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A recent book "The Spirit Level" has become popular in Britain. It says that countries with greater disparities in income also do worse in a number of social indicators, from higher murder rates to lower life expectancy. It also affects the consensus in society which is a necessary underpinning for sustained economic development and economic growth. Inequality when it affects the middle class and reduces the size of incomes in the middle, or creates stagnation in incomes, poses large risks for society and affects economic growth. In the US the home foreclosure crisis and the lack of bargaining power of wage earners in the middle class has created this problem. This is exacerbated by the banking crisis and bad loans in the banking system. Studies show that slow growth in college graduating rates in the USA after 1970 compared to the period 1900-1970, has increased inequality, especially with today's knowledge economy. Germany is also affected by this problem as wages for workers have remained stagnant with the labor reforms. Interestingly a combination of economic growth and payments to the poor have increased the size of the middle class and its incomes in Brazil. The austerity policies in Britain will affect incomes and income growth in Britain for the middle class. In China the gap is widening quickly between the urban areas and the rural areas. And the policy of residency permits- the hukou system-which limits internal mobility from rural areas to the cities and towns, makes the inequality all the more glaring. The lack of democratic election makes the situation worse in China compared to Brazil, because free elections in Brazil enabled leaders from the working classes such as Luiz Inacio Da Silva and Ms. Rousseff to emerge as heads of government. These leaders pursued policies that would explicitly bring a more shared prosperity in Brazil compared to the leadership in China. In China policies are determined by entrenched interests in its model of development- the state-owned companies and banks and their managers, local and government officials of the Communist party, and businesses with the networks and connections with the Communist party and local governments. This is why the ginni coefficient which measures inequality has dropped significantly in China, putting it in the rank of developing countries with poor records in equality. Inflation in China, India and Africa also affects the poor and lower middle classes to a greater extent. Current trends suggest that rebuilding the middle class in the developed countries and providing fairer distribution in developing countries will be of serious importance in coming years. Especially with the likelihood of more economic crises which tend to adversely affect the middle and lower classes disproportionately....

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Friedman compares the anti-corruption movements in India and the U.S., the world's two largest democracies. The Occupy Wall Street anti-corruption movement in the U.S. focusses on the excessive influence of banks on lawmakers, regulators, and the government, through the use of campaign money, revolving door for government officials and regulators to join banks, and intense lobbying. The anti-corruption movement focusses on corruption in government at higher levels, such as the handling of government licenses, and at the basic levels of needing to bribe officials for something as simple as getting a birth certificate or other government document. Both have pernicious effects, in the U.S. excesssive bank influence leads to taking excessive risk for higher bonuses, putting the entire financial system at risk and creating a crisis in housing that delays the economic recovery. And in India the corruption leads to retarded progress, as funds to invest in infrastructure and development are siphoned off, business and entrepreneurs are required to pay bribes at each step, and ordinary people face the need to pay bribes for the most routine interactions with government officials. In the process this creates more unequal societies by skewing the distribution of benefits from wealth created to groups that are better equipped to game the system. The economic system once distorted in these ways has tendencies to take talent away from productive activity and innovation which create wealth, and direct it towards speculative activities....

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A new West Coast Model is emerging with ballot measures in the states of Washington, California and Oregon. The model is to make up for decades of faulty income distribution which favored tech communities in west coast states leaving behind people from minority communities and the working class outside tech hubs such as San Francisco, San Jose and Seattle. During this period budgets for education and healthcare, social services and essential infrastructure suffered as budgets were squeezed for local governments. Minimum wage also lagged behind and communities struggled to keep up. Washington votes for a ballot measure that raises the minimum wage to $13.25 statewide and mandate paid sick leave for workers. In California a ballot measure makes permanent an income tax surcharge on millionaires to use these funds for education. In Oregon measure 97 places a gross receipts tax on corporations with annual sales in Oregon over $25 million, raising $3 billion a year for schools, health care and other programs. The California and Washington measures are likely to pass, Oregon uncertain, say experts. And even in Oregon supporters have learned from the experience to put forward new proposals on the ballot. The Washington measure is supported by Nick Hanauer, and Zach Silk, president of Civic Ventures in Seattle, who say it is essential to put more money in workers wages to increase growth and to bring better lives outside the tech hub areas. Most of the tech booms of the last two decades have not touched the areas outside tech hub metropolitan areas. The conservative approach adopted in Louisiana and Kansas of reducing taxes first and then when holes in state budgets developed to cut education, health and other service expenditures has not worked, and it has led to the backlash in the form of the new West Coast Model, which is expected to be brought up in other states in the east and midwest. The tech hub areas have grown with the boom in tech but this has largely ignored the rural areas, communities just outside of the tech cities, and led to uneven and distorted growth shortchanging the working class and the middle class, and hurting investment in education and healthcare across each state. Bill Whalen, a research fellow at Stanford University's Hoover Institution conservative think tank ,says that its hard to deny that the balanced growth for all communities across the state has lagged far behind as the tech booms boosted growth in the economies of California, Oregon and Washington. An article in the German online site Zeit on Silicon Valley described this vividly showing how this can happen in communities sitting side by side in the San Jose area, with minority Hispanic communities and working class communties seeing very little of the benefits of growth. ...

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Black employment for adults in Washington D.C. has dropped from 62% in 1988, to 56% in 2000, and to only 49% in 2009, according to the D.C. Fiscal Policy Institute

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Green is the color of the day at the Paris Air Show.

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Porsche is opting for hybrid engine over diesel as a choice for fuel efficienct vehicles. Its designing a hybrid engine for its Cayenne SUV that will give 25 mpg and reduce gasoline consumption by about a third. The hybrid Cayenne will make it to showrooms by the end of 2010. The German market is increasingly moving towards fuel efficient vehicles and interest in climate change and reducing the impact of emissions is strong. Emissions taxes (tying vehicle taxes to emissions) are being considered in Germany and carmakers are seeing a slide in sales in the first half 2007 of 9% compared to 2006 as customers are waiting to see which vehicles will get taxed the most.

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Porsche is going to introduce a hybrid version of the Cayenne to soften its image as being high on horsepower and what it does to global warming.

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How the final legislation language and fuel efficiency manadated standards were worked out . At 35 mpg for the combined fleet the standard for 2020 is well behind what is seen in European Union countries and in Asian countries. The final language gives the EPA and the states like California the right to set their own standards for tailpipe emissions.

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Michael Getler describes the missed opportunity under President Obama for using one of America's most talented diplomats to engineer a peace agreement between the warring factions in Afghanistan- the U.S., the Pakistan army, the ISI and its support in the army, the Taliban, and the other parties such as the Haqqani faction and the Afghan government of Karzai. Holbrooke had used his experience for another President, with the same force of his larger than life personality, when he helped bring about the Dayton Accords in a similiar area of stubborn ethnic strife. Could Obama have tapped Holbrooke's skills and set aside the distractions of his personality as coming from an American with unique gifts, talent and achievement, is the question Getler asks. And is this a comment on the nature of the Obama Presidency and America's poorly invested hopes.

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The Obama administration announced a policy of increasing the number of refugees accepted in fiscal 2017 to 110,000. This will be an increase from 85,000 in 2016, and 70,000 in the prior 3 years. Secretary of State Kerry says the target is consistent  with the idea that all countries need to do more, and if we could do more we would. After 3 years of cautious policy president Obama now follows Chancellor Merkel's lead.

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The Fed acts to stabilize the credit markets till the current administration and Congress or its successor can think of the best way to inject money into the USA banking system and in helping homeowners in the housing crisis. One fact remains between 2000 and 2006 Americans took on about 3 tillion dollars of additional debt than if they had followed the earlier trajectory of spending, so they owe $3 trillion dollars more than they would have if they followed earlier spending patterns, accordingto Business Week estimate. It is this debt that will depress consumption spending for 3 to 4 years according to BW estimates till this debt can be worked down. The other estimate by BW in Street of Fear in the same issue is for $285 billion in total amount of subprime writedowns expected with only $150 billon accounted for so far in early April 2008. This means another $135 billion in writedowns will come probably this year. One anlayst Meridian of Keefe, Bruyette & Woodsfor example points outan additional $15 billion of subprime writedowns expected for Citigroup on top of the $21 billn already taken and in the worst case the writedowns could reach $60 billion. So clearly we are only half way through these writedowns. With consumption spending due for a big hit, and more big hits in the credit markets, the worst may still be ahead in 2008. ...

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The epicenter of the eathquake was in Sichuan, a province of 82 million people. Most of the buildings in the capital Chengdu were intact and suffered little damage. But buildings, homes and schools in amaller towns and rural areas suffered the most damage. This is probably because most of the buildings there used subpar orr shoddy building materials and many were never inspected or followed the building codes which are poorly enforced. Because of China's rush to industrialize urbanization is taking at a rapid pace with 15 million people moving into urban areas even little towns coming out of pasturelands as well as other urban areas. A lot of housing is going up to accomodate these people and not too much attention is being paid to ensuring that the building conforms to building code except in the larger cities like Chengdu and Shanghai and Beijing. This only exposes more problems in the industrialization such as the divide between incomes in urban areas and the rual areas where 60% of China's people still live. The incomes in the rural areas have gone up 91 % between 1997 and 2007 to $590 a year or 4140 yuan, not adjusted for inflation. Urban disposable incomes rose by 150% by comparison for the same period to an average of 13,786 yuan. This 1 to 3 ratio approximately probably conceals wider disparities between cities like Beijing and Shanghai and the poorer rural towns....

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Saving the deal between Mitsubishi UFJ bank and Morgan Stanley, done over the weekend, is huge in the dimensions this could have taken in unsettling financial and credit markets at this fragile stage, and sending all the wrong signals after the collapse of Lehman caused a tightening in credit markets. Its a remarkable effort by Treasury and the Japanese government and Mitsubishi UFJ to get a workable deal negotiated and ready for markets by Sunday. This makes for an infusion of $9 billion into Morgan Stanley by Mitsubishi UFJ and gives Mitsubishi UFJ decent terms on which to make the investment. The presence of the Japanese and American governments at the table made for extrarordinary precautions that nothing is left to chance and the details are worked out to a successful conclusion for Monday opening of markets. This is how global coordination is supposed to work and at no time was it more needed than after the Lehman collapse. An agreement with Treasury that Mitsubishi UFJ would be protected by the American government in the event that Treasury had to put money into Morgan Stanley and shareholders would lose the value of their investment. Second Mitsubishi wold get 10% dividend not on aportion of its investment but on its entire $9 billion investment, reminiscent of the Buffett deal, and is good for Mitsubishi. And third with Lehman's share trading at $9 range Mitsubishi now would pay ...

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It is very important at this time of the global pandemic not to be hard on yourself. It is best to have a positive mindset and to think positive. It is important to always be kind to yourself. This is the advice from experts in good mental health. Other advice- 1. The old advice of counting your blessings each day in the morning when we wake up or when we go to sleep is more true today than ever. 2. Staying in the present. Doing 10 or more minutes of meditation in the morning. Yoga teaches one to meditate in the early morning hours so if you are up early try this. Try sitting and place a candle light that you can concentrate on. Simply repeating OM with deep inhalations is suggested in the Mundaka Upanishad, the highly venerated book from yoga. If you want to read about it try searching for Swami Sivananda on Kindle. The Sivananda Companion to Meditation can be downloaded on Kindle from Sivananda Yoga Vedanta Centre. 3.  Thinking of the needs of others and less of one's own- as it says here experts have found that we are happier when we think of the needs of others. The self focus today is simply the wrong way of going about the task of pursuit of happiness.  4. Don't overwork. Studies show the German idea of Fierabend works that is of breaking off the work day at 5 pm, then doing something completely different, going out for a bike ride, a walk outside, cooking, friendly conversation, relaxation, exercize, hobbies. ...

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Marie Le Pen and the National Front performed very poorly in French elections. Perceptions of voters are changing. The efforts in tackling the coronavirus, effective vaccination drives, public health protection, and building access to vaccine supplies, have shown the need for good leadership that believes in a science driven direction. Immigration is no longer the issue it once was and in some polls it is seventh on the list after climate change, economy,  education, pensions. The National Front in France and AfD are losing regional elections and popularity is dropping to about 10%. The Greens party in Germany and the Gaullist Republicans in France are being revitalized. Other factors are also present. The search for authenticity and effectiveness. After dismissing a popular prime minister who tackled the health crisis in 2020 France's president Macron fared badly in recent regional elections. His party En Marche was hastily put together in the last year of the administration of Mr. Hollande, the predecessor from the Socialist party. Its initial popularity has not turned into grassroots support. Mr. Hollande, Mr. Macron, are now seen as one term presidents. It is not so much that the centrist parties are gaining as a search for parties that can provide effective alternatives in the face of the challenges placed on the world by the pandemic- renewal of supply chains. climate change, public services, infrastructure, health, education, lives of the elderly. In the US, Europe, and India, countries in Latin America, there is a growing awareness of the need to rebuild with the people in mind, the people who have suffered badly in this health crisis and the financial crisis that preceded it in 2009. ...

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The US economy is growing at a much faster pace than Europe or China in the last quarter of 2021- at 7% annualized growth in the fourth quarter up from 2% in the third quarter, according to Federal Reserve Bank of Atlanta. This compares to 2% in eurozone and 4% in China. Major US ports such as Los Angeles are processing 20% more container volume in 2021 than in 2019, while Rotterdam and Hamburg are almost flat compared to 2019 level. Consumption of durable goods has jumped 45% above 2018 levels in the US, only 2% in eurozone, according to ECB data. The factory gate prices in China are far outpacing the consumer prices in China, suggesting weak domestic demand and strong foreign demand. Lars Jensen, head of network at container ship company A.P. Moller-Maersk says the global supply bottlenecks were started by this surge in US demand with more ships headed for the US taking ships away from other places. The US economy will grow at 6% in 2021 and 4% in 2022, with wages growing 4% a year above the pre-pandemic trend rate, compared with 1% in eurozone, according to Bank for International Settlements. This is pushing inflation up in other countries by pushing up the value of the dollar. In Mexico hitting 7.4% and the central bank raising interest rates 0.5% point to 5.5%. In Russia inflation up to 8.4% and central bank raising interest rates by 1percentage point to 8.5%. The equipment investment in the US is up by 13% this year according to JP Morgan Chase, only 3.6% in eurozone, 0.1% in Japan. All this is creating a large gap between the US and Europe, US and China in economic growth and demand growth, and in income growth. ...

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President Trump escalates the trade battle with China by increasing tariffs on $200 billion Chinese goods from 10% to 25%. The U.S. says China went back on its commitments in a 150 page agreement at the 11th hour or last minute, by deleting these commitments in all 7 chapters of this agreement. These are firm commitments sought by the U.S. in a number of areas of deep concern to the U.S. and the U.S. Trade Representative Mr. Lighthizer had already conveyed the determination of the U.S. to not relent on this. In the past China was seen to go back on its commitments and the U.S. side now wanted to ensure promises were kept. The U.S. concerns cover- theft of intellectual property and trade secrets, forced technology transfers, competition policy, access to financial services and currency manipulation.  The situation has been building up fro a decade with the Trump campaign honing in on this issue of China stealing U.S. jobs, and factory closures in the U.S., because of unfair trading practices. It also led to Mr. Trump's winning election campaign in the American midwestern states. With China seen as gaining an unfair technological advantage over the U.S., most recently over 5G telecom networks, the U.S. is not likely to back down. The U.S. is less dependent on trade with China. China is more dependent on the U.S. and a lot of manufacturing jobs in China are affected by the U.S. tariffs. This is why president Trump has decided to take a strong stand, including putting on tariffs on and additional $300 billion of Chinese goods.   ...