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The reckless behaviour of German elites in pursuing increased dependence on Russian oil and gas and ignoring American warnings is shown in this report in The Guardian. The first links to Russian oil and gas were started under chancellor Brandt in 1970. At that time the dependency on oil and gas supplies was much less than 10%. Dependence increased during the Schroeder and Merkel years to the extremes that exist today. Not much more even in the year of the fall of the Berlin Wall in 1989. It was the misconception of chancellor Schmidt of the SPD in his differences of opinion with presidents Carter and Reagan on the risks of increasing dependence on Russian energy that marked this period. Schmidt believed Germany was right in its conviction that increased trade would bring peaceful cooperation without realizing that economic dependency is never a good thing. Poland had a skeptical view- German elites including business elites were being corrupted. Cheap Russian energy was being used in the Schroeder and Merkel years as a competitive business advantage without considering the risks involved and the admonitions of American presidents of the dangers. With Steinmeier of the SPD there was the immense guilt of the millions of war dead from the German invasion of Russia in 1941 that acted as a brake on evaluating the increasing dependency for energy that reached over 35% by the time he was foreign minister. The fall of the Berlin Wall was seen not as a result of multiple factors including the positions taken by Carter and Reagan, the losses to the Russian economy from the war in Afghanistan, and the general decline of the Russian economy. German leaders saw this as coming from the new relationship being built with Russia. German business and Schroeder- Merkel even allowed not just new Nordstream pipelines under the Baltic Sea but also transferred ownership of reserves, the gas and oil storage inside Germany to Russia's Gazprom. German Economy minister Habeck says the storage tanks were emptied so that there would be added surge for oil and gas prices after the attacks on Ukraine. This Guardian report ends by saying that Mr. Steinmeier still needs to show why he pursued policy of cooperation with Russia with increasing dependency to the point that a cut off of Russian oil and gas supplies would lead to gas rationing in Germany in the event of a sudden cutoff. Was it a form of sensible cooperation taking dependency to such extremes. Similar questions remain for chancellor Merkel. With the added question for Merkel about the increase in trading ties with China even after the Trump administration had warned of the serious risks to US and European competitive advantage in technology and manufacturing, and the increased dependence on a supply chain that was fundamentally weak as shown clearly by the pandemic.     ...

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The Republican view supported by deficit commission panel members Paul Ryan and Jeb Hensarling, is that the proposals do not do enough to cut runaway health care spending. The Journal editorial says this is like doing a defense budget review and excluding Iraq and Afghanistan, and that Republicans should reject the report on these grounds alone.

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How the Chinese system of screening products is at its beginning stage so consumers aren't protected when companies use unsafe chemicals to cut costs. Corruption and lack of regulaory authorites and poor enforcement all add to the problem so consumers who care would try too shop at large supermarkets that have a reputation for screening out unsafe products.

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Fellow eurozone countries account for 38% of Germany's exports and other EU members not yet in the currency union take up another 20%. Since October 2006 the exports to fellow EU members increased by 11%. Germany's exports are less sensitive to price because they include specialized capital goods. German companies have also cut cost and improved productivity.

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In the first quarter of 2011 consumer demand for gold in China increased by 47% over the prior year quarter to 233 tons, according to the World Gold Council's data. Most of this is for jewelry accounting for 64% in 2010, with gold bar demand increasing as an hedge against inflation. Orlik points out that if inflation decreases from the existing level of 5.3%, and with the increase in wealth management products from Chinese banks, the demand for gold may not be sustained as it offers no return. He says urban resident demand may have reached its peak and there is not much demand from the rural population. Central bank purchases to shift a small part of foreign exchange reserves to gold is the only other factor for a push up in gold prices.

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France's finance minister says the focus in 2013 will be on meeting the structural deficit goals. The recession will likely make it difficult to bring the budget deficit in France down to the 3% target in 2013 as planned.

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In just 7 months the Trump administration has a falling apart with business leaders and union leaders on the days following the Charlottesville car attack. Here Richard Trumka gives his reasons in the NYT for withdrawing from the president's Manufacturing Council. He says Trump presented big idea such as infrastructure and fair trade deals but he is not likely to live up to his promises. Only tweaks are expected on NAFTA says Trumka, and labor rights are taking a hit under president Trump. The AFL-CIO was not called to a single meeting by president Trump, says Trumka. He now sees the Trump administration in the same way as other political leaders- filled with broken promises. In the case of the Trump administration he sees working families ending up much worse off. Trumka says a University of Pennsylvania study shows even if a plan for infrastructure comes up the president's budget proposal would sink it- leading to a net loss of $55 billion for highway, water facilities and public transit. Trumka points out the damage to the social safety net as a matter of serious concern- cutting $1.5 trillion from Medicaid, $59 billion from Medicare, $64 billion from Social Security over 10 years. With cuts to construction workers wages, and a 6% cut for government workers. He calls as "morally bankrupt" and bad economic actions the effort for large scale deportation.  He calls the events in Charlottesville and the president's condoning of the violence in Charlottesville by blaming both sides, the last straw for his union. Separately business leaders resigned from two advisory groups. Chase CEO Dimon pointed out that for economic progress the basic consensus in the country must be preserved, and divisive rhetoric can lead to the unraveling of economic progress- the vital link between society, politics and the economy in line with America's ideals being evident to the business community, as well as to labor. ...

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The Economist points out that the Bush tax cut deal between Obama and the Republican leadership ignored concerns about the old ways of dealing with the defict- simply postponing decisions to deal with the public finances in a responsible way. Worse says the Economist, both sides showed they could buy each other off, which sets a bad precedent for the next two years.

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Analysis of 126 public pension plans by the National Association of State Retirement Administrators shows an average target rate of 7.68%. New York State Common Retirement Fund, third largest by assets, says it plans to drop the assumed rate of return to 7% from 7.5%. A drop of 1% boosts pension liabilities by about 12%, accoridng to the Centre for Retirement Research at Boston College. It means workers are required to contribute more to the pension funds for the same level of benefits, especially as lifespans grow and more Americans retire in an aging population. Other options are for states to cut payrolls and expenses. This is a positive step as it makes the assumptions realistic and improves the fiscal stability of the funds. The largest pension fund, California Public Employees Retirement System is considering dropping its assumption to below the current level of 7.5%. The lower assumed rates of return are not enough say critics, who cite the 3- 3.5% returns assumed in the 1960's for cash and bond based portfolios. The Laura and Arnold Foundation's Josh McGee says it is still not realistic. Retirement systems median actual return was 3.4% for 12 months ending June 30, 2015. Expert panel of actuaries and pension specialists says the right level for assumed returns is about 6.4%. Companies in the Fortune 1000 have already dropped the figure to 7.1%, from 9.2% in 2000, according to Towers Watson survey....

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Productivity as measured by GDP per hour worked was $44 in Italy in 2009. It has remained the same as in 1999. In the EU-15 (first 15 members of the EU) the GDP per hour worked increased from 47.9 in 1999 to 49.0 in 2009. For the U.S. this GDP in the same period went up from $56.0 to $58.0. This shows the lack of productivity growth in Italy. With the current focus on Italy's slow economic growth efforts are underway to make changes that would increase growth. GDP growth in Italy was 1.3% in 2010, compared to 1.8% for the eurozone, according to Eurostat. Italy's Minister for Public Administration Renato Brunetta says he would like to cut that gap in half. Some of the measures in the recently passed $40 billion spending cuts package, include efforts to help the underdeveloped southern region. This includes cutting red tape for real estate developers, and streamlining accounting for business. Italy's growth comes mainly from exports that make up about one fourth of GDP. But this comes from lower tech sectors such as textiles, chemicals and machinery, where it must compete with China and other countries. In May 2011 industrial output was up by 1.8% in Italy,compared to 7.5% for Germany. Another problem is the large and inefficient public sector and the gap between protected state workers and a younger generation- with one in three Italians 15-24 unemployed....

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After increasing the price of subsidized diesel, the Indian government lays out a plan to cut the deficit over five years. The plan sets a goal for the deficit of 5.3% for fiscal year ending March 2013 to come down to 3% by 2017. Earlier India's central bank, the Reserve Bank of India (RBI), had said the government needed to take action on the deficit before it reduced interest rates. The RBI faces a difficult task in reducing rates to stimulate the slowing economy because inflation was 7.8% in Sept. 2012. At the same time the sharp decline in growth is a cause for serious concern- the most recent RBI forecast for GDP growth made in July for the current fiscal year through March 2013 is 6.5%. This may not be achieved as other economists have lowered the estimate to as low as 5% because of slow government action in economic reforms, high interest rates, and the uncertain global economc outlook. The last action by the RBI to lower interest rates was a drop of half a percentage point in April 2012. Much of the momentum for the Indian economy was lost in the first half of 2012 with the governments vacillating steps for opening the retail and other sectors to foreign investment. Only in October 2012 has prime minister Manmohan Singh set a clear direction by dropping coalition partners opposed to reforms and announcing new policies for foreign investment....

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Unemployment in the U.S. will be hard to bring down with the mismatch in skills for new jobs created. The National Skills Coalition, which works to promote job training, says in a report that 46% of the jobs in New York state in 2009 were in the middle skills category, and only 39% of New York workers had the skills for these jobs. Mid-skilled workers are workers with a high school diploma and training, an associates degree or vocational training. The problem is that students from public schools and community colleges who are not prepared with mid-skills and training, or lack a two year degree, are not prepared for these mid-skilled jobs in health care, transportation and other fields. This report says 40% of new jobs created in New York state will be for mid-skilled workers. In the low skilled workers category there is downward pressure on wages because there are more workers than jobs- 21% of new jobs are low-skilled and 23% of New York workers are low-skilled, according to the report. The problem is serious because funding for training programs has been cut over the years, and at the same time government policy- including that of the Obama administration- has focussed on getting people to college. Less attention has gone to training programs and vocational education. This at a time when a college education has become costly and difficult for families....

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The cost of social stability in OPEC countries is changing the attitude of countries that advised moderation in pricing in the past. Saudi Arabia has committed itself to $129 billon in new spending for public sector jobs, pay increases for state employees, and allowances for the unemployed, to preserve social stability after the democracy protests in the Middle East. This is happening throughout the Arab world and in most OPEC countries. Algeria and Iran have also increased social spending. The oil price that Saudi Arabia needs to balance its budget and pay for this is going up from $68 a barrel in 2010, to $88 in 2011, and $110 in 2015, according to the Institute of International Finance. Merrill Lynch says it is $95 a barrel for this in 2011. This is bringing the moderates like the Saudis and the hawks like Iran and Venezeula together on price issues. In the second week of April 2011, Saudi Oil Minister Ali Al-Naimi, said the Saudis had cut production by 800,000 barrels a day in March because of oversupply in the market. A consultant for Arab Petroleum Investments Corporation which reflects Saudi and OPEC views, says: "OPEC members spending pattern is expected to bear on their oil price preferences and production policy behaviour." The only restraint on price will be that price at some point will affect the global economic recovery and lead to lower consumption and growth, something the Saudis have paid attention to in the past....

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Russia's economic planners and president Putin underestimated the importance of foreign investment to build its tech sector and diversify the economy away from its dependence on oil and gas commodity exports. The strong balance sheet with only 20% of GDP in government debt and over $300 billion in foreign exchange reserves created a false sense of security. An adventurous foreign policy has resulted in western sanctions and a poor investment climate crippling much needed foreign investment. Capital flight exposed vulnerabilities in the economic situation and cracks were evident in the emerging markets crisis in early 2014. Russian corporations were exposed as they depended on access to financial markets which was reduced with EU and U.S. sanctions. These problems were compounded by Dec. 2015 as OPEC led by Saudi Arabia did not cut back production to offset higher shale oil supplies, leading to the drop in oil prices below $50. Experts see the drop as being a lasting factor and Russia's finance minister sees no rebound of oil prices to $100 as happened after 2008, accepting a long term situation of low oil prices. This increases dependence on oil says Barley. It shows how Russia under Putin had grown complacent about the risks to the economy of not forging ahead with an aggressive plan of diversifying into tech and related sectors. In a competitive global economy the risks of standing still, of complacency, misallocation of resources, poor decisions, and weak political processes, can be disastrous....

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Growing number of parttime workers and poverty levels in Japan. About 16% of the population in Japan lives on an income that is half the national median income, which is the way the government defines poverty. OECD studies in 2011 show Japan as sixth from the bottom of 34 members of the OECD. The poor quality of jobs is worsening the problem of the working poor, just as it is in the U.S. with lower wage manufacturing jobs and very low wage jobs in retail/ restaurant industries. Experts say the problem has worsened since 2012 when prime minister Abe was elected. Since 2012 the number of part time or irregular workers without permanent contracts has increased by 1.5 million, with parttime workers at 20 million, or 40% of the Japanese workforce. They point to the parental support with many young workers living at home, as is true also of Spain and Italy, that has mitigated their difficult situation. This piece in the Economist provides insights into the condition of parttime lower wage workers in Japan, a large number of whom are young people, a situation similiar to that in some European countries such as Spain and Italy. At the very low end as Japanese local and national governments- under pressure to cut spending with its high debt- reduce benefits, more people have been added to the welfare rolls with 2 million people now on welfare....

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This editorial in the Economist says Britain's economic recovery will not be complete until interest rates are well above zero and productivity growth is established. Without productivity growth and growth in wages, both lacking in the economic recovery since 2009, tax revenues will not be enough to reduce the deficit, requiring more spending cuts. That means the Bank of England will not raise interest rates, keeping a situation of no rate changes prevailing since March 2009 when the central bank cut rates by 0.5%. In the current situation the Bank of England is not expected to raise rates till 2016, only after the U.S. Federal Reserve increases rates to avoid appreciation in the pound and further deflationary pressure, according to Goldman Sachs. With inflation currently at zero, following the drop in oil prices, and 10% appreciation in the pound since mid 2013 making imports cheaper, there is little pressure to increase interest rates. In 2011 inflation with rising food and energy prices reached 5.2% , but the Bank of England did not raise rates because of the eurozone economic crisis affecting growth. Only since 2013 has economic growth picked up with 1.2 million jobs created since the beginning of 2013, bringing unemployment down from a high of 8.5% in 2011 to 5.6% in May 2015. Throughout the recovery productivity growth is falling behind- 2014 productivity measured by output per hour worked was 1.3% lower than in 2011, and 14% below the pre-crisis trend, according to the Economist....

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Meet Victor Brown, one of the remaining 450 workers at Buick City, GM's sprawling plants in Flint, where in the 1980's 27,000 workers built GM cars. Victor Brown of Clio, Michigan, and O.C. Cooper do not want to leave, and have repeatedly turned down buyout offers from GM preferring to stay with GM even if it enters bankruptcy, and take their chances. Since 2006, GM has persuaded 60,000 of its hourly employees- about half of the total hourly workforce at GM in the USA- to take cash buyouts and leave. Cooper says, this is the only life he knows, he is 64, a machine operator at Flint North, a run down engine plant in Flint, Michigan. Every day for the 42 years he has worked here, he gets up, washes up, and drives to the plant. He can't imagine anything else. If he leaves he will give up $60,000, for apension half that amount, with no guarantee that its secure after a GM bankruptcy. Victor Brown is 55, a repairman with 36 years at GM, he is divorced and putting a son through college. A year ago he and others turned down a buyout offer for $62,500 to retire with all benefits, now this is down to $20,000, and a car voucher for $25,000. GM needs an additional 21,000 jobs to be cut and closing of 13 plants in its latest restructuring under help and supervision from the Obama administration. ...

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The drop in oil prices and the credit crunch is driving a push for mergers in the oil industry. Suncor Energy of Canda is acquiring Petro-Canada for about $15 billion in stock,bringing together two of Canada's oil sands and oil companies. To do the deal Suncor will giv each Petro-Canada shareholder 1,28 shares of the combined company for each share of Petro-Canda. Suncor will shareholders will end up owning 60% of the new company and Petro-Canada shareholders 40%. Suncor founded in 1953 is the second largest oil sands producer. It posted profit of $4.1 billion on sales of $24.3 billion, debt load of $5.8 billion and has market value of $23.4 billion. Petro-Canada was established by the government of Canada in 1975 and in involved in exploration, production and distribution of oil and natural gas, with operations in Canda, Trinidad and Tobago, and Syria. The government reduced its stake to 19% in 2004. Petro-Canda had operating profit of $7 billion on $22.2 billion in sales, and $2.7 billion debt, with market value of $11.6 billion on the Toronto Stock Exchange. Its stock has suffered a larger decline, and shareholders like the Ontario Teachers Pension Fund, which owns 3.3% of Petro-Canada, was looking for ways to get more value out of the company with pressure to sell some of its assets or the whole company. Both companies have cut spending by a third, amid falling oil prices....

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Lessons for startup Jive, social networking software for business financed by Sequoia Capital. It did well in the beginning with a number of high profile sales. Then things fell apart with inexperience and a series of mistakes. With $15 million of capital raised from Sequoia in August 2007 discipline started to fall away, bad hires were made in a hurry to speed things up, staff tripled to 150 by the beginning of 2008, and there were a lot of problems with the new software. In October Sequoia went in and fired 25, 3 managers, and cancelled a project. Sequoia Capital held a direct talk in October with executives of its 100 companies, and about 1000 layoffs were made. The presentation was direct, showing a pig with a butchers knife in its head and the slide reading R.I.P. Good Times, saying that for startups it would be the survival of the quickest, the companies quickest to cut costs and be profitable. The sales people just took on as customers anyone who was interested or called. And as the economy worsened and this software was not an essential purchase they cancelled. Now the new sales approach is to say no, and get customers who actually save money from using the product or see some vitally important benefit. The sales person actually tries to find out about a company's plans, its budgets, to see if there is a good fit. Jives at this point is a survivor....

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Jerry Brown Attorney General of California and Lisa Madigan Attorney General of Illinois led the negotiations on behalf of the states of California, Illinois, Michigan, Iowa, Ohio, Washington, Arizona, Texas, Florida and North Carolina, Connecticut, against predatory lending by Countrywide and obtained a settlement of $8.4 billion for homeowners. Shows that states efforts can be effective where the federal government failed. Brown expects loan modifications worth $3.4 billion in California. Congress has proposed various programs but none made it through the legilative process, so this is the largest most comprehensive mandatory loan workout program that exists. The program will be mandatory and will be monitored by state officials. Bank of America owns Countrywide which it acquired and it says that it had anticipated and made allowance for this kind of settlement. Borrowers whose first payment was due between Jan1, 2004 and Dec 31, 2007 can participate. The loan balance must be at least 75% of the current value of the home and the borrower must be able to make the adjusted monthly payments. It will focus on borrrowers who were placed int he riskiest loans because of Countrywide's misleading and predatory lending practices. Under the program Countrywide will reduce laon balances in some and cut interest rates in others. Rates could decline to 2.5% depending on borrowers ability to pay and remain at that level 5 years. Help is also provided for those facing foreclosure or are 4 months behind in their payments and homeowners already foreclosed....

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The Group of 20 finance ministers and central bankers meet i Sao Paulo, Brazil. On the side the BRIC countries finance minsters hold their first meeting. Brazilian President Da Silva calls for greater say for the BRIC countries and for countries like Argentina, Mexico, South Africa, Nigeria, S. Korea and other large developing country economies in shaping the new global financial architecture. There is extreme frustration in Brazil that all their efforts to build a better life for millions of Brazilians may come to nought, and the first real sustained growth in decades that came to Brazil may now be cut short abruptly with huge cost to millions or rural and urban poor, a fate shared by all the BRIC and other developing countries. Wall Street source of the crisis remains closed to the BRIC and developing countries in the sense that what goes on there is determinied by insiders from the G7 countries, but the severe consequences of a fallout in Wall Street on trade and credit hit these countries just when there was hope for millions to live a better life. Just as when the Asian crisis and other crises hit in the last two decades there is a lot of talk about global financial architecture with Treasury's Rubin then and IMF's Kahn and World Bank's Zoellick now making statements, but no clue except to accept the need for getting the large developing countries of the G20 to the table for concerted action. ...