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China Investment Corporation, China's sovereign wealth fund is expected to issue upto 28 billion in bonds to help recapitalize China's state owned banks. These banks face the prospect of increasing bad loans as a result of the hectic pace of bank lending in 2009-2010. Loans guaranteed by muncipal governments are estimated at 7.7 trillion yuan, or 17% of overall lending, about 50% of these loans face uncertainty in the event of falling housing prices, and 25% are bad loans. The recent IPO of Agricultural Bank of China raised funds, but the environment for raising money in this way does not look good, as information is spreading that these banks face large loan losses. The bonds from CIC would be picked up by state controlled companies. Yet these state controlled companies are engaging in the real estate speculation, as reported by David Barboza of the New York Times and Peter Coy of Business Week. In a down cycle things could get much worse as a state sovereign fund is selling bonds, state controlled companies would buy these bonds, and state controlled banks are expected to be recapitalized making a complete circle....

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The minimum non-negotiable "breakout window" for 2015 nuclear negotiations of the EU, the U.S. and other nations with Iran, is a period of 12 months. The term "breakout window" refers to the period in which Iran decides to breakout of a signed nuclear agreement and rushes to develop nuclear weapons. It should take at least 12 months for Iran to be able to develop a weapon so that there is time to develop an effective response to the threat to world peace.

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This WSJ editorial raises serious concerns about the outlines of the nuclear deal with Iran- the AP Protocol does not provide for any time, any place inspections of nuclear facilities, could Iran evade inspections by developing a new facility such as it did with the Fordo complex underground after 2006. After all it reminds readers that Iran signed nuclear protocol agreements in 2003, but failed to observe them, and set them aside altogether after 2006. And Iran is not like reaching an agreement with Costa Rica or Netherlands, says WSJ, it could look good on paper, but with monitoring weak and the Iranian intentions not clear, a lot can go wrong. One of the principal concerns says the WSJ, is the nuclear weapons technologies spreading in the Middle East to other countries as Iran gets a weapon, leading to a disastrous war a decade from now. It says this is why president Obama's response to criticism that its this or war is not enough. A lot of the details says WSJ, have still to be worked out....

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China's NDRC targets for pollution control are to cut sulfur dioxide emissions by 2% and nitrogen oxide emissions by 5% in 2014. The NDRC says it will reduce energy consumption per unit of GDP in China by 3.9% and carbon dioxide emissions per unit of GDP by 4% in 2014.

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The NYT editorial in April 2013 supporting a cautious response in Syria as it reports the use of chemical weapons by the Assad government.

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David Barboza of NYT describes the hidden subsidies China gives to Foxconn for its plant in Zhengzhou, in a poor region of China. The factory there makes about half a million iPhones a day. These subsidies include incentive packages, infrastructure building, local government help of about $1.5 billion. As a result Apple has high margins. For a 32 gigabyte iPhone 7 that costs $400 to make, the retail price is about $649 in the U.S.  The hidden subsidies is why Apple can maintain dominance as profits are reinvested. And the result is that with only 12% of the smartphone market Apple can take in 90% of the profit, according to Strategy Analytics. Barboza looks back at Apple before co-founder Steve Jobs left in 1985 as focussing on manufacturing at plants in Colorado and California. By 2001 with iPod sales soaring the move to China under Cook, who previously worked for Compaq, was underway. With the introduction of the iPhone in 2007, the move to China for manufacturing accelerated. The reason: only China offered the kind of subsidies, the speed of approval and building of infrastructure facilities, the local government support, the hundreds of thousands of workers, and the best tooling engineers, to produce in huge volumes with speed, and maintaining quality levels. Earlier plants including one in Colorado Springs that this Lyrarc editor was invited to visit just prior to Jobs rejoining Apple had many quality problems, so much so that Apple had a large part of the manufactured personal computers set aside for rework. The quality levels were dismal, defects were unbelievably high. This is the Apple manufacturing process and plant that Jobs must have seen when he returned, and which he hired Cook to fix. Not only were costs higher in the U.S., (subsidies in China came later) when Jobs looked at the manufacturing quality and the inability to get the quality he needed from American workers and engineers at that time in the 1990's, only then did he turn to China- and the more he saw what was possible to accomplish there he sensed an unusual opportunity to finally put the ghosts of memories from competition with Microsoft at rest, and to surpass everything that had been done in Silicon Valley. The result one of the most ingenious and large manufacturing networks in the world, huge profits for an American company, except for one thing- it would not do much for American workers. ...

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Friedman describes how the farmers who left the rural areas in search of work and settled outside Aleppo and other towns after a severe drought were radicalized by the lack of help from the Assad regime. About 800,000 people migrated from their farms in the countryside to cities in Syria, and settled outside the cities without help and basic services from the Assad regime. When the call for democracy came they were the first to join the protests.

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Tom Friedman of the NYT talks with retiring Israeli defense minister, and former prime minister, Ehud Barak, in Tel Aviv. Barak makes the case for seizing opportunities as they arise in a difficult situation, which might be lost if Israel adopts a permanently pessimstic state of mind about the prospect of peace with Arab countries. Barak and Friedman suggest the approach of the Israeli government of prime minister Netanyahu has risks of highlighting the dangers to Israel at its borders, to the point where Israel could lose the ability to make wise and sensible judgements as these opportunities arise, and the Middle East itself changes. Because of the political struggles and conflict in the Middle East this may obscure the newly emerging Middle East, which needs economic advancement to support the aspirations of the overwhelmingly young populations in these countries. This has the potential for a new dynamic that could see the Middle East move beyond Israel to seizing the opportunities presented by economic and technical progress. Similiar to the other nations of Asia, including the Muslim nations of Turkey and Indonesia. ...

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The dangers to Turkey from external short term borrowings to finance its current account deficit. Turkey's current account deficit reached 10% of GDP in 2011. It is 8% in 2012 and is considered high by experts. The problem is short term borrowing from overseas which is sent through its banks for increasing levels of personal and housing loans. Were this flow to dry up because of a sharp downturn in the Eurozone economies it would damage Turkey's financial position. Bank short term external debt has doubled in 2011-2012 to $70.3 billion, or 9% of GDP, according to Capital Economics. The U.S. Fed and the ECB have eased global liquidity concerns, but risks are high as long as Turkey relies on short term borrowing. An escalation of the conflict with Syria also poses risks with fears of scaring away investors.

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U.S. Defense Secretary Panetta says the U.S. will hand over provinces to Afghan government forces and complete the transition to a training role in 2013. This is part of the withdrawal of NATO forces and comes after France's president Sarkozy proposed reducing France's committment in Afghanistan. Panetta said he would tell NATO partners- "We all went in together and we will go out together." This also fits in with the changing picture in the region, poor relations with Pakistan, sentiment in the U.S. and Europe focussed on the economic crisis, and direct talks with the Taliban for a post-NATO settlement of the conflict.

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Iran plans an ambitious $50 billion investment program to expand oil and gas output in the next 4 years. About half of that coming from Iran and the rest from outside oil companies. Iran expects to earn $54 billion in oil exports in 2006 vs. $47 billion in 2005. Iranian production represents 5% of global supply, about 4 million barrels a day. Only about 2.5 million of this is available for export. Iran has 2 problems in oil use and production. Gasoline use is growing at about 10% a year. And oil production is declining by about 5-6% a year from existing fields. The investment program over the next 4 years would increase production from new fields by about 1.3 billion barrels, but with existing fields generating less each year this will only generate about 500,000 barrels of additional output beeyond the 4million barrels today. And with domestic use growing rapidly and new refinery capacity being added to meet domestic demand of 500,000 barrels a day even this would leave no more for export than the current level of 2.5 million barrels a day, or probably less with growing gasoline use inside Iran. These are Iranian Oil Minister Vaziri Hamaneh's numbers. What this means is that with economic sanctions the whole global supply picture and the world price of crude oil would be seriously affected by economic sanctions in the next 4 years, as the 2.5 million barrels a day export number would be reduced by the increase in domestic consumption of gasoline by 10% a year, and the decline in existing fields of 5-6% a year. In the short term two year horizon this adds upto loss of some 700,000 barrels a day, about 400,000 from decline in existing oil fields and 300,000 in increased domestic use, which are no longer available for export. Hamaneh pointed to the investment as evidence of Iran's good intentions as a supplier in an interview with te Wall Street Journal. He says Iran sees the importance of preserving its credibility as a reliable supplier. It does not want to cause hardship to consumers around the world. Another reason for the pragmatic position taken by Hamaneh is that Iran depends on oil exports for 40-50% of government revenue....

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Exhibitions in Istanbul from the period 1970-1980 and the violent activity from protest groups and others during that period. Lingering effects today with crackdown on journalists by the Erdogan government and polarization of public opinion.

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The risks facing the Chinese economy in 2012-2015 from asset bubbles in housing, bad loans in the banking system and slower growth. Expert opinion from Roubini, Shih and others on the risks China faces. Risks include what is called the middle income trap, in which China's GDP per capita gets stuck at a certain middle level as economic growth declines. Economic growth could drop to below 5% in the latter part of this decade according to this scenario.