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Hernando De Soto, a prominent economist, heads the Institute for Liberty and Democracy. He has an intimate knowledge of the workings of the Egyptian economy, and describes the socio-economic marginalization of large parts of Egyptian society as Economic Apartheid. Simply put Egypt has fallen behind the times, way behind the economic progress in large developing countries.The Institute was hired by the Egyptian government in 1997, with the financial support of the US Agency for International Development, to look into what reforms were needed. It presented its 1000 page report in 2004- after years of work involving 120 Egyptian and Peruvian technicians, participation of 300 local leaders and interviews with thousands of ordinary people- to the Egyptian cabinet. The then Finance Minister Hassanein supported it and the cabinet approved it. What followed was a cabinet shakeup, and blocking of any reforms by hidden interests wanting to protect the status quo. De Soto's objective was to find out how many people were marginalized in Egypt, and how much of the economy operated outside the legal system- small business that did not have the protection of property rights or access to normal business tools and credit, that makes businesses grow. He found that 9.6 million people were employed in this sector operating "extralegally" with no protections. This being the largest sector of employment in Egypt. His action plan was intended to remove the legal impediments to these people and businesses urban and rural, so that they could grow. He says the value of these businesses outside legal protections is $248 billion or 30 times larger than the total value on the Cairo stock exchange, and 55 times greater than all the foreign direct investment in Egypt since 1800 including Suez Canal and Aswan Dam. De Soto says that because of burdensome, discriminatory and bad laws it takes 500 days to open a small bakery, getting a legal title on a vacant piece of land would take 10 years of red tape. This barrier of bad laws, poorly trained bureaucrats, inertia of the status quo, prevents people from legalizing their property and business. As a result whereas one of these types of small businesses is now India's largest company called Reliance Industries, and another Infosys is the second largest software company, most Egyptian enterprises are stuck being small and relatively poor, and do not generate jobs for the demographic surge of young people. De Soto's point is that Egypt will need good leadership to pull off this task of legal reform, and democracy alone will not be enough. Empowering the large majority of the Egyptian people operating outside the legal protections will mean giving property rights for $400 billion of assets, De Soto says. And this would unlock an amount of capital hundreds of times larger than what foreign direct investment and aid has brought to the country....

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The WTO setimates that global merchandise trade will decline by 9% in 2009. Betweeen 1990 and 2006 these trade flows increased by 6% a year, outstripping the growth of world output which remained at 3%. See the chart showing GDP and world trade growth year over year. Because of vertical supply chains products were shipped across borders and imported back into the country that exported a product, till the product was finally assembled in some third country like Mexico, in the case of automobiles. This interlinking of countries worsens the effect in adownturn, by bringing output down in many countries at once in any particular industry with these supply chains. And conversely positive effects are exaggerated in a upturn or boom cycle like that which was witnessed in recent decades. It makes a 1930's like situation less likely, where trade dropped by over 25%, because now all countries are affected, America's car industry exports as well as imports the same item as it is processed in several countries, and imported to the USA as a semifinished product and then assembeled in Mexico, as one example. Leaders of the G-20 agreed to fight protectionism athe the London meeting in April 2009. Is this enough? Should the Doha Round of talks be resumed? Arvind Subramanium of the Peterson Institute, and Aaditya Mattoo of the World Bank, argue that the Doha Round is too ambiious, as it tries to open markets for rich countries manufactured goods just when the crisis has hit developing countries making this ahard sell. At the same time DOha Round does not exclude Buy AMerica provisions and subsidies to fialing industries like the auto industry support measures taken by both the EU countries and the USA. So they sugggest anew "crisis round" of talks to replace Doha, and this makes sense as the items on the agenda can now be tailored to the pressing needs of a different time from when Doha round was conceived, and thus more realistic in its approach. And in the meantime all WTO members would commit to astandstill and take no measures that are protectionist. The Economist says the new "crisis round" would not do any better as there may not be the same level of interest in another round. It suggests that agood start would be for the leaders of the G-20 to be specificabout what protectionist measures it sees as unproductive and unhelpful in containing this crisis. Draw up a comprehensive list of protectionist measures that go beyond tariffs and export subsidies. The WTO would then be asked to monitor the countries based on this list and publish alist of offending countries, letting embarassment of these countries act as a kind of policing. And in addition an agreement should be reached on coordinating fiscal policy, so that it would reduce fears of leakages abroad. ...

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Joe Nocera says, that its like the Wizard of Oz story, and the curtain being pulled back to reveal that it was the end of quarter games that enabled GE to make earnings estimates, quarter after quarter, for years. Last April is when the curtain gets pulled back because with the Bear Stearns collapse and the crisis in financial markets, these games could not be played anymore. The fact is that after all the talk about how great GE's infrastructure business and other businesses were, GE was making somewhere near half its profit from its financial businesses under GE Capital. And during this period very little was disclosed by GE about the complicated financial machinery of its GE Capital unit and how it generated its profit, everything had to be taken on faith. This does not work anymore, after all the excesses, leverage and errors that have taken place in the financial markets. After repeated denials that it needed to raise new equity, GE raised $15 billion in new equity in late September 2008, including $3 billion from Warren Buffett. Then there was the two thirds dividend cut in early March 2009, after repeated denials, so that GE could conserve cash. Investors want to know more. Is GE Capital marking to market its assets that have fallen in value, now that its clear that these assets are likely to decline further, and stay that way for a very long time. Two analysts at Sterne Agee questioned GE Capital's accounting. Two days after GE cut its dividend, on March 3, 2009, Nicholas Heymann issued a report saying that GE Capital " is now confronting the prospect that a downward trend in fundamental performance, fueled by weakening end markets and magnified by several liquidity constraints, could potentially lead to an extended period of steadily lowered earnings, depleted loss provisions, lower credit ratings, rising borrowing costs." A day later GE stock hit $6. And credit default swaps suggested investors were worried about a default. As investors look for more transparency from GE, its going to clarify whether embedded losses are at $4 billion as GE claims or at $21 to $54 billion as Heymann is saying. GE's CFO Mr. Sherin appeared on CNBC with defense of the company's position, saying the company had $45 billion in cash, and there were no triggers that would have call on the company's cash in the short term. He said GE is trying to rebuild its credibility, and also trying to be clear, open and honest. Sherin promised to do this at a meeting on the week of March 16, 2009, where he would give details on the parts of the portfolio causing the most distress, $20 billion of subprime mortgages in the UK, the loan portfolio in Eastern Europe, and the commercial real estate holdings. And he told Joe Nocera of NYT, that GE had nothing to hide. But no one including Nocera is giving GE the benefit of the doubt, and no one today is taking anything on faith....

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A new generation of politics with an effort not to be defined by race while race still remains in the background. How politics is being shaped in the USA in 2008 due to a confluence of factors, events and leaders. The emergence of a new generation of younger people, blacks, whites and other minortities who don't carry all the baggage about racce of the previous generations and are open to a lot of different things, the global economy, changing Africa, Asia and Middle East, the integration of America into a global patern of manufacturing, trade and consumer demand, the emergence of 2 billion people from China and India to share in the development of science and technology and modernization are the confluence of factors. The events are the Iraq war, the Iran confrontation and the Afghan war, the confrontation with militant Islamist ways, which are seen as having been badly handled leading to a loss of confidence in the US in the world, the general mood of people looking at 2008 like they did after the war and the Truman period for a fresh face in a changing world in another confluence of factors. Then the independence of countries in Asia and Africa and the Middle East from centuries of colonial rule, in the case of India independence, in China's case a new ideology based government but striving for the bread bowl for a billion people, in the Middle East and Africa from Egypt to Kenya new aspiration for progress and development. The events then were the Korean war and weariness with it, now the Iraq war and Iranian confrontation, and Afghan war and weariness with it. A Irish Catholic face then, a mixed race face now, new generations and aspirations then and now. Leaders then in John Kennedy the ability to present oneself in a youthful way appealing to the new generation so that one is not perceived in the old ways, partly because like Kennedy talking to a new generation of people who did not carry the old baggage, easier to do because John was himself part of this new generation. Same thing with Barrack because he like the new generation both do not carry the old baggage and see things in a race neutral way concerned more with other things such as confidence in the future and the role of America in the world. How will this turn out? If electedthese leaders are still human and would still face the same difficulties like John faced in the cold war and Cuba and Vietnam situations, and the lack of experience would also show not that greater experience would necessarily help solve intractable problems. But the aspirations and desire for a fresh face and youthful energies of a whole generation of younger people and of other people in general who are weary of the old ways may carrry the day in election voting. ...

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International issues took on larger significance for the U.S. Federal Reserve in September 2015 as it looked at a small increase in interest rates. Schwartz points to the memories of the 1997 emerging market crisis and how fragile economies like Mexico were adversely impacted by rising rates in the U.S.. Mexico needed a large bank bailout and contagion spread to other countries. Kenneth Rogoff says the risks are real with declining commodity prices and falling currencies of emerging markets such as Brazil, Indonesia and Russia. Ripple effects would carry over to India and other countries. The sharp slowdown in the Chinese economy in the second half of 2015 was too recent for the Fed to take any sort of risk in September 2015.

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A vote on Brexit giving parliament a bigger voice if no deal is reached with the EU was defeated narrowly in parliament with 324 for and 298 against. Tory members led by Mr. Grieve called for parliament to take part in future strategy if no deal is reached by March 2019. British prime minister Theresa May argued that this would weaken Britain's negotiating position with the EU in Brussels. Mr. Grieve and Tory dissenters agreed to support the government. The recent election with Labor winning 40% of the vote leaves the Conservative Party's Mrs. May dependent on a small number of MP's from Northern Ireland for her government to survive. Some members of May's cabinet feel cutting off Britain from the EU market will hurt the economy in their districts, and a junior minister resigned. 

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Sweden gets a centre left government led by Stefan Lofven, who gets a second term in office. He managed to put together an alliance of centre left parties with the Green Party and Liberal paties after the elections gave 40% of the vote to centre left and centre right and proved inconclusive. Lofven governs without a majority in parliament because the minority government has support form other parties with 77 votes in parliament that abstained. Both centre right and centre left did not want to join with the far right anti-immigration Sweden Democrats. Lofven says Sweden chose a different path than other governments that sought to form governments with anti-immigrant parties. He said "in Sweden we stand up for democracy, for equality. Sweden has chosen a different path." To get Centre and Liberal parties support Lofven promised to cut taxes, reform the rental housing market, and relax strict employment laws.

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Forecasts show global oil output exceeding demand by 630,000 barrels a day for the fourth quarter of 2012. This is partly the result of extra oil supplies coming in from Saudi Arabia to counter the situation with Iran at the same time as oil demand is slowing with the economic slowdown in the U.S., Europe and China. Prices of crude declined to $85.73 a barrel on the Nymex, and $107.85 for Brent crude on the ICE Futures Exchange on Oct. 24, 2012. Goldman Sachs cut the 2013 price forecast for Brent crude to $110 a barrel from $130. Earlier the QE III monetary easing by the U.S. Federal Reserve had rallied oil prices because of a weakening of the dollar.

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in Areddy's piece yesterday the 24th in the WSJ he cites 100,000 accounts opening on average this month. NYT here cites 300,000 accounts opening each day. At 300,000, there would be about 50 ,illion new accounts in 6 months and 100 million new accounts in 12 months. Using the 100 million accounts currently open in the Areddy peice we have adoubling to 200 millon accounts in 12 months. What is the right number, and does anybody really know for sure. Anderson of UBS is quoted as saying only 10% of household wealth is tied up in the market, but at something like 200 million accounts, and speculative fever for another 12 months, this could end up with a big chunk of urbanized Chinese the ones most likely to be in the market. If we double the figure of $50 billon in daily stock trading we could see $100 billion in daily stock trading a year from now. The hidden part of the picture is whether Chinese banks have lent heavily to stock market speculators who would be unable to repay the loans in an adverse event and leave the banking sector in worse shape than it is now. Shang, and Guo at the Chinese Securities Regulatory commission and the China Construction Bank are likely to follow Zhou as Governor at the Central Bank. ...

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NHTSA and NASA conclude a 10 month investigation in Feb 2011, saying that "pedal misapplication" not faulty electronics were the likely cause of unintended acceleration of Toyota vehicles.

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The U.S. Fed FOMC's decision to continue tapering monthly bond purchases by $10 billion in Jan 2014.

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Jennifer Rubin of the Washington Post cites the Pew poll of September 3-7, 2015, on the Iran nuclear deal of July 2015, showing increase in skepticism about the deal's provisions by people who are informed to some extent (a little or a lot) about its details- 57% opposing to 27% supporting. The strongly partisan opinion on the issue, and the lobbying on both sides, including bringing Iraq WMD into the picture as noted by Dana Milbank in another column in the Washington Post, overstates each case. This draws attention away from the actual provisions. About 30% have no opinion it appears because the issue of this magnitude involving nuclear weapons proliferation has become politicized when it should be examined only on its merits, where public opinion would be shaped by the details of the deal itself, not who has negotiated it. The Pew Research Center poll shows 21% support the agreement negotiated with Iran, 49% disapprove, 30% offer no opinion. This compares with a poll taken 6 weeks before in July 2015 showing 33% supporting it and 45% opposing it. ...

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China limits the activities of the Carter Center. Contacts for village democracy are discontinued. Xi Jinping, China's president tells former U.S. president Carter to limit activities to U.S.-China relations.

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This article in NYT by a China expert based in Hong Kong points out that a key driver in the current developmetns in Korea are not understood. With the growth of China's influence in East Asia and a decline in American influence many of the countries in the region are rebalancing. Vietnam and Singapore are pushing back. In the same way North Korea under Kim Jong Un is concerned about its dependence on China with 90% of its trade conducted with China. The Chinese participation in the strong sanctions introduced by president Trump has increased this awareness of its dependence on China. President Xi Jinping has also ignored North Korea as China focuses on larger issues in international relations, including its relationships with the U.S., EU and India. This strategic development is what drives the current meetings between president Moon of South Korea and president Kim of North Korea, and the planned meeting of Kim with president Trump.  This China expert says the shift in better relations could be part of North Korea's effort to open up to the U.S, South Korea and Japan, in an effort to diversify its relationships to reduce dependence on China. This does not mean the unification of North and South Korea, he says, because it would mean loss of power for the Kim regime and would be too costly for the South. The nuclear missile development was part of an effort to preserve the Kim regime. The Kim regime is also focusing efforts on economic development which would be better achieved by opening up to the U.S., South Korea and Japan. ...