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Italian born Canadian Sergio Marchionne, a former tax consultant turned auto executive who joined Fiat in 2004, planned the acquisition of Fiat in 2009. GM's payout to Chrysler following a decision not to acquire Fiat, and the U.S. government's need to merge Chrysler with another auto company after a bailout, gave Marchionne the opportunity to acquire Chrysler on favorable terms. Hard bargaining with the government led to acquiring Chrysler for free, using the $2 billion from GM to show the government that it would make the needed investments to bring Chrysler back from bankruptcy. This decision, the bringing in of outside talent, and the revival of the auto industry following the bailout, has led to the success of Fiat Chrysler.  Sergio Marchionne had the right instincts to persuade the government that Fiat with its small cars including the Fiat 500 was the right company to run Chrysler, and supporting president Obama's fuel efficiency goals gave him the right credentials with the Obama administration. A chain smoker of cigarettes who also gulped down espressos, her was a workaholic sometimes carrying 5 smartphones. He passed away at the age of 66 from health complications. Ironically the Dodge Dart was presented as the car that would get 40 miles per gallon. Other efforts at fuel efficient automobiles have not happened in the way it was envisioned by the Obama administration. The Dart did not become popular. Only the redesigned Fiat made it as a hit in Europe. The plan to import small Fiats to the U.S. remained only on paper. As the auto industry revived Marchionne canceled plans to make nearly all of the Chrysler cars and shifted production to more popular Jeeps and Dodge Ram, a move followed by Ford and GM. Fuel efficiency issues from the bankruptcy period are still alive today with the decision to leave small car manufacturing to Japanese and German carmakers, and the efforts of the Trump administration to turn back the Obama administration fuel efficiency targets.  ...

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Bank of Spain Governor Luis Maria Linde told a parliamentary committee "the loss of confidence in our banking system cannot be blamed exclusively on the global economc downturn, on problems in the eurozone, or on our own recession." He was critical of the previous Bank of Spain Governor Fernandez Ordonez, an appointee of the previous Socialist government, for "acting with little determination, or insufficiently or inadequately." He said the central bank's permitting of virtual mergers of troubled savings banks in place of real mergers with restructuring decisions, were part of the problem. Linde is a member of the ECB's governing council. Spain's central bank had for years championed macroprudential supervision, where banks set aside funds in good times for contingencies in bad times. Linde described those efforts as having failed because the Bank of Spain was "too timid" with the provisions set and failed to curb the credit and property bubble.

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J.P. Morgan Chase announces $2 billion in trading losses in May 2012. The Chief Investment Office unit made a bet with a trading strategy that CEO Jamie Dimon said had grown very complex. These losses could grow or shrink during the rest of the year.

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How the Simpson-Bowles Commission recommendations on reducting tax expenditures and the Romney, Feldstein proposals to limit tax deductions and loopholes to make the rich pay more- at the same time as the tax code is simplified with lower rates- offer a basis for moving towards a deficit reduction plan that has support on both sides of the aisle in Congress, of Democrats and Republicans. Jeb Hensarling and Pat Toomey are the Republican members on the Supercommittee to address deficit reduction, who support a balanced approach to raise revenue from taxes and spending. Obama advisor, Chrisitina Romer sees the Simpson-Bowles approach to limting tax deductions as a good starting point for building an agreement. Romer goes so far as to say let the Republicans in Congress decide on infrastructure project selection as there so many worthy infrastructure improvement projects that getting started would be the main objective.

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The pact of competitiveness is designed to bring a closer integration of the eurozone. It includes proposals for increasing the retirement age to 67, ending indexation of wages to inflation, and involvement of other eurozone countries in controlling out of control deficits in some countries. Germany sees this as necessary to convince the German public that financial responsibility is being exercized by countries in budget crises that get help from Germany. This may buy time but it does not come to terms with the reality of Greece being insolvent already, which may be true also for Ireland and Portugal. Some experts see the need for debt restructuring, and the need to start early, especially if Germany is unwilling to make large transfers to these countries.

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Easwar Prasad, Cornell University economist, and a former head of the IMF's China division, says the new report by the World Bank and the Development Reform Commission (DRC), is part of an effort by government officials in China to push the agenda for change forward during the transition to a new leadership. This includes Premier Wen. There is pushback from large state enterprises. The DRC and the World Bank had called for a change from the current situation to allow more private sector involvement in the economy, which means restricting the growth of the large state owned companies and letting the private sector operate in more parts of the economy. The alternative is to see growth slowing quickly and -some economists- say suddenly without warning. The role of Zhu Rongji, a former prime minister during the period Jiang Zemin was president, in pushing for changes appropriate to the period, is also cited. The last decade under prime minister Wen Biao is seen as one in which China relentlessly pursued its currrent export led model of development with large state run companies and state run banks dominating the economy. This has made change even harder to achieve because of the pushback to preserve the status quo....

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Hon Hai has about 800,000 workers. About 400,000 are employed in the southern industrial town of Shenzhen. After a number of worker suicides (13 people have committed or attempted to commit suicide in 2010 so far), the company has announced that it will give 20% raise to its workers. Workers at one plant in Longhua are paid 900 yuan or $132, the legal minimum wage in Guangdong province, though many workers work overtime at 1.5 times the standard rate. The company is secretive about its activities and uses the trade name of Foxconn. It makes personal computers and other products for Apple, HP and other companies. The company uses a military style discipline and it is reported that there is excessive stress in working conditions.

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Mario Draghi, President of the ECB, turned down proposals to let European central banks send money to troubled European governments through the IMF. Draghi said- "we should't try to circumvent the spirit of the treaty, no matter what the legal trick is." The ECB also opposes large government bond buying to bring down yields on Italian and Spanish government bonds. The ECB by majority vote reduced interest rates in the eurozone by 0.25%, bringing interest rates down to 1%, and reversing rate increases under the previous president Trichet. It also made medium term funding available to European banks on better terms. According to a person in the room, German Chancellor Merkel opened the summit saying Germany opposes a plan to let the European Stability Mechanism (ESM) borrow from the ECB. The ESM is the bailout mechanism for future bailouts.

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Samuelson says the bill in the U.S. Senate is symbolic because it allows companies to cite the undervalued renminbi as an illegal subsidy and have the Commerce Department impose duties on Chinese products. This would have to be done on a case by case basis, making it largely ineffective in dealing with the large trade deficit with China. He also cites the differences among economists that show a range between 1 million and 2.8 million jobs lost. The 2.8 million jobs estimate is from the Economic Policy Institute for the period 2001-2010. The 1 million is an estimate for 1990-2007, which estimates a loss of quarter of all manufacturing jobs. By WTO rules subsidies that are not targeted at specific industries or firms are allowed, according to lawyers. Which means China could appeal to the WTO, and impose retaliatory duties. In the meantime the trade deficit with China, with imports of $364 billion in 2010, and $86 billion in exports, would remain largely unaffected. This is the reason some Senators, including Republican Orrin Hatch (Utah), see this move as political posturing by President Obama and the Democrats, because the administration has no new proposals to address the trade deficit and the gradual erosion of America's manufacturing base. Samuelson cites Arvind Subramanium of the Peterson Institute, and his book "Eclipse: Living in the Shadow of China's Economic Dominance." Subramanium says what is at stake is not a temporary imbalance in world trade a happened with Japan in the 1980's, but a gradual shift to a system of trade in which China has preferential access to raw materials (oil, grain, minerals), subsidizes exports in new industries as it moves upscale from shoes and textiles to automobiles, aircraft and alternative energy, and changes the very nature of the global trading system as it becomes the dominant trading nation in the world. By Subramanium's estimate China's share of global trade increased from 1.6% to 9.8% in the 2 decades from 1990 to 2010. In two more decades he estimates China could increase this to 15% of global trade, significantly larger than the U.S. In a response to Congressmen, businessmen and policymakers wary of starting a trade war, Samuelson says there already is a trade war as a "fixed" system of trade undermines America's manufacturing and industrial base. The only difference being that today only one side is fighting that war, and America is slow to grasp the implications or its policymakers are clueless how to respond....

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Close to half of the respondents in the 2010 Annual Survey of the American Chamber of Commerce in Shanghai, say that they face regulators who show a preference for domestic companies. About 80% of respondents said their operations were profitable in 2010. In 1999, 58% of Shanghai members of the chamber said their profit margins were below worldwide levels. In 2010, 78% said their profit margins matched world levels. Just under half of the respondents said they feared a negative impact from China's effort to build "indigenous innovation" and encourage domestic champions in each industry. 63.1% of respondents say regulations are getting worse or staying the same. Chinese President Hu on a state visit to the US in January 2011 is presenting the idea of a level playing field for American companies.

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Hon Hai chairman Terry Gou told corporate employees that Hon Hai plans to increase the number of robotic arms in its manufacturing plants from 10,000 to one million by 2013. He says the move will "improve working conditions and provide a better career path to employees." The improvement of working conditions is a major concern after a number of suicides. The plans to automate dangerous and monotonous tasks is intended to migrate workers to other work. Hon Hai has about 1 million employees in China. It is moving plants to the less costly interor of China where wages are lower- to Chengdu, Wuhan and Zhengzhou from the coastal areas.

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The constructive contribution made by the G-20 meetings of leaders towards building agreement on economic and other policies for peace and progress in the global economy. The meetings were especially useful for coordinating policy and addressing issues arising in the global economy after the 2008 financial crisis. Here Li Baodong, China's vice minister for international organizations and conferences, international economic affairs, describes the path ahead: IMF reforms implementation, better coordination of macroeconomic policies, pursuing the anti-protectionist and free trade policies with further support to the WTO and ministerial MC9 meeting in Bali in Dec. 2013, and infrastructure financing proposals for developing countries on the agenda at the St Petersburg, Russia, G-2- meeting in Sept. 2013. Baodong says the mechanism called the Framework for Strong, Sustainable and Balanced Growth as part of the G-20 meetings is a major achievement. Each G-20 economy submits it macroeconomic policy plan for a Mutual Assessment Process under this arrangement. The progress from the Bretton Woods financial architecture to the new arrangement- from the G-6 to the G-20 to include developing countries from India to Mexico and Brazil- is another major achievement, not fully recognized by the public, says Baodong. Interestingly Baodong makes particular mention to global rebalancing, rather than pushing what he calls the impossible task of increasing demand to get growth. This is a realization coming to China's economic policymakers under the new Jinping-Keqiang administration after the overly aggressive effort to stimulate demand in the 2009-2011 Stimulus, and the ensuing financial problems in the banking and credit system. It is indicative of the policy shift and its implementation underway in China in 2013-2015....

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Former U.S. president Bush says the U.S. has an important role as a beacon of freedom, human rights and democracy in the world. The U.S. should not shrink from the challenges in the name of a false and temporary stability, and flexibility should not mean ambiguity, difficulties should not mean shrugging away from America's role. Patience, creativity and active American leadership are needed. The Bush administration supported the struggles of people in central Europe and in other countries. This is from a speech Bush gave at the Bush Institute, Southern Methodist University in Dallas, a year into the Arab Spring. A speech that was giving voice to the aspirations of people in the Arab world.

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After overly aggressive bank lending following the financial crisis of 2008 China is now badly overextended. China has also learned from the U.S. experience about the risks inherent in growth generated from a credit boom. In 2009-2010 China was also getting less bang for the buck in terms of the increase in lending needed to generate growth compared to earlier periods. Orlik says don't expect China to help the global economy the way it did in 2009-2011, and that there is no Plan B for China.

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The SEC requirement that companies disclose the ratio between median worker pay and the pay of senior executives. The SEC says it is putting out the rule as part of implementing Dodd-Frank legislation to control excessive executive pay. Companies will be allowed to survey a fraction of their workforce as appropriate for companies with global operations. Executive pay will include pension benefits and stock options under the new rule. A WSJ chart using information from the University of Southern California and the Bureau of Labor Statistics, shows the ratio between what CEO's on average make and rank and file workers make remained at about 30 times in the post war period till about 1970, a period of rapid growth in the U.S. economy. By 1980 this climbed to about 60 times and exceeded 100 times by 1990. The period of stratospheric growth for CEO pay and extreme widening of the gap then occurs between 1990 and 2000. By 2000 the dot com boom- telecom boom and the internet- creates a surge in executive pay reaching over 500 times. This drops to about 280 times in 2008 and picks up again to reach about 320 times in 2011. Many of the poor business practices, the excessive leveraging and risktaking in the financial industry, take place against this background of excessive pay for senior executives. Some of that risk was passed on to others through such methods as securitization in the period leading to the 2008 financial crisis, so that executives were compensated with higher pay for taking excessive risk that they personally or their companies did not assume. Dodd-Frank legislation following the 2008 financial crisis sought to correct this imbalance by having pay information disclosed. The excessive pay has also coincided with an increase in the frequency of boom-bust cycles in the economy. The busts prompted the needs for intervention by the U.S. central bank, the Federal Reserve, to drop interest rates more than would otherwise have happened during this decade, culminating in the huge bond purchases and monetary easing by the Bernanke Fed. The SEC under Mary Jo White is mindful of these distortions in the economy as a result of misallocation of resources based on excessive executive pay, and the need to take action before the next crisis. ...

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Feldstein, adviser to the Romney campaign, refutes the assertion based on computer models that the Romney Tax Plan of a 20% across the board cut in taxes cannot be paid for by limiting the deductions of high income tax earners. His own analysis based on IRS data, shows taxpayers with adjusted gross incomes of over $100,000 made itemized deductions of $636 billion in 2009. By taxing these deductions at a 30% marginal rate, additional revenue of $191 billion can be raised to pay for the Romney Tax Plan's static revenue loss of $181 billion. A smaller revenue loss of $148 billion is predicted based on increased incomes and taxes from the behavioural effects of lower taxes on earners. He says this was the thinking behind the Reagan tax cuts of 1986 and the Simpson-Bowles commission plan that would generate economic growth by reforming the tax system's distortions.