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Jens Stoltenberg, Secretary General of NATO, says European nations are spending 2% of their combined GDP on defense spending in 2024. There are variations between EU and NATO members yet Europeans are already at 2% of combined GDP on defense spending. There is more defense spending that is happening beyond the 2% as the Ukraine war continues into 2024. Stoltenberg also said two thirds of this defense spending is going to US manufacturers and for manufacturing in the US as there was great demand for  American made Himars rocket launchers, Patriot missile systems, and for F35 jet fighters. The statements that the Europeans are not taking their defense seriously and that American jobs and American factories as part of defense infrastructure rebuilding are not part of the story no longer hold true.

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An audit by the Fair Labor Association finds that more than half of the workers at Foxconn's factories that supply Apple, Dell, H-P, and Microsoft, are exceeding the company limit of 60 hours of work per week under hazardous conditions. Apple in its own audit report shows 62% of workers in audited facilities worked more than 60 hours per week in 2011.

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This Wall Street Journal editorial on August 18, 2011, says Texas Governor and U.S. presidential candidate Rick Perry made a poor choice of words when he called the Fed chairman's policies "treacherous or treasonous." While admonishing Rick Perry for the use of the wrong words, it says Perry has done a public service to draw public attention to Fed policies. These policies of the U.S. Federal Reserve- Bernanke's and Greenspan's- which allowed the tech and mortgage bubbles to develop and then engaged in loose monetary policies to correct its errors over a ten year period since 2000, should be the subject of debate. Current monetary easing has also added a large element of inflation, and some experts such as Kenneth Rogoff are calling for inflationary levels of 4-6%. Critics of Fed policy such as Allan Meltzer and some Fed governors of regional banks, including Hoenig of the Kansas City Fed, say the Fed has not given enough thought to the long term consequences of its actions. The U.S. needs to address these major changes in policy as serious issues with the public and presidential candidates engaged in the debate. They have everything to do with a vision of a future America....

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Martin Feldstein looks at Bowles-Simpson Deficit Commission proposals and says the deficit reduction does not come soon enough. He points out that the Bowles-Simpson proposals still leave the national debt in 2020 at the level it is today- at 60% of GDP, and not reach the level of 40% of GDP that we had 2 years ago till 2035. The mere prospect of persistently high deficits, he says, jeopardizes the recovery by creating the expectation that tax and interest rates will eventually rise substantially. He says the Bowles-Simpson spending reductions by reforming the tax code that subsidizes mortgage payments, local government spending, health insurance and other items at an annual cost of $1 trillion, are the best approach. He differs with Bowles-Simpson in how this money would be used. Whereas Bowles-Simpson would use it to lower tax rates, leaving only $80 billion a year for deficit reduction, Feldstein would finance major deficit reductions. Feldstein recommends additional universal savings accounts to supplement Social Security. And he supports the Bowles-Simpson proposal for limiting the growth of government health-care spending to 1% more than the growth of GDP. He says the President needs to scale back the tax and spending proposals in the budget presented in the early part of 2010....

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Honda plans to move more of its manufacturing to the U.S. as the value of the yen drops below 80 to the dollar in 2011. Honda faces problems from parts shortages after floods in Thailand, and U.S. market share down 1.5 percentage points to 9% in 2011. Honda's profit declined by more than 50% for the third quarter of 2011. The yen trading at 77 to the dollar in Dec 2011 is making it impossible for Honda to make a profit from vehicles made in Japan and sold in the U.S. Honda plans to double the capacity of the Civic plant in Greensburg, Indiana, increase capacity at its other assembly plants. It will build a new plant in Celaya, Mexico, in 2014, to manufacture the Fit subcompact. This will raise North American production from 1.29 million vehicles to close to 2 million. About 200,000 to 300,000 of these vehicles will be exported to other international markets. Profits on small subcompacts are small, making manufacture of the Fit more economical in North America than in Japan. In 2011 Honda manufactured between 30-40% of vehicles in Japan, the new plans are to reduce this to 10-20% in the next 10 years, a major shift....

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The Japanese yen surged in value following the 2008 financial crisis as it was seen as a safe haven. As a result the Korean won declined by 42% against the Japanese yen. This continued till 2012. Japanese companies had to compete overseas at 80 yen to the dollar and shifted operations overseas. Now with the policy of monetary expansion of the Japanese central bank the situation is reversed in December 2014. The Korean won is up 40% against the Japanese yen since 2012. The Japanese yen is now down to 118 to the dollar in Dec. 2014. Abenomics gets a new mandate with the snap election in Dec. 2014. Aaron Back says Samsung may have gained ground in televisions and smartphones but other areas in electronics such as chips, displays and image sensors remain competitive and responsive to price. In autos Hyundai market share has declined to 4.4% by Dec. 2014 from 5.1% in 2011, according to MotorIntelligence.com. So far Japanese companies have used the currency advantage to improve profits and come up with better products. By using profits to invest in new technology and productivity Japanese companies can provide more features at the same price points to gain market share without having to cut price. After years of declining margins in electronics, autos and other markets this appears to be the current strategy. Another reason for this is that Japanese companies have already shifted production overseas, the shift being higher for Honda than for Toyota. Technological improvements from investments in R&D in Japan can be transferred to manufacturing operations overseas just as Apple is doing with smartphones manufacturing in China. The currency shift also improves Japan's position relative to American and European competitors in international markets....

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The city where the auto industry in the USA started in the 1920's and what it is today and its future a century later as we approach the 2020 mark. The industry in decline and reshaping itself as a global industry with sales in Asia and Europe and the rest of the world a new focus as the US market begins to decine in significance relative to the rest of the world both in terms of sales and opportunities for expansion. The poverty rate the highest in the nation at 28.5% and the highest foreclosure rate in the nation after Stockton, California, with one in 33 homes in Wayne County in foreclosure. And things are only going to get worse in 2008 and 2009 because auto sales are expected to decline and the Alt A mortgages are expected to see a bump up in the interest rates.

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S. Africa's slow progress in getting opportunites for black farmers and President Zuma's efforts to jump start this with a mentorship program. The program benefits S. Africa and white farmers as fewer young people want to stay on the land and farm. About 80% of farmland is white controlled, yet the number of white commercial farmers is declining rapidly, from 60,000 in 1994 to 37,000 in 2012, according to Theo de Jager, deputy president of Agri SA, a commercial farmer association. Jager says a new generaion of farmers from the black community has to fill the gap left by fewer white farmers. One of the problems is the high cost of the program and seed money for new black farmers. Since 2009 the government spent $122 million a year to support only about 1 in 10 farmers on redistributed land. The government has spent $730 million to buy white owned farmland since 1994. New farmers receive about $500,000 for equipment, seed and livestock. A mentor gets $600 per month.

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The steps taken at a meeting of Europe's leaders in March 2011. The European Financial Stability Facility will be allowed to disburse its entire 440 billion euros if needed, and it will be allowed to buy bonds in government auctions but not on the secondary market. Interest rates were reduced on loans to Greece and repayment terms were extended. But this fund can only buy bonds of countries receiving bailout money, which means Portugal will not see a decline in its interest rates for benchmark government bonds. Interest rates on Portuguese 10 year bonds remained high at 7.4%. Greek bonds saw a lowering of interest rates, but Ireland saw no change. What is needed now is a plan that will bring interest rates down for these countries, say analysts. And they say the plan agreed on by EU leaders fall short. If interest rates do not go down for these countries the debt keeps piling up, especially when austerity measures lower the economic growth rates of Greece and Portugal. Both Greece and Portugal do not have a competitive export industry, which places the burden entirely on austerity measures and revenue raising steps. The perverse scenario analysts fear is that debt continues to grow because of high interest rates at low or declining growth rates. While some relief was offered to Greece the situation is still precarious, and analysts estimate Greece's debt increasing to 160% of GDP from 127 % of GDP by 2013....

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WSJ reports that Tech companies spent heavily in 2022 to block legislation in the US. Congress. This means the US Justice Department had to step in with the Executive Branch determined to dismantle the edifice of anti competitive behavior that Google, Apple and other companies have built. States are also stepping in with the US Justice Department. Attorney General Merrick Garland seeks nothing less than to breakup Google as is clear from his statement on January 25 announcing the US Justice Department lawsuit. 

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Krugman points out that the prevailing bias in the US distorts the facts about Europe's performance. Frankfurt, London and Paris he says are just as lively and modern as New York and Chicago. They are not poor and backward. When you factor out population growth in the USA, since 1980 per capita real GDP which is what affects living standards has grown in America at about the same rate as the 15 European Union countries: 1.95 percent in the USA vs. 1.83 percent for the EU. And for the 25-54 years working age group unemployment in the EU 15 countries in 2008 was 80% of adults (83% in France), which is about the same as in the USA. The French and Germans work fewer hours but output per hour is close to American levels.

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The huge risks the misallocated stimulus capital from real estate speculation poses for the Chinese economy. China's government rapidly expanded lending after the 2008 global financial crisis. One estimate is that about 10 trillion yuan in new loans were made in 2009, over twice the amount of 2008, expanding the loan portfolio and money supply by one third. A major problem is vacant homes as Chinese put their money in second homes as an investment. Chinese are not investing in the stock market because of the volatility, and with the low yields in bonds and banks money is going into real estate. According to a Morgan Stanley economist, about 25-30% of private commercial and housing space is vacant. This happens just as middle class Chinese are being priced out of the housing market. Prices went up by 12% in the housing market this year according to the China National Bureau of Statistics. Couples wanting to leave their parent's homes find it difficult to do so. It was the topic for a Chinese TV series "Dwelling Narrowness." ...

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Krugman questions Bair's idea of the aggregator bank buying up toxic assets of the banks because the government may be assuming these huge liabilities at taxpayer expense to shore up shareholders. He questions whether these banks will not continue to be the zombie banks, that they are today, if the so called toxic asets are priced in today's market. The idea that today's market prevents these assets being priced at fair value may be deceiving he says. As the economy deteriorates, these banks even after the government at great expense buys up "toxic" assets, may still be losing money and remain that way for years, essentially zombie banks. Better he says for the government to face up to reality and nationalize these banks and then do what the Resolution Trust Corporation did with the savings and loans in the 1980's, which is clean up these banks and sell them after fixing them to new owners. The government might end up with amuddle headed approach that looks like the Resolution Trust type of action but without taking over the banks end up with something else. All because nationalization is thought of among Republicans, Democrats and Obama's people as some kind of dreaded word, when these banks are already dependent on the government for survival....

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Important year end reveiw of the oil price forecasting work of so many anlaysts and where they failed . The IEA and the US Enery Dpt forecast have year after year underestimated this pirce by over 20%. Analysts change the price forecasts within a couple of weeks based on changing information and assumptions. Of all this the Saudi Arabian forecasts have ben within 12 % of what has actually ocurred according to a study by Ronald Berger Strategy Consultants of Muich, Germany. And whats their forecast for 2008. By extrapolating from the Saudi budget and the assumptions, used such as giving a wide margin to avoid a deficit in the budget if oil prices undershot by a wide margin, one gets $75 for US benchmark crude. Forecast by experts are in the neighborhood of $80 average for the whole year 2008. Goldman recently revised theirs upwards from $85 average for 2008 to $95 within a 4 week period. How good is the Goldman forecast. No one really knows. Lehman has a forecast of $84 average for 2008 and bases it on the opacity of the market because no one knows what OPEC will do with supply and China does not provide good information on demand. So basically anlysts are adding an uncertainty premium to the price of oil. And this is especially so because as the Chief Economist at IEA says global space capacity is so thin and any event can influence price. Last year the rhetoric about Irans nuclear intentions was enough to stir up the price, as were other smaller events disrupting supplies. But the Iranian situation has since cooled down and diplomatic solutions are in the works. So what to expect in 2008 in the way of political uncertainty. Iraq, Iran, Palestine, Lebanon have all seen a cool off in the ast couple of years and the Bush administration rhetoric has become outmoded as has other rhetoric from Iran so that does'nt look like it will stir up oil prices in 2008. Still there will be some uncertainty premium about supply from OPEC and demand from China and India. And demand from the Middle Eastern oil producing countries themselves as well as the increasing demand in India and China will mean that lower demand in the US because of a recession will still mean an increase in global demand over 2007 of 1.5 million barrrels a day over 2007's 85 million barrels a day. What will change the dynamics of this situation is the government mandated fuel economy for all vehicles on the road with Europe more aggressive in this area under the pressures of global warming. If this impacts India, China and Russia as these fuel saving technologies are transferrred there overall consumption should see an impact. Europe's targets are only 4 years away for 2012. And the environment may cause China to bring in newer technologies that both contribute to improving environment and conserving energy. Because China's environmental record is almost catastrophic one could see some of this happen much sooner than expected after the Olympics in 2008. All that might change the way the world looks at oil and its use, and all energy sources and their use. ...

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Delta and US Airways are showing interest in merging with American Airlines.

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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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Not Kentucky as the title suggests but Denmark's Mette Frederiksen. Lara Spirit in The Times of London looks at Starmer and Labour in the month of Feb 2025 with the challenge it faces from Reform UK. Mette Frederiksen PM from the Socialist party in Denmark and her policy to tightly restrict immigration and oppose illegal migrants are of great interest to No. 10 Downing Street. This report says No 10 is interested in how Mette Frederiksen has for years pointed out that the only people hurt from socialist parties supporting migrants are the workers and families across Denmark.  There is a disconnect with history. In the US history shows that since the 1850's to 1960 the US vigorously opposed migration from Asia, and migration from Mexico was only supported during the war years 1940-45 because of the demand for labor and quickly  reversed under president Eisenhower's 1954 Operation Wetback. Today's situation of migrant and fentanyl flows following 490,000 deaths from fentanyl over 12 years is totally unprecedented in American history, and would be unimaginable to every president from Washington and Adams to Lincoln, TR, Wilson, FDR and Kennedy. How did this happen? Why are parties including Harris Democrats, Mayorkas Democrats, in contrast to Fetterman and  Ruben Gallegos Democrats who are asking serious questions about migrants finding themselves caught with Merkel and Scholz in Germany in this situation where the wellbeing of people in each country is obscured by lofty ideas that have no connection to the history of each country and to the situation of unease on the ground? ...

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Risks in AMR's financial situation include net debt of $12 billion and a market capitalization of $1.1 billion. The stock is down 60% so far in 2011 and is now at $3.13 on Sept 30, 2011. Analysts at J.P. Morgan Chase say AMR should have $3.5 billion in liquidity by the end of 2011, or 15% of annual revenue. About $1.8 billion of debt matures in 2012. The demand for airline debt is still healthy. The airline industry is also better able to handle another recession because of cuts in capacity, and the effect of the merger between United and Delta, keeping flights full and prices up. A recession would also cut fuel costs, with fuel taking up 35% of revenue dollars, according to analysts. The problem is low margins and high labor costs, as a result of not filing for bankruptcy and cutting legacy costs. Credit Sights estimates AMR's margin as 6% before interest, tax, depreciation, amortization, and aircraft leasing costs, with the estimate for Delta at 12% and United at 18%.

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Jeremy Grantham says he sees a 75% chance of another bubble and bust for the third time since 2000, with the stock market up 80% and speculative stocks up 140%. And he says artificially low interest rates will be responsible for this one, as it was for the other two. See Shiller, Roubini and Roach for their comments on the economic situation mid 2010.

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This important WSJ report shows how the CDC labs failed to come with the test after contamination of a component and failure of the third part of the three part test components. In the absence of a working test from CDC where delays cost three weeks of February the private labs all over the country and state labs could have developed their own test, yet HHS and FDA required approval for these labs to develop their own test and use it. From Feb. 8 when state and city public health labs detected problems with the CDC test to Feb 29 when solutions were developed including simply excluding the third part of the three component test, and letting labs around the country do their own test, were 3 crucial weeks that let the virus spread out of control. The CDC, HHHS, and the FDA and their managers and heads of departments bear responsibility for these errors. Week after week the delays continued, instead the two component test which detects if the genetic material in the sample is coronavirus material, could simply have been approved at the outset instead of the approval for this given weeks later. The third component of the test checks if the virus mutated, according to this report. There is no explanation why the labs all over the U.S. were not allowed to go ahead on February 9 itself or within a few days after that to develop their own tests once it was clear the CDC test did not work on that day. CDC officials failed to recognize that there was a possibility that they may not be able to fix the faulty third component of the test and the risks if they gave false reassurances. There is also no explanation of why a German designed test was not used once the CDC test failed on Feb. 9, which would be a proper way for action considering that this pandemic had already shutdown parts of China by this time. Alarming also is the mention in this report that on Feb. 22 a FDA official in charge of lab diagnostics  flies to Atlanta where the CDC Respiratory Diagnostic lab which developed the test is located. His boss FDA medical device center director is cited from later information as describing the lab as "filthy" meaning the lab had the potential to contaminate, and going so far as saying that if it had been any other lab it would have been shut down. Considering that investment in public health has deteriorated over the last two decades and that there has been a massive misallocation of capital in the country away from public infrastructure this is appalling. The thought of critical labs for emergency health needs as not being up to high quality standards in the U.S. as a result of two decades of misspending, that this shows, is very disturbing.  This WSJ report is based on interviews with people who know about the testing crisis, and undisclosed emails, correspondence on the issues involved. Community transmission began in January 2020 in the U.S. These delays were costly in February and could have been prevented either by going with the German design on Feb 10 or asking labs across the U.S. to develop their own test, and letting other labs immediately use the modified 2 component test of CDC that worked instead of doing this action weeks later. Mardi Gras on Feb 25 and other places where large crowds gathered in sports stadiums could have been stopped had testing gone forward and shown the true extent of the community transmission in these critical weeks.  First China delayed a U.S. team of experts coming into the country for weeks, and then the CDC, FDA, HHS, failed to get testing started, creating  a false sense of complacency. Two crucial errors outside and inside the country that caused so much damage to America and the world.   ...