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The Fed acts to stabilize the credit markets till the current administration and Congress or its successor can think of the best way to inject money into the USA banking system and in helping homeowners in the housing crisis. One fact remains between 2000 and 2006 Americans took on about 3 tillion dollars of additional debt than if they had followed the earlier trajectory of spending, so they owe $3 trillion dollars more than they would have if they followed earlier spending patterns, accordingto Business Week estimate. It is this debt that will depress consumption spending for 3 to 4 years according to BW estimates till this debt can be worked down. The other estimate by BW in Street of Fear in the same issue is for $285 billion in total amount of subprime writedowns expected with only $150 billon accounted for so far in early April 2008. This means another $135 billion in writedowns will come probably this year. One anlayst Meridian of Keefe, Bruyette & Woodsfor example points outan additional $15 billion of subprime writedowns expected for Citigroup on top of the $21 billn already taken and in the worst case the writedowns could reach $60 billion. So clearly we are only half way through these writedowns. With consumption spending due for a big hit, and more big hits in the credit markets, the worst may still be ahead in 2008. ...

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The epicenter of the eathquake was in Sichuan, a province of 82 million people. Most of the buildings in the capital Chengdu were intact and suffered little damage. But buildings, homes and schools in amaller towns and rural areas suffered the most damage. This is probably because most of the buildings there used subpar orr shoddy building materials and many were never inspected or followed the building codes which are poorly enforced. Because of China's rush to industrialize urbanization is taking at a rapid pace with 15 million people moving into urban areas even little towns coming out of pasturelands as well as other urban areas. A lot of housing is going up to accomodate these people and not too much attention is being paid to ensuring that the building conforms to building code except in the larger cities like Chengdu and Shanghai and Beijing. This only exposes more problems in the industrialization such as the divide between incomes in urban areas and the rual areas where 60% of China's people still live. The incomes in the rural areas have gone up 91 % between 1997 and 2007 to $590 a year or 4140 yuan, not adjusted for inflation. Urban disposable incomes rose by 150% by comparison for the same period to an average of 13,786 yuan. This 1 to 3 ratio approximately probably conceals wider disparities between cities like Beijing and Shanghai and the poorer rural towns....

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President Trump escalates the trade battle with China by increasing tariffs on $200 billion Chinese goods from 10% to 25%. The U.S. says China went back on its commitments in a 150 page agreement at the 11th hour or last minute, by deleting these commitments in all 7 chapters of this agreement. These are firm commitments sought by the U.S. in a number of areas of deep concern to the U.S. and the U.S. Trade Representative Mr. Lighthizer had already conveyed the determination of the U.S. to not relent on this. In the past China was seen to go back on its commitments and the U.S. side now wanted to ensure promises were kept. The U.S. concerns cover- theft of intellectual property and trade secrets, forced technology transfers, competition policy, access to financial services and currency manipulation.  The situation has been building up fro a decade with the Trump campaign honing in on this issue of China stealing U.S. jobs, and factory closures in the U.S., because of unfair trading practices. It also led to Mr. Trump's winning election campaign in the American midwestern states. With China seen as gaining an unfair technological advantage over the U.S., most recently over 5G telecom networks, the U.S. is not likely to back down. The U.S. is less dependent on trade with China. China is more dependent on the U.S. and a lot of manufacturing jobs in China are affected by the U.S. tariffs. This is why president Trump has decided to take a strong stand, including putting on tariffs on and additional $300 billion of Chinese goods.   ...

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Adam Parker, chief equity strategist of Morgan Stanley, sees the Standard and Poor's 500 stock index ending 2012 at 1167. Garry Evans, global head of equity strategy at HSBC, sees the S&P 500 stock index ending 2012 at 1190. This is down from the end of 2011 level of 1257. David Kostin, top equity strategist at Goldman Sachs, sees the S&P at 1250 at the end of 2012. Parker, Evans and Kostin, share concerns about the macroeconomic environment and Europe. Parker also sees weakness in bank earnings contributing to this level in the S&P 500 stock index. Parker view global macroeconomic factors determining 50% of the outcome, with weaknesses not only in Europe but also in China. His predictions for S&P earnings per share are at about $100 for 2012 and $103 for 2013.

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The problem of information providers is linked to the problem of the recipient of the information- the common man in America. For the common man in America these are distant places with strange cultures and manners of living, remote from his everyday existence in an industrialized country. Why should the common man in America care if a small fraction of GNP and a trained military with advanced equipment will be sufficient to deal with situations in remote places. A fast growing economy between 1950- 2000 could also absorb the costs of local conflicts. The reason the common man in America should care is that the economy is expected to grow slowly, so that poor information leading to poor decisions on allocating limited and declining resources for different local conflicts- a war in Iraq costing 1 trillion dollars, and a war in Afghanistan 1 trillion dollars- can compromise future economic security, investment in America and overall defense needs. Especially when money wasted with poor decisions cannot be retrieved or put back in the Treasury, and creates future problems....

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With 40% of the unemployment shown as longterm unemployed, U.S. Federal Reserve policies are focussed on bringing down these levels, which pose a risk to the productive capacity in the U.S.

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The Obama first family and its many mulicultural faces from Kenyan, Indonesian, Chinese to African American and White abolitionists from Missouri. Truly a new face of the American continent. About 25% of white Americans have interracial marraiges and nearly half of all black Americans belong to a multiracial family, according to estimates made by Joshua Goldstein of the Max Planck Institute for Demographic Research. What it does is wake one up to the reality, the changes that have already ocurred in the country which most people had not realized. With Blacks, Hispanics, Jewish people, Asian Americans, the 25% of whites in interracial marraiges, recent immigrants, white women, and white males making up this mosaic of cultures and communities that makeup America. And the geographical mix is also just as varied, with the west and the northwest and the midwest and east having a bigger share of this mosaic than the south and the mountain states. Whites in interracial marraiges tends to breakup the traditional white protestant insular demographic. On the religious side there is a breakup of the traditional white demographic with Irish Americans especially those in the east tending to move away from the traditional white protestant insular demographic because of their own particular historical and cultural narrative. The Obama story is one of tapping into these different demographics and changing faces of America at the right time, when the conservative southern demographic, represented by the Bush family, combined with related demographic groups in counties and neighborhoods around the country had lost popular support from two wars and a failing economy....

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The slowdown in China, the collapse of oil prices, and depreciation in emerging market currencies, suggest that low inflation in the U.S is likely to continue in 2016. This will make it harder for the U.S. Federal Reserve under Yellen to increase interest rates in 2016.

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Harold Meyerson compares the continuing inhumanity of separating parents from children that president Obama has to face with the choice presented to Lt. Colonel Jager at the Berlin Wall in 1989. Jager decided to let both parents visiting West Germany to return to East Germany to their children, even though the father had a stamp on his passport banning a return. He says the Republican control of Congress could last till 2023 by which time current law would have separated millions of parents and children. In 2012 about 13% of schoolchildren in California and Texas had an undocumented immigrant as a parent, according to the Pew Research Center. And for the last 6 years of the Obama administration deportations have reached 400,000 a year, leading to a lot of broken families.

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The risks to Republicans of losing sight of their narrative by tea-party leader comments such as calling Latino voters "illiterate." This is balanced by the careful and considered respose of presidential candidates, Kasich of Ohio, Rand of Kentucky, and Jindal of Louisiana, and of senior party leaders such as McConnell and McCain.

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The BBC's Soutik Biswas takes a look at prime minister Modi as he seeks a second term in India's general election in May 2019.  Modi's first term is marked by exceptional development schemes, efforts to provide health insurance to 500 million people who cannot afford health insurance, bringing cooking gas cylinders to hundreds of millions of Indian women especially in rural areas, efforts to jumpstart building of infrastructure projects such as airports and metro subways. A new law for GST brings together the country with one tax instead of a hodge podge of state taxes for interstate commerce, something India needed for a long time but different governments failed to implement. A failed effort to fight corruption by removing from circulation large denomination currency notes reduced economic growth briefly during the first term, though it may have accelerated the shift to formal economy needed in the long run to improve tax revenues for development needs. One of the problems for the Modi government is how do you put a value on something like Swach Bharat Mission, the achievement of the goal of defecation free India in 2019 by 100% on the 150th anniversary of the birth of Mahatma Gandhi, getting rural toilets up from 38% to 100%. Development had to start from the bottom up. Similarly in a country where middle men took up a lot of the transfer to poor families of government assistance- the delivery to hundreds of millions their own bank accounts.- how do you put a value on something like this, but it is essential for development from the ground up. More than missiles or other talk this has got to be the spirit of any development oriented administration in India. Ground up, big goals and rapid delivery and an apology for the difficulties that the people suffered earlier for lack of this infrastructure. For both China and India it is the same - moving quickly to make up for 100 years of colonial rule and stagnation. The Modi government has responded to rural farmer distress with support for guaranteed crop prices. As more young voters vote for the first time an important factor is how the new voters see the years ahead under either a government led by the BJP or by a patchwork of parties as the previous ruling Congress party depends on alliances with other parties with conflicting agendas or lack of rapid development agendas. The Modi government sees itself as setting the stage for the next phase of development that would change the economy through new infrastructure development and create jobs in construction and engineering, and other areas. The criticism is that not enough jobs were created in the first term. Yet bold infrastructure development targets such as transformed the Chinese economy could be the answer for job creation. The question then is who is better qualified to launch that effort based on its track record. The Congress party's main criticism is that it has to make alliances with parties that could stall development with conflicting agendas. The other is that in the the 2 years leading to the election of Mr. Modi the Congress led government of Manmohan Singh was stalled due to corruption charges, leading to a lack of decisionmaking at the highest levels, and stalled efforts for the rapid development that could deliver the kind of jobs India needs.  Young Indians would like to see growth first and foremost, only something rivalling China's transformation over 2 decades can do this. It should be kept in mind that China poured more concrete in the 21st century so far than all the concrete the United States poured in the 20th century, according to The Guardian report. The question then is who is best qualified and in a position to deliver this needed economic miracle.    ...

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Solyndra Inc. and what went wrong. Solyndra filed for bankruptcy in Sept. 2011, after investments of private and government capital of over a billion dollars. Of this $535 million was a loan backed by the U.S. Department of Energy, leaving taxpayers with large losses. When emails were being exchanged between Vice President Biden's advisor and OMB staffers on August 31, 2009, according to the Washington Post, Solyndra was already in trouble. OMB pleaded for more time to do due diligence and analysis of the company. A $535 million loan was approved just when the economics behind Solyndra's cylinder coated solar materials were being made obsolete by the existing technology of polysilicon cells laid out on a flat panel. At Solyndra's inception in 2005 the cylinder based technology held promise, as the polysilicon cells technology relied on polysilicon material which was costly to make. In 2009 China was investing heavily in the polysilicon technology and bringing prices down to where the material cost was coming down quickly-down as much as 80%. By the end of 2009, it cost $4.00 per watt to produce Solyndra's product, while the competing Chinese polysilicon product cost $1.00 per watt- today this is down to 75 cents for the polysilicon product. The Solyndra product was harder to manufacture and had more defective material that had to be discarded. It is in the midst of these sea changes in technology, costs, and the economics of the project, that the government pushed for and OMB approved the Solyndra loan of $535 million to build a new factory that could produce 500 megawatts. In 2010 the economics worked as it would be expected, leading to Solyndra sales of 65 megawatts. The original factory had a capacity with improvements of 100 megawatts. Solyndra lost $172 million in 2009 on revenue of $100 million. Private investors attitude to their investment changed in 2009. The Wall Street Journal quotes one investor who saw the government loan followed by an IPO as a way to exit and cash out. A press release by Solyndra in July 2009, stated the company had a contractual backlog of $2 billion, even as the economics of the Solyndra product were collapsing. Yet these orders were not firm orders but framework agreements. In Dec. 2009 the lead underwriters, Goldman Sachs and Morgan Stanley, made an initial filing for an IPO, which was cancelled by the board 6 months later when the new factory had to be closed. The private investors interests and the governments interests had already diverged by the time of the email pushing for the $535 U.S. government loan from McSweeney, Biden's domestic policy advisor, to the senior OMB staffer, cited in the Washington Post, Stephens and Leonnig, 9/14/2011. OMB and the White House staffers failed to see this and the bankruptcy outcome that seemed highly probable in August 2009, based on the economics and competitive technology and pricing. This does prove the often cited comment that the government is not good at choosing winners and losers when handing out money. It goes beond this to show the whole process of due diligence failing at agencies such as the Energy Department and the Office of Management and the Budget, where one would think technically qualified staffers could catch the problems and risks of a project that were so apparent. ...

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Li Keqiang, China's new premier, is a member of the "Class of 77," who gained entry to Peking University when university entrance exams were reinstated after Mao's death. This is a period of great curiosity in China about the outside world. Li described it this way in 2008: "In this period knowledge was expanding with the speed of an explosion. I came here not just for knowledge, but to mold a kind of temperament, to master a kind of academic discipline." This he did by working extremely hard trying to master the English language and Western legal theory. He is now the only leader in China who can speak fluent English and is familiar with western concepts of law. For this he owes much to one of his professors, Gong Xiangrui, who studied at the London School of Economics in the 1930's and supported a multiparty system for China. Li was selected as one of the students to translate "The Due Process of Law" by Lord Denning, a British jurist. He spent the next 15 years in the Communist party's Youth League and moved up through the ranks. Many of the "Class of 77' " are still close friends and in academic positions in Singapore, Hong Kong and other universities. He understands the weaknesses in China's legal system because many of his close friends are lawyers, judges and law professors. Evidence of his intellectual openness, is his return to Peking University for a masters degree in economics years later, his thesis on urbanization, and his sponsorship through the Development Reform Commission think tank and the World Bank's Zoellick, of the report published in 2012, "China 2030." That report called for China to change course and reverse the role of state owned firms in the economy, giving consumers a bigger role. Like many of China's leaders this openness also meant during the period of turmoil of the Mao period and the decades following this, of a reticence to talk about political change that came over the entire country, in the words of the 2012 Chinese Nobel Prize Laureate's name, Mo Yan, a kind of "Don't Speak." Taking any kind of political position was simply too risky. The presence of 4 older Politburo members in their mid-60's who are close allies of former president Jiang Zemin and likely to preserve the status quo, also suggests a cautious approach in making changes. One key difference between Jinping- Keqiang from the Jintao-Wen Biao leadership is that Jinping has experience in provincial leadership positions in Hebei, and Keqiang was provincial leader in Henan, China's most populous province, as well as leader in industrial Liaoning province. By odd contrast Hu Jintao was a leader in the remote Tibet region and Wen Biao was a geologist in the northeast for many years. This gives the new leadership team a first hand knowledge of conditions in populous provinces, and the connections with the World Bank's Zoellick a kind of window to the outside that no other leader has had. Jiang Zemin, a former mayor of Shanghai, China' most westernized city in the 1930's and today, was himself a experimenter in his own right when he initiated the changes tht gave China entry into the World Trade Organization. His support of Xi Jinping gives Xi the needed backing for making change happen when the time comes....