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Krauthammer cites Congressional Budget Office numbers that show the Obama U.S. health care law continues the spiralling costs of health care with new government mandates at a time of severe budget cuts in education and other areas- for 2013-2022 the costs come to $1.76 trillion. The initial Obama administration figures of 10 year costs of $938 billion announced in 2010 reflected the fact that the new U.S. health care law would take 4 years to fully go into effect. Costs after 2021 are shown to be $250 billion each year in the CBO figures. The law is now before the Supreme Court in 2012, which has to decide on the basis of the limits of the Commerce Clause.

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Pearlstein quotes Dickens in "Oliver Twist," about the law being an ass, and the constitutional law exercize in the Supreme Court of the U.S. giving a sense of a failure of the so-called best and brightest in reasoning out the issues. He points out that a serious problem is that American business which is burdened with high health care costs for employees is seriously missing in this debate after years of complaining about high costs. The National Federation of Independent Businesses is actually one of the plaintiffs questioning the constitutionality of the Obama health care law. Pearlstein says business wanted an end to the fee-for-service medicine that increases consumption of medical services and pushes up cost relentlessly, and that Obama's health care law does this. This is not the case as both Democrats and Republican administrations have failed to resolve this side of the cost issue, and this is the hidden reason for the loss of credibility for both sides in this debate, leaving health care problems to be resolved in future administrations. ...

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Parallels between the Taft, Theodore Roosevelt and Woodrow Wilson election campaigns of 1910 and 1912, and the campaigns of 2010 and 2012, drawn by a T.R. biographer. He points to a tumultuous period ahead as lobbyists, outside interests, and the political parties and their supporters battle it out to set the direction of the country.

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Leonhardt points out in the NYT that Hillary Clinton actually won in the popular vote by a substantial margin, by more than 2 million votes and more than 1.5 percentage points. He says that Democrats need to pay more attention to the working class in midwestern states- the job losses, crumbling infrastructure, and the plight of communities such as Detroit, Michigan which suffered through the bankruptcies of Chrysler and GM, and again with the foreclosure crisis, the financial crisis of the City of Detroit. With a similar situation in the neighboring states of Wisconsin and Ohio, in places like Toledo and other parts of communities facing industrial decline. While the Silicon Valley centred region powered the economy in California, and the financial industry and real estate powered New York, older midwestern communities never really recovered from a long decline stretching over 2 decades. The result was the loss of faith in Democrats among union workers and young people, leading to the loss of Wisconsin, Ohio and Michigan. For most of its history the Democratic Party was based on its union and working class base including a large number of white voters. Only under Obama because of his unique candidacy was the coalition so dependent on the minorities vote. Before minorities were part of the Democratic coalition, but not in the way under the Obama candidacy. A return to its historic and normal base among whites in unions and working class communities, liberals, minorities, is a way to go back to the historic and natural base of Democratic support. In a sense dependence on tech communities for election funding and the tech booms, globalization, may have distorted Democrats sense of their historic role as champions of the working class and middle class communities throughout the country. There is now an opportunity to restore this lost mission of protecting the interests of the middle and working class who have seen huge drop in net worth as reported by Janet Yellen of the Federal Reserve at the Inequality Conference on October 17, 2014-"62 million households with a net worth of $11,000 for the year 2013." Poorly covered in the media and not made the utmost priority by Democrats (or Republicans). In the words of Janet Yellen, this was in the past several decades "the most sustained rise in inequality since the 19th century after more than 40 years of narrowing inequality since the Great Depression." She added the shocking words "by some estimates, income and wealth inequality near their highest levels in the past hundred years, and probably much higher than much of American history before then." Even discussion in the media goes back to the Obama coalition and treats it as a way forward for Democrats, when history shows it was different and the situation described by Yellen calls for a serious response. ...

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

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Ian Talley provides this excellent account of how this drop in oil prices is likely to add to economic growth in major world economies, removing any ambiguity about the positive effect on the global economy. West Texas Intermediate crude dropped to about $65 from $105 between June and December 2014. The IMF estimates growth in 2015 will increase from 3.1% to 3.5% largely because of the lowering in energy costs. JP Morgan Chase economists see an addition of 0.7% points in global growth in the first half of 2015. ECB president Draghi sees the lower oil prices as an unambiguous positive. Estimates from Rhodium Group show major oil importing countries seeing import bills cut by $500 billion if prices remain low for 6-8 months, with $90 billion going into the U.S. economy. IMF estimate is that only 20% of the drop in oil prices is from lower demand, about 80% from higher fuel efficiency, increased supply using new technologies, decisions by OPEC to lower oil price, increases in supply. Based on estimates by the Rhodium Group, IEA and the IMF, the extra money flowing into the economies of the U.S., Asia and Western Europe from reduced oil import bills, as measured in percentage of GDP is: the U.S. 0.5%, Germany 0.8%, Japan 1.2%, China 0.8%, India 1.8%, South Korea 2.4%. Italy and France and other oil importing countries benefit. The impact comes at a time when Japan, China, India and eurozone economies badly needed a boost after significant slowdown in growth in 2014. It could not have come at a better time and because it is technologically driven as in the case of highly fuel efficient automobiles and new oil exploration technologies, a self sustaining process. The corresponding impact for oil exporters is: Russia -4.7%, Nigeria -5.4%, Venezuela -10.2%....

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Areas in the "too big to fail" part of Dodd-Frank U.S. financial reform legislation where work remains to be done to prevent a future crisis include: the creation of living wills by the largest banks so that they can be dismantled in an orderly fashion, and the designation of which banks are systemic risks by the Financial Oversight Stability Council. The FDIC and the Federal Reserve have yet to finalize the rules for creating "living wills" for large banks. The rules are expected to be finalized by fall 2011. The FOSC is working on the designations and what criteria to use for selecting the non-bank firms that pose systemic risks. Progress has been made at the FDIC by finishing several rules for implementing a new system to wind down a large failing bank. The FDIC is hiring staff for a new office that focusses specifically on large complex financial firms. Fed Governor Daniel Tarullo has led the effort for higher capital reserve requirements for U.S. banks, requirements that would be closer to 14% for capital reserves. In an editorial on June 16, 2011, the Wall Street Journal said that if the Federal Reserve is serious about controlling systemic risk then it should support capital reserve requirements of 14%....

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David Leonhardt on the policy errors of the Obama administration in managing the economy. Why he asks did the Obama administration not take the risks it took for "undeserving" recipients in the auto industry to provide significant help to GM and Chrysler and at the same not provide large scale and situation changing help to millions of mortgage holders who were under water? The housing crisis with millons of foreclosures depressing home prices has played a significant part in the lagging economic recovery. He points out that Obama economic advisors had read Rogoff and Reinhart's book "This Time Its Different," about the longer times it takes for a economic recovery after a housing bubble, and still made the mistake of believing economists who suggested that the stimulus by itself would be sufficient and that recovery was underway in 2010. Others in the Democratic party had pointed to the lack of focus on unemployment by the Obama administration. Why were such voices not heard?

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This New York Times editorial says a smaller Wall Street and growing jobs in other fields will be good for New York as well as good for the country. It says New York politicians should focus on finding new ways for New York to broaden its tax base and get new businesses and new opportunites in fields such as media, advertising, entertainment, health care and tourism. Especially welcome are initiatives such as the science and tech campus of Cornell University promoted by Mayor Bloomberg. Tighter financial rules and higher capital requirements are good for the country and for New York the editorial emphasizes, because they help control reckless banking practices that destroy capital and opportunities for growth elsewhere in the economy. It points to Kevin Rose's Nov. 21, 2011 account in the Times showing a healthy culture shift in New York and the country with the status jobs being seen not at Goldman Sachs but at Google, Apple and Facebook. Rose's account shows that in the last 3 years the number of Wall Street employees of ages 20-34 declined by 25%....

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Professors Cole and Ohanian of the University of Pennsylvania and UCLA, provide a new interpretation of FDR's economic policies during the period 1932-1934 and the period 1937-1941, based on their research. This suggests conclusions different from that of Obama advisor, Christina Romer, and Fed chairman, Bernanke about that period. Changes in economic policies under the Roosevelt administration that helped bring wages in line with productivity, reduced strikes, and gradual elimination of the undistributed profits tax, improved incentives for business investment during 1938-1939. Cole and Ohanian, say that by 1941, before the U.S. entered the war, close to half of the increase in nonmilitary hours worked in the U.S. between 1939 and the peak of the war, had already been achieved. And this was primarily the result of the changes in FDR's policies in 1938. They say a similiar opportunity is presented by the proposals of the Bowles-Simpson commission on deficit reduction, by lowering the corporate income tax through simplification of the tax code and reducing or eliminating most tax expenditures. Improving the incentives for business to hire and invest through this and other steps is likely to do more for the economy than the steps tried so far since 2009....

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A NYT report on Donald Trump's long standing relationship with his lawyer Roy Cohn,  who was also an advisor to Senator Joseph McCarthy. The report says Roy Cohn used aggressive legal tactics in lawsuits and influenced Trump's style of doing business in his real estate dealings. It is a detailed report of Roy Cohn's influence on Trump, which the reporters say has influenced the way  Trump ran his 2016 election campaign. It shows Cohn as protecting Trump in lawsuits, and Cohn's sense that Trump would someday play a big role in New York's real estate business, as Cohn's first meeting with Trump started when Trump was beginning his career in the early 70's. 

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Krugman points out the gains on three fronts evident from the Census Bureau report of 5.2% gain in median income of households in the U.S. He says the first is the growth in incomes of ordinary working class and middle class families, second the large decline in the poverty rate, and third the further rise in insurance coverage in 2015 for people without health insurance. He points to the steady efforts of the Obama administration to improve lives of ordinary families as working based on the Census report though results have taken time, and could have been better. The Stimulus, says Krugman could have been larger following the blow of the 2009 financial crisis and increased unemployment at the time. Janet Yellen at the inequality conference of the Boston Fed in 2014 pointed out the problems of 62 million households having net worth of about $10,000, and why this was running against the American idea of a better life for all Americans. In that sense the Census report is a movement in the right direction but a lot remains to be done.   ...

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The recent appointment of fast food executive Andrew Puzder as Labor Secretary has caused great concern among union leaders. Puzder supports a $9 minimum wage compared to $15 supported by Democrats. Unions now represent 7% of the labor force, down from a high of 20% during Reagan's time when Reagan appointed a construction company executive as Labor Secretary and cut regulations.  Globalization has thinned the ranks of workers in unions. And the failure of Democratic administrations to stem the shift of factories overseas to China, Mexico and other places, as part of global supply chains focussed on cost, has weakened Democratic support among workers since the period of Bill Clinton. It eroded to the point where Obama won 65% of support among unions and Hillary Clinton won 56% in 2016. Interestingly the Republican Romney gained 33% versus 37% for Trump, showing voters were more inclined to move away from Democrats and only a smaller number willing to support Republicans, but the shift enough to give Republicans a win in 2016 for the presidency. The figures are from a Election Day survey of trade union AFL-CIO, and a larger proportion in midwestern states showed disaffection with policies from Clinton to Obama. In fact Obama spent years promoting another free trade agreement TPP that favored tech more than auto and older industries, just as Bill Clinton had promoted NAFTA, without giving thought to what this was doing to its worker base of support. A similar situation happened with Social Democrats in Germany as a SPD administration moved to the centre and handed Christian Democrats led by Merkel a win in parliamentary elections. As Democrats such as former Labor Secretary Reich, a professor at UC Berkeley who served under Bill Clinton, describe the problems of working class people their is less reflection on the impact of the changes from globalization and how Democrats handled or mishandled it, and more on the politics between the two parties.   ...

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A Tax Policy Center study (joint project of the Brookings Institution and the Urban Insitute) shows $157 billion would be generated in the first year from an increase in taxes on the top 1% of income earners in the U.S., about 1.13 million households earning average $2.1 million, by increasing the federal tax rate from current 33.4% for this group to 40%. This could pay for a program to provide tution free education in America's colleges and universities. Even increasing the federal tax to 40% on the 115,000 households earning over $9.4 million on average, the top 0.1% of American households, would generate $55 billion in the first year, enough to pay for the $47 billion cost of tution free education at all of America's public colleges and universities, according to the Tax Policy Center. Economists including Stiglitz and others, point to significant impact of revenue generated from such a tax when applied to improving educational opportunity for the middle class and lower income groups. Education is a great leveler of income disparities as seen in the U.S. after World War II. During recent decades the highest income groups weren major beneficiaries of tax and economic policy, at the very time the middle class and factory workers were hit hard by global competition which lowered wages and exported jobs. The interest rate policies of the Fed after boom bust cycles also favored large investors in equity markets over smaller income earners with savings account deposits, whose savings experienced little growth under interest rates close to zero. ...

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Van Dam says its not that great being a worker in the U.S. because it is hard for the unemployed resulting from competing with workers in other countries with lower wages, and for those who are unemployed harder because worker collective bargaining is weakened over 3 decades. He cites a 296 page OECD report showing very little government support for unemployed and at risk American workers. It says this has contributed to higher income inequality and larger share of lower income people than almost any other advanced a nation. Only Spain and Greece are shown as having more households earning less than half the median income- showing large numbers of people are poor or close to being poor. In the U.S. an average of 1 in 5 lose their jobs each year, and 23% of workers 15 to 64 are in their job less than a year in 2016. The job churn hurts workers because of firing and layoffs being frequent, more than is healthy for a economy. The U.S. and Mexico are the only two countries not requiring advance notice before firings. And fewer than half of workers find a job within a year in the U.S. Two in three families with a displaced worker fall in poverty for some time. Unemployed workers with typically 26 weeks support get less support than any other country in the study. Only 12% of workers in U.S. are covered by collective bargaining. ...

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Former Fed Governor Kevin Warsh's views on the need for greater transparency and disclosure from the large U.S. banks and the risks to the financial system from "too-big-to-fail" banks in 2012-2013. He says the U.S. should not be dependent on the Basel standards for capital requirements and use its own system of stricter requirements similiar to the UK and Switzerland. His views are that the Dodd-Frank law puts too much dependence on regulators doing the right thing, information transparency is lacking for markets to impose discipline, and delegates too much to Basel standards which are not rigorous enough for protecting the U.S. economy.

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Warren Stephens, head of Stephens Inc, in Little Rock, Arkansas, says repeal of the Glass-Steagall Act was a mistake. U.S. banks should have a 5% cap on holdings of total deposits in the U.S., and no "grandfathering" of banks over the 5% limit. Five institutions controlling 50% of the deposits in the U.S. creates too much systemic risk in another financial crisis. Banks should be expected to be one or the other, commercial banks or investment banks, not both. These recommendations are not new. Bank of England Governor, Mervyn King, called for breaking up the largest banks or shrinking the size of the largest banks during the global financial crisis in 2008. This position for banks that are smaller in size is supported by veteran bankers Paul Volcker, Thomas Hoenig and other experts.

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Friedman compares the anti-corruption movements in India and the U.S., the world's two largest democracies. The Occupy Wall Street anti-corruption movement in the U.S. focusses on the excessive influence of banks on lawmakers, regulators, and the government, through the use of campaign money, revolving door for government officials and regulators to join banks, and intense lobbying. The anti-corruption movement focusses on corruption in government at higher levels, such as the handling of government licenses, and at the basic levels of needing to bribe officials for something as simple as getting a birth certificate or other government document. Both have pernicious effects, in the U.S. excesssive bank influence leads to taking excessive risk for higher bonuses, putting the entire financial system at risk and creating a crisis in housing that delays the economic recovery. And in India the corruption leads to retarded progress, as funds to invest in infrastructure and development are siphoned off, business and entrepreneurs are required to pay bribes at each step, and ordinary people face the need to pay bribes for the most routine interactions with government officials. In the process this creates more unequal societies by skewing the distribution of benefits from wealth created to groups that are better equipped to game the system. The economic system once distorted in these ways has tendencies to take talent away from productive activity and innovation which create wealth, and direct it towards speculative activities....

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Samuelson points to the risks to the American economic growth from excessive health care costs. This is hurting take home pay and shows up in consumer spending. It is hurting government spending in other areas such as needed infrastructure spending and efforts to reduce the deficit. This hurts private capital investment to create jobs because of lower demand from constricted consumer spending. The U.S. budget has as its largest single expense 27% on health care compared to 20% on defense the next largest expense, with growth in health care spending taking this to one third of the budget in coming years. Without addressing health care, says Samuelson, the Supercommitte in Congress even if successful at deficit reduction will basically have failed to do its job, and it did not have the time, resources or conviction to do this. According to a new study from the Organization for Economic Cooperation and Development (OECD), U.S. healthcare spending per person is $7,960 per person in 2009. This compares with Norway $5,352, Britain $3,487, France $3, 978, an OECD average of $3,233. Life expectancy in the U.S. is 78.2 years, compared to Japan 83 years, OECD average of 79.5 years. Chile and the Czech Republic have life expectancy equal to the U.S. Except for cancer care where the five year survival rate is 89.3% in the U.S. and the OECD average is 83.5%, the U.S. lags far behind in much needed critical areas such as diabetes and asthma. Rates of emergency hospitalization for asthma are 3 times that in France and 6 times that in Germany and Italy. The U.S. has fewer doctors per thousand population and higher cost per medical procedure- with more frequent use of the costliest procedures- creating a supply shortage that induces higher prices, and less preventive and early action care through physician visits. The number of practicing U.S. doctors is 2.4 per thousand population in the U.S. compared to 3.1 per thousand for the OECD average; and number of annual doctor consultations 3.9 per capita in the U.S. versus 6.5 for the OECD average. Appendectomy cost $7,962 in the U.S., $5,004 in Canada and $2,943 in Germany. Coronary angioplasty cost $14,378 in the U.S., compared to $9,296 in Sweden, and $7,027 in France. Knee replacement cost $14,946 in the U.S., $12,424 in France, and $9,910 in Canada. Knee replacements, angioplasties and MRI exams are twice as common in the U.S. compared to the OECD countries. ...

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Guerrera describes the vital role that FDIC chairman Gruenberg's plan for unwinding failing financial institutions will play in tackling the "too-big-to-fail" problem facing the U.S. He points to the increasing importance of this after the failure of risk management systems at JP Morgan Chase bank.

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A crisis situation exists in state revenue and spending needs. According to a Census Bureau report overall state revenue in the US dropped 30.8%, to $1.1 trillion, between fiscal 2008 and 2009. The gap between the spending needed to provide services in the recession and revenues is very large. States fiscal problems along with housing losses, will be the two forces acting as a drag to the US recovery in 2011-2012. State payrolls will be cut back and contracts to private companies reduced to cut spending. Declining federal help in 2011-2012, with the new focus on reducing the federal deficit, will worsen the situation. According to the Center for Budget and Policy Priorities, even with large federal help 46 states had to raise taxes and make cuts to close a combined gap of $130 billion in their current budgets. And next year 40 states already have projected gaps totaling $113 billion. Even as revenues drop, the Census Bureau report says the state government expenditures went up by 3% to provide essential services, safety net programs and education. Illinois has a budget deficit of 45 percent of its overall budget, according to the Pew Center on the States. In California it is equal to 13% of te state's total budget, and in Arizona it is 15%. For 2009 tax collections fell by 8.5%, and were partially offset by a 12.9% increase in federal help, which was a total of $477.7 billion, according to te Census Bureau report....

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The New York Times reports from the comments of current and former members of the Chase Chief Investment Office (CIO), that risk officers at Chase were ignored when they raised issues about the complex trades made by trader Iksil. Iksil's trades had the support of his manager Mr. Macris, and Ms. Drew who was in charge of CIO. The comments also indicate that at one point Mr. Macris brought in a Risk Officer with whom he had worked closely for many years. Risk Officers are supposed to be independent and their concerns seriously heard, with the authority to halt trades that pose excessive risks. Which made this kind of cozy behaviour in the CIO trading offices in London cause for alarm. These reports also say Mr. Braunstein, the new CFO at JP Morgan Chase, did not strengthen controls after he assumed office in 2010. Bank officials disputed this. The New York offices did not fully grasp the complex trades being made in the CIO London offices, and upper management let the CIO operate pretty much on its own, especially with CEO Jamie Dimon's confidence in Ms. Drew's management of the CIO. This led to another gap in the process of risk management. Dimon had other priorities and distractions, from problem mortgages coming with the acquisition of Washington Mutual, pushing back aginst financial regulation after the 2008 crisis, stress tests and others. At the same time the U.S. Federal Reserve, regulators, and Treasury's coordinated effort to merge failing banks with other larger banks- because of the lack of the process of unwinding failed banks provided later under Dodd-Frank legislation- created mega financial banks. Unlike what the U.S. under Treasury Secretary Rubin pushed for in the case of S. Korea during a banking crisis in 1997, Treasury under Geithner and Fed officials did not push for unwinding of failed financial institutions such as Countrywide and Washington Mutual in 2008-2009 Chase's own portfolio of assets under the CIO, increased by an astounding amount from $76 billion in 2007 to $356 billion in 2011. Even if Ms Drew had managed CIO well before, managing a portfolio of this size is most likely to have presented a whole set of new challenges and problems for which the CIO office was not prepared. Similiar concerns were raised by other Fed officials such as Fed governors, Hoenig and Fisher, who raised the issue that such mega-banks posed unacceptable risks and were too big to manage. Pressures to increase investing profits, growing complacency, relaxing risk management controls, led to the situation where a single trader Mr. Iksil, who had only joined the bank in 2007 according to other reports, could create large losses. This follows a situation at UBSin 2011, where a novice trader made bets that resulted in large losses....