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Toyota has passed GM in sales worldwidefor the first quarter 2007. But this is happening against a changing backdrop which is that worldwide sales and markets are shifting to China and India, and GM has the initative in both countries. Its Chinese sales increased by 32% to 876,000 units in 2006 and it plans to inroduce 10 new models or upgrades in the Chinese market in 2007. The other change is that after years of growth Toyota sees a relatively stagnant US market and its strategy is shifting to extracting more profit from each car, by increasing the flexibility of US plants to make more and diverse models, and building plants in low wage areas like the one in Mississippi. Note that the plant in Mississippi is expected to come onstream a year later in 2010 and produce 150,000 not 200,000 Highlander SUV's. Also related to this is the disappointment in Tundra pickup sales which may miss the modest target of 200,000 for 2007. On the manufacturing front Toyota is slowing down product development to ensure that all needed quality checks are performed by engineers. Mr Watanabe, Toyota's CEO, and a manufacturing man himself, has referred to quality checks being skipped or neglected in the rush for sales growth. GM is pursuing cost, efficiency and quality goals of its own and $9 billion in cost savings are planned for this year compared to 2006, another $9 billion is expected to be achieved in 2008. Another factor that is relevant to Toyota's experience in the US market is its fear of being labeled as a foreign company taking away American jobs. Hence the build up of US manufacturing capacity to 1.8 million now to increase to 2.2 million by 2010. And advertising for Toyota continues to foster an image of cars made in America, by American workers for the American buyers. In this new environment leadership in a worldwide market may actually shift back and forth between competitors and new challenges will come up as the Asian market explodes, and profitability and quality will become just as important or more important than sales....

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Mr. Rodrigo Maia, the 49 year old son of the former Mayor of Rio De Janeiro, Cesar Maia, is uniting Congressmen from all parties in Brazil's parliament to get things done and restore lost confidence, such as the recently passed pension reform. Brazil's pension system sucks up most of the money in the budget with overly generous benefits, leaving little to pay for essential public services such as sanitation and transportation. Shockingly sanitation has suffered as only 50% of the sewage is treated in Brazil.  Polls show confidence in parliament after corruption scandals and lack of work to help the people of Brazil with essential public services has fallen to an abysmal low of 7%. Only 50% of Brazil's sanitation is treated and the rest flows as untreated sewage and rubbish into the rivers. To bring some sanity to pensions the Brazilian parliament, with the organizing skills of Mr. Maia to bring parties together around the reform, has cut $240 billion over 10 years from pensions and introduced 65 years for men and 62 years for women as minimum retirement age.  Brazil has 33 parties and Mr. Maia's is with the centre right DEM party. How did this happen. This WSJ story says Rodrigo Maia, 49 years, was born in Santiago, Chile in 1970 during the days of Brazilian military dictatorship. His father was in exile in Chile. The election of a  far right figure Jair Bolsonaro who supported the military dictatorships record as president in the recent election was a warning sign for the different parties in Brazil on the centre right and the centre left that corruption scandals and a do-little spirit was wiping out their influence and destoroying their credibility with ordinary Brazilians. The pension cut reform was their response to gain some of the lost goodwill from the Brazilian people. In the past Brazil's members of the Chambers of Deputies were people of power and influence who held positions for long periods and passed on these positions to people in their families or in their close circle. The elections and democratic governments following years of dictatorship brought in a new class from centre right and centre left that mismanaged public finances and excluded new ideas. The Car Wash scandal and scandals at the state petroleum company under Da Silva's Workers Party led to loss of confidence not only in the centre left party government of Da Silva and the Workers Party, but also in a do-little parliament. The large state spending from the government was possible during the commodities boom from China with Brazilian iron ore and other products getting high prices. WIth the collapse of the commodities boom and lower prices the entire system of state spending has unraveled revealing how much generous pension system is damaging the financing of  basic public services.  Corruption is prevalent in many countries in Asia including India but nowhere has the spending on essential public services such as sanitation suffered as in Brazil. And nowhere was parliament and the government able to get away with staging Olympics, World Cup and building many stadiums, handing out generous benefits to gain public support as in Brazil when basic sanitation and health services were neglected in a shocking way. The health system was weakened to a great extent when it lacked the resources to tackle an outbreak of yellow fever in 2018 as it moved south from the Amazon region towards Sao Paulo and Rio de Janeiro. Protests against the lack of investment in public services such as transportation and bus systems resulted in the public protests in big cities that led to the rise of Jair Bolsonaro in an effort to bring new administration to tackle the problem of financing for infrastructure, public services, health and education.    ...

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India's Supreme Court rules on Aadhaar, India's biometric identification program, saying privacy is a fundamental right. Aadhar was started in 2009 as a way to help the poorest citizens and prevent leakage of fuel and food subsidies, and to fight corruption. Using biometric technology the government of prime minister Modi has extended the program as a way to build a database of digital fingerprints, iris scans of most of India's 1.2 billion people as part of a way to extend this into a national id card system for driver licenses, bank accounts, travel on Indian railways, making financial transactions. The government contends that privacy is not a fundamental right in a poor country where most citizens suffer from corruption and leakage of services and subsidies, given that basic safeguards against abuse are introduced. The Court's decision says privacy rights should be taken into account against surveillance by the state and for protection of data, and that it was part of the intrinsic rights of citizens to life and liberty. ...

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Caterpillar is asking workers at its Canadian plant to accept a large cut in wages and benefits. Wages and benefits at Caterpillar's rail equipment plant in LaGrange, Illinois, are less than 50% of the costs at the Caterpillar locomotive assembly plant in London, Ontario. According to the U.S. Bureau of Labor Statistics U.S. manufacturing labor costs per unit of output were 13% lower in 2010 than in 2000. This compares with an increase of 2.3% in Germany, increase of 18% in Canada, and increase of 15% in South Korea. Caterpillar is also asking for more flexible work rules at the Canadian plant. The flip side of this is that U.S. workers are earning significantly less in manufacturing, especially considering inflation, and the middle class is shrinking in the U.S. At the same time wages in the U.S. that are more competitive with wages in Mexico and China with flexible work rules and use of automation and technology, is helping to reverse the shrinking of the manufacturing sector in the U.S....

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Patrick Chovanec of Tsinghua University, says the loan target for 2011, though smaller than 2010, will still be over one and a half times the money lent in 2008. Stephen Green, head of research for Standard Chartered, says if anyone is printing money, it appears to be China's central bank, not the US. During a meeting of the Central Economic Work Conference in Beijing goals are being set for the next 12 months. One expert predicts the governmet may set official targets of 4% inflation (it is running at about 4.7% at this time) and 6.5 trillion yuan of lending in new loans in 2011, compared to 7.5 trillion in 2010. Questions remain whether China can manage a soft landing after the huge surge in lending and the continued asset bubble.

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In June 2012 India's Food Minister K.V. Thomas agreed that 13% of India's 50.2 millon of wheat grains from a record crop were under makeshift shelters which could be damaged by the monsoon rains. Another complicating factor is that a law from the 1980's intended to protect workers in the jute industry requires all packaging of foodgrains for storage to use jute bags. Since 1990 jute products have increased by about 30% compared to an increase of 82% for the wheat crop, as a result there is a severe shortage of jute bags to store foodgrains in states like Madhya Pradesh.

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How will countries like India generate jobs when technology enables manufacturing and other activity to do work with fewer and fewer people. Even Hon Hai in China is shifting work to robots. Technological progress is leaving more people unemployed and widening income gaps with the benefits going to a few people, says the Economist in this research based essay. It will require carefully managed governance to invest in infrastructure, raise skills of less skilled workers through education, and wage subsidies for those left behind to ensure our current system works in the future.

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The BJP Party wins 25 seats in the Kasmir legislative assembly, and the Kashmir People's Democratic Party led by Mufti Mohammad Sayeed wins 28 seats. Mr. Sayeed becomes the new chief minister in a coalition government formed with the BJP. Sayeed says about the election and the future- "History has given us a big opportunity, and we want to make this alliance the turning point for Kashmir." After years of conflict a new election provides an opportunity to turn the page for Kashmir and South Asia, and shift the focus to the economy and infrastructure.

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In his second part of the series on Capitalism and Globalization Schieritz says Trump's arguments have backing, and goes back to the studies done by David Autor of MIT on the adverse impact of free trade on communities across the U.S.. Lyrarc has covered this issue since 2006, and the reality is that this issue was brought up long before the Autor study gained prominence. On Nov. 12, 2010 Robert Lighthizer, Deputy Trade Representative under U.S. president Reagan wrote an op-ed in the NYT titled "Throwing Free Trade Overboard," that made a strident and strong case for what Trump says 5 years later, and from no less than a top trade official under Repubican Reagan.Trump comes late to this in 2015 when it was already amply clear what was happening. It is not so much Trump having discerned this, than others who should have paid attention, including Lew and leaders in both parties, and the business community,  who for too long ignored it. Or as Hilsenrath in a recent WSJ report says, simply said we have seen this before with Japan's entry into the American market, not realizing the speed and widespread impact of the changes in trade with China, that are unprecedented in history- evident just from the great speed of urbanization and manufacturing work force growth in China, policy rapidly impacting vulnerable communities across the U.S. The corrective course has to be credible which is why it has to come from a a reawakening among leaders such as May, Merkel and Clinton, who are keen students of change, and capable of designing and executing a corrective course of action, and winning the popular support and patience needed to stay the course which could run for most of the next decade. It would also provide leadership and show the way for societies in Brazil, China, India and other countries facing similar problems.     ...

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Zhou Xiaochuan, is head of the People's Bank of China since 2002. For a long time Zhou has tried to convince party leaders in China to make financial sector changes. The new leadership of Jinping-Li Keqiang has now adopted most of the road map and priorities drawn up by Xiaochuan. The first is bank deposit insurance, which would especially protect small depositors and provide a basis for new private banks to compete with large state owned banks, creating competition in the financial sector. By supporting creation of privately owned banks impetus could be given to loans to the private sector to rebalance the economy away from state owned banks and state owned enterprises. This is a key goal in the road map drawn up by the think tank Development Research Center (DRC) which has the backing of premier Li Keqiang. Competition from new private banks would let banks compete to offer higher rates to depositors, another goal. In a September article for the Communist Party Seeking Truth magazine, Zhou pointed out the pressing need for " supporting private capital to set up private banks and guide them to position themselves in serving small and micro companies." These new companies especially in tech and information technology fields can be the new drivers for growth in the future as the burst of infrastructure building generated growth slows down. The one area Zhou faces resistance is his idea of opening up China to foreign capital inflows and outflows. Here critics,including younger economists, say this protected China in the Asian financial markets crisis of 1997, and would protect China in the event it faces outflows of the type that are happening in India in 2013 after the U.S. Fed's plan to withdraw from its quantitative easing. Xiaochuan sees the flow of foreign capital as another way for capital to flow to new private companies and balance away from the state owned enterprises, and for China's savers to be able to obtain more attractive returns. Zhou says his plan would include the option for China to reintroduce capial controls in a crisis. As China's debt to GDP ratio is set on a trajectory to approach the levels reached in Japan before its banking crisis there is greater awareness from party leaders about the need for prudence. Xiaochuan has worked with party leader Jinping's key economic advisor Liu He for years, and has the support of He and Jinping for introducing deposit insurance as a top priority. President Jinping and Premier Li Keqiang see the need for Xiaochuan's experience and foresight "as a talent who can be counted on," as the sense of importance of changing the economic structure has deepened in 2013. Mandatory retirement for Xiaochuan at 65 was set aside to give him a third five year term, and his road map long ignored by former premier Wen Biao, is now at the top of China's agenda. ...

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Saudi Arabia and Iran are moving in the direction of taking away repressive rules and giving women more freedom in daily lives. Under Prince Salman Saudi Arabia is changing. Women can now drive in Saudi Arabia. As the role of religion is being reduced in Saudi public life women are now free to live more normal lives. Under new rules women will be able to drive motorcycles and trucks. The Tehran police chief has issued instructions that women be no longer detained if they do not wear proper hijab head covering in public. The two countries are competing with each other to show it is more modern to the international community, say some commentators. Others see the changes in Iran for hijab head covering not strictly enforced as part of the difficulty of enforcing these rules in court, as more younger women do not follow the rules strictly as in the past. Iran now substitutes educational classes in its enforcement, showing the gradual changes in Islamic societies. ...

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Krugman coins the term weaponized Keynesians for those who say building new warplanes is a good idea because it creates jobs, but do not say the same about job creation for building bridges, and other infrastructure.

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RIM reports selling 6 million smartphones in the 1st quarter of 2013, including 1 million Z10 smartphones. RIM says its Blackberry subscriber base dropped to about 76 million from 79 million the prior quarter. RIM reports earnings of $98 million, revenue declined to $2.68 billion from $4.18 billion the prior year quarter. The company's cash position at $2.9 billion was the same as the prior quarter.

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1. PETROBRAS KNOWHOW IN DEEP-WATER DRILLING HONED IN DEEPWATERS 100 MILES FROM RIO. In the 1970's Petrobras discovered oil in the coastal area near Maca. Later geological tests showed large deposits more than 100 miles offshore and more than a mile deep underwater. Senior Petrobras engineers worked with manufacturers to develop pressure resistant instruments and the hardware needed to drill deeper. This technology was developed over the years and Petrobras has now honed its skills in deepwater drilling. Since then Petrobras has become the leader in deepwater drilling.. The fact that Brazilian oil was offshore made Brazil focus on offshore oil exploration and use the Atlantic ocean near Brazil for one big R&D project. Petrobras uses floating platforms, of which many are converted oil tankers. These platforms are more agile in deep and remote waters and better weater waves and storms. Petrobras gets 90% of its oil from the waters over 100 miles north east of Rio de Janeiro from a cluster of 38 such platforms. The floating platforms are like large ships that can be connected to hoses to pumping points on the seabed. 2. PETROBRAS INVESTMENTS IN OVERSEAS OFFSHORE DEEPWATER OIL PRODUCTION. Petrobras has the size and profits to have global reach and make the large investments and bring deepwater expertise to other regions. It is 55.7% state owned. Production was 1.9 million barrels a day in 2006. Sales of $45 billion and profits of $10 billion for 2005. The 2005 profit was a 50% increase from 2004. Countries where Petrobras is working include Angola, Tanzania, Turkey and India. Petrobras has stated that it will increase overall investments by 66% in the next 4 years investing $87 billion, mostly on exploration and production from 2007 to 2011. Of that $12.1 billion will be invested overseas for new platforms off the Gulf of Mexico and new fields off the coast of Nigeria and Angola. Petrobras plans to invest $2 billion in the Gulf of Mexico for deepwater drilling. ...

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Supreme Court Justice, Elena Kagan, after her first year at the U.S. Supreme Court. Kagan was appointed by President Obama in 2010. Kagan talked about her experience at the Supreme Court at an Aspen Institute event. Kagan replaced Justice John Paul Stevens. Stevens says Kagan has voted very similiar to how he would have voted on most of the cases. And Justice Ginsberg says about Kagan: "she has already shown her talent as an incisive questioner at oral argument and a writer of eminently readable opinions." Kagan takes writing opinions for the Court very seriously. She described her style at the Aspen Institute event as figuring out how to communicate difficult ideas to people who know little about the subject. An additional aspect of Kagan's writing is that she strives to put things using vivid and colorful language that sticks with people. She has used expressions such as "loosey-goosey," for instance. In her dissent on the campaign finance case she described the supposedly smoking gun found by her colleagues, as: "the only smoking gun here is the majority's, and it is the kind that goes with mirrors." The media tends to compare Roberts with Kagan, the two youngest chief justices on the court, both articulate and vigorous in their opinions, with similiar intellectual backgrounds but taking different positions. Kagan says the most valuable experience to prepare for her new position, was the year she spent as Solicitor General, where she was trying to persuade nine chief justices of the court why they should take a particular position. The difference now being that she must persuade eight justices. The most striking aspect of the two appointments by George W. Bush and Obama, with the absence of a retirement age for the U.S. Supreme Court- as in other democracies such as India- is that both Roberts and Kagan may well be on the Court for 25 years or longer. ...

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A poll done by the International Republican Institute, a nonprofit affiliated with the Republican party, of 3500 people across Pakistan found a couple of important things. The Republican Institute's goal is to promote democracy in the developing world. 1. Popularity of President Zardari at 9% and Nawas Sharif's at 55%. The US resumed contacts with Sharif, and Sharif is seen as able to bring the Islamic moderates to the American side. 2. Economic issues are what concerns Pakistanis most. Refugees are approaching the 1 million number according to the UN High Commissioner for Refugees. 3. 81% said the country was going in the wrong direction, Zardari was never elected and is incompetent and this could be the reason. But military is still unpopular, 77% want democratic rule, possibly with Sharif or some sort of combination of Sharif, lawyers movement, and Islamic moderates in charge. 4. From alow of 9% in January 2008, now 37% are willing to work with the USA against extremism. Could Obama's election and US support of Pakistan's effort to heal itself be apart of this change of heart? 5. 45% support fighting extremists in the tribal areas and the Northwest Frontier Province. And 69% say having the Taliban and Al Quaeda operate in Pakistan is a serious problem. If these poll results accurately reflect shifting feeling in Pakistan, American help to help Pakistan pull itself up by its bootstraps economically and unify the country under a democratic administration of Islamic moderates and people from other areas like the lawyers movement, could work. It also improves the prospects of pulling out of Afghanistan after the situation improves, and setting up an administration that comprises Islamic moderates and tribal representatives that keeps out Al Quaeda, and works to rebuild Afghanistan after seemingly endless years of war. These efforts would require cooperation of Iran, India, Pakistan and the US, and assistance of countries like Turkey, in creating an atmosphere that promotes peaceful development in the entire region. ...