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There is concern that though President Da Silva has had success in his term in office, he is leaving problems for the new administration. One expert says he leaves a giant question mark behind him. One of the problems is high spending by his administration. After the financial crisis of 2008, the government flooded massive state run banks with cash, ordering the banks to to lend heavily to businesses and consumers. The government also increased its own spending on contracts and projects. Public spending has continued to grow since 2008, and federal expenditures as a percentage of the economy have doubled during Da Silva's term in office. In an editorial recently, the newspaper O Estado de S. Paulo, says the government should have used the high growth in the economy to cut public spending and improve the public finances. Because the Rousseff administration is a continuation of Da Silva's administration, and includes many of the same people, the daily asks if the Rousseff team's promises to cut spending in 2011 are believable. Inflation in 2010 is at 6%. The other serious problem is an highly overvalued currency, and volatile capital inflows from developed countries. The boom in China has helped Brazilian commodities and agricultural exports, a slowdown there would affect Brazil's economy. ...

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Felipe Caldron, Mexico's new President, addressed one of Mexico's biggest problems low tax revenue by getting passed through the legislature a tax bill that will increase tax revenues from 11% of gross domestic product to 13.5 % of GDP. This will be done by a corporate tax that taxes sales rather than profits starting at 16.5% in 2008 and rising to 17.5% in 2010. The original proposal Calderon requested would have taken this to 19%. The bill cuts taxes on Pemex which will give it an additional $3 billion a year as it is falling behind in new reserves added from exploration and drilling that would replace ones being depleted leading to a decline in output. And the tax bill imposes a tax of 2.5% on cash deposits above $2200 to attempt to collect some taxes from the underground economy which employs about a quarter of the workforce. In addition it imposes a gasoline tax of 5.5% that will go to the state governors for local spending needs. The deal was negotiated by giving the opposition reforms in the electoral process including replacing all commissioners of the Federal Election Institute, and bans radio and television advertising for candidates. Calderon wanted to increase the taxe revenue to 14% of GDP, this would increase it to 13.5%. Considering the previous administrations failure to get any legislation through Congress while Pemex production slipped, and tax revenues were some of the lowest in the world due to widespread evasion (see a similiar problem and tax reforms in the Philippines recently), this is a breakthrough. But Pemex has to turn the corner, and lags way behind Petrobras in Brazil in terms of progress in exploration and new reserves. Revenues from the oil company largely help fund state spending in Mexico. However reforms that free up the state energy sector as Brazil has done (see the recent article on Petrobras in wsj ) some years back are still for the future. How much will this help. Its a modest beginning from a low point under the Vicent Fox administration. The additional $10 billion it generates next year will go to fill the gap in declining tax revenues from state oil company Pemex, and rising health and pension committments of the state....

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The Economist takes a pessimistic view of EU's relations with Turkey, based now it says on expediency- the EU's need for Turkey to stem the flow of refugees, Turkey facing a sensitive border with Syria and internal opposition to the Erdogan government after restrictions on the media and the judiciary. Turks get visa free entry into Germany in exchange for taking back refugees crossing the Aegean into Europe.

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The inflation index for Brazil went up by 5.99% in January 2011, compared to the prior year. Prices went up by 0.83% in January, compared to December 2010. Brazil's central bank surveys show rising expectations for inflation in the country. This creates pressures for the central bank to raise interest rates above the existing 11.25% overnight interest rate, which is already one of the highest worldwide. Higer rates would worsen the impact on the currency as it accelerates volatile money flows into Brazil. The soaring Braziling curency is widely considered to be highly overvalued and a volatile currency hurts Brazil's growth prospects. Brazil's government spending under the Luis Da Silva presidency was increasing rapidly and cuts in spending are expected, though there is skepticism that the incoming President Rousseff will control spending.

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The Portuguese government asked the European Union for bailout loans. The aid the EU is providing to Portugal comes with conditions- asking Portugal to make additional austerity cuts even as new elections loom. The aid is essentially more loans at high interest rates, even if the rates are lower than the steep rates in financial markets for a country with a collapsing credit rating. There is serious concern about whether this formula applied by the EU is going to work because at this rate it may take a decade or more for Portugal to pay off all the loans. The major problem is that with severe spending cuts- a country that lacks competitiveness and cannot devalue its currency because of being the euro zone- it is that much harder to generate growth. Simon Tilford, chief economist for the Center for European Reform in London, says the EU leaders have failed to come to grips with the core of the problem for Ireland, Greece and now Portugal- which is how to restore the finances to some sustainability, and how this could ever be achieved by a policy of deeper and deeper spending cuts. Tilford points out that the other more fundamental problem EU leaders are not tackling, is that the problem is deep down the large amount of Portuguese, Irish and Greek debt held by German, French, British, Spanish and Dutch banks. If these countries default the governments of these countries would have to recapitalize their banks at the expense of the taxpayers of Germany, France, Britain, Netherlands. Political leaders of these countries want to avoid confronting angry taxpayers and lose political support. Germany has called for a bondholder haircut, something that banking interests do not support. Tilford says Portugal is not getting a bailout, because for a bailout there would need to be a default by Portugal. What it is getting along with Ireland and Greece, are loans at high interest rates, and an EU plan that simply stifles the ability to pay back accumulated debt, leaving the situation in limbo for some future resolution....

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William Booth provides a must read insight into why poorly educated young people attempt to cross the border into the U.S. looking for work and opportunity, and why Mexico fails to provide the elementary and high school educational system it needs to increase growth to create opportunity. Mexico's education system is failing when compared with other countries in the Group of 20. Sixth graders get 562 hours of instructional learning compared to 1,195 in S. Korea, according to Mexicans First, a group working to change the way the educational system works. In recent international exams half of Mexican 15 year old students scores ranked them at lower levels in math and only a little better in reading and reasoning. "De Panzazo" is a popular documentary prepared by Mexicanos Primero on the dire situation in the school system. One of the most striking measures of this failure is that only a quarter of the children graduate from high school. This only pushes more poorly educated people to attempt to cross the border into the U.S. looking for work. It means the Mexican economy is deprived of a highly educated workforce to increase productivity and growth. The middle class tries to get their children educated in private academies. And the nation's employers use special training to improve skills for workers to be able to compete in a global economy. Part of the reason rests, say experts, on the ability of the powerful teachers union with 1.4 million members to block change for teacher selection based on merits and competency, and exams for teachers. Instead teacher positions are sold, with an elementary school position tenured for life selling for $20,000 in Cancun, and a rural village position for $2000, according to Mexicanos Primeros. Even president Calderon owed his election to the support of the teachers union. And the current PAN presidential candidate Vazquez Mota, who was Education Secretary for two and half years could only go part of the way. She got the union to agree to have new teachers selected by having them take exams, made public standardized test scores, and pushed state governors to show employment rolls and whether teachers actually taught in classrooms or worked at union offices. Calderon failed to make changes because he agreed with the union that the union would take the lead on changes not the education ministry, and had the union president's son-in-law, Fernando Gonzalez, as deputy secretary of education. Jorge Castenada, a former foreign minister, says Mota was fired because of union demands. In July 250,000 teachers are required to take competency exams, but the union has asked its members to ignore the exams, and the education ministry will not do much beyond using the exam for diagnostic purposes for teachers who take the exam. The problems at the elementary and high school levels are evident also in other countries such as India and Brazil leaving the real potential of the labor force untapped....

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With a credit led expansion, and credit flowing as rapidly as in 2009, China faces some difficult choices in 2010. Inflation's annual rate rose to 4.4% in October 2010 from 3.6% in September. China's CPI target is 3%. October 2010 saw an additional $89 billion of new loans, and China is floating on a sea of credit. The question is how econmic growth can be maintained once this slows.

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Mark Sanford, Republican Governor of South Carolina, cites Donald Trump in May 2014 on releasing tax returns. At the time Trump is quoted as saying: "If I run for office, I will release my tax returns, absolutely, I would love that." Sanford says he released his tax returns, and Mike Spence, the Republican vice presidential candidate has released his tax returns, and calls on Trump to release his returns as promised. Hillary Clinton has released her tax returns, which show she paid 34% of income in taxes. Sanford says it is important information both for transparency in the political process and in giving voters an opportunity to evaluate those who want to govern the country. He also says that this is the reason a banker asks for tax returns before making a loan, that talking is'nt enough tax returns tell the real story,  and the reason why this is a precedent too important to be broken in 2016. This has become increasingly important in this election year with the public expecting corporations and wealthy individuals to pay their fair share of taxes, so that programs to aid workers left behind during the recession, provide job retraining, finance the infrastructure that will create new jobs, provide access to college for working class and poor, require adequate government revenues. ...

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With 57% of Italy's sovereign debt owned by Italians, a lot depends on Italians continuing to invest in Italian government bonds. With the higher interest rates on the bonds Italians have one more reason to continue to do so.

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The decline in the U.S. television advertising market accelerates in 2015. Viacom Inc. (Nickeodeon and MTV) sees a decline in TV domestic advertising revenue of 9% for the 2nd quarter of 2015, as its TV ratings decline. CBS Corp and Disney (ESPN) see a 3% decline. 21st century Fox with FOX network and shows such as "American Idol" and "The Following," sees a large decline in its television ad revenue of 14%. In the week of August 4-6, 2015, the share prices of these media companies were hit hard. Viacom shares declined by 21%, Fox 13%, Disney 11%. Earlier gains for digital ad revenue were from print, now the gains are at the expense of television budgets. Companies such as Allstate, Mondelez, Wendy's, MasterCard, Honda, P&G, are shifting to digital from television to follow millenials. Experts at ad buying firms say advertisers are tracking young consumers and following them to digital platforms. Viacom's Nickelodeon and MTV are hit particularly hard by the growing shift to kids shows on Netflix and to You Tube, and Amazon Prime Instant Video. Linear TV and interruptions for advertising is also accelerating the move, when other ad free or less advertising options are now easily available. By 2018 the digital ad spending will overtake television ad spending, digital getting $83 billion and television dropping to $78.6 billion....

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Missteps by the Detroit automakers include fighting fuel efficiency legislation in 2005, even when the USA faced higher gas prices, and diluting the fuel efficiency legislation with a target of 35mpg for 2020 at a time when Europeans were taking up more aggressive challenges as public opinion there moved in that direction. They also spent heavily in lobbying spending, about $175 million for GM and Ford in the last 10 years, and some would say lobbying against the national interest and the national security interest of the USA, because failure to reduce consumption of oil through fuel efficient cars weakens the economy by sending hundreds of billions of dollars overseas to mideast countries. The closing of plants in states like Alabama, Louisiana, Georgia and Delaware and consolidating their operations closer to home weakened Congressional support, And the foreign auto makers built plants in places in the south like Alabama resulting in Senator Shelby of Alabama becoming allied with them. Rick Wagoner failed to show the vision and leadership needed, and Detroit failed to realize that vision and leadership were required to run these companies. not coming up through the large bureaucracies of these companies. And people associate him with declining market share and a company in decline and asky why. The whole mood of the country is reflected in newspaper columns across the country, in reader comments that run into the hundreds for each article overwhelmingly negative for taxpayer money going to Detroit automakers. This is the situation today and catches the Detroit automakers management, union, dealers, suppliers, by surprise as they have become so used to the status quo and know nothing different....

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The in-house manufacturing approach has benefitted Lenovo. This was especially evident during the flooding in Thailand when PC manufacturers were faced with a shortage of hard drives. Because Lenovo assembles its own computers unlike competitors Dell and H-P, it was able to move quickly to focus on products for which hard drives were available and emphasize high profit margin products. The additional flexibility and speed helped Lenovo increase market share from 13.7% to above 14% in the 4th quarter of 2011, and ship 13 million computers. H-P experienced a market share decline to 16% in the 4th quarter 2012 from 18% the prior quarter. Profit for Lenovo after several years of losses was $473 million for the fiscal year ending March 31, 2012. Lenovo co-founder Liu Chuanzhi and Mr Yang took control in 2009 and refocussed the company on China and emerging markets leading to increasing sales. Mr. Yang has been with the company since 1988, when it was not called Lenovo. He became CEO in 2001 and recently he has taken the post of CEO and chairman. Yang's four year plan in 2009 was focussed on increasing its network of resellers in China to the point that even in rural areas customers could reach a Lenovo store with customer service. At meetings in 2009 the decision was taken to increase in-house manufacturing to 50% from 30%. Lenovo hoped to gain an advantage with its own manufacturing capabilities in working closely with suppliers to come up with differentiation in key components such as display screens, battery and storage, and improve existing products for a market edge. Lenovo is also promoting its brand with increased advertising to promote customer acceptance of the brand....

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Timothy Rooks in DW.com points out rightly that it will be how well Macron grasps the opportunity to turnaround the economy within the EU that will make a difference. France needs some of the changes Macron is proposing because it has one of the largest state sectors of western economies, and private industry needs to be revitalized to generate the jobs to reduce youth unemployment. A cut in the corporate tax to 25% from 33% would be in line with Britain, Germany and other countries. Some cuts in spending 60 billion euros over 5 years, and 50 billion euro stimulus package. The wealth tax would be retained, and the 35 hour work week.  He has opposing views on 35 hour week but now will focus on flexibility on overtime, capping severance pay and investing in education, job training, other ways of reviving the labor markets to get hiring started again and cut into 25% unemployment for persons under age 25. He also plans to follow the German model of letting companies deal with unions at the local level, at the company level, not only at a national level. Close cooperation with Germany and the confidence of French industry will be a plus as he works to revive the French economy, with the conviction that this will also be a project to fulfill the hope of young people for jobs, and a way to reduce the number who have turned to extremist parties in France. ...

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Debate in Germany over whether there should be exception to the minimum wage agreement of 8.50 euros per hour. The head of the federal employment agency, Heinrich Alt, says a universal minimum wage would reduce incentives for young people to join vocational training. The new labor minister, Social Democrat Andrea Nahles, says "there will be no exceptions, notwithstanding all the escape fantasies." The Social Democrats insisted on the minimum wage to win support from rank and file working class members after losing support in its own base with the increase in the low wage sector in Germany. Unemployment in Germany is less than 5%, but this comes with an increase in lower wage workers as part of the reforms under the Social Democrat Schroeder administration when unemployment was close to 10%. Economists say the increase in wages would increase weak consumer spending in Germany and increase imports from other eurozone countries. In 2011 the share of the German population making less than the new minimum wage of 8.50 euros an hour, according to the German Institute for Economic Research, is- for former East Germany 27%, for former West Germany 15%, for ages under 24 years 44%, for ages 25 to 60 years 15%. This does not affect the manufacturing sector in East Germany as wages in the sector are above 8.50 euros. The other problem is that wages appear to be declining in Germany, with wages decreasing by 0.3% in October 2013, according to the Federal Statistical Office. ...

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A study by Dr. McCormick of the Harvard Medical School and professors at the City University of New York School of Public Health at Hunter College, shows that the anticipated savings from conversion to medical records may not materialize to the extent expected. This study of data from 1100 doctors of 28,000 patient visits shows that with access to digital records doctors actually increased the number of tests ordered- from 12.9% of visits without digital records to 18% of visits with digital records. For more advanced tests such as MRI and CT scan the rate was 70% higher. Dr. McCormick says this may be because the new digital technology may have made it easier to order tests.