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Being linked to the dollar emerging country economies see the effect on their economy of a reduction in interest rates by the Fed. This is clearly evident in the Gulf countries and Middle East where the link has produced a looser monetary policy in a booming economy and only increases inflation which is already high in many countries. China, India and Russia are seeing increasing inflation as their currrencies are linked to the dollar and though a revaluation of their currency can reduce price of imports and lower overall inflation this is not an easy thing to do because in the case of China it increases the price of goods it exports to the US at the very time the US is in a recession.

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Important year end reveiw of the oil price forecasting work of so many anlaysts and where they failed . The IEA and the US Enery Dpt forecast have year after year underestimated this pirce by over 20%. Analysts change the price forecasts within a couple of weeks based on changing information and assumptions. Of all this the Saudi Arabian forecasts have ben within 12 % of what has actually ocurred according to a study by Ronald Berger Strategy Consultants of Muich, Germany. And whats their forecast for 2008. By extrapolating from the Saudi budget and the assumptions, used such as giving a wide margin to avoid a deficit in the budget if oil prices undershot by a wide margin, one gets $75 for US benchmark crude. Forecast by experts are in the neighborhood of $80 average for the whole year 2008. Goldman recently revised theirs upwards from $85 average for 2008 to $95 within a 4 week period. How good is the Goldman forecast. No one really knows. Lehman has a forecast of $84 average for 2008 and bases it on the opacity of the market because no one knows what OPEC will do with supply and China does not provide good information on demand. So basically anlysts are adding an uncertainty premium to the price of oil. And this is especially so because as the Chief Economist at IEA says global space capacity is so thin and any event can influence price. Last year the rhetoric about Irans nuclear intentions was enough to stir up the price, as were other smaller events disrupting supplies. But the Iranian situation has since cooled down and diplomatic solutions are in the works. So what to expect in 2008 in the way of political uncertainty. Iraq, Iran, Palestine, Lebanon have all seen a cool off in the ast couple of years and the Bush administration rhetoric has become outmoded as has other rhetoric from Iran so that does'nt look like it will stir up oil prices in 2008. Still there will be some uncertainty premium about supply from OPEC and demand from China and India. And demand from the Middle Eastern oil producing countries themselves as well as the increasing demand in India and China will mean that lower demand in the US because of a recession will still mean an increase in global demand over 2007 of 1.5 million barrrels a day over 2007's 85 million barrels a day. What will change the dynamics of this situation is the government mandated fuel economy for all vehicles on the road with Europe more aggressive in this area under the pressures of global warming. If this impacts India, China and Russia as these fuel saving technologies are transferrred there overall consumption should see an impact. Europe's targets are only 4 years away for 2012. And the environment may cause China to bring in newer technologies that both contribute to improving environment and conserving energy. Because China's environmental record is almost catastrophic one could see some of this happen much sooner than expected after the Olympics in 2008. All that might change the way the world looks at oil and its use, and all energy sources and their use. ...

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Example of a aluminium company in Quingtongxia which disconnected from the national electricity grid and connected to the local electricity grid with the consent of the regional government to bypass the increase in electricity prices mandated by the central government in Beijing designed to discoutrage electricity consumption by energy intensive industries. As a result of this type of activity China has seen only a 2 % decrease in electricity consumption in the first half of 2007 by official estimates. To meet the goal of a 20% reduction in energy consumption per unit of output by 2010 China would have to see reductions in the range of 4% per year. This example of Ningxia Hui Autonomous Region is an interesting one. Ningxia is in the western region of China and unlike the coastal regions which were the early beneficiaries of China's manufacturing boom years, this part of the country lagged behind. Its near Inner mongolia and far to the north west of the country near Gansu province. its one of the samllest o the provinces and autonomous regions, having a population in 1949 of about only 1 million, its since grown with migration and indutrial development but is still lagging behind. It has plentiful coal and so it is felt here that this is a natural resource asset that would help it grow in energy intensive industries like aluminium and help it close the gap with the coastal proivinces. The industrial development came to Ningxia only in the last 10 years so that its local economy and regional government officials feel they would be left out if they aren't allowed to catch up. So to them it all makes sense. Several other factors play a part. The rapid economic growth means more opportunities for relatives and friends of regional government officials. This is happening across China in coastal provinces and in the provinces of the interior. How can senior government officials in the coastal and large cities in the east point a finger at hese offendors when they are all beneficiaries of the same system and are using it to their benefit. And then there is the factor that rapid economic growth is considered the main objective if it slows down and there is social unrest from unemployment or other worker or farmer unrest then all government officials and communist party officials lose out if the communist party loses control. And the fear of chaotic years following social unrest create a common interest in pursuing rapid economic growth at all costs. So its a roller coaster that while the leaders in Beijing and Shanghai and the big eastern cities are aware of the risks and costs to the environment and other costs they are not able to control regional and local policies and actions....

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After the huge crisis the debate about capitalism. What went wrong, and importantly what did not go wrong. Not in the sense of more punditry to place the blame but to ask questions to have a better grasp of the fact and better understanding of the twists and turns of the last decade, the complexities, the frailties, the errors of judgement, and the failings, and the outright falsehoods and ethical breaks. So that the good things are not lost for instance the individual initiative and the bad things are corrected and measures put in place to prevent recurrence and minimize damage. Has the model of anglo-saxon capitalism failed? Actually some specific things failed, deregulation at a time when banks and markets were behaving irresponsibly and without any restraint internal or external, credit ratings agencies failed, financial institutions failed in performing their first line of business which is to finance investment in the economy not in housing and mortgages, and American consumerism failed in that value of saving disappeared and abundance of debt brought American savings to zero, leaving little for investment in the economy and infrastructure except by borrowing from other countries. And living on illusions and not on sound basics the leadership failed thinking that free enterprise and technology and productivity improvements somehow allowed a country or group of countries to live way beyond their means, and a tendency to excess in the popular mood of the country, excesssive consumption, excessive and profligate use of energy which sent trillions of dollars overseas over decades, and excessive expectations of the lower classes for housing and goods beyond their means, all played a part. What did not fail is the freedom to trade, the fall of "barriers to intercourse" between nations, that produced gains on a big scale so that computer and cell phone technology developed in one part of the world quickly spread around the world and the innovations and technology developed in one country spread producing benefits all over the world. It created amood of optimism in developing countries whose incomes rose especially where countries encouraged growth as in China, India, Russia, Brazil, Eastern Europe and pulled hundreds of millons out of poverty. With China, America and Germany in effect shipped technology goods in return for lower value added goods like textiles and shoes, to help China industrialize, and American consumption played a useful part until things reached an extreme and the system was abused by forgetting the basics and allowing excesses and failing to respect ethical responsibilities. Regarding regulation excessive regulation and red tape has proved to be bad as in the license Raj in India which stifled private initiative and new enterprise till it was abandoned in 1990, and no one in India is calling for more regulation. What is bad is to abandon good common sense and to rely on the illusion that no regulation is needed to run a complex financial system like we have today, a laissez fairre libertarian philosophy that was rampant in the Bush administration and in the country's leadership in the Bush years. As a result an underfunded SEC failed to deliver on its basic mission and responsibility, and the lack of a centralized regulatory authority with powers and funding to meet the challenges of modern finance as for instance ineffective derivative regulation under the CFTC, simply aggravated things further. ...

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Xi's speech at the 20th CCP party congress is strikingly similar to the speech he gave at the 100th anniversary of the CCP on July 23, 2021. Xi sees the CCP, the Communist party of China, as carrying the mission of the May 14, 1919 Movement for modernization of China that spans the period of semicolonialism with China not much different from British India, and split into spheres of foreign influence, particularly British and Japanese, the May 14, 1919 Movement after the revolution of 1912 that ended the royal dynasty, the Japanese invasion and loss of tens of millions of lives, the founding of the People's Republic in 1949 under Mao, and the reforms of market economy under socialist rule under Deng. This is the larger context in which Xi sees the CCP.

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G-7 nations reach agreement for a global minimum tax of 15% a floor for taxes that the Biden administration finds acceptable. This agreement was reached at a meeting of the Treasury chiefs of the 7 G-7 countries in London on June 5, 2021. The G-7 countries are Canada, France, Germany, Italy, Japan, UK, and US. Next agreement from Russia, China, India and Brazil in the G-20 nations would establish new ground rules for the major economies. The G-20 meeting is in Venice July 9-10. The OECD is steering the international efforts to achieve that goal. For the agreement to be effective a number of small nations that use tax rates of below 15% to attract business have to be part of the new rules. One of these countries is Ireland with a tax rate of 12.5%. For the Biden administration in the US the goal is a significant one as president Biden seeks business to pay its fair share so that long neglected priorities for education, healthcare, infrastructure, post pandemic improvements can be met. France and other nations in the EU face similar needs in the post pandemic environment. By setting a floor the Biden administration is both creating a new cultural concept of fairness in taxation and making it possible to finance the $2 trillion spending programs for these priorities of president Biden. Behind this are important facts that have left the large tech businesses paying little or no tax depriving governments of the very revenues that are needed for infrastructure and services for a modern well run state. The Biden administration seeks to include the tech businesses as well as all businesses in the new tax rules so that a uniform idea of fair taxation applies across the whole economy for the first time in two decades. In this way it makes up for the missed opportunities in the OBC administrations of Obama, Bush, Clinton that have led to loss of faith in the state and institutions in the US. A similar situation prevails in the UK,  France and Germany where previous administrations failed to address this important issue of fair taxation and financing infrastructure and priorities in health, education, and critical needs of the people.   ...

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Feldstein wants to see a stronger dollar, that is less inflation eroding the value or purchasing power of the dollar at home. Abroad he wants to see a weaker dollar in relation to Europe, Japan and Canada where about half of US imports originate. And a weaker dollar in relation to lower wage Asian countries to improve America's trade balance. Better to do this now than to wait a few years when the adjustments needed would be greater. America needs to export more and import less to improve the trade balance. A competitive dollar in relation to trading partners in Europe and Asia would provide the improvement in the trade balance that the U.S. needs for keeping economic growth. With the risks to the economy from declining housing prices improving the trade balance becomes important. During the 1985-1988 period the dollar declined in value significantly, falling 37%, but the inflation rate averaged 3.1%,says Feldstein. This is what he means by having astrong dollar at home, which is to say not eroding its purchasing value, while at the same time increasing exports and reducing imports. During this period merchandise exports increased by 40% while imports increased at half that pace. A repeat of that experience is possible and necessary to maintain growth, according to Feldstein. See the link to McKinnon, at Stanford, The Yuan and the Greenback, WSJ, August 29, 2006, which cautions against anything but a very gradual and carefully managed appreciation of the yuan, giving importance to inflation and interest rate differentials between the US and China. One point to note narrowing of interest rate differentials between the US and China is seen as backdrop for dollar weakening on exchange rate basis. McKinnon appears to consider a smaller interest rate differential as a cue for an even lower appreciation of the yuan, see his example of 2% inflation in the US and 3% interest rates. Interestingly the two approaches may complement each other. Offering a perspective of China maintaining its growth and not risking deflation or slowdown, and of the US maintaining its growth and not risking a slowdown from the housing market collapse, by strong domestic investment and exports. How to keep both economies going may be the policymakers challenge for strong global economic growth....

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Founded in 1880, Carl Welcker's company has seen the changing fortunes of manufacturing for over a century, during depression and after the wars. Still the 50% drop in orders for this company, which makes the machines that make 80% of the spark plugs in the world, is like nothing Carl Welcker has experienced. Its a tragedy he says. Its the speed of the manufacturing decline that is causing concern. In Europe where a fifth of GDP comes from manufacturing industrial production is down 12% from ayear ago. In Brazil it is down 15%, in Taiwan 43%. In China exports are down 25%. In the USA, industrial output went down by 11% in February 2009, according to the Federal Reserve. The pattern of this decline recalls the pattern of 1929, as tightening creedit and consumer fear reduces demand for manufactured goods in one country after another, creating a downward spirtal that reduces global trade. And of concern is that trade is declining even faster than manufacturing.German exports are down 20% from ayear ago, Japan's have plunged 46%, and in the USA exports fell at an annualized rate of 23.6% in the fourth quarter of 2008. A company like Schutte in Cologne, Germany, expanded rapidly as globalization opened new markets in Eastern Europe and Asia. Sales more than doubled in 5 years from 58 million euros to 100 million euros. Which suggests that the extraordinarily rapid expansion of the last few years may have its reverse effect heightened in a slowdown, as those additional sales to China and Eastern Europe disappear. For the USA manufacturing accounts for 14% of GDP, for the world 18%, and for China 33%. But this creates a misperception about the importance of American manufacturing exports. First, manufacturing contributed more to GDP growth than any other sector of the US economy, and accounts for two thirds of American exports, says the chief economist for the National Association for Mnaufacturers in Washington. America's share of global manufacturing output, he says, has remained steady at 20 to 23% for the past decade. This covers jet engines, locomotives, pharmaceuticals, and high tech products. For countries like India where manufacturing accounts for 16% of GDP, the last quarter of 2008 saw the first quarterly production decline in over a decade. And industries like handicrafts exports have fallen by 55% to $1.35 billion, and textile makers have cut half a million jobs. ...

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Chinese companies are heavily invesing in the stock markets and many companies get a large part of their earnings from the stock markets. The myth is that the real economy will simply go on like before if the stock market takes a nosedive. This is not true because large and small companies are both playing the stock market and IPO's in a big way. They are using corporate funds to invest in IPO's and stocks to boost their earnings. Morgan Stanley estimates that more than one third of corporate earnings in China come from putting money in stocks. The figures are much higher for some industries. In the health sector this number is 54% including real etate earnings also and in consumer goods sector 65% according to Morgan Stanley. If the markets take a steep downturn then these companies will have to show the losses on their income statements, depressing earnings and pushing their stock prices down even further and more steeply. Japan experienced something similiar in the the eighties. And in one respect the situation is more dismal than in Japan. The financial statements may be even less transparent than the ones in Japan's boom period. And investors lack the expertise to figure out whats behind the financial statements. There is no effort to think deeply about what can happen when a nosedive in stocks hits corporate earnings and these losses create a vicious cycle that sends stocks into a further fall turning into a freefall. A Professor of Accounting at a Business School in Shanghai, head of China research at Morgan Stanley and a governance expert in HongKong all point to the dangers in the situation as it evolves. Most of these bubbles like the housing bubble in the US have a situation which George Soros described recently as it burst after he had kept predicting for years that its going to collapse and finally he got tired of saying that because it continued going up. Its possibly the nature of bubbles that a sharp observer can tell whats going on but the phenomena will continue for quite awhile even when its obvious that something is wrong. Its something to do with human nature and the dynamics of human situations where knowing the danger the person will continue to act the opposite way just because everybody else is playing in a certain way. This is the situation in China in 2007. ...

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Zombrun describes the effect of low interest rates on savings for the bottom half of households in the U.S., the pressure to invest in stocks without the skills and experience of the better educated part of households in the top 20% of households by wealth and income. This resulted in a negative effect, a depletion of savings compared to an increase under a higher interest rates scenario with less pressure to take risks in a volatile stock market. This is the direct cost of the crises in stock and financial markets of 2000 caused by a internet bubble, and the larger crisis of 2008-2009 caused by the bubble in mortgages and housing. The secondary effects of the mortgage price bubble and faulty mortgage securities was in the millions of homeowners who went into foreclosure in 2009-2013, which further depleted wealth and savings of households in the bottom half lacking the experience and skills to navigate this type of housing market. The failure of the Obama administration to stem the foreclosures with practical steps which would have helped not hurt the banking sector, as suggested by FDIC's Sheila Bair and Harvard economist Martin Feldstein in many WSJ op-eds in 2010-2012, added to the erosion of savings and wealth of the bottom half. Minorities in particular were hit hard. A third effect is of communities across America that are feeling the effects of job migration to emerging markets such as China that has been underway as part of the globalization of the last three decades. A fourth effect in the rising cost of education, particularly since 2000, has reduced the opportunities for struggling working class people to enter the middle class and enjoy the higher incomes in precisely the very period when the divergence of incomes between less educated, less killed people and the more educated and better skilled people was taking place. The last two effects were neutral as part of the overall process of emergence of a globalized economy with a premium on more skills and education, requiring action by the government, universities and business for a concerted effort to mitigate in some places the negative effects and enhance in other places the positive effects. The first two effects were man made crises which required managing in constructive and positive ways for the entire American people, taking risks where necessary such as fears about the financial system if foreclosures did not go through. The risks of a long period of extremely low interest rates for savers and the middle as well as working class were poorly understood by the Fed since 2000. A similiar crisis is being faced in Europe with extremely low interest rates. Janet Yellen was only doing the honest thing by acknowledging how far and how different the situation is now compared to the period of three decades following 1945- a question not just of values cherished in America, also of the need for societies to advance through creation of wealth across all sectors of society or regress, as described by Smith in the Wealth of Nations....

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Trade economists from Ivy League universities, are still peddling the old theories on trade from textbooks that make no sense and have got America in this huge mess that it is in where other countries are ripping America off with unfair trade practices. These economists have turned a blind eye, turned their backs to the great damage done to industrial towns and communities across America for two decades with the loss of manufacturing. Take Irwin's point that the US would have to monitor rates on 13000 tariff line items. This is ridiculous because the US simply needs to monitor the key products such as semiconductors, oil and gas, LNG. In just one negotiation with India the US having a trade deficit DJT states of $100 billion with India- terrible trade. By opening up supply of LNG and oil US can fill India's needs for Oil and LNG and cut the deficit to zero. Who came up with this idea. Indian PM Modi and his trade team. Once it was known that the status quo was unacceptable India came up with its own ideas lets import what we get from Russia from the US. Yes we had discounts from Russia but that was when oil prices were high. DJT's effort to get oil prices down by increasing US production will make it possible for India to get this oil at similar prices. India is a much bigger economy now than during Covid 5 years back India can do this. US and India win-win by doing joint aviation production deals and US gains with sale of F-35 stealth fighters. It is just common sense. Sadly, much of this is common sense that is beyond Ivy League Economics departments at American universities.  Reciprocal Tariffs make a lot of sense because this is how fairness is done- for China, for India. In the case of Mexico, Canada, China, on stopping flow of fentanyl- this reciprocal tariff is not a tariff it is as Commerce Secretarty Luttnick pointed out domestic policy of the United States. Which country would tolerate 490,000 deaths from fentanyl over 12 years and not take domesti policy action. It is not that the policy actions are taken it is that these action should have been taken a long time back. ...

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The director of the MIT Initiative on the Digital Economy says he worries about the effect of automation on work performed by garment workers in countries such as Bangladesh. As machines become adept at performing the difficult tasks performed by humans, automation is spreading in places like Bangladesh. This report shows the Mohammadi Group which makes sweaters for H&M, Zara and other brands replacing 500 workers in its Bangladesh factory with 173 German machines. As wages grow in countries that made garment products such as Bangladesh, India, China and Cambodia are affected. A 2016 International Labor Organization Study predicts some Asian countries could lose as much as 80% of the apparel, textile jobs as automation spreads. This presents a huge problem for these countries as creating high skilled jobs is a challenge in these Asian countries. In Bangladesh where 2 million new jobs are needed each year to keep pace with increasing labor force, the 300,000 new textile industry jobs a year for 2003-2010 have shrunk now to about 60,000 a year, according to World Bank data.  The garment industry in Bangladesh provides 80% of the exports and 3 million  manufacturing jobs, reducing significantly the number of people below the poverty line. After a fire at a garment factory in Bangladesh the government set a monthly minimum wage of $64, an increase of 77%, with automatic annual raises. Factory owners moved to suburbs and used more machines to deal with labor unrest. Some garment workers became rickshaw drivers, a scooter type taxi in India. The Bangladeshi garment industry is continuing to be cost competitive by reducing costs through automation, increasing exports by 19.5% from 2013 to mid 2016, increasing jobs by 4.5% during this period, according to the local industry association figures.   ...

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China's GDP growth accelerated slightly to 6.9 percent in the 1st quarter of 2017, after five consecutive quarters of GDP growth at 6.7-6.8%, according to government data. This reflected larger use of steel in the construction industry and more mortgages issued by the state controlled banking sector. Government officials say productivity is improving helping GDP growth, with closing of less efficient manufacturing plants. Industrial production increased 7.6% in March 2017, according to the National Bureau of Statistics. The government is trying to control higher lending and reduce the backlog of bad loans at banks. Higher growth helps to reduce the bad loans at banks from the earlier period after 2008 financial crisis, improving financial stability.

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Angola's recent election gives the country a new president Joao Lourenco. Since independence Angola is governed by the MPLA led by Jose Dos Santos. Lourenco was selected by Dos Santos to help Angola navigate a difficult period when oil prices have fallen. Dos Santos remains a key figure in Angola- his daughter heads the oil company that generates 95% of Angola's export revenues, and his son heads the sovereign wealth fund. Lourenco's wife is an executive director of the World Bank, and helped negotiate a loan from the IMF for $1.4 billion in 2009. Lorenco is a low key figure who started by joining the MPLA in the struggle for independence at the age of 20, and is seen as a person Mr. Santos is appointing as he considers retirement.

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China's prime minister, Wen Jiabao says he supports policies supporting stimulus and growth along with prudent monetary policy and efforts to dampen real estate prices to increase affordability. Efforts to strike the right balance and keep growth of at least 7.5%.

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Why rebalancing the world economy will not be easy. Rebalancing depends on the success of American companies selling goods in China and Germany. China and Germany report large gains in exports through August 2010. The US trade deficit in 2010 is up 40% from 2009. One reason is that it involves changing behaviour of consumers. Another reason is each percentage point reduction in the annual savings rate in Germany and China would increase consumer spending by $42 billion. By comparison each percentage point increase in the annual savings rate for the US reduces spending by $100 billion, according to estimates by McKinsey Global Institute.

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Berlin based China studies center MERICS experts say China's weak spot is domestic consumption, as it is too reliant on export demand. These experts say overseas demand from Europe and US has held up in recent months, but where would China pick up manufacturing production when this demand slows down? Stimulus is seen as risky by experts and contradictory to efforts by the Chinese government to reduce debt based financial risks, with the debt built up in hypergrowth of two decades since 2000. Much of this hypergrowth itself has resulted in trade tensions with US and today puts China in what MERICS calls this "tricky situation." This situation resulted from growth since 2000 that was was unleashed from local governments in China with failure to control it from the central government in Beijing to reduce its impact on deindustrialization of towns and communities in the US and Europe. A lesson that China's planners may be looking at as they look to the future for more balance and quality of life,  and dignity of life for rural, town and city communities across China. Politburo CCP's standing committee has put forward the idea of a "dual circulation economy" to reduce dependence on foreign demand, and balance it with growing domestic demand, yet experts at Berlin base MERICS say this has not happened. A report from the Atlantic Council says without domestic demand picking up the pace of China's growth, China would have difficulty growing beyond 3% annually by 2025.  ...

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A hard look at the idea of the "Great Moderation" a peiod of stable prosperity that America has enjoyed for 20 or so years with low inflation, stable unemployment and smaller bumps along the road even in recessions such as the one in 1990 and in 2000 which had shorter durations with good rebound. The IMF report on the world economy for September looks at this period of stability and sees a continuation. This report takes a look at the current crises in housing and credit markets and takes a more cautious view wondering if things may be at a turning point where such stable growth cannot be taken as a given. In general the world economy has become more flexible and structural shifts to globalization and the shifts in manufacturing to other parts of the world such as emerging countries have made for a more resilient world economy compared to the economy that faced the oil shocks of the seventies. The three specific causes to which this stable period is attributed are the better handling of monetary policy, the better inventory management with Just in Time and manufacture to order, inventories literally being the shipments that are carried by Fedex or UPS on a particular day, and credit markets securitization of debt packaging it into marketable securities creating a large credit pool so thay companies could have better access to credit. Securtization has suffered because some of the basic rules were broken such as how securities are rated and not because of the basic concept. Have the markets and investors and households taken on more risk in their asset portfolios because of the belief that this period of 'Great Moderation' would simply continue. Its these kinds of behaviour that get tripped up until things get cleared up and return to normal. Is this simply a phase like the prior downturns preceding it that should see a similiar rebound or is it something different. One thing that is noted is that the period of relative prosperity has ocurred as in many countries in Europe and Asia. And the housing markets in many countries in Europe and Asia have also seen rising prices similar to that of the US. Can this turn into a worldwide recessionary situation? Comment made later on April 12, 2008 after the Bear Stearns crisis in March 2008 and the Fed meeting summary describing the downturn as expected to " be protracted and severe", and the emergency measures by the Fed itself made to prevent a possible global financial crisis. In hindsight the 3 reasons for the Great Moderation can be evaluated in this way. The first was the only real one to which researchers attribute about 50% of the Great Moderation, which is the revolution that Just In Time inventories have accomplished for smoothing drops in demand. The second financial innovation proved to be illusory just as mentioned here because it was gamed because the financial houses and other firms were able to get around regulation or the regulations were inadequate and the innovation fell victim to unrestrained greed in the manner mortgage securitization was done. The third wise better monetary policy as mentioned here did not get much credit from researchers and this turns out to be true. Keeping interests rate low was possible because of the disinflationary aspect of globalization specifically manufacturing in China which ended in 2007. Further the success of the US economy made it possible for the US dollar to remain strong and the USA to continue to attract capital for much of this period even while interest rates were low. But its the export of disinflation from China, and no pressures of inflation from globalization through commodities demand for much of this period, that kept inflation low and made it possible for the Fed to keep interest rates low without creating inflationary pressures. Of the three financial innovation and monetary policy may have in them in fact unlike the first Just in Time and information technology, may have in them the seeds of trouble as well as gain if not carefully managed, like fire a good servant but bad master, and this is really what happened in what turns out to be a very human world, greed subverted financial innovation without the necessary appropriate regulation to go with it and the Fed's libertarian instincts and complacency or lack of energetic oversight under a man past eighty years made it lose sight of its need to adjust interest rates to cool off excesses in the market and send appropriate signals to the financial and housing markets. The Economist was slightly ahead of the curve when it makes the observation here that this is likely to be a global housing crisis and a global credit crisis with all the implications of this for global economic growth. ...

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Decades of investment in infrastructure and manufacturing have given China a strong grip on manufacturing. China's economy depends on exports with sluggish domestic demand. One economist in Hong Kong says Vietnam is the key, if tariffs are placed on Vietnam it will be tough he says, because Chinese goods enter the US from third countries.

In 2025 China's world trade is imbalanced to an extraordinarily large degree, hurting thriving manufacturing communities around the world, and depends on a concentration of port logistics, manufacturing and lack of fair trade practices, that allow $3.5 trillion in exports while taking in only $2.5 trillion in imports. By 2008 America was waking up to this, DJT actually flagged it a decade later, Biden realized this, in the second term what appears like a whirlwind 100 days is really action on many fronts that is coming one to two decades late. 

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James Areddy explains why the Jinping administration in China was so keen on promoting gains in the equity markets. It was seen as a way to ease the debt overhang from the 2008 Stimulus of $586 billion. The Stimulus was put together in November 2008 to pay for infrastructure, construction and social spending, at a level that was 3 times the stimulus proposed in the European Union. Critics say that the initial signs of a crisis that might affect the government are magnified in China's authoritarian political structure, with one example being the size of this stimulus. With this kind of hasty spending a common problem is that not enough good projects can be found. One example of wasted spending is the $930 million spent to build the Shanghai West rail station from a older structure that had fallen into disuse. With three other stations serving Shanghai this station gets little traffic. The Jinping administration promoted the stock market as a way for companies to issue equity and reduce debt, and make less reliance on bank loans. The result was to push the Shanghai Composite Index up by 150% for the one year gain by June 12, 2015. The government also made it possible for individual investors to borrow money to invest in the market. About $354 billion of margin lending to finance stock purchases is estimated by Goldman Sachs, which now poses problems with a one third decline in stocks after June 12, 2015, leading to losses for individual investors. The loss of the boost from the stock market is likely to hurt GNP growth by 1% percentage point, according to Capital Economics. As China's real growth according to experts is closer to 4%, because of statistical errors and overestimates, according to experts, this could pose a serious problem for the economy. Countries dependent on commodity exports to China such as Australia, Chile and Brazil are likely to feel the effects of a decline in demand for iron ore, copper and other metals....