LyrArc Article Gist
Consumer spending boom is over and when you look at the detail in the government numbers on spending consumer spending is already declining. So the idea that consumer stocks like P&G, J&J and Coca Cola and Kimberly Clark will hold up better than other stocks is a mirage. Just this week the idea that stocks of companies doing a lot of business overseas and in infrastructure will hold up better turned out to be an illusion as GE fell by 12% in one day, April 11, 2008, because of earnings shortfalls in its finance units as a result of the new climate in the credit and financial markets. Consumers spent heavily. If consumer spending had continued the trends from the 1990's then it would have gone up $3 trillion less today. It would have been 70% ratio of household debt to GDP, right now its close to 97% of GDP. Some of this $3 trillion estimate of Business Week economist Mandel using Fed data will be what the American consumer will be dealing with as he reduces spending in the years ahead. According to OECD data the ratio of household liabilities to disposable income (charts P11 of BW, April 21, 2008) is close to 1.0 in France and Germany which is contrary to what one would expect considering the more conservative spending there especially Germany, exceeds 1.0 in Japan, and far exceeds 1.0 in the US, and in Canada aabout 1.3, with the highest ratio in Britain at a whopping 1.7, using a ballpark view of the charts. This suggests that Britain is way off the charts in spending, see the link to this so expect spending to be hit hardest in Britain and with financial services being a bigger part of the GDP and the economy in Britain expect higher unemployment in Britain than the rest of Europe....

LyrArc Article Gist
Mullaly's experience at Ford, its culture, changes he has made and the gradual improvements that are taking place and showing up in better quality cars, cars for a global market with all global product capabilities focussed on developing top rated cars and all energies focussed on fewer car brands, the Ford and Lincoln brands. But as results improve the test will be how well Ford can withstand the difficult conditions ahead as consumption is sure to decline, and sales of cars drop with it as carmakers go through 2008 and 2009. The decision to focus on profitability was a critical choice made by Mulally and shows his instincts are right to let Ford's market share drop to its natural level and cut production to cut inventories and let ford scale down into a smaller but profitable and reilient company. The other was to focus on global cars and global product capabilities under Dennis Kuzak. And the third move to get marketing right with Jim Farley taken by Mullaly from Toyota's marketing organization. And the focus would be only on the Ford brand and logo, so Mulally will close Mercury models and sell the premium luxury brands except Volvo with the sale to Tata Motors. The market and stock price is responding and Ford has already shown a profit of $750 million in the second quarter of 2007 by being able to sustain higher prices with fewer cars to sell. The Fiesta compact goes on sale in the US in 2010 and this with the redesigned Focus and other models will show how far Ford can go. The risk is now more in the economy as BW estiimates show a $3 trillion overhang of overspending that occurred over the last decade that will have to be worked down by US consumers and so one can expect a continued and protracted decline in sales not just for Ford but for all manufacturers in the USA market....

LyrArc Article Gist
Kyle Wingfield meets up with Robert Mundell, Nobel winner in 1999. What does he have to say now? He thinks the oil prices are on track and would reach $130 by 2020 with 3.5% inflation, starting with $34 a barrel in 1980 doubling to $68 in 2000 and doubling again to $136 in 2020. Today its already at $136 but he thinks it will settle down lower to about $100, so hethinks were not so far off track. On inflation he looks at the price of gold at$850 an ounce , and now its still about the same, with high inflation gold should be at $1500, so he does not see the public thinking high inflation is coming. He was in favor of the Reagan tax cuts and set the groundwork for this and aslo supported the euro. He believes the Bush tax cuts should be kept as it would be disastrous for the world economy. Mundell has always believed that there is a link between economic growth and lower tax rates. He advocates corporate tax rates of 25%. Tax rates went down to 28% under Reagan back up to 40% under Clinton and down to 35% under Bush. Hewould like to see a ceiling on marginal rates of 30%. He would like to see a fixed exchange rate so that there are not these large currency rate swings, the euro should be valued somehwehere between 90 cents to the euro to $1.30. The US has a growing population and better adoption of innovation with a younger population than Europe so he sees the USA as a leader in innovation and growth and the dollar or some new global currency should be formed for a global economy. Just as he supported the euro he supports a currency for Asia. He does not see overvaluing the Chinese currency as doing much good as he sees the Japanese economy hurt by the overvaluing of its currency after a period of Japoan bashing. He is an advisor to China on currency issues....

LyrArc Article Gist
Prof. David Spiegelhalter of Cambridge University is critical of the British government for not finding out how many people may be infected by coronavirus. He says he is not telling how anybody should feel or what they should be worried about, but at least the people's anxiety should be proportional to the risks they actually face. His estimate is that based on the death rate of 1% its possible that there could be 3.5 million people in Britain who are infected with coronavirus or higher. Sir Spiegelhalter is professor at Cambridge University for the public understanding of science. He says this "basic information" is essential in making the decision such as how far and when to go out of lockdown, and that the British government has failed to do this in a timely manner required for tackling coronavirus without risking more lives.

LyrArc Article Gist
German views on Trump's economic policies are described by DW.com's Jeffrey Michels. German business sees a Trump presidency increasing the uncertainty affecting the global economy, a kind of second hit after the hit from Brexit. There is concern about the $114 billion euros in exports made by Germany to the U.S., because of Trump's increasingly protectionist policies. Trump could move to the centre, but so far these populist policies have helped Trump win in the primaries, and this is unlikely to change in the election campaign,  says DW.com.  Trump opposes the TTIP trade agreement with European Union, and because of opposition in Germany, these negotiations are likely to flounder. Even under a Clinton presidency there is little support for more trade agreements, and economist Krugman points out that most of the gains from free trade have already been made. 

LyrArc Article Gist
Wooden delivery in interviews, number crunching or scientific approach, and hesitant decision making, did not hurt Merkel. Germany's SPD is now seeing a former mayor of Hamburg known for number crunching as "brave in crisis."  He is finance minister in Merkel's government and helped convince Merkel of the need to have the $390 billion nonrepayable aid given as part of the European Union Recovery Fund. This and his work during the pandemic has convinced SPD's different factions to support Scolz in an effort to provide continuity after Merkel, as no effective Christian Democrat leader has emerged so far. Once the party of Willy Brandt, a respected leader in the period of the post war West Germany known as the Federal Republic, the Social Democrats have languished in the period Merkel was chancellor of Germany.

LyrArc Article Gist
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. ...

LyrArc Article Gist
Discussion with Doug Parker of how he is thinking of pulling off the second large merger in a short period of time, America West, US Airways, and now Delta possibly. What they learnt from their previous experience and what they are planning to do with the new merger, difficulties ahead and how they hope to accomplish this. The experience of US Airways employees with prior managements is telling. Parker realized this when he talked to employees and learned many things that would keep them motivated, instead of being cynical and skeptical. But it still comes too soon to have a second merger, when the first one is still far from having addressed all problems.

LyrArc Article Gist
The debates about the spending are taking place in standing room only meetings in Congessional discussion rooms. With longer term project suuporters callling for spending not to be skewed towards building the roads in the far flung areas that only encourage the same kind of long commutes and urban sprawl that created the energy crisis raher than look at alternatives (perhaps like the ones in Sacramento where new kind of layounts with lower commutes and more proximity of housing and jobs is designed), give public transit and other projects equal importance, and finance projects for a greener America. See te link to Jan Corzine on a view from the perspective of the state governors.

LyrArc Article Gist
Jim Press first non Japananese member of Board. Compare this to Sony and Toyota is far behind in internationalizing the company. Meantime about 34% of sales and 43% of profits for Toyota worlwide come from the North American market, US sales hit 16% market share, andnow Toyota exports nearly 50% of the vehicles sold in the US from 38% in 2005, according to WSJ. The man he will be replacing is internationally minded, Yoshimi Inaba, studied at Northwestern University and heads the Chinese operations. So little net change unless the 5 new members when the Board expands from 25 to 30 members in June reflect a move to internationalization of the Board.

LyrArc Article Gist
Deven Sharma takes charge at Standard and Poors, a unit of McGraw Hill. He worked on S&P's strategy as a consultant at Booz Allen and was executive VP at Standard and Poors. McGraw Hill stock has lost 26% of its value so far this year. half of McGraw Hill's revenue came from S&P, a growth of 21%, a large part of it was made rating structured finance products such as mortgage securities which brought in higher fees than rating corporate or municipal bonds possibly because of the way that market operated and because it provided higher ratings to help the mortgage securitization grow rapidly even when the ratings did not make good sense.

LyrArc Article Gist
Shipments of LG phones were up 54% in the 1st quarter of 2008 from a year ago, about 4 times the average growth of 14% in the industry., according to Strategy Analytics. The market share goes up to 8.6% from 6.4%. This puts it near overtaking Motorola for 3rd place ater Nokia and Samsung. Its biggest hit so far is the Chocolate, a skinny phone that looks like a chocolate barwith a dial pad that glows red. About 18 million have been sold worldwide sine introduction in May 2006. It also developed a pricey handset called Prada designed with the Italian fashion house and introduced in March of 2007. What is interesting is the way LG has approached product development. The Chocolate's creator Skott Ahn got the top job at the LG cell phone business unit in early 2007. And he has been put in charge of all areas of design developmet with the authority to make decisions in the way he would run this business. Ahn doubled the headcount of designers to 150 and engineers to 4000. He launched an inhouse design competition. The winner of the 2008 competition is the Secret, made from sleek yet sturdy carbon fiber and tempered glass and with a 5 megapixel camera and software to let users create their own music videos. This phone was intorduced in Europe this month. LG's profits on cell phones are expected to double to $2 billion according to Mirae Securities in Seoul, with a 50% jump in sales, and the stock is up 57%....

LyrArc Article Gist
Regulation in theE.U. is more difficult than in the US because of the differinginterests of countries, with the U.K. seeing things diffrently from the Germans and the French. Under the new Obama financial regulatory framework white paper the Fed gets increased powers for overisght over the financial system. Under the proposed system for the E.U. that emerged from the Brussels summit, June 19, 2009, the European Central Bank would setup a European Systemic Risk Council headed by the President of the ECB. But its role is only advisory. This Council would "have the power to make recommendations but not to implement policies directly." French President Sarkozy says that it will acquire powers over time through experience and practice.

LyrArc Article Gist
The Fifth U.S. Circuit Court of Appeals granted a U.S. administration request staying the effect of a lower court ruling, giving the government the $3.6 billion in U.S. Defense Department funds to build a border wall. This money goes towards the goal of building 500 miles of the wall by the end of 2020. In a 2-1 decision the court majority cited a Supreme Court order from July 2019 that gave the Trump administration the go ahead to use military funds for border wall construction.

The $3.6 billion is part of a $6.7 billion plan of spending under an emergency declaration by president Trump on grounds of border security. So far 100 miles of border wall have replaced flimsier construction barriers that existed. The government now needs to convince private land owners along large stretches of the border along the Rio Grande and other areas to give up their land for the wall. 

LyrArc Article Gist
Voters were split in places such as San Diego and Sacramento which have a higher degree of homeless than other places in California. California has one third of America's homeless people. Part of this is that there is a sense that this problem can't be solved, a sense of helplessness that nothing so far has worked. And confusion created about it shifting funds raised from a 1% tax on wealthy for mental health services to be delivered by counties and protests by local mental health organizations that it would prevent prevention efforts. This tax money is shifted to the state level which will put responsibility for solution in one place with a comprehensive attack on the problem in a multipronged way getting to the root of the problem with adequate funding for the first time- the unaffordability of California housing where a 1-2 bedroom house could cost $1 million.

LyrArc Article Gist
Exercise at a relatively low effort for a long time is now called Zone 2. In it someone can carry a slightly strained conversation while exercising. This is becoming popular as the right way to exercise and is the best way to build a sustained and stable way to health. It stimulates our cell's powerhouses say experts and converts into better health and athletic fitness. It is the secret of great elites that helps them faster for longer, says an expert at UT Medical Center in Dallas. As we age we lose mitochondrial function so it is even more important to so this kind of exercise. Mitochrondrial refers to the mitochondria, the battery packs in our cells that convert fat and cars into energy. Zone 2 exercise stimulates mitochondria effectively. About 80% of training can be Zone 2, and 20% at higher intensity to achieve the right balance.

LyrArc Article Gist
Janet Yellen Fed chairwoman, says many obstacles still exist for women in the workforce. Bringing more women into the workforce will increase the productive capacity of the American economy. The increasing participation of women in the workforce was factor in the growth and prosperity of America by the middle of the 20th century. In a speech sharing her personal narrative at Brown University, her alma mater, she described how other nations had passed the U.S. in women's participation in the workforce, and how it remains stalled at 75% for women either working or looking for work. Her speech was at a conference "125 Years of Women at Brown." The U.S. is now 17th among 22 developed nations in participation of women in workforce, mostly because of government and business policies that relate to paid maternity leave, affordable child care, and flexible work schedules.

LyrArc Article Gist
How a new financing mechannism with a private-public partnership is helping India sole severe infrastructure problems when government deficits make public financing inadequate to meet India's needs. Note that the IPO for GMR Infrastructure which has the contract to develop Delhi's airport was fully subscribed on the first day it opened, July 31, 2006. GMR hoped to raise $170-200 million through that issue. Private investment comes from loans from India's public sector banks which are flush with cheap money. Crisil , a rating agency, is quoted as stating that lending by banks to infrastructure projects has grown from 2% to 15.5% in 7 years to 2005. Financing through the corporate bond market for infrastructure projects is something that has not been tackled so far.

LyrArc Article Gist
A half humorous half cynical view of busineses getting on the environmental bandwagon. Not just businesses but consumers also for that good feeling of being environmentally conscious. Along the way businesses find ways to have higher margin products. See article on Lutz at GM who was not known for his environmental support also making a statement for cars friendly to the environment. Is this to build the new image of GM as environmentally conscious. Same with the recent air shows with the Airbus chief caling for Boeing to join Airbus to develop new technologies to conserve fuel consumption. Cynicism is where the hybrids actually have far less mileage than the really fuel efficient cars with upwards of 50 miles per gallon.