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Economic forecasts expect economic growth to slow to 7%. Inflation has reched a high of 11% in India. With rising interest rates and large government deficits India's economic growth is slowing.

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The global impact of the credit and housing crisis as it extends from USA to the rest of the world. Heavy machinery makers such as Japan and Germany are doing better than consumer goods exporters like China, and Asian countries like Thailand and Malaysia. And countries that borrowed heavily like Hungary are being watched by lending institutions. Commodities producers like Australia and Russia and Brazil are continuing to do well. For Middle Eastern countries the bigger danger is overheating in their economies as inflation soars. But while the crisis spreads the forecasts have only been taken down a notch displaying the conservative wait and see instincts of forecasters so that China and India still continue to grown near double digits which is not likely to hold up as one goes into 2008 and 2009 and actually might slip considerably from the high growth rates of the past as a number of factors converge especially in the case of China but also for India.

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Troubles at UBS including $18 billion in writeoffs and $80 billion exposure in risky securities on its books.

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BMW's CEO Reithofer says in a conference call that the company will redirect cars from the USA to China and Russia and other countries because of the currency exchange rates and unfavorable market conditions in the US. These market conditions caused a236 million euros charge to compensate for the falling value of second hand vehicles and potential payment defaults on loans for leased vehicles in the USA. At Daimler you see a 491 million euro fall in the value of Daimler's remaining 19.9% stake in Chrysler LLC showing up in 1st quarter results but also similiar to BMW one sees a 151 million euro writedown to cover the falling value of cars that were leased to customers. This is from earnings announcements by Daimler and BMW.

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Goldman Sachs sees the unemployment rate peaking at 6.4% in late 2009.

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In the last 3 years foreign exchange reserves from Iraqi oil revenues have tripled to $22 billion, and there are an additional $8 billon in bank accounts in New York from unused funds from oil exports. Yet Americans are shouldering most of the burden for reconstruction of Iraq with $47 billion spent so far and both Senators Warner and Levin are raising questions about why Iraqi oil revenue cannot bear some of thses costs. These questions will grow louder as the US faces its own economic crisis from financial markets in turmoil. Meantime only 22% of Iraq's $6 billion capital budget for infrastructure expenditures has been spent so far. The infrastructure budget itself seems to be very small. After the war and years of decline under economic sanctions of the previous regime one would expect the needs to be huge, yet only $2 billion spent so far is very strange. Even the account here of bureaucratic bungling and loads of signatures required to prevent corruption, and the lack of a computerized banking system requiring the physical handling and moving of truckloads of cash seem strange considering the extraordinary amount of investment and huma effort the US has put into this war and reconstruction. Even this article fails to account for this bizarre situation of dire needs for infrastructure and for basic services of sewage, health and basic food supplies and housing going unmet while oil revenues and US funds go unused. Has this something to do with the militias, lack of security, insurgent fighting, and ethnic cleansing, and lack of agreement and decision power in the administration, that has created a bizarre situation in which nothing much happens. The oil revenues also complicate matters in that in any defacto partition and separate administrations of Sunni and Shiite areas and Kurdish areas the oil revenues need to be fairly divided so that it supports neigborly coexistence of the communities. This delays creation of separate administrations and accountability which could lead to dramatic improvement in services and rebuilding as accountability is missing today with every bureaucrat and politicain waiting to see what happens and what the future will look like....

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China's new foreign policy team under the Jinping-Keqiang administration. Foreign minister Yang Jiechi, becomes state councilor, and senior official on the team. The new foreign minister Wang Yi, was China's ambassador to Japan 2004-2007. The new ambassador to the U.S. is Cui Tiankai, a diplomat who graduated from the Johns Hopkins School of Advanced International Studies in the U.S. Cui was ambassador to Japan 2007-2009. Managing the China-Japan and China-U.S. relationships is critical for China because China depends on U.S. and Japanese companies for investment and new technology, for continued economic progress. The relationship has been affected by the territorial disputes with Japan in the East China Sea. Germany as an advanced technology manufacturer and commodity exporters Australia, Canada, Argentina and Brazil depend on the Chinese market for exports, creating an interwoven economic dynamic that is likely to be the dominant factor in relations. This is also the perception of Li Keqiang who told a press conference in Beijing that the competition with the U.S. has been overemphasized, that he "does not believe conflicts between great powers are inevitable." Foreign affairs remains subordinate to domestic policy and priorities in China, as China tackles the problem of reorienting its economy to give an important place to the private sector and consumers. Itself not an easy task, as prime minister Keqiang pointed out at his first press conference: "Talking the talk is not as good as walking the walk." One of Keqiang's main allies in this effort is Robert Zoellick, former president of the World Bank, who helped put together with China's DRC, the report "China: 2030," outlining these priorities....

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Prof. Calomiris of Columbia University, says the U.S. Federal Reserve should increase the cash reserve requirement for U.S. banks to prevent a surge in inflation. He points out that excesss reserves at banks stand at about $1.5 trillion. He suggests the Fed should take early action to prevent a jump in lending and credit creation- a pattern seen in the past after several years of dampened credit and lending.

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Moody's Investor's Service downgrades China's credit rating to A1 from Aa3. Moody's predicts a slowdown in growth for China. GDP growth for 1st quarter 2017 was 6.9%. Total debt has grown from 149% of gross domestic product in 2008, to 213% in 2013, and is now 253%, according to JP Morgan. The problem is that ever higher levels of credit have supported growth and more of this is coming from the shadow banking sector. Higher levels of debt in future years from the already high levels will weigh heavily on growth, leading to an eventual slowdown in the economy's growth rate.

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The Federal Reserve Open Market Committe voted 7 to 3 to carry out "Operation Twist." This does not involve printing new money as was done for the $600 billion QE II Fed program. This time the Fed will shift its holdings to hold fewer short-term Treasury bills and notes and increase holdings of Treasury securities with longer maturities. The overall impact would be to increase the average maturity of its Treasury securities portfolo to 8 years from the current 6 years. The idea is to put pressure to reduce long tem rates. The Fed says the impact on short term rates is expected to be small because of its conditional pledge made in August 2011 to hold short term rates near zero until mid-2013. The impact of the Fed's move is likely to be modest considering the fact that the average rate on 30 year fixed rate mortgages is already low. It is at 4.09%, according to the latest Freddie Mac survey.

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Martin Feldstein renews his call for new policies that channel significant government aid to homeowners under water. He says this is the only way to stem the decline in home prices. Letting the forest fire of foreclosures burn itself out is simply not an option, as it would only damage the economy further.

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The wounds left behind in S. Korea from the 1997 Asian financial crisis when the IMF imposed conditions for $21 billion in loans as part of a $60 billion loan package to prevent a sovereign debt default. The conditionality imposed for loans led to layoffs and economic hardship for the working class. S. Koreans remember the crisis as the "IMF crisis." It also has a particular stigma in S. Korea which the IMF is now trying hard to erase. One laid off employee from an automobile plant describes the period as a hard hitting IMF typhoon. So struck are S. Koreans with the term that it has become synonymous with financial hardship. In the 12 years since the crisis the IMF itself has changed. It is now trying to provide help to countries on better terms and is conscious of the problems of austerity policies. During the 2008 financial crisis Seoul stayed away from the IMF. Seoul is host to the G-20 in 2010 and now has a participatory role in international meetings. The IMF has created a emergency loan facility that could be useful for Asian countries and wants to change the perception of the IMF in Asia....

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How the Bush presidency started with hopes in domestic policy that were never to come to fruition. Jacob Weisberg, editor of Slate, reflects on the promise of the Bush State of the Union address of Feb. 2001, and the compassionate conservatism it evoked- the Bush priorities of education, setting higher educaion standards, immigration reform, helping needy and at risk children, health care access. He recalls the words used by Bush in Spanish: "Juntos podemos," we can do it together. As governor of Texas Bush had focussed on racial disparities and gaps in education, winning 27% of black votes and a third of Hispanic votes. Then came 9/11 (2002), weapons of mass destruction (from 2003 onwards), which soon overshadowed the education efforts, grants to extend health insurance coverage, initiative to encourage mentring of at-risk children. The $10 billion program to fight AIDS in Africa and the Caribbean is a part of the Bush legacy, other areas were overcome by the distraction of wars in the Middle East....

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Krugman points to the need for action on revaluation of the yuan, and sees the vote in the House of Representatives sponsored by Sander Levin as a necessary step to get China to act. He sees China as dragging its feet on this issue for many years, and the need to keep the heat on US policy makers, who have acted very passively on this issue. He describes the US policymakers as being infuriatingly, incredibly passive in the light of the Chinese inaction and stalling on currency appreciation. China he says denies manipulating the exchange rate, even as $2.4 trillion foreign currency was purchased by China. Krugman says China is not letting what is a natural process to unfold that would help the world economy as a whole to recover. Its manipulation of the exchange rate, is in effect subsidizing its exports at the expense of other countries like the US. See the link to Roubini, who shows how this is bad for China. Roubini says China will see a growth collapse in 2-3 years, if it does not change direction and let the yuan appreciate. He says it is in effect a large transfer of income from Chinese households to Chinese state owned companies which is dangerous because of increasing misallocation of resources and real estate speculation. See David Barboza for information on the real estate speculation of these Chinese state owned companies. When all this information is added up, it shows China's serious need to act. This would make possible a transition to a new model of development that relies on domestic consumption, and bettter allocation of resources and investment. ...