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Richard Barley points out that Italy has some breathing room even as the ten year yields on Italian debt reaches 6.15%, up 1.5 percentage points in 2011. Existing Italian debt has an interest rate of 4% and an average maturity of 7 years, according to Morgan Stanley. This means higher interest rates on new debt will take some time to have a serious impact. Fitch's estimates are that if 10 year yields on Italian debt went up to 7%, interest payments would go up to 6.1% of GDP by 2015 from 4.8% of GDP. This gives Italy some time to come up with solutions for competitiveness and growth issues. Italy's growth rate was only 0.1% for the 1st quarter of 2011, and debt is 119% of GDP. Italy also has a primary budget surplus which puts it in a better situation than other southern European economies.

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Scott Sperling, co-president of THL Partners, one of the oldest private equity firms, says rather than be anticapitalist the Obama administration is capitalism at work, as the restructuring is rebuilding two auto companies through bankruptcy by reducing unsustainable legacy obligations and making the bankruptcy process work right for these two companies. It also helps these firms get a new start. The process of "creative destruction" that helps make capitalism work is put to work in an enlightened way so there is creation as well as destruction, destruction through the tough choices that all stakeholders had to make, and creation through the new structures that are coming up. Preservation also works here through keeping what was good in these firms, which are the employees who had no part in management's mistakes, and workers who may be just as badly trapped in union ways. Scott also explains why the government's offer of 10% ownership shares to debtholders is fair, considering that without the government's money Chrysler would be worth little....

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The French government announced a 26 billion euros or $33 billion package as Stimulus spending. Its going into infrastructure projectsand investents by state owned firms like Electricite de France. It also includes aone-off payment of 200 euros for low-income households. Its valued at 1.3% of GDP. Under this plan, France will dig acanal north of Paris, renovate university buildings, and put new metro cars in service, and also fincnace the construction of 70,000 homes, on top of the 30,000 unfinished homes it is buying in 2009. Motorists who scrap thier old cars to buy new fuel efficient cars in 2009 will get a1000 euros bonus. This is aimed at reducing the stock of unsold cars which is at 1 million cars. And small companies will be exempted from social charges when they hire new employees.

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Mahathir Mohamed 92, wins the 2018 general elections in Malaysia with a commanding majority, leading to the fall of the government of prime minister Najib Razak. Razak led the United Malay National Organization UMNO after Mahathir Mohamed's departure from politics.  Unlike Mahathir, Najib was not fluent in Malay, was educated at top British schools and unable to connect freely with the Malay popular base. His main connnection was through his father Tun Abdul Razak who was the second prime minister of Malaysia. The United Malay National Organization serves the interests of the Malay people in the country. After decades in government the party has deteriorated and is now steeped in patronage, with the corruption in the Najib government leading to the 1MDB money laundering scandal. This led to the return of Mahathir Mohamed to politics to cleanup the government.  For several years the Najib government was seen as acting with impunity following the 1MDB revelations of corruption which were investigated by prosecutors in Malaysia and the Justice Department in the U.S. The Attorney General of Malaysia was fired for his investigation by Najib Razak, leading to the return of Mahathir Mohamed to politics and the elections of 2018. The investigations into the 1MDB scandal are now likely to proceed as this has aroused popular sentiment in Malaysia for clean government. ...

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India's economy has overcome the challenges posed by demonetization and the implementation of the GST tax that slowed growth to 5.7% for much of 2017. The growth rate increased to 7.2% in the last quarter of 2017. The GST tax change that created a single market is likely to increase growth. Growth of 8-10% matching China's growth rate in the last two decades is possible. Faster economic growth is needed to meet the need for more jobs, as 1 million new job entrants enter the job market each month. Indian Railways received 20 million applications for 100,000 new jobs showing the need for new jobs cannot be met at current growth rates. A major problem is the condition of the banking sector with bad loans affecting ability of banks to lend. A planned bailout of the banking sector and a new bankruptcy code are efforts to address this problem. Governance in the banking sector is also a problem that needs to be addressed. The price of oil is now up to $65 a barrel, increasing the cost to India which now faces a larger oil import cost.   ...

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Executives are outspoken in their frustration with having to develop plans to operate in the event Britain leaves the European Union on March 29 without a deal. Ties in logistics bind Britain with the single customs market of the EU. 

The British plans of a German toolmaker Heller are shown here to continue operating. Questions are raised whether Heller will close it Brexit goes the wrong way. Across Britain plants have closely timed cross border supply chain. Airbus Chief Enders calls the Brexit failures a "disgrace."

All the uncertainty means new investments will be postponed, and the cost of contingency planning will increase. Some say they have difficulty believing this crash culture and say its not British way of doing things.

 

 

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The airlines are hit hard by the coronavirus crisis. Reservations have declined as fewer people travel. There is a sense that a recovery will take time, several months. Delta is cutting international capacity by about 25% and domestic flights by 15%. It is also offering voluntary leave options to employees.

Southwest CEO Kelly says the severity of the decline is being felt with loss of $300 million in revenue in March. One piece of good news for airlines that offsets the severe demand decline is the fall in oil prices. American Airlines estimates the cost savings as much as $3 billion. A decade of industry profits have put the airlines in a better position to tackle the crisis. Other cost savings moves are reducing capital expenditures and managing cash flows efficiently.

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WSJ's Dawn Gilbertson on Amtrak's California Zephyr train from Chicago to Emeryville, California through the Rocky mountains in Colorado and Sierra Nevada mountain range. A three day two night 53 hour journey with an observation lounge and dining car, and a small private room called a sleepette at $1200, private bedrooms and shower bathrooms at $2500 per person. She says the draw is the scenic route and many of the 200 passengers one meets in the dining car for the three meals aday that come with the roomette. Train enthusiasts even young children fly in from all parts of the USA to catch this train braving what is a long train ride. 

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Last week investors in mortgage securities, including the Federal Reserve Bank of New York, sent a letter to the Bank of America, demanding that it buy back billions of dollars of mortgages that were bundled into securities and sold by Countrywide. (Bank of America took over Countrywide in 2008). Investors contention is that the documentation supporting the loan is faulty, and that Bank of America did not correct the deficiencies in the loan files and lien records when these deficiencies were found. Investors can try to force a bank to buy back its securities, if the strict rules governing the issue of such securities were not followed. As the market for mortgage securities is about $1.4 trillion dollars, even if a small fraction of the securities is affected, it would pose serious problems for the banks. This is a problem that can't be papered over.

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High youth unemployment at an estimated 40.5% for persons ages 15-24- which includes persons in school who cannot find jobs- is a priority for the Letta administration in Italy in 2013. The government is investing 1.5 billon euros in a program that would help about 200,000 young people gain jobs, and seeks additional funding from the EU to address this problem.

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With Ukraine unwilling to give up the Donbass and Germany/France/UK wanting to prevent Russian favored deal adverse for Europe, US focus on Monroe Doctrine and western hemisphere, Ukraine Russia war is likely to drag on. This is what one sees in Merz, Zelensky, Rubio speeches at the Munich Security conference. In 2026 Germany+ (that includes France and the UK) does not see it in the interests of Europe to allow a Ukraine capitulation to Russian attacks and Germany has already allocated funds to rebuild its military to prevent this from affecting Germany+ interests in Europe. Even though the winter attacks on Ukraine grid and electricity infrastructure leaves Kviv and other cities in a dire situation it appears that without the 20 year security guarantee or something solid Ukraine is not willing to sign an agreement which it fears Russia could turn around and start the war again. Germany+ which is the position of the major parties in Germany 60-70 % of voters for the SDP, CDU, Greens and others except AfD with 20-30% of voters. (AfD may have reached a ceiling as CDU under Merz is tough on migrants). Which means about 70% of Germans will support a policy of joining UK and France in resisting Russian attacks. Russia may have lost so much in manpower may see the war as a vindication only if it can hold onto the Donbass which may make it harder to reach a deal. Zelensky says Ukrainians live there and is unwilling to leave the Donbas region. The net result is that Germany+ and Ukraine are not likely to concede ground, the US reluctant to commit to 20 year security condition for Ukraine as it focuses energy on the western hemisphere and the fentanyl, drug traffickers in Mexico, Venezuela and Colombia, and their support structures in Cuba, in addition to Iran and China's plan on Taiwan sees limits to what it can do beyond limiting oil's funding the Russian attacks. It is amisrepresentation to say that the US is the cause, as everything changed the moment China became an industrial power with the help of US business interests and returned to its own story of being subject to British and Japanese incursions in the 19th and 20th centuries, and sensing that it is an industrial power in its own right by 2020 and insisting on framing its own policy in the world. Europe always had its own narrative since 1600 long before the US became an industrial power under Teddy Roosevelt in 1904. In that narrative which now plays out again different European powers band together to prevent any dominant power in Europe (Russia in 2026) from gaining dominance. ...

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The new oil law allowing foreign oil companies to compete with Pemex passes the Senate in Mexico and now goes to the lower house. The legislation removes the 4 oil worker union's representatives from the 15 person Board of Pemex. The oil law now leaves only a 10 member board- five appointed by the government and five independent members approved by the Senate. Because past opening of investment by the private sector in state owned railways and telecom sectors has led to wealth passing into the hands of a few business owners and worsening competitiveness, there is concern in Mexico about how this law will be implemented so that it benefits Mexico and Mexicans through foreign investment in the oil industry. Leftist parties are pushing a bill in the lower house to allow a referendum on the oil law by 2015 if 1.6 million signatures are collected. Oil experts point to foreign investment in the Mexican oil industry as further enhancing the prospects of North American oil production in comparison to the position of Middle East oil producers, because of Mexico's large shale oil and gas reserves and the prospects for new exploration in deep waters. ...

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Oil prices drop below $38 by mid-December 2015, as the Saudis continue to push prices down further by continuing production increases. No change is planned for 2016 and analysts expect low oil prices into 2016. At $38 a barrel it becomes uneconomical for most shale oil producers to operate in the U.S. About 50,000 jobs are lost in Texas and 250,000 jobs worldwide. This is a boost for large oil importers such as India, Japan, and Europe. China also stands to benefit from low oil prices. Nigeria, Venezuela, Iran and Russia have the most to lose from an extended period of low oil prices. Politics in the Middle East also may play a part in decisions as the Saudis oppose intervention in Syria and Iraq by Russia and Iran. Rising shale oil production in the U.S. could also be one of the additional targets of Saudi policy. One consequence is that OPEC is divided with the Saudis going their own way.

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What this Editorial board opinion in the Indian Express is saying is that India should concentrate its efforts on modernizing its economy on a scale that is similar or surpasses that of China because of its access to the latest technologies. Just as China capitalized on the opportunity presented by its entry in the World Trade Organization in 2001, through an economy wide effort to build a manufacturing and export logistics base. India is presented with the opportunity of building its own manufacturing and export logistics base as supply chains are being redesigned in 2023. This requires a longer term plan with clear thinking and concentrated effort with the entire resources of the nation. What looks like a small or gradual shift in supply chain with the US and EU adding India and Vietnam to their Chinese manufacturing base is going to change with every change in world events, as the US concentration of manufacturing in China becomes a situation that is impossible to to maintain. The only logical way for the US and following the US the EU to create a proper balance in its political relationship with China is to change fully its lopsided concentration of manufacturing in China. Biden is only making the initial moves, the EU is only waking up to the need to make its own changes to reduce this concentration. How much distance does the US need to cover to reduce its concentration in China? By a large amount because the shift of manufacturing was excessive and ill advised done as companies in the US raced in a competition to shift outside over 2 decades and simply outdid themselves and performed a disservice to the workers and families of America whom they served. Just for the US to get workers and families to benefit from return of good manufacturing jobs to the US and restore its manufacturing base that has shriveled, it will have to be a massive enterprise, where day by day it becomes more evident that more and more needs to be and accomplished in an accelerated way. What this also means where appropriate to leave a progressively year after a year larger base in India, and also Vietnam, much larger than is envisaged today. This situation is even more acutely felt in Japan which to bring a proper balance in its political relationship with China needs to even more urgently reduce its concentration of manufacturing in China. It must be the task of the Modi government to have a clear view of the road ahead- build the needed logistical base for exports using the latest technologies and set higher and higher targets for manufacturing.  If you look at the map of Asia this is the Global South- India is 60-70% of the Global South with its population of 1.4 billion people mostly young with aspirations for a modern economy like that of the US and Germany. Add to that Indonesia and Vietnam, and other nations already in the redesigned supply chain in 2023 and you have 2 billion people in Asia. Concentrate on this for the next 2 decades for a complete transformation of India, that is what the younger generation demands of its government. ...