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The U.S. market looks like it is becoming the kind of maturing market that Japan and Germany have become for automobiles. Germany and Japan saw sales peak at high levels and then decline. And they have been declining steadily for several years. The US has a growing population and demographics because of immigration compared to Japan so there wil be continued demand for new cars. However since 2000 carmakers have introduced so many price incentives, interest free loans, and other ways of pushing sales that sales have continued to climb to unsustainable levels. All through the 1990's sales were in the 15 million range, then after 2000 sales climbed, except for the short period of uncertainty after 9/11/2001 Trade Center bombings. Sales climbed up to 17 million and stayed at these higher levels till the recent crises in 2007 saw a drop in sales and a shift to smaller fuel efficient cars. GM was offering 0% financing for 5 years through its Keep America Rolling campaign in the aftermath of 9/11. By 2005 automakers were offering as much as $8000 in discounts on pickup trucks. Employee pricing enabled regular customers to buy at employee prices. The Big Three sold to rental fleets unsold cars, so much so that by 2005 25% of all vehicles made by GM and Ford went to rental fleets, to rental companies in which these companies had large ownership stakes. For GM this became part of strategy. Fixed costs were high and the UAW contracts made it difficult to layoff workers, a jobs bank in which layed off workers could remain till rehired was itself quite costly as money had to be paid to the workers in the job bank. With this kind of inflexibility in the labor market GM could only spread all the fixed costs for its aging workforce which required pension payouts to retirees and health payments to retirees, by selling more automobiles. During this period of inflexibility in labor, and the legacy costs of previous boom years since the 1950's with generous UAW contracts, GM and Ford pushed sales to unsustainable levels; without considering the furture implications of this short term strategy. Another way this could hurt is by pulling sales in future years into current years because of interest free financing or huge discounting which probably happened in 2004-2005 and is seeing a payback today in 2008. At the peak in 2005 carmakers were planning further expansion of SUV capacity or expansion of other carmaking facilities. Gas was still not at the high levels of today. In 1999 gas cost $1.15 cents a gallon, and it was a little higher than that, but nowhere near what we are seeeing today. These new plants are coming up just as the sales are dropping dramatically, the half million SUV's sold in 2008 is about half the sales in 2003, enough to fill 2 plants when many more plants are being built or opening. The new capacity of 4 plants capable of producing 1 million vehicles is looking like a big mistake, like the new Toyota Tundra plant in Texas. Some of the new carmaking capacity is a Toyota plant in Tupelo, Mississippi, a Honda plant in Indiana, and a Kia Motors plant in Georgia. All this means a big drop in factory utilization rates. GM has 2 plants making full size SUV's. Later this year GM will cut production at these plants and at 2 plants making pickup trucks to utilize them only for 1 eight hour shift a day. Toyota has 1 full plant of excess capacity, not including the plant opening in Tupelo, Missisippi, making it likely to be down in utilization very significantly as well. Nissan is only using 65% of capacity at plants in Canton, Mississippi and Smyrna , Tennessee. And these utilization rates reflect the impact at the early stage of the housing crisis, consumption spending is only now beginning to bite, and unemployment is still to take a hit, so th economic recession immpact is still not reflected in auto sales. Even now GM and Chrysler cling to the hope of a sales pickup in late 2008 and in 2009, which is looking less likely by the day. J.D. Powers survey show the North American auto making capacity at 18.7 million cars and production this year at 14.1 million. This means the automakers have disastrously misjudged the auto market, and the role their own actions in pushing sales have affected the market in inflating the sales numbers beyond what is a sustainable sale increase. When credit tightening and lower consumption spending, housing crisis, and higher unemployment all hit the US in full impact by 2009 the situation is likely to worsen significantly and could become a disaster. ...

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Over $65 billion invested in 2014 by German companies to acquire American companies with a global presence, including TRW and Dresser Rand.

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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....

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With the strong positions taken by Clinton and Trump on China in the 2016 election campaign, U.S. relations with China enter a new phase. The strident tone in the campaign on China on trade deficit, women's issues, human rights, comes with the issues relating to China's role in the South China Sea and cyber espionage already in the background.

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China raises objections to the setup of the U.S. THADD missile defense system to protect South Korea, but the South Korean government of president Park Geun-hye is determined to go forward. The U.S. and South Korea say the North's missile tests have created conditions for the Terminal High Altitude Area Defense System to be setup to protect South Korea.

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The tensions that exist in Australian society, as a result of the large Chinese investments and imports of infrastructure building commodities such as iron ore, natural gas and other commodities. Australia's Pilbara region in the northwestern part of the country, has become one huge quarry for China, as an estimated 1 million tons of iron ore raw material is loaded onto 2 story high trucks each day- with automated driverless trucks system being implemented- and shipped by 2 mile long trains to waiting ships on the coast. Australians remember this done on a smaller scale in the 1980's by Japan. At the time Japan brought in Japanese workers. The same is true today but on a bigger scale, with China bringing in workers with lower pay. The concern now is what it was then, as one local leader put it- are we going to have towns with mines or mines with towns, he asked. The mining companies are looking at it purely as a commercial venture, and not investing in the towns. The towns now fear they will find the boom times gone someday and nothing tangible to show for it, no schools, hospitals and no infrastructure. And because the mining project companies fly people in and out, the 8000 aboriginal people in Pilbara- the original people of this land- see little of the mining expansion's benefits. Wandoan, a small place with 300 homes in the outback in Queensland, in eastern Australia, is an example of the gut wrenching change taking place in the mining areas. The lives of the people from the local pharmacy, the local supermarket, and the local ranchers, depend on the mining decisions made in China. This area was part of a planned, on again off again, $6 billion coal mine -part of a A$150 billion complex of natural gas and coal projects for exports to Asia in Queensland- and involved Xstrata buying 70,000 acres of the best grazing land for 7 coal mines. With the locals selling off, the mining uncertain, the supermarket closing, the whole town has the feeling of being up in the air, and fading out someday. Australian public sentiment recognizes this feeling, and at the same time is ambivalent about the impact. Polls conducted by the Lowy Institute for International Policy, show 73% of Australians feel Chinese economic growth has a positive impact, and at the same time 57% feel that there is now excessive Chinese investment, and 46% feel China will be a military threat in 20 years. Australians remember the same feeling about Japan's investments in raw material sources in the eighties. In 1988, polls then showed 70% of Australians saying there was too much Japanese investment, even though they also recognized that Australia had benefitted. The difference now is that there are also fears of China's influence, and foreign investment guidelines limit investments in Australian mining companies to below 50%. China's investment in Australia's natural resources comes in several ways: in the year upto July 2009 A$42 billion in export demand, A$3 billion in direct investment in Australian companies, and about A$5 billion in project financing. Iron ore sales to China amount to A$22 billion each year, and about one fourth of Australia's exports went to China, growing at a rate of 31% in 2009. According to the chief economist of Austrade, the government trade organization, Australia benefits from the economic relationship with China- this adds A$3,400 per year to every Australian household. Efforts to use some of the profits made by mining corporations for infrastructure and other public purposes, by increasing the mining tax have failed; as the mining industry launched a campaign against the government of Kevin Rudd, who was removed from office by his party. In the recent national elections, the ruling Labor party lost its majority, after losses in the resource rich states of Western Australia and Queensland. In the meantime the Australian currency has become the currency used by currency speculators who cannot use the yuan to make a bet on the currency- as the yuan is pegged to the dollar- and instead use the Australian dollar as a proxy. This makes it volatile, with the Australian dollar losing 10% of its value in a single day, when pessimism increased about China's growth forecasts. It also shows how much of the good story of employment and gdp growth in Australia is tied to the story in China, and the extent of the negative impact a reversal in this area can mean for Australians; especially now that the bad debt in the post-2008 explosion of bank lending poses risks to China's banknig system. ...

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Friedman says Putin acted emotionally by letting impulsive reaction to the anti-Russian feelings in western Ukraine determine Russian policy following the collapse of the Yakunovych government. The months long Russian response in Crimea and eastern Ukraine may have secured Russian pride at a large cost. This includes the damage to the relationship with Germany, seting the EU on a path to look for other sources of energy to reduce dependence on Russian gas, a natural gas deal with China in which the price was kept "a secret" and may have provided China with a bargaining edge considering the timing of the negotiations. The most severe impact is in the loss of confidence within Russia, reminding the Putin administration that though the economy has grown in the Putin years it is still fragile and connected to the global economy. The capital outflows of the magnitude of $160 billion at a time of high inflation and sharply slowing growth actually put at risk the gains Putin and Russia made in the last decade, and risk the future agenda to improve the standard of living of the Russian people eyond the major cities. Putin's own assessment would eventually be closer to that of Alexei Kudrin. Kudrin, finance minister in Putin's previous term, correctly saw the dangers of impulsive policy concentrated in one figure, and the suppression of other voices including the opposition needed for Russia to be governed in a manner similiar to western Europe, to attain a similiar level of economic progress and standards of living. In today's global economy even the U.S., France, UK and states inside Germany need foreign investment for jobs, new ideas and technology, and the opinion expressed on media television and internet shapes investor sentiment to a larger degree than fully understood....

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The U.S. and China presented conflicting views on trade and security in Asia-Pacific region at the APEC summit in 2018. Vice President Pence said "we don't drown our partners in a sea of debt," in a criticism of the China Belt and Road Initiative. The U.S. has 1500 new projects and $61 billion in new investments in the region. Mr. Xi Jinping stated " confrontation in a Cold War, hot war, trade war will produce no winner." 

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U.S. naval exercizes in Hawaii (Pacific Rim) which include China, and the naval exercizes at Subic Bay intended to counter China in the Pacific.

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Andrew Stuttaford's excellent review of a book on the hyperinflation of Weimar Germany. In early 2010, the out of print book, "When Money Dies," by Adam Fergusson was trading for four figure sums. It describes life under hyperinflation in Germany and the events leading to it, the efforts to find a solution, and the collapse of the German economy with the worldwide great depression. The book describes the death of the German mark, with 20 marks needed to buy one British pound in 1914, going to 310 billion in late 1923! The story starts with the onset of war in 1914, and the fateful German decision to fund the war effort largely through debt and the printing presses. What exacerbated the situation was the relatively shallow capital markets in Germany, the creation of 'loan banks' funded by a printing press used by the central bank, and the muffling of all information. The stock markets were closed during the war and foreign exchange rates were not published. The destruction of the war, revolution, protests, imposition of reparations by the victorious powers, and terrotorial occupation worsened the situation. The efforts of central bank president, Rudolf Havenstein, to prevent mass unemployment by devaluing the currency to keep exports competitive, worked only for a time. In the end, says Fergusson, the music stopped. Lacking a reliable pricing mechanism and faced with huge strains, including the onset of the worldwide depression, the whole German economy stopped functioning at even the most basic level. The whole economy was reduced to barter. Rent was payed with butter and lumps of coal were bartered for something else. The only time an economy was reduced to barter in recent times (in the last 2 decades) was the situation in Argentina after a sharp devaluation. The Russian economy also faced a trying period in recent years with the collapse of communism and a collapse of the currency. And the Asian economies faced a difficult period during the 1997 Asian financial crisis. But nothing compares with what happened in Weimar Germany. The book was originally written for a British audience at a time of rapid inflation in the 1970's, and it reminded readers of the connection between the quantity of money in circulation and price stability. Financial crises play out in different ways in different periods, but it is a sobering warning for the need for prudence in financial affairs, avoiding excesses, the need for global cooperation and a measure of peaceful coexistence in world affairs that enables financial systems to work. With excesses in asset bubbles of the stock market or housing kind, bad loans in the financial system, overleveraging in the financial system, lack of reserves, or huge trade deficits, posing the new types of risks in today's environment. Bad loans in the financial system caused problems in Japan in the past and pose risks in China today, overleveraging caused problems in the US in 2008, lack of reserves in S. Korea in 1997, a collapse of the currency in Russia in the 1990's, and a sharp devaluation with a lack of reserves in Argentina. Too much money in the system, as in China today with the sharp increase in bank lending as part of the stimulus following the 2008 crisis, can distort the functioning of the financial system with excesses in real estate speculation and overproduction. The nature of the crises are different but all have a common factor of tolerance for excesses over a long period and a lack of prudence, exacerbated by international tensions and wars that weaken a country's finances. The twin wars in Iraq and Afghanistan are estimated to cost a trillion dollars each and this can only exacerbate the finances in the US, when coupled with other factors such as bad real estate loans in the financial system, and huge trade deficits....

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It is not clear how China's president Jinping's support for the idea of "China Dream," -of China as a world power on a level with the U.S.- should be interpreted. China will increase its defense budget and continue its efforts to be the dominant power in its region, even as the U.S. and Japan begin to build closer ties in the Pacific. Is it simply a new assertiveness for its rights in relation to territorial disputes with Japan, and a continuation of a policy of peaceful development of earlier leaders. The move could also be an effort to build close ties with the military as the new leadership of Jinping-Keqiang prepares to make major changes in the economy. A speech in Dec. 2012 to Communist party officials in Guangdong province by Jinping, on how the lack of unity with the military led to the collapse of the Soviet Union under Gorbachev, could throw light on the thinking. In a few days an old party was gone, as he put it. This also follows the Bo Xilai episode which involved contacts with the military and the risks of division in the military and political leadership....