LyrArc Article Gist
The government sets a goal of reducing the number of automakers in China from 70 currently to a much smaller number by 2015. With slower growth in the Chinese market, 55 of these companies sell only 11% of the total cars sold, and no sales for 10 manufacturers. Foreign car companies are investing heavily and control 58% of the 18 million cars sold in China. Domestic car companies are faring poorly. Cherry sales dropped by 30% in November 2011 acccording to the China Association of Automobile Manufacturers. Changan, Guangzhou Automobile Group and BYD have seen sales declines of 10% in 2011 for domestic sales.

LyrArc Article Gist
ECB president Draghi tells a Brookings Institution audience on Oct. 9, 2014 "for governments that have fiscal space, then of course it makes sense to use it," referring to Germany. IMF's Christine Lagarde is also calling on Germany to increase spending. The German statistics office says exports declined 5.8% in August from prior month. Mr. Draghi also emphasized that the survival of European governments depended on getting economic changes right- "if they don't do the right things, they will disappear forever because they will not be re-elected." Germany's respected economic institutes said in a joint statement that GDP growth in 2014 will be down from earlier forecast of 1.9% to 1.3%. In 2015 growth is forecast at 1.2%. For the 3rd quarter 2014 growth is zero and for the 4th quarter 2014 it is estimated at 0.1%. Economic contraction is not ruled out.

LyrArc Article Gist
A Pew Research Center poll before April elections shows 70% of Indians dissatisfied with conditions in the country. 63% of those polled say they prefer the opposition BJP party to lead the next government, compared to 19% for the ruling Congress party. More significant was the favorable view of Narendra Modi by 78% of those polled, with only 16% holding an unfavorable view of Modi, the chief minister of the state of Gujarat which has seen fast growth rates. The Congress party has been hurt by a series of corruption scandals, weak leadership and poor management of the economy as growth slowed in 2012-2013.

LyrArc Article Gist
Japan's new prime minister told the Japanese Parliament in a policy speech, that a crisis like that in Greece was possible in Japan, if trust in national bonds was lost and the policy of public spending to lift the economy was not reversed. This speech followed the resignation of Shizuka Kamei, as banking minister. Kamei was seen as an advocate of continued public spending. He cautioned that a policy of relying heavily on issuing debt could not be sustained for long. Japan has government debt of $9.7 trillion, which is close to twice its gross national product in 2009. Much of this debt is held by the public in Japan, but analysts have cautioned that with the aging population, it is possible that people who retire will need the cash from bonds, requiring the government to turn to the debt markets for financing. Among the proposals Kan suggested is raising the 5% sales tax to pay for rising social welfare costs for an aging population. Satoshi Arai, the new national strategy minister, says the government will draft a plan by June 22 to address the public debt. He said the government would not exceed $500 billion in bond issuance for fiscal year ending March 2012....

LyrArc Article Gist
Brent crude drops below $60 by Dec. 15, 2014.

LyrArc Article Gist
Koichi Hamada, a former professor of economcs at Yale University, is one of prime minister Abe's advisors for the policy called Abenomics. He says the increase in the consumption tax was never part of Abenomics. It was the legacy of the previous Democratic Party of Japan's policies and of prime minister Noda, who pushed for it in the last 2 years of his administration. Nikkei polls in 2011 showed 53% of the public opposed to the doubling of the consumption tax to 10% by 2015 proposed by Noda and passed in 2012. Ichiro Ozawa's group of legislators left the DPJ over this issue. The real force behind the push to double the tax was the Finance Ministry, which warned the Abe government that not increasing the tax would make Japan look fiscally irresponsible. The Finance Ministry appears to have lost sense of the timing and fiscal hawks in the LDP party had gone along with it. The deteriorating global economy in the third quarter has hurt Japanese exports, and the lack of wage increases coupled with the increase in the consumption tax to 8% from 5% made Japanese feel poorer, leading to conditions that exacerbated the situation. Recognizing this Yamamoto says Abe has called the snap election in Dec. 2014, after postponing the second increase in the consumption tax to 10% in 2015 which the Noda legislation set to the future date of 2017. He says Abe had to have the guts to take on the Finance Ministry for Abenomics to work....

LyrArc Article Gist
Cochrane says the best option today is for Europe to accept a sovereign default for Greece. He says the European Central Bank which stands behind the euro, should not be used for buying bonds of troubled countries with shaky "collateral." This would only lead to a situation where EU countries would have to recapitalize the ECB. He emphasizes the fact that Greece will not pay back this debt. And the only way out is to have a situation similiar to Argentina where it needs to start over, and it would at some point be able to borrow again. Austerity is deeply unpopular in Greece and with higher unemployment Greece's financial situation is rapidly deteriorating. Making austerity something that was tried to buy time but will not work. Cochrane also makes the point that the euro itself acts like the euro bonds that EU countries are reluctant to support, it means the ECB backs the currency and supports it- which makes it vital to keep the ECB whole and prevent the dilution of its financial strength. Axel Weber, former head of the Bundesbank, resigned to express his opposition to the ECB buying the bonds of troubled eurozone countries, which he said was outside the ECB's mandate to conduct monetary policy....

LyrArc Article Gist
Difficulty attracting foreign investors to India's bond market. After adjusting for consumer inflation India's three month Treasury bill pays a negative 2.3%, according to Citi. Official foreign funds data for India shows as of Dec. 16, 2013, that foreigners used up only 32% of the quotas assigned to them in the bond market. If they were to use up the entire quota this would be $81 billion compared to the deficit for the year ending March of $50 billion. Foreign investors also have to deal with the risk that the currency could depreciate as in the summer of 2013, for which they need higher interest rates. The RBI increased interest rates twice since Rajan's taking office in September 2013. During 5 months of 2013 foreigners made a net withdrawal of $12.9 billion.

LyrArc Article Gist
The WSJ's Alessandra Galloni speaks with Mario Monti, the Italian premier, for in-depth interviews. Here Galloni and Walker provide an account of what happened during and after the June 28, 2012 summit of European leaders. Monti described the comments of ECB president Draghi in early August- about ECB buying of bonds of Italy and Spain being within the mandate of the ECB if monetary transmission channels were not working properly to reduce yields- as a bold effort following the agreement made at the June 28 summit to support Italy and Spain. Monti expressed the idea that Draghi should feel morally and politically justified if and when he makes the bold moves to rescue the euro. The only problem he says is whether one has to wait till the night before the euro is about to disintegrate for this to happen. This is the first time Monti has publicly expressed the possibility of this happening.

LyrArc Article Gist
Hon Hai has about 800,000 workers. About 400,000 are employed in the southern industrial town of Shenzhen. After a number of worker suicides (13 people have committed or attempted to commit suicide in 2010 so far), the company has announced that it will give 20% raise to its workers. Workers at one plant in Longhua are paid 900 yuan or $132, the legal minimum wage in Guangdong province, though many workers work overtime at 1.5 times the standard rate. The company is secretive about its activities and uses the trade name of Foxconn. It makes personal computers and other products for Apple, HP and other companies. The company uses a military style discipline and it is reported that there is excessive stress in working conditions.

LyrArc Article Gist
Losses of about 75% of production at some textile plants in Pakistan from severe electricity shortages. Demand outstrips supply by a huge margin. The Ministry of Power estimates demand at 18,0000 watts for a country of 180 million and supply is only 12,000 megawatts. There is a electricity crisis in Pakistan. The first priority of prime minister Nawaz Sharif is to get electricity production up significantly. This means textile plants cannot operate, fans can't operate in the heat of the summer months, and children cannot do homework because of lack of lighting, the whole country and people suffer from the lack of electricity.

LyrArc Article Gist
Liu Junning points out China's heritage of liberal ideas that goes back to Laozi, the founder of Taoism (6th century B.C.), Mencius (4th century B.C), Huang Zongxi (1610-1695) which are similiar to the liberal ideas of the Enlightenment in the Western nations. He says the liberal ideas and accountability of government are the heritage of all nations and not a particular western experience.

LyrArc Article Gist
Polls show 83% of the German public support increasing the minimum wage to 8.50 euros an hour. About two thirds of the public support increasing income taxes on high wage earners. The Social Democrats talks with the CDU to form a coalition are likely to lead to CDU accepance of the condition for a minimum wage of 8.50 euros an hour, but not to the condition for raising the taxes on high income earners. The SPD sees the higher taxes as a way to pay for new infrastructure. A survey done for TV broadcaster ZDF shows 61% of Germans favoring a SPD-CDU coalition. In the 2013 elections the SPD gained 25.7% of the vote and the CDU-CSU gained 41.5%. The SPD is pushing for flexible retirement age, equal pay for men and women, a tighter financial regulation, and a growth and employment strategy in the EU.

LyrArc Article Gist
The political risk in China as the change of leadership takes place in 2012, and with the removal of Chongqing party chief Bo Xilai. The slowing of manufacturing activity and slowdown in growth expected in 2012-2014. Export growth declines to 6.8% from 14.2% in the fourth quarter of 2011. Quarterly surveys by the central bank shows demand for loans is dropping. And the HSBC purchasing managers index shows a reading of 48.1 in March, declining from 49.6% in February, showing shrinking manufacturing activity in China- anything less than 50 means contraction is taking place.

LyrArc Article Gist
An account by Journal reporters based on over 25 interviews with eurozone policymakers shows how the central players in the eurozone drama acted to defend their national interests during the period April to July 2011. On one side France's president Sarkozy, Frenchman Claude Trichet at the European Central Bank, arguing in favor of the banks not to take bondholder losses or haircuts on loans made to Greece. On the other side the Bundesbanks Axel Weber, and Jens Weidman, Jurgen Stark and German Finance Minister Schauble. The Germans argued strongly for bondholder losses to take responsibility for bad loan decisions by French and German banks. French banks had committed more loans to Greece than German banks and had more at stake. German public opinion was strongly against German taxpayers paying for the losses, making German politicians insistent that European banks take losses on their bad loan decisions, or Germany would not support additional loans to Greece. Throughout April to July the two sides were locked in an impasse. The French feared losses for their banks and a Lehman Brothers bankruptcy style situation. The Germans at the Bundesbank and the Finance Ministry were equally insistent. A July 2011 summit meeting did not settle the issue. The events not covered here from the July to the December summit of eurozone leaders resulted in bondholders taking 50% haircut on loans to Greece, reducing the debt burden in Greece after austerity measures led to popular protests. The French pushed hard for the ECB or the EFSF to be allowed to make large purchases of bonds of troubled eurozone countries in an effort to protect Spain and Italy from contagion through higher bond yields. The Netherlands and Finland supported Germany's position. German bankers Weber, Weidman at the Bundesbank and Finance Minister Schauble opposed large scale buying by the ECB of Italy's and Spain's bonds and Chancellor Merkel said about a common eurobond that "this is not going to happen." Governments changed in Greece, Italy, and Spain by Dec. 2011, which committed to austerity programs and spending cuts. Italian Mario Draghi was appointed with German support as new head of the ECB. In late December 2011 Draghi launched the Long Term Financing Operation for lending unlimited amounts at 1% for three year loans to European banks and relaxing the terms to accept government bonds and other debt as collateral for loans. The effect of this was to provide a large infusion of liquidity into the banking system in Europe and drastically bring down the yields on bonds issued by Italy and Spain....