamala herself.  Robert Draper looks at Kamala Harris at different points of her childhood, university education and work as District Attorney for Alameda County, California, and Attorney General of California. He describes her as a daughter of highly educated yet stoic parents and one with a reverence for law and order, methodical and diligent, a caring and compassionate person to the people in the communities she lived in. As one who would experience disrespect as a woman of color many times she chose not to complain but to do something about it in bringing about a better life for all Americans. Not only did she do this, Kamala Harris also was always striving to do better for the people she served, putting all her energies into that task, always keeping in mind "We the People." ...

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Much of this report concentrates on big name schools ignoring the facts about student debt and value delivered, and the shifts in perceptions in companies that see big name schools as not necessarily an asset as inthe past. In this new situation looking objectively at value delivered the US state university system is its strongest asset and the state universities offer higher value for local students without the unneeded debt loads of big ticket institutions with a lot of debt overhang, and little additional value. In the end education is about persistence, hard work, grit and determination. A  Kamala Harris at Hastings in San Francisco can do as well or better than someone from the big name schools. After the Supreme Court decision opposing quotas for affirmative action the first results of enrollment by ethnic group and race are mixed and sometimes confusing. Some colleges and universities are seeing the same enrollment and some are moving in opposite directions for ethnic groups and race. This NYT report says if universities can get to a fair enrollment for different groups without racial quotas then these quotas may not be essential to achieve their purpose. Schools are looking at students from rural areas in ways they did not in the past, and trying innovative approaches to building a better America after the pandemic because they think it is the right way. ...

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Alissa Rubin of NYT covers a visit by Emmanuel Macron, French presidnetial candidate, to a village in the mountains on the Spanish border where his grand parents lived and where he visited often as a child, and where he learned to cycle, ski and appreciate the outdoors. Macron was born and raised in Amiens, near Paris. His parents are both doctors. He attended a parochial school run by Jesuits, and at age 15 met a teacher of French and drama, Brigitte Trogneux, with whom he fell in love and later married in 2007.

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This podcast in the WSJ by Sarah Randazzo shows how 15 months of the Theranos trial have revealed ways in which Silicon Valley startups raise cash. It shows the culture of creating hype and so called buzz behind startups that was lauded in business culture but has led to massive capital misallocation away from essential needs of society for infrastructure, health services, and education, investing in new technologies at home and fighting climate change. Many such situations are recorded in the pages of the WSJ, of hype and huge losses for investors in the last decade when some of the most egregious behaviour happened. Along with this was the acceptance in the business culture of shipping jobs and technology overseas, then shipping products halfway across the globe what could be easily be made in the home country- leading to a loss of control over the future and with it a loss of hope. The WSJ says the trial was a referendum on how Silicon Valley startups raise cash, with the jury finding Holmes guilty on 4 counts. The pandemic has led to rethinking and going back to basics, discarding all the unessentials or self-harm behaviours.  ...

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The Wall Street Journal looks back at president Trump's first year in office from the inauguration speech to the passage of the new tax law. Race and immigration issues form the background of much of the domestic politics as Democrats prepare to shutdown government by December 2017 over a comment by the president. This happens during a meeting between the two parties on the Dreamer legislation to allow children of people illegally in the U.S. to stay in the country, when the president makes a derogatory remark about immigrants from Haiti and says he prefers immigrants from Norway. Efforts to repeal the Obama healthcare legislation fail during the first year. Democrats win a Senate seat in Alabama. A special counsel, Mr. Mueller, is appointed to investigate the Russian meddling in the U.S. presidential election. The tax law is skewed towards more tax cuts for the wealthy than the middle class, with the increase in the deficit not justifying the cut as infrastructure and other needs in health and education require funding. In international affairs Trump recognizes Jerusalem as the capital of Israel, and takes a strong stand on Iran and North Korea.    ...

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Under a deal made between Partido Popular of prime minister Mariano Rajoy and the Ciudadanos party in Spain, the ruling party agreed to back measures to tackle corruption and ensure an independent judiciary. Public officials being investigated for corruption will be suspended from office. Selection will be done by members of the judiciary for 12 of the 20 board members previously elected by parliament that appoints judges and prosecutors. Wage subsidies are introduced for low income families and cuts in public spending for health and education are restored under the agreement,  which includes a program of 150 measures. The combined vote of the two parties get it to 169- 137 for the Partido Popular and 32 for Ciudadanos- and with the aid of a Canary Islands party to 170. The Ciudadanos party will not participate in the Partido Popular government but will vote in its favor. This is still short of the 176 votes needed in the 350 seat parliament. Rajoy could have a second term only if the Socialist party allows some members to abstain. As this is uncertain Spain faces the prospect of an election in December 2016. ...

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A state wide ban on single use plastic bags goes into effect in New York state March 1, 2020. This is part of a global push to get rid of single use plastic bags that pollute the environment, end up in waterways, rivers, on trees and landfills. Some clues are offered here on why store owners still used plastic bags, and why large grocery chains still use plastic. The plastic bags cost much less than paper bags. Here one small store owner says 100,000 plastic bags cost him $2000, the same number of paper bags $15,000. New York state uses 23 million single use plastic bags a year. A public education campaign is underway. New York city requires stores to charge 5 cents per paper bag, with 3 cents going to an environmental fund and 2 cents to a the local government. Astonishingly for a large city in a developed country this report shows a Moroccan immigrant saying that it is already popular in her home country Morocco where the ban on single use plastic bags has reduced litter. Americans are not used to carrying reusable bags to the grocery store in the way Germans or people in other countries are. ...

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India's demographics show one startling fact. By 2020, the average age of Indians will be 29. This is happening just as the rest of the world is aging very fast. In the next 15 years India will have 130 million more people in the 20 to 49 age group. This compares with a shrinking in population of 100 million in that age group in developed countries and China, according to the U.N. Population Division. The problem facing India is malnutrition that runs as high as 43% for children with half the mothers anemic, weak educational system at the primary and secondary school levels especially in the government run schools, lack of good governance in the most populated states such as Uttar Pradesh in the Ganges plains which has 200 million people, the consequent overburdening of cities which have no plans to manage the migration of the rural poor to the cities. India has to find ways to fill the huge gaps in getting better nutrition, education, dignity and sense of opportunity, and work for the growing numbers....

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The new Indian government priorities were offered in an address to the first session of parliament after recent elections. The Modi government will speed up investment projects, infrastructure development of rail and road networks, and setup industrial regions for competitive global manufacturing hubs to create jobs. For the poor and rural areas hygiene will be a new focus with plans to put toilets in every home. Education will by enhanced by connecting all Indian schools to the internet.

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The European Economic Recovery Plan adopted in November 2008 includes money for social cohesion policy spending. This spending is designed to ensure that there is money in the pipeline for spending on infrastructure and transport, training and education. Poland for example was entitled to 67.3 billion euros for 2007 through 2013 and has been able to maintain its spending in these areas with the help from the E.U. Ith has also helped Germany and the U.K.

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France's Baccalaureate exam goes back to the days of Napoleon. Students take 15 exams in their final year in high school. Since 1808 it has not changed much. French president Macron is changing the exam as part of reform of the education system. Changes include making 40% of the score coming from in class testing. The philosophical essay is retained. Students are tested on knowledge that helps them think quickly on their feet.

Teacher pay has not changed much in 15 years and teachers protested recently asking for resources not reforms. One of the problems is that more students pass the exam, 60% compared to 40% thirty years ago, and many flunk out in the first year of college. The value of passing the exam is not as before with fewer job opportunities. Changes are seen as needed because the Bac exam was treated as sacred and little was done to adapt it to the changing times. 

 

 

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Annamaria Andriotis does enormous service to millions of borrowers for student loans by putting down in simple payments terms everybody can understand the approach to take for a university education. She points out the pitfalls in taking federal loans and following the advice of the student loan office. The federal student loans have an origination fee of about 4.2%, so even if you pay off the loan early you are stuck with the origination cost, which private lenders such as major banks do not normally charge. On a $100,000 loan this could be $4200 right off the beginning, reducing the loan to $95,800. Private lenders offer fixed rates also at attractive terms of about 4%-4.25%, with added reduction of 0.25 to 0.5% for loans with automatic payment. The lenders include Wells Fargo, Suns Trust. It is important to have good credit ratings. Scores of over 700 or 720 in credit ratings provide the most attractive rates, yet a good credit rating is also acceptable. FICO scores range from 350 to 850 for credit ratings. Added reduction of quarter to half percentage point for automatic payment. A loan for $100,000 taken with Federal PLUS loan and government guarantees could run 7.21% for fixed rate. Andriotis points out that compared to the $4586 payment on a $100,000 student fixed rate private loan at 4.25% for 10 years, a federal guaranteed PLUS loan at fixed rate of 7.21% for 10 years would cost $3541 more over the life of the loan. Mortgage loans for 30 year fixed rate jumbo loan is about 4.14%. In September 2014, the rates for jumbo mortgage loans offered by private banks are now converging at the 4.18% for conventional mortgage loans. For auto loans zero percent financing from auto company lenders such as Toyota Financial are a better option. Rates of 2% on auto loans may be available from private banks and credit unions. SunTrust Banks has an online lending division LightStream that is offering personal loans to borrowers having good credit ratings scores, with interest rates of as low as 1.99%. The borrowers with excellent scores can get the unsecured option at the best rate of 1.99%. Credit unions are offering lower auto loan rates of 2.64% and 2.74% compared to banks charging average of 4.79% and 4.9%, according to data from SNL Financial. Millions of borrowers with good credit ratings, especially for student loans, need to start early in checking out the rates and shopping for the best rate. A good credit rating of parents can enable a student to make a huge difference in payments for undergraduate or postgraduate education, and avoid the unnecessary burden of high interest rate loans in a low interest rate environment....

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A study of the economies of the 100 largest metropolitan areas in the U.S. by the Brookings Institution suggests that states in the South may be facing a harder time recovering from high unemployment than the northeast and midwestern states. Of the ten states with the highest unemployment six are in the West and the South, including Nevada, California, and S. Carolina. Unemployment in S. Carolina is 11.1%. A researcher at the Federal Reserve Bank of Atlanta, says the better performance of the South in earlier years was driven by development and in-migration. This has abruptly ended. A Brookings Fellow, Howard Wial, suggests the possibility of California, Nevada, Arizona and Florida being depressed for a long time, while states in the Great Lakes region see a rebound. States and regions that are dependent on education, healthcare and energy, are doing better than others. In Pennsylvania, the Pittsburgh region with its emphasis on education and healthcare is doing better than Philadelphia. In New York, Buffalo and Rochester in the upstate region are doing better than the New York City metropolitan area. Areas around Akron and Youngstown in the rustbelt part of Ohio are recovering better than Tucson and Colorado Springs....

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What happens to the 70,000 residents of Anacostia, near the Capitol in Washington DC where a third of the people live in poverty and there is a 40% dropout rate, and only 8% of all students there attend college. Vacant homes, drug use and crime sap the neighborhood here. Obama said he would bring 20 cities an antipoverty program successful in Harlem, New York that would include parenting and infant care classes, as well as early childhopod education and free medical care for children. An investment of $1 billion for 5 years for a transitional jobs program, to place the unemployed in temporary jobs. The Obama transition team did not return requests seeking comment on the 20 city plan or the $1 billion for transitional jobs, says the WSJ on January 20, 2008, the day of the inauguration. Its incredible that right in the nation's capital there exists another Washington DC of such neighborhood decline within sight of the Capitol.