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Modernizing India's construction industry may be one of the keys to keeping global growth from slowing down significantly. Here's why. If China slows down significantly after almost two decades of breakneck growth since the 1990's, as nothing like that goes on forever and China is facing significant environmental challenges, skilled workers and managerial talent constraints, and demands for fair treatment and compensation for workers, that stem from this uncontrolled and haphazard growth and export drive. This would leave India as a potentially large engine for world growth if properly managed, a role China has played alongside the USA for so long. India's infrastructure is one of the critical hurdles to achieving this potential. And neither India or the world can afford not to overhaul India's construction industry which is a roadblock to accomplishing what needs to be done in infrastructure. As described here more than 80% of the people in the construction industry are unskilled workers, usually working as day laborers or migrant workers in tiny crews. The other 20% - the carpenters, welders, painters, tile layers, pipe fitters, brick layers, and other skilled trade workers, are becoming harder to recruit and those unskilled workers that receive basic training by companies like Reliance are keen on looking for better opportunities in the Gulf region. The unskilled workers work at construction sites with little training are mainly workers coming from agricultural areas and villages for better wages and living conditions. One of the striking things about Indian construction sites is the use of few machines with most of the unskilled workers, men and women, carrying loads of bricks on their heads, digging holes with shovels and cutting steel bars with mallets and moving sand with spades. There is a huge opportunity for foreign and Indian manufacturers of construction equipment and rapidly increasing production within India of all types of construction equipment should be one of the first things to be tackled. Special incentives by the government and efforts should be made to bring new foreign and domestic investment and plants for construction equipment. Big construction firms that handle large projects, construction equipment manufacturers worldwide and domestic firms interested in investing, and firms involved in large construction projects throughout the country should be brought together in executing the plans for modernization of the construction industry. Training of unskilled workers chosen and recruited for aptitude, discipline and interest in learning new skills from villages as opposed to just working with "nakas" should be initiated in large numbers. A new vocational training system should be initiated borrowing from ideas of systems in countries that have excelled in this in Europe such as Germany so that workers can go straight from villages or urban areas to vocational schools for training in a craft or trade in the construction industry or in the manufacturing industry. And living conditions have to be improved for workers so that skilled workers see advantages in remaining in India rather than leave their families behind for work in the Gulf, and unskilled workers have the basic but good living conditions, access to clean water, basic but decent housing, and clean toilets and showers, and kitchen facilities. One thing is clear one cannot reach organized and well though out development goals on the back of such a haphazard and ineffective sytem of using the human and machine resources in the best possible manner, and free markets and capitalism may not be the best guide in this matter. China's example may not be a good guide in this matter either. There has to be a better way where treating people right and using the most intelligent use of resources brings better results than haphazard approach as with week by week recruiting through "nakas" and minimal use of machines, and recycling of agricultural labor through free markets in labor. The haphazard approach rejects the idea that the training, the discipline and the well thought out approach on recruiting training and best use of human resources without losing sight of costs can lead to superior and continually improving results. The continual improvement and better methods in the construction industry would free up the infrastructure bottleneck and hurdle to growth. Then it would be best to take an original path to development which would be true to the Indian character and spirit and emphasis on education and thoughtful way of doing things, which means that India should make an efficient use of its human and machine resources, and take advantage of all its human resources and intelligent approaches to develop industry and agriculture and avoid the waste in human resources. ...

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Where on the global map has there been a far bigger runup in house prices than in the USA? Answer Ireland, and way bigger runup. The average house price went up to $490,000 at the beginning of 2007, an increase of 300% compared to 130% in the US over ten years, according to the IMF. Important to note that in Ireland home prices have dropped only 7%in 2007, even though according to the Economic and Social Research Institute 90,000 new homes were constructed in 2006 double the number needed which suggests large inventory buildup of homes. This is similiar to the situation in the USA where house prices have not dropped more than 10% and in some parts like the northeastern USA not yet dropped according to the National Association of Realtors considering February 2008 over February 2007. See the BW link. What this suggests is that there will be a slow unwinding of the housing price bubble and that it has a long way to go for prices to go down 20-30% as many experts expect. Ireland also shares other problems as we see in countries like Ireland that changed the rues to promote foreign investment, China for instance. According to the Bureau of Labor Statistics Ireland's hourly pay for manufacturing workers was an astounding $25.96 in 2006 compared to $23.82 in the USA and only $4.99 in Poland. See the link to China, BW April 7, 2008. China is seeing a jump in wages, according to one manufacturer in Hebei province the wages for unskilled workers is 1000 reminbi a month compared to 500 renminbi a month in Vietnam. Ireland is losing foreign investment from companies that are either closing plants or postpoing new investment. Groeth rates close to 6.5% on average for the last 10 years now is projected at 1.6% and will probably be negative when the full brunt of the housing crisis hits Ireland....

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China's economic planning agency, the National Development and Reform Commission, has approved $156 billion in new infrastructure projects, new subways, highways and other projects in recent weeks. The response is more carefully planned than the stimulus projects in 2009-2010, which are now seen as excessive response creating the prospect of bad loans in the banking system and causing inflation. The stimulus spread over 2 years, 2009 and 2010, was by government's initial estimates about 4 trillion yuan and this does not include additional local government spending as the government encouraged spending. This time the stimulus is about 1 trillion yuan or $158 billion, 2% of GDP, spread over 4 years, with projects going through careful review, according to Nomura economist Zhang Zhiwei. The Chinese government wants to avoid losing gains made in controlling a property bubble and holding down inflation.

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Xi Jinping's childhood years were spent during the Chinese Cultural Revolution. He studied for a degree in chemical engineering after the end of the Cultural Revolution. He belongs to the group of leaders who worked to form the consensus around the current leadership and the leadership of Jiang Zemin. Little is known of his views on many issues.

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Chinese exporters are required to bring their revenue in dollars after covering costs such as imported materials, back into China, exchanging it with the central bank for yuan. This foreign currency is the main source of the Chinese foreign exchange reserves of $2.6 trillion. The system was based on an earlier period when China worried about capital outflows. Now with rising inflation, and a lot of money circulating in the economy after the recent stimulus and huge lending surge, China is rethinking this practice. Hu Xiaolian, vice governor of the People's Bank of China, says it makes it harder to control liquidity levels in China in todays situation.Because of this China's government is easing controls and letting exporters keep more of their revenues earned overseas. However with the expected declining value of the dollar Chinese exporters may prefer to convert their dollars into yuan. Some companies may want to accumulate dollars and other overseas foreign currency for investments abroad. The difference with Japan is striking. For Japan, also a major exporter, the bulk of foreign currency assets are held by companies, which are available for use to invest in manufacturing and other assets. By concentrating these decisions in the state, China has accumulated a huge reserve of foreign exchange. But this also creates major problems as China is concerned about the impact of the declining dollar on its huge holdings of US treasury debt. ...

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Class of 1977 was first after the Cultural revolution. In 1977 China held its first competitive national university entrance examination since 1965. A period of 12 years of the cultural revolution till 1977 were a lost decade in terms of education and getting the best minds and training them for careers in various fields for development and modernization. The year 1977 with the reinstatement of university entrance exams was remarkable in the outpouring of energy as young people prepared for entrance exams in a period of a few weeks. Textbooks were hard to find, for over ten years most had no schooling and worked in rural areas doing farming work. Students scrambled to find teachers to guide them. 273,000 were admitted to universities that year- only 4.7% of the the students taking the test. In comparison 58% of nine million students in 2007 were admitted to universities three decades later in 2007. Li Keqiang is one of these students who worked really hard to get into Peking University. He is the new prime minister, part of the new generation of leaders in China. Others include Zhou Qiang, governor of Hunan province, Wang Yi, party secretary of Foreign Affairs Ministry, and Jin Liqun, vice president of the Asian Development Bank, filmmakers Yimou and Kaige. and the writer Chen Cun. ...

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About 1.17 million jobs were lost in 2008 according to the Labor Department, with half of these job losses in the last 3 months, as unemployment reached 6.5%. Bu the the labor underutilization rate is the one to watch, the measure of total unemployment including parttime workers who seek full time employment but can't get it. This hit 11.8% in October up from 11% a year earlier. This is what happened in Japan where companies began using parttime workers to reduce costs and not to have to pay benefits, a trend that has already started in the US. See link to trend. Over a long period like 5-10 years this can lead to depressed consumer spending as workers see an uncertain future, as ocurred and is still the case in Japan. Also note that the unemployment rate reached 10.8% in the 1981-82 recession and this is shaping up to be something bigger, and half of the 1.2 million job losses ocurring in the last 3 months so this is accelerating. The economy is expected to shrink at an annual rate of 4% in the 4th quarter, and could see these kinds of declines or worse in 2009 and beyond....

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Juarez, the city across from El Paso, has done well in the last 10 months with 27,000 jobs added in the maquiladoras. These foreign owned factories continue to attract business interest even with a drug war raging in the background. The reason is that Juarez connects straight to American Interstate highways and this makes it possible to deliver goods in 3-4 weeks in some cases from the time of order compared to 10 weeks for China. And wages can run as low as $4.21 an hour. Companies get incentives in the tax treatment and worker training is supported by the local government.

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China's jobs situation is holding up better than expected with lower levels of economic growth. In 2014 there were 115 job openings for every 100 applicants, according to an official labor survey. Part of the reason is that the services sector is playing a larger role in growth. The services sector contributed 3.8% to growth in 2014, compared to the slower growing manufacturing sector, which contributed 3.0 percentage points. With problems in heavy industry and real estate this is reducing the need for larger stimulus spending. Official figures for GDP growth in 2014 are 7.4%.

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In China since 1981 the poorest people making below $1.25 a day fell to 207 million in 2005 from 835 million in 1981. In India the number of people below $1.25 a day increased to 455 million in 2005 from 420 million people in 1981. The share of the people in poverty fell to 42 percent from 60 percent during the same period. Corresponding figures for East Asia including China show a drop from 80% of the people in poverty in 1981 dropping to 18% in 2005. The proportion of people living below the $1.25 a day poverty line worldwide fell over the nerarly 25 year period from 1981 to 2005 from 52% in 1981 to 26% in 2005. In subSaharan Africa, now the poorest region half or 50% of the people live under the poverty line of $1.25 a day in 2005 almost where it was in 1981. In absolute numbers the region had 380 million people living below the poverty line in 2005 compared to 200 million people in 1981. Note that the World Bank this year changed the poverty line from $1 to $1.25 a day, to make allowance for the inflation that is hitting the poorer countries. Is China a rich nation after the Olympics? Some parts of China, the coastal regions and the regions around big cities like Shanghai and Beijing are relatively affluent with pockets of poorer people but in the rest of the country there is poverty as defined perhaps in terms of deep poverty, poverty, poor middle class without health insurance or any kind of savings for emergencies. With 200 million people in 2005 below the poverty line a question could be asked how many people in China below say $2.00 a day which could be seen as being poor at a time when inflation in food and fuel costs has been significant in developing countries. If its somewhere in the range of 300 and 400 million people in China this explains why in relative terms China would identify with India and the rest of the developing countries and it also explains its stand in the WTO trade talks acting as a developing country protecting the rights of agriculture and farmers within China. And it also explains the reasons why China sees a long transition before it ceases to be a poor developing country and why there is real concern that these 300-400 million people as well as others adversely affected by the rapid industrialization and exercize of state authority, corruption and increasing gaps between rich and poor, adverse effects on environment, that these people adversely affected are listened to and accomodated in the interests of stable progress and fairness. Much of recent history has shown that countries open to foreign trade have done better given the right conditions and careful policy measures. China opened up around 1981, and India around 1991. Also progress and gains are more significant in infrastructure building and in poverty reduction in the latter phases of development as the synergies increase, capital pool increases, and the development accelerates, this shows why China's gains look significant compared to India's at this point in time. In ten years or fifteen years a better assessment could be made and then some points may favor China and some India, and the results will be a result of different history, experiences and problems faced and routes taken because of prior developments in each region and varying complexity. ...

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The U.S. Agriculture Department lowered its forecast of corn yield per acre from 166 busherls per acre to 123.4 after a severe drought in the U.S. The projected corn harvest is expected to come in at 10.8 billion bushels, 13% smaller than the 12.4 billion bushels in 2011. The USDA forecast for corn price in August 2012 was raised at the upper end to $8.90 per bushel, up 39% from a month ago.

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Macroprudential policies of central banks in S. Korea, Indonesia, China, Canada, and other countries, as concerns grow about a housing and credit bubble.

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Critics of the Obama administration's so-called "light footprint strategy" for the Middle East say it is more about keeping distance from problems in that region. This is a reaction to the extensive involvement of the U.S. in two wars in that region and intuitively makes sense, as well as being in line with American public opinion to focus on problems at home. The shift or pivot to Asia of president Obama also comes in that context. The problem with this approach is that this ignores the fact that most of the momentum and effort for the freedom struggles throughout the Middle East from Tunisia first, then Libya, Egypt, and now Syria, comes from within. The lead role is now being taken by France and Britain, with German public opinion also lined up in support. The U.S. in forfeiting its role as a facilitator with strategies such as "no-fly-zones" is losing the opportunity to gain the goodwill in the Middle East with cost that is negligible in comparison to the cost of Iraq and Afghanistan, and comes after the huge U.S. effort to remove one dictator in Iraq. A minor followup effort is all that is required from an administration that pushed for the "surge" in Afghanistan. When history is written the investment of the Obama administration in Afghanistan may show little results, if what is considered by the media and experts as an unpopular and undemocratic government of Karzai falls in the aftermath of the U.S. withdrawal. There is little doubt in public opinion in the U.S. and worldwide that the movement for freedom and democracy in the Middle East and democratically elected governments will become a lasting facet of the new Middle East. It also provides huge opportunties for trade and investment as is shown by the gains made by Turkey in just 2 years. This is why the Obama adminstration policies in the Middle East show a lack of grasp of the facts showing the Middle East as opportunity more than threat for the next decade, especially in its overreaction to the Bush era policies. This happens as there is a demographic explosion of young people in the Middle East. An administration that was keen to sense the demographic changes in North America, has failed to grasp this fact and why the struggle in the Middle East flashes daily on television screens young people carrying on the struggle. A pivot to Asia means a pivot to the Far East more than Asia because India is part of the South Asian-Middle Eastern region, which presents another paradox because as China is slowing the entire South Asian-Middle Eastern region of Asia is where future growth is expected to accelerate in the next decade. ...