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China takes another step to curb inflation. Effective May 18, 2011, China's largest banks will have a 21% reserve requirement. Food prices were up 11.5% in April. There were a larger number of bank loans in April 2011, of $112 billion, and a larger trade surplus of $11.4 billion. This may cause banks to lend in ways that go around these requirements, say experts. It may also ration capital to the entrepreneurial sectors of the economy.

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Street protests in Brazilian cities with economic growth slowing to about 1% in 2012 and inflation at about 6%. Street protests in Brazil reflect public disconten over corruption, overspending on the World Cup and Olympics, and lack of good education, health and other public services. Increase in bus fare and police response against small protests using tear gas set off the large scale protests of tens of thousands in Brazilian cities. President Rousseff's sees her popularity ratings drop 8% percentage points from the March level to 57% in June 2013, according to polling firm Datafolha. Ths includes high popularity in poor northern states. Rousseff's popularity in more industrialized southern states declined by 13%, and by 16% among college educated youth.

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Liu He, the author of the 2013 DRC report on recommended changes to China's banking and financial system, is now the director of the Communist party's top financial policy committee and senior advisor to president Jinping. Changes he is pushing for relate to increasing focus on credit risk for China's banks, promoting competiion between banks, a mechanism for letting banks fail, and a deposit insurance program to protect the public against failing banks. To open up the sector dominated by state owned banks, opening private banks would be encouraged. Local governments would be allowed to issue bonds in an effort to reduce their dependence on land sales and opaque off-market borrowing. The urgency of this agenda comes from the realization in top Chinese policy circles and the Jinping-Keqiang administration of the risks to the banking sysem from the lack of attention to credit risks in bank lending.

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The PBOC, China's central bank, injects $65 billion into China's banking system in Dec. 2014 to get banks to increase lending as the economy slows further. Experts say the growth rate is likely to drop below 7%. At the same time the central bank and economic policy makers are concerned about excesssive debt in the economy, shadow banking and local government debt risks. It cut benchmark interest rates by 0.25% in 2014. Other risks are developing as the property market cools off and investors shift investment to equity markets creating a surge of 50% in the Shanghai and Shenzen stock exchanges for 2014. As a result economic policy is not as effective in today's environment.

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Lower reserve capital ratios of China's mid-size banks, Citic, Mingsheng, China Merchants bank falling below the Basel III requirements of Tier 1 capital ratios- mostly common equity- of at least 8.5% of assets by 2018, 9.5% for systemically important banks. In comparison the higher capital ratios exceeding Basel III requirements of Industrial and Commercial Bank of China, Bank of China and Construction Bank of China, the large state owned banks. The situation is worse when one considers that these midsized banks have tried to grow aggressively taking on credit risks beyond their capacity. China Merchants Bank has off-balance sheet wealth management products, high interest deposits invested in riskier assets of $83.7 billion at the end of Sept 2013, equivalent to 200% of shareholders equity.

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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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The continuing decline in copper prices in Nov. 2015, and the Federal Reserve's decision to hold off on raising rates, are the subject of this comment.

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Copper supplies are expected to be constrained in 2015-2016. Copper demand was up 18% in China in 2014 even with the slowdown in housing. This suggests the future for copper prices may be brighter than it is for other commodities such as crude and iron ore.

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Lenovo's acquisition of Motorola Mobility from Google for $2.91 billion in January 2014. Google paid $12.5 billion for Motorola Mobility in 2011. The Moto X model has not sold well in competition with Apple and Samsung smartphones. Google will retain 15,000 of 17,000 patents acquired as part of the Motorola acquisition, patents worth billions of dollars and helping it defend its Android mobile operating system. Google sold Motorola Home which made setup boxes to Arris in 2012 for $2.35 billion. Motorola Mobility had $2.9 billion in cash at the time of the acquisition. In addition Google is retaining a research group led by Regina Dugan working on new technologies.

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The effects of loose monetary policy in China, and the high inflation, make another spurt in spending- like that after the global crisis in 2008- less likely in the event of another crisis.

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Vegetable prices in China went up by 22% in July 2010, from a year earlier, and grain prices went up by 12%, eggs by 8%. About a third of household budgets go to food in the budgets of people in India and China. Wheat prices are climbing on world markets after the ban on Russian exports, and rice prices are also climbing with the floods in Pakistan ruining the rice crop- Pakistan being the No.3 world's rice exporter. Personal spending accounts for 36% of overall GDP in China and 57% in India. Food prices in China were up 6.8% in July, 2010. Industrialization in China, and agricultural land freely taken over for factory sites with the consent of local authorites, may be a complicating factor. See the link to BYD's acquisition of agricultural land for factory site.