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After the financial crisis of 2008-2009, commercial real estate defaults posed a serious threat to the US economy. Now this threat is receding with low interest rates making it easier to get cheap financing, which raises the returns. For banks the rising earnings give a cushion to absorb losses, letting them sell distressed properties and not have to hold onto them. From office towers in Manhattan to Florida apartment buildings and retail properties in Washington, commercial real estate values are going up. Prices of commercial real estate properties sold by institutional investors went up by 19% in 2010, according to an index developed by the MIT Center for Real Estate. Investors have boosted the prices of bonds backed by commerical real estate to the highest level in two years. The managing director at Real Capital Analytics says, that with values going up, both the owners and lenders have more room to work out difficult situations. Real Capital Analytics January 2011 report shows that of the $52 billion in retail properties to fall into default, a little over half have completed workouts. In Feb 2010, the Congressional Oversight Panel of the Troubled Asset Relief Program said that the commercial real estate market had the potential to pose a serious threat to the US economy. The panel estimated that about half of the $1.4 trillion in commercial property real estate loans set to be paid off by 2014 were under water, where the borrower owes more than the property is worth. Market segments for hotel, apartment buildings and retail are going up. Hotel occupancy rates in the top 25 markets went up from 60% to 64%, according to Smith Travel Research. Sales of apartment buildings in the US went up as home ownership hit new lows, and lease rates went up to the highest levels in 4 years, according to Axiometrics....

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As appliance maker Fagor goes into bankruptcy with $1.16 billion in debt during Spain's long downturn, 1800 workers lose their jobs. Unemployment in the Basque town of Mondragon in northern Spain where Fagor is located, is up from 15% to 22%. Fagor was founded in 1955 and sold refrigerators, washing machines and televisions. Sales were 14 billion euros in 2012. An injection of 300 million euros from other members of the Mondragon co-op network and 80 million euros from workers failed to prevent the factories from closing. Decisions for international expansion with the acquisition of a French appliance maker created problems for Fagor because of the long economic downturn in the home base. Failure to move jobs to emerging markets with lower costs hurt Fagor, as Whirlpool and Electrolux moved jobs to China and other developing countries. Fagor's unique co-op structure of worker ownership made it difficult to move jobs outside Spain and France, and issuing new shares for capital is not possible under the co-op structure. ...

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Marie Le Pen's National Front Party gets only 8 seats in France's parliament following the second round of voting. It will not have enough seats to form its own parliamentary group. After winning about one third of the votes in the presidential election Marie Le Pen will not have enough seats in parliament to act as opposition leader. Marie Le Pen will represent the industrial constituency of Henin-Beaumont in northern France. Many voters from the parties on the right and the left decided not to vote in the parliamentary elections giving smaller representation to all parties, with a sharp drop for the Socialist and Republican parties. The big gainer in this situation was the En Marche party of  president Macron. For the first time younger members were elected with average age around 40-ish and 38% of parliamentary seats going to women, which is seen as a positive factor in the results. By giving Macron a solid majority in parliament the French people chose to give the government the ability to implement its program for reviving the economy, and reducing the gap between rural areas, industrial towns and large metropolitan areas such as Paris, Lyon, Bordeaux.   ...

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The AKP party loses its parliamentary majority in the 2015 general election. It wins 41% of the vote compared to 50% in the 2011 general election. This gives it 258 seats in the Turkish parliament, compared to 327 seats in the last election. Kurds, liberals and secular Turks were part of the antigovernment protests in 2013. This part of the electorate voted for the Kurdish People's Democratic Party, which won 13% of the vote. The traditional secular party in Turkey won 25% of the vote, giving the opposition to the AKP a combined 38% of the vote. Turnout was 86% for the election. The Kurdish People's Democratic Party is led by a 42 year old human rights lawyer, who told reporters: "As of this hour, the debate about the presidency, the debate about dictatorship, is over. Turkey narrowly averted a disaster."

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This editorial in the WSJ raises questions about Chief Justice Roberts' written majority opinion, and says Justice Scalia's comment about SCOTUScare should be replaced with the term RobertScare. It says Justice Roberts has emerged twice as a "political" Justice in the way he has interpreted the law in this case.

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Section 230 is a law passed in 1996 that makes the Social Media Companies and Media companies such as Meta and Google and others to have no liability for content posted on their sites. This has allowed these companies to grow and develop monopolies on the internet. Here CSPAN covers the hearings in the US Senate today December 9  with the following US Senators speaking at a Senate hearing on Online Safety for Children. Senator Whitehouse of Rhode Island describes the biggest problem as being the Section 230 which needs to be removed. The following mothers who are Senators and mothers or grand mothers of children were very vocal on this point- Katie Britt-Alabama, Martha Blackburn-Tennessee, Ashley Woody-Florida (former Attorney General of Florida).  Senators who are fathers or grandfathers of children speaking are-Josh Hawley-Missouri,      Whitehouse-Rhode Island, Bluementhal-Connecticut, Corbyn-Texas, Chuck Grassley-Iowa. Senator Whitehouse says-  "I understand Senator Graham was with respect to getting rid Of Section 230 Um, I strongly believe that Section 230 has long outlived its use, and it is now a real vessel for evil. That needs to come to an end. Um, the laws that Section 230 protects these big platforms from are very often laws that go back to the common law of England. that we inherited when this country was initially founded. I mean, these are long lasting, well tested. Important Legal constraints that have They've met the test of time, not by the year, by the decade, but by the century. And yet because of this crazy Section 230, these Ancient and highly respected doctrines just don't reach these people. And it really makes no sense that if you're a Internet platform you get treated one way. You do the exact same thing. And you're a publisher, you get treated a completely different way. And so I think that the time has come. I think it's pretty widely known that there were a core 4 of us. Ready to proceed with a bipartisan bill 2 and 2. And a A lot of work, important work, good work, valuable work has gone into making sure that other members of the committee and other members of the Senate have a chance to look at that and decide whether they want to join or not. And I'm at the stage right now where I think we just need to go." The Online Safety Act passed overwhelmingly in the US Senate recently still languishes in the House of Representatives. Ostensibly because of free speech but really because of monopolies and campaign contributions, and beyond this because of the idea that rapid internet growth gives the US economic and business leadership in the world. That is not how it has turned out instead by weakening the education of the children of the Nation this has created the idea in China and other nations that the US's period of world leadership has passed. In the overall scheme of things social media has weakened education in America as children of the Nation spend countless hours away from classroom education on their smartphones. Australia and other countries including China regulate the use of the smartphones and internet social media for children under the age of 14. This regulation strengthens education in these countries at the same time that the absence of limits weakens education competitiveness in America, and creates the idea that America's days of leadership in education have passed.The loss of this leadership means the loss of American leadership in the world in a decisive way. ...

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This report from Italy by Jason Horowitz of the NYT, shows the Five Star Movement as having emerged as Italy's leading political party, and making efforts to tackle its inexperience in politics with charges from other parties that its candidate for prime minister Mr. DiMaio, 31, is a complete novice. Here he is shown to have inflated the qualifications of a candidate with a pro-EU background, Italian Ms. D'Alessandro who lives in Berlin, Germany. She is one of many candidates from the professional class recruited by the Five Star Party to polish its image and show it is capable of governing. Ms. Alessandro was presented in the Southern region of Italy by Di Maio as an "economist" and someone close to Merkel's CDU. In elections on March 4, the governing Democratic party is presenting older candidates in their fifties with family and political connections in contrast to the young people like Ms. D'Alessandro who is only 27 years old with a masters degree in public policy from a German University.  The Five Star Movement hopes to gain from Italy's proportional system and the voter dissatisfaction with existing parties. A similar situation led to the untested and untried En Marche Movement in France winning the national elections. A separate report in the Economist magazine shows the Five Star Movement retaining its popularity even after other parties accused it of inexperience, improper financial dealings of candidates, plagiarism, anti-immigration views of specific candidates.  ...

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A study by Chris Whalen, managing director of Institutional Risk Analytics, of 7000 regional and community banks from data presented for the second quarter to the FDIC, shows that the bank's financial picture is deteriorating. Institutional Analytics put afailing grade on 1,882 banks as of June 30, 2009, up 16.5% from the end of March 2009. He says even the best run banks are feeling the bad effects of declining employment and asluggish economy. Whalen says this calls into question whether the stress tests for the "big banks" by the Obama adminsitration are adequate to control the crisis. Whalen says the asummption in those stress tests was that thes big banks had tohave enough capital and earnings to withstand a 9% loss rate, but what he is seeing in the industry is that we are already at a 9% loss rate , and the cycle has not peaked yet. He says any reduction in loss rates as assumed by the government may be shortlived as he sees things worsening in the fourth quarter of 2009. What about the good news that the big banks have raised capital in 2009. He says banks face operational problems, in addition to loan losses and low recovery rates on unloading assets they face rising expenses to carry these properties that generate little revenue. This cuts into earnings and what they can allocate to reserves. In this period banks are setting aside only half of what they would normally put in reserves to offset expected losses....

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To ensure a recovery in profits in 2010-2011, Ford's strategy was to sell the Focus and Fiesta small cars at a higher price point even if this meant lower sales. Profit margins for the North American region were above 10%, and Ford's president of the Americas, Mark Fields, says this will be maintained for 2012. In the first 3 quarters of 2011, Ford's profits were $6.6 billion. Analysts for Edmunds.com say Ford has shied away from offering large discounts, subsidizing leases and other incentives, and tried to maintain higher margins. The average price for the Focus of $20,589 being higher than average prices of rivals except for the Jetta from VW, according to Edmunds. The average price of the Fiesta is higher than rivals except for the Honda Fit, according to this information. Focus sales increased by 2% in 2011 over 2010, even as compact car sales went up by 8.7%, according to Autodata. Sales of the Fiesta actually fell by 30% in December 2011 compared to the prior year. The result of this strategy is that inventories of small cars are up significantly for Ford. By 2011 years end Ford had on dealer lots inventory of Focus cars at 92 days current sales, and Fiesta cars at 126 days. Normal inventory is considered less than 60 days supply. By comparison GM had a 68 day supply for the Cruze, and a 61 day supply for the Chevy Sonic. The challenge for Ford is to hold on to its pricing strategy, which means reducing production to work off the extra inventory....

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Karen Elliott House, a former publisher of the Wall Street Journal, who won a Pulitzer prize for reporting on the Middle East, is now researching Saudi society. She now writes this scathing report from Saudi Arabia. She says that just as in Egypt, an old corrupt leadership continues in power for several decades, an old corrupt leadership in the form of 7000 princes in a vast royal family. King Abdullah is in his eighties and the ruling princes have an average age of 83, and have illnesses for which they are under medical treatment. They continue to lead a nation where 60% of the people are young people under the age of 18! Itself an astounding fact. Karen House points out that the internet and social media have also made the young very knowledgeable about the conditions in the country- where 40% of Saudis live in poverty and 70% cannot afford a home. Bad managemet by the princes has affected basic services including the sewage and drainage problems in Jeddah after the floods. It is astounding that far less wealthy Gulf sheikdoms are doing a better job of providing education, jobs and health care. Thirty years of visiting Saudi Arabia, and the last four years of intensive reporting, has persuaded Karen House that this situation is at an impasse that might end up resolving itself through some sort of upheaval. To Karen House this looks like the last days of the aging leadership under Brezhnev before the Soviet Union collapsed....

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Samsung's decision to focus on LCD Displays and improve existing technology, citing lack of demand for higher priced OLED Displays, leaves LG Display as the sole maker of next generation OLED Displays. OLED Displays allow the screens to be very thin and to be made in flexible forms with better colors. In this WSJ interveiw, Han Sang-beom, the head of LG Display division says how LG reached the decision to take the risks involved in making the large investments required. He says LG Display already has about 2 years of experience ahead of other companies which he sees as important to keep in preparing for the future market. He cites progress in reducing panel defects and production efficiency, moving up the learning curve, which is similiar to its early experience in developing LCD's. LG Display's strategy is to keep this lead for capabilities that will be needed for the new wearable devices, automobiles and new types of products. It sees other competitors who are developing OLED panels moving into manufacturing to help solve the problems related to cost reduction and product competitiveness. LG Displays production plans are for the second OLED plant with capacity for 26,400 sheets of mother glass a month to be ready by the end of 2015, following the first plant of 8000 sheets. Each sheet makes six 55 inch TV screens. LG's existing small screen business is highly dependent on demand from Apple. LG Display plans to continue focus on LCD mobile product screens while developing new flexible OLED mobile screens....

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Hubbard at Columbia, Scott at Harvard, and Zingales at University of Chicago, go over the options. Bad bank option has the drawback that you have assets that are written down and you put them in a bad bank, but what about all those assets that deteriorate as the economy deteriorates, would'nt they have to be be put in the bad bank too? Banks hold $6 trillion of mortgages and mortgage securities, with mortgage securities of $1.3 trillion. Option two, guaranteeing bad assets has been tried for Citigroup, where taking asset pool of $306 billion which was created, Citigroup absorbed the first $29 billion losses, Treasury and FDIC jointly fund next $15 billion, and Fed holds 90% of remaining losses. The government getting $7 billion in preferred stock with 8% yield. This Citigroup option according to a conservative estimate would cost the government $60 billion after stock warrants received. This would cost for all the banks something like the $700 billion of the TARP, and if bad assets deteriorate further as is likely, could end up costing the government trillions. So this isnt a great option. Hubbard, Scott, and Zogales, say that the option of encouraging banks to spin off toxic assets into separate affiliated bad banks would be a reasonable one. But the government should't guarantee the assets of that bad bank if it poses systemic risk. And banks with negative capital or close to negative capital should be taken over by the government, nationalized, through already established FDIC procedures, such as bridge loans. ...

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Suzuki is not going to give up its dominant position in the Indian market easily. It has about 25 years of experience in India and owns 54% of Maruti Udyog which makes about 750,000 cars a year and plans to make 1 million cars in India annually by 2010. In JD Powers surveys Suzuki ranks first then Hond and Hyundai and Toyota fourth. Tata Motors is ninth. Competitiion is sure to heat up and Hyundai also has considerable experience being the second foreign company after Suzuki to come into India earlyon. The newcomers from Euope USA and Japan like Toyota and GM don't have anywhere near the experience and distribution netwrks and years of experience of Suzuki and Hyundai. So Suzuki may lose market share but will continue to be one of the top companies in India for some time. This is made possible by Suzuki investments in India. Suzuki plans a one billion yen research center in India to develop cars for the Indian market and is building a new plant in India.In the nextfew years Suzuki plans to double the number of service centers and showrooms to 1000 to reach every part of India. Suzuki is seeing considerable demand for its Swift car and has higher end versions in the Grand Vitara and the SX4. The head of Suzuki, Mr. Suzuki, has run the company since 1977 and is determined to respond to competition from newcomers with moves of his own to keep Suzuki as one of the leaders in India. ...

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How ACA a company that provided bond insurance for Collaterized Debt Obligation or CDO's basically did not provide good insurance to the CDO issuers becase it did not have the financial resources necessary to do this but instead let banks and investment houses to benefit from the accounting rules in the insurance industry which allow another set of accounting rules different from GAAP (Geerally Accepted Accounting Principles). Under these rules banks and investment houses did not have to follow the mark to market rules of GAAP and could book the difference between interest payments and the insurance premium across the life of the bond (5-10 years), in the quarter they bough the insurance, what were essentially illusory profits. Merill Lynch issued a lot of these CDO's. In November 2007 ACA was forced to take $1 billion in losses for the third quarter. Standard and Poors downgraded ACA from A to CCC a month later. The downgrade forced ACA to come up with more collateral to show that it had the funds to back up its insurance. When it came short of funds Merrill Lynch, UBS, CIBC had to take big losses on these policies. This began the first big shocks on the Street at te end of 2007. Note that $43 billion in securities backed by risky corporate loans and bonds like the ones used for a lot of the buyouts have insurance from ACA. These could be the next to sour and lead to more writedowns as the economy weakens. ...

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One senior real estate economst at Property and Portfolio Research says the value of New York metropolitan area office buildings will decline by 58% from its late 2007 peak. Losses of 40 % have already ocurred, bu there is a ways to go for commercial real estate losses.

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Chrysler-Fiat's efforts to ramp up Jeep's global sales in 2012-2014. Plans to build 120,000 Jeeps annually in St. Petersburg. Chrysler CEO Marchionne sees Jeep as Chrysler's global brand. The problem with sales in Russian and Chinese markets is price, because of high import duties. In Russia this can add upto $22,000 to price, and in China $37,000. This put Jeep prices in Russia at about $86,000 for a Grand Cherokee, forcing it to compete with luxury SUV's like Land Rover. Production locally in Russia and China should make Jeep prices competitive. For covering the international market Chrysler's plan is to build 6 Jeep models with new designs for a sleeker appearance as a lifestyle vehicle. In the past the Jeep was seen largely as a off-road SUV in emerging markets rather than a lifestyle vehicle.

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Trade between Russia and Germany was about $100 billion in 2013, or about 3.3% of German exports. About 300,000 jobs depend on exports to Russia, according to Germany's DIHK Chambers of Commerce. A poll released by Der Spiegel on July 27, 2014, shows 52% of Germans now support tough sanctions on Russia, with the mood shifting following the death of 193 Dutch residents on Malaysian Airlines Flight 17. Finance minister Schauble told the Bild newspaper- "Damaging pece and stability would be the biggest risk for the economy."

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Abbott Labs acquisition of Piramal Healthcare for $3.7 billion gives it 7% of the Indian market. Acccording to IMS Health emerging markets drug sales for 17 countries went up from $42 billion in 2000 to 126 billion in 2009. Anlysts expect 70% of global growth to come from these areas in next 5 years.