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The campaign rhetoric for renegotiating NAFTA and building a wall at the border has had a sharply negative effect on growth in Mexico. Growth slowed in 2016 and is expected to be close to zero in 2017 with declining foreign investment in the economy. The uncertainty is leading to sharp decline in foreign direct investment of 24% in the first 9 months of 2016, according to the Bank of Mexico. Further declines can be expected in 2017. The decline in the value of the peso of 16% since May 2016 has led to 6 interest rate increases in the past year. Inflation on annual basis was at 4.72% in Jan. 2017 and is rising. As Mexico depends on exports for one third of its output growth, and 80% is sent to the U.S., there is a need to diversify with trade agreements made with the European Union and other countries. Mexicans now question the value of NAFTA trade agreement as average growth of 2.6 since NAFTA was signed is below the 4.6% in the 2 decades prior to that. And poverty level is the same with about 60% of people in the underground economy. In addition crime, drug trade, a weak education system, weak rule of law, political corruption, show that Mexico has not made the progress since NAFTA that it should have made. ...

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Studies by Mexico's Interior Ministry show that 62% of the $23 billion in remittances to Mexico by Mexicans living in the U.S. go to the lower middle class. As migration to the U.S. diminishes to zero Mexicans who are illegal aliens in the U.S. are returning to Mexico as small entrepreneurs using earnigs made in the U.S.. This offers them a chance for upward mobility and a return to families that they never had in the U.S., and is aiding the growth of a Mexican middle class. About 12 million Mexicans, or 15% of Mexico's labor force lives legally or illegally in the U.S., according to the Pew Hispanic Center. Experts say that in the first 3-5 years remittances go to help their families, after 7 years the money goes into savings and investment fueling growth of small towns such as Santa Maria in Mexico. About half of Mexico's 112 million people have family living in the U.S., which is having an influence on atttitudes and ways of thinking of the lower middle class that emigrated to the U.S.and is now returning to the country. Other factors are reinforcing the trends such as the lower price of consumer goods with the entry of retailers such as Wal-Mart and Costco into Mexico. Nestle, P&G, and Unilever, all sell at low price points in Mexico. The government's effort to setup a basic safety net subsidizing schooling, health care and food has also helped in this direction. Rapid change in demographics in all of Latin America, including Mexico with a shift to smaller families is creating new opportunities to invest in children for better educational opportunities and working lives....

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Planning for lifestyle issues and how time will be spent together, as well as expenses, when one partner retires before the other.

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NYT reporters Lyman and Eddy show how the city of Weimar in Germany is coping with the arrival of about 900 refugees, and how well the integration efforts are working.

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Only by learning the lessons of "normal" trade with China, and accepting a feeling of "buyers remorse," says Senator Sherrod Brown of Ohio, will a better bilateral trade relationship with China evolve. He points out that every $1 billion of the trade deficit with China, has destroyed 13,000 net jobs, making the $226 billon deficit a tale of shuttered factories and devastated communities. He says China uses illegal subsidies and currency manipulation, and punitive steps are needed, not the moral suasion that the Obama administration keeps doing with no result. He says price manipulation keeps Chinese products 40% cheaper than comparable American made products. He wants the Senate to give tariff authority to the President, to impose tariffs on countries that manipulate their currency, when it convenes next month. Brown is the author of the book- Myths of Free Trade.

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Problems of declining production at the Cantarell oil field in Mexico have been known for some time. Now President Calderon is trying to take on this issue. Brazil's Petrobras reached an impasse also some years back but was able to make the reforms, see the link to Petrobras. See the link in the WSJ for 8/30/07 on Petrobras . In 1995 President Cardozo of Brazil pushed through reforms after a oil workers strike at Petrobras. Upto that time Petrobras had problems similar to Pemex with underinvestment, state meddling in its affairs and finances, and too much bureaucracy and inefficiency. Can Calderon get reform for Pemex. Which amount of Pemex revenues should go to the government, how much should Pemex have so that it can adequately fund investment in new oil field exploration offshore, how to overcome bureaucracy and inefficient management, and how to arrange board representation so that Pemex can transform itself like Petrobras did. Some of the answers to these questions are emerging. Calderon wants to prepare his political position as the reform of Pemex is something that previous Presidents have failed to tackle. To do this the Senate's Energy Committee is holding a private debate on the issues. Calderon may try to forge a consensus with the Institutional Nacional Party, as he did with pension reforms if an all party consensus eludes him. Already in reforms of public finances that Calderon has pushed through Pemex will pay 71.5 centavos on every peso of oil extracted by 2012, instead of 79 centavos as royalty payments to the government. One reform being considered is to givePemex control of its own budget. At this time $10 billion a year goes back to the government on top of the royalty tax payments. Another reform would open up refining, transport and distribution to private enterprise. A think tank expert at CIDAC in Mexico City thinks that this can be done without reforming the constitution as was done to allow private investment in electricity generation in the 1990's. The same methods could be used to promote risk sharing contracts with other companies to bring in new technology for oil exploration, including companies from emerging countries like Petrobras, Petrochina and others, given Mexican's bias against the western oil majors. Especially because Petrobras has proven expertise in deep water drilling offshore. There is no question that Mexico is falling behind. One energy expert at the National Autonomous University estimates that the density of drilling rigs in the American portion of the Gulf of Mexico is 20 times greater than in the Mexican part, with Mexico having drilled only 20 exploratory wells in water deeper than 980 feet. in other areas like refining Pemex has not built a new refinery in 20 years, and imports 40% of its gasoline from US refineries, and its 7500 gasoline stations need expansion as Mexico's economy expands. Cardozo's transformation came with setting up an independent Board of Directors and putting an investment banker in charge. International oil companies were allowed into Brazil as a way to get Petrobras to compete with western oil companies and increase efficiency. And Cardozo got Petrobras listed on the New York Stock Exchange selling some 16% of Petrobras in the capital markets. This listing ensured transparency and improved corporate governance, as about 50 analysts now tracked Petrobras. ...

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Some of the crude rhetoric at Donald Trump rallies, and use of coarse language, according to the NYT. Working class and older Americans show their anger at a system that appears to have left them behind with slogans, stickers, T-Shirts. The idea of the wall figures in much of this and shows that the wall has become not jut about Mexico but a metaphor that captures this anger, that reflects this anger. Another aspect of the 2016 campaign is that those most vulnerable and most in need of help have not sought the comfort of knowing about programs to improve middle class and working class wages, incomes, to build infrastructure, create jobs, stop companies from shifting jobs overseas, plans for improving accesss to health care and education, to ask for specifics and delivery. This is the supreme irony of the 2016 election campaign that not enough attention is going to what will be done for the middle and working class, and what specifics will be delivered, in what time frame- which is essential for restoring the condition of the American middle and working class to where it was in the 2 decades after the Second World War. ...

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Krugman points out that the U.S. Federal Reserve's forecasts in March 2012 show the U.S. will experience low inflation and high unemployment for many years. These forecasts are in sharp contrast to the expectations in the equity markets based on an uptick for a couple of months of unemployment numbers. The Fed's own statements suggest the improvement in hiring may be temporary and a response to the overreaction in hiring in 2009-2010 to the financial crisis, and not a lasting improvement. The Fed pointed out that the long term unemployed are at about 40% of the total unemployed and the share of the population that is working in March 2012 has barely budged from 58% in 2009.

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Declining manufacturing wages in the U.S. and the return of manufacturing jobs. Indiana's experience with new manufacturing plants.

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Su Liping, professor at Tsinghua Unversity, says there were 180,000 protests, riots and other incidents, protesting economic injustice in 2010. Most of the incidents were against land grabs, corruption and abuses by local officials, and unpaid wages. Inflation has hit the poor, migrant workers and people with low incomes hardest. Food prices were up 13.4% in August over the same month prior year. Pork prices were up 52.3%. Other problems are now meshed in with inflation. Local government debt in China, according to the National Audit Office, was 10.7 trillion yuan in June 2011. The National Audit Office estimates 23% of this, or 2.5 trillion yuan, depends on land for repayment. Analysts say China's local government made repayment in 2010 using the 2.9 trillion yuan in revenue from land sales. The same amount of land has to be sold in 2010 to make repayment. At lower prices even more land may have to be sold. The danger say Orlik and Jie, is that inflation and the pressure to acquire more land- and consequently more land grabs- will pose severe risks to the social contract in China....

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Working America, an arm of the U.S. trade union the AFL-CIO, conducted conversations with 350,000 voters in 17 U.S. states. Here a representative of Working America, says the overwhelming response to the question "does it make a difference whether Democrats or Republicans are in power for my well being," is reflected in one of the responses- "does it even matter?"

The suggested approach here is for Democrats in particular who have represented working class voters in the past, to start with a fresh approach by creating new conversations with working class Americans.

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Spain's cabinet announced new changes to labor laws to provide incentives to business to hire. Spain has some of the most restrictive labor laws in Europe and high unemployment. The unemployment rate reached 23% in December 2011, and about half of the people under 26 are unemployed. The cost of downsizing is so high in Spain that Spain's representative on the executive committe of the European Central Bank, Jose Manuel Gonzalez-Paramo, says companies prefer to close rather than downsize. The World Bank has singled out the labor laws as one of the main reasons for Spain's rising unemployment rate. New rules will reduce severance payments to 33 days per year of employment from 45 days. Severance packages will be reduced to a maximum of 24 months from 48 months. To encourage companies to hire permanent workers and depend less on temporary workers the new rules say employers must switch temporary workers to permanent contracts after two instead of three years. As an incentive for companies with a maximum of 50 employees to hire young people the rules give a 3000 euros corporate tax break for each new person hired under age 30. If the hired person was jobless he can still collect 25% of previous unemployment benefits for a limited period with 50% of the unemployment benefits going to the employer. Companies having losses for three consecutive quarters are allowed to pay less in severance payments- only 20 days per year of employment. Companies will now find it easier to leave collective bargaining agreements and make deals with their own staff. Luis Garicano, a professor at the London School of Economics, says this is a good step forward. He finds missing from the new rules subsidies to train young and unemployed people given the high dropout rates in Spanish schools. The government approved the rules by decree, but they will be discussed in the Spanish parliament. The government of prime minister Mariano Rajoy was recently elected with an overwhelming majority in parliament. This makes making major changes different from the process in Italy where a consensus has to be established....