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This editorial in the Economist points to the long term effects of a crash in China's stock markets. This would reduce access to equity markets for corporate funding. It would pose larger risks because of the increase in total debt in the Chinese economy from 150% in 2008 to more than 250% in 2015. The fallout would not be as large as in the U.S. after a stock market bubble collapsed in the U.S., because market capitalization is about 40% of GDP, and households have put about 10% of their wealth in stock markets. Coming at a time when China's economy is slowing, and it faces other problems such as addressing pollution, healthcare and other issues, this could lead to a further slowdown for a prolonged period. Most economists from Krugman to Summers, say China is no exception to basic rules of finance and economics. The indexes have accelerated in the past year- CSI300 index of China's largest mainland stocks doubling in the past year, and ChiNext market for startups tripling in the past year, and at P/E ratio of 140 times prior year earnings. 4 million new brokerage accounts opened in one week of April 2015, and a study shows about 66% of people buying stocks for the first time have no schooling beyond the age of 15. Margin financing has increased to 2 trillion yuan or $325 billion. Clearly unlike the U.S. investors and stock market authorites have not experienced the collapse of a bubble with all the economic distress for a prolonged period....

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Lael Brainard, head of the National Economic Council, and former Vice Chair at the Federal Reserve answers questions at the Council of Foreign Relations in Dec. 2024. Points she made are- The inflation we experienced was correctly diagnosed by Powell and the Fed as caused by Supply shocks from the pandemic not 1970's style embedded expectations inflation.  The response was to free up the supply by freeing up the clogged Los Angles Ports with labour and logistics coordination, and other actions. It also included redoing the supply chains to reduce dependence on China as only supplier. The 2017 tax cuts mean revenue will be 1.5 percentage points lower than the historically 18% of the GDP. This will increase the deficit. Biden administration had kept the deficit in control and reduced it by making offsetting adjustments when investment in certain areas such as childcare was done. The childcare tax credit is important for American families. Action is needed to increase the supply of housing. These are reminders of what is needed for the new DJT administration to keep the American economy on a strong footing says Brainard.     ...

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Niall Ferguson, a history professor at Harvard, and Moritz Shularick, a economic history professor at the Free University of Berlin, coined the term Chimerica, to describe the Chinese export machine and the American overconsumption right down to negative savings. Now they call it an economic monster that needs to be given a burial. It does little good for America. For America its a 10-10 deal the authors say, 10% growth for China and 10% unemployment int the USA. The mood in the USA is no longer to go on with this arrangement they warn, and ask that the Obama administration take steps to end this arrangement. The USA should ask China to make a 30 % depreciation of the renminbi say Ferguson and Schularick. Krugman makes a similiar point and warns of dire consequences in aworld out of balance on the same page of the NYT, see the link. Ferguson and Schularick point out that unlike China, both Germany and Japan let their currencies appreciate by 60% for Germany and 50% in Japan, at a similiar period in their country's development. China's renmibi is pegged at 6.83 renminbi to the dollar, and China's government used $300 billion in reserves to keep the renminbi from appreciating this year. Throughout the 1980's and 1990's it was pegged at around 8.28 renminbi to the dollar. For the USA this has been very costly, with a distortion in the global cost of capital significantly reducing long term interest rates, and helping create the real estate bubble in the US. They point out that with Japan and Germany dollar reserves increased roughly in line with growth of American GDP at about 1% and stable before moving slighltly higher in the 1970's. By contrast China's reserves have grown from about 1% of Ameica's GDP in 2000 or $165 billion to 5% in 2005 and 10% in 2008 and headed for 12% in 2009 end. This is simply unsustainable any longer; carrying on any longer risks China losing the very basis of its economic success which is the open global trading system....

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Mark Landler of the NYT intervews Ben Bernanke at his office overlooking the Washington Mall, and Secretary Paulson in his Treasury office. Both men look back at events that led to Chinese savings financing excessive American consumption, and currency and other policies on both sides perpetuating the dependence of America on lowpriced Chinese products, and of China on the American export market. Now that this export market is collapsing it presents China with serious problems with unemployment in the export sector, and pesents America with the hangover from a consumption binge that now must be paid for with years of low or negative growth. Could this have been foreseen and if foreseen could things either have been mitigated or prevented. In March 2005, Prof. Bernanke at Princeton was not at the Fed (his Fed job started in 2006), and cautioned about the imbalances presented by Chinese savings finacing American consumption. But Bernanke saw this as a market phenomenon that would take years, even a decade to work itself out in a global economy. He said "for now, we have little choice except to be patient." The prevailing opinion among Greenspan, Bernanke and others was that the global economy worked in ways that were ultimately benign and regulation was not a good thing. After all the situation benefitted American consumers and kept inflation low while also providing China as an additional engine for global economic growth. The American economy it was believed was large and resilient, and it would not be adversely affected in the long run by such a large dependence on foreign savings. Only the positive effects were visible and the adverse effects were simply talked away as not serious for now. Zoellick, who was deputy secretary of state says that successful models are very hard to change, and Paulson says that without some kind of crisis its hard to get changes made once asituation gets entrenched. For China efforts to strengthen the currency that would slow exports and improve internal consumption were stymied by a reluctance to disturb the status quo, and Americans were lulled into complacency as years of low priced imports provided the best of both worlds, high growth and low inflation. ...

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“My absolute priority will be to strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the USA." European perceptions of recent happenings in the Ukraine war and the war's progression from the beginnings over three years will matter in 2025 as Europe, as Germany, France and Britain take on the role of bringing a fair peace to Europe that closes the war and does the reconstituting of defense architecture of Europe under new institutions that needed to be taken up in the 1990's after the fall of the Berlin Wall. Republicans and DJT's perception of Europe as 27 states is likely to be false. Germany and France in the 21st century may just be stepping into a role that was prepared since the formation of the European community in the 1950's with Germany and France at the core of Europe. It may surprise many that Europe just steps into this role. And with it a reconstituting of the defense architecture of Europe that needed to be done after the fall of the Berlin Wall and not left to the vagaries of free market capitalism that have created the present situation. “It was not a spontaneous reaction to interventions by Zelenskyy, but obviously a manufactured escalation,” Merz of Germany has said recently of recent White House happenings.  “My absolute priority will be to strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the USA,” Germany's Merz says and means it even if it confounds the US, China and other nations. ...

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China's breakneck growth was enabled by housing construction, and coal in a way that created problems of climate change. Now China's largest housing developers Evergrande and Country Garden together have a staggering $500 billion in debt and in serious financial trouble in or near default. How will China's government respond? It let Evergrande who had defaulted on debt payments build 300,000 apartments last year, just to protect home buyers. Now it's founder Mr. Xu is taken in for questioning and "illegal crimes." Making sure that the apartments on which people made deposits are built would cost another $72 billion, says Nomura. Yet suppliers, painters, builders and brokers are owed another $390 billion, in one estimate. And foreign creditors are getting together for complicated restructurings. Evergrande had entered wealth management promising 8 or 9% returns and has stopped making payments. All this is affecting public confidence in the future and China's growth story. For decades China depended on housing construction for high growth rates. Now the process is unwinding with both in financial difficulties. This NYT report says that after Evergrande's default, Country Garden failed to make a payment on $200 billion in debt last week and has 400,000 apartments that it sold but has not finished building. ...

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Very little is known about executives in AI who were till 2018 unknowns. Murati is from Albania, went to high school in British Columbia and on to a bachelors degree in mechanical engineering at Thayer School of Dartmouth in 2012. She worked at Tesla and a startup on augmented reality before joining OpenAI in 2018, according to Wikipedia. Much controversy was generated in 2024 with ouster of Sam Altman and reinstatement generating concern how AI is being used for profit by individuals without a role for government and leaders of major world nations and setting rules and guidance. The world of AI pioneers is fragmented with different views and it is not clear if the US, Europe, India, China or other countries can delegate such important technologies to a few individuals with little experience. The recent AI conference chaired by Macron of France and Modi of India was intended to bring leadership of major countries in advanced technology to take the lead in managing AI instead of leaving the field to unknown individual players.  ...

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The BBC's security correspondent looks at the cyber espionage being conducted from Russia during the U.S. presidential election. The U.S. director of national intelligence has pointed to the Russian government as the source of hacking into U.S. databases. U.S. intelligence officials say this is intended to interfere with the U.S. election process in some way. It follows hacking into the DNC database of the Democratic Party.

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Priceline surged in a tech boom of two decades ago before coming down. It has regenerated itself through its 2005 acquisition of Amsterdam based portal Booking.com, followed by acquiring booking site Agoda and travel search engine Kayak. This has helped the stock rise in the last decade. Over 90% of its revenue comes from outside the U.S., even though its original model of naming a price for a booking is gone.  Booking.com is making an attempt to penetrate the Chinese travel market with a series of acquisitions starting with online travel agency Ctrip.com. Ctrip.com is established but recent acquisitions are burning cash. There is skepticism about these acquisitions as Chinese company share prices are seen as inflated similar to the stock booms that went bust in the U.S. Booking.com invested heavily in online advertising primarily through Google. Yet though western customers use search engines to find and book travel, in China customers go directly to Ctrip or apps like Meituan to book trips. To get people to book Chinese travel companies offer large discounts, a model that may not be right for Booking.com. The effort is to add to Ctrip customer base the middle to lower income customers from Didi ride sharing app and the Meituan app, through its partnerships with these companies. The experience of other travel sites such as Expedia in the Chinese market is poor, with price wars and Expedia selling its majority stake to Didi Chuxing. Expedia's CEO at the time calls it "the wild, wild east" because of the intense competition. About 130 million Chinese travelled overseas in 2017, up 7%, and spending $115 billion. ...

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Decades of investment in infrastructure and manufacturing have given China a strong grip on manufacturing. China's economy depends on exports with sluggish domestic demand. One economist in Hong Kong says Vietnam is the key, if tariffs are placed on Vietnam it will be tough he says, because Chinese goods enter the US from third countries.

In 2025 China's world trade is imbalanced to an extraordinarily large degree, hurting thriving manufacturing communities around the world, and depends on a concentration of port logistics, manufacturing and lack of fair trade practices, that allow $3.5 trillion in exports while taking in only $2.5 trillion in imports. By 2008 America was waking up to this, DJT actually flagged it a decade later, Biden realized this, in the second term what appears like a whirlwind 100 days is really action on many fronts that is coming one to two decades late. 

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Yaroslav Trofimov gives his reflections on what the war means for Russia in this Essay in WSJ, and the sense within Russia that the war itself was a mistake. A result of miscalculations and a result that leaves Russia in no way better than it was in 2021 before the conflict. Hard won economic gains achieved by Mr. Putin during the last two decades have in fact been compromised by the conflict. No discussion has even been done on the transition away from fossil fuels that have been accelerated by the conflict. This is particularly relevant for Russia where the question of redundant fossil fuel assets during the rapid transition to renewable energy is a problem that needs to be tackled. The Ukraine diversion in this way affects the Russian economy and acts as a distraction from important economic goals. Global public opinion is also affected in ways that do not look favorable for Russia the longer the war goes on particularly the effect on food insecurity in poor countries, and energy security in Europe for poor households, the senseless destruction of infrastructure in Ukraine and millions of women and children displaced, all creating a sense of overwhelming moral failure. Mr. Modi of India is reported by FR24 to have told Mr. Putin at a meeting on September 15 that "this is no time for war." This is shown on today's pages in Lyrarc. How could it be a time for war when the pandemic has taken lives of over 1 million people in the US, over 2 million in Europe, millions in Asia, Latin America and Africa, and the world is only now coming out of it. The competition is not between countries for major power status but between countries on achieving better lives for its people, stronger economies, and better job, health, infrastructure and services to ordinary people, tackling problems on a common basis such as climate change. In most situations even the advanced countries of North America and Europe are facing the same problems faced by middle income countries such as China,Russia, and developing countries such as India- how to combine market economy with State participation in the economy and government ensuring fairness to all, better distribution of incomes and wealth, ensuring that there is a level playing field for all and opportunities for all. ...

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A 1000 mile windswept coastline and 300 days of sunshine make the southern African nation of Namibia an attractive location for green hydrogen projects. Green hydrogen is produced using wind and solar energy. There is a 50 fold increase in green hydrogen projects in just the last 12 months globally. The costly technology needs many projects to get to lower costs through technological advances. Germany is doing a pilot project in Luderitz, Namibia. Luderitz will need a deep water project to ship the fuel out.   Renewable wind and solar energy is used to distil the hydrogen atoms in water, as opposed to the currently used method to maky hydrogen from fossil fuels, known as gray hydrogen, or blue hydrogen if the emissions from fossil fuels are captured. Namibia is chosen as its natural advantages could bring the costs down faster. Other locations being adopted are Morocco, Australia, and Chile. The two sites in Namibia had bids from Africa's Sasol, Australia's Fortescu, Germany's Enertrag and Hyphen Hydrogen.  Hyphen Hydrogen won the bid for the two sites. It says the $9.4 billion project is targeting 300,000 metric tons of green hydrogen production a year from 5 gigawatts of renewable energy generation capacity by 2030. "Now all of a sudden the desert has become valuable," says Namibia's finance minister Mr. Shiimi. Additional asset for Namibia is that it ranks highest after Cape Verde in Africa for transparency, creating ease of doing business. It is ranked 57 in Transparency International rank of transparency for countries in 2020. China is 78, India 86 in rank. Namibia is putting up $45 million for the feasibility study on the project with the sesert scrub land an hour from Luderitz, once a diamond mining town on a rocky Atlantic coastline in 1900. Two sites are located in the area each 675 square miles. South Africa is severely short of energy supplies and a pipeline is being considered to take the Namibian hydrogen to South Africa. The African region is expanding in renewable energy. Lake Turkana Wind Power Project in Kenya provides 17% of installed electricity capacity in Kenya with 365 wind turbines.     ...

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Even if a automobile part for assembly is manufactured in the U.S., the subparts may be sourced overseas. This makes it extremely difficult to pinpoint the country of manufacture. Toyota Siena is 90% sourced with US and Canadian parts according to the U.S. National Highway and Traffic Safety Administration. The Ford Mustang 2005 by contrast uses 65 %US and Canadian parts according to NHTSA. There is a publicity war between the US makers and the Japanese with commercials arguing about who is more American. According to the Japanese Automobile Manufacturers Association $28 billion is the amount of cumulative investment in N. America and $45 billion is the amount of annual purchases of parts, so that 67% of the Japanese brand cars sold in N. America are made there. A graph from National HighwayTraffic Safety Association shows the Average percentage of auto parts made in the US and Canada for cars sold in N. America. It shows 2 interesting things. 1. That the US makers GM and Ford are closer to 80% and the Japanese makers Toyota and Honda are about 70%. So American makers still have more American content. Note though that Nissan is only around 54 % domestic content, significantly lower. Its always been a much weaker competitor than Toyota, and its sales recently have been sluggish in the US. The Koreans are not shown here but its quite possible that their content is closer to Nissans than to Toyota or lower than Nissans. So all foreign plants may not be the same. Notice the change in Toyota from 52% domestic content to 70% domestic content, from 2000 to 2005,an 18% jump which could only result from a deliberate strategy anticipating the controversy of who is truly American and who isn't. 2. In contrast GM has definitely shifted from 92% to 80% and rapidly moving in the opposite direction than Toyota. The sea change currently underway in the American auto parts industry is in the background, with Delphi looking to increasing manufacture and sourcing overseas particularly Asia (China, India etc), to bring down costs and be competitive in a globalizing auto parts industry. In the future as Delphi shifts overseas and GM procures from China and India one could see a continuing rapid shift to higher overseas content to add the cost savings directly to GM and Ford's bottom line. ...

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Immigration and drug flows became an explosive issue in the US by 2016, yet between 2016-2024 Venezuelan people outflows added up to 7.1 million migrants including about 1 million to the US, as Venezuela collapsed and Russia intervened to keep the regime.   None of this could have happened with major powers US Russian cooperation. The Monroe Doctrine of president Monroe, 1824, warned European powers to not restore colonial influence in the Americas. By 2024 Syria sent 14 million of its population to Europe, and Venezuela sent 7.7 million migrants to Colombia, Brazil, and the US, as their economies and democratic institutions collapsed. Missing was working cooperation with another military power Russia. Clinton, Bush, Obama, Western financial interests, failed to grasp the importance of US Russia cooperation and mutual respect. Obama denigrated Russia as insignificant because of its GDP.   Russia intervened in failing states but gained little, straining the good relations mutual respect from earlier periods of its history and interactions with the US.  DJT tariff on all importers of Venezuelan oil affect China to which Venezuela sent 55% of its oil exports over half a million barrels a day. It also affects India and other importers. These importers say experts, will shift to Russian crude preferring it to heavy oil from Venezuela. This is a sore point for Americans affected by violent crime from Venezuelan gang members reflected in recent election results. This also affects the sense of safety in American neighborhoods and in towns across America. The Linken Riley Act was passed in the US Congress as action on this issue. People in China, India, and in Europe, and some even in Silicon Valley in the US fail to grasp the way this has affected communities across the US when after decades of deindustrialization and shipping jobs overseas by American business, these communities are affected by a sense of lack of safety in their neighborhoods. There is also a failure to grasp the harm done by migration of 7.7 million people from Venezuela, almost a fourth of the country's population, because of mismanagement of the economy and crippling inflation, and the failure of democratic institutions to function effectively. A failure to grasp the extent of the economic and human disaster in Venezuela. DJT says- "Venezuela has been very hostile to the US and the Freedoms which we espouse...Venezuela has "purposefully and deceitfully sent to the United States, undercover, tens of thousands of high level, and other, criminals".    ...

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Stephen Miller, as both intellectual and organizer, is shaping policy on immigration at the White House as adviser to Kristi Noem, head of Homeland Security. He is a dedicated follower of DJT and White House deputy chief of staff. He also brought Prof. Navarro to the attention of DJT on trade policies.  He was a key figure in the first DJT administration at the age of 31 having served as communications secretary for Senator Jeff Sessions and developed his ideas during the period with Sessions. As director of speech writing and senior adviser to DJT,  he wrote some of president DJT's policy speeches in the first term, the speech to the Republican National Convention 2016 , and the Inaugural Address of 2017,  including the speech on Jan. 6th 2020 following the storming of the Capitol building.  Who is Stephen Miller? He comes from a Jewish family that immigrated in his grandfather's generation in 1903 to Ellis Island from Belarus, during a period of discrimination in Russian regions. During the period on campus at Duke University where he graduated in Political Science, Miller was a follower of a prolific author, David Horowitz. Horowitz was part of the Jewish leftist intellectual movement in New York in the post war period, but after the 1980's joined the Reagan movement and questioned the ideas he had believed in, questioned what he saw as the antisemitism on US campuses. At Santa Monica public school in California in 2000-2003 Stephen Miller questioned the multiculturalism that replaced the America of the founding fathers, that he saw at the school. It is this perspective that also underlies Stephen Miller's ideas about universities, about immigration, about the economy and China under Bush, Obama and Biden. Miller is also an organizer as he set up the America First Legal in 2020 with funding from donors on the right which has filed many lawsuits during Biden's term in office.  ...

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This WSJ editorial is pessimistic about the prospects for Abenomics without the actions needed for structural economic reform. Japan is in a recession after two successive quarters of declining growth by the end of 2015. It gives credit to prime minister Abe for encouraging companies to add more independent directors to the boards and pushing for improving corporate governance, but finds other actions lacking. The low unemployment rate is seen as concealing the problem of two tier labor market with most of the recent job growth coming from temporary workers, and the total number of worked hours actually declining. The 30% decline in the yen has not boosted the economy as much as expected because it also means decline in consumer spending power, and Japanese companies continue to move jobs overseas. It cites a Nikkei poll showing only 25% of the Japanese public now see Abenomics as improving the condition of the economy. The declining growth in China is also playing a part in slowing growth in Japan, adding more headwinds for Abenomics in 2016....

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India's demographics show one startling fact. By 2020, the average age of Indians will be 29. This is happening just as the rest of the world is aging very fast. In the next 15 years India will have 130 million more people in the 20 to 49 age group. This compares with a shrinking in population of 100 million in that age group in developed countries and China, according to the U.N. Population Division. The problem facing India is malnutrition that runs as high as 43% for children with half the mothers anemic, weak educational system at the primary and secondary school levels especially in the government run schools, lack of good governance in the most populated states such as Uttar Pradesh in the Ganges plains which has 200 million people, the consequent overburdening of cities which have no plans to manage the migration of the rural poor to the cities. India has to find ways to fill the huge gaps in getting better nutrition, education, dignity and sense of opportunity, and work for the growing numbers....

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The Dow Jones Average stock index drops by 800 points on August 14, 2019 with the ratcheting up of tensions in Hong Kong over autonomy protests, and the ongoing trade U.S. China trade dispute with more tariffs in September. Weak economic data from Europe exacerbated the situation. 

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The Guardian makes a serious point that the German miracle 70 years ago after World War II, was based on giving debt relief to war torn Germany. Half of Germany's borrowings accumulated after two world wars were written off. Germany was allowed to repay a large part of its debt in its national currency. The cost of servicing the debt was kept at 5% of export revenues. In 2021 the comparable figure is 16% for poor indebted countries. Yet the generosity extended to Germany is not extended to poor indebted nations in 2023, says The Guardian. There is no space for them to gain industrial strength or control, says this editorial. Big powers are not in a hurry to let poor nations develop away from sectors such as agriculture and mining. Private bondholders would be the biggest ones to pay for international debt relief- institutional funds and investors lent 250 billion dollars to 55 most climate vulnerable countries, China 46 billion dollars. It calls on US and UK to pass legislation requiring private bondholders to take part in international debt relief, as bonds are covered under English or New York law. ...

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Bhutan is a small mountain kingdom in north eastern India, bordering Tibet. Historically close ties with Tibet continued after China's takeover of Tibet following the coming to power of China's Communist Party in 1949. This led to a friendship treaty with India in 1949. A narrow piece of terrritory with 34 square kilometres is part of the dispute between China and India. India opposed the move to build Chinese roads in the area leading to a standoff that is now over 50 days. This territory is significant because it connects India's central plains to the northeastern states. Bhutan opposes the Chinese road work but tries to maintain friendly relations with China. The close relationship between India and Bhutan is part of the situation that emerged after China's takeover of Tibet. The Royal Bhutan Army's salaries are paid by India, road construction is done by India, and subsidies for food and kerosene were provided by India. A parliamentary democracy with a monarch was established in Bhutan under king Jigme Wangchuk, and elections were held in 2008, 2013. This has led to more openness towards China, leading to concern in India.  Bhutan is a popular destination for Chinese tourists who pay $250 for a visa. Indians do not need a visa. ...

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With the decline of its hardware business making iPhones Apple is looking at other fields. It is launching cheap online TV subscriptions in streaming wars in competition with Netflix and others. Apple is launching a new TV streaming service Apple TV+ in 100 countries for 4.99 British pounds a month undercutting Netflix's price of 5.99 pounds. The new service will be started November 1, 2019. Disney plans a streaming service for 7 pounds a month starting November 12. This service is alongside iPhone 11 launch and anew iPad, a new iWatch. Buy any new Apple device and you get a 1 year streaming service free.  Sales of iPhones fell 14% in the April to June 2019 quarter to 39 million units. Samsung's business is growing by 4% to 75 million units and Huawei by 16% to 58 million units. Apple sees the need to increases its services business with a target of $50 billion in 2020. Apple sees itself more as a media and cloud services company as it makes this change. In markets such as India Apple's growth is limited by its failure to lower prices on new iPhones. In China it faces strong competition from Huawei. The trade tensions are increasing the strength of Chinese brands in the Chinese market. The market in U.S. and Europe is saturated after years of expansion. New iPhone models are costly and bring peripheral advantages such as more and better cameras and features such as screens that are not breakable- for the iPhone 11- not dimensions that are critical for making a costly purchase. After years of growth tech companies such as Apple, Google, Alibaba, Amazon are reaching a point where incremental growth is not what it used to be and most of the rapid growth behind them. Trade tensions are also limiting the outlook in the Chinese market, and pricing remains a major factor in the Indian market. Western markets are saturated. There are fewer and fewer substantial new ideas from these tech companies. ...