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Germany's chancellor Angela Merkel said the government will follow the recommendations of the government appointed Ethics Comission to close eight nuclear reactors immediately, and close most of the other reactors by 2021. Three plants may be kept online into 2022 for reserve power. About 70% of the German public by some estimates opposes nuclear power. Nuclear energy provides 23% of German energy supplies, and coal fired plants 42.4%. In 2002 a coalition government of Social Democrats and the Green party made a decision to phase out nuclear energy. Already Germany has the highest targets of any country in the world for alternative energy. German renewable energy targets are for the country to generate 80% of energy supply from sources such as wind, solar and other renewable energy by 2050. Currently Germany produces 16.9% of electricity consumption through renewable energy. And Germany has a thriving energy industry with solar energy companies SolarWorld AG, solar cellmaker Q-Cells SE and wind turbine maker Nordex. Germany sees the challenge as both reducing the risks of nuclear energy and an opportunity to become the world leader in renewable energy with growing markets overseas. Merkel vioced this by saying - "This path sets a great challenge for Germany, but we can be the first industrial country to make the transition ino an age of highly efficient and renewable energy." ...

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U.S. Federal Reserve chairwoman Janet Yellen's speech at the Federal Reserve Bank of Boston conference on inequality was remarkable in the clear focus on the increase in inequality of the last three decades. Yellen calls it "the most sustained rise in inequality since the nineteenth century." Yellen also described the stark inequality between the lower half of households and those at the top- "The lower half of households by wealth held just 3 percent of wealth in 1989 and only 1 percent in 2013. To put that in perspective... the average net worth of the lower half of the distribution, representing 62 million households, was $11,000 in 2013. About one fourth of these families reported zero wealth or negative net worth, and a significant fraction of those said they were "underwater" on their home mortgages, owing more than the value of the home." Without saying this explicitly Yellen has accepted the Fed's own role in this situation under Greenspan and Bernanke. Under Bernanke Yellen was vicechairwoman. Yellen participated in many of the decisions of the Fed that kept interest rates low- hurting savers and those who could not take the risks of a volatile stock market. Yet Yellen has shown courage in stating the problem with all the facts she could muster, and making clear that Fed sees the long term unemployed as a critical driver for Fed policy....

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Venezuela's economy declined by 2.8% in 2014, according to the government. In 2015 the GDP decline is forecast at 7% by the IMF. Venezuela is finally confronting the serious problems it faces by giving gasoline at the pump at pennies a gallon. The huge subsidy leading to waste and smuggling in the border regions with Columbia was wasteful at crude oil prices of $100 a gallon, and is now a burden on the economy at crude oil prices of $50 a gallon in Jan. 2015. In his annual address at the National Assembly president Maduro confronted this by saying- "It's a distortion, you have to admit it, you can crucify me if you want but there's a need for us to go to a balanced price." On devaluation of the currency, the Bolivar, he said a state run operation that sells U.S. dollars at the rate of 50 Bolivares per dollar would now be run by private brokers. As this is the lowest of a three tier exchange rate run by the government for all foreign exchange transactions it effectively would be a devaluation of the currency. It would help the government meet its budget deficit by bringing in more local currency, which private economists estimate at 14% of GDP. At the same time it would worsen already high inflation of about 64%....

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Fears of nervous investors is now touching the bond markets. AIG's insurance subsidiaries traded their bonds at prices ranging from 38 cents on the dollar to around 81 cents, from more than 50 cents on the dollar a month ago, according to MarketAxess. Investors are worried that future restructurings will cause cash generated by AIG's units to go to the government before its bondholders, as the government has already chalked up a huge bill of $177 billion for AIG. Long term bonds of triple rated General Electric Company, which with GE Capital is the largest US corporate debt issuer, dropped last week to 63 cents on the dollar. Again investors are worried that they may not get all their money back. And again GE's CFO Sherin had to reassure investors that GE's capital position was strong. The bonds of Citigroup are trading at 70 cents on the dollar. Sales of blocks of securities called "bid lists" are not a good sign, as big groups of sales are an indication investors are desperate to unload investments quickly. Bonds issued by Goldman Sachs and General Electric without the government's backing have dropped to 96 cents on the dollar and 73 cents on the dollar, respectively in the last few days. Their government backed debt trades at close to full value or 100 cents on the dollar. ...

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The Japanese economy went through asevere contraction in the first quarter 2009, declining 15% on an annualized basis. But Japan's unemployment rate in April was 4.8%, compared with much higher rates in EUrope and even higher rates in the USA. France and Germany have social democratic states that protect workers jobs, and Germany even after the Harz reforms continues to help workers deal with unemployment making it least painful as possible with government help. Japan takes this astep further. The law in Japan requires that even though companies can cut worker's hours, they must pay at least 60% of their hourly wages during that time. THe government provides help. It has budgeted $624 million this year to reimburse companies for half of these payments. In March 48,000 companies got subsidies for 2.38 million employees according to government figures. This includes large companies like NEC Electronics and Nissan Motor. THey have to find things for the workers to do, community service like keeping the area clean, vegetable gardens, handicrafts shop, anything that helps the communities. A recent survey by the Nikkei financial daily, shows zero percent of large business owners said they had plans to layoff permanent staff members, compared with 39% in South Korea. WIthout this the unemployment rate, say experts, would be 2 percentage points higher....

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The chairman of India's Tata Group, Ratan Tata, talks to the WSJ's Paul Beckett. Tata Group now employs 357,000 people and gets 65% of saes from overseas. He describes the difficulties with the Jaguar and land Rover acquisition. And says Tata Motors did very well to extinguish $3 billion in debt arising from the acquisitions by raisng new capital, liquidating some assets and doing away with loose practices. The experience at the new location in Gujarat for the Tata Nano minicar is very positive and production is planned for January 2010. He has some words for India's government, saying that India will remain an agricultural country unless the government finds some better way to fairly and justly compensate farmers for their land where industrializaton is takng place. He sees an alien view of industrial development in W. Bengal and says Tata is better off from being away from that place. For the US and Indian firms operating in the outsourcing space he has some advice. He wants Indian companies to be sensitive to the American unemployment situation, the stress being felt by jobless people, and that its important not to be aggressive and alien to pain that is going on in the USA. Ratan Tata is a graduate of Cornell University in aeronautical engineering, and closely connected with the University. ...

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The problems in the commercial real estate bad loans that make it too hard for the government to rescue. An adjustment here could slow the economy in the years ahead and expose banks to big losses in the $3.4 trillion outstanding commercial real estate debt. Big banks benefitted from the gvernmet TARP program, and after the stress tests raised funds. But big banks held only 29% of the $1.84 trillion commercial real estate debt on bank balance sheets in the 2nd quarter of 2009, according to Foresight Analytics. Smaller banks with $1 billion to $10 billion of assets had $450 billion in commercial real estate exposure in the second quarter equivalent to 330% of Tier 1 capital. For the largest banks that ratio was much less at 99%, according to Foresight. And the smaller banks did not get stresstested the way the larger banks did and so wer not able to raise enough equity. Governmet plans to deal with this coming crisis are to hopwe that real estae prices recover. a recovery of 10% could cut those loans underwater to 37% from 68%. And regulators issued guidelines to encourage banks to restructure, not foreclose on problem commercial mortgages. But even if prices rise banks would want to pare exposure not refinance these loans. Meanwhile the $700 billin market in bonds backed by commercial real estate loans is moribund....

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The company that only a couple of years ago was coming up with new models and among the top names in the cell phone business, is now gasping for air as it struggles to keep its cellphone business alive. It is an example of how vigilant and on ones toes (how paranoid in Andy Grove's words), one has to be in the fast moving tech businesses. Losing its leadership position to Nokia and other rivals like Samsung and LG from South Korea, who had better strategies and newer models, Motorola has never recovered, and the way down has been steep and precipitious. Motorola's cellphone sales fell a huge 51% in the fourth quarter, matching in its magnitude the kind of breathtaking sales drops that have hit GM and Chrysler for January 2009. And things cannot get better when the loss of $595 million for the cellphone division (or $31 for each cellphone shipped), mean cuts in design and other needed staff. Motorola has been closing design centers and has laid off 25% of design staff. In total Motorola posted a loss of $3.58 billion for the 4th quarter 2008. The rest of the losses include writedowns and charges for layoffs of 7000 workers announced since October 2008. Motorola shares trade at $4.04 on the NYSE and Moody's has downgraded it to Baa3, the lowest investment grade rating. ...

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Cerberus Capital will lose its entire stake under the plan announced by the Obama administration. And Fiat will be limited to a 20% stake in Chrysler, down from an earlier figure of 30%. And Fiat will have to repay the $6 billion loan that the Obama administration is willing to make before in can take astake in Chrysler of above 49%. Obama administration official confirmaed that the Cerberus 80% equity stake no longer holds value and that the firm's ownership would come to an end. Only if Fiat and Chrysler reach an agreement in 30 days will Treasury invest $6 billion in Chrysler. The task force requires Chrysler to eliminate the "vast majority" of roughly $9 billion in outstanding secured debt. Cerberus acquired Chrysler from Daimler AG in august 2007 when US vehicle sales were 16 million a year, and did this by having Chrysler borrow heavilyusing its plants and property as collateral. $10 billion of secured debt was raised, and $2.5 billion was paid down of it. With prices of gasoline hitting $4 things collapsed. Chrysler sales fell 40%, and Chrysler was loaned $4 billion by Treasury. Now Chrysler has 30 days of working capital from Treasury till it reaches an agreement with Fiat, and before the government provides an additional $6 billion if the agreements as required by the Obama task force are reached....

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Oil prices doubled in the last year but wholesale gasoline prices rose a mere 39% according to analysts. Independent refiners like Valero and Tesoro have difficulty passing on the increased price of crude oil to consumers and their profits are being squeezed. Th cost of oil represents about 75% of the cost of gasoline at the pump, state and federal taxes 12%, and refining and distribution the rest according to the Energy Department. Meanwhile the demand for gasoline is dropping as motorists drive less, drive in more fuel efficient cars, and take shorter trips. Refining utilization rates are dropping going to a low of 81.4% in April 2008 compared to 90.4% in April 2007. In the beginning of May they were running at 85% utilization rate. Its appears odd but the rising price of oil hurts the refiner's margins because independent refiners buy the crude they process. Tesoro,Sunoco and United Refining all lost money in the first quarter even as producer/refiners like Exxon Mobil showed big profits. Valero which processes the heavier crudes that trade at discount saw its profit drop to $261 million in the first quarter 2008 from $1.1 billion in the 1st quarter 2007. Refining margins are about $12.45 a barrel on average, about 60% below the level a year ago, and in the low part of their 5 year range according to a UBS report....

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General Motors reports a huge second quarter 2008 loss of $15.5 billion , of which $ 2billion loss is from leasing vehicles, $3.3 billion for former part division Delphi Corp, and $3.3 billion for a buyout offer that reduced payrolls by 19000 last quarter. It also includes a surprising $65 million loss for Asian operations with added costs of hedging against drop in currencies. And Europe made just $99 million. So other than Brazil the situation is disappointing overseas also. Lower truck sales caused a $9.9 billion decline in N. American revenues to $19.8 billion from $29.7 billion. And GM said US vehicle sales dropped 26% in July, 2008. The course of GM's decline is now taking on breathtaking proortions-From 2005 to 2007 GM lost $50 billion and in the 1st and second quarters of 2008 losses of $18 billion, leaving only $20.5 billion of readily available cash and assets for future downturns. GM's market share close to 30% in 1998 is now a liitle over 20% in 2008. With all this havoc on GM's bottom line and market share GM continues to hobble along without any new blood and fresh thinking and new leadership that combines experience in other difficult business settings with vision and execution. Fiat went through this a few years before with fresh thinking and leadership and Ford is trying to get some fresh thinking under Mulally....

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With only 44% of Catalan people supporting independence and 48% opposed there is considerable division in the Catalan region about independence from Spain. The WSJ looks at different neighborhoods in Barcelona some working class and others more affluent and sees a sharp division along lines of class, age and language. People in the working class neighborhoods of Ciutat Meridiana are opposed to separation from Spain. The independence movement is mostly popular among younger, middle class and Catalan speaking people. Meridiana in northern Barcelona is one of the poorest neighborhoods. In the hip central neighborhood of Gracia with leafy squares dotted with art galleries and vegan restaurants the pro-separatist movement has major support. Support for independence is highest under age 25 and declines with age and is lowest for people at 65 years. More popular with middle class and less with people earning less than 1300 euros. Today Spain has a constitution that gives greater autonomy to individual regions such as Galicia, Basque and Catalan regions that have their own language and traditions. This was suppressed during dictator Franco's rule after the Spanish civil war in the 1930's. The Spanish constitution was written after Franco's death and ratified under King Carlos in 1978 providing freedom with self-government for all nationalities and regions, and an unusual degree of autonomy.  Poorer people in Barcelona feel the young people supporting separation are spoiled brats and dismiss charges that the state is fascist as a lack of knowledge of what fascism really is.  As the division and dispute drags on following the 2017 referendum that was declared unconstitutional, support for independence is declining, as reported in the Guardian recently.  All this has hurt the Catalan economy and foreign investment adding an economic dimension to this as Catalonia is now seeing growth lower than the national growth rate in Spain. In addition to this the new socialist government of Pedro Sanchez and some Catalan separatist parties are supporting new negotiations to address Catalan grievance. Catalans have felt that they are not getting a fair share of revenues that can be invested in housing, health and other services, that they are giving more in tax revenues than they are receiving. The 2009 financial crisis has also affected Catalonia in ways that increased support for an independent state as Catalonia was growing more than the rest of Spain at that time.  ...

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This report in the WSJ provides details on the groundwork that was laid by the Trump administration as it worked to find a solution to the problems facing Venezuela with refugees and economic crisis, and months of protests. The plans were set in the days before Nicholas Maduro took office for the second term as president. The night before Juan Guaido, head of the National Assembly, declared himself president, U.S. vice president Mike Pence stated that the U.S. would support him if he took the reins of government from Maduro by invoking a clause in the Venezuelan Constitution that makes the head of the National Assembly take the office of president if the existing president is declared illegitimate taking office unlawfully. About 60 nations did not recognize the elections that gave Maduro a second term. On Jan 2 Mr Trump who feels deeply about the collapse of the Venezuelan economy and rising poverty, the suffering of the Venezuelan people, met with presidents of Brazil and Colombia. Colombian president Ivan Duque and Trump hinted at a plan to cooperate to help people fleeing Venezuela and respecting its democratic heritage. Mr Pompeo spoke to allies of the U.S. The National Assembly laid out its plans on Jan 15, for using a constitutional mechanism that allows the head of the Assembly to lead an interim government till new elections are held if the existing president is declared illegitimate. A leading Republican senator of Cuban origin Mr. Rubio supported the move. On the eve of protests in Venezuela Rubio and two other senators from Florida met Mr. Trump and Pence at the White House. Also present were Bolton, Pompeo, Ross and Treasury Secretary Mnuchin. Mr. Trump then decided to do it. He placed a call to Mr. Guiado  to tell him that if the National Assembly invoked Article 233 the U.S. president would back him.  The U.S. believes the rank and file in the military are with the opposition even though its leaders back Maduro. After the U.S. action, the governments of Brazil, Argentina, Chile, Peru, Colombia, backed the move for an interim government. The European Union called for free and credible elections. Russia and Mexico supported Maduro.  The State Department instructed the U.S. Federal Reserve about Guiado government as the sole representative for Venezuelan assets in banks. Sanctions could be placed on Venezuelan oil exports as backup efforts proceed to support the interim government. ...

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This indepth report from the Economist looks at the damage done in 9 years of rule under Jacob Zuma, and the prospects of the African National Congress under the new leadership of Cyril Ramaphosa. The South African economy suffered under Jacob Zuma. The Zuma government hurt the government's finances, and suffered from corruption and mismanagement. Only 21% of South Africans trust their government in one poll. This indepth report also asks the question- how much has changed since the days of Apartheid South Africa? Mandela's release from prison in 1990, and the ANC party winning elections in 1994 changed South Africa into a multi cultural and multi ethnic society with democracy. A liberal constitution protects the rights of all of South Africa's communities and citizens. Share of households without electricity fell from 42% in 1996 to 10% in 2016. Black people make up 50% of the middle class. Blacks now make up more buyers of suburban homes than whites. Race relations are better today. The problem is that progress and improvement in living and economic conditions stalled after 2009 when Jacob Zuma as head of the African National Congress became president. GDP per person declined after 2013. Half of South Africans were born after the end of Apartheid in 1994. Nearly 40% of people of age 15-34 are not in work, training or education. To get into the middle class one needs a job. About 62% of South Africans would trade democracy for an unelected leader who could deliver on housing and jobs and the economy. Cyril Ramaphosa was made president and head of the ANC after a bruising struggle to oust Jacob Zuma in 2017 ANC conference. He now faces elections in May 2019. In the 1980's he led the National Union of Mineworkers. He later became secretary general of the ANC in the 1990's and led talks for democracy. Ramphosa was passed over by Mandela because of pressure within ANC to select Thabo Mbeki. Mbeki was followed by Zuma, also from ANC. Ramaphosa then joined business, as a small number of well connected black South Africans and made $450 million through preferential access to equity in large firms for a few black South Africans. Then went back to the ANC as deputy president,  then deputy president of the country. The Economist says after Zuma South Africa is running out of time, and Mr. Ramaphosa expected to win, faces many challenges, particularly youth unemployment. ...

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India's Northeast has been completely transformed in the 8 years since 2014 with PM Modi's infrastructure improvements. Tele density is up from a little over 40% to 65%, and massive road, rail and air infrastructure building have created a new Northeastern India. This can be seen in the way Northeasterners are looking at the future with a new optimism and integrating into India's experiment with development under democracy with enthusiasm never seen this way before.

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Pulitzer prize winning journalist reporting on the Middle East and Saudi Arabia, Karen Elliott House, describes the changes in Saudi society and politics against the backdrop of the changes in the Middle East. Her exceptional reporting and insights provide a look into the Middle East at a time when young people make up the largest demographic and are looking for jobs and economic opportunity, with political structures lagging far behind in meeting the growing aspirations. The larger backdrop of the region extends into South Asia, with large Muslim populations unable to make the right choices for freedom and economic progress because of internal divisions, widespread illiteracy and lack of education of the rural population, and poor leadership. The lag affects western society in different ways, including the threat of terrorism, sporadic involvement in the region's conflicts, and a sense of not being able to do the right thing by its own ideals.

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Putin's reaction to the falling ruble with declining oil prices adding to the impact of sanctions on the Russian economy is to blame the Western countries for a "civilizational" conflict against Russia that is centuries old. President Obama speaking about the same time to a Business Roundtable meeting says Putin was taken by surprise during the changes in Ukraine and has improvised his way since then, using Russian nationalism in a way that is taking the country backwards in history. Merkel makes the same point and says the Federal Republic of Germany has taken a new positive direction, learning from past history. This has led to a loss of credibility for Putin as seen at the G-20 meeting in Australia in 2014, as the opening of the Russian economy and the efforts to improve Russia's standard of living in an atmosphere of trust and international cooperation is replaced with distrust and misgivings by these policy improvisations.

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Incentives such as 0% financing for 60 months reduce GM profitability and GM had hoped to stay aaway from them, but with over 100 days of inventory on most of the pickup and passenger trucks GM has been forced to resort to it again. With construction slowing dowwn the inventory has been building up quickly.

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Questions raised by Nicholas Kristof of the NYT on Russian hacking during the 2016 U.S. presidential election. Kristof says the implausible or far fetched idea of foreign interference in U.S. elections is not as implausible as it may appear.

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WSJ asks the question how are companies run in America by CEO's during the 9 month old pandemic? To answer that question it looks at Emerson Electric, based in Ferguson, Missouri, with its 90,000 employees in the U.S. and around the world. David Farr is CEO of American conglomerate Emerson Electric that makes products in a number of industries, for longer than most CEO's in America. At 65 years today, he has managed the company since he became CEO at the age of 45. It has 8000 employees in China and 10,000 in Mexico, and plants in the midwest, all hard hit by the pandemic. Add to this racial riots after killing of a black man in Ferguson, Missouri, and you have a challenging situation for any CEO.    As a son of a plant manager at a Corning plant in Corning, New York and growing up in a manufacturing environment in England, his instincts are that customers are what matter the most. That shrinking production could lead to some competitors making it and others shrinking if they did not act quickly to protect their supply chains. His goal is to keep factories running to have parts ready for their customers who made the finished product in the oil and gas industry and in factories where Emerson supplied the automated processes. As a first step he has 7 charter planes fly parts from a Nanjing factory to Shanghai when the trucks stopped moving. He campaigns with the Mexican ambassador to the U.S. to have the company listed as essential business to be kept open in a lockdown but fails. He gets up at 5.30 am and works till 8 pm and spends most nights reading, lounging with 2 spaniels, and going to bed early. He tells his son who works at Caterpillar company to get back to work as soon as he can as he believes being on the job is really really important. Yet he is worried up his daughter working as a pastry chef in New York and wants her to come back home to the midwest. He is a manager in the old style saying he wouldn't hire American workers because the Obama administration was out to destroy American manufacturing with its environmental rules forgetting that he was doing just that in the end-  and what had America and the concept of a free nation and a free people with opportunities for all have anything to do with like or dislike of any president or party. He also has his quirks, keeping 5 baseball bats and swinging a bat while he took walks and did some thinking. Passionate, hard working, and getting it done he keeps Emerson in the game as an industrial competitor from the U.S. ...