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

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For the first time in years Bank of Japan has to be concerned about inflation as energy and food prices climb. In March Japanese consumer prices rose by 1.2% when compared with a year earlier, the highest inflation seen in ten years. Bank of Japan now sees 1.5% growth in the economy and is holding rates neutral instead of raising them.

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With the strong jobs growth report in September the US Federal Reserve, America's central bank, is expected to increase interest rates by 0.75% at its meeting on Nov. 1-2. That will be the fourth interest rate increase in 4 consecutive meetings of the Fed. It is designed to tackle inflation yet it also reverses the period of low interest rates for savers that extended from 2000 to 2020. This period covered two crises one created by irresponsible behaviour of banks in the financial crisis of 2000 and the second a natural health disaster from the pandemic when interest rates were brought down to zero as a policy response. During that period savers who suffered decline in savings with little interest income and lower income groups were hit by both the financial crises, employment gaps that hurt income and savings, and the shift of jobs overseas as jobs were shifted to China and American manufacturing declined. Economic policy was determined in that period by economists who failed to grasp the dangers to American manufacturing, to American communities with loss of jobs from offshoring, rising inequality that fragmented society.   This has changed under the Fed run by Mr. Powell first appointed by Mr. Trump and now renominated by Mr. Trump, who is not an economist and brings a very different mindset to central banking, going with common sense about what works for average Americans. a sense of humility, and down to earth about American workers and American manufacturing and its place in America. ...

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Bank of England Governor Mark Carney has called for an "innovative, co-operative and responsible" approach to Brexit, saying that fragmentation is in no one's interest. With the British pound weakening inflation is expected to rise ahead of growth in wages. Speaking at the Mansion House next to the Governor was Philip Hammond, Britain's finance minister, who pointed out that people did not vote for Brexit to become poorer. This report in the BBC points to Hammond's position becoming closer to Mark Carney's following the parliamentary election in June 2017.

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U.S. stocks were trading at 22.7 times the total earnings of the companies in the index in March 2013, averaged over the past 10 years and adjusted for inflation, according to data developed by Yale University economist Robert Shiller. This is closer to the average of 19.5 times adjusted earnings seen in the last 50 years. In 2000 the level reached 44 times adjusted earnings. Using operating earnings according to data developed by Howard Silverblatt of S&P Dow Jones Indices, the S&P 500 is 15.9 times operating earnings in March 2013. This compares to 28.4 times in 2000 and a long term average of 18.8 times. The European markets are about 25% cheaper says Zweig, with European shares for Ireland, Italy, France and the UK trading at less than 15 times the average of their long term adusted earnings after inflation. By comparison Japan is at 19 times long term adjusted earnings.

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A large blackout leaves Venezuela's capital Caracas and parts of the country in complete darkness. The blackout was the result of problems at the El Guri hydroelectric dam in eastern Venezuela. Venezuela's power grid has deteriorated rapidly from lack of investment, corruption leading to siphoning off of funds for investment in new turbines and technology, and mismanagement with the power company run by people with little experience in power generation. Initially Electricidad de Caracas was  bought by AES Corporation in the U.S. in 2000, then nationalized by president Hugo Chavez in 2007. The lack of investment is also a result of policies that subsidize power making it practically free, just as in the case of gasoline. 70% of Venezuela's electricity comes from El Guri hydroelectric dam. Hyper inflation estimated at an astounding 1 million percent is ruining Venezuela's economy leading to 3 million refugees into neighboring Colombia and other countries. ...

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Alan Blinder, former Fed senior official, makes a spirited defense of the Federal Reserve's $600 billion quantitative easing move in November 2010. He says at the most this would lead to 1% to 3% inflation, and not the inflation critics are pointing to that would hurt the US. He is critical of the mercantilist countries, Germany and its Finance Minister Schauble, for calling this currency manipulation. He finds it incomprehensible that aides to Russsian Prime Minister Putin have asked the Fed to consult with Russia before taking such action. His preferred move would have been to purchase private securities and reduce the rate the Fed pays on reserves to negative. This he says would blast reserves out of banks into more productive uses. Yet he sees the Fed's move as better than doing nothing. He says that if buying Treasury's is a weak tool, a view he shares, then this should not be very inflationary. See his earlier op-ed piece in the WSJ when the Fed announced its action.

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The U.S. market has better prospects than emerging markets according to some analysts. This is because a large number of U.S. tech and blue chip companies have good earnings and cash positions, and lower valuations. Commodities prices are volatile because China is raising interest rates to control inflation, slowing growth. Many emerging markets like Russia and Brazil are dependent on commodities exports making them riskier as China's growth slows.

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Senator Schumer calls it a "momentous 24 hours here in the US Congress, a legislative one two punch that you rarely see." Schumer negotiated a major climate change action bill for $369 billion in the Senate, that also covers tax changes to cover costs, and helps cut drug and health care expenses of Americans. The second quarter shows healthy job gains of average 375,000 a month and unemployment at 3.6%. The economy declined by 1.1% but much of this was from a slowdown in home and business construction sectors sensitive to higher interest rates and from higher inventory. Consumer spending increased by 1% during the quarter. The Fed's series of 0.75 percentage points interest rate increases had softened inflation expectations before they get entrenched in the economy. This makes it possible for Democrats to present a message to ordinary Americans that president Biden is getting things done with 2 legislative achievements. A $280 billion bill for investment in the semiconductor industry in the US. And a huge win on climate change with the $269 billion Schumer is negotiating in the US Congress. It is the opposite of what Republicans are saying is Biden's failure to tackle inflation. Appropriately Biden and Schumer are calling this the bill the Inflation Reduction Act of 2022. How did Schumer get this done? After the Ukraine war and EU decision to shut down Russian oil supplies, cut oil and gas use by 15%, and the climate change action inducing fires and floods, there is increasing awareness about climate change action as vital for our future all over the world. This gives more confidence to Democrats to negotiate a temporary continuation of oil and gas, with increased exports of US LNG to Europe. Senator Manchin from an energy producing state of West Virginia was brought over to Schumer's side with this idea. What Biden gets is a 40% reduction of US carbon emissions over 2005 levels, enough to get within reach of the 50% he promised at COP26 in Glasgow. It is a win-win for all sides and for the American people, and shows that patience and hard work, and persistence in the face of adversity can bring results. ...

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The Emirates keep the dollar peg for their currency. The central bank's review showed that inflation was not a result of the dollar peg or not to the extent as previously thought.

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Seen as a rural urban divide, less educated and well educated and tech workers the situation in France looks similar to that in the US in the elections of 2016 and 2020. With business in the US and European Union shifting manufacturing to China and the governments neglecting rural areas, decline in standard of living for people on pensions that have not kept up with the cost of living, the situation in France as in the US is decades in the making. Bernie Sanders and Melenchon were appealing in different ways to younger people yearning for change and a system that would correct these changes.   Melenchon coming this close to less than one percentage point of Le Pen in the first round of French elections shows that a straight Macron Le Pen version of what has happened is an oversimplification, just as seeing the changes in America under president Biden vs Trump would be a simplification, as voters for Sanders who voted for Biden are changing the Biden agenda and setting America on a new path. A path to reshoring jobs that were sent to China, rebuilding American manufacturing, increasing workers wages and restoring workers leverage for higher wages, investing $2 trillion in child care, housing, supporting worker incomes and families, supporting older Americans on pensions. In the same way beneath the idea that nothing has happened after the yellow vest protests for cost of living, that has not only not gone away- but increased in the concern for cost of living in this election with the surging inflation - new developments are happening.  Even as Germany under Merkel appeared not be changing in 2020- 1 year after Merkel the situation will have changed completely to address social concerns that were ignored earlier and to invest in infrastructure in a big way. Behind this is a fundamental change that is taking place. Facing a challenge from totalitarian states the fabric of society in the free world, the US, Germany, France, other EU states, India, and nations in the free world will have to respond with changes that restore the fabric of society to what it was before this kind of fracturing, bringing all parts of society together to bring all the energies in place for rebuilding, investing in infrastructure, restoring local manufacturing and renewal. It requires a unified effort to be put in place to respond in the right way.     ...

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The contrast between Erdogan and a modest humble civil servant Kilicdaroglu is shown here in FR24. Kilicdaroglu is from the CHP or Republican party setup by Kemal Ataturk. Ataturk founded the party in Ankara after the colonial powers took over Istanbul by 1921 following victory in World War I and planned to breakup the Ottoman Empire. To resist this plan Ataturk responded similar to Japan by forming a new country based on the model of European nations and introduced a new alphabet to increase literacy. He took the country back to its European roots before the Ottomans in the 16th century and turned the Hagia Sophia into a museum. In the process rural people in the Anatolian heartland were not fully integrated by the 1960's and Erdogan appealed to these people, increased social mobility and incomes in Turkey between 2001 and 2018. In the period since then Turkey is faced with an economic crisis and rampant inflation that hurt ordinary Turkish people. The pandemic and earthquake made things worse. This is why Turkey is poised for a change and the Republican party hopes to build the Turkey of Ataturk with Turkey firmly seen as a European nation, with some changes that respect the right to wear scarves for women. For just the earthquake alone Turkey needs $90 billion for reconstruction and there are changes that are needed that would integrate the Turkish economy with the expanding economy of the US and the EU which can take place under Kilidaroglu and the new mayors of both Istanbul and Turkey who are deputy leaders of the CHP Republican party. ...

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It came down to the price of eggs, bread, basic items on a grocery list. And Democratic politicians including Harris were not seen as sensitive to the pain, being the incumbent meant they were the ones who were responsible for letting prices get out of hand. This isn't just the WSJ analysis in its conversations with ordinary Americans. About 50 percent of Trump voters said higher prices were the largest factor in their decision, according to AP (Associated Press) VoteCast.  The Labor Department’s measure of consumer prices was up 20% higher in September 2024 than January 2021—the largest increase in the last 45 years for one presidential term. Average Year-Over-Year Inflation Rate by President Carter 1977 - 1981.    9.9% Ford 1974 - 1977.       8% Biden 2021 -  2024      5.2% Nixon 1969 - 1974.       5.7% Reagan 1981 - 1989     4.6% H.W. Bush 1989 - 1993. 4.3% W. Bush 2001 - 2009.     2.8% LBJ 1963 - 1969.             2.6% Clinton 1993 - 2001.        2.6% Trump 2017 - 2021          1.9% Obama 2009 - 2017.        1.4% Eisenhower 1953 - 1961.  1.4% JFK 1961 - 1963.               1.1% Overall Inflation Rate Data seasonally-adjusted Consumer Price Index for all items, current as of Aug. 2024. Chart: Adrian Nesta  Source:  BLS Consumer Price Index This also places a special burden of responsibility on the new DJT administration to take action on prices of everyday goods and groceries. ...

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How the peg to the dollar creates two major problems for the Gulf countries, Qatar, United Arab Emirates, Saudi Arabia. First it means higher inflation in these countries, with double digit inflation in Qatar and the Emirates, and 5% in Saudi Arabia. Second it means policy inflexibility, monetary policy should be tightened when the Fed is easing. Monentary expansion is as much as 15 to 40% in the Gulf countries. There are 2 option one is a revaluation at a much higher exchange rate but this does not solve the problem of monetary inflexibility. The other is to peg to a basket of currencies including euro and dollar just as Kuwait has done. A shift to a peg to a basket of currencies would lead to diversification with these countries holding fewer dollars and would hurt the dollar. Saudi Arabia is reluctant to go with a different peg considering the dollars precarious situation but other Gulf countries may follow Kuwait.

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About 105,000 airings of ads on immigration making up 42% of all Republican ads in battleground states are on the Immigration issue since Harris became candidate July 22, according to WSJ analysis. WSJ polling shows 59% of respondents favored the bipartisan Senate deal negotiated by Republican Senator Lankford with Biden which Trump rejected in February. This deal would have effectively closed the Border, added Border Patrol resources, and would have passed says Lankford in NYT if it came only 3 months earlier in December 2024 before Mr. Trump won the primaries. Mr. Trump rejected the deal preferring to run on it, leading to action by Biden to do this with executive orders and cut illegal entry. This means less advertising for discussing the Economy and less for Inflation, which is the top issue says WSJ polling, immigration coming in second.   WSJ cites the Congressional Budget Office on the number of legal migration in the Biden term as 4.5 million, and illegal entry at 4.5 million. Instead the Trump-Vance Republican campaign is using the figure over 4 times that for illegal migration of 20 million without saying why and makes less distinction between legal and illegal entry, says WSJ. And makes statements that economists say is not the case that this will solve the housing supply and cost crisis, and other cost of living pressures. ...

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India places a $3 billion order for 1200 electric locomotives and railway modernization with Siemens. It includes a 35 year contract for maintenance. The equivalent of 800,000 trucks can be replaced by these locomotives over the lifetime. Siemens CEO Roland Busch says "This will help India create the world's largest green rail network, as our locomotives will save the equivalent of 800 million tons of CO2 emissions over their lifecycles."

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Chancellor Scholz of Germany holds talks with PM Narendra Modi on growing ties between Germany and India in trade, clean energy and new technologies. Scholz is on a two day trip to New Delhi and Bengaluru. The trip takes place in the backdrop of G-20 talks in India.

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Chancellor Scholz's visit to India with the heads of 12 large German companies and heads of medium size company business associations will lead to increasing economic cooperation between Germany and India. Bilateral trade is about 25 billion dollars. German companies such as Siemens are suppliers of rail locomotives for modernization of India's rail network. Topics for talks include the geopolitical situation in Europe with the Russian invasion of Ukraine, cooperation on climate change, utilization of German technologies, and increasing investment by German companies in India's economy.

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As India takes on the presidency of the G20 in December the first steps are being taken by the German Foreign Minister Annalena Baerbock to build closer ties with India. The Hindu gives this intervew with Baerbock that shows Germany's keen interest in building the India Germany partnership. This sets the stage for the bi-annual India Germany summit meeting, with German chancellor Scholz to visit India in early 2023. Some of Baerbock's comments show energy and enthusiasm for India to work closely with Europe. "Our countries have so much to offer one another. We want to tap that enormous potential. One such example is the concrete agreement we will sign during my visit, making it a lot easier for both Indians and Germans to study, research and work in our respective countries." "Today's era is not the era of war, that was Mr Modi's message to Putin- that was the resounding message and I highly appreciate India's seminal role in achieving this." ...

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The campaign rhetoric for renegotiating NAFTA and building a wall at the border has had a sharply negative effect on growth in Mexico. Growth slowed in 2016 and is expected to be close to zero in 2017 with declining foreign investment in the economy. The uncertainty is leading to sharp decline in foreign direct investment of 24% in the first 9 months of 2016, according to the Bank of Mexico. Further declines can be expected in 2017. The decline in the value of the peso of 16% since May 2016 has led to 6 interest rate increases in the past year. Inflation on annual basis was at 4.72% in Jan. 2017 and is rising. As Mexico depends on exports for one third of its output growth, and 80% is sent to the U.S., there is a need to diversify with trade agreements made with the European Union and other countries. Mexicans now question the value of NAFTA trade agreement as average growth of 2.6 since NAFTA was signed is below the 4.6% in the 2 decades prior to that. And poverty level is the same with about 60% of people in the underground economy. In addition crime, drug trade, a weak education system, weak rule of law, political corruption, show that Mexico has not made the progress since NAFTA that it should have made. ...

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The first farmer in recent history to become president of the US, 1977-1981, Jimmy Carter ran a peanut farm in the southern state of Georgia. He also served in the US Navy under Admiral Rickover. Rickover hired Jimmy Carter for the US early submarine program in 1949. It was Jimmy Carter's loss to Ronald Reagan that made the Democrat a rare one term president. The Iran hostage crisis happened during the election year 1980 which may have shifted the election in the Republican Reagan's favor. The economy also suffered from high inflation and lower growth during this period leading to the loss of the presidency for Carter. The incidents leading to the fall of the Berlin Wall happened during the Reagan presidency. This led to the period of three decades when the free market, less regulation period led to the 2009 economic crisis and the earlier breakup of the Soviet Union leading to the economic crisis in the early period in Russia. It was during this period that 2 Democrats president Clinton and Obama tacitly accepted the Reagan era policies of free markets and less regulation. This period is now coming to a close with the pandemic and a reassessment of what has happened. During that period Clinton paved the way for China's admission into the World Trade Organization. The lack of regulation has led to Section 230 leading to a proliferation of undesirable content on the internet, with support for regulation in the Us Congress. US policy is also moving to support its own industries something the Reagan policies saw negatively, particularly chip manufacturing where the US has lost its leadership role. The period that ended the Carter presidency is thus an inflection point that is now reversing itself decades later with the sense that government staying away from the economy is not a desirable thing. ...

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The Gulf economies are not managing their wealth that much better this time. There is more money in the hands of private companies compared to the last boom but the investments in Saudi Arabia to create 6 or 7 cities in the desert and the huge construction boom pose questions about what is the best way to allocate capital for countries like Saudi Arabia, which have larger population than some Abu Dhabi or Dubai for instance. Are many aluminium plants and other similiar investments and building cities in the desert the best way to allocate capital resources to provide for the needs of a growing population in Saudi Arabia, especially as high prices of oil may not last more than a couple of years if conservation and energy efficiency really take hold and there is a global softening in growth after the rapid pace of the last decade? Interestingly some of the wealth that is being spread through imported labor to neighboring countries is not doing enough because of the Gulf countries exchange rate with the US dollar and the link to US monetary policies which create looser monetary policy just when inflation is picking up. With higher inflation and the fixed exchange rates of Gulf countries the inflation eats into the sm all earnings of foreign labor from South Asian countries and elewhere and money repatriated home brings less rupees or home currencies. In addition to all the waste and these distortions in the way wealth is shared with neighboring countries who send in labor, there is also the way this creates distortions in global finance. Mentioned here is the example of how in the last boom in petro economies of the Gulf the recycled petrodollars were loaned out to niave latin american borrowers whose countries borrowed more capital than they could possibly absorb or afford and ended up with a lost decade of growth when it became impossible to support so much overseas debt. The current boom for oil producing countries is already being cited as the cause of the huge global liquidity, that made for the availbility of cheap capital and kept interest rates too low for too long, leading to too much risk taking and taking on off too much debt by homeowners and companies in the USA. ...

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The U.S. Federal Reserve chairman, Ben Bernanke, will have his first Q&A and press conference on April 27, 2011. This is an effort to reach a broader audience with the Fed's view of the economy, his defense of the $600 billion quantitative easing decision, and views on inflation and the U.S. dollar.

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Zero covid lockdowns have added to the sentiment seeing China as a less attractive location for foreign investment. American companies are seeing staff resign due the lockdowns and zero covid policy. About a fourth of companies in a US Chamber of Commerce survey see a 20% drop in sales in 2022. A similar situation is being seen for European companies in China. The other area of growth from property sector is not working anymore as there is a 59% drop in demand for new property units. Investors in the property sector fear  another situation like that of property developer Evergrande's collapse.  Similar to Japan by 2000 a lot of the government infrastructure for roads and rail and automobiles has already been built leaving less room for this sector to kick in. Investments are possible in AI, renewables, electric cars, and advanced technologies, with limited potential to tackle loss of jobs in other sectors such as construction and government financed infrastructure spending and in retail stores. Retail sales are hit by inflation and high gas prices. The result is that China's GDP may fall by 1% according to one estimate for this quarter from the previous year. For growth and foreign investment look to India where a surge in government financed infrastructure in construction of roads and rapid transit, fast rail, construction of housing, and rapid increase in use of mobile phones, automobiles, and appliances is taking place. A new logistics system is being built with a Master plan for the whole economy under Gati Shakti creating a whole new place for foreign investment in a country of 1.3 billion. With Indonesia and Bangladesh closely related to India this is a market of 1.8 billion people far surpassing China and built on values of democracy ingrained over 100 years since the experiments under the British of elected state assemblies. This happened under limited Hind Swaraj since 1930's when India was led by Mohandas Gandhi in these early experiments with democracy. Germany, France and the US have a lot in common with India and the ground is being prepared with improvements for extensive German, US foreign investment by the Modi administration.  ...