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When Paulson met with his staff a few days ago he stamped his hand on a marble table asking his staff to stop their arguments with politicians who supported Fannie and Freddie because it would result in a war which he did not want as reported in the New York Times recently. Representative Barney Frank is mentioned as one of the politicians supporting the management of Fannie and Freddie. So it happened that to the very bitter end these managers used their lobbying and political donations to distort the policymaking progress right under the eyes of the Republican administration that knew what was going on and media like the Wall Street Journal that has warned about the dangers at Fannie and Freddie for years. One question remains why under the original mandate for Fannie and Freddie were the companies not banned from political donations and lobbying as they were backed by a government guarantee and at the same time could distort the process of supervision by lobbying and political donations to Congress if this was allowed. So in the end its the biggest failure of the political process and of setting up of such companies that once set up they were beyond anybody's control. Josh Rosner, an analyst at Graham Fisher an independent research firm in New York, makes an apt comment: "since 2003 when these companies' accounting came under question, policymakers have done nothing." One can repeat nothing, and the politicains in Congress who received the donations will go on with their political ways while the government and the public shoulder the burden of billions of taxpayer dollars in the biggest bailout ever, considering the size of these two companies and what at stake for the country's housing markets, and considering that foreign governments like China have invested billions of dollars in these companies and needed assurance to continue to buy and hold Treasury bonds....

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What is the role of a small wine importer of European wines who supplies local stores in NY city, and other similar business, in a issue of $1 trillion trade imbalances that destroyed American manufacturing and millions of jobs as large US business corporations shipped manufacturing to China? The trade deficit with China has led to loss of 3.8 million jobs, 75% of them or 2.9 million in manufacturing.  Go back to 1990 and Beijing was a city of bicycles not cars. If Beijing shifted to a open economy and simply imported products from the US and Europe as it had done since 1700 it would have remained a backward agricultural economy. It took 20 years of focused effort after 2000 for China with US technological assistance to excel in manufacturing, as the US had done after 1920. Can or cannot the US excel in Manufacturing with its own focused effort and restore jobs and decent wages to the American people, that is the question. That a $1 trillion deficit that has already destroyed the US manufacturing and its capacity to defend itself by rapidly building up the US Navy, is that not an emergency, then what is, is also the question, and the role, the duty, of the president of the US in such a situation. The federal appeals court has allowed the DJT Tariffs to remain in place till it goes to the US Supreme Court. Today May 30 the WSJ in a front page article shown here says the one California shipyard could assemble a supply ship in 5 days in 1942. China's independence in the fight against Imperial Japan and the Kwantung Army's adventures, and the independence of Europe in the 1940's depended on this vital US capacity. Is this forgotten? FDR acted step by step by 1938 to restore the US lost capacity at that time, what is the role of the president today? ...

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China decides to go ahead with a reception honoring the 40th anniversary of the setting up of diplomatic ties with Japan in 1972. Hu Shuli, editor in chief of Caixin Media, economic journalist, says job losses for Chinese working in Japaneses owned companies will hurt China. China received $12.6 billion of Japanese investment in 2011, in comparison the U.S. received $14.7 billion, according to Japan's External Trade Organization.

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This report in the Economist points to the improved situation for Mexico after the scare from Trump's plans to build the wall and deport large numbers of immigrants. The peso dropped by 15% between mid November 2016 and January 2017, but has since recovered, and non-oil exports were up 5.5% in February 2017 over prior year with the manufacturing growth in the U.S.  Growth forecasts are now up from about 1% GDP growth previously to 2% for 2017, close to the 2.3% in 2016. Much of the change in mood in Mexico is a result of the failure of the early travel bans being blocked in the courts, the failure to get health care legislation through Congress, and the effort by the trade advisers and economic advisers around Trump to move Trump's positions more to the centre and closer to traditional Republican party positions. Wilbur Ross, the Commerce Secretary, says " a sensible agreement" can be reached with Mexico. Peter Navarro, trade adviser, talks about making "a mutually beneficial regional powerhouse." Robert Lighthizer, a veteran from the Reagan days, is likely to be made the new U.S. Trade representative. Still as the Economist points out the "20% border adjustment tax" continues to be supported by Paul Ryan in Congress to pay for tax cuts. But certainly the mood has lifted in Mexico in the first 100 days. This is true for economic policy in relation to China and Germany, and the close circle of Ross, National Economic Council head Gary Cohn, and Secretary of State Tillerson is moving Trump to the centre in policy statements to get things done. Mexico is faced with internal challenges of reestablishing the rule of law, improving infrastructure, reducing red tape and corruption, addressing problems in the education system, to promote economic growth. These challenges may prove to be as large as the external challenges were once thought to be. ...

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How the energy business sale of gas turbines to provide electricity in the middle east is boosting GE's energy business worldwide, increasing sales to over $20 billion in 2007, at the last peak in 2002 sales reached $22.5 billion for GE's energy business. Couple of things to note. GE's revenue is growing at about 20% a year in the middle east. Its sales in the middle east now exceed China's with $8 billion in Middle East for 2007 vs. 6 billion in China. By 2010 sales from China India Brazil and Middle East will total $50 billion compared to 30 billion today. thst is an increase of 67% over 3 years. Power is a big chunk of this in addition there are aircraft engines and health care equipment. See the other article on middle east growth July 19, 2007 WSJ. About half of the population of 300 million in the middle east is under 20 years of age. Also note the last runup in GE's stock price was from its surging energy business in the 1990's.

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Daimler and China's BYD Company are setting up a 50-50 joint venture to develop an all electric car for China's market. The total investment is for $87 million and the venture name is Shenzen BYD Daimler New Technology Company.

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The Economist magazine points out that even without the one-child policy birth rates would have declined in China because of rising participation of women in the work force, education, delayed marraige, and the high cost of education and housing for more children. As China pursues a two child policy starting in 2015, many of the same factors are at work and many women are seen as unlikely to have two children. The Economist says the right policy would have been to scrap this policy altogether. This may actually happen as China sees the social and economic factors behind the falling birthrate continuing to operate limiting the size of families, and creating problems of rapidly aging society as in Japan. Latin America provides strong evidence to support the Economist magazine's point because of the falling birthrates in Brazil and Mexico for social and economic reasons.

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Tokyo governor Ishihara says he does not want to see Japan become something like Tibet.

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India's emissions rates up by 57% and China's by 34% in the past decade. U.S. contributes 25% of the world's greenhous gas emissions.

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The huge risks the misallocated stimulus capital from real estate speculation poses for the Chinese economy. China's government rapidly expanded lending after the 2008 global financial crisis. One estimate is that about 10 trillion yuan in new loans were made in 2009, over twice the amount of 2008, expanding the loan portfolio and money supply by one third. A major problem is vacant homes as Chinese put their money in second homes as an investment. Chinese are not investing in the stock market because of the volatility, and with the low yields in bonds and banks money is going into real estate. According to a Morgan Stanley economist, about 25-30% of private commercial and housing space is vacant. This happens just as middle class Chinese are being priced out of the housing market. Prices went up by 12% in the housing market this year according to the China National Bureau of Statistics. Couples wanting to leave their parent's homes find it difficult to do so. It was the topic for a Chinese TV series "Dwelling Narrowness." ...

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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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The political risk in China as the change of leadership takes place in 2012, and with the removal of Chongqing party chief Bo Xilai. The slowing of manufacturing activity and slowdown in growth expected in 2012-2014. Export growth declines to 6.8% from 14.2% in the fourth quarter of 2011. Quarterly surveys by the central bank shows demand for loans is dropping. And the HSBC purchasing managers index shows a reading of 48.1 in March, declining from 49.6% in February, showing shrinking manufacturing activity in China- anything less than 50 means contraction is taking place.

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At the end of the 2012 Communist Party Congress in Beijing, Xi Jinping assumes the post of chief of the Communist Party of China. He also assumes the post of head of the Central Military Commission, which makes him head of the armed forces of China. Li Keqiang, the incoming prime minister, is the only member of the party Politburo Standing Committee selected by current president Hu Jintao. Jinping is supported by Jiang Zemin, former president. Four of the other five members are older party leaders placed in these positions by former president Jiang Zemin, who succeeded Deng Xiaoping and started China's three decade long modernization. The seven member Standing Committee governs China by consensus. This will limit the room for change, especially as the other five members are in their mid 60-s and favor the status quo. Xi Jinping is 59, Li Keqiang is 57. Xi becomes president in the spring of 2013, and Li becomes prime minister to run the government ministries. The optimism for Li who is the best educated of China's leaders, holding a doctorate in economics from Peking University, and an early interest in constitutional law, is restrained by the institutional arrrangements that favor the status quo. Some experts in China see the new leaders likely to make major changes only if confronted by a crisis. In his live television acceptance speech Xi focussed on China's "rejuvenation," with improvements in the party bureaucracy, tackling corruption, and improving the lives of ordinary people, for better schooling, jobs, incomes, health care, better housing conditions, social security and the environment. From the rush to modernize and build infrastructure attention is now shifting to creating better conditions for the Chinese people....