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The Chevy Volt GM's plug in electric car comes out in 2010. Toyota plans to bring its plug in electric car in late 2009. A company in China, BYD, has already come out with an electric car, the F3DM, priced at 150,000 yuan or $22,000. By contrast the Chevy Volt is expected to be priced at $40,000 when it comes out in 2010. Essentially this gives the market leadership to BYD, because it would have 2 years of experience with its cars on the road, and $40,000 is just not a commercially viable price if a competitor can sell it for half the price. So how does BYD do it? Wang Chuanfu is founder and chairman of BYD Co. a battery and car maker. BYD has built up low cost, high quality and highly motivated research and development capabilities. Wang put together about 10,000 technicians and engineers, many fresh out of colleges and technical schools in China. As it learns the efficiencies of manufacturing and design it is able to bring this to bear on the H3DM improvement, for introduction of other new electric car models. And this technical capacity comes at a much lower cost in China compared to western countries. Wang's focus on this area making it possible to price at $22,000. The CEO of Mid American an Iowa based energy producer with majority stake ownership of Warren Buffett, was attracted to BYD for this very reason, and bought a 10% stake in BYD for $230 million. Wang believes there is a more level playing field in electric cars because of the simplicity of their design and fewer parts, making for a faster move up the learning curve. Electric cars have just 2 motors (45 parts each) and 2 gearboxes (60 parts each), a total of 210 parts excluding nuts and bolts. BYD's gasoline car the F6 has 1400 powertrain parts, 840 parts for the V6 and for transmission 560 parts. Says Wang, this puts all of us on the same starting line. The F3DM is the first real electric car being able to go for 60 miles exclusively on electricity on a full charge. A car that can go 180 miles on one full charge called the BYD e6 is planned for 2009. BYD uses iron-phosphate technology which is safer because of stable chemicals and less chance of fire from overheating. This is a key criteria for this lithium ion battery technology for cars. The Chevy Volt battery being developed by A123 company at MIT uses a similiar technology. BYD started with lithium ion battery development years ago. Its founder Mr Wang was fascinated by batteries when he studied metallurgical physics and chemistry in the mid 1980's for his Masters degree. He found a research position at the General Research Institute of Nonferrous Metals in Beijing, then decided to form his own company BYD in 1995, to develop lithium ion batteries with about 20 engineers. Experience was gained selling batteries to Samsung, Nokia and Motorola. In 2002 the company went public on the Hong Kong stock exchange. Wang was attracted to the idea of electric cars at this early stage even though he did not know how to drive. In 1998, says Wang, he had his engineers start upscaling development from cellphone battery technology to electric car battery technology. At the same time to pursue his vision for the development of electric cars Wang made the decision to learn car development by making and selling gasoline cars. The first car was a small sedan called the F3 brought out in 2005. By the last quarter of 2008 the F3 was one of China's best selling automobiles. Demand for BYD's F3 and F10 models is growing even as car sales are dropping in China, helping BYD to gain in car sales relative to Cherry Automobile and Geely Holding, two of the largest competitors. ...

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A new report on American driving habits by Samantha Gross and Aaron Brady of Cambridge Energy Associates shows that finally the gasoline price increases are beginning to bite the consumer and American drivers are changing their habits. After increasing from about2.5 trillion miles of total vehicle miles travelled by Americans in 1998 to about 3.0 trillion miles in 2007 the last 6 months are showing a downward trend for the first time. In the late 1970's and early 1980's something similar happened with a deep recession, rising gasoline prices and improved fuel efficiency standards, during this period gasoline consumption declined by 12 % accordingt o CEA. What is different now? For one thing the environmental issues are a big factor now and they take a new meaning as developing countries like India China Brazil and Rusia as well as other countries with much larger numbers of people than the US and Europe are now part of the car buying and electricity using peoples of the world. Its impossible both for the environment and for resource supplies to meet the needs of billions of new people joining the global economy and western ways of living without doing something radically different. And he problem is immediate as China becomes the second largest car buying country and India is not far behind with an explosion in Nano sales expected in the next few years, and the huge demands on electricity in these countries meaning burning huge amounts of coal to generate this electricity and create global environmental problems. All this makes the 70's and early eighties period remotely relevant. We are looking at something hugely different and 21st century defining now as its clear fuel has to be conserved and resources shared between the western world and the developing world, and technology moved forward quickly to meet the needs of a new world of Asia, Africa, Europe and the Americas all bundled into one both by the global ecoomy and the way business operates and by the needs of people everywhere. And the media and public perceptions may be just catching up to these changes which are already taking place on the lands and under the feet of millions of people around the world. Some clues to what might have happened. Americans spent 4.5% of their after tax income on transportation fuels in 1981 according to Global Insight, a forecasting firm, and this went down to 1.9% in 1998, and is back up to 4% now in 2008. In California and more affluent areas of the country where the incomes are higher and gasoline prices are higher over 4% is spent on transportation fuels, whereas in areas of Alabama and Mississippi in the poorest areas where gasoline is less expensive this is over 16% according to the New York Times interactive graphic. During this period 1998 to 2008 demand increased for gasoline, in terms of the number of miles driven went up by 25% from 2.5 trillion miles driven to 3.0 trillion miles driven, and the sales of large pickup trucks and SUV's soared to make them the largest number of vehicles sold each year. At 1.9% of after tax income nationally, transportation fuels were cheap and consumers reacted rationally by splurging on gasoline in the USA. As a sobering note to all this sign of improvement in conservation of fuel the miles driven are still at about 3.0 trillion miles the high reached last year 2007. It will take a lag of a couple of years before a changing fleet to smaller vehicles and more fuel efficient vehicles and better driving habits and conserving fuel habits to make itself felt in transportation fuel usage across the USA and this requires prices at least at these levels to make the change seen as necessary to meet global needs and global environment....

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After suffering a deep depression Greece's economy is in 2019 24% smaller than in 2007. It may not be till 2033 that Greece recovers to its precrisis level GDP, says Oxford Economics, a consulting firm. With the creditors of Greece maintaining a tight control and requiring high taxes and high budget surpluses of 3.5% of GDP excluding interest payments, there is very little financial leeway to reduce taxes as the newly elected government of Mr. Mitsotakis of the New Democracy party has stated. Greece spent 8 years till 2018 under an austerity regime set by the European Union overseen by the IMF with eurozone authorites in return for a financial bailout loan package. Spending cuts and tax increases of 40% of GDP led to drop in GDP of 25%. Greece had misrepresented its official spending numbers to eurozone authorites in the years leading upto the crisis, leading to a lack of sympathy from ordinary German taxpayers for the country's situation. Unlike Portugal which was able to increase exports and find ways to reduce the austerity regime with sympathy from Germany, Greece lags behind in foreign investment and is 72nd in the ease of doing business ranking of the World Bank.  Unemployment is falling very slowly and is at 18%. Greece has returned to bond markets with 10 year bond yields of 10%. Growth is stuck at 2%. Pension spending takes up most of the budget, with little left for investment, education and other needs. No parties talk about cutting pensions anymore as a grandparents pension supports many families. The high taxes have hurt the private sector with the most productive people emigrating to other countries in northern Europe and to other parts of the world. About 500,000 left from 2010 to 2017, most are college graduates, and 64% have postgraduate degrees, a survey shows. Most of them will never return as it  is difficult to live and plan a life on a Greek salary. During the financial crises affecting Latin American countries such as Mexico, Brazil and Argentina for decades, the expression lost decade became common. Some like Argentina had repeat situations of lost decade before recovering. Even the U.S. suffered badly suffering close to a lost decade with faulty mortgages causing a crisis in 2009. Only Greece has proved that this can happen for nearly three decades. Greece's experience also sullied the euro currency's image, that was further damaged by the austerity policies across the eurozone's financially weaker countries. Lack of transparency and insider groups unable to take up the national interest and pursuing narrow interests left Greece in a bad position with little sympathy from stronger northern European countries such as Netherlands, Sweden, Germany. Today's political crisis for the centre right and centre left parties in Germany and other Northern European countries such as Scandinavia, Netherlands, also stems from this flawed entry of countries such as Greece into the eurozone with poorly managed finances. A combination of Tech creating low wage jobs, erosion of working class, failure of centrist parties free market policies to protect the working class, shift of jobs to low wage countries such as China, had already eroded the situation. The humanitarian response to what was both a economic and war related migration from North Africa  to Europe only worsened the image of these parties with working class people alienating them further. The eurozone countries and the European Union are only gradually recovering from these errors.     ...

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Decline in capital investment in 2016-2017 expected at Lukoil and Rosneft as the Russian government postponed a reduction in taxes on oil exports for 2016. Russia is dependent on oil exports for a third of its national output, and about half of its budget depends on oil revenues, a major weakness, but this is being managed carefully till oil prices recover. Russian officials say the $50 a barrel assumption for oil revenues in 2016 in the budget is optimistic. Yet Russian output decline is expected to be limited to about 3% a year from 5% for Lukoil in future years from decline in investment, because of drilling new wells and use of horizontal drilling technology on older fields. In 2015 oil output increased modestly to 10.73 barrels a day from 10.58 barrels a day in 2014. Russia's oil industry benefits from a tax system that favors the industry. The export duty on oil and the mineral extraction tax are based on price. A declining ruble which has gone from 35 to the dollar before its invasion of Ukraine in 2014 to 86 to the dollar in Jan 2016, has a favorable impact. This actually helps the industry because workers and oil equipment suppliers in Russia are paid in rubles, and oil revenues are earned in dollars. As a result new technologies such as horizontal drilling now make up one third of oil supplies from 11% in 2010. Chinese suppliers also provide new technology drilling equipment, as China is not part of the sanctions. Gazprom Neft's CEO Dyukov says it can make a profit at oil price of $15 a barrel. Because of the tax system after tax revenues are stable at the oil companies in Russia, even as government tax revenue declines. All this points to resilience in the short run for the Russian oil industry. The decline in the value of the ruble is seen as an opportunity to shift away from an overdependence on imports during the period of high oil prices. Alexei Kudrin, former Russsian finance minister, sees growth returning for the Russian economy in 2017. This may actually be good news for the struggling economies of U.S., Europe, India, China, and other countries which would be boosted by low oil prices sustained over a longer period- something made possible by competition between big oil producing countries Russia, Saudi Arabia, Iraq and Iran, and the profitability of oil production at prices below $30 to $20 a barrel....

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The House bill on health care cleared the House Committee on Energy and Commerce with a vote of 31 to 28. Five Democrats joined all 23 Republicans. Compromises were reached with Blue Dog Democrats, centrist Democrats who had concerns about the cost of the health care overhaul. The bill will be taken up again in September after the August recess, when Congress will be faced with the task of recociling the House and Senate versions and reaching common ground on a number of proposals. Some common ground has already been achieved between centris and Blue Dog Democrats and Democratic members who support Obama's proposals. Among the changes on which consensus was reached in the House version: 1. Access Insurers will have to accept all applicants and will not be able to charge higher premiums because of medical history or current illness. All insurers will have to offer a minimum package of benefits, to be defined by the federal government, and nearly all Americans will be required to have insurance. Insurers will have to get prior approval from the government before increasing premiums over a certain amount. About 95% of Americans will be covered this time. The cost will still be approaching $ 1trillion over 10 years. Federal subsidies will be given to those who cannot afford health insurance and Medicaid coverage will be expanded. And the insurance will be made more affordable for the uninsured. Democrats also reached a consensus on creating some sort of government insurance plan or nonprofit cooperative to compete with private insurers. 2. Mobility And under this new plan it will be easier to change jobs as one would retains one's health insurance. This should actually help the job market, and help promote the mobility that is needed, now that jobs are shifting out of sectors like autos to sectors like energy. 3. Cost The Energy and Commerce Committee voted 47 to 11 to set aprocedure for the government to give federal approval of generic versions of expensive biotechnology drugs. By one estimate this saves $9 billion over 10 years. The Democratic proposals from the Energy and Commerce Committee would authorize the Health and Human Services Secretary to negotiate prescription drug prices for Medicare benificiaries. The agreement and consensus among the conservative, liberal and centrist Democrats, and Democrats with ties and connections to the health care industry was reached after intensive negotiations, and adoption of a package of amendments that helped bridge the differences they had. ...

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Prime minister Matteo Renzi focussed on some critical aspects of how other Europeans see the negotiations in the Greece bailout in June 2015. Considering that the EU had relaxed conditions for the surplus, a critical condition for reducing austerity programs in Greece and focussing on reforms, and considering the high unemployment not insisted on further cuts to the public sector employees, the conditions put forward focussing on reforms such as collection of taxes are seen as essental by other eurozone countries, including Spain, Portugal, Ireland and Italy. Renzi told II Sole 24 Ore- "The point is that Greece may get different conditions, but it has to abide by the rules. It's not the case that we have taken early retiremnt pensions away from the people of Italy just to allow the Greeks to have them! We have brought in labor reform, but it is not the case that, with our money, a number of Greek shipowners can continue not to pay taxes.. I could go on." If he went on he would cite the tax collection laws and methods in Italy which were changed under prime minister Monti to tackle tax evasion in Italy, with no effort to collect the $11 billion in estimated taxes that are not collected in Greece. Italy banned cash payment above 1000 euros and started a cross referencing initiative to tackle tax evasion under premier Monti. Greece took up tax evasion legislation in 2010 in parliament but opposition from many groups led to no action. In 2012 Labor minister Elsa Fornero broke down in tears as she described raising the retirement age for women to 66 in the private sector from 60, saying this was to prevent "collective impoverishment." Italy lacks childcare and older women help with childcare for grandchildren. Renzi was probably thinking of these changes in Italy. He went on to say- " If there is a mass get-out clause over the rules, what will happen in Spain in October? And in France in a year and half? It is one thing to ask for flexibility amid abidance by the rules. It is another thing to think that one is the craftiest of them all, in other words to be the that does not abide by the rules. We want them to save Greece. But the people of Greece also have to want that." On tax evasion and other issues for long term financial health Greece is seen as not following basic financial rules for sustaining the euro....

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VW's sales in the U.S. doubled between 2009 and 2012, and VW set aggressive goals for the U.S. market to reach 800,000 by 2018. The goal was a stretch goal because this was double the level of 438,000 vehicles in 2012. This was part of its Mach 18 plan to pass GM and Toyota in global sales by 2018. Now this goal appears less achievable, because of new models from Honda and Ford which surpass VW's Jetta and Passat in technology, features and fuel efficiency. The U.S. market sales have increased by 9.6% in 2013, VW's sales declined by 1.3% so far through August in 2013, at 282, 913 vehicles. Ramping up production at the new Chattanooga plant will have to be put off and 500 contract workers have been given leave from the assembly line. By contrast Toyota sales for the 8 month period 2013 increased by 7% and 8.6%. In August Toyota's were up 23%, Honda's 27%, and VW down 1.6%. VW executives have said the company needs sales of 400,000 to make the U.S. manufacturing operations profitable. VW made a strategic decision to cut costs and bring the Passat price more in line with competition from similiar cars from Japanese carmakers. But this was done not relying solely on productivity and other improvements, but used cost cutting using cheaper materials. VW even went one step further by taking away the European suspension which delivered a more precise ride, and installed a lower cost suspension on the Jetta and Passat. Customers have noticed with some buying older models with the European suspension. Honda and Toyota moved in the other direction in the last 2 years coming out with more advanced features on the Accord and Camry. Ford did this with the Fusion. The new Accord has a backup camera, iPod connection, power seats and alloy wheels as standard. As a result Passat sales were up only 3% through Aug 2013, and Accord sales increased by 17%, Ford Fusion sales up 13%. VW's response is to ramp up discounts. It is also coming up with a new engine, Jetta compact with a sportier ride will be introduced, and a redesigned Golf hatchback for 2014. The slowdown in sales at VW shows how competitive the car market has become with Korean, German, Japanese and American carmakers quick to make inroads in turn with weak points of the competition. Strategic missteps can be costly for any manufacturer and the customer can never be taken for granted....

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Car sales in Germany are up 40% from ayear ago. This is not about to happen in the USA. The cash for clunkers program in Germany is broad and less complicated.In Germany eligible cars have to 9 years old and the subsidy covered the purchase of any new car, regardless of size and fuel efficiency. In the US the program just signed by President Obama covers a narrow profile of customers. In the US customers who benefitare economically challenged and in the midst of adeep recession. Cars can't be over 25 years old, and can't have a combined highway and city fuel economy rating of more than 18 miles per gallon as calculated by EPA. To get the full $4500 credit customers must buy either a new truck or sport utility rated 5mpg higher than the clunker or scrapped vehicle, or a passenger car rated at least 10 mpg higher.And the credit is given instead of the trade in value, so if the trade in value is higher it doesn't help. The German government is giving away upto $4500 but it started out with 1.5 billion euros to get 600,000 clunkers off the road, but because of the popularity of the program has expanded it to 5 billion euros for 2 million cars and extended it to end of 2009. The US program only has $1 billion for 250,000 cars or one eight of what the Germans are doing for amuch larger car market. Because of the dire shape Detroit and much of the midwest is in, because of the slump in the auto industry, this may be a mistake and a missed opportunity to do what the Europeans are doing, and get an even bigger impact. The American car market and industry is taking a severe blow from the deep recession. Because of the depressed region the impact of a real clunkers for cash program that targets a broader profile, with bigger financing and designed to give a boost to the market, could make a real difference. At this point it is more of a program designed to help people turn in their gas guzzling trucks for passenger cars, and those driving a $200 car are not likely to be the kind of customer who goes out and buys a new car say dealers. See the link to Alan Blinder's stimulus proposal in July 29, 2008, that suggested a $20 billion program even before the current crisis. The present program has only $1 billion....

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Risks to China's banking system from the bond market in China. China's bond market has grown rapidly to 25.5 trillion yuan or $4.1 trillion yuan, especialy in the period following the stimulus. But it is not similiar to bond markets in developed countries, the U.S., Japan and France. It has a patchwork of regulators, is closed to foreign investors, and does not offer protections to investors. It also lacks an effective ratings system. Most bonds are held and traded by the banks, which concentrates the risks in the banking system. In developed countries the risks are spread out among investors. Bond markets offer the advantage of reducing dependence on banks for lending but with banks holding most of the bonds in China, including that of local governments, the risks if bond issuers default are concentrated in the banking system.

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See Liz Claiborne, 11 July 2007, WSJ. How a new CEO at Liz Claiborne is tackling the problems of a bureaucracy, layers of management from acquisitions, lack of clear direction, responsibility, and out of focus organization. A problem that is coupled with too many brand labels so that there is no focus for marketig and advertising and distribution dollars to obtain a winning advantage. And the added problem of designers not having the opportunities to come up with winning products in a constantly changing fashion field with changing consumer tastes and trends. McCom is a top manager at J&J before this and handled the Tylenol brand after its crisis, so he's seasoned. His approach also makes sense given the need for focus and the need to be able to develop a new model for sales not dependent on others. He sent out an email to 200 senior managers asking them to identify the biggest barriers to success. What is common between the jobs at Mitsubishi, Liz Claiborne (Tylenol), and

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This article in the Economist says the bad loans in the financial system threaten to derail India's rapid growth. It points out that about 17 percent of all loans are estimated to be non-performing. Government plans to set up a bad bank and have bad loans transferred at steep discounted rate to the bad bank are still at an early stage. India weathered the 2008 financial crisis with a financial system in better shape. Since then a surge in lending has led to an increase in the bad loans. Today both banks and corporate firms are facing this problem. The political system and dysfunctional governance with frequent changes for management at state controlled banks are part of the problem.

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The major provisions of the Republican House healthcare bill that passed by a vote of 217-213 are- 1. To help people buy insurance coverage the bill offers $2000 to $4000 a year, upto $14,000 a year in credits based mainly on age, reducing them for families making $150,000, individuals making $75,000. 2.  Under the Affordable Care Act insurers cannot charge older Americans more than 3 times for same coverage they offer to younger people, the new bill makes this 5 times. This would increase premiums for older Americans and reduce it for younger Americans. This is the most controversial part of the bill. Older Americans supported the Republican party in the presidential election. 3. The new bill ends Medicaid as an open ended entitlement and places this on a budget with cuts of $880 billion over 10 years. 4. To mollify conservative Republicans a provision allows state to opt out some provisions of the ACA that requires minimum benefits such as maternity care and emergency services. It retains coverage for pre-existing conditions to mollify moderate Republicans. The bill provides states with $138 billion over 10 years to subsidize premiums, provide coverage for pre-existing conditions, mental healthcare and drug addiction. 5. The bill removes the taxes imposed under the Affordable Care Act (ACA) on high income people of about $300 billion over 10 years by repealing a payroll tax increase and tax on investment income. This bill and the ACA offer 2 competing visions on healthcare, both bills passed only by a margin of 4-5 votes in the House. The ACA overlooked the impact on premiums causing discontent among middle income Americans. The new bill lets premiums rise for older Americans in order to keep premiums down for other Americans. This shows the many tradeoffs involved and choices being made, and the lack of a consensus on the issue of healthcare in the U.S., becoming a highly politicized issue instead of the way it is treated in western Europe.     ...