LyrArc Article Gist
Spain delays setting up a financing mechanism for aiding regions short of funds by extending existing credits till Spain's high bond yields of 7% decline.

LyrArc Article Gist
A new family sedan will come out of a new manufacturing plant VW has built in Chattanooga, Tennessee, in 2011. The plant will turn out a new version of the Passat to compete with the Toyota Camry and the Honda Accord. Production capacity will be 150,000 A new Beetle will also be introduced. This is the first time VW has built a car specifically designed for the U.S.. During its previous efforts in the 80's VW used European designs and transferred them to the U.S. Its plans are to sell 400,000 VW's in the U.S. by 2013. VW sold 213,000 cars in the U.S. in 2009, so this means doubling sales in 4 years. At it height VW sold 577,000 cars in 1970, but this was before the Japanese and the Koreans entered the market in a significant way, and now the potential is there for Chinese and Indian imports at the low end of the price scale. Another factor making this goal difficult to achieve is the smaller car market and lower economic growth. By 1992, sales had dropped to 49,000, after the boxier replacement to the bug- in its Rabbit and Golf models- never took off. The new Beetle's introduction in 1998 improved sales, which reached 356,000 in 2001, and then declined as a result of too few new models, declining quality and a weakening dollar. There is a feeling among VW's American dealers, that VW's European headquarters staff is not giving the US the priority it deserves. The revolving door change in CEO's for the US operations, has only reinforced this impression. Mr Browning of GM's European operations replaced Jaccoby recently. Jaccoby joined Volvo as its new CEO. Steps taken to address these issues are to revamp the Jetta model for American customer preferences, and advertising that appeals to price conscious customers with the line: "Great for the price of good." Another innovative effort is an ad strategy that tries to capture Hispanics in the US market, with ads on Spanish language television networks. A sign of how much German management is involved in the detail of the new Jetta, is the discussion at the management board level about whether the new model should have American style cup holders. This meant pushing the brake two inches forward towards the driver, a decision that was made to do so after some deliberation at the management board. This will lead to intense competition in the US market, with Asian, European and US manufacturers all vying for the same price conscious customers....

LyrArc Article Gist
Private equity firm 3G Capital Partners of Brazil innovates its way in cost reduction with the use of 'zero based budgeting' tool to have managers justify budgets each year from scratch. The firm hopes to use these skills in bringing down costs in the merged Heinz-Kraft Foods company. Shifting consumer preferences from packaged foods to fresher foods are pressuring sales and margins in the packaged foods industry, creating the need for new ways to run these companies to improve financial performance.

LyrArc Article Gist
The WSJ's Christopher Emsden and Alessandra Galloni's interview with Italy's Labor Minister, Elsa Fornero, after major changes to Italy's labor laws including Article 18. This is a major change for Italy. She describes the problems she faced and how she has tackled them to get the new labor law passed. Fornero will set up a monitoring system to ensure that the law's imprementation takes place smoothly. To make the change Fornero took apart Article 18 to its constituent elements, preserving the anti discrimination aspect and the right to appeal, but allowing employees to be terminated for economic reasons. This puts Italy on an even footing with its europartners Germany and France, and addresses one of the main reasons Italian businesses are loath to hiring new employees. It also addresses the main reason why foreign investment in the Italian economy is so scarce. In achieving this Fornero faced the lack of support from Confindustria, the business association (which does not cease to amaze her), CGIL, the labor unions, and the political class in Italy, with each side wanting to tweak the system to make gains or get special exemptions. Fornero is a pensions expert and economics professor at the University of Turin. Her ministry covers pensions, labor, welfare and equal opportunity policies....

LyrArc Article Gist
U.S. auto sales in May 2012 increased by 26% over the prior year. Toyota sales were up 87% to 203,000 bringing its market share up by 5 percentage points to 15.2%. Honda's sales were up 48% to 134,000, according to Autodata. Overall seasonally adjusted sales were up from the 11.7 million vehicles in 2011 to 13.8 million vehicles in May 2012. Ford's sales were up to 216,000, with a 30% increase in sales of F-series pickup trucks. A cause for concern for Ford would be the 35% of sales in May to rental companies and fleet buyers.

LyrArc Article Gist
Bloomberg television interviews Russian President Medvedev.

LyrArc Article Gist
Critics of the Obama administration's so-called "light footprint strategy" for the Middle East say it is more about keeping distance from problems in that region. This is a reaction to the extensive involvement of the U.S. in two wars in that region and intuitively makes sense, as well as being in line with American public opinion to focus on problems at home. The shift or pivot to Asia of president Obama also comes in that context. The problem with this approach is that this ignores the fact that most of the momentum and effort for the freedom struggles throughout the Middle East from Tunisia first, then Libya, Egypt, and now Syria, comes from within. The lead role is now being taken by France and Britain, with German public opinion also lined up in support. The U.S. in forfeiting its role as a facilitator with strategies such as "no-fly-zones" is losing the opportunity to gain the goodwill in the Middle East with cost that is negligible in comparison to the cost of Iraq and Afghanistan, and comes after the huge U.S. effort to remove one dictator in Iraq. A minor followup effort is all that is required from an administration that pushed for the "surge" in Afghanistan. When history is written the investment of the Obama administration in Afghanistan may show little results, if what is considered by the media and experts as an unpopular and undemocratic government of Karzai falls in the aftermath of the U.S. withdrawal. There is little doubt in public opinion in the U.S. and worldwide that the movement for freedom and democracy in the Middle East and democratically elected governments will become a lasting facet of the new Middle East. It also provides huge opportunties for trade and investment as is shown by the gains made by Turkey in just 2 years. This is why the Obama adminstration policies in the Middle East show a lack of grasp of the facts showing the Middle East as opportunity more than threat for the next decade, especially in its overreaction to the Bush era policies. This happens as there is a demographic explosion of young people in the Middle East. An administration that was keen to sense the demographic changes in North America, has failed to grasp this fact and why the struggle in the Middle East flashes daily on television screens young people carrying on the struggle. A pivot to Asia means a pivot to the Far East more than Asia because India is part of the South Asian-Middle Eastern region, which presents another paradox because as China is slowing the entire South Asian-Middle Eastern region of Asia is where future growth is expected to accelerate in the next decade. ...

LyrArc Article Gist
Questions raised whether the $125 billion in EU aid could stigmatize Spain's sovereign debt considering that Spain's banks and domestic sector was the prominent buyer of government bonds. If this were to happen the $125 billion would be insufficient and more funds would be needed. It would also bring up questions about Italy's sovereign debt and its banks. This suggests the crisis of confidence may abate for awhile but will continue.

LyrArc Article Gist
Hysteresis is the term used for entrenched stubborn unemployment especially as workers stay on the job market for so long that they become dispirited and permanently unemployed. Britain's New Deal policies introduced by the Labor party do not work well in such situations because forcing people to find jobs has to be accompanied by jobs being available. The most successful so far are job subsidizing programs like Germany's Kurzarbeit. Kurzabeit encourages companies to adopt shorter working hours and reduce job losses and layoffs, because 60% of the lost income is paid to workers by the government. Since September 2008 the numbers taking advantage of this scheme went up from 80,000 to 1.4 million in June 2009. At present the OECD counts 22 governments that support a shorter working week to reduce job losses.

LyrArc Article Gist
Estimates show the 50 million Americans enrolled in Medicare today will increase to 80 million by 2030, according to the program's actuaries. Simple demographics as the baby boom generation ages is making controlling the deficit without controlling increase in health care costs as both sides in the fiscal cliff negotiations are attempting to do can only lead to defunding critical areas such as education, R&D and infrastructure, and breaching the safety net for lower income Americans. Health care spending took up 7% of GDP in 1960, increasing to 17.9% of GDP in 2010. Federal spending on healthcare has grown to about 25% in 2012 from 10% in 1960, and is projected to increase to about 33% in ten years by the Congressional Budget Office.

LyrArc Article Gist
Castilla-La Mancha includes the region around Toledo, Spain. It has an unemployment rate of 27% for the 1st quarter of 2012, up 5.4% from 2011, faster than the increase of 3.1% to 24.4% for Spain. Estimates from the University Carlos III in Madrid show economic growth contracting with GDP decline at 3.1% annual rate by the end of June 2012 for Castilla La Mancha. Part of the problem was the lack of credible accounts by the previous administration. Unpaid bills to suppliers were not included in the accounts for the region. When Maria Dolores de Cospedal of the Partido Popular became the president in May 2011, these unpaid bills were discovered and led to the doubling of the region's budget deficit to 7.3% for 2011. Cospedal sees the austerity cuts she is making as a long term approach to preserve education and healthcare. In an interview with Sara Schaeffer Munoz of the WSJ she says reducing debt is the first priority, so that interest rate premiums on borrowing can be brought down. Debt for Castilla was 17.2% of GDP in 2011, according to the Bank of Spain, it was 16.6% in the first quarter of 2012, among the highest of Spain's regions Ms. Cospedal says she wants growth too, but insists that Spain cannot get growth as long as it is sinking in debt. Moody's Investors Service says Ms. Cospedal is strict in executing the budget- a new second hospital slated to be built for 150 million euros in Cuenca with population 56,000 was cancelled and other cuts are proceeding- and Moody's did not include Castilla in the downgrades of 7 Spanish regions in June 2012. ...

LyrArc Article Gist
Apple and protests over working conditions at factories of suppliers like Foxconn which make the iPads and iPhones. Issues related to Apple's large profit margins and the low wages paid to workers at supplier factories in China and other countries.

LyrArc Article Gist
Underreporting of coronavirus cases in China poses risks for other nations in not giving them a sense of the magnitude and severity of coronavirus. This leads to a false sense of security- in Japan, Sweden and other countries, much delayed action and a sense of exceptionalism that we can ride this thing through like an ordinary virus, In the U.S. and Italy, Spain, UK and Germany, loss of crucial weeks before taking action. Looking to the future this poses new risks as it still leaves people without a sense of how long to continue lockdowns.  The pandemic poses huge risks for Asia and Latin America because of poverty, crowded conditions and sanitation levels. The early action by prime minister Modi was a huge step in the right direction before coronavirus spread could damage the economy and people- as Mr. Modi said if not done right such as with a 21 day lockdown this could set India back by 21 years. It had value in that it alerted other countries such as Philippines, Indonesia, Malaysia, Bangladesh, Pakistan to take strong action early. As the WSJ says here in this essay by what is important for China and all other countries reporting on coronavirus is that this reporting is vital only because it can save many other countries from making costly mistakes. Which is why the direct doctor to doctor contact between Chinese doctors and American doctors is an encouraging right step, says WSJ.  ...