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An August survey by Japan's Ministry of Economy, Trade and Industry, shows 40% of the country's manufacturers saying they would shift production and R&D facilities overseas if the yen remains at 85 to the dollar. It has dropped below that. Nissan will make 71% of its cars overseas in 2010, compared to 66% in 2009. Murata Manufacturing plans to double its foreign output to 30% by March 2013. By buying Dutch printer maker Oce NV in March, Canon Inc., saw its overseas output jump to 48% for the first half of 2010. Toyota is on track to produce 57% of its output overseas in 2010 , compared to 48% in 1995. The popular Prius will now be built at a plant in Bangkok, Thailand. Sony did 20% of its television manufacturing in Japan in 2010, it is aiming to do 50% in 2011. As a result Sony showed a profit for the April-June quarter, after 6 straight years of losses. Its also important to note that when inflation is taken into account the yen has not strengthened the way it appears, which reduces domestic pressures to dampen the yen's rise. Tohru Sasaki, head of foreign-exchange research at J.P. Morgan Chase & Co. in Tokyo, says that in inflation-adjusted terms, the yen is 30% below the rate it reached in April 1995. U.S. consumer prices have risen by 69% since 1990, in Japan the prices rose only 8.5% during the same period. In inflation adjusted terms the April 1995 exchange rate of 80 yen to the dollar would be 56 yen to the dollar today. Japan's exporters can also benefit from the fact that a large part of Japanese trade is denominated in yen- according to Japan's Ministry of Finance 48% of exports to Asia were paid for in yen in 2009. Like China and Germany, Japan remains highly dependent on exports for growth- which provide two thirds of its growth. The yen's strength increases the outflow of production facilities. In July 2010, 10.3 millon workers were employed in manufacturing in Japan, down from 12 million in 2002. Japan's unemployment rate was 5.6% in 2009....

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Signs of a serious bubble in house prices in Canada. Home prices in February 2011 rose 8.8% from the year before, to 365,000 Canadian dollars. This is more than double the average home price of C$158,145 in 1999, according to the Canadian Real Estate Association. A comparison with the U.S. shows home prices going up 58% between 1999 and 2006, according to the National Association of Realtors, and falling 18% after the subprime mortgage crisis. By contrast home prices in Canada went down in 2008-2009 during the global financial crisis but are now back up and surpassed the previous high. This suggests the Canadian real estate market is facing a serious bubble comparable to or exceeding the bubble in the U.S. Trends that have supported the market such as Chinese buyers in Vancouver and Toronto, depend largely on the strength of the high economic growth in China and overseas buyers. Other weaknesses- the Canadian Association of Accredited Mortgage Professionals pointed out in a study in January that of the 400,000 first time home buyers during 2010, about 50,000 would have high-debt service ratios if interest rates, now at between 2-4%, were to rise to 5%. The Canada economst at Capital Economics, David Madani, says he expects a correction of 25% in the next 3 years, as this boom unwinds. He points out that house prices are now 5.5 times disposable income per worker, compared to an historical average of 3.5....

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The aggressive effort of the US central bank, the Federal Reserve, to increase interest rates to dampen inflation will have an effect on Asian currencies and trade. The Japanese yen lost 14% of its value and the Korean won 8%, Chinese yuan 5% since the beginning of 2022. This is a result of the widening gap between interest rates in the US and Japan where the interest rates have not been increased due to mild inflation.  Asian trade is done in US dollars and exports to the US are invoiced in dollars. Citigroup says about three quarters of trade in Asia-Pacific is invoiced in dollars. Weaker currencies would translate into higher effective prices for imported commodities - energy and food. This pushes up domestic inflation and hurts manufacturing.   Add to this a shift in the US demand from goods into services in 2022 and there is weaker external demand for the economies of Asia. This will exacerbate the slowdown in Asian economies. Many countries such as South Korea and Thailand have increased their external borrowing in dollars. Debt service ratio was 21% in South Korea and 14.5% in Thailand, according to Bank for International Settlements. Years of low rates allowed governments in Asia to borrow more without incurring high interest bills. Now that situation is changing quickly and will result in difficulties for South Korea and Thailand says this report in WSJ. In the last 10 years Asian economies excluding China increased debt to GDP ratios by 15 percentage points, according to Gavekal. The result might not be debt crises as in Sri Lanka but painful slowdowns in economy with combination of loss in external demand from the US and higher inflation, higher interest bills. ...

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The NASDAQ Internet Index is up 46% in April 2014 over the past year, even though it was down 12% in March-April 2014 as investors grew wary over high price rises for stocks in the "cloud," "big data" and "social" fields. Investors turned to old tech stocks such as Microsoft which were seen as value stocks because of lower price and valuations. Gallagher suggests watching the IPO market for signals of where this market is headed. In the 1st quarter 2014 companies raised $10.6 billion in the U.S., the busiest quarter since 2000. 103 companies submitted initial IPO filings in the same quarter. Venture Capital has invested $29.4 billion in 2013, an increase of 7% from 2012, according to MoneyTree Report. Even though the NASDAQ Composite Index is down 5% over the last 30 days, Gallagher points out that the NASDAQ has witnessed 4 drops of about 10% since 2010.

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Strange as it may sound the retired coal power stations in Europe were back in operation and highly profitable during the COP26 Glasgow conference. Unknown to speakers at the conference calling stridently for complete coal phaseout instead of rapid phasedown including speakers from the European Union and from Tuvalu (population about 1500) this was happening not just in China but also in Europe. This was dictated by energy economics as coal prices have come down by half and natural gas prices have risen ten fold, and natural gas shortfall in Europe.  This report in the WSJ shows coal and lignite plants making huge profits for electricity companies in Europe. As a result the calls for phaseout were seen as hollow by China and India in the last days of the conference leading to the language change in the final agreement to "phasedown of fossil fuels." Natural gas producing power stations are losing 2.26 euros for every megawatt hour, compared to 57 euros per magawatt hour for coal powered power plants, 4 times as high as the previous highest levels in 2017, as reported in the WSJ. Estimates are for coal power stations to be more than gas rivals till 2023. Germany says WSJ still has highest level of addiction to coal and lignite. It generated 40 gigawatts of electricity from coal and lignite in September and October, the highest for these 2 months since 2018, Poland is doing the same exporting its coal based power to the rest of Europe. In the same way coal power plants that were idled are back producing electricity in Spain, Portugal and in UK home of the COP26 Glasgow conference.   ...

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President Xi Jinping's Made in China 2025 plan has spurred startups in electric car technologies, and raises concern about overcapacity. Electric cars is one of 10 sectors in the Made in China 2025 plan to promote global competitiveness for Chinese companies and domestic dominance. China Construction Bank and National Development and Reform Commission announced a $47 billion plan. Direct government subsidies of $15 billion over last 5 years have also increased the number of startups.

All automakers in China are required to produce electric cars. The electric cars sold in China at 777,000 make up half of the electric cars sold in the world. 

Local governments in places such as Anhui province have invested in electric car companies. One such company Singulato in Tongling, Anhui, is profiled here, with its first electric car expected by the end of the year priced at $43,000.

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The impact on stock markets around the world of the protests in Egypt. The Nikkei fell 1.5%, the Kospi index fell 1.5%, on Jan 31, and the Dow Jones average fell 166 points on Friday Jan 28, 2011. Oil prices increased by 3.7% to $89.34 during the week of protests in Egypt. The Bipartisan Policy Center in Washington estimates a 5% increase in the price of oil takes away $5 billion dollars from the US economy. Sam Stovall, chief investment strategist at Standard & Poor's Equity Research, says that a boxer rarely gets knocked out by a punch he is expecting, and this could be what starts a decline after the market fought off fears from sovereign debt crises in Europe and interest rate increases in China. What makes Egypt significant? The Suez Canal is ony a 1000 feet wide at the narrowest point. Supertankers carrying oil do not pass through the canal but rely on smaller vessels and on the Sumed pipeline. About 2.9 million barrels of oil a day, 2.6% of global oil production passed though the Suez Canal and the pipeline according to the US Energy Department. Because prices are determined at the margin this is a lot of oil, especially considering the global spare production capacity is only 2.5 millon barrels a day. The immediate impact would be on Europe which gets much of the oil refined in the Middle East and shipped using the canal and pipeline. Egypt is also a major importer of wheat, importing more wheat than any other country. Any increase in imports to placate consumers would increase wheat prices. Already wheat prices are impacted by floods in Australia, a long drought in Argentina, and forest fires in Russia. Inflationary impact of rising food prices has been felt in China, India and other countries....

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The climate change bill that passed the House 219 to 212. When the program begins in 2012 the estimated prie of apermit to emit aton of carbon dioxide will be about $13. This is projected to rise steadily as emission limits come down, but there is aprovision to prevent a surge in costs. In the early years of the program amajority of permits will be given out free to keep costs down. The Congressional Budget Office estimate is that an average American household will pay $175 ayear more in energy costs by 2020 as aresult of this bill, while the poorst households will recveive a rebate to lower their energy costs by $40. WHile the bill has been watered down form its original, the fact remains that this is the first climate change bill America has passed in decades. It is welcomed by Chancellor Merkel and the Germans who want to see the USA as akey negotiator in future talk on global warming.

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This report in the WSJ makes the America centric thinking mistake of forgetting where China started from in assessing progress and China's new priorities. In 1960 the World Bank shows China per capita at $90 which does not change much till 1990 when it was $300, the Deng opening to western technology and capital pushed it up to $3000 the year 2000 (US $36,000) and $4500 in 2010 (US $50,000) when the global financial crisis hit. Since 2010 the Chinese economy was burdened by high local government debt and struggled to get to $10,000 in 2020 under Xi Jinping's first two terms as president. Yet it paid a huge price for this -the chance of Bo Xilai (2014) upsetting the twin banners of Science and Modernization of the May 4th 1919 movement that set the course of China for 100 years uninterrupted through the Nationalists, the Japanese occupation, the Maoist CCP, the Deng CCP opening and Jinping CCP pullback. The huge inequality was seen as an opportunity for Bo Xi Lai or some other leader to capitalize on moving China in an unknown direction that posed risks for the future of China. Even then the first preference of Xi would be to carry on with what had worked after Deng. Yet it was clear that working class votes were shifting the dynamics of elections after the Trump election and closing the doors to open access to western capital, technology, and investment. With Trump in erratic and uncertain ways, with Biden after the elections of 2020 consistent and with single minded determination to limit flows. Not just Xi, any other Chinese leader would have had to have the internal discussions about the need to shift back to a model China was familiar with and one that worked before- that of state intervention in the economy, that of reducing the inequalities that posed risks for the CCP's survival as forging a path for stability to carry out the twin banners of the May 4, 1919 Movement - Science and Modernization as China's salvation. Unlike the hysteria about China posing a challenge to the US these internal debates of Xi and the party may have concluded that the US with about half the population of China's as it grows with immigration in the future and multiple times the per capita GDP was a country that no other country was going to come close to. In this sense the supply chains are deceptive as these are likely to be completely redone under the Biden administration to bring most important manufacturing back to China. It is in this context that Xi had limited room to manoeuvre and decided to focus on stability for the long term to fulfill China's dream of the May 4, 1919 Movement of the last 100 years for Science and Modernization casting aside the risks associated for instability of the inequality that comes with more of the western type of growth, and with the climate change risks also associated with it. Lower growth gives China a chance to correct some of the flaws of the hyper growth that was partly of its own making and partly thrust upon it by investors from the outside, so that the new climate would best serve the goals of the May 4, 1919 Movement of keeping high the banners of Science and Modernization. This kind of rethinking is also going on in the US in the same manner about inequalities and hardships for workers and families, with some of the anger directed at China as internal political sentiment- hence the trillions of dollars moved by the Biden administration to address the flaws of growth under free markets and intervene in the economy where needed as in climate change to give firm sense of direction. In a sense the direction taken in different contexts the American and the Chinese are the same - address the problems of workers and families, of the people, as Lincoln had pointed out and striven so hard for, so that Labor is the more important than Capital, and workers and families vital to the nation.   ...

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Reflecting the volatile nature of the global economy with systemic risks remaining, impact of sharp cuts in spending, and the danger of oil prices exceeding $150 with a mideast crisis, the IMF provided a wide range of possibilities around its basic forecast. The IMF says it expects the global economy to grow 3.5% in 2012, up 0.2% from a Jan. forecast, and a forecast of 4.1% for 2013. But the IMF says this depends on the eurozone crisis, which could take off 2% from global output and 3.5% from output in the eurozone if things went wrong in Europe. Higher oil prices above $165 with supply disruptions after Iranian sanctions are another danger. Its forecast for Europe is 0.3% contraction in 2012 and 0.9% growth in 2013. Because of the risks in the outlook the IMF cautions countries from cutting spending too quickly, and says the best approach is to reduce deficits gradually over the long term and not to move too fast in the short term. This word of caution applies to Spain, the UK, France and Germany. To maintain enough funding in a crisis the IMF plans to increase its lending capacity from $380 billion by an additional $280 billion, with pledges of $60 billion from Japan, $26 billion from the Nordic countries, and $200 from other eurozone countries. ...

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Greece passed what prime minister Samaras called the last of the austerity cuts in November 2012 and called for action by lenders in the EU. The EU's Rehn says it is time to dispel the notion that Greece has not made progress in making the economic changes needed. Finance ministers of the eurozone meeting in Brussels agreed to give Greece two more years to reach deficit reduction targets. The cost of this to the eurozone will be 32.6 billion euros. A $40 billion payment to Greece is still on hold till Nov. 20, 2012. The cuts passed in parliament in November 2012 by the Samaras government will raise 17 billion euros over 4 years. The 2013 budget passed in parliament has cuts of 9.4 billion euros to salaries pensions and benefits, and raises the retirement age from 65 to 67. As of Nov. 2012 the bailout packages to Greece from the eurozone countries are at $240 billion.

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Total public and private spending on health care in the U.S. will increase by 6.1% in 2014 compared to 2014 in a revised Commerce Department forecast. The total spending will reach $4.1 trillion in 2014 from $3.9 trillion in 2013. Some of the lower rise in spending than the earlier 7.4% forecast will come from 28 states opting out of Medicaid expansion under the health care overhaul because of a June 2012 Supreme Court ruling. Employers are trying to reduce costs and the public is reducing spending because of the recession. Less generous health plans mean users are paying more out of their own pocket, paying more attention to prices and even postponing care. Growth in health care costs is a about 3.9% a year since 2009 following the recession. The costs increase in 2015 by 5.8%, in 2018 by 5.9% and 2022 by 6.5%, according to U.S. government forecasts, because of enrollment in Medicare for baby boomers. This is still higher than the inflation rate of below 2%.

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Will Detroit automakers be able to respond to a change in consumer preferences and a shift to cars from SUV's and light trucks? Gasoline prices are expected to rise significantly in 2011, and could approach $4 a gallon. The Detroit carmakers are better prepared now than in 2008. The question is are they prepared enough considering that there was a renewed emphasis on light trucks and SUV's in the lineup of Detroit carmakers in 2010, and compared to Asian competitors in the market whose focus is still on cars. To rebound to profitability GM and Ford took advantage of a pickup in SUV and light truck sales. Chrysler benefitted from a revamped Jeep Cherokee. All three Detroit carmakers sold more light trucks and SUV's than cars in 2010, and GM's car sales went down in 2010. By comparison Toyota and Honda sold more cars than SUV's and light trucks in 2010, and Hyundai does not make any light trucks. Toyota brand US sales head, Bob Carter, says as vehicles are becoming more fuel efficient across all sizes he does not expect the impact to be as dramatic as in 2008. The impact of fuel prices is becoming evident at some Toyota dealerships where sales of Prius vehicles are up significantly. In 2007 before a gas price surge SUV and truck sales were at 53% in the US market, they were down to 47% in 2009, and are now back up to 50%....

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Alluring scenery but hollowing out. Rail station in Dunedin New Zealand looks like it is from the 19th or early 20th century. New Zealand wages are 27% lower than Australian wages in 2025. New Zealand's weak, economy cuts in public services in 2025 affect jobs and employment. New Zealand sees emigration of 69,000 for the year to Feb 2025, highest on record.  Australia has mining and huge demand from China and India for its coal to support it's economy. In a paradox black coal in the interior supports a healthy lifestyle with weather and sports in the coastal belt of Brisbane, Melbourne, Sydney, and further up the coastline in Perth and Adelaide. New Zealand life means higher grocery prices and less quality than Australia, it means health services are not as good, and the public services are being cut to reduce the deficit and borrowing. Most migration is to Auckland and towns in the interior look scenic such as Dunedin but are increasingly seeing people leaving for lack of prospects, lack of pay raises and high cost of living, poor public services. This is a cycle that was felt in 2002 and goes back a long way and is unlikely to change. ...

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This Economist magazine editorial says the Republican plan for health care with its roll back of Medicaid expansion by limiting funding to states after 2020, and by scaling back subsidies especially for older Americans and not basing them on income levels, is likely to have its own problems just as the Affordable Care Act. One concern is that keeping healthy people in the market with a mandate that everyone have insurance is present but in a milder form with premiums going up by 30% in one year if they change their mind. There is concern that this may not work among insurers leading to an increase in premiums, pricing people out of the market in "a death spiral." This could lead to more people being priced out of the market as premiums rise. About 12 million people were added to Medicaid by increasing eligibility level to $16400, or 138% of poverty line- this reduced the uninsured from 16% in 2010 to 8.8% today. The Economist concludes that the Republican health care bill has its own problems, and that this bill does not clear up the problems in Obamacare by substituting Ryancare as the Republican bill is called. Peggy Noonan writing in the WSJ says this may have negative consequences for the new Republican base shift to populist support. Critics on the right like Rand Paul see even the reduced subsidies as an entitlement program, yet the Republicans can only change parts of the Affordable Care Act as they need 60 votes in the Senate where they only have a small majority.   ...

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India gets 4,100 megawatts from nuclear power or only 2.7% of capacity of 152,000 megawatts. It currently has 17 nuclear power plants. THe US-India Nuclear Cooperation Treaty signed in October 2008 wil give abig push to nuclear energy in India. Six new plants will be built. Nuclear power will rise to an estimated 40,000 megawatts by 2020, and Prime Minister Singh said it could generate 470,000 megawatts by 2050. THis week India's Hindusthan Construction Company signed adeal with Amec PLC, a UK engineering and project management company for taking up nuclear energy plants in India. About 500 engineers are eventually expected to work for the company.

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How electric utilities and the oil industry are backing California's fight with the EPA to regulate auto emissions, cutting them by 30% by 2016 for new cars and trucks in the state. Its a fight endorsed by 14 states in the Northeast and Northwest. California sued the EPA, and in effect the Bush Administration which controls the EPA, in federal district court and federal appeals court. THe EPA has taken two years to respond to California's request for a waiver so that it can regulate auto emissions in its state. California's auto emissions rules are part of a broad effort to reduce all emissions in the state by 25% by 2020, including by manufacturing, electric utilities and the oil industry. Utilities and the oil industry share the opinion that all sectors of the economy should be required to take on this responsibility, including the transportation sector. In the past oil companies and the auto industry have been at loggerheads about who is responsible for the worsening dependence of the USA on foreign oil and the worsening impact of the oil consumption on the environment and their advertising campaign have often shifted the blame on each other. Is this part of the continuing debate about oil as oil prices rise and consciousness about global warming rises as it has already done so in Europe. See the links to the Frankfurt Auto Show. BMW known for gas guzzling machines has done an aboutface in the face of public opinion in Germany and is advertising its image as environment friendly and investing in new technologies to curb emissions and increase fuel economy. ...

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Accounting experts say the rebound in bank earnings in 2010-2011 is a good time to offset unrealized losses from troubled loans against higher earnings. These troubled assets make it hard to understand the true financial condition of banks, which becomes a major problem in financial crises. According to a WSJ analysis US banks had $13.8 billion in "unrealized losses" that have lasted at least a year in their portfolios as of Sept. 30, 2010. If these losses were taken now it would reduce bank's pretax income for the first 9 months of 2010 by 21%, according to the Journal analysis. Another problem focusses on Level 3 securities, which are illiquid investments that cannot easily be valued using market prices. The Journal analysis shows that as of Sept 30, 2011, the top ten banks had $360.7 billion in Level 3 securities. This is 42.6% of bank's shareholder's equity. At the top ten banks Level 3 securities fell by 24% in the last 2 years, which indicates an improvement. However some banks have made changes, whereas other large banks have not reduced the level of Level 3 securities. Take Bank of New York Mellon, for example, which took a $4.8 billion charge against earnings in 2009, largely related to mortgage backed securities. CEO Kelly said, it wanted to "put our investment securities issues behind us." Contrast that with Citigroup. Citgroup did not mention its high level of Level 3 securities when it anounced fourth quarter earnings. As of Sept 30, the bank held $79.1 billion of Level 3 securities- equal to 48% of its book value. This includes credit derivatives, asset backed securities and sub-prime mortgage securities....

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Zombrun describes the effect of low interest rates on savings for the bottom half of households in the U.S., the pressure to invest in stocks without the skills and experience of the better educated part of households in the top 20% of households by wealth and income. This resulted in a negative effect, a depletion of savings compared to an increase under a higher interest rates scenario with less pressure to take risks in a volatile stock market. This is the direct cost of the crises in stock and financial markets of 2000 caused by a internet bubble, and the larger crisis of 2008-2009 caused by the bubble in mortgages and housing. The secondary effects of the mortgage price bubble and faulty mortgage securities was in the millions of homeowners who went into foreclosure in 2009-2013, which further depleted wealth and savings of households in the bottom half lacking the experience and skills to navigate this type of housing market. The failure of the Obama administration to stem the foreclosures with practical steps which would have helped not hurt the banking sector, as suggested by FDIC's Sheila Bair and Harvard economist Martin Feldstein in many WSJ op-eds in 2010-2012, added to the erosion of savings and wealth of the bottom half. Minorities in particular were hit hard. A third effect is of communities across America that are feeling the effects of job migration to emerging markets such as China that has been underway as part of the globalization of the last three decades. A fourth effect in the rising cost of education, particularly since 2000, has reduced the opportunities for struggling working class people to enter the middle class and enjoy the higher incomes in precisely the very period when the divergence of incomes between less educated, less killed people and the more educated and better skilled people was taking place. The last two effects were neutral as part of the overall process of emergence of a globalized economy with a premium on more skills and education, requiring action by the government, universities and business for a concerted effort to mitigate in some places the negative effects and enhance in other places the positive effects. The first two effects were man made crises which required managing in constructive and positive ways for the entire American people, taking risks where necessary such as fears about the financial system if foreclosures did not go through. The risks of a long period of extremely low interest rates for savers and the middle as well as working class were poorly understood by the Fed since 2000. A similiar crisis is being faced in Europe with extremely low interest rates. Janet Yellen was only doing the honest thing by acknowledging how far and how different the situation is now compared to the period of three decades following 1945- a question not just of values cherished in America, also of the need for societies to advance through creation of wealth across all sectors of society or regress, as described by Smith in the Wealth of Nations....

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This picture essay in The Guardian shows the 700,000 additional people displaced inside Afghanistan in 2021 in addition to the 2.9 million displaced people by 2020. The British stayed out of Afghanistan except for brief forays from concern about Russia entering close to British India. Not much happened till Zahir Shah, the King of Afghanistan was seen as not doing much for a famine that struck the country in 1972. Drought struck much of the country in 1972 leading to the deaths of over 100,000 people from starvation. The King had ruled since 1933. And for a brief period his cousin and brother-in-law Daud Khan had actually run the administration between 1953 to 1963, before being dismissed with a new constitution adopted not allowing the royal family to rule the country without consulting parliament. The poor handling of famine relief led to the fall of the government appointed by King Zahir Shah in 1972. In 1973 Daud Khan violates this constitution and assumes control of the country. British India was in 1972 the India of the Nehru period, with his daughter Indira Gandhi the democratically elected prime minister. India fought a brief war with Pakistan in 1971 that set up the new nation of Bangladesh from territory of East Bengal. India preoccupied with Bangladesh refugees did not do what the British had done to keep outside powers out of Afghanistan and maintain a stable monarchy. Daoud Khan's repression of Communist party leaders led to Communist party military factions in the army taking over the country in 1978. The Afghan military led by officers in the army's Communist factions had little support in the traditional Islamic nature of the countryside for their land reforms. Leading to a rebellion and entry of Soviet troops under a friendship treaty signed in 1978 with Soviets under Leonid Brezhnev. It is this disrupting of the stability of the Afghan monarchy or the entry of Soviets or Americans or any other foreign influence that was carefully prevented in British India by Britain's India policy, which resulted in a period of peace and stability in that region. The events of 1974 with the fall of the monarchy, and the entry of Russia in 1978 broke two of the main rules the British had observed from 1750- a stable monarchy and no outside influence in Afghanistan. A policy the British also followed for Tibet. When China entered Tibet in 1950 Nehru was too preoccupied with the millions of refugees from Pakistan and failed to prepare in the years 1947-50 for following British policy on Tibet by preparing or anticipating the entry of foreign powers. The entry of China into Tibet in October 1950 led to the Sino India border war of 1962, and led to the current situation of India facing a Chinese army all along the border of Arunachal Pradesh, Ladakh, Nepal and all the way in the Himalayas to Kashmir. The result has been billions of dollars spent by the US every week starving domestic priorities, as president Biden observed this week, and a burial place for empires. Ten years for Russia, and twenty for the US with the same result. It has left the whole region poorer and in humanitarian crisis for 50 years, and created crises for Russia, Pakistan, India, and the US. ...

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The Russian economy says a World Bank report in June 2009 won't recover to precrisis levels till 2012. The growth in the first quarter of 2008 reached 8.7%. The drop in GDP in 2009 will be 7.9%. And World Bank chief economist for Russia, Zelkjo Bogetic, says that half a decade will be lost. This is even with the rise in oil prices and the worst of the crisis with the collapsing ruble now put behind Russia. What is keeping things looking grim is the drop in domestic demand, reduced global growth, tight credit, and declining infrastructure investment. The World Bank projects Russia will see increasing number of people slipping back into poverty. By the end of 2009 17.4% of the people in Russia, or about 26.4 million people, will be living in poverty.

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Paul Singer, head of hedge fund firm Elliott Management and its unit NML Capital, has relentlessly pursued a case in U.S. courts involving collecting full payment on bonds from the Argentine government after its default on the bonds in 2001. Singer bought bonds with face value of about $170 million according to legal filings, but paid a price well below the original value. Elliott and other investors are now seeking $1.5 billion, including unpaid interest. Judge Griesa's ruling in a federal court in Manhattan blocks Argentina from paying bondholders who accepted an agreement for about 25 cents on the dollar from being paid $530 million in interest in July 2014. Argentina has to consider other risks in settling the dispute as more than the $1.5 billion as a one off payment is involved, because as Stevenson points out in another article (see link), the payment could run from $15- $27 billion depending on whether it then has to pay all holdout bondholders or all exchange and holdout bondholders at a higher rate. The result is an intractable dispute beyond the statement of honoring creditor rights, seen by a debtor country facing difficult finances in a different light. Serving as a reminder for Greece, Argentina, and other countries with chronic borrowing and debt history about the need for care and constant vigilance on state finances. In May 2012 Greece paid over $436 million in a one off payment to holdout bondholder financial firm Dart Management in a similiar bind, even as pensions were being cut and Greeks protested daily on Athens streets with over 20% unemployment (see link)....

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Reilly asks whether Morgan Stanley is in an unstoppable decline. He raises the question whether it is viable as an independent investment banking firm.