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Mike McNamara, CEO of Flextronics, on the increasing competitiveness of U.S. manufacturing and the return of manufacturing jobs to the U.S.

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The unemployment rate for young people 16-24 years old is 18% in the USA in 2009, up from 13% in 2008. This has serious consequences, creating a lost generation as happened in Japan in the last decade.

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E.U. leaders reached a new agreement for solving the debt crisis in Greece and the broader eurozone debt crisis. This time an effort was made to come up with a solution that had some chance of working unlike earlier efforts. Earlier efforts that concentrated on austerity and burdened Greece and other countries in the debt crisis with higher interest rates came under severe criticism as unworkable. The result was higher unemployment, a shrinking economy, higher debt to GDP ratios, and contagion effects. The new plan commits to getting Greece on the path to growth. The European Financial Stability Facility will have powers to buy Greek bonds at their value in the secondary markets which means Greece would owe less to the EFSF, bringing down Greek debt. Greek debt maturities are to be extended over many years and interest rates lowered, with similiar actions for Portugal and Ireland. And private bondholders were given the option of taking 20% less on their bonds or extending the maturities of the bonds at lower interest rates. In return the bonds would have guarantees for repayment by the E.U. so that the private creditors would limit their losses. The draft document of the agreement says all the E.U. countries would commit to fiscal discipline....

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Reilly points out that removing the government and "putting private capital back at the center of a healthier" housing-finance system, as recommended in a policy paper from the Treasury Department, is only possible if the government gives up the idea of a 30 year mortgage. Thirty year loans as currently structured are not attractive to investors without a government guarantee. The revival of securities markets for mortgages not backed by the government is not possible with the 30 year mortgage. There are benefits from the government getting out of the mortgage markets. A significant benefit is that there would be less incentive to invest in housing, so that more capital is available to other productive areas of the economy leading to higher economic growth. In fact the diversion of economic resources from more productive uses to housing was a major problem in the last decade.

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China's shift in emphasis from heavy manufacturing and the auto industry to other technologically advanced and less environmentally sensitive industries including new energy sources. The National Development Reform Commisson lists industries in 3 categories- encouraged, allowed, and restricted. The auto industry is now in the allowed or permitted category, and is no longer encouraged for the purposes of foreign investment and the granting of preferential tax or streamlined approval processes. Alternative energy cars, internet equipment and some service industries are moving to the encouraged category. The growth in the auto industry has slowed to about 3% in 2011 from 32% in 2010, with the change hitting the domestic Chinese brands the most. As a result more laws are expected to help technical know-how flow towards Chinese auto companies, according to IHS Automotive.

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"China's Superbank," by Henry Sanderson and Michael Forsythe looks at the rise of China Development Bank to provide insights into the two decade real estate boom in China, and the trillions of dollars in loans made by state owned banks to finance China's state owned industries and infrastructure development. The authors say these loans based on land owned by the state, improved with roads and other infrastructure and then sold to industry, have helped finance China's urbanization and industrial development. But it has also created problems including eviction of farmers from the land by local government authorites increasing inequality, led to misallocation of capital on bad projects, and an unsustainable model of development focussed on state owned companies. A major side effect of this is not covered in the book. This is the impact of crowding out of credit for private industry in China, with privately owned business having to pay higher rates in the underground loan market or lacking financing. A major focus of the report "China: 2030" by the World Bank and China's official think tank Development Research Center is on reversing this development to come up with a sustainable development model. The report was supported by World Bank chief Zoellick and China's new prime minister Li Keqiang. "The Great Rebalancing," by Pettis, a finance professor at Beijing University, looks at the other side of the financing of China's boom- the low interest rates on savings for China's consumer. This reduces household incomes and reduces purchasing power as the interest rates are lower than the rate of inflation. Lower value of China's currency also reduces the purchasing power for China's consumers. Estimates show the low interest rates cost China's workers and consumers somewhere in the range of 3 to 8% of GDP annually in bank deposit income. This money is funnelled through the banking system to make more loans for infrastructure and growth at the state owned companies, concentrating exraordinary level of financing in one direction. As a result the consumption share of GDP in China has actually fallen in the two decades of hyper development. This is about 34% compared to 50-55% for other Asian economies....

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The US needs 100,000 jobs a month just to keep up with population growth. And 7.2 million jobs have been lost since December 2007. Where will the new jobs come from to replace lost jobs in retail, banking auto and other job losing sectors and when, and will some jobs never come back. Global Insight forecast show 8.1% unemployment in 2013, suggesting that jobs needed for population growth and some jobs from the pool of job losses will not be recovered for some years.

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Shiller's ten year earnings P/E ratios for U.S. stocks are at about 24.5 in October 2013. By comparison Shiller adjusted 10 year P/E ratio for Greece is at 4, Italy and Spain at close to 10 and Germany at 15.6. The one year earnings P/E ratios in Oct 2013 are at 15.8 for U.S. stocks. Within the U.S. Shiller says, the sectors where P/E ratios are much lower than 24 are in healthcare and energy and industrials. Emerging markets are also much lower than 24 for the U.S., says Shiller.

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This WSJ editorial points out a big concern in the third quarter 2012 economic growth figures- the figure showing non-housing related investment contracting by 1.3%. It says the U.S. borrowed $5 trillion and all it got in return was 1.7% economic growth- 1.7% being the growth in U.S. GDP for the first 9 months of 2012. It also points out that the growth came from consumer spending and the Federal Reserve's money printing. The consumer spending would be hard pressed to continue if incomes remain stagnant without the capital investment and hiring from the private sector. Government spending accounts for 0.7% of the GDP growth, and estimates for private sector growth in output is about 1.3%.

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Shipping and freight statistics show an increase of shipments from Mexico. Trains and truck shipments from Mexico to the U.S. increased by 8.7% by weight in the first 11 months of 2011 compared to the prior year. By comparison shipping containers entering the ports of Los Angeles and Long Beach went down by 0.2% in 2011. Mexico stands to benefit from the shift in dynamics as manufacturing costs in China increase with labor constraints, higher wages, higher commercial land prices and recent Asian supply chain issues making firms wary of unanticipated problems. This is expected to benefit the U.S. with the return of some manufacturig jobs and a serious rethink of outsourcing. Because of highly automated factories and advanced technologies the manufacturing process requires fewer and more skilled operators, reducing the labor component of costs. Carlisle Companies CEO, David Roberts says he is expanding tire manufacturing plants in Tennessee. He says he can make tires as cheaply or cheaper in the U.S than in China. This has serious implications as the U.S. gets down to rebuilding and renewal of its manufacturing industry....

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It may come as a bit of a shock to learn, that the entire country of Nigeria produces about as much electricity at electricity generating facilities, as the electricity used around Japan's Narita airport. Most people in this country of 150 million people, get electricity only for a few hours a day. As a result two thirds of all electricity consumed in Nigeria is produced using small scale generators. President Jonathan's plan to raise $3.5 billion to increase electricity supply 13 fold. Since the 1990's the capacity increased by half, but distribution is extremely poor, so that the actual supply has remained flat. One result is a very small manufacturing sector, of about 4% of GDP.

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Greece's GDP was up by 1.7% in the third quarter of 2014, according to Elstat, with the recovery in tourism a major factor. It is now on track to achieve 0.6% growth for 2014, for the first time seeing growth since 2008. Yet the recovery is only beginning as Greece's economy is 30% smaller than in 2008.

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The risk premium for investors in the U.S. stock market is about 5.4%. The risk premium is the higher return investors expect above the return on less risky government bonds to assume risks of a volatile stock market.This is the finding of researchers Fernando Duarte and Carlo Rosa at the New York Federal Reserve. It is the weighted average of 29 models used to calculate the average over the last 50 years. This is close to what it was after the bear market of the mid 70's and when shares were in a slump in 2009, and suggests a positive outlook for stocks. A separate indicator is the cyclically adjusted price earnings ratio of the American stock market developed by Robert Shiller of Yale, which averages profits over 10 years. This is at 23.2 in May 2013, and above the historical average, suggesting the U.S. market gains may not be too much higher from this point. Inflation is low, and commodity prices are lower which gives central banks in the U.S. and the eurozone more room flexibility in monetary policy. Japan's central bank is increasing the money supply to fight deflation and other central banks are cutting rates. This adds to the positive picture for U.S. share prices and stock market....

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Timothy Egan vists the west coast of Ireland, near Dingle, where David Lean filmed "Ryan's Daughter," and sees abandoned half-finished houses. One in eight houses in Ireland sits empty he says, as the excesses of the boom years now are there for all to see.

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The Economist points out that China's total debt of government, corporate and households has grown by about 100% of GDP since 2008. The 2009 crisis led to rapid increase in debt. It is now about 250% of GDP, according to the Economist. Slower growth of below 7% risks reducing China's ability to service this debt. About half of this debt is owed by state owned companies and property developers. China can use its sovereign reserves to continue supporting bank and state owned companies. Investor's are pricing bank shares to reflect about 10% of this debt as bad debt even though government estimates are much lower. The reserves provided China time to fix the banking system since 2008, yet the debt keeps growing and China has failed to take strong action in the last 6 years. Complacency is a problem, and the incentives for local governments to continue prior practices that increase debt continue. As Krugman and other experts have pointed out at some point the rules of finance will apply to China as they have for other countries that faced a debt crisis- Japan in the late 1980's, South Korea and other Aisan countries in 1997, and the U.S. in 2008. Even without a crisis through deft managemen and use of reserves China risks zombifying the economy as old loans are backed up by new loans, with the further risk of misallocation of capital or poor use of capital. This lowers productivity of capital and hurts development. With poor statistics such as the figure of 1% of debt being bad debt cited here, the problems of complacency can be magnified, as there is less reason for a strong response....

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Mortimer Zuckerman of U.S. News and World Report magazine expresses his disappointment at the Obama administration's performance. He points to a "competency crisis" of the Obama administration and the President. On the Simpson-Bowles Commission's recommendations and President Obama's complete silence on its proposals, Zuckerman like other observers expresses strong disappointment. He says that he and other early supporters are no longer excited by the novelty of his candidacy and his presidency. Obama's single minded focus on getting re-elected is disturbing for Zuckerman.

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Dow Chemical CEO, Anthony Liveris, is co-chair of the Advanced Manufacturing Partnership, an effort to bring together federal government, industry, universities and other groups to invest in new technologies that would generate good-quality jobs and increase U.S. competitiveness. He writes this letter in the Wall Street Journal to correct two misperceptions. The first, is that government has no significant role in nurturing an environment that is good for business and manufacturing industry. Because other countries, including China, are now operating like companies, it is important not to let the U.S. be in a disadvantageous position. Government has always been involved in its writing of tax and incentive policies, regulations, trade agreements, and creating a climate of certainty. The second, is that the loss of manufacturing capacity and job losses in the last 10 years are different from the job losses in the 1980's. These are not the low tech and less efficient manufacturing job losses of the 1980's, but job losses as a result of moving advanced manufacturing capacity and research and development centers to outside of the U.S. Of the 8 million jobs lost in the last recession, he says two million manufacturing jobs of higher pay and supporting employment in other sectors were lost. His point: its time to focus on expanding manufacturing in the U.S. because manufacturing is the sector with the highest multiplier effect on other sectors. Public-private partnerships are critical to this effort for increasing technology development and increasing investment. This view is supported by other experts....

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Adam Parker, chief equity strategist of Morgan Stanley, sees the Standard and Poor's 500 stock index ending 2012 at 1167. Garry Evans, global head of equity strategy at HSBC, sees the S&P 500 stock index ending 2012 at 1190. This is down from the end of 2011 level of 1257. David Kostin, top equity strategist at Goldman Sachs, sees the S&P at 1250 at the end of 2012. Parker, Evans and Kostin, share concerns about the macroeconomic environment and Europe. Parker also sees weakness in bank earnings contributing to this level in the S&P 500 stock index. Parker view global macroeconomic factors determining 50% of the outcome, with weaknesses not only in Europe but also in China. His predictions for S&P earnings per share are at about $100 for 2012 and $103 for 2013.

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Public sentiment shifts sharply against free trade in the March 2016 Michigan primary for the U.S. presidential election, with candidates saying trade agreements do not take into account the interests of American manufacturing workers making large gains. Between 1999 and 2010 public sentiment shifted against trade agreements for all age, education and income groups. A study by Autor, Hanson and Dorn showed loss of 5.6 million jobs in the last decade and large trade deficits, and demonstrated the effect by counties in the U.S. most hurt by trade policies.

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Toyota is reducing senior management positions to 60 from 77. The board of directors will also be smaller, with 11 members instead of the current 27 members. It was felt that the large board did not enable discussion of important issues and slowed down decisionmaking. This is part of the new Business Plan and the new global vision for Toyota. The thrust is on sales in emerging markets which Toyota will target for increasing sales to 50% of the total sales by 2015, up from 40% currently. Sales in developed markets are set to decline to 50% of the total sales by 2015, down from 60% currently. The other push is in the hybrid sales area. Toyota will roll out 10 more hybrid vehicles by 2015, in addition to all electric cars, plug-in hybrids. Toyota will continue to have an all-Japanese board, and will use a committee of outside advisors to stay abreast of opinion in other countries. Akio Toyoda announced these plans recently and did this by himself, as he puts his own ideas to work for setting Toyota's direction....

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Applebaum describes how Obama as president took action on the stimulus after the 2008 financial crisis, but did not take the necessary action to stem foreclosures and aid a recovery in housing. This now appears to be one of the critical failures of his presidency.