LyrArc Article Gist
Diesel prices are regulated and subsidized by the Indian government, but gasoline prices are deregulated since 2010, resulting in gasoline costing 64% more than diesel in India. As a result buyers are staying away from gasoline cars and shifting to diesel creating distortions in demand. The government is considering a tax on diesel cars and SUV's of between $3000 to $4600 to correct the distortion. Because lower income people woud be hurt by increasing the price of diesel it continues to be subsidized. Because of the uncertainty car manufacturers are shutting down production to reduce growing inventory of gasoline vehicles. High interest rates of 12% on car loans also reduces demand. Suzuki Maruti sales declined 6% in May 2012, Ford and GM showed sales declines of 14% and 20%. The year ending March 2012 shows Indian car sales growing only slightly by 2.2% to 2 million cars. Sales were rising at 29% only about a year ago. Gasoline costs 68 rupees a liter in New Delhi after a 11.5% increase in May 2012, compared to 41 rupees per liter for diesel. The increase in gasoline prices is a result of the government having difficulty paying the rising imports of oil, costing $141 billion for the year ending March 31, 2012. The sharp slowdown in the car industry and the problems in the energy sector have affected India's growth rate....

LyrArc Article Gist
A study by Bank of Japan's Research and Statistics Department in the Feb. 2013 Bank of Japan Review paper titled "About the Real Effective Exchange Rate," shows how Japan maintained international price competitiveness during the period of the strong yen at 80 to the dollar. It found that with deflation the cost inputs of labor, factory equipment and materials in Japan were reduced, even as the price in overseas markets for finished products went up. It found that while the yen went up against the dollar in nominal terms, in price adjusted terms accounting for deflation it has actually fallen. Nomura economist Kiuchi says the Japanese yen had to go to 54 to the dollar before it matched the level of the 1995 priceadjusted high of 79 to the dollar.

LyrArc Article Gist
Unstable politics and government in Japan as three prime ministers from the DPJ party are followed by Shinzo Abe of the LDP party.

LyrArc Article Gist
The bottom half of all U.S. households have only recently recovered the wealth lost in the 2009 financial crisis. They still have 32% less wealth than in 2003 when inflation is taken into account. The top 1% of households have more than twice as much as they did in 2003. Wealth is defined as net worth that includes houses , savings and stocks minus any debt. The wealthy have 85% of their wealth in stocks and bonds. For the bottom 50% half of the assets are in the house or family home. Economic and regulatory trends have happened in ways that favored the people investing in stocks, and rescued people investing in stocks with policies designed with this purpose by central banks and the U.S. government. By contrast for the bottom 50% buying a home is more difficult today. The problem this WSJ report points out is that the next recession would most hurt the bottom 50%, even before they have recovered from the last one which was a result of shaky practices of banks in financial lending and not some cyclical swing in the economy. Policy was then geared to provide a recovery first for stock markets as a way to economic recovery. The bottom 50% have little stake in the stock market, the top 1% have most of their gains from the stock market. Much of the popular anger comes from the way policies by both Democrats and Republicans differed little in past administrations in the way they approached this in shaping economic policy. As a result infrastructure building and investments in public services took less priority in this period of 30 years with trade imbalances with China building up on the external front, in another side to this development. The shift to Trump and to right wing populists in Europe is only the first phase in the corrective action that has to take place to return to a fairer distribution of wealth that existed before the last 3 decades. Eventually it is not right wing or left wing factions or parties, but healthy policies, that matter to create a better balance for society.  ...

LyrArc Article Gist
Harvard professor Robert Lawrence tells Tom Keene, the Obama administration has'nt paid that much attention to trade and trade agreements. He says this is unfortunate because it is important to lower barriers to trade, create fair trade, and increase U.S. exports.

LyrArc Article Gist
China's campaign against corruption and the popular programs that the Chinese government of Jinping encourages on television. This includes the 52 part series on television called "In the Name of the People." The programs show how the Communist party's upright officials stand up against the corrupt ones. The idea is to build up the reputation of the Communist Party, as it sagged under the previous administrations during the period of rapid growth when such behaviour was tolerated to in some ways.

LyrArc Article Gist
A less known political leader, Albert Hernandez, who teaches university law classes, is now set to become the next president of Argentina. He has worked with Peronist party under the Kirchner administrations and quit Christina Kirchner's administration after some disagreements on policies.  He is so far ahead of president Macri- sixteen points in the primary, that it is seen as too much of a gap for Macri to reverse. Hernandez is seen as a pragmatic leader and has as his running mate Christina Kirchner. Ms. Kirchner says she supports Hernandez as he can bring together all the Peronist factions. Mr. Hernandez is 60 years old and has worked with Peronist leaders in government from the 1990's who supported free market changes and with the Kirchner administrations when Argentina was recovering from economic collapse. Hernandez says he is learning from the mistakes made by Christina Kirchner. During the administration of Nestor Kirchner, Christina's husband, Hernandez, who was chief of staff, acted as a key problem solver. Argentina faced a crisis in debt accumulation and defaulted on the debt during that period around 2003. Argentina recovered from that crisis with the help of a commodities boom and demand from China. Mr. Hernandez was also chief of staff under Christina Kirchener who followed her husband as president, but resigned early because of differences on economic policy. Today debt accumulation is again a problem, with debt built up under the Macri administration and errors in policy of Mr. Macri. Christina Kirchner asked Hernandez to lead the ticket after it was clear that Peronist factions who did not support her could only come together if Mr Hernandez was the candidate. As a moderate without ideological tendency Mr. Hernandez was able to lead a broader coalition after errors in economic policy made by Mr. Macri leading to high inflation and a declining economy. Mr. Hernandez says he would renegotiate a deal with the IMF for a $57 bailout, which was signed by Mr. Macri to tackle a currency crisis. He also plans to take a new look at the trade deal with the European Union. Today both Brazil and Argentina are mired in economic crisis. Brazil through extravagant spending including on pensions, that left basic sanitation services, transport services, health care  poorly funded. Argentina has gone from prosperity to crisis, before 2003 during the first Kirchner administration, and now under Mr. Macri in 2019. Recurrent economic crises are a regular pattern in the region since 1950, with the region dependent on commodities exports and failing to build manufacturing industries.   ...

LyrArc Article Gist
China's view on its new Air Defense Zone as expressed by the Foreign Ministry is that if European countries and Japan are entitled to set their own air defense zones then China should be able to set its own zone. The differences with Asian neigbors and the U.S. arises over the fact that this overlaps with the zones of S. Korea, Japan and Taiwan and also covers the area of the disputed Senkaku Islands. Other problems lie in the ambiguous wording and failure to share this information in advance with other countries. As it stands B-52's from the U.S. and Japanese planes entered the zone on Nov. 29, and Chinese fighter jets tracked the planes but there was no incident. U.S. civilian airlines have agreed to follow the rules set by China for the air defense zone, and the U.S. government says it will let the airlines make the decision to follow the zone. The EU protested the setting up of the new air defense zone.

LyrArc Article Gist
The campaign rhetoric for renegotiating NAFTA and building a wall at the border has had a sharply negative effect on growth in Mexico. Growth slowed in 2016 and is expected to be close to zero in 2017 with declining foreign investment in the economy. The uncertainty is leading to sharp decline in foreign direct investment of 24% in the first 9 months of 2016, according to the Bank of Mexico. Further declines can be expected in 2017. The decline in the value of the peso of 16% since May 2016 has led to 6 interest rate increases in the past year. Inflation on annual basis was at 4.72% in Jan. 2017 and is rising. As Mexico depends on exports for one third of its output growth, and 80% is sent to the U.S., there is a need to diversify with trade agreements made with the European Union and other countries. Mexicans now question the value of NAFTA trade agreement as average growth of 2.6 since NAFTA was signed is below the 4.6% in the 2 decades prior to that. And poverty level is the same with about 60% of people in the underground economy. In addition crime, drug trade, a weak education system, weak rule of law, political corruption, show that Mexico has not made the progress since NAFTA that it should have made. ...

LyrArc Article Gist
The authors of the book Red Capitalism, two bankers, Walter and Howie, describe the evolution of China's banking system from the early days of 1974 to the present day. The account shows a sophisticated system of markets and companies, but behind the facade, is a more primitive system with its good side and problem areas. Risk is hard to define or capture in this system as the system is for the most part closed, trading entirely with itself. State controlled banks deal with stae entities in ways that are not so transparent. This distorts external perception of China's solvency. state debt for example is low, about 20% of GDP by one measure, but when all government obligations are added together, the authors say it is 76%. The whole business of providing, receiving and regulating money involves different state entities. As the system trades with itself, critical information about liabilities and pricing is concealed or difficult to figure out. The lack of outside entities setting prices disrupts efficient capital allocation and lets excesses grow within the system, making for concern about the future of this system.This is especially true considering that with the Asian crisis of 1997, then the US banking crisis of 2008, and the current crisis in the Euro-zone countries banking systems, excesses eventually take root....

LyrArc Article Gist
Competing interests of the U.S. and China on issues such as jobs, currency and trade. Chinese stalling over currency revaluation.

LyrArc Article Gist
The Indian economy is expected to grow by 8.5% this year compared to 6.5% in 2009. But a major problem looms in the high inflation facing India. The poor monsoon in 2009 led to higher prices for foodgrains, lentils, and sugar. And the government's cut in the fuel subsidies will lead to more efficient use of energy, but will lead to one additional percentage point in wholesale price inflation according to the Reserve Bank of India, India's central bank. The whoesale price index in India went up by 10.5% in June from the prior year, and this after a 10.1% increase in May. Bloomberg's tracking of consumer prices in the Asia-Pacific region shows India at the top of 17 countries in inflation, and consumer prices paid by industrial and farm workers in India are shown to be increasing at 14% annually. The government is coming under criticism for not releasing more grains from its stocks to soften the impact of last year's monsoon. The Manmohan Singh government finds inflation at above 10% unacceptable and is looking for further action from the central bank. Reserve Bank of India governor Subbarao has raised rates 3 times since March 2010 to 5.5%, and a further increase is expected at its next meeting on July 27. A better harvest in September, from a better monsoon season, could help lower food prices. If this does not happen, more tightening by the central bank could hurt economic growth, putting the government in a quandary....

LyrArc Article Gist
Major decisions about changing the economic structure- as advocated by the DRC and the PBOC- are expected from the Third Plenum party conference in China. This may compare to the Plenums in 1978 and 1993 which led to the setup of a market economy.

LyrArc Article Gist
Vivek Wadhwa visits India's IT sector companies to take a first hand look at new developments in 2011-2012. He finds innovation in areas ranging from printer ink to medical diagnostic tools, all at low price points suited for India's large population and lower incomes.

LyrArc Article Gist
Krugman says that China fears that a decline in the value of the dollar will reduce the value of the 70% of the $2 trillion in assets it holds, that are in the form of US Treasury bills. This may have been the reason Zhou Xiaocuan, China's central bank governor called for a new currrency to replace the dollar as new "super-sovereign reserve currency." He doesn't think this is likely to happen. Neither is his hope and that of Japan that somehow the two countries can export their way out of current difficulties. The US will not be the market it once was, that is certain. So Krugman says China, Japan, and the Europeans on the issue of the Stimulus are all hoping that things will return to the way they were. Something that is not going to happen. March figures in the US for jobs lost hit an high of 663,000, and this crisis says Krugman has years to run.