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A former WSJ Detroit Bureau chief says that if GM is to receive help it should go into government receivership, old management and the board have to go, shareholders would lose value as shares become worthless, and old union contracts have to go, and only then would the industry get back on its feet. The same should happen for Ford and Cerberus, and the shares becoming worthless would take away the control that the Ford family has of the company, giving it a fresh start with new management. He is saying what many have thought true for a long time, management of these companies have failed Detroit and the midwestern states for a long time, for decades in which management has simply protected its own interests and avoided taking the steps needed for renewal of the companies. The few changes have simply come so late and are inadequate in this crisis.

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The view of a Prof. of Finance at New York University's Stern School of Business on the auto industry and the destruction of capital. About $110 billion of destruction of capital between 1980 and 1990 for GM and Ford, and the destruction of $182 billion in capital that was invested in GM between 1998 and 2007. From a Finance point of view this is society's capital that can be better invested. The total $465 billion invested in GM and Ford between 1998 to 2007 says Yermack could have purchased all the shares of Toyota, Honda, Nissan and VW. The job losses overstate the situation he says, as jobs would be created in other auto factories which expand as Detroit contracts, which is already happening as sales decline is less steep at other automakers such as the Japanese. Regarding the proposals to ask the automakers to build environmentally friendly cars with serious fuel efficiency, he says its like asking the cigarette companies finance cancer research, considering their lobbying efforts to gut serious conservation or environment friendly legislation....

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The lessons from the British auto industry which ran through $16.5 billion in rescue money in the 70's and 80's before collapsing as German and Japanese automakers took over its markets. One of the problems was the failure of labor relations, the other was shoddy quality just when the Germans and Japanese were improving theirs aggressively. The labor relations are a problem at the Detroit automakers and quality has also been an issue with Detroit playing catchup again and again for three decades. Management's lack of vision and leadership in fuel efficiency may have struck a fatal blow, and the concentration on overseas markets at GM without foresight and vision for the American market may now be called a failed strategy. British auto experts say that Leyland controlled 36% of the British market even in the 70's before gradually going out of business and its start was even before General Motors.

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This op-ed essay by the President of Toyota Motor Company, Akio Toyoda, talks frankly about the situation that led to the quality failures at Toyota and promises that Toyota will try to live up to the ideals that shaped its beginnings some 70 years ago. Toyota had humble beginnings in the thirties when the original founder of Toyoda was in the textile loom manufacturing business. Following a new venture in automobiles in the 1930's, for three decades Toyota was only trying to catchup with the U.S. in auto manufacturing. It started with the current chairman Shoichiro Toyoda's father -and Akio Toyoda's grandfather Kiichiro- visiting a Professor of Metallurgical Engineerig at a university in Tokyo to collect ideas and information for entering the automobile manufacturing business. Akio Toyoda seems quite cognizant of these beginnings in this essay. Action steps he mentions are a top down review of global operations, establishing an Automotive Center of Quality Excellence in the United States, and asking a blue-ribbon safety advisory group of outside experts in quality management to independently review Toyota's operations, with the findings made public. Akio Toyoda points to the lack of effective communication in quality matters in its global operations that led to the problem festering for so long. He says that in regard to sticking accelerator pedals, Toyota "failed to connect the dots between problems in Europe and problems in the United States because the European situation related primarily to right-hand-drive vehicles." Toyota also moved to address problems in its Prius and Lexus HS250h models for anti-lock braking systems....

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The CUP party repudiates the leadership of Arturo Mas following a corruption scandal in the Catalonia ruling party Convergence. Convergence led by Mas is losing support in the state in 2016.

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Jonathan Lu succeeds Jack Ma as CEO of Alibaba in March 2013.

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Alibaba's new CEO Jonathan Lu.

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New CEO Jonathan Lu of Alibaba.

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A complete breakdown in negotiations between the U.S. and Russia happens after Russia continues its bombing campaign in Aleppo. About 275,000 people and 100,000 children are in the war torn area in northern Syria. The U.S. had called on Russia to stop the bombing campaign, but Secretary of State Kerry failed to persuade Russia to commit to a ceasefire. The result has been international criticism of the Russian role in the war, and speculation on what president Putin sees Russia gaining from this intervention in DW.com and other sites. 

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After an emergency cabinet meeting and a vote in the Spain's Senate prime minister Rajoy imposed direct rule on Catalonia, dismissing the government of Mr. Puigdemont in Catalonia. He set local elections in Catalonia for Dec. 21. Rajoy was responding to a vote in the Catalan parliament with 70 in favor, 10 against and the rest abstaining, in favor of independence. As the BBC points out Catalonia has 16% of Spain's population and generates 25% of exports, 20% of foreign investment, leading to a feeling among Catalan people that they are sending resources to other parts of Spain. The vote was still far short of the large majority that would show Catalans overwhelmingly support Mr Puigdemont's move for independence. As the reality of the consequences of such a move- when the EU and other parts of Spain have shown little support -begin to be felt it is possible that new elections could bring a result like that in Scotland where the Scottish Nationalist party lost ground to the Conservative party in the recent British parliamentary election. It is significant that the BBC cites a recent poll which shows 41% of Catalans favor independence, 49% opposed. Particularly now that Catalans may have time to consider carefully the difference between redressing a grievance and making a complete break into an uncertain future outside the European Union. Also relevant is that Catalonia enjoys a high degree of autonomy, and that other parts of Spain including Mr. Rajoy's home region of Galicia also suffered under the Franco dictatorship. Even the Basque region has come to terms with the past from the period under Franco and has opted to be part of Spain. ...

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A Wall Street Journal Survey of how the credit ratings firms have performed in prediciting looming defaults. The Journal's Matt Wirz looked at 35 years of data. He found the ratings firms did not do an effective job with predicting defaults in the 12 month period before an actual default. Of the 15 government defaults since 1975 tracked by S&P, S&P's sovereign ratings division rated 12 of the countries single B or higher in the 12 months preceding the default. S&P says a single-B rating on sovereign debt signifies that the government has only a 2% average default rate in the next 12 months. For Moody's Investors Service the figures show that of the 13 governments rated by Moody's, 11 were rated B or higher one year before an actual default. By contrast the investment grade ratings of the credit ratings firms have worked better- as no government defaulted within 15 years of having a tripe-A, double-A, or a single-A rating. Ratings firms say that the ratings indicate a relative default risk for countries and not an actual default probability, a rank ordering for different countries and their relative risk. Research chiefs at investment management firms point out that once a crisis develops the ratings firms are not much help. They also say the ratings firms use static indicators like current account balances and other critical indicators for countries in emerging markets such as political sentiment and bank deposit flows get less attention. Historically bond yields have priced in higher risk premiums into government bonds before a default and investors look at the bond yields in assessing risk conditions, and not at the ratings which change only slowly. Brazil and Argentina both had a double B-minus rating in Jan. 2001. A year later Argentina had defaulted....

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Moody's lowered long term ratings on Unicredit, Intesa Sanpaolo, Banco IMI by 2 notches to Baa2. Moody's recently lowered Italy's rating to Baa2. Moody's cited the high direct exposure of Italian banks to sovereign debt of Italy and risks that the Italian government may not be able to provide financial support to Italian banks in the event banks need help.

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Mark Fields and the efforts to improve margins at Ford Motor Company. Ford's global operating margins at 6% lagged behind the 9% margins at VW and Hyundai in 2011. Ford is sixth among all automakers in profits earned on each vehicle sold..The difficulties in Europe, and fears of a slowdown in the American market create new pressures at Ford.

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Related to Mervy King's stand as Governor of the Bank of England about moral hazard, that if you let them off easy then these crises will recur and no penalty for excesses. But we can see that when this happens people who committed wrongdoing will be investigated, their reputations destroyed and the prospect of jail time.

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India's crude oil imports were sharply higher in 2011 and 2012. India's imports of crude oil for the first 11 months of the 2012 fiscal year ending March 31, show a 40% increase over the same period in 2011 fiscal year. India's import bill was $128 billion for crude oil imports for the 11 months of fiscal year 2012. Indian subsidies to lower prices for fuel are $30 billion annually. The higher prices for crude create inflationary presssures in India and restrict economic growth.