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Expensive new fuel saving technology investments at BMW to meet new pollution control standards in Europe (130 grams per kilometer) and boost fuel efficiency in the US. This year only 40% of its cars will meet 140 grams per kilometer. With a production total of 1.4 million cars BMW faces sizable investments with smaller car volume than the likes of Toyota and Honda. R&D costs have climbed 22% in first half 2007 to 1.5 billion euros. BMW has agreements to jointly develop some of the new technology with Daimler and GM on hybrid gasoline-electric drive cars. Its developing a new 3 liter diesel engine for the US market that cleaner and fuel efficient. BMW plans also to boost advertising budgets to promote itself as a fuel efficient carmaker conscious of the environment, See related article. It plans to expand in India China and Russia to get a share of the expanding markets there. BMW's second quarter profit fell 23% on a 7% gain in revenues underlying the additional investments BMW faces. CEO Reithofer wants to increase profits to above last years 3.75 billion euros. ...

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Readers of the NYT reflect on the Syria-Iraq conflict and the experience in Vietnam. Stuart Gottlieb, who teaches American foreign policy and international security at Columbia University, describes Logevall and Goldstein's Vietnam analogy for Syria as a situation on how one can go wrong by relying on historical reference when new thinking is required based on existing challenges. Others point to the situation in Vietnam as Kennedy's war with 16,000 advisors already on the ground. Kennedy's words "let every country know whether it wishes us well or ill, that we will support any friend, oppose any foe...," were part of the Cold War in the early sixties that Kennedy inherited from Eisenhower and Truman starting with a Communist Iron Curtain falling over Eastern Europe and threatening Western Europe. The situation today is quite different in a Middle East with little to do with Russia and China, at the same time sectarian with Sunni and Shia, and aspirations of Arab people for freedom from dictatorships....

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S&P credit analyst put GM and Ford on credit watch with negative implications saying both companies face a serious challenge to liquidity in 2009. And said in an interview that "these companies need a lot of liquidity to run their businesses, and they could approach the minimum levels they need if nothing changes." For GM liquidity concerns are rising because losses for the last 3 and half years have reached $70 billon and credit markets have locked it out of new financing and stalled asset sales such as the Hummer brans and its medium duty truck unit. All this has rattled investor confidence including slipping sales numbers in the US, Europe and in emerging markets like Russia. GM had the larges one day decline in its history by 31% to $4.76 on October 9, 2008, a postwar low for GM stock, and Ford fell 22% to $2.08. In fact GM's intraday low was $2.26! for an astonishing collapse.

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The Russian currency, the rouble crashed to 0.8 cents to the US dollar from 1.3 cents. It has now bounced back to 1.2 cents. Peter Coy of the NYT says this is the result of Russian oil and gas exports to Europe and other parts of the world which continued after sanctions for the invasion of Ukraine. The increase in oil prices from the war actually increased Russian oil revenues by a third. Another reason is the steps taken by the Russian government to ask for payment for energy supplies in roubles. 

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Russia is excluded for the second year for the G-7 Summit meeting of leaders in Berlin, in June 2015. The exclusion follows Russian intervention in Ukraine.

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Government GDP figures show the GDP shrank by 1.8% in the third quarter of 2016 compared to the same period in 2015, the first such contraction in the economy since 2009. Household consumption was down 3.2%. The sharp decline in the value of the lira by 20% in 2016 makes imports costlier, in an economy dependent on consumption spending and tourism for higher GDP growth. Political uncertainty with instability in Turkey following a crackdown on opposition and media also leads to decline in foreign investment and investment by domestic firms.

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Brent crude drops below $60 by Dec. 15, 2014.

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Chile, Mexico and the U.S. rank high in the diabetes rate for top soda consuming countries. In the U.S. the diabetes rate is at 7.7% of the population, in Chile 9.6% and Mexico 9%. Soda consumption per capita was at 165 litres in the U.S., 146 litres in Mexico and 134 litres in Chile, and 145 litres in Argentina where the diabetes rate is at 3.9%, for 2012. A new public service ad in Mexico City subway stations says it all, showing an ad with a soda bottle and the words- "Would you take 12 teaspoonfuls of sugar? Soda is sweet, diabetes isn't." The new Pacto de Mexico agreed to by all major political parties includes the soaring diabetes rate in Mexico as a problem to be tackled, including lunches at public schools and the consumption of coke and sodas by children. A particular acute problem in Mexico is the lack of clean drinking water in many areas and the dependence on coke and sodas for liquids. But bottled water could be used in its place if available at lower prices. One proposal is for a soda tax which could generate $2 billion and be used for setting up clean drinking water fountains in schools and other places. Elected officals in Mexico are firm about the need for action, as Mexico recently became the first country over 100 million inhabitants with the highest obesity rates at 7 adults out of 10 over the age of 20 obese or overweight, and the consequently high diabetes rate. Diabetes is the No. 2 killer in Mexico, and a serious health danger. Coca Cola gets its second highest revenues from Mexico after Europe, and the situation has evolved after years of heavy coke advertising to the point where Coca Cola is taken at every meal by some Mexican families, and is a sign of prestige. The company's response is to fight the public service ads with ads showing people burning off 149 calories by walking. The country now faces a long and uphill fight. Russia is one of the countries which is also conducting a similiar fight against soda drinks. The Bloomberg Philanthropy is financing efforts against soda drinks in Mexico, as part of its campaign against smoking and sodas as health hazards, and this maybe Bloomberg's bigger contribution to society than his service to New York City. Developing middle income countries such as Mexico, Chile, India, China, Brazil, are the hardest hit by soaring diabetes. And the costs to their health systems in 10-20 years from uncontrolled obesity and diabetes will be enormous. The U.S. is a developed country with similiar high rates of obesity and diabetes, with soaring medical costs, and serious problems that strangely have not received the public awareness and efforts that one should expect. ...

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Ishaan Tharoor provides a brief history of Russia's intervention in Syria and its role in the Middle East since 1950. This does not mention the Dulles period under Eisenhower in U.S. politics when the U.S. engaged in the Cold War withdrew support for building the Aswan High Dam, thinking that the Soviet Union would not come up with support. The Soviet Union under Krushchev provided $1.2 billion at 2% interest in 1958 for building the Aswan High Dam- constructed from 1960-1970- which helped increase irrigation and crops in the Nile river region and reduced the damage from droughts and floods. Soon after the dam was built it provided about 50% of Egypt's electricity. This was the high point of Soviet Union's economic engagement, latter support was defined by military arms supplies and led to the Six Day War, and the economic stagnation of the economy under Nasser's successors from the military. The Soviet Union was actively engaged in Iran with a Russian and British zone in the country in 1907, soon after the flowering of an effort to write a democratic constitution 1900-1907 for Iran with the help of British intellectuals, similar to the failed effort of the Arab Spring today. In neighboring Afghanistan the Soviet Union fought a long war under Brezhnev, contributing to the unravelling of the economic structure of the Soviet Union before the fall of the Berlin Wall. The British were primarily focussed on protecting oil interests in Iran in the period 1900-1950, yet contacts with British civil society led to the first grasp of democratic constitution and processes in Iran during this period. The American intervention funnelling arms support to the Saddam regime in Iraq in a war Iraq initiated against Iran 1980-1988, marks a low point in American intervention similiar to the Russian intervention in Iran-Iraq-Syria today. It may also define some of the problems of today because of the length of that war, the entrenching of military in the government in Iran, suspicions of the U.S., and the possible sense of a need for nuclear weapons to prevent attacks on Iran, as Pakistan has done in its conflict with India, though this is rarely brought up in discussions. The American arms support intervention, led to a series of cascading conflicts since 1980 with the invasion of Kuwait by the Saddam regime in 1990, the destruction of Shia in the marshlands of Iraq after a flawed peace agreement, and the follow up to that conflict with George Bush's invasion of Iraq on grounds of WMD development in 2003 for the 2003-2011 Second Gulf War including the Surge. The arms support of the Saddam regime in the war it initiated against Iran, was policy designed under President Reagan 1980-1988 following the hostage crisis and the Islamic revolution in Iran in 1979. The cascading crises with Iran and Iraq may not have led to this level of conflict and disruption, refugees and deaths in the Middle East, if American policymakers had heeded George Washington's advice during his presidency, that your enemy's enemy is not your friend when it comes to framing policy- for this reason Washington as president did not see it in the national interest to get involved in conflicts between Britain and France beginning in 1793, France having aided the American side against the British in the War of Independence. In the Proclamation of Neutrality, Philadelphia, April 22, 1993, he says: "Whereas it appears a state of war exists between Austria, Prussia, Sardinia, Great Britain and the United Netherlands, on the one part, and France on the other; and the duty and interest of the United States require, that they should with sincerity and good faith adopt and pursue a conduct friendly and impartial towards the belligerent powers.." And in a letter to Patrick Henry offering him the position of Secretary of State from Mount Vernon, October 9, 1795, Washington says: "My ardent desire is, and my aim has been, to comply strictly with all our engagements, foreign and domestic; but to keep the U States free from political connexions with every other Country. To see that they may be independent of all, and under the influence of none. In a word I want an American character, that the powers of Europe may be convinced we act for ourselves and not for others, this in my opinion is the only way to be respected abroad and happy at home and not by becoming the partizans of Great Britain or France, create dissensions, disturb the public tranquillity, and destroy perhaps for ever the cement which binds the Union." At a time of passionate political debate, it is time to step back and reflect on lessons that can be learned from the founding fathers about the way they tackled the important issues of their time....

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Casey describes the crucial policy errors in Brazil with over spending and lack of transparency in the years leading to the crisis in 2014-2015. Brazil raised interest rates half a percentage point in May 2015 to 13.25%. Inflation was at 8.13% in Brazil in March 2015. Brazilian companies have large dollar denominated debt accumulated during the boom years which needs to be refinanced as its currency the real declines. With current policies economic growth is likely to continue at 0-1%. Russia made policy errors with the departure of Kudrin as finance minister for Putin's second term as president. Policies to attract foreign investment, controlling military expenditures, and continuing growth were reversed as Russia took positions on Ukraine that led to western sanctions, capital outflows, and a sharp decline in the ruble. By May 2015 the ruble and oil prices had recovered from lows, but the ruble was still 35% below the level in June 2014, and the oil prices were still only two thirds of the peak in 2014. Russia sees the decline in the ruble as a way to reduce imports and increase import substitution for many products. The economy is weakened by high inflation- inflation was 6.9% in March 2014, going up to 16.9% in March 2015. In May 2015 Russia lowered the target repo rate by 1.5 percentage points to 12%. Russia faces stagflation- high unemployment with low GDP growth, and high inflation....

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Efforts to bring the textbook industry under state control by selling the firm "Enlightenment," which had a 30% share of the market, to Putin ally Rotenberg. "Enlightenment" has now received further support as other competitor's textbooks were not given approval by the Ministry of Education and Science. Apparently Putin sees western ideas introduced in some textbooks as harmful to the development of Russia's youth. All schools will now be given state inspections, and where textbooks are not on the approved list the schools will see cutoff of state funds. Putin was chairman of the publisher "Enlightenment" when it was under state control, Rotenberg is the new chairman. During Soviet times "Enlightenment" as a state publisher controlled all textbook publication. The industry was opened up after 1990, resulting in a large number of new publishers. Now many small publishers are being pushed out as the industry is being consolidated under the state's private sector allies with an educational agenda being set by Mr. Putin....

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Ulrich Volz of the German Development Institute says the $250 billion the IMF has- counting the $100 billion Japan has contributed- may not be enough to prevent some countries in Eastern Europe and Asia or Latin America from defaulting. Especially because a lot of debt is coming due and has to be renewed. There may be some sovereign country defaults. Even China and India have a lot of debt coming due. India and China have external debt payments of $260 billion and $2.4 trillion respectively this year. According to ING Wholesale Banking emerging market governments and companies have to repay some $6.8 trillion of debt, bonds, loans and interest payments and trade finance, and this excludes any debt taken on for stimulus. Russia has $600 billion to renew this year. Latin American governments according to Harvard economist Hausmann need to rollover $250 billion in debt. The US and developed countries are soaking up a lot of funds, with the US eexpected to issue $2 trillion in government bonds, and the big developed countries placing another $1 trillion. So there will be severe competition for limited capital. Mr Volz suggests a Global Support Fund to which the developed countries would contribute to help emerging market countries....

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Alan Blinder, former Fed senior official, makes a spirited defense of the Federal Reserve's $600 billion quantitative easing move in November 2010. He says at the most this would lead to 1% to 3% inflation, and not the inflation critics are pointing to that would hurt the US. He is critical of the mercantilist countries, Germany and its Finance Minister Schauble, for calling this currency manipulation. He finds it incomprehensible that aides to Russsian Prime Minister Putin have asked the Fed to consult with Russia before taking such action. His preferred move would have been to purchase private securities and reduce the rate the Fed pays on reserves to negative. This he says would blast reserves out of banks into more productive uses. Yet he sees the Fed's move as better than doing nothing. He says that if buying Treasury's is a weak tool, a view he shares, then this should not be very inflationary. See his earlier op-ed piece in the WSJ when the Fed announced its action.

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BMW's CEO Reithofer says in a conference call that the company will redirect cars from the USA to China and Russia and other countries because of the currency exchange rates and unfavorable market conditions in the US. These market conditions caused a236 million euros charge to compensate for the falling value of second hand vehicles and potential payment defaults on loans for leased vehicles in the USA. At Daimler you see a 491 million euro fall in the value of Daimler's remaining 19.9% stake in Chrysler LLC showing up in 1st quarter results but also similiar to BMW one sees a 151 million euro writedown to cover the falling value of cars that were leased to customers. This is from earnings announcements by Daimler and BMW.

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Special Counsel Mueller's team says in a court filing that Paul Manafort, Mr. Trump's campaign manager should face a prison term of 19 to 24 years for "serious, longstanding, and bold" financial crimes.  Manafort also faces financial penalties totaling about $50 million, according to the filing. Some of the problems date to years before Manafort joined the Trump campaign as campaign chairman.

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Trump campaign manager, Paul Manafort, gets a more lenient sentence of 4 years for tax and bank fraud from a judge doing the sentencing. Prosecutors had asked for 13 to 24 years. Separately another sentencing takes place on a different charge next week.

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This WSJ report sees Angela Merkel as leaving an international legacy of cooling relations with America. It says Angela Merkel turned down US president Biden's first call after his election as president because she was going to her cottage in the country that weekend. This report says after 4 terms Merkel is to be seen as dramatically increasing her country's economic dependence on China, pushing through a energy deal with Russia, joining France in challenging US political influence in Europe, rejecting American requests on economic policy and setting Berlin's openness to Chinese technology.  What happened with her youthful fascination with America during the years growing up in East Germany asks the WSJ? It also says of the Bush years of unregulated banking leading to the 2009 US banking crisis- that left her with a distaste for Anglo-Saxon banks and Wall Street lobbying. Of the Obama years it says Merkel found Obama unsteady, verbose, and sometimes meddling, with the spying on Merkel's phone also giving her a sense of disrespect to Germany. The result was that Merkel increasingly was fascinated by the Chinese experiment in development, visiting China 13 times while in office, studying Chinese history, politics and economics.  Merkel over this period met with the Dalai Lama and had questions about one party rule by CCP. Yet she became more and more resigned to Germany as a country of 80 million, not the EU and Europe as one group united in vision with a population of about 500 million, larger than America that could be a force for good in its own right. She said "we can be as hardworking, awesome,  as super as we like, but as a country of 80 million we won't be able to prevail if China ever decided that it no longer wants to have good relations with Germany." She ignored the experience of Sweden and Scandinavian countries in their relations with China. In saying this she ignored the potential of India and its neighbors in south-east Asia that make up about 2 billion people or about twice the population of China. She also seemed unaware of the role Woodrow Wilson, FDR, have played in realizing the democratic vision of the German revolutionaries of 1948 who failed to bring democratic government to Germany. And she had forgotten of the role Harry Truman, the commoner president of the US, who played a major role in establishing German democracy and its dignity during the Berlin Crisis after the blockade of Berlin by the Soviets in 1948. The mediocrity of presidents from Bush to Trump has bothered Merkel. Yet it may very well be that there is nothing mediocre about Mr. Biden and America's vision about its future as it grapples with the social and economic problems of the last three decades, as it has done before in its history and come through. ...

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Yanukovych, the president of Ukraine, is from the industrial eastern part of Ukraine centring on Donetsk. He is intensely disliked by the protesters in Ukraine and unpopular with the western part of the country which favors joining the European Union. Polls show 45% of the people support joining the EU, and only 14% joining Russia in a economic union. Yanukovych failed to bring the country together. The EU had called for the release of a former prime minister Ms. Tymoshenko in prison for the last 2 years, and Yanukovych's failure to do this worsened relations with Germany. The U.S. sees Yatsenuyk 39, a economist who served in the Tymoshenko administration as economy minister, as a person with the credibility in Ukraine and the experience to be part of a transition government. Figures who are popular with protesters but have no connections with previous governments include Vitali Klitschko, 42, a boxing champion, who has his own party Udar, meaning punch. Tymoshenko, was popular during the Orange Revolution in 2004, but her two terms as prime minister came under criticism for mismanagement. Parliament selected the prime minister under the 2004 constitution, and the protests focussed on consolidation of power under the president, including the appointment of the prime minister. As a first step parliament took on powers to appoint the prime minister on Feb. 21, 2014, freed Tymoshenko from prison, and set a date for elections in May 2014. Yanukovych fled Kiev and left for the eastern part of the country as parliament began the transition to a new government. ...