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Vietnam has seen rapid growth in the last 20 years as it joined the shifted away from the state planned economy similar to China in the late 1980's, joined the worlds trading system, freed up the economy and attracted foreign investment. But something doesn't seem right. Looking at the Vietnam growth curve, growth in Vietnam's GDP vs growth of world GDP the curve seems to be following a similiar pattern, there is a sharp downturn in the early 1990's with a V shaped bounce back and a sharp downturn in early 2000 followed by another V shaped bounce back in growth to this date. As America begins its first of several years of credit contraction and investment contraction followed by similiar patterns in some European economies like the UK, Ireland, Spain and a slowdown in the rest of Europe, the question hangs over growth in Asia, from South Korea and Taiwan where recent elections reflected these concerns in electing politicians who promised new ways of kickstaring their economic growth, to China, India and Vietnam where the concerns are about how to meet the growing expectations of the large numbers of people, probably the majority of the people in these countries who have been left out of the economic development experienced in urban areas and by the new middle class. Corruption, the stock market collapse or severe setback, and a slowdown in their main export markets, and are problems shared by all 3 countries China, India and Vietnam. India and Vietnam share the problems of a poor infrastructure. In this new environment Asian countries will have to come up with innovative solutions to maintain growth and quality of growth, as some of the chaotic growth of the last 20 years may have come at some cost like that of the environment in the case of China and better solutions can be found than growth that sacrifices goals in health care and other necessary goals of balanced development....

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Comments about immigration policy by Donald Trump, candidate for the Republican nomination for president in the 2016 election, create uneasiness in Mexico. Trump says he would block the billions of dollars that illegal immigrants from Mexico in the U.S. send back to Mexico, and deport millions of Mexicans in the U.S. illegally back to Mexico.

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This editorial in the WSJ says Judge Hannon was right to question the wholesale suspension of immigration law by the DHS memos blanket use of discretion in impementing existing immigration law. The ruling did not address the broader constitutional issues for an executive order that bypasses the states (and Congress) completely- 26 states have questioned the order. WSJ says Obama's executive order is going beyond presidential powers, and can be done by enacting legislation under Article I of the U.S. Constitution. Hannon's ruling justifies the injunction against the executive order on the basis of unfunded mandates such as the $198.73 it costs to process driver licenses for 500,000 illegal immigrants living in Texas from a total of 1.6 million illegal immigrants in the state, not even taking up the other costs related to education and other benefits.

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Krueger and Posner, eminent economists, say the reason wages have stagnated in the U.S. with wages not having budged much over a decade 2008-2018, is not only because of globalization and automation as long term trends. They attribute this stagnation in wages to "monopsony power," or power American corporations have over workers because of their stronger bargaining position and because workers have few alternatives.  For most of this period 2008-2018 high unemployment as reflected by the people out of work and taking part time jobs or having stopped looking for work, shifted bargaining power to companies. The Economist magazine pointed out that workers have not shared in the profit and gains corporations made during this period. Here Krueger and Posner show additional factors such as non compete clauses in worker agreements that have depressed wages. Half of franchise agreements prohibit competition for labor. Outsourcing work to other companies that hire workers means these outsourcing companies have more power over workers than the original companies using the labor. Unions represent only 7 percent of private sector workers by 2017, compared to 35 percent in the 1950's, so that there are no mechanisms to counteract the greater bargaining power gained by companies vs. workers. The way workers have roots in the communities they live and the consolidation of employers into a few companies in a particular area, mean fewer options exist for workers.  Senators Warren and Booker and the anti-trust division of the U.S. Justice Department are in agreement on this issue of widespread use of noncompete agreements that is considered unlawful, says this report in the NYT, offering hope for a solution to bring a better balance between the rights of workers to fair wages and companies seeking profit for stakeholders. Issues about workers, lack of gains for workers, prevalent outsourcing, and the frustrations of labor with parties that had lost touch with their worker base- such as Labor in Britain, SPD in Germany, Socialist Party in France and the Democratic Party in the U.S. - have led to political upsets with support shifting to other parties. This has not led to significant change to improve bargaining power of workers to correct the imbalance that now exists between labor and companies, leading to calls for change. Eric Posner is a law professor at the University of Chicago law school and co-author of a new book "Radical Markets: uprooting Capitalism and Democracy for a Just Society." This book turns the popular notion on its head that free markets have produced the imbalances that hurt social cohesion and democracy, by saying it is precisely the suppression of free competition such as for labor that have created this unhealthy situation. This is true in other areas where monopoly power has developed in other parts of the U.S and European economies in 2008-2018, as also for distortions in capital allocation that hurt infrastructure and other public investment. Krueger is a professor of public affairs at Princeton University and former head of the President's Council of Economic Advisors in 2011 under Obama, showing that Democrats themselves failed to correct this imbalance leading to a shift to other parties and Mr. Trump, who also appear to lack ideas or solutions to this problem that affects social cohesion and democracy. This is contrary to the vision of American or European society of better opportunity for all shared by all Americans and Europeans for most of the twentieth century. ...

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The problems Brazil faces with a sea of liquidity from developed countries with low interest rates going to emerging market countries with higher interest rates. Brazil is taking steps including a recent cut in interest rates to stem the flow. But interest rates at 12% are still too high not to attract business people in the carrying trade who borrow at low rates in the U.S. and Europe and invest the money in Brazil. The foreign direct investment has also increased. The result is an artificially overvalued currency- by as much as 36% since Jan 1, 2009 according to analysts- which hurts exporters and job creation in Brazil, as it becomes cheaper to import products than manufacture at home. Workers from VW recently protested in Sao Paulo as imports of cars are up significantly and there is a fear of job reduction at VW plants in Brazil. Brazil's automakers association estimate is for car imports to make up 25% of all cars sold in Brazil in 2011. This compares with 5% of cars sold being imported in 2005. It also shows up in production statistics. Brazilian industrial production declined by 1.6% in June 2011 from May. The cost of inputs are increasing rapidly for labor, raw materials, transportation, making Brazil a costly place to do business. The cost of living is now higher in Sao Paulo than in New York city. Cynthia Benedetto, the CFO of Embraer, a large Brazilian aircraft maker, says she always thought since she was a little girl that Brazil was the place of the future. But its deceptive now that the future is here, because this euphoria of progress could be shortlived. Embraer is investing in technology to reduce labor costs and is opening factories overseas. Bombardier, one of Embraer's competitors from Canada recently announced plans to build a manufacturing plant in Mexico. Brazilian president Rousseff is aware of this, and told Latin American leaders in Lima, Peru: "we have to defend ourselves against this immense, fantastic, extraordinary sea of liquidity that finds its way to our economies in search of returns that it can't find in its own." At the same time Rousseff has election promises to fulfill that require larger spending and for which the capital inflows are convenient but could prove erratic- for social welfare projects, and for infrastructure spending in advance of the Olympics. Turkey is seeing a similiar situation with booming consumer credit sustained by capital inflows even as its manufacturing competitiveness has remained weak. ...

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With its slogan "Expect More, Pay less" Target has tried to combine low prices with moving upmarket, carrying designer merchandise and chic styling without breaking the family budget. Now with the recession and consumers becoming frugal in the USA, Target and its new CEO who took on the role in May 2008, Steinhafel, is looking at Wal-Mart to see how it can also emphasize the low prices in this recessionary climate. With store sales fallig by 10% in early 2009 Target executives were concerned that something needed to be done. And the thing was to bring even lower prices withor making customers feel cheap. Its chief marketing officer natty Francis always believed in the marketing philosophy of the 1952 book about Marshall Field "Give the Lady What She Wants." Question was what the lady wanted in today's environment. Instead of the old aspirational image of the designers behind Target apparel, Francis now put up the idea of how good value can be chic too. Target designers emphasized how the lady can look "frugalista fabulous." The other challenge was introducig groceries in the store. And instead of packaged foods he idea was to introduce fresh foods which have higher margins. Protype grocery stores were put up and the concept launched. And now instead of gradual rollout, Target went hyper local putting fresh food in all 30 Philadelphia stores. And the marketing ads, radio, newspaper circulars, TV everything made Philly residents aware of the move. Sales went up by 5to 10%. Now the concept has proven to work and Target plans to put in in 350 stores in 2010. And Nat Francis thinks Target did not move fast enough considering how quickly consumers have turned frugal. In the new frugal environment Target research showed its working-mom was obsessing about the price of milk not the thigh-high boots, and she was visiting the grocery store twice aweek and Target only 3 times amonth. Showing groceries mattered. Meantime Target's markeing is ore focussed and its creating the perception that Target and Wal-mart are so close on price. Target is actually devoting 75% of its advertising budget to price compared to 25% in 2008. So a 32 inch panel TV is $246, a coffeemaker is $3. Yet Target executives don't want to undo a strategy built up over years of a better customer experience, designer merchandise at lwer prices, something that would differentiate it from Wal-Mart. So the moves may simply be an adjustment to comport with the thriftier savings oriented times....

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This election is seen as a turning point for Britain. The Liberal-Conservative coalition has come up with a radical plan to cut spending and decentralize services in the areas of education, policing and health care. The plan is to cut the deficit quickly from 11% of GDP in 2009-10, to 2.1% in 2014-15. By comparison the outgoing Labor government's plan was to balance the budget by 2016-17. And the fiscal impact of Labor's budgets would have been 4% by 2014-15, compared to the Cameron government's looking at 6.3%, with larger and accelerated cuts in spending. It is something of a gamble by the Tory-Liberal government. If the severity of the cuts in spending stifle growth, then Plan B will be needed. The size of the cuts are not seen as feasible. With growing interest payments with the large borrowing by the government, and no real cuts in healthcare spending, departments delivering public services in Britain face cuts of 25% by 2014-15. With defense and schools limited to cuts of 10%- other departments would face cuts of 33%. According to the Institute of Fiscal Studies one way to reduce the severity of these cuts in department budgets, would be to find additional savings in the welfare budget. In June, Mr Osborne, the Chancellor of the Exchequer, announced 11 billion pounds in savings in this area (with half coming from using a different measure for inflation in calculating benefits). Additional savings of 14 billion pounds in welfare budgets, can reduce the size of the cuts needed in departmental budgets to 20%. One example cited is means-testing payments that go to the affluent as well as to poor people, such as child benefits, and cutting winter-fuel payments. Tories and Liberals agree on the need to decentralize government and services in the areas of schools, policing and the NHS. In schooling the idea is to give more choices to parents and children. Current schools can apply for academy status and new "free schools" will be run be non-profits, charities, churches, and parents. These schools will have freedom to set pay, select curriculum, and still receive state funding. In policing, the idea is to have directly elected police and crime commissioners for every constabulary in England and Wales. The elected commissioners would appoint constables and determine budgets and priorities. For the National Health Service the move is to give groups of general practitioners a significant role in the delivery of health care. ...

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As Japanese sales in the USA drop from 4.35 million vehicles in 2007 to 4 million in 2008 and an estimated 3.67 million in 2009 according to CSM Worldwide, even the Prius and the Honda Civic are afected. The Mississipi Blue Springs plant originally designed for the Higlander SUV , then assigned the task of making Prius after the shift to smaller cars, now will not make the Prius. The plant investment will stop at $300 million, with the plant construction being completed but the equipment not being installed, and no plans to manufacture cars there till things improve and the plant is made fully operational. At the same time it is noteworthy that employees Toyota has hired at the plant will keep their jobs. Toyota has not laid off permanent staffers at its plants in North America or any other region despite slowing sales in its worldwide markets. What does this mean? The culture of the United Autoworkers Union developed through the prewar confrontations between the union and the auto companies, and union workers and union officials and company managers came to a consensus through these struggles with the coexistence of high executive compensation and union medical benefits and other benefits and job security. But its not really been a frutiful arrangement as it has constantly been whittled away and eroded to the point of going out of existence even as the union clung on to the old ideas and management just went on with the status quo. Jobs security is nonexistent and jobs constantly cut as plants close, and now high executive compensation will face government oversight with the auto loans. See the link to Business Week which states that the numbers show the auto workersin Detroit union plants pay about 5% of their medical costs as opposed to 30% for workers who have healtcare coverage in the USA. But what good is the additional benefit in an environment where plants are constantly closing and jobs being cut. Is'nt aworker at a Toyota plant with no job cuts but costlier medical benefits better off than his Detroit counterpart? Which is to say with forward looking management that lowered executive compensation and unions that discarded an entitlement attitude and proactively matched its medical benefits to levels to nonuninized Japanese plants, and management that proactively shifted to higher fuel efficency and smaller cars in the interest of energy conservation and good strategy to be level with companes like Honda ad Toyota in that performance measure, wouldn't that have led to fewer plant closures and jobs, and public support across the country including in dealer showrooms?...

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Classic story of a chain that fit the times and was on a tear as hundreds of Applebees opened all across the American landscape and it became a sign that a small town had arrived to have one. And then as quickly as it had grown it began its downhill slide as it lost touch with the times. Eating healthy had become popular, organic or fresh healthy ingredients were now poular, so also tastes had become more varied as the ethnic landscape of America changed and as more people travelled in the states and abroad, and people tried new flavors, so also new restaurants that opened were doing all these things, and cooking shows on TV popularized the new things to more of the Applebee's customer segment which had modest incomes around $50,000. How do you create a menu that is healthy and fits this kind of budget even as you compete with more and more choices for the average American. The you have the decor it s now outdated the kind of decor Applebee started with.

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Treasury Secretary Paulson meets Germany's Economics minister and the President of the European Central Bank Mr Trichet as there are indications that the situation in Europe is not looking much better. An influential survey of purchasing managers points out that manufacturing activity shrank in the 15 country euro region in June. The situation in Europe is uneven as some countries Like Spain and Ireland are seeing sharp declines in economic activity, whereas Germany is doing much better. German unemployment dropped to 7.8% the lowest it has been since 1992. Manufacturing activity contracted in June in Fance, Italy and Austria. In the midst of this Claude Trichet has to make a decision about inflation, the ECB's target inflation is 2%, and inflation in the euro region is about 4% with higher food and energy costs. Economists expect the ECB to raise rates to 4.25% this week. This will widen the difference between USA interest rates at 2% and Euro region rates at 4.25% and also affect the USA dollar....

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To gauge economic progress and improvement in living standards, instead of GNP alone look at number of indicators. Look at healthcare and education, cleaner skies and cleaner air, water and land. This is what areport commissioned by President Sarkozy of France, done by Siglitz and Amartya Sen, esentially emphasizes. And be careful when you see more cars and gasoline and more driving drive up GDP numbers and growth because this may actually work in the wrong direction, and have unusual negative effects as the SUV buildup and later collapse led to destroying companies and jobs in Michigan and the midwestern USA.

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Stephen Hadley, national security advisor to President George W. Bush, says there is every likelihood that the new government in Egypt after the departure of Mubarak will be non-Islamist and committed to a free and democratic Egypt. Such an Egypt would he says become a leader of a movement toward freedom ad democracy in the Arab world. Reports from Egypt in the New York Times and Washington Post show that the protests are led by younger people, many of them under 30 years of age, educated and middle class, interested mainly in moving Egypt to a democratic government and economic opportunity for all.

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Krugman sees Japanese style deflation as a plausible threat in 2011. He says that there is a very real possibility that the US would be seeing deflation in 2011.

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Under VW CEO Martin Winterkorn sales were up by 77% to 10.2 million units, revenues by 92% to 202 billion euros, and net profit tripled to 10.8 billion euros from 2007 to 2014. Winterkorn's contract ends in 2016.