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Federal Reserve proposals in Dec 2011 for large U.S. banks leave capital cushions at 5% of assets. This phases in the higher 7% of assets rule for capital reserves and a surcharge of upto 2.5% based on bank risk levels under new Basel III regulations for implementation in 2016.

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China's shift in emphasis from heavy manufacturing and the auto industry to other technologically advanced and less environmentally sensitive industries including new energy sources. The National Development Reform Commisson lists industries in 3 categories- encouraged, allowed, and restricted. The auto industry is now in the allowed or permitted category, and is no longer encouraged for the purposes of foreign investment and the granting of preferential tax or streamlined approval processes. Alternative energy cars, internet equipment and some service industries are moving to the encouraged category. The growth in the auto industry has slowed to about 3% in 2011 from 32% in 2010, with the change hitting the domestic Chinese brands the most. As a result more laws are expected to help technical know-how flow towards Chinese auto companies, according to IHS Automotive.

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Volcker says that even with all the fuss about the length of the Volcker Rule, its important to remember that the regulation itself is only 35 pages. And he says that lawyers for the banks are not honest when it comes to this, because they spent a lot of time finding holes in the rule and were working to add complications to it, and now they are turning around and saying that the Volcker Rule is too complicated. Asked about Dodd-Frank, Volcker says that it does make the U.S safer in a financial crisis because of the crisis resolution process set up under Dodd-Frank legislation. A bank fails and the resolution is clearly laid out- the government takes over and liquidates it, or merges it or sells it. Stockholders don't get a bail out, management is fired, and creditors have to take losses. A lot still depends on having vigorous and alert regulators. He sees two large problems, the Euro crisis and the U.S. deficit, which need strong action. Volcker remains perplexed by why the situation of huge disparities in income growth has not been expressed to a greater extent- on one side the lack of growth in income for the average family in 10-15 years and the other side having the huge increase in incomes at the top end. He does not know of any years when this was as big as it is now- except 1928, 1929....

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About 400 million or one in 4 people people smoke in China. State ownership of the tobacco industry only makes this worse. Enforcement of bans on smoking is lax. Experts warn that this would become a major healthcare problem in China.

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The American Treasury Secretary who handled the 2008 financial crisis, Henry Paulson, gives the new US financial reform legislation an incomplete grade. His main concern is that the too-big-to fail risk in the US banking system continues, and without clear rules a lot depends on the regulators. He does not see higher capital requirements doing much to ease that problem, and sees another crisis in a few years as inevitable. Former SEC chief, Harvey Pitt, gives it an F for failure or an I for Incomplete. He sees it as a boon for lawyers, because it is not clearly written and leaves so many loopholes, to a degree that is simply astounding. He says it does nothing in the way of preventing another crisis. Does nothing for transparency, nothing for monitoring and action by regulators, all factors that led to the crisis of 2008. Nouriel Roubini gives it a C+, because it does little to fix the reasons why securitization failed and caused the crisis, and in this way will keep credit creation and expansion in a weak state. He sees this financial reform bill as a failed effort that is laying the ground for the next crisis, with little action in the "too-big-to-fail" area, a huge dilution of what former Fed Chairman paul Volcker had advocated in the Volcker rule, and no real impact on the risky trading of derivatives. Bill Gross of PIMCO gives his frank assessment in no uncertain terms. A D+ for this bill. It shows how lobbyists for the banks still control Congress he says. It would have been better to let Paul Volcker take charge completely, than to have the lobbyists dilute the critical reform proposals. Simon Johnson gives it the lowest passing grade at MIT, a B. The only large change he says, is the Kanjorski Amendment, which give federal regulators the authority to breakup the large banks. But he cautions that it may require another crisis for the regulators and Congress to "get it," and do what they should be doing....

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Changes to China's five year plan to include critical social goals, reduce income inequality, and provide a social safety net. The influence of local governments in distorting central government policy.

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Khairat el-Shatar, a leader of the Muslim Brotherhood in Egypt. He was the main voice for the Brotherhood for many years and guided its direction to a movement that supports moderation and modernization. He also guided the Brotherhood in its participation in electoral politics in the Mubarak days and recently in the elections for the new parliament. He is also a businessman and provides financial support to the Brotherhood.

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Toyota's changes in its global architecture in 2011-2013. Reorganization to build amore tight knit management structure for better responsiveness and decisionmaking. The focus is on getting rid of bureaucracy after years of growth that led to excessive and sometimes indirect reporting layers. For instance, chief engineers now report directly to top product planning executives to speed decisionmaking and make new product introductions faster. Regional managers are now shrunk to three groups: North America and China; Japan and Europe; Australia, Russia and emerging markets. It is interesting to note that China and the U.S. are put together- the logic is based on the idea that the buyers in each group tend to have similiar buyer behaviour for vehicles, say Toyota managers. Another significant effort focusses on increasing the use of standardized parts to 50% for vehicles that are of similiar size. The Prius C, the redesigned Camry and the Etios subcompact in India, were cited recently by CEO Akio Toyoda as examples of products that have utilized these changes in methods and approach....

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Spain delays setting up a financing mechanism for aiding regions short of funds by extending existing credits till Spain's high bond yields of 7% decline.

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Greg Ip points out that Saudi Arabia's effort to get back market share is not working so far as shale oil producers continue to increase production. OPEC now confronts a very different competitor in the U.S. shale oil industry- 77 different producers produce 75% of American oil production, each acting like a tech startup, with access to capital markets which are continuing to provide capital. These producers can increase or reduce production with agility, and act differently from state owned oil producers or the major western oil companies. He cites Goldman Sachs figures showing average rig in Texas Eagle Ford shale yielding 5000 barrels a day in the first year compared to 2000 barrels in 2011. This analysis also shows shale oil production cost on a declining curve- $80 in 2014 and $60 in 2015, which could upset Saudi calculations with the advances in technology. Majors such as ExxonMobil are also moving forward with the technological advances.

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After years of rapid growth and rapid rate of credit creation China's economy is stalling. Each $1 of new credit generates only 17 cents in GDP growth, according to Bloomberg. This compares with 83 cents of GDP growth for each credit dollar in 2007. Local governments cannot find projects that are worthy of investment. Financial repression with low interest rates for savers is further depressing consumer spending when it is needed to rebalance the economy away from exports.

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Feldstein's thoughts in April 2009, on Treasury's Public-Private Investment Plan. First, he says this plan will only remove $500 billion of impaired assets. The banks he says now own $3 billion of residential mortgages, $1.5 trillion of corporate real-estate loans, and $1 trillion of consumer debt. Not all of this is impaired but the banks will have to sell much more than $500 billion to regain confidence in their solvency. And with one third of all residential mortgages exceeding the value of the houses, and thie many homeowners under water, likely to default, the negative feedback loop of foreclosures begetting falling prices begetting foreclosures, threatens the whole effort to shore up the defences. If no workable solution is executed quickly to prevent this then even larger pools of mortgage debt will be impaired irretrievably. Feldstein suggests that the Obama administration seriously look at his plan suggested in March 2008 to provide government loans at low rates of interest like 1- 2% for 20% of the principal amount of the mortgage and then reduce the mortgage principal by 20%, thus keeping millions of homeowners above water. But this needs to be done quickly. All voluntary efforts have failed and have become asmokescreen for banks and lobbying groups with support from Congress to make it appear that this problem is being addressed. Thirdly Feldstein says that if banks sell these impaired mortgage assets at a loss- say 40-60 cents on the dollar on the upside with government and the FDIC picking up alot of the risk and financing for private investors under the new plan- they will now have to show the loss whereas they could have previously shown these assets at unrealistic price levels but still not taking losses. This might push banks into insolvency, so banks will need more injection of capital by the government to make this possible. What are the risks in this situation? Without an effective plan to prevent the negative feedback loop of foreclosure waves and falling houseprices, the quantity of impaired assets will simply grow larger. In effect even if some private investors take out some of the impaired assets from the banking system, it is possible that a new set of assets equal to or larger than these assets that are taken out are added to impaired assets in the banking system as house prices fall steeply from new foreclosures. That only means the economy is in the same hole as before, or in a slightly larger one, even with all the well intentioned steps. At some point the private enterprise argument has to be seen in the correct light. It is not that there is any argument that private enterprise can function better or far superior, it is only that the banks as private enterprises are in such an enormously stressed situation that the bank executive's cannot execute a way out of this mess. ...

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Daniel Tarullo, the new Fed Governor is the architect of the Fed's new pay guidelines. Fed officials at all the Fed banks around the country met the leaders of the large banks and thier compensation committee leaders. Tarullo has set up the principle based framework to guide pay which covers compensation practices that discourage risktaking that endangers the firm while enriching the employee, including risk management people in setting pay, better corporate governance and other principles.

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This WSJ article provides a detailed account of the positions of Clinton and Trump on Wall Street, the financial industry, banks, Dodd-Frank, regulatory reform, 6 weeks before the U.S. presidential election.

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A plan being put together in eurozone financial circles is for Spain to request aid and the European Stability Mechanism fund to provide far less than 100 billion euros approved for aid to Spain. With the request Spain would agree to conditions set by the EU, ECB and the IMF for improving competitiveness, reducing rigidity in labor markets, and controlling spending by regions in Spain. This would lead to the ECB taking action to buy Spanish bonds and lower borrowing costs.

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This report in the Economist points to the improved situation for Mexico after the scare from Trump's plans to build the wall and deport large numbers of immigrants. The peso dropped by 15% between mid November 2016 and January 2017, but has since recovered, and non-oil exports were up 5.5% in February 2017 over prior year with the manufacturing growth in the U.S.  Growth forecasts are now up from about 1% GDP growth previously to 2% for 2017, close to the 2.3% in 2016. Much of the change in mood in Mexico is a result of the failure of the early travel bans being blocked in the courts, the failure to get health care legislation through Congress, and the effort by the trade advisers and economic advisers around Trump to move Trump's positions more to the centre and closer to traditional Republican party positions. Wilbur Ross, the Commerce Secretary, says " a sensible agreement" can be reached with Mexico. Peter Navarro, trade adviser, talks about making "a mutually beneficial regional powerhouse." Robert Lighthizer, a veteran from the Reagan days, is likely to be made the new U.S. Trade representative. Still as the Economist points out the "20% border adjustment tax" continues to be supported by Paul Ryan in Congress to pay for tax cuts. But certainly the mood has lifted in Mexico in the first 100 days. This is true for economic policy in relation to China and Germany, and the close circle of Ross, National Economic Council head Gary Cohn, and Secretary of State Tillerson is moving Trump to the centre in policy statements to get things done. Mexico is faced with internal challenges of reestablishing the rule of law, improving infrastructure, reducing red tape and corruption, addressing problems in the education system, to promote economic growth. These challenges may prove to be as large as the external challenges were once thought to be. ...