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The US needs good manufacturing jobs for the jobs and income that it brings into communities, and also because of the tax revenues from the companies making products in America that provide the basis for local governments to provide good public services in healthcare, education, and transportation. To say comparitive advantage that helped first Japanese and now Chinese manufacturers is real and how society gains is to deny some basic facts that are self evident from observation that contradict textbook ideas in economics. Comparitive Advantage is a textbook economics concept that says countries are proficient in what they make best and should specialize in that product. But it is a static concept that exists only in textbooks. If Japan in 1960, China in 1980 and India in 2000 were each presented with this idea they would have turned down the idea of making steel and remained makers of lower end products such as footwear and textiles. If Japan in 1980, China in 2000, and India in 2020 were each presented with this idea they would have turned down the idea of making semiconductors and remained makers of lower end products such as steel. A senior vice president of US Steel in the late 1960's even told this writer a graduate student at Northwestern in Chicago- as the US can make steel better than India or China let us keep making it for you. He and much of the business faculty at Northwestern also could not understand in 1970 why Airbus was being setup to compete with Boeing who by the concept of comparitive advantage should have had the whole market to itself for commercial aircraft . By this kind of thinking Airbus would not exist today because it did not have the lowest cost or the manufacturing technologies Boeing had through its vast manufacturing operation. America would be still the only one making aircraft in 2023 if textbook concepts ruled the day. By indirect methods such as hidden preferential arrangements, provision of inputs such as land, capital and labor, tax relief, the costs can be represented in a way that shows it is cheaper to manufacture overseas. The lack of a level playing field is what president Biden is correcting by doing what first Japan, then South Korea, then China and now India are doing since the 1960's. By 1974 in four years after its founding in 1970 Airbus came up with its first model the A-300 using advanced technologies. America will regain its leadership in the cost and manufacturing of many products through Biden policy and the efforts of American companies by 2030, and do this in a transformative way that will benefit the world as a whole.  It is an enormous error to say the US does not need good manufacturing jobs, that local governments do not need the tax revenues from manufacturing plants to build services for communities where manufacturing workers live, and the US does not need the manufacturing experience curve that leads to reduced costs. It is this loss of the manufacturing experience curve that is the most vital aspect for understanding the need for the US government to compete effectively with the governments of Asian countries to keep manufacturing healthy and strong at home. Economics experts ignorant of how important this science and engineering principle is fail to grasp this. Related to this is the idea of a virtuous cycle in manufacturing- whoever braves the hard years of moving up the learning and experience curve gets rewarded because once that country has mastered that skill it gets better an better as the technology advances- making it harder and harder to prevent a new monopoly in manufacturing by the country (Japan, China or Taiwan) that had the highest costs and the least advantage ten or 20 years earlier but just persevered through it all with the government's help to gain cost competitiveness. This part does not make it into the economics textbooks which are mostly theory and much of it outdated by the time they are written. Observation is the best teacher and guide as it is in science, to guide policy and action. Obsessive attachment to theory that ignores observation becomes the enemy of progress. Comparitive advantage is one concept that needs to be retired even from the textbooks. Overseas manufacturing then is a piece of the overall picture that fits into what is good for the US. Macroeconomic principles determine microeconomic outcomes as opposed to microeconomic principles with companies out on their own being forced to compete without a level playing field, or handing out technology for special status in a recipient country as some do putting the US at a macroeconomic disadvantage. This is also healthy for the recipient country overseas, as recrimination with loss of manufacturing jobs in the US inevitably leads to the kind of recrimination that does not serve either country well as in the case of China today, and worse still can lead to conflict, even war. After the egregious situation of loss of manufacturing communities across the US leading to destabilizing the social fabric, it is hard to see such thinking prevail about the US not needing manufacturing as a vital part of its social fabric and industrial strength. China, it can be said, would have developed, and developed well over the past two decades without overconcentration of US and EU manufacturing in China. Without aggravating the problems of climate change and contamination of air, land and water, and destabilizing the social fabric in the US hurting workers and communities across the US, if macroeconomic policy was made to manage this process in the US government without it being left entirely to individual companies to decide. Instead China faces today a difficult situation through events such as destabilizing the social fabric in the US (the Trump tariffs), advanced economies in G-7 resistance to sharing of technologies, the damage to its environment from microeconomic locally determined policy at individual companies, and the global effects of climate change from climate unsustainable levels of growth since 2000.  ...

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Elected to the Politburo in 1980, Gorbachev became president of USSR in 1985. In the six year period to 1991 he launched a movement to free the USSR from the rigid constraints of communist party rule called Perestroika to improve productivity, freedoms and quality of life. He came from a peasant family with Ukrainian origins and was born in 1931 during the period of upheaval in Russia. The rapid removal of Soviet rule was something Russia was not able to adapt to in the early years with no experience in democratic process. By 2000 after drop in life expectancy and fall in the standard of living Mr. Putin emerged as president.  Russia's economy recovered under Putin's three terms till the miscalculations in the invasion of Ukraine in 2022, that were itself a result of a sense that Russia had lost something with the fall of the Soviet Union and the advancement of NATO and the European Union. Gorbachev's sense in his memoirs was that Russia would do best under democracy. Even in 2017 he wrote that Russia and its people were "ready for a real multiparty system, fair elections and a regular rotation of government." Yet he was too much of an optimist and not enough hands on to grasp that Russia was a large economy and safeguards had to be put in place for the rule of law to prevent lawless elements that could control companies, safeguards for the vulnerable sections of society such as pensioners and older people, and limited self government through elected assemblies and parliaments were needed for a decade before democracy to take roots. Gorbachev's knowledge of American and British democracies, constitutions and parliaments and their evolution over centuries was non existent, with little contact and education of this sort under the Czar or Soviets. The democracies in Germany and Japan were established with American power and extensive education, the Marshall Plan, and unlimited imports by the US from Japan to prevent economic catastrophes of the kind experienced by the Weimar Republic in Germany in the 1920's. No plan from western aid and assistance, limited self government of the people was introduced as training ground as in India. In India the British introduced limited self-government or Swaraj in the 1930's with elected assemblies in Indian states, in the pattern of Dominion states such as Canada and Australia. Mohandas Gandhi negotiated the rights of indentured Indians in South Africa in this arrangement and studied British law and constitutions. This led to the catastrophic failure of the rule of law in Russia after 1979, lawless elements emerging under Yeltsin  that controlled companies and the state, high unemployment, failure of the economy, and drop in life expectancy between 1979 and 2005. How this led to the Putin years and now led to the war in Ukraine is covered in more detail under the Lyrarc article on Gorbachev and how he is seen in Germany. ...

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The story of the Vanguard 500 Index Fund's founding in 1976, and the inspiration from Nobel Laureate economist Paul Samuelson, is told by founder John Bogle. On August 31, 1976, the first index mutual fund, First Index Investment Trust was born. It was launched by Bogle at Vanguard. The idea he put forth was that passive index management could outperform active management with its fees, load, commission and other costs. The IPO target was $150 million, but the underwiritng resulted only in $11.3 million. The underwriters suggested cancelling the deal, saying that this was not enough to own all 500 stocks in the S&P 500 Index. Bogle's response was just the opposite- he now had the world's first index mutual fund. Here Bogle talks about the early inspiration. His senior thesis at Priceton University in 1951, in which Bogle broached the idea that mutual funds could not say they were superior to market averages, received support from Samuelson. This was followed by the article 23 years later by Samuelson in "Challenge to Judgement," an article in the Journal of Portfolio Management in summer 1974, that stated: "that some large foundation set up an in-house portfolio that tracks the S&P 500 Index." Bogle took up the challenge and offered well diversified funds at minimal costs, with a focus on the long term investment. Writing in Newsweek in August 1976, Samuelson said that his prayer had been answered. Bogle describes how his inital encounter working with Samuelson's "Economics: An Introductory Analysis," was difficult. He barely made a C-. In 1993 Samuelson offered to write the foreword on Bogle's first book- "Bogle on Mutual Funds." The relationship lasted 61 years!...

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There is a mixed picture behind the drop in investment in new oil exploration. The IEA estimates that overall investment will be down 15-20% in 2009. The number of drilling rigs in use globally fell 32% in the year to April 2009, to 2055, according to Baker-Hughes, an oilfield services firm. In America the number of rigs in use is down by 50%, and OPEC countries are cancelling 35 big projects, according to the OPEC secretary general, Salem Al-Badri. Cambridge Energy Associates estimates that 5.5 million barrels a day of capacity additions may not take place in the next couple of years, which is a third of expected net increase by 2014. Examine this a bit more closely and you find that the oil majors despite lack of access to oil in inhospitable terrain or foreign countries, are still holding up well in investment. Exxon increased capital spending by 5% in the 1st quarter 2009, and Shell and Chevron plan to invest the same in 2009 as in 2008, $31 billion and $23 billion. BP plans to go from $21 billion to $20 billion. Canadian Tar Sands investments are being reevaluated in the light of prices, and smaller companies like Devon Energy are cutting back, for Devon from $9 billion in 2008 to $4 billion in 2009. From the national oil companies the investments are holding up in Saudi Arabia, whereas they are faltering in Russia and cash strapped Venezuela. Saudi Aramco recently completed a 5 year project increasing capacity from 10m b/d to 12.5 b/d at cost of $70 billion. And another $60 billion is set aside for more investments which will be less vigorously pursued as Saudis have 4.5m b/d of idle capacity after production cutbacks by OPEC. Petrobras plans to increase its investment by 55% to $174 billion in the next 5 years in offshore discoveries challenged by deep waters and thick layers of salt. The oilfield services companies like Schlumberger are cutting back, with Schlumberger cutting investment in 2009 by 13% to $2.6 billion and shedding 5000 jobs. Baker Hughes shed 3000 jobs. Mature fields are also receiving less investment, so that the drop from mature fields will be 9.4% according to IEA instead of 7.7% projected earlier with larger investments. The picture described above shows investments by the Saudis, the majors, oil field services firms, investments in recovery improvements in mature fields, not in a precipitious decline. The picture is of cautious and careful investment and some pullbacks as the economies of the US suffered decline in GDP of 6% in the 1st quarter 2009 over prior year and the German and Japanese economies suffered decline of 15-16%. Even the most optimistic forecasts for China do not go above 8% for 2009. In the light of these growth estimates the moderate drop in investments in new oil exploration may match the moderation in growth in Asia and the drop in growth in the USA and Europe and Japan. The forecasts of steeply higher oil prices or spikes like those in 2007-2008 are based on the notion of a quick economic recovery. See the links to economic recovery on this. These links suggest that the current surge may not last as the basics for a recovery are weak. In the US foreclosures, toxic assets, housing, consumption and savings, and unemployment all indicate a weak economy for several years down the road. And it is this weakness that the oil investment exploration budgets may be responding to in amoderated manner. The latest sign of this weakness is the spread of foreclosures to prime borrowers with job losses, link NYT May 24, 2009. The Saudi king thinks that $75 is a fair price for oil. Current prices have taken oil to $60 a barrel, even as inventories remain strong with over 60 days of supply. No spikes like those in the past are realistic in this economic environment....

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Surprisingly very little can be found on the internet on how the relationship between Apple's Tim Cook and Foxconn started and how it evolved over the two decades- a key to understanding the two decade rise of Apple since 1998 when Tim Cook, an Alabama engineer, joined Apple's Steve Jobs to rebuild an almost demolished Apple. It is also key to understanding the rise of China in manufacturing to the point of excluding all other countries, including the US, for major investments. It is also key to understanding how the social relations have been disrupted in the US, how the US workers and families suffered from outshoring on this massive scale never before seen in the US for 100 years of the Industrial Revolution since Lincoln in the 1860's. This has not significantly changed to this day as the US goes into the midterms to elect a new Congress. Mr. Trump ruffled sentiment on this issue but had little action or results to show for it to reverse this. Mr. Biden is making some headway as the US elects a new Congress in November 2022 to take up the tasks to restore American leadership in manufacturing and in technologies that support advanced manufacturing from semiconductors to renewable energy. What happens now depends on many things. Mr. Cook talks about intuition as a main driver along with preparation and hard work in his project which has done little for America and the American people, in the sense of how its communities look like, and how its families live, as they are largely excluded from Cook's Apple project. Even as it employs about 3 million workers of contract manufacturers, for the most part in China with Foxconn. Total employees in the US are 37,000 mostly highly paid engineers and technical workers. The 270,000 working in what it calls its ecosystem are mostly workers in retail stores paid much lower wages. Of manufacturing there is little on the scale in China. Not since the days of Lincoln in the 1960's who fought a civil war so that the rights of labour in the US were protected as seen in his message to Congress in the 1860's, and through the Industrial Revolution for 100 years, has something like this happened in the US. It is not about some manufacturing taking place in Asia, it is the sheer scale that excludes America from significant manufacturing, about 300,000 workers in the US mostly in lower paid retail jobs, and 3 million in China with contract manufacturers that is an aberration from history. It is about delegating an entire supply chain in manufacturing that constitutes this huge aberration.     ...

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Gilead Sciences sales of Sovaldi for Hepatitis C reach $3.5 billion in second quarter 2014. This would help double sales to $21-$23 billion in 2014. Issues are being raised about pricing of $1000 a day for 12 week course. At this pricing the new drug could reach only about 160,000 patients a year.

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For immigration bipartisan solutions such as the one Senator Lankford and president Biden and Senator Schumer worked out are the answer, intelligent solutions are the answer, as America will need to fill the vacant positions in its factories. As baby boomers retire Minnesota is short of workers as this story in WSJ shows. It is recruiting from Florida and Puerto Rico for people willing to relocate to the north and its severe winters. Marvin, $1.5 billion maker of windows and doors, founded in this town of Warroad near the Canadian border 112 years back can move but is attached to this town and its people. It has resisted trends of outshoring and keeps trying to get new workers replacing the ones retiring of the 700 workers at this factory.  About 2.1 million manufacturing jobs will remain unfilled by 2030 according to the Manufacturing Institute. This shows the other side of the immigration story where immigrants also add to meeting the needs of the Nation as they are absorbed over time. It is not immigration but the sudden surges that need to be handled carefully that is the problem as America will continue to need new workers to replace the workers who retire from its factories. ...

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London's new Crossrail system adding 10% to existing rail capacity, about 200 million passengers a year.

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Fruit and vegetable gardens one can harvest for free in the Rhine River Valley city of Andernach, a medieval city that is one of the oldest settlements in Germany. The city administration launched this project in 2010 to get more local people engaged in the outdoors in their community and raise awareness of how food is grown. The plants cover tomatoes to pomegranates. The mayor hopes other cities around the world will follow this example. The mayor Anneli Karlsson says one does not feel such a relationship to plants as when one goes out and picks out the food, the salad, that one is then going to use for dinner that evening. This is an idea that cities in Europe, the US and other parts of the world can take up in the middle of the current rise in food prices, so that the interest would lead to closer relationship with the food grown around us, and in even growing it oneself in one's own garden. In the first year 100 varieties of tomatoes were planted. Then other edible plants were added. It includes Greek mountain tea leaves as well as the usual pumpkins, potatoes, grapes zucchini, kale, almonds. No pesticides so it is all organic. There aren't any fences one just takes what one needs.  The gardens are good for tourism. They also hire unemployed people to add to the workers in addition to the team of gardeners. Rising food prices are getting people to take interest in how food is grown and urban area food gardens. ...

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Pressed by tariffs from DJT China is trying to become technologically sufficient, yet this comes at a considerable cost, says this report in WSJ. Made in China 2025 was put out in 2014 when president Xi was beginning his plans for the Chinese economy. It is 2025 now and a look at the nation's investment plans show China putting $250 billion a year in advanced manufacturing sectors from automobiles to solar panels and AI, says Centre for Strategic and International Studies CSIS in Washington. This is giving China an edge but at the cost of using up valuable resources and some wasted spending at a time of stagnant government revenues. China's new production needs new markets with overcapacity such as in the electric automobile industry. This overcapacity comes at a cost when the US and other countries are restricting imports from China with new trade policies. During the DJT first term in 2016 China pulled back reference to make in China 2025 but this was temporary and China's 2021 Economic Plan puts top priority to be self sufficient in Science and Technology. Industrial support for EV's went from $15 billion in 2019 to $45 billion in 2023 (CSIS). 48% of 11 million new vehicles were EV's in 2024 with BYD and Geely the main ones of 100 brands. In shipbuilding $132 billion was invested in 2010-2018 taking China from 5% in 1999 to 48% of total manufacturing of shipbuilding in 2025 worldwide. The same is true for manufacturing aircraft and chemicals. ...

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Steps taken by Secretary of State Tillerson are drawing criticism from Senator McCain and Democrats in Congress for weakening the diplomatic efforts of the U.S. Before taking office Tillerson, who believes the State Department has a bloated staff, announced a 31% cut in its budget. A year later  the cuts are leading to the departure of many senior diplomats. Some like Mr. Miller have received only a few minutes to talk to Tillerson, six top career diplomats were fired by Tillerson. Most hiring is stopped and a $25,000 buyout is being promoted to get 2000 career diplomats to leave by October 2018. This report describes a retirement class for diplomats with 26 senior employees, including two acting secretaries of statein early 50's who would normally wait many years before retiring. The top two position ranks at State are career ambassador and career minister. This is cut from 39 to 19. Political appointees are also missing to fill positions with only 10 of 44 political positions filled. Some experts see a loss also in diversity as this happens. Differences between the Nikki Haley, who is the next senior official in America's foreign service and a potential successor to Tillerson, and Mr Tillerson are also complicating the situation at the State Department. During the Obama and Bush administrations experts cited the weak role played by the institutions such as diplomatic services in promoting America's role in the world. This was not corrected in any significant way in the last decade. The position of the diplomatic service has weakened further, along with the abandonment of America's leadership role under the presidency of Mr. Trump. It will require a future president's concerted effort to restore the diplomatic service under new leadership and with a new generation of diplomats more in tune with the multipolar world of today.   ...

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About what sort of a leader Liz Truss will be the BBC's Nicholas Watt says it will be someone who cares, and will find a way to support the public with the cost of living crisis. Reports in the Guardian show she is likely to set up the freezing of energy bills at the current level of 1975 pounds with a 100 billion pound plan. That plan would involve commercial banks depositing cash in a state backed fund that would be repaid over 10-15 years. Of all the qualities seen in Truss the most is her adaptability and a sense of going with the groups that cares deeply about things. This is one reason why she supported the Brexiteers. A quality she shares with Boris Johnson is her affability, a sense of genuine concern for people, that has helped someone who was a Liberal Democrat, and had parents who were pro-Labor, and who was in Remain, easily act as someone who was always a Tory Brexiteer. One thing she brings from her father who is a Math professor is her passion for math says Watt, saying also that anyone going to 10 Downing Street to interview her needs to be ready for a tricky maths challenge. ...

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The former president having 81% of the vote for non college educated in the primaries and  small percentage of votes among college educated means that if elected it would be that a whole population of college educated people are being effectively disenfranchised in choosing the government. It means that democracy that took over 200 years to include people with less education and income in selecting a government has moved in 2024 to doing the opposite excluding the educated with all its implications for good government of such a lopsided state of affairs. A recent poll shows 81% of Haley's 250,000 votes in the Republican primary would not vote for the former president. Haley won moderates by 61% to 31%. Trump won those without a college degree by 82% to 13% for Haley. Trump support huge in rural areas, Haley's in the suburbs.This shows how different this Republican party is from that even as recent as 2015. In fact Gallup has found that in 1999 the Democratic party was a plus 14 percentage points for non college educated and in 2024 the Republican party is a plus 14 percentage points for non college educated. Among postgraduate educated the gap was 8 percentage points in 1999 and now has widened to where Democrats have 60% to Republicans 21%. ...

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Britain has fallen way behind under Conservatives Tories misrule. On just about all indicators of the economy the US is ahead of Britain, on cost of living, on investment in infrastructure, on chips and science, on unemployment and on economic growth. The US economic growth was 2% compared to 0.5% for Britain.  Britain under the Tories over the last ten years lost so much ground fighting for Brexit and hurting it's economy. The Tory party is itself torn apart again today by Farage's Reform party, much of it from poor leadership- Cameron, Boris Johnson, Sunak. The result today is that Labour's Starmer says he has a 22 billion pound gap in the Budget that the Tories Conservatives have left him, a hole he says that will lead to Labour cutting winter fuel payment for pensioners this winter.  The US with president Biden is so far ahead of Britain with $1 trillion in investments taking place under the Inflation Reduction Act and $53 billion under the CHIPS and Science Act. Harris plans to build 3 million homes and offer $100 billion to small business to spur growth. There is just no comparison and owes much to president Biden and Harris, and to senior Republicans who supported the administration on the economy. ...

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Arguments that are expected to be used by both sides before the U.S. Supreme Court on the health care law. At the heart of this is the 1942 decision, Wickard v. Filburn, on the limits of federal power. Mr. Filburn, was an Ohio farmer who questioned a 1938 federal law that imposed a penalty on every extra bushel of wheat on his farm beyond the stipulated amount. The decision was unanimous and went against Filburn. At issue is whether the federal government can impose a penalty on individuals for not buying health insurance. Justice Robert Jackson wrote in that case: "Even if appellee's activity be local, and though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress, if it exerts a substantial economic effect on commerce." The Obama administration's argument in its brief is that the decision of individuals not to buy insurance, like that of Filburn to plant that extra bushel, has larger effects beyond the local one and serious consequences for the whole country- it raises insurance rates of people in states across the country and makes hospitals bear the burden of caring for these uninsured people. For over 50 years the Supreme Court has largely supported the idea behind the Filburn decision, except in 1995 and 2000- these two decision invalidated laws made about guns near schools and violence against women. The Court ruled that the activities were local and noncommercial and beyond the federal power to regulate interstate commerce....

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Brazil depends on private financing for agricultual production by farmers from companies like Cargill, ADM and Bunge. These companies finance about 40% of Brazilian farmers financial needs, though this year it may drop to 25% as credit tightens. They provide this money in advance cash payments and loans in exchange for future delivery of grain. This has led to a,rapid buildup of agricultural production and the infrastructure and roads needed, making Brazil the second biggest producer of soyabeans and accounting for 25% of world production. Now Bunge has cut advance cash payments by 70% since December 2007 according to company filings. ADM and Cargill have actually expanded the amount of credit available. But Soyabean and Corn Advisor, a consulting firm in Illinois estimates the cost of producing the 3 main crops in the state of Mato Grasso, the soyabeans, corn and cotton, will increase by 42% in 2008 over 2007. So farmers are faced with higher debt especially because this comes on top of accumulated debt from prior years when there were higher exchange rates in the early 2000's. Now Brazilian farmers are faced with falling crop prices, rising costs of farm supplies, unfavorable real-dollar exchange rates, and tighter credit, similiar to the situation playing out in the American farm belt. The plantings are smaller this year for soyabeans. And many farmers are forgoing debt payments and letting banks repossess farm machinery in Mato Grasso state. The overall impact of this will be lower global farm production and the impact will be felt in Brazilian GDP growth rates. ...

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Dubai's sewage system is not keeping up with the rest of the sewage system. For homes not connected to the sewage system the sewage is transferred by tanker trucks and sometimes tanker trucks will unload the sewage on desolate streets outside of town. Also treated sewage water is used in sprinklers in public parks in Dubai but this water may ot be healthy or have a bad odor so some residents ask their children to stay inside when the sprinklers go on. So where is the $300 billion thats supposedly going to be spent in the next 10 yeas and where is the money thats being spent now going for something as basic as sewage systems to be inadequately funded and tackled? It also shows the imbalances in development that go on side by side in the developig countries. In the rush for western style living a lot of other things may be happening or neglected. In China basic labor rights, food and drug safety, and pollution of the nation's water system, and contamination hazards were left untackled or ignored as a lot of money went into new infrastructure and western style living for those able to acquire it in the cities. Thus the substandard housing with neglect of safety inspections, supply of shoddy materials for building and the corruption which made a lot of this possible, especially painful when it came to collapsed school buildings in the Sichuan earthquake, is a recent reminder of these imbalances in the developing countries middle classes making a rush to acquire western standards of living. In Dubai sewage is rising by 25% a year and one sewage plant that is 30 years old is all that Dubai has to meet its expanding sewage needs!!!...

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When experts say corporate earnings and balance sheets are healthy this is because they are speaking of the situation in aggregate. Companies that benefitted from the commodities boom like the oil companies and companies like Microsoft and Apple have hundreds of billions of dollars, but this is very deceptive and misleading. About two thirds of nonfinancial companies, 1600 companies, carry a junk rating according to S&P. How does this compare with earlier periods? Its up 50% from the beginning of the last bust in 2000 and 40% higher than in 1990. Also Wall Street hugely expanded the market for speculative floating rate loans with $1.2 trillion raised like this in the last 4 years to 2007, according to Thomson Reuters. And the junk bonds are much junkier. Between 2003 and 2007 lenders financed $194 billion worth of bonds in the bottom tier of non investment grades with B- or below. And that was twice the amount of the previous 4 years. Histoically it should be noted 23% of bonds in this group default within 3 yearsafter they are issued vs just 3% in the top 3% of junk. Which companies are likely to default? Amusement park operator Six Flags, construction products maker Georgia Gulf, trucking company Swift Transportation, and sports equipment maker Easton-Bell Sports. Private Equity owners who have loaded the companies they own with debt also could default. This includes real estate brokerage operator Realogy, newspaper company Tribune and pizza chain Uno Holdings. S&P's estimate that the default rate among US junk rated borrowers will jump from 1% last year to 4% this year but other experts estimate it at around 8%. And if history is any guide it will probably be in double digits. After the 2 lending booms the one in late 1980's for LBO's and commercial real estate and for telcom and tech in the late 1990's default rates reached double digits. And with a recession one expert Fridson of research service FridsonVision estimates default rates of upto 16% for two consecutive years considering the huge amount of debt that has built up....

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InterContinental Hotels plans to have a new Hualuxe Hotels and Resorts brand upscale hotel chain in China. Plans call for hotels in 100 Chinese cities in 15-20 years.

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The Kingdom of Saudi Arabia is building huge aluminium smelters powered by crude oil. Some of these aluminum smelters are near new economic cities coming out of desert landscape. This is part of an effort to create new jobs for young people at the cost of about $600 billion. The Saudi unemployment rate for young people is officially 12%, but probably more like 24%, because there aren't that many of the kinds of jobs which Saudis would accept. But a smelter like one being built on the Persian Gulf Coast creates about 10,000 jobs, and even 10 of these smelters couldn't create more than 100,000 jobs, and takes up 600,000 barrels a day of Saudi production. With a population of 24 million there is a need to create more jobs in which these smelters make only a small dent. Most countries use natural gas for electricity and for a high energy consuming industry like aluminium use natural gas. Because Saudi Arabia needs a lot of electricity to power heavily subsidized and wasteful use of electricity and has not been able to get natural gas production upto where it should be, the government has made the decision to use its crude oil for producing electricity to meet its growing needs. This means a lot of crude is being used in a manner that its normally not used and quite wastefully because its heavily subsidized. Because of the soaring electricity needs the head of the Saudi Electricity Company sees the need for six big power plants to raise generating capacity to 55,000 megawatts over 7 years, about what the United Kingdom uses, all using crude oil. As production is not going up by that much it means more of Saudi crude will be used up in Saudi Arabia and not available for export. The figures show that Saudis used more than 2 million barrels a day in 2006, up 6% from 2005 when Saudi production dropped by 2.3%. Just to remain level with the current production of 9 million barrels a day the Saudis have to bring an additional 600,000 barrels a day each year to make up for depleted and declining wells. And it is becoming more difficult to increase capacity. Apart from the fact that more Saudi oil will be in future used up by a growing population, there is a question about whether the investments in aluminium, petrochemicals and new economic cities estimated at $600 billion in future years is the best allocation of resources to create jobs. If oil prices decline and oil revenues decline with prices then these projected investments especially in the economic cities and costlier projects may have to be abandoned In that situation there will be more oil available for domestic use but the situation for unemployment may not be much improved. ...

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India recorded 100,000 cases in one day on April 5, 2021. About half of these cases are in one state Maharashtra. Most of the cases are in about 6 states. Super spreader events such as cricket matches, weddings and social gatherings, political rallies with elections in states of Tamilnadu, Kerala, West Bengal, and Holi festival, are increasing the rate of infection. People have become lax in wearing masks and following the safety protocol after cases dropped to less than 15,000 for the whole country in February. This report says variants also are playing apart. Google Mobility Reports have shown that movements around retail areas dropped to about 80% below regular levels in the middle of the national lockdown in spring of 2020, and have come back up to about 20% below normal levels. When the winter surge did not happen, and the vaccination drive started in January in India people became less vigilant, allowing infections to increase. The vaccination drive is accelerating and open to everyone over 45 years. About 80 million doses have been given and the target is still for 300 million doses by August.  ...

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Did you know that SUV's are the second largest source of emissions after Power. We hear a lot about aviation which is much smaller but little about SUV's in the impact on climate change. SUV's make up about 40% of cars in Britain, and higher in the U.S. at 43%, 40% worldwide an astounding sixfold increase from 32 million to 200 million since 2010. People may even be driving an SUV and talking a lot about climate change.

Any savings from electric cars expected to grow from 2 million to 20 million by 2030  will be offset by more SUV's on the road. This is the view of the International Energy Agency in its recent report. Again all the talk about electric cars as a way to address climate change misses what is really happening in automobiles. Even in China the SUV's make up 42% of sales, and in India 30%. It is more profitable to make SUV's and they are harder to electrify adding 25% to energy consumed compared to cars. 

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Goldman Sachs Group is in negotiations with the U.S. government to admit responsibility for its role in the 1MDB corruption scandal in Malaysia and pay a $2 billion fine. The WSJ reports that Goldman raised $6.5 billion for 1MDB, or 1Malaysia Development BhD. Money raised was intended to be used for development and infrastructure in Malaysia. WSJ points out that it was misused by Malaysian government advisors under the government of Mr. Najib Razak, and 2 Goldman bankers. Goldman pursued $600 million in fees and ignored red flags that this misuse of funds was happening. Malaysia's newly elected government of Mr. Mahathir Mohammed is trying to clear up the mess of the previous government of Mr. Najib Razak, and has charged Goldman in a separate criminal investigation including 17 former and current employees of Goldman offices in Asia. Mr. Mahathir Mohammed came to power on an anti-corruption platform. The WSJ was the first to look into problems at the development fund, which it has continued to do for many years, helping Malaysia redirect development finances for growth. ...

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An investment of $1000 in Deutsche Bank shares in 2015 would have led to loss of most of the capital - loss of 75% of it, says this report in DW.com. For years Deutsche Bank chased profitability but the results are dismal. Recently 18,000 jobs were slashed and the bank is now accepting the inevitable shrinking. It all started with with chasing profitability in the U.S. as an investment bank leading to deep losses during the 2009 financial crisis. While German and Swedish teachers as shown in this weeks stories from Europe show struggle to make ends meet on low salaries, jobs in banking have continued to pay even when their are steep losses as at Deutsche Bank. This report argues about who is responsible for high severance pay at banks investors, shareholders, supervisory boards or regulators. Ultimately it is about what choices a society makes, and about the importance it gives to education compared to other occupations, and to good governance across the board without exceptions. Developed countries sometimes fail to learn the lessons of the past in the chaos of the times. ...